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 |
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LORD ABBETT SECURITIES TRUST |
(Exact name of registrant as specified in charter) |
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90 Hudson Street, Jersey City, NJ | | 07302 |
(Address of principal executive offices) | | (Zip code) |
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Christina T. Simmons, Vice President & Assistant Secretary 90 Hudson Street, Jersey City, NJ 07302 |
(Name and address of agent for service) |
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Registrant’s telephone number, including area code: | (800) 201-6984 | |
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Date of fiscal year end: | 10/31 | |
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Date of reporting period: | 4/30/2007 | |
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Item 1: Report to Shareholders.
2007
LORD ABBETT SEMIANNUAL
REPORT
Lord Abbett
All Value Fund
Alpha Strategy Fund
International Core Equity Fund
International Opportunities Fund
Large Cap Value Fund
Value Opportunities Fund
For the six-month period ended April 30, 2007
Lord Abbett Securities Trust
Semiannual Report
For the six-month period ended April 30, 2007
Dear Shareholders: We are pleased to provide you with this overview of Lord Abbett Securities Trust's performance for the six-month period ended April 30, 2007. On this page and the following pages, we discuss the major factors that influenced performance. For detailed and more timely information about the Fund, please visit our Website at www.lordabbett.com, where you also can access the quarterly commentaries by the Fund's portfolio managers.
General information about Lord Abbett mutual funds, as well as in-depth discussions of market trends and investment strategies, is also provided in Lord Abbett Insights, a newsletter accompanying your quarterly account statements. We also encourage you to call Lord Abbett at 888-522-2388 and speak to one of our professionals if you would like more information.
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,
Robert S. Dow
Chairman
From left to right: Robert S. Dow, Director and Chairman of the Lord Abbett Funds; E. Thayer Bigelow, Independent Lead Director of the Lord Abbett Funds; and Daria L. Foster, Director and President of the Lord Abbett Funds.
Q: What were the overall market conditions during the six-month period ended April 30, 2007?
A: Although there was a brief, but sharp, sell-off in late February, equity returns were positive for the six-month period ended April 30, 2007. Share prices rose in excess of 7.4% (on a total return basis relative to the S&P headline indexes*).
Inflation, after trending lower in late 2006, rose in the first few months of 2007. Nevertheless, the Federal Reserve Board (the Fed) held interest rates steady, while the 10-year Treasury yield fluctuated between 4.4% and 4.9%.
Within the equity market, the performance of companies with mega-capitalizations (defined by the S&P 100® Index1) trailed that of their smaller
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capitalized peers, with mid caps, in particular, leading the pack; however, this trend of small cap outperformance did not extend to the micro cap segment of the equity market. Broadly speaking, the value style of investing outperformed the growth style; however, the performance gap narrowed in the February–April period.
In the S&P Composite 1500® Index,2 the top performing sectors were materials, utilities, and energy. Rising material prices sent the materials sector soaring approximately 20% during the six-month period ended April 30, 2007. The worst performing sectors were financials and consumer discretionary. Financials, especially banks and money lending centers, lagged, as net interest margin (the difference between interest rates paid on deposits and those received on loans) continued to be problematic.
On the international side, foreign equity markets posted strong returns for the six-month period ended April 30, 2007. The MSCI EAFE® Index with Net Dividends3 (primarily a large company index) rose 15.5% (in U.S. dollar terms), and the S&P/Citigroup Extended Market World ex-U.S. Index4 (primarily a small company index) rose 20.7% (in U.S. dollar terms), outdistancing the U.S. equity markets, as measured by the S& P 500® Index,5 which rose 8.6% (in U.S. dollar terms).
The solid performance by global markets during the period was interrupted in late February by a sharp sell-off that began in the Shanghai stock index. The decline there followed efforts by the Chinese government to curb excessive market speculation and cool that country's economy. The sell-off spread rapidly around the globe, but proved to be short-lived, with most markets eventually making up for lost ground. Even rising oil prices, tensions arising in the West over Iran's nuclear ambitions (the world's third-biggest oil exporter), and concerns that troubles in the U.S. subprime mortgage market would weaken the American economy also failed to slow the market advance during the period.
Emerging markets, which have generally made strong gains in recent years, were pressured by China's sell-off and geopolitical tensions. But they, too, recovered nearly as rapidly as they declined.
Lord Abbett All Value Fund
Q: How did the All Value Fund perform during the six-month period ended April 30, 2007?
A: The Fund returned 7.3%, reflecting performance at the net asset value (NAV) of Class A shares with all distributions reinvested, compared to its benchmark, the Russell 3000® Value Index,6 which returned 9.5% over the same period.
Q: What were the most significant factors affecting performance?
A: The materials and processing sector was the most significant detractor from the Fund's performance relative to its
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benchmark for the six-month period, followed by the utilities sector and the integrated oils sector (owing to an underweight position).
Among the individual holdings that detracted from the Fund's performance were materials and processing companies Barrick Gold Corp. (the Fund's number-one absolute detractor), an international gold company operating mines and development projects, and Newmont Mining Corp., an international gold and mining company; healthcare holding Boston Scientific Corp., a developer of minimally invasive medical devices; producer durables holding Hubbell Inc., a manufacturer of electrical, lighting, and electronic products; and financial services holding Cullen/Frost Bankers, Inc., a provider of a full array of banking services in Texas.
The greatest contributor to the Fund's performance relative to its benchmark was the financial services sector (owing to an underweight position versus its benchmark), followed by the healthcare and the auto and transportation sectors.
Among the individual holdings that contributed to the Fund's performance were integrated oils holding ExxonMobil Corp. (the Fund's number-one contributor), an operator of petroleum and petrochemicals businesses throughout the world; consumer staples holding The Kroger Co., an operator of supermarkets and convenience stores in the United States; utilities holding AT&T Inc., a U.S. communications services provider; other sector holding Trinity Industries, Inc., a manufacturer of transportation, construction, and industrial products; and healthcare holding Abbott Laboratories, a developer of a diversified line of healthcare products and services.
The 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.
Lord Abbett Alpha Strategy Fund
Q: How did the Alpha Strategy Fund perform during the six-month period ended April 30, 2007?
A: The Alpha Strategy Fund is a strategic asset allocation fund using a fund of funds approach. Assets are currently divided among Lord Abbett Developing Growth Fund, Lord Abbett International Opportunities Fund, Lord Abbett Small Cap Value Fund, Lord Abbett Micro Cap Growth Fund, and Lord Abbett Micro Cap Value Fund. As a result, the Alpha Strategy Fund's performance is directly related to the performance of its underlying funds.
The Alpha Strategy Fund returned 13.6%, reflecting performance at the net asset value (NAV) of Class A shares with all distributions reinvested, compared to its benchmark, the S&P/Citigroup Small Cap World Index,4 which returned 15.1% over the same period.
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Lord Abbett Developing Growth Fund Component
(Approximately 24.5% of Alpha Strategy Fund portfolio)
Q: How did the Developing Growth Fund perform during the six-month period ended April 30, 2007?
A: The Fund returned 15.2%, reflecting performance at the net asset value (NAV) of Class Y shares with all distributions reinvested, compared to its benchmark, the Russell 2000® Growth Index,7 which returned 7.4% over the same period.
Q: What were the most significant factors affecting performance?
A: The consumer discretionary sector was the greatest contributor to the Fund's performance relative to its benchmark for the six-month period, followed by the financials services and materials and processing sectors.
Among the individual holdings that contributed to performance were technology holding SunPower Corp. (the Fund's number-one contributor), a maker of silicon solar cells; consumer discretionary holding TeleTech Holdings, Inc., a provider of integrated customer management solutions to Fortune 500 and multinational companies; technology holding First Solar, Inc., a manufacturer of solar modules; financial services holding IntercontinentalExchange Inc., an operator of an electronic commodities trading platform; and producer durables holding Varian Semiconductor Equipment Associates, Inc., a provider of semiconductor processing equipment used in the fabrication of integrated circuits.
The most significant detractor to the Fund's relative performance during the period was the auto and transportation sector, followed by the consumer staples sector (owing to an underweight position) and the utilities sector.
Among the individual holdings that detracted from the Fund's performance were technology holdings SiRF Technology Holdings, Inc. (the Fund's number-one detractor), which supplies global positioning system (GPS) semiconductor solutions, Rackable Systems Inc., which provides high-density computer servers and high-capacity storage systems based on an open architecture approach, and Isilon Systems, Inc., a manufacturer of computer hardware; healthcare holding Ilumina, Inc., a developer of tools for the large-scale analysis of genetic variation and functions; and consumer discretionary holding PeopleSupport, Inc., which provides business process outsourcing.
Lord Abbett International Opportunities Fund Component
(Approximately 49.5% of Alpha Strategy Fund portfolio)
Q: How did the International Opportunities Fund perform during the six-month period ended April 30, 2007?
A: The Fund returned 17.6%, reflecting performance at the net asset value (NAV) of Class Y shares with all distributions
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reinvested, compared to its benchmark, the S&P/Citigroup Extended Market World ex-U.S. Index, which returned 20.7% over the same period.
See discussion about Lord Abbett International Opportunities Fund on page 8.
Lord Abbett Small Cap Value Fund Component
(Approximately 23.7% of Alpha Strategy Fund portfolio)
Q: How did the Small Cap Value Fund perform during the six-month period ended April 30, 2007?
A: The Fund returned 6.4%, reflecting performance at the net asset value (NAV) of Class Y shares with all distributions reinvested, compared to its benchmark, the Russell 2000® Value Index,8 which returned 6.4% over the same period.
Q: What were the most significant factors affecting performance?
A: The financial services sector was the greatest contributor to the Fund's performance (owing to an underweight position) relative to its benchmark for the six-month period, followed by the producer durables sector and the other sector (owing to an overweight position); this is the category reserved for diversified corporations.
Among the individual holdings that contributed to the Fund's performance were technology holding Anixter International Inc. (the Fund's number-one contributor), a distributor of communications and specialty wire and cable products; producer durables company Curtiss-Wright Corps., a manufacturer of precision components and systems; other sector holding Trinity Industries, Inc., a manufacturer of transportation, construction, and industrial products; and two materials and processing sector holdings: Hexcel Corp., a developer of reinforcement products, composite materials and engineered products; and Quanex Corp., a maker of specialized metal products made from carbon and alloy steel and aluminum.
The consumer staples sector was the worst detractor from the Fund's relative performance for the period, followed by the materials and processing and the consumer discretionary sectors.
Among the individual holdings that detracted from the Fund's performance were materials and processing holdings Rogers Corp. (the Fund's number-one detractor), a manufacturer of specialty materials and components for applications in the communications, computer, imaging, consumer, and transportation markets; NCI Building Systems, Inc., a maker of metal-engineered building systems and products for the building industry; Brady Corp., a supplier of industrial identification solutions; technology holding Plexus Corp., a provider of a variety of product development and project realization services; and utilities holding Avista Corp., a North American energy company.
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Lord Abbett Micro Cap Growth Fund Component
(Approximately 1.0% of Alpha Strategy Fund portfolio; the Alpha Strategy Fund began investing in the Micro Cap Growth Fund on April 2, 2007)
Q: How did the Micro Cap Growth Fund perform during the six-month period ended April 30, 2007?
A: The Fund returned 19.5%, reflecting performance at the net asset value (NAV) of Class Y shares with all distributions reinvested, compared to its benchmark, the Russell 2000® Growth Index, which returned 7.4% over the same period.
Q: What were the most significant factors affecting performance?
A: The healthcare sector was the greatest contributor to the Fund's performance relative to its benchmark for the six-month period, followed by the materials and processing and the consumer staples sectors.
Among the individual holdings that contributed to the Fund's performance were materials and processing holding Force Protection, Inc. (the Fund's number-one contributor), a maker of vehicles that protect and save lives and property, including mine-protected vehicles used by the military; consumer staples company Jones Soda Co., which manufactures and distributes a variety of soda and juice beverages; technology holdings Omniture, Inc., a provider of online business optimization software to manage online, offline and multi-channel business initiatives, and Blue Coat Systems, Inc., a provider of Web security solutions that increase the protection and control of enterprise Web infrastructures; and utilities holding Eschelon Telecom, Inc., a telecommunications services provider.
Only two sectors detracted from the Fund's relative performance for the period: consumer discretionary and (owing to an underweight position) producer durables.
Among the individual holdings that detracted from the Fund's performance were consumer discretionary PeopleSupport Inc., a provider of business process outsourcing, and Travelzoo Inc., a supplier of online marketing solutions to the travel industry; and technology holdings STEC Inc., a designer of technology solutions that offers products based on dynamic random access memory, static random assess memory, and Flash memory technologies, and RRSat Global Communications Network Ltd., a distributor, of video and audio programming by satellite; and healthcare holding Xtent, Inc., a medical device company.
Lord Abbett Micro Cap Value Fund Component
(Approximately 1.0% of Alpha Strategy Fund portfolio; the Alpha Strategy Fund began investing in the Micro Cap Value Fund on April 2, 2007)
Q: How did the Micro Cap Value Fund perform during the six-month period ended April 30, 2007?
A: The Fund returned 10.6%, reflecting performance at the net asset value (NAV) of Class Y shares with all distributions reinvested, compared to its benchmark, the
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Russell 2000® Value Index, which returned 6.4% over the same period.
Q: What were the most significant factors affecting performance?
A: The producer durables sector was the greatest contributor to the Fund's performance relative to its benchmark for the six-month period, followed by the financial services (in which the Fund was underweight) and the healthcare sectors.
Among the individual holdings that contributed to performance were healthcare holding Molecular Devices Corp. (the Fund's number-one contributor), a bioanalytical measurement systems supplier; producer durables holding Twin Disc, Inc., a provider of heavy duty off-highway power transmission equipment to the marine, energy, heavy equipment, and other markets; consumer discretionary holding Carriage Services, Inc., a U.S. operator of funeral homes and cemeteries; Amerigon Inc., an auto and transportation sector holding that supplies high-technology products for automotive original manufacturers; and materials and processing holding Lydall, Inc., a developer of engineered materials for a variety of applications.
The most significant detractor from the Fund's relative performance was the consumer staples sector (in which the Fund was underweight), followed by the materials and processing sector and the consumer discretionary sector.
Among individual holdings that detracted from the Fund's performance were Ultralife Batteries, Inc. (the Fund's number-one detractor), a manufacturer of a comprehensive line of lithium batteries; Susser Holdings Corp., an operator of convenience stores and distributor of nonrefining motor fuels; Interstate Hotels & Resorts, Inc., an operator of various hotel assets; financial services holding Donegal Group Inc., an insurance holding company offering property and casualty insurance in five states; and healthcare holding Kensey Nash Corp., a manufacturer of a line of absorbable medical devices.
Each of the Fund's component portfolios is actively managed and, therefore, the 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.
Lord Abbett International Core Equity Fund
Q: How did the International Core Equity Fund perform during the six-month period ended April 30, 2007?
A: The Fund returned 15.2%, 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 Net Dividends, which returned 15.5% over the same period.
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Q: What were the most significant factors affecting performance?
A: Overall, the consumer discretionary sector was the worst detractor from the Fund's relative performance, followed by the financials and information technology sectors.
Among the individual holdings that detracted from the Fund's performance were financials company Sumitomo Mitsui Financial Group, Inc. (the Fund's number-one detractor), a Japanese provider of commercial banking and a variety of financial services; consumer discretionary holdings Nissan Motor Co., Ltd., a manufacturer of automobiles, light trucks, and related parts, and Don Quijote Co., Ltd., an operator of Tokyo-based discount retail stores; financials holding Kazkommertsbank, the largest private, full-service bank in Kazakhstan; and industrials holding, Hong Kong-based Melco International Development Ltd., an operator of investment banking, financial services, technology, fine dining, leisure and tourism, property investment, and investment businesses.
The telecommunications services sector was the strongest contributor to the Fund's performance relative to its benchmark for the six-month period, followed by the consumer staples and energy sectors.
Among the individual holdings that contributed to the Fund's performance were materials holding Alcan Inc. (the Fund's number-one contributor), a multinational company involved in all aspects of the aluminum industry; telecommunications services holding MTN Group Ltd., a diversified South African wireless telecommunications company; consumer staples holding Altadis, S.A., a manufacturer of tobacco products marketed in Europe, Asia, and North America; financials holding National Bank of Greece S.A., a provider of retail and corporate banking services; and consumer discretionary holding Desarrolladora Homex S.A. de C.V., a Mexican-based homebuilder.
The 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.
Lord Abbett International Opportunities Fund
Q: How did the International Opportunities Fund perform during the six-month period ended April 30, 2007?
A: The Fund returned 17.4%, reflecting performance at the net asset value (NAV) of Class A shares with all distributions reinvested, compared to its benchmark, the S&P/Citigroup Extended Market World ex-U.S. Index, which returned 20.7% over the same period.
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Q: What were the most significant factors affecting performance?
A: The industrials sector was the worst detractor from the Fund's performance relative to its benchmark for the six-month period, followed by the information technology sector and the consumer discretionary sector.
Among the individual holdings that detracted from the Fund's performance were consumer discretionary companies Avex Group Holdings Inc. (the Fund's number-one detractor), a marketer of CDs, videos, and DVDs, and Japan General Estate Co., Ltd., a seller of newly constructed condominiums and houses; information technology company Capcom Co., Ltd., a developer of consumer videogame software; healthcare holding LMA International, a Singapore-based maker of laryngeal masks for non-invasive and nonstimulating airway support for patients during surgery; and financials holding The Thai Military Bank Public Company Ltd., a commercial bank based in Thailand.
The financials sector was the best contributor to the Fund's relative performance, followed by the energy sector and telecommunications services sector.
Among the individual holdings that contributed to the Fund's performance were healthcare holding Fresenius Medical Care AG & Co. (the Fund's number-one contributor), a provider of kidney dialysis services, as well as equipment and products used in the treatment of dialysis patients; consumer discretionary holding EganaGoldpfeil Holdings Ltd., a designer of timepieces, jewelry, and leather products; materials holding Wacker Chemie AG, a maker of various chemicals used in the construction, textile, pharmaceutical, cosmetics, agriculture, and tobacco industries; and financials sector holdings Arques Industries AG, a company that acquires medium-sized German, Swiss, and Austrian companies in need of restructuring, and BlueBay Asset Management plc, a manager of fixed-income credit funds and products.
The 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.
Lord Abbett Large Cap Value Fund
Q: How did the Large Cap Value Fund perform during the six-month period ended April 30, 2007?
A: The Fund returned 7.1%, reflecting performance at the net asset value (NAV) of Class A shares with all distributions reinvested, compared to its benchmark, the Russell 1000® Value Index,9 which returned 9.8% over the same period.
Q: What were the most significant factors affecting performance?
A: The consumer discretionary sector was the most significant detractor from the
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Fund's performance relative to its benchmark for the six-month period, followed by the integrated oils sector (owing to an underweight position versus the benchmark) and the materials and processing sector.
Among the individual holdings that detracted from the Fund's performance were materials and processing holding Barrick Gold Corp. (the Fund's number-one detractor), an international gold company operating mines and development projects; financial services holding Freddie Mac, a stockholder-owned corporation chartered by Congress in 1970 to create a continuous flow of funds to mortgage lenders; consumer discretionary holding The TJX Companies, which operates eight retail chains, including the two largest off-price clothing retailers in the United States, including T.J. Maxx and Marshalls; and technology holdings Sun Microsystems, Inc., a provider of solutions for building and maintaining network computing environments, and Alcatel-Lucent, a manufacturer of telecommunications equipment and supplier of telecommunications services.
The greatest contributor to the Fund's performance relative to its benchmark was the financial services sector (owing to an underweight position in this sector versus its benchmark), followed by the auto and transportation sector.
Among the individual holdings that contributed to performance were utilities holding AT&T Inc. (the Fund's number-one contributor), a communications services provider; integrated oils holding ExxonMobil Corp. an operator of petroleum and petrochemicals businesses throughout the world; consumer staples holding The Kroger Co., an operator of supermarkets and convenience stores in the United States; Baxter International Inc., a healthcare holding that develops products and technologies related to the blood and circulatory systems; and financial services holding Citigroup Inc., a diversified international financial services holding company.
The 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.
Lord Abbett Value Opportunities Fund
Q: How did the Value Opportunities Fund perform during the six-month period ended April 30, 2007?
A: The Fund returned 11.5%, reflecting the performance at the net asset value (NAV) of Class A shares with all distributions reinvested, compared to its benchmark, the Russell 2500® Value Index,10 which returned 9.7% for the same period.
Q: What were the most significant factors affecting performance?
A: The materials and processing sector (owing to an overweight position) was the
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greatest contributor to the Fund's performance relative to its benchmark for the six-month period, followed by the financial services sector (owing to an underweight position) and the producer durables sector.
Among the individual holdings that contributed to the Fund's performance were materials and processing holdings Reliance Steel & Aluminum Co. (the Fund's number-one contributor), a distributor and processor of steel and aluminum; Harsco Corp., an industrial services and engineered products company; The Shaw Group Inc., a provider of engineering and construction services serving the energy and environmental infrastructure market; and Silgan Holdings Inc., a maker of consumer goods packaging products; and technology holding Anixter International Inc., a distributor of communications and specialty wire and cable products.
Overall, the healthcare sector was the worst detractor from the Fund's relative performance, followed by the other energy sector (the category reserved for oil service companies, as well as smaller exploration and production companies, and independent refiners) and the technology sector.
Among the individual holdings that detracted from the Fund's performance were technology holdings Plexus Corp. (the Fund's number-one detractor), a provider of a variety of product development and project realization services, CACI International Inc., a supplier of information technology products and services, Napco Security Systems, Inc., a manufacturer of electronic security devices, and Black Box Corp., a provider of technical network services and related products to businesses; and healthcare holding Omnicare, Inc., a provider of professional pharmacy, related consulting, and data management services.
The 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.
A prospectus contains important information about a fund, including its investment objectives, risks, charges, and ongoing expenses, which an investor should carefully consider before investing. To obtain a prospectus for any Lord Abbett mutual fund, please contact your investment professional or Lord Abbett Distributor LLC at 888-522-2388 or visit our Website at www.lordabbett.com. Read the prospectus carefully before investing.
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* The S&P U.S. headline indexes include the S&P Composite 1500®, S&P 500®, S&P 500® Equal Weight, S&P Mid Cap®, S&am p;P Small Cap®, and the S&P 100®.
1 The S&P 100® Index is a market capitalization-weighted index made up of 100 major, blue-chip stocks across diverse industry groups.
2 The S&P Composite 1500® Index combines the S&P 500®, S&P MidCap 400®, and S&P Small Cap 600® indexes in an efficient way to create a broad market portfolio representing 90% of U.S. equities.
3 The MSCI EAFE® Index with Net Dividends is an unmanaged index that reflect the stock markets of 22 countries, including Europe, Australasia, and the Far East, with values expressed in U.S. dollars. The MSCI EAFE Index with Net Dividends approximates the minimum possible dividend reinvestment. The dividend is reinvested after deduction of withholding tax, applying the rate to nonresident individuals who do not benefit from double taxation treaties. MSCI uses withholding tax rates applicable to Luxembourg holding companies, as Luxembourg applies the highest rates.
4 The S&P/Citigroup Global Equity Index SystemSM and the names of each of the indexes and subindexes that it comprises (GEIS and such indexes and subindexes, each an "Index" and collectively, the "Indexes") are service marks of Citigroup. The S&P/Citigroup Small Cap World ex-U.S. Index is a subset of the Global Citigroup Broad Market Index (BMI). The S&P/Citigroup Extended Market World ex-U.S. Index is a subset of the Global Citigroup Extended Market Index (EMI).
5 The S&P 500® Index is widely regarded as the standard for measuring large-cap U.S. stock market performance and includes a representative sample of leading companies in leading industries.
6 The Russell 3000® Value Index measures the performance of those Russell 3000® Index companies with lower price-to-book ratios and lower forecasted growth values. The stocks in this index are also members of either the Russell 1000® Value or the Russell 2000® Value indexes.
7 The Russell 2000® Growth Index measures the performance of those Russell 2000® Index companies with higher price-to-book ratios and higher forecasted growth values.
8 The Russell 2000® Value Index measures the performance of those Russell 2000® Index companies with lower price-to-book ratios and lower forecasted growth values.
9 The Russell 1000® Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
10 The Russell 2500® Value Index measures the performance of those Russell 2500® Index companies with lower price-to-book ratios and lower forecasted growth values.
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 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 the Funds 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 our Website at 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. The Funds offer additional 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 reimbursements were in place. Without such expense reimbursements, the Funds' returns would have been lower.
The views of the Funds' management and the portfolio holdings described in this report are as of April 30, 2007; these views and portfolio holdings may have changed subsequent to this date, and they do not guarantee the future performance of the markets or the Funds. Information provided in this report should not be considered a recommendation to purchase or sell securities.
A Note about Risk: See Notes to Financial Statements for a discussion of investment risks. For a more detailed discussion of the risks associated with the Funds, please see each Fund's prospectus.
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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Expense Examples
As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including sales charges 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. These Examples are 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 Examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period (November 1, 2006 through April 30, 2007).
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 the Period 11/1/06 – 4/30/07" 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.
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All 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. 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† | |
| | 11/1/06 | | 4/30/07 | | 11/1/06 – 4/30/07 | |
Class A | |
Actual | | $ | 1,000.00 | | | $ | 1,073.40 | | | $ | 5.71 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,019.30 | | | $ | 5.56 | | |
Class B | |
Actual | | $ | 1,000.00 | | | $ | 1,070.30 | | | $ | 9.04 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,016.08 | | | $ | 8.80 | | |
Class C | |
Actual | | $ | 1,000.00 | | | $ | 1,070.70 | | | $ | 9.04 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,016.08 | | | $ | 8.80 | | |
Class P | |
Actual | | $ | 1,000.00 | | | $ | 1,072.40 | | | $ | 6.22 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,018.81 | | | $ | 6.06 | | |
Class Y | |
Actual | | $ | 1,000.00 | | | $ | 1,075.80 | | | $ | 3.91 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,021.04 | | | $ | 3.81 | | |
† For each class of the Fund, expenses are equal to the annualized expense ratio for such class (1.11% for Class A, 1.76% for Classes B and C, 1.21% for Class P and 0.76% for Class Y) multiplied by the average account value over the period, multiplied by 181/365 (to reflect one-half year period).
Portfolio Holdings Presented by Sector
April 30, 2007
Sector* | | %** | |
Auto & Transportation | | | 2.11 | % | |
Consumer Discretionary | | | 7.91 | % | |
Consumer Staples | | | 9.37 | % | |
Financial Services | | | 12.92 | % | |
Healthcare | | | 10.94 | % | |
Integrated Oils | | | 6.09 | % | |
Materials & Processing | | | 12.38 | % | |
Sector* | | %** | |
Other | | | 8.72 | % | |
Other Energy | | | 4.06 | % | |
Producer Durables | | | 5.79 | % | |
Technology | | | 9.24 | % | |
Utilities | | | 9.64 | % | |
Short-Term Investment | | | 0.83 | % | |
Total | | | 100.00 | % | |
* A sector may comprise several industries.
** Represents percent of total investments.
14
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. 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† | |
| | 11/1/06 | | 4/30/07 | | 11/1/06 – 4/30/07 | |
Class A | |
Actual | | $ | 1,000.00 | | | $ | 1,135.60 | | | $ | 1.85 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,023.06 | | | $ | 1.76 | | |
Class B | |
Actual | | $ | 1,000.00 | | | $ | 1,131.70 | | | $ | 5.29 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,019.84 | | | $ | 5.01 | | |
Class C | |
Actual | | $ | 1,000.00 | | | $ | 1,131.90 | | | $ | 5.29 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,019.85 | | | $ | 5.01 | | |
Class Y | |
Actual | | $ | 1,000.00 | | | $ | 1,137.50 | | | $ | 0.00 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,024.79 | | | $ | 0.00 | | |
† For each class of the Fund, expenses are equal to the annualized expense ratio for such class (0.35% for Class A, 1.00% for Classes B and C, and 0.00% for Class Y) multiplied by the average account value over the period, multiplied by 181/365 (to reflect one-half year period).
Portfolio Holdings Presented by Investment Objective
April 30, 2007
Investment Objective | | %* | |
Long Term Growth of Capital** | | | 26.41 | % | |
Long Term Capital Appreciation** | | | 73.24 | % | |
Short-Term Investment | | | 0.35 | % | |
Total | | | 100.00 | % | |
* Represents percent of total investments.
** Alpha Strategy Fund invests in other funds ("Underlying Funds") managed by Lord, Abbett & Co. LLC. The category shown represents the investment objective of these Underlying Funds.
15
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 or redemption fees. 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† | |
| | 11/1/06 | | 4/30/07 | | 11/1/06 – 4/30/07 | |
Class A | |
Actual | | $ | 1,000.00 | | | $ | 1,152.20 | | | $ | 7.42 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,017.91 | | | $ | 6.95 | | |
Class B | |
Actual | | $ | 1,000.00 | | | $ | 1,148.70 | | | $ | 10.87 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,014.69 | | | $ | 10.19 | | |
Class C | |
Actual | | $ | 1,000.00 | | | $ | 1,148.70 | | | $ | 10.87 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,014.69 | | | $ | 10.19 | | |
Class P | |
Actual | | $ | 1,000.00 | | | $ | 1,151.90 | | | $ | 7.90 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,017.44 | | | $ | 7.40 | | |
Class Y | |
Actual | | $ | 1,000.00 | | | $ | 1,154.50 | | | $ | 5.50 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,019.67 | | | $ | 5.16 | | |
† For each class of the Fund, expenses are equal to the annualized expense ratio for such class (1.39% for Class A, 2.04% for Classes B and C, 1.48% for Class P and 1.03% for Class Y) multiplied by the average account value over the period, multiplied by 181/365 (to reflect one-half year period).
Portfolio Holdings Presented by Sector
April 30, 2007
Sector* | | %** | |
Consumer Discretionary | | | 9.11 | % | |
Consumer Staples | | | 12.19 | % | |
Energy | | | 4.72 | % | |
Financials | | | 26.60 | % | |
Healthcare | | | 5.90 | % | |
Industrials | | | 13.40 | % | |
Sector* | | %** | |
Information Technology | | | 4.96 | % | |
Materials | | | 6.95 | % | |
Telecommunication Services | | | 7.24 | % | |
Utilities | | | 4.33 | % | |
Short-Term Investment | | | 4.60 | % | |
Total | | | 100.00 | % | |
* A sector may comprise several industries.
** Represents percent of total investments.
16
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 or redemption fees. 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† | |
| | 11/1/06 | | 4/30/07 | | 11/1/06 – 4/30/07 | |
Class A | |
Actual | | $ | 1,000.00 | | | $ | 1,173.50 | | | $ | 8.19 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,017.26 | | | $ | 7.60 | | |
Class B | |
Actual | | $ | 1,000.00 | | | $ | 1,170.60 | | | $ | 11.68 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,014.03 | | | $ | 10.84 | | |
Class C | |
Actual | | $ | 1,000.00 | | | $ | 1,170.10 | | | $ | 11.68 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,014.04 | | | $ | 10.84 | | |
Class P | |
Actual | | $ | 1,000.00 | | | $ | 1,173.30 | | | $ | 8.73 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,016.76 | | | $ | 8.10 | | |
Class Y | |
Actual | | $ | 1,000.00 | | | $ | 1,176.20 | | | $ | 6.31 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,018.99 | | | $ | 5.86 | | |
† For each class of the Fund, expenses are equal to the annualized expense ratio for such class (1.52% for Class A, 2.17% for Classes B and C, 1.62% for Class P and 1.17% for Class Y) multiplied by the average account value over the period, multiplied by 181/365 (to reflect one-half year period).
Portfolio Holdings Presented by Sector
April 30, 2007
Sector* | | %** | |
Basic Materials | | | 9.97 | % | |
Consumer Cyclicals | | | 14.61 | % | |
Consumer Non-Cyclicals | | | 5.81 | % | |
Div. Financials | | | 7.75 | % | |
Energy | | | 6.08 | % | |
Healthcare | | | 4.06 | % | |
Ind. Goods & Services | | | 19.60 | % | |
Non-Property Financials | | | 11.87 | % | |
Sector* | | %** | |
Property & Property Services | | | 4.36% | | |
Technology | | | 7.11 | % | |
Telecommunications | | | 2.08 | % | |
Transportation | | | 3.11 | % | |
Utilities | | | 1.01 | % | |
Short-Term Investment | | | 2.58 | % | |
Total | | | 100.00 | % | |
* A sector may comprise several industries.
** Represents percent of total investments.
17
Large 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. 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† | |
| | 11/1/06 | | 4/30/07 | | 11/1/06 – 4/30/07 | |
Class A | |
Actual | | $ | 1,000.00 | | | $ | 1,071.10 | | | $ | 4.88 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,020.09 | | | $ | 4.76 | | |
Class B | |
Actual | | $ | 1,000.00 | | | $ | 1,067.60 | | | $ | 8.20 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,016.87 | | | $ | 8.00 | | |
Class C | |
Actual | | $ | 1,000.00 | | | $ | 1,067.50 | | | $ | 8.20 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,016.88 | | | $ | 8.00 | | |
Class P | |
Actual | | $ | 1,000.00 | | | $ | 1,070.90 | | | $ | 5.39 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,019.58 | | | $ | 5.26 | | |
Class Y | |
Actual | | $ | 1,000.00 | | | $ | 1,072.90 | | | $ | 3.08 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,021.82 | | | $ | 3.01 | | |
† For each class of the Fund, expenses are equal to the annualized expense ratio for such class (0.95% for Class A, 1.60% for Classes B and C, 1.05% for Class P and 0.60% for Class Y) multiplied by the average account value over the period, multiplied by 181/365 (to reflect one-half year period).
Portfolio Holdings Presented by Sector
April 30, 2007
Sector* | | %** | |
Auto & Transportation | | | 0.13 | % | |
Consumer Discretionary | | | 7.00 | % | |
Consumer Staples | | | 15.66 | % | |
Financial Services | | | 20.84 | % | |
Healthcare | | | 16.87 | % | |
Integrated Oils | | | 5.33 | % | |
Materials & Processing | | | 5.75 | % | |
Sector* | | %** | |
Other | | | 3.89 | % | |
Other Energy | | | 2.87 | % | |
Producer Durables | | | 2.85 | % | |
Technology | | | 6.84 | % | |
Utilities | | | 11.00 | % | |
Short-Term Investment | | | 0.97 | % | |
Total | | | 100.00 | % | |
* A sector may comprise several industries.
** Represents percent of total investments.
18
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. 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† | |
| | 11/1/06 | | 4/30/07 | | 11/1/06 – 4/30/07 | |
Class A | |
Actual | | $ | 1,000.00 | | | $ | 1,114.80 | | | $ | 6.82 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,018.37 | | | $ | 6.51 | | |
Class B | |
Actual | | $ | 1,000.00 | | | $ | 1,111.20 | | | $ | 10.21 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,015.15 | | | $ | 9.74 | | |
Class C | |
Actual | | $ | 1,000.00 | | | $ | 1,111.20 | | | $ | 10.21 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,015.15 | | | $ | 9.74 | | |
Class P | |
Actual | | $ | 1,000.00 | | | $ | 1,114.00 | | | $ | 7.34 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,017.86 | | | $ | 7.00 | | |
Class Y | |
Actual | | $ | 1,000.00 | | | $ | 1,116.60 | | | $ | 4.99 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,020.07 | | | $ | 4.76 | | |
† For each class of the Fund, expenses are equal to the annualized expense ratio for such class (1.30% for Class A, 1.95% for Classes B and C, 1.40% for Class P and 0.95% for Class Y) multiplied by the average account value over the period, multiplied by 181/365 (to reflect one-half year period).
Portfolio Holdings Presented by Sector
April 30, 2007
Sector* | | %** | |
Auto & Transportation | | | 4.25 | % | |
Consumer Discretionary | | | 7.34 | % | |
Financial Services | | | 11.62 | % | |
Healthcare | | | 6.64 | % | |
Materials & Processing | | | 24.91 | % | |
Other | | | 3.85 | % | |
Sector* | | %** | |
Other Energy | | | 5.72 | % | |
Producer Durables | | | 7.91 | % | |
Technology | | | 13.64 | % | |
Utilities | | | 6.20 | % | |
Short-Term Investment | | | 7.92 | % | |
Total | | | 100.00 | % | |
* A sector may comprise several industries.
** Represents percent of total investments.
19
Schedule of Investments (unaudited)
ALL VALUE FUND April 30, 2007
Investments | | Shares | | Value (000) | |
COMMON STOCKS 99.12% | |
Advertising Agency 1.40% | |
Interpublic Group of Cos., Inc. (The)* | | | 1,674,400 | | | $ | 21,232 | | |
R.H. Donnelley Corp.* | | | 325,000 | | | | 25,379 | | |
Total | | | | | | | 46,611 | | |
Aerospace 1.22% | |
Alliant Techsystems Inc.* | | | 293,300 | | | | 27,315 | | |
Curtiss-Wright Corp. | | | 150,000 | | | | 6,464 | | |
Moog Inc. Class A* | | | 159,300 | | | | 6,773 | | |
Total | | | | | | | 40,552 | | |
Auto Components 1.70% | |
Oshkosh Truck Corp. | | | 1,010,000 | | | | 56,499 | | |
Banks 5.19% | |
Bank of New York Co., Inc. (The) | | | 690,000 | | | | 27,931 | | |
Cullen/Frost Bankers, Inc. | | | 1,064,600 | | | | 54,476 | | |
JPMorgan Chase & Co. | | | 340,000 | | | | 17,714 | | |
Marshall & Ilsley Corp. | | | 880,000 | | | | 42,258 | | |
Mellon Financial Corp. | | | 231,700 | | | | 9,947 | | |
TCF Financial Corp. | | | 178,300 | | | | 4,828 | | |
U.S. Bancorp | | | 450,000 | | | | 15,457 | | |
Total | | | | | | | 172,611 | | |
Beverage: Brewers 0.41% | |
Anheuser-Busch Cos., Inc. | | | 274,600 | | | | 13,508 | | |
Beverage: Soft Drinks 2.16% | |
PepsiCo, Inc. | | | 1,085,000 | | | | 71,708 | | |
Chemicals 3.81% | |
Cabot Corp. | | | 472,600 | | | | 21,409 | | |
Cytec Industries Inc. | | | 647,400 | | | | 35,542 | | |
Eastman Chemical Co. | | | 96,500 | | | | 6,533 | | |
Praxair, Inc. | | | 685,000 | | | | 44,217 | | |
Investments | | Shares | | Value (000) | |
Rohm & Haas Co. | | | 370,000 | | | $ | 18,933 | | |
Total | | | | | | | 126,634 | | |
Communications & Media 0.64% | |
Time Warner Inc. | | | 1,031,500 | | | | 21,280 | | |
Communications Technology 3.90% | |
Anixter International Inc.* | | | 580,000 | | | | 41,528 | | |
Corning Inc.* | | | 1,375,000 | | | | 32,615 | | |
JDS Uniphase Corp.* | | | 823,929 | | | | 13,578 | | |
McAfee, Inc.* | | | 665,600 | | | | 21,625 | | |
Tellabs, Inc.* | | | 1,908,254 | | | | 20,266 | | |
Total | | | | | | | 129,612 | | |
Computer Services, Software & Systems 1.40% | |
Cadence Design Systems, Inc.* | | | 2,100,000 | | | | 46,620 | | |
Computer Technology 2.47% | |
Sun Microsystems, Inc.* | | | 6,471,900 | | | | 33,783 | | |
Zebra Technologies Corp. Class A* | | | 1,210,000 | | | | 48,146 | | |
Total | | | | | | | 81,929 | | |
Consumer Electronics 0.49% | |
Yahoo! Inc.* | | | 585,000 | | | | 16,403 | | |
Consumer Products 0.37% | |
International Flavors & Fragrances Inc. | | | 249,200 | | | | 12,129 | | |
Containers & Packaging: Metal & Glass 0.55% | |
AptarGroup, Inc. | | | 248,200 | | | | 18,181 | | |
Copper 0.30% | |
Freeport-McMoRan Copper & Gold Inc. | | | 150,000 | | | | 10,074 | | |
Diversified Financial Services 2.37% | |
Citigroup, Inc. | | | 1,467,700 | | | | 78,698 | | |
See Notes to Financial Statements.
20
Schedule of Investments (unaudited) (continued)
ALL VALUE FUND April 30, 2007
Investments | | Shares | | Value (000) | |
Diversified Manufacturing 1.35% | |
Ball Corp. | | | 416,870 | | | $ | 21,131 | | |
Brady Corp. Class A | | | 435,000 | | | | 14,294 | | |
Hexcel Corp.* | | | 435,000 | | | | 9,440 | | |
Total | | | | | | | 44,865 | | |
Drug & Grocery Store Chains 1.64% | |
Kroger Co. (The) | | | 1,849,700 | | | | 54,585 | | |
Drugs & Pharmaceuticals 9.20% | |
Abbott Laboratories | | | 1,220,000 | | | | 69,076 | | |
Bristol-Myers Squibb Co. | | | 200,000 | | | | 5,772 | | |
Eli Lilly & Co. | | | 150,000 | | | | 8,870 | | |
Mylan Laboratories, Inc. | | | 2,100,000 | | | | 46,053 | | |
Novartis AG ADR | | | 812,500 | | | | 47,198 | | |
Sanofi-Aventis ADR | | | 397,790 | | | | 18,243 | | |
Schering-Plough Corp. | | | 734,200 | | | | 23,296 | | |
Teva Pharmaceutical Industries Ltd. ADR | | | 1,050,000 | | | | 40,225 | | |
Wyeth | | | 850,066 | | | | 47,179 | | |
Total | | | | | | | 305,912 | | |
Electrical Equipment & Components 2.09% | |
AMETEK, Inc. | | | 273,750 | | | | 9,932 | | |
Cooper Industries Ltd., Class A | | | 346,380 | | | | 17,236 | | |
Emerson Electric Co. | | | 655,492 | | | | 30,801 | | |
Molex Inc. | | | 390,000 | | | | 11,653 | | |
Total | | | | | | | 69,622 | | |
Electronics: Technology 1.46% | |
General Dynamics Corp. | | | 620,000 | | | | 48,670 | | |
Engineering & Contracting Services 0.18% | |
URS Corp.* | | | 140,000 | | | | 6,118 | | |
Financial Data Processing Services & Systems 0.68% | |
Automatic Data Processing, Inc. | | | 410,080 | | | | 18,355 | | |
Jack Henry & Assoc. Inc. | | | 180,600 | | | | 4,289 | | |
Total | | | | | | | 22,644 | | |
Investments | | Shares | | Value (000) | |
Foods 1.68% | |
Campbell Soup Co. | | | 337,083 | | | $ | 13,180 | | |
Kraft Foods Inc. Class A | | | 1,270,100 | | | | 42,510 | | |
Total | | | | | | | 55,690 | | |
Gold 2.66% | |
Barrick Gold Corp. (Canada)(a) | | | 1,800,000 | | | | 50,598 | | |
Newmont Mining Corp. | | | 910,000 | | | | 37,947 | | |
Total | | | | | | | 88,545 | | |
Healthcare Management Services 0.55% | |
IMS Health Inc. | | | 225,000 | | | | 6,599 | | |
Sierra Health Services, Inc.* | | | 280,100 | | | | 11,602 | | |
Total | | | | | | | 18,201 | | |
Identification Control & Filter Devices 1.05% | |
Agilent Technologies, Inc.* | | | 287,300 | | | | 9,874 | | |
IDEX Corp. | | | 480,000 | | | | 25,186 | | |
Total | | | | | | | 35,060 | | |
Insurance: Multi-Line 3.15% | |
American International Group, Inc. | | | 1,065,000 | | | | 74,454 | | |
Genworth Financial, Inc. Class A | | | 372,629 | | | | 13,597 | | |
Hartford Financial Services Group, Inc. (The) | | | 165,000 | | | | 16,698 | | |
Total | | | | | | | 104,749 | | |
Insurance: Property-Casualty 0.17% | |
Everest Re Group, Ltd. (Bermuda)(a) | | | 54,708 | | | | 5,506 | | |
Machinery: Construction & Handling 0.96% | |
Caterpillar Inc. | | | 440,000 | | | | 31,953 | | |
Machinery: Industrial/Specialty 0.46% | |
Kennametal, Inc. | | | 215,900 | | | | 15,234 | | |
See Notes to Financial Statements.
21
Schedule of Investments (unaudited) (continued)
ALL VALUE FUND April 30, 2007
Investments | | Shares | | Value (000) | |
Machinery: Oil Well Equipment & Services 1.69% | |
BJ Services Co. | | | 675,000 | | | $ | 19,346 | | |
CARBO Ceramics Inc. | | | 104,997 | | | | 4,562 | | |
Halliburton Co. | | | 425,000 | | | | 13,502 | | |
Schlumberger Ltd. (Netherlands Antilles)(a) | | | 96,700 | | | | 7,139 | | |
Superior Energy Services, Inc.* | | | 320,400 | | | | 11,640 | | |
Total | | | | | | | 56,189 | | |
Medical & Dental Instruments & Supplies 1.19% | |
Patterson Companies, Inc.* | | | 543,630 | | | | 19,603 | | |
Zimmer Holdings, Inc.* | | | 218,800 | | | | 19,797 | | |
Total | | | | | | | 39,400 | | |
Metal Fabricating 2.02% | |
Quanex Corp. | | | 804,962 | | | | 34,638 | | |
Shaw Group Inc. (The)* | | | 1,000,000 | | | | 32,430 | | |
Total | | | | | | | 67,068 | | |
Miscellaneous: Consumer Staples 1.38% | |
Diageo plc ADR | | | 545,200 | | | | 46,015 | | |
Miscellaneous: Materials & Processing 0.15% | |
Rogers Corp.* | | | 110,000 | | | | 4,987 | | |
Multi-Sector Companies 8.71% | |
Berkshire Hathaway Financial Class B* | | | 15,050 | | | | 54,601 | | |
Carlisle Cos., Inc. | | | 1,445,000 | | | | 59,505 | | |
Eaton Corp. | | | 210,000 | | | | 18,734 | | |
General Electric Co. | | | 3,000,000 | | | | 110,580 | | |
Trinity Industries, Inc. | | | 993,250 | | | | 46,087 | | |
Total | | | | | | | 289,507 | | |
Oil: Crude Producers 1.91% | |
Chesapeake Energy Corp. | | | 1,005,000 | | | | 33,919 | | |
Forest Oil Corp.* | | | 400,000 | | | | 14,096 | | |
Investments | | Shares | | Value (000) | |
Range Resources Corp. | | | 419,754 | | | $ | 15,342 | | |
Total | | | | | | | 63,357 | | |
Oil: Integrated Domestic 0.95% | |
EnCana Corp. (Canada)(a) | | | 605,000 | | | | 31,732 | | |
Oil: Integrated International 5.13% | |
Chevron Corp. | | | 385,000 | | | | 29,949 | | |
Exxon Mobil Corp. | | | 1,770,012 | | | | 140,504 | | |
Total | | | | | | | 170,453 | | |
Publishing: Miscellaneous 1.07% | |
R.R. Donnelley & Sons Co. | | | 882,500 | | | | 35,476 | | |
Real Estate Investment Trusts 0.10% | |
Host Hotels & Resorts Inc. | | | 125,200 | | | | 3,210 | | |
Rental & Leasing Services: Commercial 0.82% | |
GATX Corp. | | | 555,000 | | | | 27,201 | | |
Restaurants 0.55% | |
Brinker International, Inc. | | | 260,750 | | | | 8,109 | | |
OSI Restaurant Partners, Inc. | | | 253,400 | | | | 10,088 | | |
Total | | | | | | | 18,197 | | |
Retail 2.89% | |
Costco Wholesale Corp. | | | 510,000 | | | | 27,321 | | |
Federated Department Stores, Inc. | | | 983,234 | | | | 43,184 | | |
Foot Locker, Inc. | | | 347,600 | | | | 8,269 | | |
MSC Industrial Direct Co., Inc. Class A | | | 354,561 | | | | 17,281 | | |
Total | | | | | | | 96,055 | | |
Savings & Loan 0.44% | |
Webster Financial Corp. | | | 330,000 | | | | 14,668 | | |
Services: Commercial 0.50% | |
IAC/InterActiveCorp.* | | | 435,000 | | | | 16,582 | | |
See Notes to Financial Statements.
22
Schedule of Investments (unaudited) (concluded)
ALL VALUE FUND April 30, 2007
Investments | | Shares | | Value (000) | |
Soaps & Household Chemicals 2.10% | |
Procter & Gamble Co. (The) | | | 1,085,050 | | | $ | 69,780 | | |
Steel 1.35% | |
Carpenter Technology Corp. | | | 370,000 | | | | 44,907 | | |
Truckers 0.41% | |
Heartland Express, Inc. | | | 789,641 | | | | 13,606 | | |
Utilities: Cable TV & Radio 2.13% | |
Comcast Corp. Special Class A* | | | 2,677,612 | | | | 70,689 | | |
Utilities: Electrical 2.96% | |
CMS Energy Corp. | | | 730,000 | | | | 13,520 | | |
Dominion Resources, Inc. | | | 156,700 | | | | 14,291 | | |
FPL Group, Inc. | | | 105,100 | | | | 6,765 | | |
NiSource Inc. | | | 172,700 | | | | 4,247 | | |
PNM Resources, Inc. | | | 424,825 | | | | 13,828 | | |
Southern Co. (The) | | | 1,210,000 | | | | 45,726 | | |
Total | | | | | | | 98,377 | | |
Utilities: Gas Distributors 0.82% | |
AGL Resources Inc. | | | 192,300 | | | | 8,373 | | |
UGI Corp. | | | 668,000 | | | | 18,944 | | |
Total | | | | | | | 27,317 | | |
Utilities: Gas Pipelines 0.46% | |
El Paso Corp. | | | 1,025,733 | | | | 15,386 | | |
Utilities: Telecommunications 3.73% | |
AT&T Inc. | | | 2,490,170 | | | | 96,419 | | |
Qwest Communications International Inc.* | | | 981,300 | | | | 8,714 | | |
Verizon Communications, Inc. | | | 492,000 | | | | 18,785 | | |
Total | | | | | | | 123,918 | | |
Total Common Stocks (cost $2,794,212,890) | | | | | | | 3,294,480 | | |
Investments | | Principal Amount (000) | | Value (000) | |
SHORT-TERM INVESTMENT 0.83% | |
Repurchase Agreement | |
Repurchase Agreement dated 4/30/2007, 4.70% due 5/1/2007 with State Street Bank & Trust Co. collateralized by $28,475,000 of Federal Home Loan Bank at Zero Coupon due 7/3/2007; value: $28,119,063; proceeds: $27,568,068 (cost $27,564,469) | | $ | 27,564 | | | $ | 27,564 | | |
Total Investments in Securities 99.95% (cost $2,821,777,359) | | | | | 3,322,044 | | |
Other Assets in Excess of Liabilities 0.05% | | | | | 1,678 | | |
Net Assets 100.00% | | | | $ | 3,323,722 | | |
ADR American Depositary Receipt.
* Non-income producing security.
(a) Foreign security traded in U.S. dollars.
See Notes to Financial Statements.
23
Schedule of Investments (unaudited)
ALPHA STRATEGY FUND April 30, 2007
Investments | | Shares | | Value (000) | |
INVESTMENTS IN UNDERLYING FUNDS 99.61% | |
Lord Abbett Developing Growth Fund, Inc. - Class Y*(a) | | | 5,213,466 | | | $ | 100,516 | | |
Lord Abbett Research Fund, Inc. - Small-Cap Value Fund - Class Y*(b) | | | 2,978,436 | | | | 97,395 | | |
Lord Abbett Securities Trust - International Opportunities Fund - Class Y*(b) | | | 10,810,155 | | | | 203,663 | | |
Lord Abbett Securities Trust - Micro-Cap Growth Fund - Class Y*(b) | | | 273,532 | | | | 3,991 | | |
Lord Abbett Securities Trust - Micro-Cap Value Fund - Class Y*(b) | | | 150,132 | | | | 4,091 | | |
Total Investments in Underlying Funds (cost $324,598,934) | | | | | | | 409,656 | | |
Investments | | Principal Amount (000) | | Value (000) | |
SHORT-TERM INVESTMENT 0.35% | |
Repurchase Agreement | |
Repurchase Agreement dated 4/30/2007, 4.70% due 5/1/2007 with State Street Bank & Trust Co. collateralized by $1,435,000 of Federal Home Loan B ank at 5.625% due 2/9/2010; value: $1,452,938; proceeds: proceeds: $1,423,487 (cost $1,423,301) | | $ | 1,423 | | | $ | 1,423 | | |
Total Investments in Securities 99.96% (cost $326,022,235) | | | | | 411,079 | | |
Other Assets in Excess of Liabilities 0.04% | | | | | 174 | | |
Net Assets 100.00% | | | | $ | 411,253 | | |
* Non-income producing security.
(a) Fund investment objective is long-term growth of capital through a diversified and actively managed portfolio consisting of developing growth companies, many of which are traded over the counter.
(b) Fund investment objective is long-term capital appreciation.
See Notes to Financial Statements.
24
Schedule of Investments (unaudited)
INTERNATIONAL CORE EQUITY FUND April 30, 2007
Investments | | Shares | | U.S. $ Value (000) | |
LONG-TERM INVESTMENTS 95.01% | |
COMMON STOCKS 94.01% | |
Australia 2.49% | |
Boart Longyear Group* | | | 7,895,000 | | | $ | 12,655 | | |
Downer EDI Ltd. | | | 1,755,528 | | | | 10,921 | | |
Oxiana Ltd. | | | 2,688,000 | | | | 6,787 | | |
Pan Australian Resources Ltd.* | | | 9,200,000 | | | | 4,164 | | |
Total | | | | | | | 34,527 | | |
Belgium 3.42% | |
Delhaize Group | | | 216,564 | | | | 20,873 | | |
KBC Group N.V. | | | 199,371 | | | | 26,519 | | |
Total | | | | | | | 47,392 | | |
Brazil 0.78% | |
Cia De Concessoes Rodoviria | | | 695,300 | | | | 10,876 | | |
Canada 4.96% | |
Addax Petroleum Corp. | | | 507,864 | | | | 19,790 | | |
Alcan, Inc. | | | 375,670 | | | | 22,116 | | |
AUR Resources Inc. | | | 303,300 | | | | 6,665 | | |
OPTI Canada Inc.* | | | 495,090 | | | | 9,925 | | |
Teck Cominco Ltd. Class B | | | 136,500 | | | | 10,342 | | |
Total | | | | | | | 68,838 | | |
China 0.19% | |
Huaneng Power International, Inc. | | | 2,615,330 | | | | 2,661 | | |
Czech Republic 1.80% | |
CEZ, a.s. | | | 511,043 | | | | 24,982 | | |
Egypt 1.22% | |
Orascom Telecom Holdings (S.A.E.) GDR | | | 252,500 | | | | 16,993 | | |
Investments | | Shares | | U.S. $ Value (000) | |
France 5.42% | |
AXA | | | 309,389 | | | $ | 14,326 | | |
BNP Paribas S.A. | | | 262,846 | | | | 30,722 | | |
Sanofi-Aventis | | | 75,607 | | | | 6,962 | | |
Schneider Electric S.A. | | | 114,705 | | | | 16,257 | | |
VINCI S.A. | | | 43,001 | | | | 6,957 | | |
Total | | | | | | | 75,224 | | |
Germany 13.60% | |
Allianz AG Registered Shares | | | 64,311 | | | | 14,630 | | |
E. On AG | | | 122,601 | | | | 18,457 | | |
Fresenius Medical Care AG & Co. KGaA | | | 124,988 | | | | 18,834 | | |
Hannover Rockversicherung AG* | | | 209,331 | | | | 10,675 | | |
Henkel KGaA | | | 134,107 | | | | 18,868 | | |
Hypo Real Estate Holding AG | | | 204,639 | | | | 13,729 | | |
Linde AG | | | 217,843 | | | | 24,478 | | |
Merck KGaA | | | 176,473 | | | | 23,560 | | |
SAP AG | | | 277,485 | | | | 13,439 | | |
Siemens AG | | | 176,527 | | | | 21,488 | | |
Symrise GmbH & Co. AG* | | | 360,504 | | | | 10,523 | | |
Total | | | | | | | 188,681 | | |
Greece 3.83% | |
Hellenic Telecommunications Organization S.A.* | | | 477,009 | | | | 13,800 | | |
National Bank of Greece S.A. | | | 698,581 | | | | 39,353 | | |
Total | | | | | | | 53,153 | | |
Hong Kong 2.08% | |
Agile Property Holdings Ltd. | | | 10,534,000 | | | | 11,123 | | |
China Unicom Ltd. | | | 7,602,900 | | | | 11,158 | | |
Galaxy Entertainment Group Ltd.* | | | 6,779,000 | | | | 6,647 | | |
Total | | | | | | | 28,928 | | |
See Notes to Financial Statements.
25
Schedule of Investments (unaudited) (continued)
INTERNATIONAL CORE EQUITY FUND April 30, 2007
Investments | | Shares | | U.S. $ Value (000) | |
Indonesia 1.35% | |
PT Indosat tbk | | | 24,985,000 | | | $ | 18,705 | | |
Israel 0.87% | |
Teva Pharmaceutical Industries Ltd. ADR | | | 315,900 | | | | 12,102 | | |
Japan 14.88% | |
Capcom Co., Ltd. | | | 529,300 | | | | 8,027 | | |
Daiichi Sankyo Co Ltd. | | | 439,800 | | | | 13,121 | | |
Don Quijote Co., Ltd. | | | 808,400 | | | | 14,589 | | |
East Japan Railway Co. | | | 1,630 | | | | 13,218 | | |
Fanuc Ltd. | | | 54,500 | | | | 5,337 | | |
Jupiter Telecommunications Co. Ltd.* | | | 11,375 | | | | 9,462 | | |
Nippon Commercial Investment REIT | | | 1,943 | | | | 9,858 | | |
Nissan Motors Co., Ltd. | | | 1,345,400 | | | | 13,532 | | |
Nissin Food Products Co., Ltd. | | | 369,326 | | | | 13,867 | | |
NSK Ltd. | | | 1,503,000 | | | | 14,545 | | |
ORIX Corp. | | | 66,711 | | | | 17,788 | | |
Ricoh Co., Ltd. | | | 845,800 | | | | 18,564 | | |
Sumitomo Corp. | | | 841,200 | | | | 14,407 | | |
Sumitomo Mitsui Financial Group | | | 1,563 | | | | 13,654 | | |
Thk Co., Ltd. | | | 718,900 | | | | 17,518 | | |
Tokyo Tatemono Co., Ltd. | | | 645,000 | | | | 9,015 | | |
Total | | | | | | | 206,502 | | |
Kazakhstan 1.28% | |
Halyk Savings Bank GDR*+ | | | 223,691 | | | | 5,033 | | |
Kazkommertsbank GDR*+ | | | 607,023 | | | | 12,748 | | |
Total | | | | | | | 17,781 | | |
Mexico 0.86% | |
Corporación GEO S.A. de C.V.* | | | 965,700 | | | | 5,291 | | |
Desarrolladora Homex, S.A. de C.V. ADR* | | | 114,900 | | | | 6,669 | | |
Total | | | | | | | 11,960 | | |
Investments | | Shares | | U.S. $ Value (000) | |
Netherlands 3.29% | |
ABN AMRO Holding N.V. ADR | | | 253,600 | | | $ | 12,287 | | |
ING Groep N.V. CVA | | | 310,818 | | | | 14,269 | | |
Koninklijke Ahold N.V.* | | | 1,490,806 | | | | 19,083 | | |
Total | | | | | | | 45,639 | | |
Norway 1.72% | |
Electromagnetic GeoServices AS* | | | 411,800 | | | | 8,825 | | |
Petroleum Geo-Services ASA* | | | 540,190 | | | | 15,071 | | |
Total | | | | | | | 23,896 | | |
South Africa 1.24% | |
MTN Group Ltd. | | | 1,169,825 | | | | 17,199 | | |
South Korea 3.31% | |
Hana Financial Holdings | | | 262,495 | | | | 13,817 | | |
Kookmin Bank | | | 77,910 | | | | 6,988 | | |
Pusan Bank | | | 695,100 | | | | 10,267 | | |
Samsung Electronics Co., Ltd. | | | 24,039 | | | | 14,823 | | |
Total | | | | | | | 45,895 | | |
Spain 0.97% | |
Altadis, S.A. | | | 205,477 | | | | 13,530 | | |
Switzerland 1.74% | |
Nestle S.A. Registered Shares | | | 43,442 | | | | 17,256 | | |
Novartis AG Registered Shares | | | 118,888 | | | | 6,935 | | |
Total | | | | | | | 24,191 | | |
Taiwan 0.99% | |
Acer Inc. | | | 7,164,000 | | | | 13,676 | | |
United Kingdom 21.72% | |
Aegis Group plc | | | 5,352,465 | | | | 15,011 | | |
Aviva plc | | | 1,541,969 | | | | 24,375 | | |
BAE Systems plc | | | 3,343,266 | | | | 30,553 | | |
See Notes to Financial Statements.
26
Schedule of Investments (unaudited) (concluded)
INTERNATIONAL CORE EQUITY FUND April 30, 2007
Investments | | Shares | | U.S. $ Value (000) | |
United Kingdom (continued) | |
Bluebay Asset Management plc* | | | 1,039,793 | | | $ | 9,565 | | |
British American Tobacco plc | | | 621,009 | | | | 19,261 | | |
Kesa Electricals plc | | | 2,721,697 | | | | 18,478 | | |
Prudential plc | | | 1,444,843 | | | | 21,640 | | |
Punch Taverns plc | | | 657,404 | | | | 17,143 | | |
Reckitt Benckiser plc | | | 308,378 | | | | 16,964 | | |
Reed Elsevier plc | | | 1,220,613 | | | | 15,573 | | |
Rio Tinto plc ADR | | | 45,000 | | | | 10,980 | | |
Rolls-Royce Group plc* | | | 1,083,136 | | | | 10,391 | | |
Rolls Royce Group plc B Shares | | | 57,303,646 | | | | 117 | | |
Royal Bank of Scotland Group plc (The) | | | 345,858 | | | | 13,348 | | |
SABMiller plc | | | 920,587 | | | | 21,907 | | |
Sports Direct (International)* | | | 1,511,436 | | | | 7,178 | | |
Tesco plc | | | 742,145 | | | | 6,864 | | |
Tullow Oil plc | | | 1,578,849 | | | | 11,571 | | |
Vodafone Group plc | | | 7,751,057 | | | | 22,242 | | |
Yell Group plc | | | 845,362 | | | | 8,258 | | |
Total | | | | | | | 301,419 | | |
Total Common Stocks (cost $1,173,167,662) | | | | | | | 1,304,750 | | |
PREFERRED STOCK 1.00% | |
Brazil | |
Cia Energetica de Minas Gerais (cost $13,021,453) | | | 391,355,600 | | | | 13,815 | | |
Total Long-Term Investments (cost $1,186,189,115) | | | | | | | 1,318,565 | | |
Investments | | Principal Amount (000) | | U.S. $ Value (000) | |
SHORT-TERM INVESTMENT 4.59% | |
Repurchase Agreement | |
Repurchase Agreement dated 4/30/2007, 4.70% due 5/1/2007 with State Street Bank & Trust Co. collateralized by $51,335,000 of Federal Home Loan Bank at 5.33% due 3/6/2012 and $4,810,000 of Federal Home Loan Mortgage Corp. at 4.65% due 10/10/2013 and $8,435,000 of Federal National Mortgage Assoc. at 4.625% to 6.625% due from 5/01/2013 to 11/15/2030; value: $64,908,627; proceeds: $63,641,968 (cost $63,633,660) | | $ | 63,634 | | | $ | 63,634 | | |
Total Investments in Securities 99.60% (cost $1,249,822,775) | | | | | 1,382,199 | | |
Foreign Cash and Other Assets in Excess of Liabilities 0.40% | | | | | 5,611 | | |
Net Assets 100.00% | | | | $ | 1,387,810 | | |
ADR American Depositary Receipt.
GDR Global Depositary Receipt.
REIT Real Estate Investment Trust.
* Non-income producing security.
+ Security was purchased pursuant to Rule 144A under the Securities Act of 1933 or is a private placement and, unless registered under the Act or exempted from registration, may only be resold to qualified institutional investors. Unless otherwise noted, 144A securities are deemed to be liquid.
See Notes to Financial Statements.
27
Schedule of Investments (unaudited)
INTERNATIONAL OPPORTUNITIES FUND April 30, 2007
Investments | | Shares | | U.S. $ Value (000) | |
COMMON STOCKS 96.76% | |
Australia 3.02% | |
Downer Edi Ltd. | | | 755,774 | | | $ | 4,701 | | |
Newcrest Mining Ltd. | | | 244,230 | | | | 4,718 | | |
Zinifex Ltd. | | | 372,608 | | | | 5,122 | | |
Total | | | | | | | 14,541 | | |
Canada 1.88% | |
Addax Petroleum Corp. | | | 157,746 | | | | 6,147 | | |
OPTI Canada Inc.* | | | 145,789 | | | | 2,923 | | |
Total | | | | | | | 9,070 | | |
China 1.24% | |
Beauty China Holdings Ltd.* | | | 2,200,861 | | | | 1,521 | | |
Celestial NutriFoods Ltd.* | | | 4,848,584 | | | | 4,468 | | |
Total | | | | | | | 5,989 | | |
Denmark 1.03% | |
Topdanmark AS* | | | 25,052 | | | | 4,955 | | |
France 4.71% | |
Gemalto N.V.* | | | 195,479 | | | | 4,986 | | |
Neopost S.A. | | | 76,734 | | | | 11,185 | | |
Vallourec S.A. | | | 23,712 | | | | 6,536 | | |
Total | | | | | | | 22,707 | | |
Germany 11.55% | |
Arques Industries AG | | | 312,831 | | | | 9,093 | | |
AWD Holding AG | | | 48,182 | | | | 2,445 | | |
Fresenius Medical Care AG & Co. KGaA ADR | | | 186,100 | | | | 9,322 | | |
Hypo Real Estate Holding AG | | | 108,806 | | | | 7,299 | | |
Patrizia Immobilien AG* | | | 140,411 | | | | 2,979 | | |
Rheinmetall AG | | | 73,848 | | | | 7,364 | | |
Symrise GmbH & Co. AG* | | | 305,991 | | | | 8,932 | | |
Wacker Chemie AG* | | | 44,881 | | | | 8,213 | | |
Total | | | | | | | 55,647 | | |
Investments | | Shares | | U.S. $ Value (000) | |
Greece 3.32% | |
Folli-Follie S.A. | | | 117,264 | | | $ | 4,753 | | |
Greek Postal Savings Bank* | | | 258,237 | | | | 6,216 | | |
Piraeus Bank S.A. | | | 137,338 | | | | 5,012 | | |
Total | | | | | | | 15,981 | | |
Hong Kong 5.00% | |
Agile Property Holdings Ltd. | | | 7,312,000 | | | | 7,721 | | |
EganaGoldpfeil (Holdings) Ltd. | | | 14,909,421 | | | | 10,883 | | |
Melco International Development Ltd. | | | 208 | | | | 1 | | |
Playmates Holdings Ltd. | | | 13,858,000 | | | | 2,037 | | |
REXCAPITAL Financial Holdings Ltd.* | | | 40,000,000 | | | | 3,426 | | |
Total | | | | | | | 24,068 | | |
Indonesia 0.79% | |
PT Indosat Tbk | | | 5,113,000 | | | | 3,828 | | |
Ireland 3.15% | |
C&C Group plc | | | 304,243 | | | | 5,136 | | |
FBD Holdings plc | | | 89,589 | | | | 4,899 | | |
Grafton Group plc Unit* | | | 309,119 | | | | 4,598 | | |
Waterford Wedgwood plc Unit* | | | 10,307,389 | | | | 548 | | |
Total | | | | | | | 15,181 | | |
Italy 5.08% | |
Azimut Holding S.p.A. | | | 430,144 | | | | 6,950 | | |
Davide Campari-Milano S.p.A. | | | 611,568 | | | | 6,364 | | |
Hera S.p.A. | | | 1,050,380 | | | | 4,852 | | |
Milano Assicurazioni S.p.A. | | | 633,988 | | | | 6,290 | | |
Total | | | | | | | 24,456 | | |
See Notes to Financial Statements.
28
Schedule of Investments (unaudited) (continued)
INTERNATIONAL OPPORTUNITIES FUND April 30, 2007
Investments | | Shares | | U.S. $ Value (000) | |
Japan 16.22% | |
Avex Group Holdings Inc. | | | 328,100 | | | $ | 4,707 | | |
Capcom Co. Ltd. | | | 233,700 | | | | 3,544 | | |
Don Quijote Co., Ltd. | | | 289,600 | | | | 5,226 | | |
FP Corp. | | | 71,100 | | | | 2,191 | | |
IBIDEN Co., Ltd. | | | 116,314 | | | | 6,612 | | |
Japan General Estate Co. Ltd. (The) | | | 250,500 | | | | 5,471 | | |
kabu.com Securities Co., Ltd. | | | 1,329 | | | | 1,950 | | |
Meisei Industrial Co., Ltd. | | | 303,000 | | | | 1,354 | | |
Mitsui Mining & Smelting Co., Ltd. | | | 523,200 | | | | 2,523 | | |
Nabtesco Corp. | | | 550,088 | | | | 7,464 | | |
Nippon Commercial Investment Corp. REIT | | | 1,127 | | | | 5,718 | | |
Nitori Co., Ltd. | | | 133,200 | | | | 6,363 | | |
Okinawa Cellular Telephone Co. | | | 2,086 | | | | 6,147 | | |
Tokuyama Corp. | | | 310,900 | | | | 4,661 | | |
Wacom Co., Ltd | | | 1,562 | | | | 3,820 | | |
Yamada Denki Co., Ltd. | | | 55,640 | | | | 5,141 | | |
ZEON Corp. | | | 509,000 | | | | 5,240 | | |
Total | | | | | | | 78,132 | | |
Kazakhstan 1.02% | |
Kazkommertsbank GDR*+ | | | 233,653 | | | | 4,907 | | |
Netherlands 6.89% | |
Aalberts Industries N.V. | | | 60,462 | | | | 6,453 | | |
Ballast Nedam N.V. | | | 45,093 | | | | 2,403 | | |
Draka Holding N.V.* | | | 185,192 | | | | 7,134 | | |
Koninklijke BAM Groep N.V. | | | 229,769 | | | | 6,124 | | |
LMA International N.V.* | | | 7,287,000 | | | | 2,782 | | |
Wavin N.V. | | | 363,624 | | | | 8,292 | | |
Total | | | | | | | 33,188 | | |
Investments | | Shares | | U.S. $ Value (000) | |
Norway 4.15% | |
Electromagnetic Geo Services AS* | | | 252,418 | | | $ | 5,409 | | |
Petroleum Geo-Services ASA* | | | 227,030 | | | | 6,334 | | |
Songa Offshore ASA* | | | 868,738 | | | | 8,250 | | |
Total | | | | | | | 19,993 | | |
Philippines 1.07% | |
Ayala Corp. | | | 407,137 | | | | 5,131 | | |
South Korea 1.50% | |
Pusan Bank | | | 489,783 | | | | 7,234 | | |
Spain 4.03% | |
Enagas, S.A. | | | 203,566 | | | | 4,959 | | |
Prosegur Compania de Seguridad S.A. | | | 209,184 | | | | 7,839 | | |
Vueling Airlines S.A.* | | | 117,660 | | | | 6,615 | | |
Total | | | | | | | 19,413 | | |
Sweden 2.86% | |
Getinge AB Class B | | | 316,700 | | | | 7,303 | | |
KappAhl Holding AB | | | 588,135 | | | | 6,452 | | |
Total | | | | | | | 13,755 | | |
Switzerland 0.51% | |
Geberit AG | | | 1,369 | | | | 2,445 | | |
Taiwan 2.41% | |
Chi Mei Optoelectronics Corp. | | | 4,357,000 | | | | 4,911 | | |
MediaTek Inc. | | | 220,000 | | | | 2,760 | | |
Motech Industries Inc. | | | 318,000 | | | | 3,947 | | |
Total | | | | | | | 11,618 | | |
Turkey 0.72% | |
Turkiye Is Bankasi A.S. (Isbank) Registered Shares GDR | | | 295,680 | | | | 1,419 | | |
Turkiye Vakiflar Bankasi TAO* | | | 786,320 | | | | 2,051 | | |
Total | | | | | | | 3,470 | | |
See Notes to Financial Statements.
29
Schedule of Investments (unaudited) (concluded)
INTERNATIONAL OPPORTUNITIES FUND April 30, 2007
Investments | | Shares | | U.S. $ Value (000) | |
United Kingdom 14.61% | |
Balfour Beatty plc | | | 483,679 | | | $ | 4,536 | | |
Bespak plc | | | 95,060 | | | | 1,425 | | |
BlueBay Asset Management* | | | 1,526,800 | | | | 14,044 | | |
Burberry Group plc | | | 612,405 | | | | 8,511 | | |
Ceres Power Holdings plc* | | | 428,086 | | | | 1,986 | | |
Intertek Group plc | | | 453,424 | | | | 8,473 | | |
Man Group plc | | | 542,717 | | | | 6,132 | | |
Michael Page International plc | | | 466,227 | | | | 5,375 | | |
Northgate Information Solutions plc | | | 1,971,099 | | | | 3,459 | | |
Northgate plc | | | 206,996 | | | | 4,553 | | |
Premier Foods plc | | | 290,511 | | | | 1,782 | | |
Punch Taverns plc | | | 300,546 | | | | 7,837 | | |
Slough Estates plc REIT | | | 146,979 | | | | 2,272 | | |
Total | | | | | | | 70,385 | | |
Total Common Stocks (cost $380,538,522) | | | | | | | 466,094 | | |
Investments | | Principal Amount (000) | | U.S. $ Value (000) | |
SHORT-TERM INVESTMENT 2.56% | |
Repurchase Agreement | |
Repurchase Agreement dated 4/30/2007, 4.70% due 5/1/2007 with State Street Bank & Trust Co. collateralized by $12,555,000 of Federal Farm Credi t Bank at 5.00% due 10/23/2009; value: $12,602,081; proceeds: $12,351,782 (cost $12,350,170) | | $ | 12,350 | | | $ | 12,350 | | |
Total Investments in Securities 99.32% (cost $392,888,692) | | | | | 478,444 | | |
Foreign Cash and Other Assets in Excess of Liabilities 0.68% | | | | | 3,286 | | |
Net Assets 100.00% | | | | $ | 481,730 | | |
ADR American Depositary Receipt.
GDR Global Depositary Receipt.
REIT Real Estate Investment Trust.
Unit More than one class of securities traded together.
* Non-income producing security.
+ Security was purchased pursuant to Rule 144A under the Securities Act of 1933 or is a private placement and, unless registered under the Act or exempted from registration, may only be resold to qualified institutional investors. Unless otherwise noted, 144A securities are deemed to be liquid.
See Notes to Financial Statements.
30
Schedule of Investments (unaudited)
LARGE CAP VALUE FUND April 30, 2007
Investments | | Shares | | Value (000) | |
COMMON STOCKS 98.98% | |
Aerospace 0.48% | |
Rockwell Collins, Inc. | | | 4,650 | | | $ | 305 | | |
Agriculture, Fishing & Ranching 1.18% | |
Monsanto Co. | | | 12,662 | | | | 747 | | |
Banks 8.29% | |
Bank of New York Co., Inc. (The) | | | 27,381 | | | | 1,109 | | |
JPMorgan Chase & Co. | | | 25,140 | | | | 1,310 | | |
Marshall & Ilsley Corp. | | | 9,530 | | | | 458 | | |
Mellon Financial Corp. | | | 15,820 | | | | 679 | | |
Regions Financial Corp. | | | 13,000 | | | | 456 | | |
SunTrust Banks, Inc. | | | 3,130 | | | | 264 | | |
U.S. Bancorp | | | 11,010 | | | | 378 | | |
Wachovia Corp. | | | 5,470 | | | | 304 | | |
Zions Bancorp. | | | 3,620 | | | | 296 | | |
Total | | | | | | | 5,254 | | |
Beverage: Brewers 0.94% | |
Anheuser-Busch Cos., Inc. | | | 12,080 | | | | 594 | | |
Beverage: Soft Drinks 3.47% | |
Coca-Cola Co. (The) | | | 24,460 | | | | 1,276 | | |
Coca-Cola Enterprises, Inc. | | | 41,960 | | | | 921 | | |
Total | | | | | | | 2,197 | | |
Biotechnology Research & Production 1.54% | |
Baxter International Inc. | | | 17,193 | | | | 974 | | |
Chemicals 0.56% | |
Praxair, Inc. | | | 5,484 | | | | 354 | | |
Communications & Media 0.87% | |
Time Warner Inc. | | | 26,690 | | | | 551 | | |
Communications Technology 0.86% | |
Juniper Networks, Inc.* | | | 3,230 | | | | 72 | | |
QUALCOMM Inc. | | | 10,830 | | | | 475 | | |
Total | | | | | | | 547 | | |
Investments | | Shares | | Value (000) | |
Computer Technology 2.72% | |
Hewlett-Packard Co. | | | 13,250 | | | $ | 558 | | |
International Business Machines Corp. | | | 2,690 | | | | 275 | | |
Sun Microsystems, Inc.* | | | 170,690 | | | | 891 | | |
Total | | | | | | | 1,724 | | |
Consumer Products 0.52% | |
Kimberly-Clark Corp. | | | 4,670 | | | | 332 | | |
Copper 1.07% | |
Freeport-McMoRan Copper & Gold Inc. | | | 10,070 | | | | 676 | | |
Diversified Financial Services 4.87% | |
Citigroup, Inc. | | | 57,529 | | | | 3,085 | | |
Drug & Grocery Store Chains 3.62% | |
Kroger Co. (The) | | | 45,345 | | | | 1,338 | | |
SUPERVALU INC. | | | 20,850 | | | | 957 | | |
Total | | | | | | | 2,295 | | |
Drugs & Pharmaceuticals 11.64% | |
Abbott Laboratories | | | 23,520 | | | | 1,332 | | |
Bristol-Myers Squibb Co. | | | 26,900 | | | | 776 | | |
Eli Lilly & Co. | | | 11,840 | | | | 700 | | |
Novartis AG ADR | | | 20,523 | | | | 1,192 | | |
Sanofi-Aventis ADR | | | 18,370 | | | | 842 | | |
Teva Pharmaceutical Industries Ltd. ADR | | | 27,480 | | | | 1,053 | | |
Wyeth | | | 26,605 | | | | 1,477 | | |
Total | | | | | | | 7,372 | | |
Electrical Equipment & Components 0.98% | |
Emerson Electric Co. | | | 13,212 | | | | 621 | | |
Electronics: Semi-Conductors/Components 0.90% | |
Microchip Technology, Inc. | | | 11,790 | | | | 476 | | |
Texas Instruments Inc. | | | 2,790 | | | | 96 | | |
Total | | | | | | | 572 | | |
See Notes to Financial Statements.
31
Schedule of Investments (unaudited) (continued)
LARGE CAP VALUE FUND April 30, 2007
Investments | | Shares | | Value (000) | |
Electronics: Technology 2.35% | |
General Dynamics Corp. | | | 7,470 | | | $ | 587 | | |
Raytheon Co. | | | 16,910 | | | | 905 | | |
Total | | | | | | | 1,492 | | |
Financial Data Processing Services & Systems 0.45% | |
Automatic Data Processing, Inc. | | | 6,440 | | | | 288 | | |
Financial: Miscellaneous 2.41% | |
Fannie Mae | | | 20,260 | | | | 1,194 | | |
MBIA, Inc. | | | 4,840 | | | | 336 | | |
Total | | | | | | | 1,530 | | |
Foods 3.50% | |
Campbell Soup Co. | | | 11,170 | | | | 437 | | |
Kraft Foods, Inc. Class A | | | 53,175 | | | | 1,780 | | |
Total | | | | | | | 2,217 | | |
Gold 0.94% | |
Barrick Gold Corp. (Canada)(a) | | | 21,180 | | | | 595 | | |
Health & Personal Care 2.30% | |
CVS Caremark Corp. | | | 40,290 | | | | 1,460 | | |
Insurance: Multi-Line 4.60% | |
American International Group, Inc. (The) | | | 22,142 | | | | 1,548 | | |
Aon Corp. | | | 24,320 | | | | 942 | | |
Hartford Financial Group, Inc. (The) | | | 1,620 | | | | 164 | | |
Lincoln National Corp. | | | 3,620 | | | | 258 | | |
Total | | | | | | | 2,912 | | |
Machinery: Industrial/Specialty 0.66% | |
Illinois Tool Works Inc. | | | 8,170 | | | | 419 | | |
Machinery: Oil Well Equipment & Services 1.99% | |
Schlumberger Ltd. (Netherlands Antilles)(a) | | | 7,708 | | | | 569 | | |
Smith International, Inc. | | | 13,260 | | | | 695 | | |
Total | | | | | | | 1,264 | | |
Investments | | Shares | | Value (000) | |
Medical & Dental Instruments & Supplies 1.39% | |
Boston Scientific Corp.* | | | 56,900 | | | $ | 879 | | |
Milling: Fruit & Grain Processing 0.99% | |
Archer Daniels Midland Co. | | | 16,140 | | | | 625 | | |
Multi-Sector Companies 3.89% | |
3M Co. | | | 730 | | | | 60 | | |
Eaton Corp. | | | 4,332 | | | | 386 | | |
General Electric Co. | | | 54,680 | | | | 2,016 | | |
Total | | | | | | | 2,462 | | |
Office Furniture & Business Equipment 0.72% | |
Pitney Bowes Inc. | | | 9,570 | | | | 459 | | |
Oil: Crude Producers 0.50% | |
Devon Energy Corp. | | | 4,330 | | | | 316 | | |
Oil: Integrated International 5.33% | |
Exxon Mobil Corp. | | | 42,531 | | | | 3,376 | | |
Paper 1.01% | |
International Paper Co. | | | 16,979 | | | | 640 | | |
Radio & TV Broadcasters 0.67% | |
News Corp. Class B | | | 17,610 | | | | 423 | | |
Railroads 0.13% | |
Canadian National Railway Co. (Canada)(a) | | | 1,600 | | | | 80 | | |
Rental & Leasing Services: Consumer 0.52% | |
Hertz Global Holdings, Inc.* | | | 16,520 | | | | 329 | | |
Retail 2.25% | |
Costco Wholesale Corp. | | | 3,160 | | | | 170 | | |
Federated Department Stores, Inc. | | | 11,660 | | | | 512 | | |
Wal-Mart Stores, Inc. | | | 15,570 | | | | 746 | | |
Total | | | | | | | 1,428 | | |
See Notes to Financial Statements.
32
Schedule of Investments (unaudited) (concluded)
LARGE CAP VALUE FUND April 30, 2007
Investments | | Shares | | Value (000) | |
Securities Brokerage & Services 0.20% | |
Charles Schwab Corp. (The) | | | 6,520 | | | $ | 125 | | |
Services: Commercial 2.17% | |
IAC/InterActiveCorp.* | | | 28,875 | | | | 1,101 | | |
Waste Management, Inc. | | | 7,250 | | | | 271 | | |
Total | | | | | | | 1,372 | | |
Soaps & Household Chemicals 4.12% | |
Procter & Gamble Co. (The) | | | 40,589 | | | | 2,610 | | |
Utilities: Electrical 6.00% | |
Consolidated Edison, Inc. | | | 6,680 | | | | 343 | | |
Dominion Resources, Inc. | | | 10,600 | | | | 967 | | |
FPL Group, Inc. | | | 9,620 | | | | 619 | | |
PG&E Corp. | | | 22,810 | | | | 1,154 | | |
PPL Corp. | | | 13,330 | | | | 581 | | |
Southern Co. (The) | | | 3,740 | | | | 141 | | |
Total | | | | | | | 3,805 | | |
Utilities: Gas Distributors 0.49% | |
Spectra Energy Corp. | | | 11,790 | | | | 308 | | |
Utilities: Gas Pipelines 0.38% | |
El Paso Corp. | | | 15,925 | | | | 239 | | |
Utilities: Telecommunications 4.51% | |
AT&T Inc. | | | 61,258 | | | | 2,372 | | |
Verizon Communications, Inc. | | | 12,665 | | | | 483 | | |
Total | | | | | | | 2,855 | | |
Total Common Stocks (cost $54,826,818) | | | | | | | 62,708 | | |
Investments | | Principal Amount (000) | | Value (000) | |
SHORT-TERM INVESTMENT 1.44% | |
Repurchase Agreement | |
Repurchase Agreement dated 4/30/2007, 4.70% due 5/1/2007 with State Street Bank & Trust Co. collateralized by $930,000 of Federal Farm Credit B ank at 5.00% due 10/23/2009; value: $933,488; proceeds: $914,218 (cost $914,099) | | $ | 914 | | | $ | 914 | | |
Total Investments in Securities 100.42% (cost $55,740,917) | | | | | 63,622 | | |
Liabilities in Excess of Other Assets (0.42%) | | | | | (269 | ) | |
Net Assets 100.00% | | | | $ | 63,353 | | |
ADR American Depositary Receipt.
* Non-income producing security.
(a) Foreign security traded in U.S. dollars.
See Notes to Financial Statements.
33
Schedule of Investments (unaudited)
VALUE OPPORTUNITIES FUND April 30, 2007
Investments | | Shares | | Value (000) | |
COMMON STOCKS 90.79% | |
Aerospace 3.65% | |
Alliant Techsystems Inc.* | | | 53,820 | | | $ | 5,012 | | |
Curtiss-Wright Corp. | | | 23,368 | | | | 1,007 | | |
Total | | | | | | | 6,019 | | |
Air Transportation 1.50% | |
AAR Corp.* | | | 18,380 | | | | 561 | | |
Bristow Group, Inc.* | | | 50,860 | | | | 1,913 | | |
Total | | | | | | | 2,474 | | |
Aluminum 1.01% | |
Kaiser Aluminum Corp.* | | | 21,050 | | | | 1,659 | | |
Auto Components 1.89% | |
Oshkosh Truck Corp. | | | 55,600 | | | | 3,110 | | |
Banks 4.35% | |
Alabama National BanCorp. | | | 23,254 | | | | 1,456 | | |
BOK Financial Corp. | | | 21,730 | | | | 1,115 | | |
Cullen/Frost Bankers, Inc. | | | 75,800 | | | | 3,879 | | |
First Midwest Bancorp, Inc. | | | 20,000 | | | | 719 | | |
Total | | | | | | | 7,169 | | |
Biotechnology Research & Production 0.52% | |
Charles River Laboratories International, Inc.* | | | 18,200 | | | | 862 | | |
Building: Materials 1.72% | |
NCI Building Systems, Inc.* | | | 39,950 | | | | 1,996 | | |
Watsco, Inc. | | | 15,848 | | | | 843 | | |
Total | | | | | | | 2,839 | | |
Building: Miscellaneous 0.78% | |
Comfort Systems USA, Inc. | | | 103,400 | | | | 1,291 | | |
Chemicals 5.06% | |
Albemarle Corp. | | | 29,720 | | | | 1,262 | | |
Cabot Corp. | | | 25,175 | | | | 1,140 | | |
Cytec Industries Inc. | | | 43,907 | | | | 2,411 | | |
Investments | | Shares | | Value (000) | |
Lubrizol Corp. (The) | | | 39,293 | | | $ | 2,355 | | |
Sigma-Aldrich Corp. | | | 27,737 | | | | 1,167 | | |
Total | | | | | | | 8,335 | | |
Communications Technology 5.11% | |
Anaren, Inc.* | | | 125,411 | | | | 2,373 | | |
Anixter International Inc.* | | | 63,559 | | | | 4,551 | | |
Harris Corp. | | | 23,260 | | | | 1,194 | | |
ViaSat, Inc.* | | | 8,720 | | | | 299 | | |
Total | | | | | | | 8,417 | | |
Computer Services, Software & Systems 0.51% | |
Macrovision Corp.* | | | 34,277 | | | | 832 | | |
Computer Technology 2.83% | |
Radiant Systems, Inc.* | | | 178,023 | | | | 2,396 | | |
Zebra Technologies Corp., Class A* | | | 57,000 | | | | 2,268 | | |
Total | | | | | | | 4,664 | | |
Containers & Packaging: Metal & Glass 1.58% | |
Silgan Holdings, Inc. | | | 45,381 | | | | 2,604 | | |
Diversified Manufacturing 1.43% | |
American Standard Cos. Inc. | | | 22,165 | | | | 1,221 | | |
Hexcel Corp.* | | | 52,636 | | | | 1,142 | | |
Total | | | | | | | 2,363 | | |
Diversified Production 1.33% | |
Thomas & Betts Corp.* | | | 40,335 | | | | 2,197 | | |
Drugs & Pharmaceuticals 1.33% | |
Mylan Laboratories, Inc. | | | 99,700 | | | | 2,186 | | |
Electrical Equipment & Components 1.24% | |
AMETEK, Inc. | | | 46,525 | | | | 1,688 | | |
Cooper Industries Ltd., Class A | | | 7,040 | | | | 350 | | |
Total | | | | | | | 2,038 | | |
See Notes to Financial Statements.
34
Schedule of Investments (unaudited) (continued)
VALUE OPPORTUNITIES FUND April 30, 2007
Investments | | Shares | | Value (000) | |
Electronics 1.71% | |
Napco Security Systems, Inc.* | | | 112,271 | | | $ | 670 | | |
Vishay Intertechnology, Inc.* | | | 129,021 | | | | 2,148 | | |
Total | | | | | | | 2,818 | | |
Electronics: Semi-Conductors/ Components 0.60% | |
ANADIGICS, Inc.* | | | 91,375 | | | | 981 | | |
Electronics: Technology 2.70% | |
PerkinElmer, Inc. | | | 104,400 | | | | 2,527 | | |
ScanSource, Inc.* | | | 66,645 | | | | 1,914 | | |
Total | | | | | | | 4,441 | | |
Engineering & Contracting Services 1.36% | |
Foster Wheeler Ltd.* | | | 10,745 | | | | 740 | | |
URS Corp.* | | | 34,350 | | | | 1,501 | | |
Total | | | | | | | 2,241 | | |
Financial Data Processing Services & Systems 1.98% | |
Fiserv, Inc.* | | | 30,760 | | | | 1,635 | | |
Global Payments Inc. | | | 42,600 | | | | 1,618 | | |
Total | | | | | | | 3,253 | | |
Financial Information Services 0.65% | |
Dun & Bradstreet Corp. (The) | | | 11,780 | | | | 1,064 | | |
Financial: Miscellaneous 1.16% | |
Financial Federal Corp. | | | 72,515 | | | | 1,906 | | |
Health & Personal Care 1.59% | |
Amedisys, Inc.* | | | 52,083 | | | | 1,633 | | |
Omnicare, Inc. | | | 29,600 | | | | 982 | | |
Total | | | | | | | 2,615 | | |
Healthcare Facilities 0.28% | |
LifePoint Hospitals, Inc.* | | | 12,698 | | | | 464 | | |
Investments | | Shares | | Value (000) | |
Healthcare Management Services 1.95% | |
IMS Health Inc. | | | 68,965 | | | $ | 2,023 | | |
Sierra Health Services, Inc.* | | | 28,795 | | | | 1,192 | | |
Total | | | | | | | 3,215 | | |
Identification Control & Filter Devices 1.34% | |
ESCO Technologies, Inc.* | | | 21,565 | | | | 982 | | |
IDEX Corp. | | | 23,230 | | | | 1,219 | | |
Total | | | | | | | 2,201 | | |
Insurance: Multi-Line 0.68% | |
Assurant, Inc. | | | 19,395 | | | | 1,116 | | |
Insurance: Property-Casualty 1.67% | |
Argonaut Group, Inc.* | | | 49,650 | | | | 1,669 | | |
IPC Holdings, Ltd. (Bermuda)(a) | | | 36,041 | | | | 1,080 | | |
Total | | | | | | �� | 2,749 | | |
Machinery: Oil Well Equipment & Services 2.98% | |
BJ Services Co. | | | 29,000 | | | | 831 | | |
CARBO Ceramics, Inc. | | | 37,510 | | | | 1,630 | | |
Hanover Compressor Co.* | | | 113,360 | | | | 2,452 | | |
Total | | | | | | | 4,913 | | |
Medical & Dental Instruments & Supplies 0.88% | |
Patterson Companies, Inc.* | | | 39,970 | | | | 1,441 | | |
Metal Fabricating 4.61% | |
Quanex Corp. | | | 49,226 | | | | 2,118 | | |
Reliance Steel & Aluminum Co. | | | 62,600 | | | | 3,719 | | |
Shaw Group Inc. (The)* | | | 54,096 | | | | 1,754 | | |
Total | | | | | | | 7,591 | | |
Metals & Minerals Miscellaneous 1.11% | |
A.M. Castle & Co. | | | 54,097 | | | | 1,834 | | |
See Notes to Financial Statements.
35
Schedule of Investments (unaudited) (continued)
VALUE OPPORTUNITIES FUND April 30, 2007
Investments | | Shares | | Value (000) | |
Miscellaneous: Materials & Processing 1.21% | |
Rogers Corp.* | | | 43,771 | | | $ | 1,985 | | |
Multi-Sector Companies 3.80% | |
Carlisle Cos., Inc. | | | 96,530 | | | | 3,975 | | |
Kaman Corp. | | | 91,833 | | | | 2,278 | | |
Total | | | | | | | 6,253 | | |
Office Furniture & Business Equipment 0.24% | |
Diebold, Inc. | | | 8,220 | | | | 392 | | |
Oil: Crude Producers 2.65% | |
Forest Oil Corp.* | | | 52,000 | | | | 1,833 | | |
Petrohawk Energy Corp.* | | | 98,000 | | | | 1,416 | | |
Range Resources Corp. | | | 30,587 | | | | 1,118 | | |
Total | | | | | | | 4,367 | | |
Publishing: Miscellaneous 0.49% | |
Meredith Corp. | | | 13,850 | | | | 802 | | |
Railroad Equipment 0.50% | |
Wabtec Corp. | | | 22,339 | | | | 830 | | |
Rental & Leasing Services: Commercial 0.98% | |
Williams Scotsman International, Inc.* | | | 73,070 | | | | 1,610 | | |
Retail 3.29% | |
Dollar Tree Stores, Inc.* | | | 9,850 | | | | 387 | | |
Genesco Inc.* | | | 7,700 | | | | 390 | | |
Guitar Center, Inc.* | | | 25,837 | | | | 1,196 | | |
MSC Industrial Direct Co., Inc. Class A | | | 48,100 | | | | 2,345 | | |
Sonic Automotive, Inc. | | | 38,430 | | | | 1,099 | | |
Total | | | | | | | 5,417 | | |
Services: Commercial 2.93% | |
CDI Corp. | | | 33,565 | | | | 994 | | |
CRA International, Inc.* | | | 27,924 | | | | 1,440 | | |
Rollins, Inc. | | | 65,625 | | | | 1,514 | | |
Tetra Tech, Inc.* | | | 42,400 | | | | 883 | | |
Total | | | | | | | 4,831 | | |
Investments | �� | Shares | | Value (000) | |
Steel 4.68% | |
Carpenter Technology Corp. | | | 22,088 | | | $ | 2,681 | | |
Harsco Corp. | | | 98,622 | | | | 5,030 | | |
Total | | | | | | | 7,711 | | |
Textiles Apparel Manufacturers 0.53% | |
Quiksilver, Inc.* | | | 65,000 | | | | 865 | | |
Truckers 0.29% | |
Heartland Express, Inc. | | | 27,943 | | | | 481 | | |
Utilities: Electrical 3.18% | |
Avista Corp. | | | 54,690 | | | | 1,290 | | |
Black Hills Corp. | | | 51,610 | | | | 2,054 | | |
NiSource, Inc. | | | 28,620 | | | | 704 | | |
PNM Resources, Inc. | | | 36,740 | | | | 1,196 | | |
Total | | | | | | | 5,244 | | |
Utilities: Gas Distributors 1.75% | |
Piedmont Natural Gas Co., Inc. | | | 47,675 | | | | 1,258 | | |
UGI Corp. | | | 57,470 | | | | 1,630 | | |
Total | | | | | | | 2,888 | | |
Utilities: Telecommunications 1.18% | |
Leap Wireless International, Inc.* | | | 25,459 | | | | 1,943 | | |
Total Common Stocks (cost $138,788,849) | | | | | | | 149,521 | | |
See Notes to Financial Statements.
36
Schedule of Investments (unaudited) (concluded)
VALUE OPPORTUNITIES FUND April 30, 2007
Investments | | Principal Amount (000) | | Value (000) | |
SHORT-TERM INVESTMENT 7.81% | |
Repurchase Agreement | |
Repurchase Agreement dated 4/30/2007, 4.70% due 5/1/2007 with State Street Bank & Trust Co. collateralized by $13,190,000 of Federal National M ortgage Assoc. at Zero Coupon due 6/1/2007; value: $13,124,050; proceeds: $12,866,159 (cost $12,864,479) | | $ | 12,864 | | | $ | 12,864 | | |
Total Investments in Securities 98.60% (cost $151,653,328) | | | | | 162,385 | | |
Other Assets in Excess of Liabilities 1.40% | | | | | 2,298 | | |
Net Assets 100.00% | | | | $ | 164,683 | | |
* Non-income producing security.
(a) Foreign security traded in U.S. dollars.
See Notes to Financial Statements.
37
Statements of Assets and Liabilities (unaudited)
April 30, 2007
| | All Value Fund | | Alpha Strategy Fund | | International Core Equity Fund | |
ASSETS: | |
Investments in securities, at cost | | $ | 2,821,777,359 | | | $ | 326,022,235 | | | $ | 1,249,822,775 | | |
Investments in securities, at value | | $ | 3,322,044,270 | | | $ | 411,079,044 | | | $ | 1,382,198,916 | | |
Foreign cash, at value (cost $8,000,163) | | | – | | | | – | | | | 7,925,447 | | |
Receivables: | |
Interest and dividends | | | 3,229,995 | | | | 186 | | | | 6,095,012 | | |
Investment securities sold | | | 49,752,416 | | | | – | | | | 41,899,587 | | |
Capital shares sold | | | 3,735,406 | | | | 1,513,198 | | | | 4,047,858 | | |
From affiliates (See Note 3) | | | – | | | | 237,355 | | | | - | | |
Prepaid expenses and other assets | | | 70,380 | | | | 43,361 | | | | 77,327 | | |
Total assets | | | 3,378,832,467 | | | | 412,873,144 | | | | 1,442,244,147 | | |
LIABILITIES: | |
Payables: | |
Investment securities purchased | | | 45,064,652 | | | | 418,264 | | | | 51,315,656 | | |
Capital shares reacquired | | | 5,224,493 | | | | 806,144 | | | | 1,170,769 | | |
Management fees | | | 1,400,756 | | | | – | | | | 781,015 | | |
12b-1 distribution fees | | | 1,724,546 | | | | 237,564 | | | | 495,506 | | |
Fund administration | | | 106,118 | | | | – | | | | 42,409 | | |
Trustees' fees | | | 312,819 | | | | 19,544 | | | | 28,962 | | |
To affiliates (See Note 3) | | | – | | | | – | | | | 101,376 | | |
Accrued expenses and other liabilities | | | 1,277,337 | | | | 138,469 | | | | 498,222 | | |
Total liabilities | | | 55,110,721 | | | | 1,619,985 | | | | 54,433,915 | | |
NET ASSETS | | $ | 3,323,721,746 | | | $ | 411,253,159 | | | $ | 1,387,810,232 | | |
COMPOSITION OF NET ASSETS: | |
Paid-in capital | | $ | 2,707,681,196 | | | $ | 312,972,271 | | | $ | 1,148,191,891 | | |
Undistributed (distributions in excess of) net investment income | | | 4,603,440 | | | | (10,222,420 | ) | | | 2,567,157 | | |
Accumulated net realized gain on investments and foreign currency related transactions | | | 111,170,199 | | | | 23,446,499 | | | | 104,776,376 | | |
Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies | | | 500,266,911 | | | | 85,056,809 | | | | 132,274,808 | | |
Net Assets | | $ | 3,323,721,746 | | | $ | 411,253,159 | | | $ | 1,387,810,232 | | |
Net assets by class: | |
Class A Shares | | $ | 2,334,923,026 | | | $ | 251,205,345 | | | $ | 883,917,472 | | |
Class B Shares | | $ | 285,183,113 | | | $ | 52,320,512 | | | $ | 67,849,235 | | |
Class C Shares | | $ | 645,718,196 | | | $ | 106,325,047 | | | $ | 181,071,854 | | |
Class P Shares | | $ | 48,391,975 | | | | – | | | $ | 121,736 | | |
Class Y Shares | | $ | 9,505,436 | | | $ | 1,402,255 | | | $ | 254,849,935 | | |
Outstanding shares by class (unlimited number of authorized shares of beneficial interest): | | | |
Class A Shares | | | 179,788,151 | | | | 9,737,537 | | | | 53,632,193 | | |
Class B Shares | | | 22,775,655 | | | | 2,101,183 | | | | 4,180,060 | | |
Class C Shares | | | 51,759,558 | | | | 4,286,823 | | | | 11,155,151 | | |
Class P Shares | | | 3,764,512 | | | | – | | | | 7,397 | | |
Class Y Shares | | | 728,254 | | | | 54,176 | | | | 15,361,377 | | |
Net asset value, offering and redemption price per share (Net assets divided by outstanding shares): | | | |
Class A Shares–Net asset value | | $ | 12.99 | | | $ | 25.80 | | | $ | 16.48 | | |
Class A Shares–Maximum offering price (Net asset value plus sales charge of 5.75%) | | $ | 13.78 | | | $ | 27.37 | | | $ | 17.49 | | |
Class B Shares–Net asset value | | $ | 12.52 | | | $ | 24.90 | | | $ | 16.23 | | |
Class C Shares–Net asset value | | $ | 12.48 | | | $ | 24.80 | | | $ | 16.23 | | |
Class P Shares–Net asset value | | $ | 12.85 | | | | – | | | $ | 16.46 | | |
Class Y Shares–Net asset value | | $ | 13.05 | | | $ | 25.88 | | | $ | 16.59 | | |
See Notes to Financial Statements.
38
Statements of Assets and Liabilities (unaudited)(concluded)
April 30, 2007
| | International Opportunities Fund | | Large Cap Value Fund | | Value Opportunities Fund | |
ASSETS: | |
Investments in securities, at cost | | $ | 392,888,692 | | | $ | 55,740,917 | | | $ | 151,653,328 | | |
Investments in securities, at value | | $ | 478,444,085 | | | $ | 63,621,630 | | | $ | 162,385,251 | | |
Foreign cash, at value (cost $3,267,952) | | | 3,241,459 | | | | – | | | | – | | |
Receivables: | |
Interest and dividends | | | 1,061,416 | | | | 89,301 | | | | 48,096 | | |
Investment securities sold | | | 4,320,386 | | | | 923,780 | | | | 1,991,199 | | |
Capital shares sold | | | 898,578 | | | | 57,996 | | | | 2,839,055 | | |
From advisor (See Note 3) | | | – | | | | 13,878 | | | | 12,886 | | |
Prepaid expenses and other assets | | | 85,660 | | | | 33,752 | | | | 42,428 | | |
Total assets | | | 488,051,584 | | | | 64,740,337 | | | | 167,318,915 | | |
LIABILITIES: | |
Payables: | |
Investment securities purchased | | | 5,012,890 | | | | 952,096 | | | | 2,243,320 | | |
Capital shares reacquired | | | 498,387 | | | | 311,158 | | | | 161,515 | | |
Management fees | | | 280,608 | | | | 19,710 | | | | 91,646 | | |
12b-1 distribution fees | | | 146,150 | | | | 16,299 | | | | 83,338 | | |
Fund administration | | | 14,921 | | | | 1,971 | | | | 4,888 | | |
Trustees' fees | | | 25,442 | | | | 3,534 | | | | 1,131 | | |
To affiliates (See Note 3) | | | 119,257 | | | | – | | | | 2,267 | | |
Accrued expenses and other liabilities | | | 224,098 | | | | 82,748 | | | | 48,044 | | |
Total liabilities | | | 6,321,753 | | | | 1,387,516 | | | | 2,636,149 | | |
NET ASSETS | | $ | 481,729,831 | | | $ | 63,352,821 | | | $ | 164,682,766 | | |
COMPOSITION OF NET ASSETS: | |
Paid-in capital | | $ | 388,467,536 | | | $ | 52,822,491 | | | $ | 148,507,597 | | |
Undistributed (distributions in excess of) net investment income | | | (650,097 | ) | | | 271,451 | | | | 73,488 | | |
Accumulated net realized gain on investments and foreign currency related transactions | | | 8,386,221 | | | | 2,378,166 | | | | 5,369,758 | | |
Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies | | | 85,526,171 | | | | 7,880,713 | | | | 10,731,923 | | |
Net Assets | | $ | 481,729,831 | | | $ | 63,352,821 | | | $ | 164,682,766 | | |
Net assets by class: | |
Class A Shares | | $ | 186,702,251 | | | $ | 25,382,072 | | | $ | 109,182,010 | | |
Class B Shares | | $ | 42,020,388 | | | $ | 3,768,481 | | | $ | 11,039,139 | | |
Class C Shares | | $ | 39,730,533 | | | $ | 6,292,957 | | | $ | 34,735,571 | | |
Class P Shares | | $ | 1,727,237 | | | $ | 16,148 | | | $ | 2,344,983 | | |
Class Y Shares | | $ | 211,549,422 | | | $ | 27,893,163 | | | $ | 7,381,063 | | |
Outstanding shares by class (unlimited number of authorized shares of beneficial interest): | | | |
Class A Shares | | | 10,128,344 | | | | 1,730,695 | | | | 8,122,908 | | |
Class B Shares | | | 2,374,639 | | | | 261,038 | | | | 828,422 | | |
Class C Shares | | | 2,256,393 | | | | 435,723 | | | | 2,606,794 | | |
Class P Shares | | | 92,798 | | | | 1,099 | | | | 174,713 | | |
Class Y Shares | | | 11,226,805 | | | | 1,892,467 | | | | 547,163 | | |
Net asset value, offering and redemption price per share (Net assets divided by outstanding shares): | | | |
Class A Shares–Net asset value | | $ | 18.43 | | | $ | 14.67 | | | $ | 13.44 | | |
Class A Shares–Maximum offering price (Net asset value plus sales charge of 5.75%) | | $ | 19.55 | | | $ | 15.56 | | | $ | 14.26 | | |
Class B Shares–Net asset value | | $ | 17.70 | | | $ | 14.44 | | | $ | 13.33 | | |
Class C Shares–Net asset value | | $ | 17.61 | | | $ | 14.44 | | | $ | 13.33 | | |
Class P Shares–Net asset value | | $ | 18.61 | | | $ | 14.69 | | | $ | 13.42 | | |
Class Y Shares–Net asset value | | $ | 18.84 | | | $ | 14.74 | | | $ | 13.49 | | |
See Notes to Financial Statements.
39
Statements of Operations (unaudited)
For the Six Months Ended April 30, 2007
| | All Value Fund | | Alpha Strategy Fund | | International Core Equity Fund | |
Investment income: | |
Dividends (net of foreign withholding taxes of $253,280, $0, and $974,452 respectively) | | $ | 27,150,228 | | | $ | 566,209 | | | $ | 11,317,875 | | |
Interest and other | | | 1,965,167 | | | | 142,192 | | | | 974,815 | | |
Total investment income | | | 29,115,395 | | | | 708,401 | | | | 12,292,690 | | |
Expenses: | |
Management fees | | | 8,454,926 | | | | 179,613 | | | | 4,240,223 | | |
12b-1 distribution plan-Class A | | | 3,908,724 | | | | 384,880 | | | | 1,324,676 | | |
12b-1 distribution plan-Class B | | | 1,396,985 | | | | 247,867 | | | | 295,267 | | |
12b-1 distribution plan-Class C | | | 3,143,399 | | | | 442,166 | | | | 783,715 | | |
12b-1 distribution plan-Class P | | | 100,534 | | | | – | | | | 210 | | |
Shareholder servicing | | | 2,509,884 | | | | 402,843 | | | | 848,836 | | |
Professional | | | 37,812 | | | | 14,064 | | | | 25,728 | | |
Reports to shareholders | | | 242,376 | | | | 28,995 | | | | 98,663 | | |
Fund administration | | | 638,707 | | | | - | | | | 228,310 | | |
Custody | | | 70,919 | | | | 14,529 | | | | 295,728 | | |
Trustees' fees | | | 43,831 | | | | 4,530 | | | | 13,476 | | |
Registration | | | 120,111 | | | | 44,151 | | | | 104,348 | | |
Subsidy (See Note 3) | | | – | | | | – | | | | 159,294 | | |
Other | | | 32,309 | | | | 3,359 | | | | 10,458 | | |
Gross expenses | | | 20,700,517 | | | | 1,766,997 | | | | 8,428,932 | | |
Expense reductions (See Note 7) | | | (50,890 | ) | | | (4,383 | ) | | | (74,365 | ) | |
Expenses assumed by Underlying Funds (See Note 3) | | | – | | | | (508,088 | ) | | | – | | |
Management fee waived (See Note 3) | | | – | | | | (179,613 | ) | | | – | | |
Net expenses | | | 20,649,627 | | | | 1,074,913 | | | | 8,354,567 | | |
Net investment income (loss) | | | 8,465,768 | | | | (366,512 | ) | | | 3,938,123 | | |
Net realized and unrealized gain: | |
Capital gains received from Underlying Funds | | | – | | | | 24,202,650 | | | | – | | |
Net realized gain on investments and foreign currency related transactions (net of foreign capital gains tax of $0, $0 and $9,026, respectively) | | | 111,391,616 | | | | – | | | | 106,054,793 | | |
Net change in unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies | | | 106,104,372 | | | | 21,711,342 | | | | 52,884,204 | | |
Net realized and unrealized gain | | | 217,495,988 | | | | 45,913,992 | | | | 158,938,997 | | |
Net Increase in Net Assets Resulting From Operations | | $ | 225,961,756 | | | $ | 45,547,480 | | | $ | 162,877,120 | | |
See Notes to Financial Statements.
40
Statements of Operations (unaudited)(concluded)
For the Six Months Ended April 30, 2007
| | International Opportunities Fund | | Large Cap Value Fund | | Value Opportunities Fund | |
Investment income: | |
Dividends (net of foreign withholding taxes of $198,921, $4,559, and $5,392 respectively) | | $ | 2,249,311 | | | $ | 667,037 | | | $ | 629,030 | | |
Interest and other | | | 287,423 | | | | 43,732 | | | | 290,361 | | |
Total investment income | | | 2,536,734 | | | | 710,769 | | | | 919,391 | | |
Expenses: | |
Management fees | | | 1,581,666 | | | | 120,375 | | | | 436,308 | | |
12b-1 distribution plan–Class A | | | 293,083 | | | | 40,847 | | | | 140,202 | | |
12b-1 distribution plan–Class B | | | 196,986 | | | | 17,353 | | | | 37,060 | | |
12b-1 distribution plan–Class C | | | 173,797 | | | | 27,092 | | | | 112,902 | | |
12b-1 distribution plan–Class P | | | 3,482 | | | | 35 | | | | 1,955 | | |
Shareholder servicing | | | 347,524 | | | | 40,266 | | | | 65,305 | | |
Professional | | | 24,447 | | | | 19,154 | | | | 19,416 | | |
Reports to shareholders | | | 23,638 | | | | 14,341 | | | | 9,050 | | |
Fund administration | | | 84,356 | | | | 12,038 | | | | 23,270 | | |
Custody | | | 107,422 | | | | 17,652 | | | | 19,642 | | |
Trustees' fees | | | 5,207 | | | | 822 | | | | 1,159 | | |
Registration | | | 51,914 | | | | 30,207 | | | | 33,786 | | |
Subsidy (See Note 3) | | | 247,468 | | | | – | | | | 4,621 | | |
Other | | | 7,923 | | | | 708 | | | | 1,652 | | |
Gross expenses | | | 3,148,913 | | | | 340,890 | | | | 906,328 | | |
Expense reductions (See Note 7) | | | (6,777 | ) | | | (1,001 | ) | | | (2,992 | ) | |
Expenses assumed by advisor (See Note 3) | | | – | | | | (73,999 | ) | | | (58,560 | ) | |
Net expenses | | | 3,142,136 | | | | 265,890 | | | | 844,776 | | |
Net investment income (loss) | | | (605,402 | ) | | | 444,879 | | | | 74,615 | | |
Net realized and unrealized gain: | |
Net realized gain on investments and foreign currency related transactions | | | 34,152,180 | | | | 2,549,430 | | | | 5,791,614 | | |
Net change in unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies | | | 33,752,416 | | | | 1,195,703 | | | | 7,239,274 | | |
Net realized and unrealized gain | | | 67,904,596 | | | | 3,745,133 | | | | 13,030,888 | | |
Net Increase in Net Assets Resulting From Operations | | $ | 67,299,194 | | | $ | 4,190,012 | | | $ | 13,105,503 | | |
See Notes to Financial Statements.
41
Statements of Changes in Net Assets
April 30, 2007
| | All Value Fund | | Alpha Strategy Fund | | International Core Equity Fund | |
INCREASE IN NET ASSETS | | For the Six Months Ended April 30, 2007 (unaudited) | | For the Year Ended October 31, 2006 | | For the Six Months Ended April 30, 2007 (unaudited) | | For the Year Ended October 31, 2006 | | For the Six Months Ended April 30, 2007 (unaudited) | | For the Year Ended October 31, 2006 | |
Operations: | |
Net investment income (loss) | | $ | 8,465,768 | | | $ | 12,630,673 | | | $ | (366,512 | ) | | $ | (1,359,195 | ) | | $ | 3,938,123 | | | $ | 2,849,951 | | |
Capital gains received from Underlying Funds | | | – | | | | – | | | | 24,202,650 | | | | 5,240,213 | | | | – | | | | – | | |
Net realized gain on investment and foreign currency related transactions | | | 111,391,616 | | | | 234,652,599 | | | | – | | | | 6,154,161 | | | | 106,054,793 | | | | 56,922,694 | | |
Net change in unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies | | | 106,104,372 | | | | 173,974,912 | | | | 21,711,342 | | | | 33,601,350 | | | | 52,884,204 | | | | 65,025,393 | | |
Net increase in net assets resulting from operations | | | 225,961,756 | | | | 421,258,184 | | | | 45,547,480 | | | | 43,636,529 | | | | 162,877,120 | | | | 124,798,038 | | |
Distributions to shareholders from: | |
Net investment income | |
Class A | | | (12,776,846 | ) | | | (8,298,830 | ) | | | (6,348,739 | ) | | | – | | | | (2,708,189 | ) | | | (1,152,035 | ) | |
Class B | | | (558 | ) | | | – | | | | (1,171,315 | ) | | | – | | | | (320 | ) | | | (32,546 | ) | |
Class C | | | (128,111 | ) | | | – | | | | (2,273,146 | ) | | | – | | | | (662 | ) | | | (83,863 | ) | |
Class P | | | (289,375 | ) | | | (70,338 | ) | | | – | | | | – | | | | (358 | ) | | | (45 | ) | |
Class Y | | | (37,716 | ) | | | (20,815 | ) | | | (42,103 | ) | | | – | | | | (477,573 | ) | | | (108,654 | ) | |
Net realized gain | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A | | | (161,679,096 | ) | | | (122,757,293 | ) | | | (2,238,806 | ) | | | – | | | | (41,431,605 | ) | | | (7,353,570 | ) | |
Class B | | | (21,498,446 | ) | | | (17,224,653 | ) | | | (547,383 | ) | | | – | | | | (3,325,811 | ) | | | (568,199 | ) | |
Class C | | | (48,023,158 | ) | | | (36,819,832 | ) | | | (907,584 | ) | | | – | | | | (8,780,857 | ) | | | (1,470,008 | ) | |
Class P | | | (3,249,133 | ) | | | (998,437 | ) | | | – | | | | – | | | | (5,119 | ) | | | (453 | ) | |
Class Y | | | (308,114 | ) | | | (182,162 | ) | | | (13,729 | ) | | | – | | | | (4,561,881 | ) | | | (491,686 | ) | |
Total distributions to shareholders | | | (247,990,553 | ) | | | (186,372,360 | ) | | | (13,542,805 | ) | | | – | | | | (61,292,375 | ) | | | (11,261,059 | ) | |
Capital share transactions (Net of share conversions) (See Note 11): | |
Net proceeds from sales of shares | | | 284,917,126 | | | | 636,042,456 | | | | 79,327,723 | | | | 176,788,208 | | | | 376,676,204 | | | | 556,348,568 | | |
Reinvestment of distributions | | | 221,554,103 | | | | 165,079,376 | | | | 11,553,500 | | | | – | | | | 55,790,358 | | | | 10,164,040 | | |
Cost of shares reacquired | | | (307,470,815 | ) | | | (431,030,391 | ) | | | (32,229,108 | ) | | | (66,184,289 | ) | | | (61,684,873 | ) | | | (73,847,708 | ) | |
Net increase in net assets resulting from capital share transactions | | | 199,000,414 | | | | 370,091,441 | | | | 58,652,115 | | | | 110,603,919 | | | | 370,781,689 | | | | 492,664,900 | | |
Net increase in net assets | | | 176,971,617 | | | | 604,977,265 | | | | 90,656,790 | | | | 154,240,448 | | | | 472,366,434 | | | | 606,201,879 | | |
NET ASSETS: | |
Beginning of period | | $ | 3,146,750,129 | | | $ | 2,541,772,864 | | | $ | 320,596,369 | | | $ | 166,355,921 | | | $ | 915,443,798 | | | $ | 309,241,919 | | |
End of period | | $ | 3,323,721,746 | | | $ | 3,146,750,129 | | | $ | 411,253,159 | | | $ | 320,596,369 | | | $ | 1,387,810,232 | | | $ | 915,443,798 | | |
Undistributed (distributions in excess of) net investment income | | $ | 4,603,440 | | | $ | 9,370,278 | | | $ | (10,222,420 | ) | | $ | (20,605 | ) | | $ | 2,567,157 | | | $ | 1,816,136 | | |
See Notes to Financial Statements.
42
See Notes to Financial Statements.
43
Statements of Changes in Net Assets (concluded)
April 30, 2007
| | International Opportunities Fund | | Large Cap Value Fund | | Value Opportunities Fund | |
INCREASE IN NET ASSETS | | For the Six Months Ended April 30, 2007 (unaudited) | | For the Year Ended October 31, 2006 | | For the Six Months Ended April 30, 2007 (unaudited) | | For the Year Ended October 31, 2006 | | For the Six Months Ended April 30, 2007 (unaudited) | | For the Period Ended October 31, 2006* | |
Operations: | |
Net investment income (loss) | | $ | (605,402 | ) | | $ | 1,098,817 | | | $ | 444,879 | | | $ | 694,460 | | | $ | 74,615 | | | $ | 713 | | |
Net realized gain on investment and foreign currency related transactions | | | 34,152,180 | | | | 59,342,797 | | | | 2,549,430 | | | | 1,296,453 | | | | 5,791,614 | | | | 2,366,322 | | |
Net change in unrealized appreciation on investments and translation of assets and liabilities denominated in in foreign currencies | | | 33,752,416 | | | | 8,965,836 | | | | 1,195,703 | | | | 6,287,353 | | | | 7,239,274 | | | | 3,492,649 | | |
Net increase in net assets resulting from operations | | | 67,299,194 | | | | 69,407,450 | | | | 4,190,012 | | | | 8,278,266 | | | | 13,105,503 | | | | 5,859,684 | | |
Distributions to shareholders from: | |
Net investment income | |
Class A | | | (146,761 | ) | | | – | | | | (267,279 | ) | | | (129,227 | ) | | | (2,595 | ) | | | – | | |
Class B | | | – | | | | – | | | | (27,218 | ) | | | (6,435 | ) | | | – | | | | – | | |
Class C | | | – | | | | – | | | | (35,814 | ) | | | (13,656 | ) | | | – | | | | – | | |
Class P | | | (2,764 | ) | | | – | | | | (163 | ) | | | (101 | ) | | | – | | | | – | | |
Class Y | | | (586,899 | ) | | | – | | | | (438,019 | ) | | | (242,031 | ) | | | (5,179 | ) | | | – | | |
Net realized gain | |
Class A | | | – | | | | – | | | | (492,154 | ) | | | (330,265 | ) | | | (1,967,502 | ) | | | – | | |
Class B | | | – | | | | – | | | | (76,558 | ) | | | (45,427 | ) | | | (179,920 | ) | | | – | | |
Class C | | | – | | | | – | | | | (111,463 | ) | | | (75,035 | ) | | | (508,641 | ) | | | – | | |
Class P | | | – | | | | – | | | | (342 | ) | | | (304 | ) | | | (386 | ) | | | – | | |
Class Y | | | – | | | | – | | | | (661,763 | ) | | | (465,494 | ) | | | (131,729 | ) | | | – | | |
Total distributions to shareholders | | | (736,424 | ) | | | – | | | | (2,110,773 | ) | | | (1,307,975 | ) | | | (2,795,952 | ) | | | – | | |
Capital share transactions (Net of share conversions) (See Note 11): | |
Net proceeds from sales of shares | | | 73,223,841 | | | | 144,893,690 | | | | 7,538,050 | | | | 20,223,350 | | | | 83,748,251 | | | | 82,283,119 | | |
Reinvestment of distributions | | | 730,056 | | | | – | | | | 1,736,921 | | | | 1,177,868 | | | | 2,329,852 | | | | – | | |
Cost of shares reacquired | | | (26,095,899 | ) | | | (48,706,339 | ) | | | (7,028,375 | ) | | | (7,599,577 | ) | | | (14,597,425 | ) | | | (5,250,266 | ) | |
Net increase in net assets resulting from capital share transactions | | | 47,857,998 | | | | 96,187,351 | | | | 2,246,596 | | | | 13,801,641 | | | | 71,480,678 | | | | 77,032,853 | | |
Net increase in net assets | | | 114,420,768 | | | | 165,594,801 | | | | 4,325,835 | | | | 20,771,932 | | | | 81,790,229 | | | | 82,892,537 | | |
NET ASSETS: | |
Beginning of period | | $ | 367,309,063 | | | $ | 201,714,262 | | | $ | 59,026,986 | | | $ | 38,255,054 | | | $ | 82,892,537 | | | $ | – | | |
End of period | | $ | 481,729,831 | | | $ | 367,309,063 | | | $ | 63,352,821 | | | $ | 59,026,986 | | | $ | 164,682,766 | | | $ | 82,892,537 | | |
Undistributed (distributions in excess of) net investment income | | $ | (650,097 | ) | | $ | 691,729 | | | $ | 271,451 | | | $ | 595,065 | | | $ | 73,488 | | | $ | 6,647 | | |
* | | For the period December 20, 2005 (commencement of investment operations) to October 31, 2006. | |
See Notes to Financial Statements.
44
See Notes to Financial Statements.
45
Financial Highlights
ALL VALUE FUND
| | Class A Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 13.14 | | | $ | 12.13 | | | $ | 11.18 | | | $ | 9.93 | | | $ | 8.22 | | | $ | 9.83 | | |
Investment operations: | |
Net investment income(a) | | | .04 | | | | .08 | | | | .07 | | | | .06 | | | | .02 | | | | .01 | | |
Net realized and unrealized gain (loss) | | | .86 | | | | 1.82 | | | | 1.06 | | | | 1.30 | | | | 1.87 | | | | (.67 | ) | |
Total from investment operations | | | .90 | | | | 1.90 | | | | 1.13 | | | | 1.36 | | | | 1.89 | | | | (.66 | ) | |
Distributions to shareholders from: | |
Net investment income | | | (.08 | ) | | | (.06 | ) | | | (.07 | ) | | | (.01 | ) | | | – | | | | (.02 | ) | |
Net realized gain | | | (.97 | ) | | | (.83 | ) | | | (.11 | ) | | | (.10 | ) | | | (.18 | ) | | | (.93 | ) | |
Total distributions | | | (1.05 | ) | | | (.89 | ) | | | (.18 | ) | | | (.11 | ) | | | (.18 | ) | | | (.95 | ) | |
Net asset value, end of period | | $ | 12.99 | | | $ | 13.14 | | | $ | 12.13 | | | $ | 11.18 | | | $ | 9.93 | | | $ | 8.22 | | |
Total Return(b) | | | 7.34 | %(d) | | | 16.49 | % | | | 10.19 | % | | | 13.80 | % | | | 23.46 | % | | | (7.95 | )% | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions | | | .55 | %(d) | | | 1.14 | % | | | 1.17 | % | | | 1.24 | % | | | 1.38 | % | | | 1.42 | % | |
Expenses, excluding expense reductions | | | .55 | %(d) | | | 1.14 | % | | | 1.17 | % | | | 1.24 | % | | | 1.38 | % | | | 1.42 | % | |
Net investment income | | | .35 | %(d) | | | .63 | % | | | .62 | % | | | .53 | % | | | .25 | % | | | .13 | % | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 2,334,923 | | | $ | 2,198,884 | | | $ | 1,771,120 | | | $ | 1,268,285 | | | $ | 452,098 | | | $ | 189,698 | | |
Portfolio turnover rate | | | 29.22 | %(d) | | | 63.84 | % | | | 52.24 | % | | | 21.92 | % | | | 36.39 | % | | | 79.39 | % | |
See Notes to Financial Statements.
46
Financial Highlights (continued)
ALL VALUE FUND
| | Class B Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 12.66 | | | $ | 11.74 | | | $ | 10.84 | | | $ | 9.69 | | | $ | 8.07 | | | $ | 9.70 | | |
Investment operations: | |
Net investment income (loss)(a) | | | – | (e) | | | – | (e) | | | – | (e) | | | (.01 | ) | | | (.03 | ) | | | (.04 | ) | |
Net realized and unrealized gain (loss) | | | .83 | | | | 1.76 | | | | 1.02 | | | | 1.26 | | | | 1.83 | | | | (.66 | ) | |
Total from investment operations | | | .83 | | | | 1.76 | | | | 1.02 | | | | 1.25 | | | | 1.80 | | | | (.70 | ) | |
Distributions to shareholders from: | |
Net investment income | | | – | | | | – | | | | (.01 | ) | | | – | | | | – | | | | – | | |
Net realized gain | | | (.97 | ) | | | (.84 | ) | | | (.11 | ) | | | (.10 | ) | | | (.18 | ) | | | (.93 | ) | |
Total distributions | | | (.97 | ) | | | (.84 | ) | | | (.12 | ) | | | (.10 | ) | | | (.18 | ) | | | (.93 | ) | |
Net asset value, end of period | | $ | 12.52 | | | $ | 12.66 | | | $ | 11.74 | | | $ | 10.84 | | | $ | 9.69 | | | $ | 8.07 | | |
Total Return(b) | | | 7.03 | %(d) | | | 15.68 | % | | | 9.52 | % | | | 12.98 | % | | | 22.77 | % | | | (8.51 | )% | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions | | | .87 | %(d) | | | 1.79 | % | | | 1.81 | % | | | 1.87 | % | | | 2.00 | % | | | 2.03 | % | |
Expenses, excluding expense reductions | | | .87 | %(d) | | | 1.79 | % | | | 1.81 | % | | | 1.87 | % | | | 2.00 | % | | | 2.03 | % | |
Net investment income (loss) | | | .03 | %(d) | | | (.02 | )% | | | (.01 | )% | | | (.10 | )% | | | (.37 | )% | | | (.48 | )% | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 285,183 | | | $ | 278,649 | | | $ | 240,977 | | | $ | 185,775 | | | $ | 100,272 | | | $ | 47,423 | | |
Portfolio turnover rate | | | 29.22 | %(d) | | | 63.84 | % | | | 52.24 | % | | | 21.92 | % | | | 36.39 | % | | | 79.39 | % | |
See Notes to Financial Statements.
47
Financial Highlights (continued)
ALL VALUE FUND
| | Class C Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 12.62 | | | $ | 11.71 | | | $ | 10.81 | | | $ | 9.66 | | | $ | 8.05 | | | $ | 9.67 | | |
Investment operations: | |
Net investment income (loss)(a) | | | – | (e) | | | – | (e) | | | – | (e) | | | (.01 | ) | | | (.03 | ) | | | (.03 | ) | |
Net realized and unrealized gain (loss) | | | .83 | | | | 1.75 | | | | 1.02 | | | | 1.26 | | | | 1.82 | | | | (.66 | ) | |
Total from investment operations | | | .83 | | | | 1.75 | | | | 1.02 | | | | 1.25 | | | | 1.79 | | | | (.69 | ) | |
Distributions to shareholders from: | |
Net investment income | | | – | | | | – | | | | (.01 | ) | | | – | | | | – | | | | – | | |
Net realized gain | | | (.97 | ) | | | (.84 | ) | | | (.11 | ) | | | (.10 | ) | | | (.18 | ) | | | (.93 | ) | |
Total distributions | | | (.97 | ) | | | (.84 | ) | | | (.12 | ) | | | (.10 | ) | | | (.18 | ) | | | (.93 | ) | |
Net asset value, end of period | | $ | 12.48 | | | $ | 12.62 | | | $ | 11.71 | | | $ | 10.81 | | | $ | 9.66 | | | $ | 8.05 | | |
Total Return(b) | | | 7.07 | %(d) | | | 15.64 | % | | | 9.56 | % | | | 13.02 | % | | | 22.70 | % | | | (8.42 | )% | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions | | | .87 | %(d) | | | 1.79 | % | | | 1.81 | % | | | 1.87 | % | | | 2.00 | % | | | 1.89 | % | |
Expenses, excluding expense reductions | | | .87 | %(d) | | | 1.79 | % | | | 1.81 | % | | | 1.87 | % | | | 2.00 | % | | | 1.89 | % | |
Net investment income (loss) | | | .03 | %(d) | | | (.02 | )% | | | (.01 | )% | | | (.10 | )% | | | (.37 | )% | | | (.34 | )% | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 645,718 | | | $ | 622,822 | | | $ | 513,752 | | | $ | 389,161 | | | $ | 200,025 | | | $ | 112,052 | | |
Portfolio turnover rate | | | 29.22 | %(d) | | | 63.84 | % | | | 52.24 | % | | | 21.92 | % | | | 36.39 | % | | | 79.39 | % | |
See Notes to Financial Statements.
48
Financial Highlights (continued)
ALL VALUE FUND
| | Class P Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 13.03 | | | $ | 12.05 | | | $ | 11.12 | | | $ | 9.88 | | | $ | 8.19 | | | $ | 9.83 | | |
Investment operations: | |
Net investment income(a) | | | .04 | | | | .06 | | | | .06 | | | | .05 | | | | .01 | | | | – | (e) | |
Net realized and unrealized gain (loss) | | | .84 | | | | 1.82 | | | | 1.05 | | | | 1.30 | | | | 1.86 | | | | (.66 | ) | |
Total from investment operations | | | .88 | | | | 1.88 | | | | 1.11 | | | | 1.35 | | | | 1.87 | | | | (.66 | ) | |
Distributions to shareholders from: | |
Net investment income | | | (.09 | ) | | | (.06 | ) | | | (.07 | ) | | | (.01 | ) | | | – | | | | (.05 | ) | |
Net realized gain | | | (.97 | ) | | | (.84 | ) | | | (.11 | ) | | | (.10 | ) | | | (.18 | ) | | | (.93 | ) | |
Total distributions | | | (1.06 | ) | | | (.90 | ) | | | (.18 | ) | | | (.11 | ) | | | (.18 | ) | | | (.98 | ) | |
Net asset value, end of period | | $ | 12.85 | | | $ | 13.03 | | | $ | 12.05 | | | $ | 11.12 | | | $ | 9.88 | | | $ | 8.19 | | |
Total Return(b) | | | 7.24 | %(d) | | | 16.36 | % | | | 10.09 | % | | | 13.71 | % | | | 23.30 | % | | | (8.04 | )% | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions | | | .60 | %(d) | | | 1.24 | % | | | 1.26 | % | | | 1.32 | %† | | | 1.45 | % | | | 1.48 | % | |
Expenses, excluding expense reductions | | | .60 | %(d) | | | 1.25 | % | | | 1.26 | % | | | 1.32 | %† | | | 1.45 | % | | | 1.48 | % | |
Net investment income | | | .30 | %(d) | | | .49 | % | | | .47 | % | | | .45 | %† | | | .18 | % | | | .07 | % | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 48,392 | | | $ | 42,516 | | | $ | 13,279 | | | $ | 4,895 | | | $ | 1,280 | | | $ | 368 | | |
Portfolio turnover rate | | | 29.22 | %(d) | | | 63.84 | % | | | 52.24 | % | | | 21.92 | % | | | 36.39 | % | | | 79.39 | % | |
See Notes to Financial Statements.
49
Financial Highlights (concluded)
ALL VALUE FUND
| | Class Y Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | | 3/31/2003(c) to | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 10/31/2003 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 13.21 | | | $ | 12.19 | | | $ | 11.22 | | | $ | 9.95 | | | $ | 7.83 | | |
Investment operations: | |
Net investment income(a) | | | .07 | | | | .12 | | | | .12 | | | | .10 | | | | .03 | | |
Net realized and unrealized gain | | | .86 | | | | 1.83 | | | | 1.06 | | | | 1.30 | | | | 2.09 | | |
Total from investment operations | | | .93 | | | | 1.95 | | | | 1.18 | | | | 1.40 | | | | 2.12 | | |
Distributions to shareholders from: | |
Net investment income | | | (.12 | ) | | | (.10 | ) | | | (.10 | ) | | | (.03 | ) | | | – | | |
Net realized gain | | | (.97 | ) | | | (.83 | ) | | | (.11 | ) | | | (.10 | ) | | | – | | |
Total distributions | | | (1.09 | ) | | | (.93 | ) | | | (.21 | ) | | | (.13 | ) | | | – | | |
Net asset value, end of period | | $ | 13.05 | | | $ | 13.21 | | | $ | 12.19 | | | $ | 11.22 | | | $ | 9.95 | | |
Total Return(b) | | | 7.58 | %(d) | | | 16.87 | % | | | 10.61 | % | | | 14.18 | % | | | 27.08 | %(d) | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions | | | .38 | %(d) | | | .79 | % | | | .81 | % | | | .87 | %† | | | 1.00 | %(d)† | |
Expenses, excluding expense reductions | | | .38 | %(d) | | | .79 | % | | | .81 | % | | | .87 | %† | | | 1.00 | %(d)† | |
Net investment income | | | .52 | %(d) | | | .97 | % | | | .97 | % | | | .90 | %† | | | .63 | %(d)† | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 9,505 | | | $ | 3,880 | | | $ | 2,645 | | | $ | 1,750 | | | $ | 13 | | |
Portfolio turnover rate | | | 29.22 | %(d) | | | 63.84 | % | | | 52.24 | % | | | 21.92 | % | | | 36.39 | % | |
† The ratios have been determined on a Fund basis.
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.
(c) Commencement of offering of class shares.
(d) Not annualized.
(e) Amount represents less than $.01.
See Notes to Financial Statements.
50
Financial Highlights
ALPHA STRATEGY FUND
| | Class A Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 23.68 | | | $ | 19.11 | | | $ | 15.96 | | | $ | 14.38 | | | $ | 10.62 | | | $ | 12.96 | | |
Investment operations: | |
Net investment income (loss)(b) | | | .01 | | | | (.06 | ) | | | (.01 | ) | | | .10 | | | | .02 | | | | (.05 | ) | |
Net realized and unrealized gain (loss) | | | 3.11 | | | | 4.63 | | | | 3.26 | | | | 1.48 | | | | 3.83 | | | | (1.70 | ) | |
Total from investment operations | | | 3.12 | | | | 4.57 | | | | 3.25 | | | | 1.58 | | | | 3.85 | | | | (1.75 | ) | |
Distributions to shareholders from: | |
Net investment income | | | (.74 | ) | | | – | | | | (.10 | ) | | | – | | | | – | | | | – | | |
Net realized gain | | | (.26 | ) | | | – | | | | – | | | | – | | | | (.09 | ) | | | (.59 | ) | |
Total distributions | | | (1.00 | ) | | | – | | | | (.10 | ) | | | – | | | | (.09 | ) | | | (.59 | ) | |
Net asset value, end of period | | $ | 25.80 | | | $ | 23.68 | | | $ | 19.11 | | | $ | 15.96 | | | $ | 14.38 | | | $ | 10.62 | | |
Total Return(c) | | | 13.56 | %(d) | | | 23.91 | % | | | 20.46 | % | | | 10.99 | % | | | 36.59 | % | | | (14.41 | )% | |
Ratios to Average Net Assets:* | |
Expenses, including expense reductions and expenses assumed and waived | | | .17 | %(d) | | | .35 | % | | | .35 | % | | | .36 | % | | | .39 | % | | | .37 | % | |
Expenses, excluding expense reductions and including expenses assumed and waived | | | .17 | %(d) | | | .35 | % | | | .35 | % | | | .36 | % | | | .39 | % | | | .37 | % | |
Expenses, excluding expense reductions and expenses assumed and waived | | | .36 | %(d) | | | .80 | % | | | .83 | % | | | 1.03 | % | | | 1.45 | % | | | 1.37 | % | |
Net investment income (loss) | | | .02 | %(d) | | | (.28 | )% | | | (.08 | )% | | | .63 | % | | | .13 | % | | | (.34 | )% | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 251,205 | | | $ | 196,448 | | | $ | 90,641 | | | $ | 69,957 | | | $ | 62,383 | | | $ | 53,121 | | |
Portfolio turnover rate | | | .00 | %(d) | | | 8.83 | % | | | 6.94 | % | | | 2.59 | % | | | 2.47 | % | | | 1.75 | % | |
See Notes to Financial Statements.
51
Financial Highlights (continued)
ALPHA STRATEGY FUND
| | Class B Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 22.79 | | | $ | 18.51 | | | $ | 15.46 | | | $ | 14.02 | | | $ | 10.43 | | | $ | 12.81 | | |
Investment operations: | |
Net investment income (loss)(b) | | | (.07 | ) | | | (.20 | ) | | | (.12 | ) | | | .01 | | | | (.06 | ) | | | (.12 | ) | |
Net realized and unrealized gain (loss) | | | 3.00 | | | | 4.48 | | | | 3.17 | | | | 1.43 | | | | 3.74 | | | | (1.67 | ) | |
Total from investment operations | | | 2.93 | | | | 4.28 | | | | 3.05 | | | | 1.44 | | | | 3.68 | | | | (1.79 | ) | |
Distributions to shareholders from: | |
Net investment income | | | (.56 | ) | | | – | | | | – | | | | – | | | | – | | | | – | | |
Net realized gain | | | (.26 | ) | | | – | | | | – | | | | – | | | | (.09 | ) | | | (.59 | ) | |
Total distributions | | | (.82 | ) | | | – | | | | – | | | | – | | | | (.09 | ) | | | (.59 | ) | |
Net asset value, end of period | | $ | 24.90 | | | $ | 22.79 | | | $ | 18.51 | | | $ | 15.46 | | | $ | 14.02 | | | $ | 10.43 | | |
Total Return(c) | | | 13.17 | %(d) | | | 23.12 | % | | | 19.73 | % | | | 10.27 | % | | | 35.62 | % | | | (14.91 | )% | |
Ratios to Average Net Assets:* | |
Expenses, including expense reductions and expenses assumed and waived | | | .50 | %(d) | | | 1.00 | % | | | 1.00 | % | | | 1.01 | % | | | 1.04 | % | | | 1.00 | % | |
Expenses, excluding expense reductions and including expenses assumed and waived | | | .50 | %(d) | | | 1.00 | % | | | 1.00 | % | | | 1.01 | % | | | 1.04 | % | | | 1.00 | % | |
Expenses, excluding expense reductions and expenses assumed and waived | | | .69 | %(d) | | | 1.44 | % | | | 1.47 | % | | | 1.68 | % | | | 2.10 | % | | | 2.00 | % | |
Net investment income (loss) | | | (.29 | )%(d) | | | (.92 | )% | | | (.71 | )% | | | .03 | % | | | (.52 | )% | | | (.97 | )% | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 52,321 | | | $ | 47,954 | | | $ | 45,179 | | | $ | 41,771 | | | $ | 42,342 | | | $ | 35,661 | | |
Portfolio turnover rate | | | .00 | %(d) | | | 8.83 | % | | | 6.94 | % | | | 2.59 | % | | | 2.47 | % | | | 1.75 | % | |
See Notes to Financial Statements.
52
Financial Highlights (continued)
ALPHA STRATEGY FUND
| | Class C Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 22.79 | | | $ | 18.51 | | | $ | 15.46 | | | $ | 14.02 | | | $ | 10.43 | | | $ | 12.80 | | |
Investment operations: | |
Net investment income (loss)(b) | | | (.07 | ) | | | (.20 | ) | | | (.12 | ) | | | .01 | | | | (.06 | ) | | | (.10 | ) | |
Net realized and unrealized gain (loss) | | | 3.00 | | | | 4.48 | | | | 3.17 | | | | 1.43 | | | | 3.74 | | | | (1.68 | ) | |
Total from investment operations | | | 2.93 | | | | 4.28 | | | | 3.05 | | | | 1.44 | | | | 3.68 | | | | (1.78 | ) | |
Distributions to shareholders from: | |
Net investment income | | | (.66 | ) | | | – | | | | – | | | | – | | | | – | | | | – | | |
Net realized gain | | | (.26 | ) | | | – | | | | – | | | | – | | | | (.09 | ) | | | (.59 | ) | |
Total distributions | | | (.92 | ) | | | – | | | | – | | | | – | | | | (.09 | ) | | | (.59 | ) | |
Net asset value, end of period | | $ | 24.80 | | | $ | 22.79 | | | $ | 18.51 | | | $ | 15.46 | | | $ | 14.02 | | | $ | 10.43 | | |
Total Return(c) | | | 13.19 | %(d) | | | 23.12 | % | | | 19.73 | % | | | 10.27 | % | | | 35.62 | % | | | (14.77 | )% | |
Ratios to Average Net Assets:* | |
Expenses, including expense reductions and expenses assumed and waived | | | .50 | %(d) | | | 1.00 | % | | | 1.00 | % | | | 1.01 | % | | | 1.04 | % | | | .89 | % | |
Expenses, excluding expense reductions and including expenses assumed and waived | | | .50 | %(d) | | | 1.00 | % | | | 1.00 | % | | | 1.01 | % | | | 1.04 | % | | | .89 | % | |
Expenses, excluding expense reductions and expenses assumed and waived | | | .69 | %(d) | | | 1.45 | % | | | 1.47 | % | | | 1.68 | % | | | 2.10 | % | | | 1.89 | % | |
Net investment income (loss) | | | (.30 | )%(d) | | | (.92 | )% | | | (.71 | )% | | | .03 | % | | | (.52 | )% | | | (.86 | )% | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 106,325 | | | $ | 75,193 | | | $ | 29,998 | | | $ | 27,701 | | | $ | 28,970 | | | $ | 24,690 | | |
Portfolio turnover rate | | | .00 | %(d) | | | 8.83 | % | | | 6.94 | % | | | 2.59 | % | | | 2.47 | % | | | 1.75 | % | |
See Notes to Financial Statements.
53
Financial Highlights (concluded)
ALPHA STRATEGY FUND
| | Class Y Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | | 10/20/2004(a) to | |
| | (unaudited) | | 2006 | | 2005 | | 10/31/2004 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 23.77 | | | $ | 19.12 | | | $ | 15.96 | | | $ | 15.65 | | |
Investment operations: | |
Net investment income(b) | | | .05 | | | | .02 | | | | .05 | | | | – | (e) | |
Net realized and unrealized gain | | | 3.12 | | | | 4.63 | | | | 3.27 | | | | .31 | | |
Total from investment operations | | | 3.17 | | | | 4.65 | | | | 3.32 | | | | .31 | | |
Distributions to shareholders from: | |
Net investment income | | | (.80 | ) | | | – | | | | (.16 | ) | | | – | | |
Net realized gain | | | (.26 | ) | | | – | | | | – | | | | – | | |
Total distributions | | | (1.06 | ) | | | – | | | | (.16 | ) | | | – | | |
Net asset value, end of period | | $ | 25.88 | | | $ | 23.77 | | | $ | 19.12 | | | $ | 15.96 | | |
Total Return(c) | | | 13.75 | %(d) | | | 24.32 | % | | | 20.91 | % | | | 2.18 | %(d) | |
Ratios to Average Net Assets:* | |
Expenses, including expense reductions and expenses assumed and waived | | | .00 | %(d) | | | .00 | % | | | .00 | % | | | .00 | %(d) | |
Expenses, excluding expense reductions and including expenses assumed and waived | | | .00 | %(d) | | | .00 | % | | | .00 | % | | | .00 | %(d) | |
Expenses, excluding expense reductions and expenses assumed and waived | | | .19 | %(d) | | | .45 | % | | | .48 | % | | | .00 | %(d) | |
Net investment income | | | .20 | %(d) | | | .08 | % | | | .27 | % | | | .00 | %(d)(f) | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 1,402 | | | $ | 1,001 | | | $ | 539 | | | $ | 398 | | |
Portfolio turnover rate | | | .00 | %(d) | | | 8.83 | % | | | 6.94 | % | | | 2.59 | % | |
* Does not include expenses of the Underlying Funds in which the Fund invests.
(a) Commencement of offering of class shares.
(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) Amount represents less than $.01.
(f) Amount represents less than .01%.
See Notes to Financial Statements.
54
Financial Highlights
INTERNATIONAL CORE EQUITY FUND
| | Class A Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | | 12/15/2003(a) to | |
| | (unaudited) | | 2006 | | 2005 | | 10/31/2004 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 15.23 | | | $ | 12.37 | | | $ | 10.42 | | | $ | 10.00 | | |
Unrealized appreciation on investments | | | | | | | | | | | | | | | .15 | | |
Net asset value on SEC Effective Date | | | | | | | | | | | | | | $ | 10.15 | | |
Investment operations: | |
Net investment income(b) | | | .06 | | | | .08 | | | | .09 | | | | .04 | | |
Net realized and unrealized gain | | | 2.17 | | | | 3.17 | | | | 1.87 | | | | .23 | | |
Total from investment operations | | | 2.23 | | | | 3.25 | | | | 1.96 | | | | .27 | | |
Distributions to shareholders from: | |
Net investment income | | | (.06 | ) | | | (.05 | ) | | | (.01 | ) | | | – | | |
Net realized gain | | | (.92 | ) | | | (.34 | ) | | | – | | | | – | | |
Total distributions | | | (.98 | ) | | | (.39 | ) | | | (.01 | ) | | | – | | |
Net asset value, end of period | | $ | 16.48 | | | $ | 15.23 | | | $ | 12.37 | | | $ | 10.42 | | |
Total Return(c) | | | | | | | | | | | | | | | 1.50 | %(d)(e) | |
Total Return(c) | | | 15.22 | %(d) | | | 26.86 | % | | | 18.80 | % | | | 2.66 | %(d)(f) | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | .68 | %(d) | | | 1.52 | % | | | 1.66 | % | | | 1.50 | %(d) | |
Expenses, excluding expense reductions and including expenses assumed | | | .69 | %(d) | | | 1.53 | % | | | 1.66 | % | | | 1.50 | %(d) | |
Expenses, excluding expense reductions and expenses assumed | | | .69 | %(d) | | | 1.53 | % | | | 1.66 | % | | | 2.13 | %(d) | |
Net investment income | | | .36 | %(d) | | | .55 | % | | | .79 | % | | | .40 | %(d) | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 883,917 | | | $ | 655,273 | | | $ | 235,563 | | | $ | 58,484 | | |
Portfolio turnover rate | | | 70.90 | %(d) | | | 134.00 | % | | | 100.87 | % | | | 142.16 | % | |
See Notes to Financial Statements.
55
Financial Highlights (continued)
INTERNATIONAL CORE EQUITY FUND
| | Class B Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | | 12/15/2003(a) to | |
| | (unaudited) | | 2006 | | 2005 | | 10/31/2004 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 15.00 | | | $ | 12.24 | | | $ | 10.36 | | | $ | 10.00 | | |
Unrealized appreciation on investments | | | | | | | | | | | | | | | .15 | | |
Net asset value on SEC Effective Date | | | | | | | | | | | | | | $ | 10.15 | | |
Investment operations: | |
Net investment income (loss)(b) | | | – | | | | (.01 | ) | | | .03 | | | | (.01 | ) | |
Net realized and unrealized gain | | | 2.15 | | | | 3.13 | | | | 1.85 | | | | .22 | | |
Total from investment operations | | | 2.15 | | | | 3.12 | | | | 1.88 | | | | .21 | | |
Distributions to shareholders from: | |
Net investment income | | | – | | | | (.02 | ) | | | – | | | | – | | |
Net realized gain | | | (.92 | ) | | | (.34 | ) | | | – | | | | – | | |
Total distributions | | | (.92 | ) | | | (.36 | ) | | | – | | | | – | | |
Net asset value, end of period | | $ | 16.23 | | | $ | 15.00 | | | $ | 12.24 | | | $ | 10.36 | | |
Total Return(c) | | | | | | | | | | | | | | | 1.50 | %(d)(e) | |
Total Return(c) | | | 14.87 | %(d) | | | 25.98 | % | | | 18.15 | % | | | 2.07 | %(d)(f) | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | 1.01 | %(d) | | | 2.17 | % | | | 2.30 | % | | | 2.04 | %(d) | |
Expenses, excluding expense reductions and including expenses assumed | | | 1.02 | %(d) | | | 2.18 | % | | | 2.30 | % | | | 2.04 | %(d) | |
Expenses, excluding expense reductions and expenses assumed | | | 1.02 | %(d) | | | 2.18 | % | | | 2.30 | % | | | 2.67 | %(d) | |
Net investment income (loss) | | | .03 | %(d) | | | (.09 | )% | | | .22 | % | | | (.14 | )%(d) | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 67,849 | | | $ | 51,040 | | | $ | 17,472 | | | $ | 2,937 | | |
Portfolio turnover rate | | | 70.90 | %(d) | | | 134.00 | % | | | 100.87 | % | | | 142.16 | % | |
See Notes to Financial Statements.
56
Financial Highlights (continued)
INTERNATIONAL CORE EQUITY FUND
| | Class C Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | | 12/15/2003(a) to | |
| | (unaudited) | | 2006 | | 2005 | | 10/31/2004 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 15.00 | | | $ | 12.24 | | | $ | 10.37 | | | $ | 10.00 | | |
Unrealized appreciation on investments | | | | | | | | | | | | | | | .15 | | |
Net asset value on SEC Effective Date | | | | | | | | | | | | | | $ | 10.15 | | |
Investment operations: | |
Net investment income (loss)(b) | | | .01 | | | | (.01 | ) | | | .02 | | | | (.01 | ) | |
Net realized and unrealized gain | | | 2.14 | | | | 3.13 | | | | 1.85 | | | | .23 | | |
Total from investment operations | | | 2.15 | | | | 3.12 | | | | 1.87 | | | | .22 | | |
Distributions to shareholders from: | |
Net investment income | | | – | | | | (.02 | ) | | | – | | | | – | | |
Net realized gain | | | (.92 | ) | | | (.34 | ) | | | – | | | | – | | |
Total distributions | | | (.92 | ) | | | (.36 | ) | | | – | | | | – | | |
Net asset value, end of period | | $ | 16.23 | | | $ | 15.00 | | | $ | 12.24 | | | $ | 10.37 | | |
Total Return(c) | | | | | | | | | | | | | | | 1.50 | %(d)(e) | |
Total Return(c) | | | 14.87 | %(d) | | | 25.98 | % | | | 18.03 | % | | | 2.17 | %(d)(f) | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | 1.01 | %(d) | | | 2.17 | % | | | 2.30 | % | | | 2.04 | %(d) | |
Expenses, excluding expense reductions and including expenses assumed | | | 1.02 | %(d) | | | 2.18 | % | | | 2.30 | % | | | 2.04 | %(d) | |
Expenses, excluding expense reductions and expenses assumed | | | 1.02 | %(d) | | | 2.18 | % | | | 2.30 | % | | | 2.67 | %(d) | |
Net investment income (loss) | | | .03 | %(d) | | | (.07 | )% | | | .19 | % | | | (.14 | )%(d) | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 181,072 | | | $ | 138,424 | | | $ | 44,240 | | | $ | 9,291 | | |
Portfolio turnover rate | | | 70.90 | %(d) | | | 134.00 | % | | | 100.87 | % | | | 142.16 | % | |
See Notes to Financial Statements.
57
Financial Highlights (continued)
INTERNATIONAL CORE EQUITY FUND
| | Class P Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | | 12/15/2003(a) to | |
| | (unaudited) | | 2006 | | 2005 | | 10/31/2004 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 15.22 | | | $ | 12.36 | | | $ | 10.41 | | | $ | 10.00 | | |
Unrealized appreciation on investments | | | | | | | | | | | | | | | .15 | | |
Net asset value on SEC Effective Date | | | | | | | | | | | | | | $ | 10.15 | | |
Investment operations: | |
Net investment income(b) | | | .05 | | | | .08 | | | | .07 | | | | .04 | | |
Net realized and unrealized gain | | | 2.17 | | | | 3.16 | | | | 1.88 | | | | .22 | | |
Total from investment operations | | | 2.22 | | | | 3.24 | | | | 1.95 | | | | .26 | | |
Distributions to shareholders from: | |
Net investment income | | | (.06 | ) | | | (.03 | ) | | | – | | | | – | | |
Net realized gain | | | (.92 | ) | | | (.35 | ) | | | – | | | | – | | |
Total distributions | | | (.98 | ) | | | (.38 | ) | | | – | | | | – | | |
Net asset value, end of period | | $ | 16.46 | | | $ | 15.22 | | | $ | 12.36 | | | $ | 10.41 | | |
Total Return(c) | | | | | | | | | | | | | | | 1.50 | %(d)(e) | |
Total Return(c) | | | 15.19 | %(d) | | | 26.69 | % | | | 18.73 | % | | | 2.56 | %(d)(f) | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | .73 | %(d) | | | 1.62 | % | | | 1.71 | % | | | 1.55 | %(d)† | |
Expenses, excluding expense reductions and including expenses assumed | | | .74 | %(d) | | | 1.63 | % | | | 1.71 | % | | | 1.55 | %(d)† | |
Expenses, excluding expense reductions and expenses assumed | | | .74 | %(d) | | | 1.63 | % | | | 1.71 | % | | | 2.18 | %(d)† | |
Net investment income | | | .33 | %(d) | | | .55 | % | | | .63 | % | | | .35 | %(d)† | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 122 | | | $ | 66 | | | $ | 16 | | | $ | 11 | | |
Portfolio turnover rate | | | 70.90 | %(d) | | | 134.00 | % | | | 100.87 | % | | | 142.16 | % | |
See Notes to Financial Statements.
58
Financial Highlights (concluded)
INTERNATIONAL CORE EQUITY FUND
| | Class Y Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | | 12/15/2003(a) to | |
| | (unaudited) | | 2006 | | 2005 | | 10/31/2004 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 15.33 | | | $ | 12.43 | | | $ | 10.45 | | | $ | 10.00 | | |
Unrealized appreciation on investments | | | | | | | | | | | | | | | .15 | | |
Net asset value on SEC Effective Date | | | | | | | | | | | | | | $ | 10.15 | | |
Investment operations: | |
Net investment income(b) | | | .10 | | | | .13 | | | | .12 | | | | .08 | | |
Net realized and unrealized gain | | | 2.18 | | | | 3.19 | | | | 1.89 | | | | .22 | | |
Total from investment operations | | | 2.28 | | | | 3.32 | �� | | | 2.01 | | | | .30 | | |
Distributions to shareholders from: | |
Net investment income | | | (.10 | ) | | | (.08 | ) | | | (.03 | ) | | | – | | |
Net realized gain | | | (.92 | ) | | | (.34 | ) | | | – | | | | – | | |
Total distributions | | | (1.02 | ) | | | (.42 | ) | | | (.03 | ) | | | – | | |
Net asset value, end of period | | $ | 16.59 | | | $ | 15.33 | | | $ | 12.43 | | | $ | 10.45 | | |
Total Return(c) | | | | | | | | | | | | | | | 1.50 | %(d)(e) | |
Total Return(c) | | | 15.45 | %(d) | | | 27.26 | % | | | 19.23 | % | | | 2.96 | %(d)(f) | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | .51 | %(d) | | | 1.18 | % | | | 1.30 | % | | | 1.16 | %(d) | |
Expenses, excluding expense reductions and including expenses assumed | | | .52 | %(d) | | | 1.19 | % | | | 1.30 | % | | | 1.16 | %(d) | |
Expenses, excluding expense reductions and expenses assumed | | | .52 | %(d) | | | 1.19 | % | | | 1.30 | % | | | 1.79 | %(d) | |
Net investment income | | | .64 | %(d) | | | .92 | % | | | 1.01 | % | | | .74 | %(d) | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 254,850 | | | $ | 70,641 | | | $ | 11,952 | | | $ | 3,091 | | |
Portfolio turnover rate | | | 70.90 | %(d) | | | 134.00 | % | | | 100.87 | % | | | 142.16 | % | |
† The ratios have been determined on a Fund basis.
(a) Commencement of investment operations is December 15, 2003; SEC effective date is December 31, 2003; date shares first became available to the public is January 2, 2004.
(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) Total return for the period 12/15/2003 through 12/31/2003.
(f) Total return for the period 12/31/2003 through 10/31/2004.
See Notes to Financial Statements.
59
Financial Highlights
INTERNATIONAL OPPORTUNITIES FUND
| | Class A Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 15.72 | | | $ | 11.97 | | | $ | 9.61 | | | $ | 8.41 | | | $ | 6.29 | | | $ | 7.78 | | |
Investment operations: | |
Net investment income (loss) | | | (.03 | ) | | | .05 | | | | (.01 | ) | | | .02 | | | | .08 | | | | .03 | | |
Net realized and unrealized gain (loss) | | | 2.76 | | | | 3.70 | | | | 2.37 | | | | 1.33 | | | | 2.09 | | | | (1.52 | ) | |
Total from investment operations | | | 2.73 | | | | 3.75 | | | | 2.36 | | | | 1.35 | | | | 2.17 | | | | (1.49 | ) | |
Distributions to shareholders from: | |
Net investment income | | | (.02 | ) | | | – | | | | – | | | | (.15 | ) | | | (.05 | ) | | | – | | |
Net asset value, end of period | | $ | 18.43 | | | $ | 15.72 | | | $ | 11.97 | | | $ | 9.61 | | | $ | 8.41 | | | $ | 6.29 | | |
Total Return(b) | | | 17.35 | %(d) | | | 31.33 | % | | | 24.56 | % | | | 16.31 | % | | | 35.07 | % | | | (19.16 | )% | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions | | | .75 | %(d) | | | 1.60 | % | | | 1.74 | % | | | 1.83 | % | | | 2.11 | % | | | 1.89 | % | |
Expenses, excluding expense reductions | | | .75 | %(d) | | | 1.60 | % | | | 1.74 | % | | | 1.83 | % | | | 2.11 | % | | | 1.89 | % | |
Net investment income (loss) | | | (.16 | )%(d) | | | .38 | % | | | (.11 | )% | | | .26 | % | | | 1.11 | % | | | .50 | % | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 186,702 | | | $ | 148,996 | | | $ | 89,402 | | | $ | 67,314 | | | $ | 55,230 | | | $ | 44,975 | | |
Portfolio turnover rate | | | 43.62 | %(d) | | | 98.16 | % | | | 78.65 | % | | | 75.56 | % | | | 72.36 | % | | | 82.38 | % | |
See Notes to Financial Statements.
60
Financial Highlights (continued)
INTERNATIONAL OPPORTUNITIES FUND
| | Class B Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 15.12 | | | $ | 11.59 | | | $ | 9.37 | | | $ | 8.20 | | | $ | 6.13 | | | $ | 7.65 | | |
Investment operations: | |
Net investment income (loss)(a) | | | (.08 | ) | | | (.04 | ) | | | (.08 | ) | | | (.04 | ) | | | .03 | | | | (.02 | ) | |
Net realized and unrealized gain (loss) | | | 2.66 | | | | 3.57 | | | | 2.30 | | | | 1.30 | | | | 2.05 | | | | (1.50 | ) | |
Total from investment operations | | | 2.58 | | | | 3.53 | | | | 2.22 | | | | 1.26 | | | | 2.08 | | | | (1.52 | ) | |
Distributions to shareholders from: | |
Net investment income | | | – | | | | – | | | | – | | | | (.09 | ) | | | (.01 | ) | | | – | | |
Net asset value, end of period | | $ | 17.70 | | | $ | 15.12 | | | $ | 11.59 | | | $ | 9.37 | | | $ | 8.20 | | | $ | 6.13 | | |
Total Return(b) | | | 17.06 | %(d) | | | 30.46 | % | | | 23.69 | % | | | 15.61 | % | | | 33.89 | % | | | (19.87 | )% | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions | | | 1.08 | %(d) | | | 2.24 | % | | | 2.38 | % | | | 2.48 | % | | | 2.73 | % | | | 2.69 | % | |
Expenses, excluding expense reductions | | | 1.08 | %(d) | | | 2.24 | % | | | 2.39 | % | | | 2.48 | % | | | 2.73 | % | | | 2.69 | % | |
Net investment income (loss) | | | (.49 | )%(d) | | | (.30 | )% | | | (.76 | )% | | | (.39 | )% | | | .49 | % | | | (.30 | )% | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 42,020 | | | $ | 36,642 | | | $ | 27,115 | | | $ | 21,962 | | | $ | 17,978 | | | $ | 13,174 | | |
Portfolio turnover rate | | | 43.62 | %(d) | | | 98.16 | % | | | 78.65 | % | | | 75.56 | % | | | 72.36 | % | | | 82.38 | % | |
See Notes to Financial Statements.
61
Financial Highlights (continued)
INTERNATIONAL OPPORTUNITIES FUND
| | Class C Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 15.05 | | | $ | 11.54 | | | $ | 9.32 | | | $ | 8.19 | | | $ | 6.12 | | | $ | 7.61 | | |
Investment operations: | |
Net investment income (loss)(a) | | | (.08 | ) | | | (.04 | ) | | | (.08 | ) | | | (.04 | ) | | | .07 | | | | – | (c) | |
Net realized and unrealized gain (loss) | | | 2.64 | | | | 3.55 | | | | 2.30 | | | | 1.30 | | | | 2.04 | | | | (1.49 | ) | |
Total from investment operations | | | 2.56 | | | | 3.51 | | | | 2.22 | | | | 1.26 | | | | 2.11 | | | | (1.49 | ) | |
Distributions to shareholders from: | |
Net investment income | | | – | | | | – | | | | – | | | | (.13 | ) | | | (.04 | ) | | | – | | |
Net asset value, end of period | | $ | 17.61 | | | $ | 15.05 | | | $ | 11.54 | | | $ | 9.32 | | | $ | 8.19 | | | $ | 6.12 | | |
Total Return(b) | | | 17.01 | %(d) | | | 30.42 | % | | | 23.82 | % | | | 15.61 | % | | | 34.67 | % | | | (19.58 | )% | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions | | | 1.08 | %(d) | | | 2.24 | % | | | 2.38 | % | | | 2.48 | % | | | 2.73 | % | | | 2.36 | % | |
Expenses, excluding expense reductions | | | 1.08 | %(d) | | | 2.25 | % | | | 2.39 | % | | | 2.48 | % | | | 2.73 | % | | | 2.36 | % | |
Net investment income (loss) | | | (.48 | )%(d) | | | (.27 | )% | | | (.75 | )% | | | (.39 | )% | | | .99 | % | | | .03 | % | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 39,731 | | | $ | 30,673 | | | $ | 17,621 | | | $ | 12,766 | | | $ | 10,323 | | | $ | 7,823 | | |
Portfolio turnover rate | | | 43.62 | %(d) | | | 98.16 | % | | | 78.65 | % | | | 75.56 | % | | | 72.36 | % | | | 82.38 | % | |
See Notes to Financial Statements.
62
Financial Highlights (continued)
INTERNATIONAL OPPORTUNITIES FUND
| | Class P Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 15.89 | | | $ | 12.11 | | | $ | 9.71 | | | $ | 8.47 | | | $ | 6.31 | | | $ | 7.82 | | |
Investment operations: | |
Net investment income (loss)(a) | | | (.04 | ) | | | .09 | | | | (.01 | ) | | | .01 | | | | .10 | | | | .03 | | |
Net realized and unrealized gain (loss) | | | 2.79 | | | | 3.69 | | | | 2.41 | | | | 1.35 | | | | 2.10 | | | | (1.54 | ) | |
Total from investment operations | | | 2.75 | | | | 3.78 | | | | 2.40 | | | | 1.36 | | | | 2.20 | | | | (1.51 | ) | |
Distributions to shareholders from: | |
Net investment income | | | (.03 | ) | | | – | | | | – | | | | (.12 | ) | | | (.04 | ) | | | – | | |
Net asset value, end of period | | $ | 18.61 | | | $ | 15.89 | | | $ | 12.11 | | | $ | 9.71 | | | $ | 8.47 | | | $ | 6.31 | | |
Total Return(b) | | | 17.33 | %(d) | | | 31.21 | % | | | 24.72 | % | | | 16.37 | % | | | 35.17 | % | | | (19.31 | )% | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions | | | .80 | %(d) | | | 1.74 | % | | | 1.69 | % | | | 1.93 | %† | | | 2.18 | %† | | | 2.14 | % | |
Expenses, excluding expense reductions | | | .80 | %(d) | | | 1.74 | % | | | 1.69 | % | | | 1.93 | %† | | | 2.18 | %† | | | 2.14 | % | |
Net investment income (loss) | | | (.22 | )%(d) | | | .62 | % | | | (.06 | )% | | | .16 | %† | | | 1.00 | %† | | | .25 | % | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 1,727 | | | $ | 1,489 | | | $ | 3 | | | $ | 1 | | | $ | 1 | | | $ | 1 | | |
Portfolio turnover rate | | | 43.62 | %(d) | | | 98.16 | % | | | 78.65 | % | | | 75.56 | % | | | 72.36 | % | | | 82.38 | % | |
See Notes to Financial Statements.
63
Financial Highlights (concluded)
INTERNATIONAL OPPORTUNITIES FUND
| | Class Y Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 16.08 | | | $ | 12.21 | | | $ | 9.77 | | | $ | 8.53 | | | $ | 6.39 | | | $ | 7.90 | | |
Investment operations: | |
Net investment income(a) | | | – | | | | .11 | | | | .02 | | | | .06 | | | | .10 | | | | .06 | | |
Net realized and unrealized gain (loss) | | | 2.82 | | | | 3.76 | | | | 2.43 | | | | 1.34 | | | | 2.12 | | | | (1.57 | ) | |
Total from investment operations | | | 2.82 | | | | 3.87 | | | | 2.45 | | | | 1.40 | | | | 2.22 | | | | (1.51 | ) | |
Distributions to shareholders from: | |
Net investment income | | | (.06 | ) | | | – | | | | (.01 | ) | | | (.16 | ) | | | (.08 | ) | | | – | | |
Net asset value, end of period | | $ | 18.84 | | | $ | 16.08 | | | $ | 12.21 | | | $ | 9.77 | | | $ | 8.53 | | | $ | 6.39 | | |
Total Return(b) | | | 17.62 | %(d) | | | 31.70 | % | | | 25.06 | % | | | 16.73 | % | | | 35.22 | % | | | (19.11 | )% | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions | | | .58 | %(d) | | | 1.25 | % | | | 1.38 | % | | | 1.48 | % | | | 1.74 | % | | | 1.69 | % | |
Expenses, excluding expense reductions | | | .58 | %(d) | | | 1.25 | % | | | 1.39 | % | | | 1.48 | % | | | 1.74 | % | | | 1.69 | % | |
Net investment income | | | .02 | %(d) | | | .76 | % | | | .22 | % | | | .61 | % | | | 1.47 | % | | | .70 | % | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 211,549 | | | $ | 149,509 | | | $ | 67,574 | | | $ | 57,143 | | | $ | 53,237 | | | $ | 45,748 | | |
Portfolio turnover rate | | | 43.62 | %(d) | | | 98.16 | % | | | 78.65 | % | | | 75.56 | % | | | 72.36 | % | | | 82.38 | % | |
† The ratios have been determined on a Fund basis.
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.
(c) Amount represents less than $.01.
(d) Not annualized.
See Notes to Financial Statements.
64
Financial Highlights
LARGE CAP VALUE FUND
| | Class A Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended | | 6/23/2003(a) to | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 10/31/2003 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 14.19 | | | $ | 12.38 | | | $ | 11.80 | | | $ | 10.73 | | | $ | 10.00 | | |
Unrealized depreciation on investments | | | | | | | | | | | | | | | | | | | (.10 | ) | |
Net asset value on SEC Effective Date, June 30, 2003 | | | | | | | | | | | | | | | | | | $ | 9.90 | | |
Investment operations: | |
Net investment income(b) | | | .10 | | | | .17 | | | | .14 | | | | .09 | | | | .03 | | |
Net realized and unrealized gain | | | .87 | | | | 2.05 | | | | .71 | | | | 1.05 | | | | .80 | | |
Total from investment operations | | | .97 | | | | 2.22 | | | | .85 | | | | 1.14 | | | | .83 | | |
Distributions to shareholders from: | |
Net investment income | | | (.17 | ) | | | (.12 | ) | | | (.11 | ) | | | (.07 | ) | | | – | | |
Net realized gain | | | (.32 | ) | | | (.29 | ) | | | (.16 | ) | | | – | | | | – | | |
Total distributions | | | (.49 | ) | | | (.41 | ) | | | (.27 | ) | | | (.07 | ) | | | – | | |
Net asset value, end of period | | $ | 14.67 | | | $ | 14.19 | | | $ | 12.38 | | | $ | 11.80 | | | $ | 10.73 | | |
Total Return(c) | | | | | | | | | | | | | | | | | | | (1.00 | )%(d)(e) | |
Total Return(c) | | | 7.11 | %(d) | | | 18.40 | % | | | 7.23 | % | | | 10.74 | % | | | 8.38 | %(d)(f) | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | .47 | %(d) | | | .95 | % | | | .95 | % | | | .95 | % | | | .33 | %(d)† | |
Expenses, excluding expense reductions and including expenses assumed | | | .47 | %(d) | | | .95 | % | | | .95 | % | | | .95 | % | | | .33 | %(d)† | |
Expenses, excluding expense reductions and expenses assumed | | | .59 | %(d) | | | 1.28 | % | | | 1.50 | % | | | 2.59 | % | | | 7.12 | %(d)† | |
Net investment income | | | .70 | %(d) | | | 1.26 | % | | | 1.14 | % | | | .75 | % | | | .27 | %(d)† | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 25,382 | | | $ | 20,994 | | | $ | 13,763 | | | $ | 10,102 | | | $ | 2,271 | | |
Portfolio turnover rate | | | 43.88 | %(d) | | | 42.16 | % | | | 54.12 | % | | | 30.53 | % | | | 8.87 | % | |
See Notes to Financial Statements.
65
Financial Highlights (continued)
LARGE CAP VALUE FUND
| | Class B Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended | | 6/23/2003(a) to | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 10/31/2003 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 13.96 | | | $ | 12.19 | | | $ | 11.67 | | | $ | 10.68 | | | $ | 10.00 | | |
Unrealized depreciation on investments | | | | | | | | | | | | | | | | | | | (.11 | ) | |
Net asset value on SEC Effective Date, June 30, 2003 | | | | | | | | | | | | | | | | | | $ | 9.89 | | |
Investment operations: | |
Net investment income(b) | | | .05 | | | | .08 | | | | .06 | | | | .01 | | | | – | (g) | |
Net realized and unrealized gain | | | .86 | | | | 2.03 | | | | .69 | | | | 1.05 | | | | .79 | | |
Total from investment operations | | | .91 | | | | 2.11 | | | | .75 | | | | 1.06 | | | | .79 | | |
Distributions to shareholders from: | |
Net investment income | | | (.11 | ) | | | (.04 | ) | | | (.07 | ) | | | (.07 | ) | | | – | | |
Net realized gain | | | (.32 | ) | | | (.30 | ) | | | (.16 | ) | | | – | | | | – | | |
Total distributions | | | (.43 | ) | | | (.34 | ) | | | (.23 | ) | | | (.07 | ) | | | – | | |
Net asset value, end of period | | $ | 14.44 | | | $ | 13.96 | | | $ | 12.19 | | | $ | 11.67 | | | $ | 10.68 | | |
Total Return(c) | | | | | | | | | | | | | | | | | | | (1.10 | )%(d)(e) | |
Total Return(c) | | | 6.76 | %(d) | | | 17.65 | % | | | 6.49 | % | | | 10.02 | % | | | 7.99 | %(d)(f) | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | .79 | %(d) | | | 1.60 | % | | | 1.60 | % | | | 1.60 | % | | | .56 | %(d)† | |
Expenses, excluding expense reductions and including expenses assumed | | | .79 | %(d) | | | 1.60 | % | | | 1.60 | % | | | 1.60 | % | | | .56 | %(d)† | |
Expenses, excluding expense reductions and expenses assumed | | | .92 | %(d) | | | 1.93 | % | | | 2.11 | % | | | 3.24 | % | | | 7.35 | %(d)† | |
Net investment income | | | .38 | %(d) | | | .60 | % | | | .49 | % | | | .10 | % | | | .04 | %(d)† | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 3,768 | | | $ | 3,109 | | | $ | 1,749 | | | $ | 1,445 | | | $ | 111 | | |
Portfolio turnover rate | | | 43.88 | %(d) | | | 42.16 | % | | | 54.12 | % | | | 30.53 | % | | | 8.87 | % | |
See Notes to Financial Statements.
66
Financial Highlights (continued)
LARGE CAP VALUE FUND
| | Class C Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended | | 6/23/2003(a) to | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 10/31/2003 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 13.95 | | | $ | 12.20 | | | $ | 11.69 | | | $ | 10.69 | | | $ | 10.00 | | |
Unrealized depreciation on investments | | | | | | | | | | | | | | | | | | | (.11 | ) | |
Net asset value on SEC Effective Date, June 30, 2003 | | | | | | | | | | | | | | | | | | $ | 9.89 | | |
Investment operations: | |
Net investment income(b) | | | .05 | | | | .08 | | | | .06 | | | | .01 | | | | – | (g) | |
Net realized and unrealized gain | | | .86 | | | | 2.02 | | | | .70 | | | | 1.06 | | | | .80 | | |
Total from investment operations | | | .91 | | | | 2.10 | | | | .76 | | | | 1.07 | | | | .80 | | |
Distributions to shareholders from: | |
Net investment income | | | (.10 | ) | | | (.05 | ) | | | (.09 | ) | | | (.07 | ) | | | – | | |
Net realized gain | | | (.32 | ) | | | (.30 | ) | | | (.16 | ) | | | – | | | | – | | |
Total distributions | | | (.42 | ) | | | (.35 | ) | | | (.25 | ) | | | (.07 | ) | | | – | | |
Net asset value, end of period | | $ | 14.44 | | | $ | 13.95 | | | $ | 12.20 | | | $ | 11.69 | | | $ | 10.69 | | |
Total Return(c) | | | | | | | | | | | | | | | | | | | (1.10 | )%(d)(e) | |
Total Return(c) | | | 6.75 | %(d) | | | 17.58 | % | | | 6.50 | % | | | 10.07 | % | | | 8.09 | %(d)(f) | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | .79 | %(d) | | | 1.60 | % | | | 1.60 | % | | | 1.60 | % | | | .56 | %(d)† | |
Expenses, excluding expense reductions and including expenses assumed | | | .79 | %(d) | | | 1.60 | % | | | 1.60 | % | | | 1.60 | % | | | .56 | %(d)† | |
Expenses, excluding expense reductions and expenses assumed | | | .92 | %(d) | | | 1.93 | % | | | 2.18 | % | | | 3.24 | % | | | 7.35 | %(d)† | |
Net investment income | | | .38 | %(d) | | | .61 | % | | | .46 | % | | | .10 | % | | | .04 | %(d)† | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 6,293 | | | $ | 4,753 | | | $ | 3,155 | | | $ | 1,490 | | | $ | 148 | | |
Portfolio turnover rate | | | 43.88 | %(d) | | | 42.16 | % | | | 54.12 | % | | | 30.53 | % | | | 8.87 | % | |
See Notes to Financial Statements.
67
Financial Highlights (continued)
LARGE CAP VALUE FUND
| | Class P Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended | | 6/23/2003(a) to | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 10/31/2003 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 14.19 | | | $ | 12.38 | | | $ | 11.80 | | | $ | 10.73 | | | $ | 10.00 | | |
Unrealized depreciation on investments | | | | | | | | | | | | | | | | | | | (.10 | ) | |
Net asset value on SEC Effective Date, June 30, 2003 | | | | | | | | | | | | | | | | | | $ | 9.90 | | |
Investment operations: | |
Net investment income(b) | | | .09 | | | | .15 | | | | .13 | | | | .07 | | | | .02 | | |
Net realized and unrealized gain | | | .88 | | | | 2.05 | | | | .70 | | | | 1.07 | | | | .81 | | |
Total from investment operations | | | .97 | | | | 2.20 | | | | .83 | | | | 1.14 | | | | .83 | | |
Distributions to shareholders from: | |
Net investment income | | | (.15 | ) | | | (.10 | ) | | | (.09 | ) | | | (.07 | ) | | | – | | |
Net realized gain | | | (.32 | ) | | | (.29 | ) | | | (.16 | ) | | | – | | | | – | | |
Total distributions | | | (.47 | ) | | | (.39 | ) | | | (.25 | ) | | | (.07 | ) | | | – | | |
Net asset value, end of period | | $ | 14.69 | | | $ | 14.19 | | | $ | 12.38 | | | $ | 11.80 | | | $ | 10.73 | | |
Total Return(c) | | | | | | | | | | | | | | | | | | | (1.00 | )%(d)(e) | |
Total Return(c) | | | 7.09 | %(d) | | | 18.23 | % | | | 7.07 | % | | | 10.65 | % | | | 8.38 | %(d)(f) | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | .52 | %(d) | | | 1.05 | % | | | 1.05 | % | | | 1.05 | % | | | .37 | %(d)† | |
Expenses, excluding expense reductions and including expenses assumed | | | .52 | %(d) | | | 1.05 | % | | | 1.05 | % | | | 1.05 | % | | | .37 | %(d)† | |
Expenses, excluding expense reductions and expenses assumed | | | .64 | %(d) | | | 1.38 | % | | | 1.52 | % | | | 2.69 | % | | | 7.16 | %(d)† | |
Net investment income | | | .65 | %(d) | | | 1.17 | % | | | 1.06 | % | | | .65 | % | | | .23 | %(d)† | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 16 | | | $ | 15 | | | $ | 13 | | | $ | 12 | | | $ | 11 | | |
Portfolio turnover rate | | | 43.88 | %(d) | | | 42.16 | % | | | 54.12 | % | | | 30.53 | % | | | 8.87 | % | |
See Notes to Financial Statements.
68
Financial Highlights (concluded)
LARGE CAP VALUE FUND
| | Class Y Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended | | 6/23/2003(a) to | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 10/31/2003 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 14.27 | | | $ | 12.44 | | | $ | 11.85 | | | $ | 10.75 | | | $ | 10.00 | | |
Unrealized depreciation on investments | | | | | | | | | | | | | | | | | | | (.10 | ) | |
Net asset value on SEC Effective Date, June 30, 2003 | | | | | | | | | | | | | | | | | | $ | 9.90 | | |
Investment operations: | |
Net investment income(b) | | | .13 | | | | .21 | | | | .17 | | | | .13 | | | | .04 | | |
Net realized and unrealized gain | | | .87 | | | | 2.07 | | | | .72 | | | | 1.05 | | | | .81 | | |
Total from investment operations | | | 1.00 | | | | 2.28 | | | | .89 | | | | 1.18 | | | | .85 | | |
Distributions to shareholders from: | |
Net investment income | | | (.21 | ) | | | (.15 | ) | | | (.14 | ) | | | (.08 | ) | | | – | | |
Net realized gain | | | (.32 | ) | | | (.30 | ) | | | (.16 | ) | | | – | | | | – | | |
Total distributions | | | (.53 | ) | | | (.45 | ) | | | (.30 | ) | | | (.08 | ) | | | – | | |
Net asset value, end of period $14.74 | | $ | 14.27 | | | $ | 1 | | | | 2.44 | | | $ | 11.85 | | | $ | 10.75 | | |
Total Return(c) | | | | | | | | | | | | | | | | | | | (1.00 | )%(d)(e) | |
Total Return(c) | | | 7.29 | %(d) | | | 18.83 | % | | | 7.58 | % | | | 11.09 | % | | | 8.59 | %(d)(f) | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | .30 | %(d) | | | .60 | % | | | .60 | % | | | .60 | % | | | .21 | %(d)† | |
Expenses, excluding expense reductions and including expenses assumed | | | .30 | %(d) | | | .60 | % | | | .60 | % | | | .60 | % | | | .21 | %(d)† | |
Expenses, excluding expense reductions and expenses assumed | | | .42 | %(d) | | | .93 | % | | | 1.18 | % | | | 2.24 | % | | | 7.00 | %(d)† | |
Net investment income | | | .88 | %(d) | | | 1.61 | % | | | 1.37 | % | | | 1.10 | % | | | .39 | %(d)† | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 27,893 | | | $ | 30,156 | | | $ | 19,576 | | | $ | 2,043 | | | $ | 11 | | |
Portfolio turnover rate | | | 43.88 | %(d) | | | 42.16 | % | | | 54.12 | % | | | 30.53 | % | | | 8.87 | % | |
† The ratios have been determined on a Fund basis.
(a) Commencement of investment operations; SEC effective date and date shares first became available to the public is June 30, 2003.
(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) Total return for the period June 23, 2003 through June 30, 2003.
(f) Total return for the period June 30, 2003 through October 30, 2003.
(g) Amount represents less than $.01.
See Notes to Financial Statements.
69
Financial Highlights
VALUE OPPORTUNITIES FUND
| | Class A Shares | |
| | Six Months Ended 4/30/2007 (unaudited) | | 12/20/2005(a) to 10/31/2006 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 12.43 | | | $ | 10.00 | | |
Investment operations: | |
Net investment income(b) | | | .02 | | | | .01 | | |
Net realized and unrealized gain | | | 1.37 | | | | 2.42 | | |
Total from investment operations | | | 1.39 | | | | 2.43 | | |
Distributions to shareholders from: | |
Net realized gain | | | (.38 | ) | | | – | | |
Net asset value, end of period | | $ | 13.44 | | | $ | 12.43 | | |
Total Return(c) | | | 11.48 | %(d) | | | 24.30 | %(d) | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | .64 | %(d) | | | 1.11 | %(d) | |
Expenses, excluding expense reductions and including expenses assumed | | | .64 | %(d) | | | 1.11 | %(d) | |
Expenses, excluding expense reductions and expenses assumed | | | .69 | %(d) | | | 1.73 | %(d) | |
Net investment income | | | .14 | %(d) | | | .14 | %(d) | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 109,182 | | | $ | 59,245 | | |
Portfolio turnover rate | | | 85.09 | %(d) | | | 296.82 | %(d) | |
See Notes to Financial Statements.
70
Financial Highlights (continued)
VALUE OPPORTUNITIES FUND
| | Class B Shares | |
| | Six Months Ended 4/30/2007 (unaudited) | | 12/20/2005(a) to 10/31/2006 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 12.37 | | | $ | 10.00 | | |
Investment operations: | |
Net investment loss(b) | | | (.02 | ) | | | (.06 | ) | |
Net realized and unrealized gain | | | 1.36 | | | | 2.43 | | |
Total from investment operations | | | 1.34 | | | | 2.37 | | |
Distributions to shareholders from: | |
Net realized gain | | | (.38 | ) | | | – | | |
Net asset value, end of period | | $ | 13.33 | | | $ | 12.37 | | |
Total Return(c) | | | 11.12 | %(d) | | | 23.70 | %(d) | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | .96 | %(d) | | | 1.67 | %(d) | |
Expenses, excluding expense reductions and including expenses assumed | | | .96 | %(d) | | | 1.67 | %(d) | |
Expenses, excluding expense reductions and expenses assumed | | | 1.01 | %(d) | | | 2.30 | %(d) | |
Net investment loss | | | (.19 | )%(d) | | | (.53 | )%(d) | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 11,039 | | | $ | 5,440 | | |
Portfolio turnover rate | | | 85.09 | %(d) | | | 296.82 | %(d) | |
See Notes to Financial Statements.
71
Financial Highlights (continued)
VALUE OPPORTUNITIES FUND
| | Class C Shares | |
| | Six Months Ended 4/30/2007 (unaudited) | | 12/20/2005(a) to 10/31/2006 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 12.37 | | | $ | 10.00 | | |
Investment operations: | |
Net investment loss(b) | | | (.02 | ) | | | (.06 | ) | |
Net realized and unrealized gain | | | 1.36 | | | | 2.43 | | |
Total from investment operations | | | 1.34 | | | | 2.37 | | |
Distributions to shareholders from: | |
Net realized gain | | | (.38 | ) | | | – | | |
Net asset value, end of period | | $ | 13.33 | | | $ | 12.37 | | |
Total Return(c) | | | 11.12 | %(d) | | | 23.70 | %(d) | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | .96 | %(d) | | | 1.67 | %(d) | |
Expenses, excluding expense reductions and including expenses assumed | | | .96 | %(d) | | | 1.67 | %(d) | |
Expenses, excluding expense reductions and expenses assumed | | | 1.01 | %(d) | | | 2.29 | %(d) | |
Net investment loss | | | (.19 | )%(d) | | | (.53 | )%(d) | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 34,736 | | | $ | 14,850 | | |
Portfolio turnover rate | | | 85.09 | %(d) | | | 296.82 | %(d) | |
See Notes to Financial Statements.
72
Financial Highlights (continued)
VALUE OPPORTUNITIES FUND
| | Class P Shares | |
| | Six Months Ended 4/30/2007 (unaudited) | | 12/20/2005(a) to 10/31/2006 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 12.42 | | | $ | 10.00 | | |
Investment operations: | |
Net investment income(b) | | | – | | | | .02 | | |
Net realized and unrealized gain | | | 1.38 | | | | 2.40 | | |
Total from investment operations | | | 1.38 | | | | 2.42 | | |
Distributions to shareholders from: | |
Net realized gain | | | (.38 | ) | | | – | | |
Net asset value, end of period | | $ | 13.42 | | | $ | 12.42 | | |
Total Return(c) | | | 11.40 | %(d) | | | 24.20 | %(d) | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | .69 | %(d) | | | 1.20 | %(d) | |
Expenses, excluding expense reductions and including expenses assumed | | | .69 | %(d) | | | 1.20 | %(d) | |
Expenses, excluding expense reductions and expenses assumed | | | .74 | %(d) | | | 3.09 | %(d) | |
Net investment income | | | .01 | %(d) | | | .27 | %(d) | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 2,345 | | | $ | 12 | | |
Portfolio turnover rate | | | 85.09 | %(d) | | | 296.82 | %(d) | |
See Notes to Financial Statements.
73
Financial Highlights (concluded)
VALUE OPPORTUNITIES FUND
| | Class Y Shares | |
| | Six Months Ended 4/30/2007 (unaudited) | | 12/20/2005(a) to 10/31/2006 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 12.47 | | | $ | 10.00 | | |
Investment operations: | |
Net investment income(b) | | | .04 | | | | .05 | | |
Net realized and unrealized gain | | | 1.38 | | | | 2.42 | | |
Total from investment operations | | | 1.42 | | | | 2.47 | | |
Distributions to shareholders from: | |
Net investment income | | | (.02 | ) | | | – | | |
Net realized gain | | | (.38 | ) | | | – | | |
Total distributions | | | (.40 | ) | | | – | | |
Net asset value, end of period | | $ | 13.49 | | | $ | 12.47 | | |
Total Return(c) | | | 11.66 | %(d) | | | 24.70 | %(d) | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | .47 | %(d) | | | .81 | %(d) | |
Expenses, excluding expense reductions and including expenses assumed | | | .47 | %(d) | | | .81 | %(d) | |
Expenses, excluding expense reductions and expenses assumed | | | .52 | %(d) | | | 1.53 | %(d) | |
Net investment income | | | .31 | %(d) | | | .53 | %(d) | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 7,381 | | | $ | 3,345 | | |
Portfolio turnover rate | | | 85.09 | %(d) | | | 296.82 | %(d) | |
(a) Commencement of investment operations and SEC effective date is December 20, 2005; date shares became available to the public is January 3, 2006.
(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.
See Notes to Financial Statements.
74
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Lord Abbett Securities Trust (the "Trust") is registered under the Investment Company Act of 1940 (the "Act") as a diversified open-end management investment company organized as a Delaware statutory trust on February 26, 1993. The Trust currently consists of eight funds. This report covers the following six funds and their respective classes (separately, a "Fund" and collectively, the "Funds"): Lord Abbett All Value Fund ("All Value Fund"), Classes A, B, C, P and Y shares; Lord Abbett Alpha Strategy Fund ("Alpha Strategy Fund"), Classes A, B, C, P and Y shares; Lord Abbett International Core Equity Fund ("International Core Equity Fund"), Classes A, B, C, P and Y shares; Lord Abbett International Opportunities Fund ("International Opportunities Fund"), Classes A, B, C, P and Y shares; Lord Abbett Large-Cap Value Fund ("Large-Cap Value Fund"), Classes A, B, C, P and Y shares; and Lord Abbett Value Opportunities Fund ("Value Opportunities Fun d"), Classes A, B, C, P and Y shares. As of the date of this report, Alpha Strategy Fund has not issued Class P shares. Value Opportunities Fund commenced investment operations and became effective with the SEC on December 20, 2005. Shares first became available to the public on January 3, 2006.
All Value Fund's investment objective is to seek long-term growth of capital and income without excessive fluctuations in market value. 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"). Large Cap Value 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 the Class B, C, P and Y shares, although there may be a contingent deferred sales charge ("CDSC") as follows: certain redemptions of Class A shares made within 12 months following certain purchases made without a sales charge; Class B shares redeemed before the sixth anniversary of purchase; and Class C shares redeemed before the first anniversary of purchase. Class B shares will convert to Class A shares on the eighth anniversary of the original purchase of Class B shares.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make 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–Securities traded on any recognized U.S. or non-U.S. exchange or on NASDAQ, Inc. 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 more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange. Each Fund may rely on an independent fair valuation service in adjusting the valuations of foreign securities. Unlisted equity securities are valued at last quoted sale price
75
Notes to Financial Statements (unaudited) (continued)
or, if no sale price is available, at the mean between the most recently quoted bid and asked prices. Securities for which market quotations are not readily available are valued at fair value as determined by management and approved in good faith by the Board of Trustees. Investments in the Underlying Funds are valued at their NAV each business day at the close of regular trading on the New York Stock Exchange, normally 4:00 p.m. Eastern time. Short-term securities with 60 days or less remaining to maturity are valued using the amortized cost method, which approximates current market value.
(b) Security Transactions–Security transactions are recorded as of the date that the securities are purchased or sold (trade date). Realized gains and losses on sales of portfolio securities are calculated using the identified-cost method. Realized and unrealized gains (losses) are allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day.
(c) Investment Income–Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis. Discounts are accreted and premiums are amortized using the effective interest method. Withholding taxes on foreign dividends have been provided in accordance with the Funds' understanding of 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) Federal Taxes–It is the policy of each Fund to meet the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all taxable income and capital gains to its shareholders. Therefore, no Federal income tax provision is required.
(e) Expenses–Expenses incurred by the Trust that do not specifically relate to an individual fund are generally allocated to the Funds within the Trust on a pro rata basis. Expenses, excluding class specific expenses, are generally allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day. Classes A, B, C and P 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 International Core Equity Fund and International Opportunities Fund are maintained in U.S. dollars. 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 to reflect current exchange rates. The resultant exchange gains and losses are included in Net realized gain on investments 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.
(g) Forward Foreign Currency Exchange Contracts–International Core Equity 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 and to lock in the U.S. dollar cost of firm purchase and sale commitments for securities denominated in foreign currencies. A forward foreign currency exchange contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated rate. The contracts are valued daily at forward exchange rates and any unrealized gain (loss) is included in Net change in unrealized appreciation on investments
76
Notes to Financial Statements (unaudited) (continued)
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 contracts is included in Net realized gain on investments and foreign currency related transactions on each Fund's Statement of Operations. As of April 30, 2007, there were no open forward foreign currency exchange contracts outstanding.
(h) 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 value of these securities has dec lined, the Fund may incur a loss upon disposition of the securities.
(i) 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 the 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 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 enterprises 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 t he 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 the value of the security in determining its net asset value. 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.
3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management Fees
The Trust has a management agreement with Lord Abbett pursuant to which Lord Abbett supplies the Trust with investment management services and executive and other personnel, pays the remuneration of officers, provides office space and pays for ordinary and necessary office and clerical expenses relating to research and statistical work and supervision of the Trust's investment portfolios.
77
Notes to Financial Statements (unaudited) (continued)
The management fees are based on average daily net assets at the following annual rates:
| | Management Fees | | Voluntary Waiver | |
All Value Fund | | | .53 | %(1) | | | - | | |
Alpha Strategy Fund | | | .10 | % | | | .10 | %(2) | |
International Core Equity Fund | | | .75 | %(3) | | | - | | |
International Opportunities Fund | | | .75 | %(3) | | | - | | |
Large Cap Value Fund | | | .40 | %(4) | | | - | | |
Value Opportunities Fund | | | .75 | %(3) | | | - | | |
(1) The management fee for All Value 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 | % | |
(2) For the fiscal year ending October 31, 2007 Lord Abbett has contractually agreed to waive its management fee.
(3) The management fee for International Core Equity Fund, International Opportunities Fund and Value Opportunities Fund is based on average daily net assets at the following annual rates:
First $1 billion | | | .75 | % | |
Next $1 billion | | | .70 | % | |
Over $2 billion | | | .65 | % | |
(4) The management fee for Large Cap Value Fund is based on average daily net assets at the following annual rates:
First $2 billion | | | .40 | % | |
Next $3 billion | | | .375 | % | |
Over $5 billion | | | .35 | % | |
For the period November 1, 2006 through October 31, 2007, Lord Abbett has contractually agreed to reimburse the Large Cap Value Fund to the extent necessary so that each class' total annual operating expenses do not exceed the following annual rates:
Class | | % of Average Daily Net Assets | |
A | | | .95 | % | |
B | | | 1.60 | % | |
C | | | 1.60 | % | |
P | | | 1.05 | % | |
Y | | | .60 | % | |
For the period November 1, 2006 through October 31, 2007, Lord Abbett has contractually agreed to reimburse the Value Opportunities Fund to the extent necessary so that each class' total annual operating expenses do not exceed the following annual rates:
Class | | % of Average Daily Net Assets | |
A | | | 1.30 | % | |
B | | | 1.95 | % | |
C | | | 1.95 | % | |
P | | | 1.40 | % | |
Y | | | .95 | % | |
78
Notes to Financial Statements (unaudited) (continued)
Lord Abbett provides certain administrative services to the Funds pursuant to an Administrative Services Agreement at an annual rate of .04% of each Fund's average daily net assets. This fee is not charged to the Alpha Strategy Fund.
Alpha Strategy Fund has entered into a Servicing Arrangement with the Underlying Funds in which it invests (Lord Abbett Developing Growth Fund, Inc., Lord Abbett Research Fund, Inc. – Lord Abbett Small Cap Value Fund, Lord Abbett Securities Trust – Lord Abbett International Opportunities Fund, Lord Abbett Securities Trust – Lord Abbett Micro Cap Growth Fund and Lord Abbett Securities Trust – Lord Abbett Micro Cap Value Fund) 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 Receivable from affiliates on Alpha Strategy Fund's Statement of Assets and Liabilities.
In addition, International Core Equity Fund, International Opportunities Fund, and Value Opportunities Fund, along with certain other funds managed by Lord Abbett, have entered into a Servicing Arrangement with Lord Abbett Investment Trust – Lord Abbett World Growth & Income Strategy Fund, Alpha Strategy Fund, and Lord Abbett Investment Trust – Lord Abbett Diversified Equity Strategy Fund, respectively (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 Underlying Fund shares owned by the Fund of Funds. Amounts paid pursuant to the Servicing Arrangement are included in Subsidy expense on each Fund's Statement of Oper ations and Payable to affiliates on each Fund's Statement of Assets and Liabilities.
12b-1 Distribution Plans
Each Fund has adopted a distribution plan with respect to Class A, B, C and P 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 ("Distributor"), an affiliate of Lord Abbett. The fees are accrued daily at annual rates based upon average daily net assets as follows:
Fee | | Class A | | Class B | | Class C | | Class P(2) | |
Service | | | .25 | % | | | .25 | % | | | .25 | % | | | .20 | % | |
Distribution | | | .10 | %(1) | | | .75 | % | | | .75 | % | | | .25 | % | |
(1) The amount of CDSC collected by each Fund during the six months ended April 30, 2007 was as follows:
| | CDSC Collected | |
All Value Fund | | $ | 5,597 | | |
Alpha Strategy Fund | | | 228 | | |
International Core Equity Fund | | | 103 | | |
International Opportunities Fund | | | 592 | | |
Large Cap Value Fund | | | - | | |
Value Opportunities Fund | | | 40,000 | | |
(2) All Value Fund, International Core Equity Fund, International Opportunities Fund, Large Cap Value Fund, and Value Opportunities Fund only.
Class Y does not have a distribution plan.
79
Notes to Financial Statements (unaudited) (continued)
Commissions
Distributor received the following commissions on sales of shares of the Funds, after concessions were paid to authorized dealers, for the six months ended April 30, 2007:
| | Distributor Commissions | | Dealers' Concessions | |
All Value Fund | | $ | 650,133 | | | $ | 3,444,707 | | |
Alpha Strategy Fund | | | 152,463 | | | | 843,224 | | |
International Core Equity Fund | | | 716,750 | | | | 3,797,710 | | |
International Opportunities Fund | | | 62,927 | | | | 342,822 | | |
Large Cap Value Fund | | | 17,007 | | | | 88,073 | | |
Value Opportunities Fund | | | 119,304 | | | | 654,891 | | |
Distributor received the following amount of CDSCs for the six months ended April 30, 2007:
| | Class A | | Class C | |
All Value Fund | | $ | - | | | $ | 11,123 | | |
Alpha Strategy Fund | | | 90 | | | | 4,869 | | |
International Core Equity Fund | | | 7,630 | | | | 10,729 | | |
International Opportunities Fund | | | 3,991 | | | | 1,546 | | |
Large Cap Value Fund | | | - | | | | 9 | | |
Value Opportunities Fund | | | 50 | | | | 1,195 | | |
Two Trustees 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 semiannually for All Value Fund, and annually for Alpha Strategy Fund, International Core Equity Fund, International Opportunities Fund, Large Cap Value Fund, and Value Opportunities Fund. Taxable net realized gains from investment transactions, reduced by capital loss carryforwards, if any, are declared and distributed to shareholders at least annually. The capital loss carryforward amount, if any, is available to offset future net capital gains. Dividends and distributions to shareholders are recorded on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with Federal income tax regulations which may differ from accounting principles generally accepted in the United States of America. These book/tax differences are either considered temporary or permanent in nature. To the ex tent 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.
80
Notes to Financial Statements (unaudited) (continued)
The tax character of distributions paid during the six months ended April 30, 2007 and the year ended October 31, 2006 were as follows:
| | All Value Fund | | Alpha Fund | |
| | Six Months Ended 4/30/2007 (unaudited) | | Year Ended 10/31/2006 | | Six Months Ended 4/30/2007 (unaudited) | | Year Ended 10/31/2006 | |
Distributions paid from: | |
Ordinary income | | $ | 58,233,863 | | | $ | 27,452,587 | | | $ | 9,832,721 | | | $ | - | | |
Net long-term capital gains | | | 189,756,690 | | | | 158,919,773 | | | | 3,710,084 | | | | - | | |
Total distributions paid | | $ | 247,990,553 | | | $ | 186,372,360 | | | $ | 13,542,805 | | | $ | - | | |
| | International Core Equity Fund | | International Opportunities Fund | |
| | Six Months 4/30/2007 (unaudited) | | Ended Year Ended 10/31/2006 | | Six Months 4/30/2007 (unaudited) | | Ended Year Ended 10/31/2006 | |
Distributions paid from: | |
Ordinary income | | $ | 40,528,543 | | | $ | 8,931,477 | | | $ | 736,424 | | | $ | - | | |
Net long-term capital gains | | | 20,763,832 | | | | 2,329,582 | | | | - | | | | - | | |
Total distributions paid | | $ | 61,292,375 | | | $ | 11,261,059 | | | $ | 736,424 | | | $ | - | | |
| | Large Cap Value Fund | | Value Opportunities Fund | |
| | Six Months Ended 4/30/2007 (unaudited) | | Year Ended 10/31/2006 | | Six Months Ended 4/30/2007 (unaudited) | | Year Ended 10/31/2006 | |
Distributions paid from: | |
Ordinary income | | $ | 768,493 | | | $ | 547,207 | | | $ | 2,795,952 | | | $ | - | | |
Net long-term capital gains | | | 1,342,280 | | | | 760,768 | | | | - | | | | - | | |
Total distributions paid | | $ | 2,110,773 | | | $ | 1,307,975 | | | $ | 2,795,952 | | | $ | - | | |
As of October 31, 2006, the capital loss carryforwards along with the related expiration dates, are as follows:
| | 2010 | | 2011 | | Total | |
International Opportunities Fund | | $ | 17,291,165 | | | $ | 7,911,942 | | | $ | 25,203,107 | | |
As of April 30, 2007, the aggregate unrealized security gains and losses based on cost for U.S. Federal income tax purposes are as follows:
| | All Value Fund | | Alpha Strategy Fund | | International Core Equity Fund | |
Tax cost | | $ | 2,821,986,718 | | | $ | 326,780,968 | | | $ | 1,252,442,382 | | |
Gross unrealized gain | | | 514,048,537 | | | | 84,389,430 | | | | 143,177,912 | | |
Gross unrealized loss | | | (13,990,985 | ) | | | (91,354 | ) | | | (13,421,378 | ) | |
Net unrealized security gain | | $ | 500,057,552 | | | $ | 84,298,076 | | | $ | 129,756,534 | | |
81
Notes to Financial Statements (unaudited) (continued)
| | International Opportunities Fund | | Large Cap Value Fund | | Value Opportunities Fund | |
Tax cost | | $ | 393,468,565 | | | $ | 55,886,705 | | | $ | 152,074,782 | | |
Gross unrealized gain | | | 93,409,681 | | | | 8,006,110 | | | | 12,115,481 | | |
Gross unrealized loss | | | (8,434,161 | ) | | | (271,185 | ) | | | (1,805,012 | ) | |
Net unrealized security gain | | $ | 84,975,520 | | | $ | 7,734,925 | | | $ | 10,310,469 | | |
The difference between book-basis and tax-basis unrealized gains (losses) is attributable to the tax treatment of certain foreign securities and wash sales.
5. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments) for the six months ended April 30, 2007 are as follows:
| | Purchases | | Sales | |
All Value Fund | | $ | 987,124,091 | | | $ | 917,730,616 | | |
Alpha Strategy Fund | | | 72,393,785 | | | | - | | |
International Core Equity Fund | | | 1,064,582,590 | | | | 778,827,956 | | |
International Opportunities Fund | | | 229,594,851 | | | | 177,126,681 | | |
Large Cap Value Fund | | | 28,480,158 | | | | 25,861,435 | | |
Value Opportunities Fund | | | 153,876,511 | | | | 90,422,360 | | |
There were no purchases or sales of U.S. Government securities for the six months ended April 30, 2007.
6. TRUSTEES' REMUNERATION
The Trust's officers and the two Trustees who are associated with Lord Abbett do not receive any compensation from the Trust for serving in such capacities. Outside Trustees' fees are allocated among all Lord Abbett-sponsored funds based on the net assets of each fund. There is an equity based plan available to all outside Trustees under which outside Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, Trustees' fees. The deferred amounts are treated as though equivalent dollar amounts have been invested proportionately in the funds. Such amounts and earnings accrued thereon are included in Trustees' fees on the Statement of Operations and in Trustees' fees payable on the Statement of Assets and Liabilities and are not deductible for U.S. Federal income tax purposes until such amounts are paid.
7. EXPENSE REDUCTIONS
The Trust has entered into arrangements with the Funds' 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.
8. LINE OF CREDIT
Each of All Value Fund, International Core Equity Fund, International Opportunities Fund, Large Cap Value Fund and Value Opportunities Fund, along with certain other funds managed by Lord Abbett, has available a $250,000,000 unsecured revolving credit facility ("Facility") from a consortium of banks, to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Any borrowings under this Facility will bear
82
Notes to Financial Statements (unaudited) (continued)
interest at current market rates as defined in the agreement. The fee for this Facility is at an annual rate of .08%. As of April 30, 2007, there were no loans outstanding pursuant to this Facility nor was the Facility utilized at any time during the six months ended April 30, 2007.
9. CUSTODIAN AND ACCOUNTING AGENT
State Street Bank & Trust Company ("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.
10. INVESTMENT RISKS
Each Fund is subject to the general risks and considerations associated with equity investing. The value of an investment will fluctuate in response to movements in the stock market in general and to the changing prospects of individual companies in which the Funds invest.
Large company value stocks, in which each of the All Value Fund and Large Cap Value Fund invest, may perform differently than the market as a whole and other types of stocks, such as small company stocks and growth stocks. Small and mid-sized company stocks, in which Value Opportunities Fund invests, may also perform differently than the market as a whole and other types of stocks, such as large-company and growth stocks. This is because different types of stocks tend to shift in and out of favor depending on market and economic conditions. The market may fail to recognize the intrinsic value of a particular value stock for a long time. The small and mid-sized company stocks in which Value Opportunities Fund invests may be less able to weather economic shifts or other adverse developments than those of larger, more established companies. In addition, if a Fund's assessment of a company's value or prospects for exceeding earnings expectations or market conditions is wrong, the Funds could suffer losses or produce poor performance relative to other funds, even in a rising market.
In addition, although All Value Fund invests a significant portion of its assets in large-cap company stocks, it also invests in mid-cap and small-cap company stocks which may be more volatile and less liquid than large-cap stocks.
International Core Equity Fund is subject to the risks of investing in foreign securities and in the securities of large foreign companies. Foreign securities may pose greater risks than domestic securities, including greater price fluctuations and higher transaction costs. Foreign investments also may be affected by changes in currency rates or currency controls.
International Opportunities Fund is also subject to the risks of investing in foreign securities and in the securities of small-cap companies. Foreign securities may pose greater risks than domestic securities, including greater price fluctuations and higher transaction costs. Foreign investments also may be affected by changes in currency rates or currency controls. Investing in small-cap companies generally involves greater risks than investing in the stocks of large-cap companies, including more volatility and less liquidity.
Alpha 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 and small-cap companies.
83
Notes to Financial Statements (unaudited) (continued)
Due to their investments in multinational companies, All Value Fund, Large Cap Value Fund, and Alpha Strategy Fund may experience increased market, liquidity, currency, political, information and other risks.
These factors can affect each Fund's performance.
11. SUMMARY OF CAPITAL TRANSACTIONS
Transactions in shares of beneficial interest are as follows:
ALL VALUE FUND
| | Six Months Ended April 30, 2007 (unaudited) | | Year Ended October 31, 2006 | |
Class A Shares* | | Shares | | Amount | | Shares | | Amount | |
Shares sold | | | 15,447,786 | | | $ | 194,621,533 | | | | 34,273,048 | | | $ | 428,865,322 | | |
Converted from Class B** | | | 247,847 | | | | 3,131,357 | | | | 488,411 | | | | 6,079,686 | | |
Reinvestment of distributions | | | 13,559,293 | | | | 166,236,936 | | | | 10,510,974 | | | | 124,659,881 | | |
Shares reacquired | | | (16,860,712 | ) | | | (213,558,039 | ) | | | (23,915,079 | ) | | | (298,561,391 | ) | |
Increase | | | 12,394,214 | | | $ | 150,431,787 | | | | 21,357,354 | | | $ | 261,043,498 | | |
Class B Shares* | |
Shares sold | | | 1,406,451 | | | $ | 17,082,992 | | | | 3,790,553 | | | $ | 45,674,376 | | |
Reinvestment of distributions | | | 1,516,094 | | | | 17,965,631 | | | | 1,236,703 | | | | 14,234,475 | | |
Shares reacquired | | | (1,891,685 | ) | | | (22,999,715 | ) | | | (3,046,121 | ) | | | (36,829,208 | ) | |
Converted to Class A** | | | (256,710 | ) | | | (3,131,357 | ) | | | (504,934 | ) | | | (6,079,686 | ) | |
Increase | | | 774,150 | | | $ | 8,917,551 | | | | 1,476,201 | | | $ | 16,999,957 | | |
Class C Shares | |
Shares sold | | | 4,584,525 | | | $ | 55,268,913 | | | | 10,768,461 | | | $ | 129,370,505 | | |
Reinvestment of distributions | | | 2,834,166 | | | | 33,471,505 | | | | 2,172,387 | | | | 24,917,279 | | |
Shares reacquired | | | (4,996,204 | ) | | | (60,641,903 | ) | | | (7,495,172 | ) | | | (90,176,215 | ) | |
Increase | | | 2,422,487 | | | $ | 28,098,515 | | | | 5,445,676 | | | $ | 64,111,569 | | |
Class P Shares | |
Shares sold | | | 1,014,389 | | | $ | 12,640,201 | | | | 2,480,207 | | | $ | 30,994,051 | | |
Reinvestment of distributions | | | 291,133 | | | | 3,534,363 | | | | 90,360 | | | | 1,064,438 | | |
Shares reacquired | | | (804,258 | ) | | | (9,982,695 | ) | | | (409,347 | ) | | | (5,060,756 | ) | |
Increase | | | 501,264 | | | $ | 6,191,869 | | | | 2,161,220 | | | $ | 26,997,733 | | |
Class Y Shares | |
Shares sold | | | 429,118 | | | $ | 5,303,487 | | | | 92,016 | | | $ | 1,138,202 | | |
Reinvestment of distributions | | | 28,126 | | | | 345,668 | | | | 17,099 | | | | 203,303 | | |
Shares reacquired | | | (22,726 | ) | | | (288,463 | ) | | | (32,416 | ) | | | (402,821 | ) | |
Increase | | | 434,518 | | | $ | 5,360,692 | | | | 76,699 | | | $ | 938,684 | | |
* Prior year amounts have been reclassified to conform with current presentation.
** Automatic conversion of Class B shares occurs approximately eight years after the initial purchase date.
84
Notes to Financial Statements (unaudited) (continued)
ALPHA STRATEGY FUND
| | Six Months Ended April 30, 2007 (unaudited) | | Year Ended October 31, 2006 | |
Class A Shares* | | Shares | | Amount | | Shares | | Amount | |
Shares sold | | | 1,787,586 | | | $ | 43,931,271 | | | | 5,035,816 | | | $ | 113,251,740 | | |
Converted from Class B** | | | 209,901 | | | | 5,141,311 | | | | 545,419 | | | | 12,280,398 | | |
Reinvestment of distributions | | | 321,851 | | | | 7,637,531 | | | | - | | | | - | | |
Shares reacquired | | | (878,789 | ) | | | (21,519,107 | ) | | | (2,027,424 | ) | | | (44,655,435 | ) | |
Increase | | | 1,440,549 | | | $ | 35,191,006 | | | | 3,553,811 | | | $ | 80,876,703 | | |
Class B Shares* | |
Shares sold | | | 335,692 | | | $ | 7,973,104 | | | | 812,086 | | | $ | 17,679,538 | | |
Reinvestment of distributions | | | 62,135 | | | | 1,426,621 | | | | - | | | | - | | |
Shares reacquired | | | (183,862 | ) | | | (4,361,355 | ) | | | (582,939 | ) | | | (12,527,253 | ) | |
Converted to Class A** | | | (217,414 | ) | | | (5,141,311 | ) | | | (565,358 | ) | | | (12,280,398 | ) | |
Decrease (3,449) | | $ | (102,941 | ) | | | (336,211 | ) | | | $ | | | | (7,128,113 | ) | |
Class C Shares | |
Shares sold | | | 1,145,356 | | | $ | 27,079,559 | | | | 2,093,865 | | | $ | 45,490,652 | | |
Reinvestment of distributions | | | 106,407 | | | | 2,433,518 | | | | - | | | | - | | |
Shares reacquired | | | (264,322 | ) | | | (6,246,121 | ) | | | (414,990 | ) | | | (8,943,379 | ) | |
Increase | | | 987,441 | | | $ | 23,266,956 | | | | 1,678,875 | | | $ | 36,547,273 | | |
Class Y Shares | |
Shares sold | | | 14,052 | | | $ | 343,789 | | | | 16,627 | | | $ | 366,278 | | |
Reinvestment of distributions | | | 2,347 | | | | 55,830 | | | | - | | | | - | | |
Shares reacquired | | | (4,323 | ) | | | (102,525 | ) | | | (2,700 | ) | | | (58,222 | ) | |
Increase | | | 12,076 | | | $ | 297,094 | | | | 13,927 | | | $ | 308,056 | | |
* Prior year amounts have been reclassified to conform with current presentation.
** Automatic conversion of Class B shares occurs approximately eight years after the initial purchase date.
85
Notes to Financial Statements (unaudited) (continued)
INTERNATIONAL CORE EQUITY FUND
| | Six Months Ended April 30, 2007 (unaudited) | | Year Ended October 31, 2006 | |
Class A Shares* | | Shares | | Amount | | Shares | | Amount | |
Shares sold | | | 10,800,248 | | | $ | 168,780,557 | | | | 27,337,269 | | | $ | 384,363,636 | | |
Converted from Class B** | | | 31,089 | | | | 491,732 | | | | 52,377 | | | | 726,860 | | |
Reinvestment of distributions | | | 2,727,276 | | | | 41,427,369 | | | | 608,580 | | | | 7,917,623 | | |
Shares reacquired | | | (2,960,275 | ) | | | (46,259,522 | ) | | | (4,006,273 | ) | | | (56,440,276 | ) | |
Increase | | | 10,598,338 | | | $ | 164,440,136 | | | | 23,991,953 | | | $ | 336,567,843 | | |
Class B Shares* | |
Shares sold | | | 848,383 | | | $ | 13,053,891 | | | | 2,369,109 | | | $ | 32,953,939 | | |
Reinvestment of distributions | | | 186,069 | | | | 2,789,168 | | | | 38,906 | | | | 501,508 | | |
Shares reacquired | | | (225,430 | ) | | | (3,448,482 | ) | | | (380,258 | ) | | | (5,334,274 | ) | |
Converted to Class A** | | | (31,542 | ) | | | (491,732 | ) | | | (53,003 | ) | | | (726,860 | ) | |
Increase | | | 777,480 | | | $ | 11,902,845 | | | | 1,974,754 | | | $ | 27,394,313 | | |
Class C Shares | |
Shares sold | | | 2,142,417 | | | $ | 33,010,045 | | | | 6,285,989 | | | $ | 87,286,138 | | |
Reinvestment of distributions | | | 439,150 | | | | 6,582,953 | | | | 91,138 | | | | 1,174,766 | | |
Shares reacquired | | | (654,411 | ) | | | (10,054,632 | ) | | | (764,098 | ) | | | (10,619,540 | ) | |
Increase | | | 1,927,156 | | | $ | 29,538,366 | | | | 5,613,029 | | | $ | 77,841,364 | | |
Class P Shares | |
Shares sold | | | 2,998 | | | $ | 47,439 | | | | 3,102 | | | $ | 44,492 | | |
Reinvestment of distributions | | | 361 | | | | 5,474 | | | | 31 | | | | 405 | | |
Shares reacquired | | | (312 | ) | | | (4,791 | ) | | | (47 | ) | | | (658 | ) | |
Increase | | | 3,047 | | | $ | 48,122 | | | | 3,086 | | | $ | 44,239 | | |
Class Y Shares | |
Shares sold | | | 10,548,527 | | | $ | 161,784,272 | | | | 3,689,265 | | | $ | 51,465,235 | | |
Reinvestment of distributions | | | 326,483 | | | | 4,985,394 | | | | 43,625 | | | | 569,738 | | |
Shares reacquired | | | (121,625 | ) | | | (1,917,446 | ) | | | (86,410 | ) | | | (1,217,832 | ) | |
Increase | | | 10,753,385 | | | $ | 164,852,220 | | | | 3,646,480 | | | $ | 50,817,141 | | |
* Prior year amounts have been reclassified to conform with current presentation.
** Automatic conversion of Class B shares occurs approximately eight years after the initial purchase date.
86
Notes to Financial Statements (unaudited) (continued)
INTERNATIONAL OPPORTUNITIES FUND
| | Six Months Ended April 30, 2007 (unaudited) | | Year Ended October 31, 2006 | |
Class A Shares* | | Shares | | Amount | | Shares | | Amount | |
Shares sold | | | 1,567,919 | | | $ | 26,910,699 | | | | 3,848,385 | | | $ | 55,686,203 | | |
Converted from Class B** | | | 67,752 | | | | 1,179,324 | | | | 180,322 | | | | 2,560,187 | | |
Reinvestment of distributions | | | 8,859 | | | | 140,243 | | | | - | | | | - | | |
Shares reacquired | | | (997,105 | ) | | | (17,028,188 | ) | | | (2,015,095 | ) | | | (28,966,407 | ) | |
Increase | | | 647,425 | | | $ | 11,202,078 | | | | 2,013,612 | | | $ | 29,279,983 | | |
Class B Shares* | |
Shares sold | | | 320,078 | | | $ | 5,284,829 | | | | 895,693 | | | $ | 12,529,643 | | |
Shares reacquired | | | (298,508 | ) | | | (4,919,097 | ) | | | (623,822 | ) | | | (8,764,350 | ) | |
Converted to Class A** | | | (70,480 | ) | | | (1,179,324 | ) | | | (186,849 | ) | | | (2,560,187 | ) | |
Increase (decrease) | | | (48,910 | ) | | $ | (813,592 | ) | | | 85,022 | | | $ | 1,205,106 | | |
Class C Shares | |
Shares sold | | | 437,926 | | | $ | 7,236,100 | | | | 942,658 | | | $ | 13,190,891 | | |
Reinvestment of distributions | | | 5 | | | | 81 | | | | | | | | | | |
Shares reacquired | | | (220,280 | ) | | | (3,590,371 | ) | | | (431,329 | ) | | | (5,946,269 | ) | |
Increase | | | 217,651 | | | $ | 3,645,810 | | | | 511,329 | | | $ | 7,244,622 | | |
Class P Shares | |
Shares sold | | | 16,568 | | | $ | 284,559 | | | | 101,896 | | | $ | 1,528,988 | | |
Reinvestment of distributions | | | 173 | | | | 2,764 | | | | - | | | | - | | |
Shares reacquired | | | (17,671 | ) | | | (299,047 | ) | | | (8,449 | ) | | | (116,984 | ) | |
Increase (decrease) | | | (930 | ) | | $ | (11,724 | ) | | | 93,447 | | | $ | 1,412,004 | | |
Class Y Shares | |
Shares sold | | | 1,908,890 | | | $ | 33,507,654 | | | | 4,097,067 | | | $ | 61,957,965 | | |
Reinvestment of distributions | | | 36,322 | | | | 586,968 | | | | - | | | | - | | |
Shares reacquired | | | (14,771 | ) | | | (259,196 | ) | | | (335,417 | ) | | | (4,912,329 | ) | |
Increase | | | 1,930,441 | | | $ | 33,835,426 | | | | 3,761,650 | | | $ | 57,045,636 | | |
* Prior year amounts have been reclassified to conform with current presentation.
** Automatic conversion of Class B shares occurs approximately eight years after the initial purchase date.
87
Notes to Financial Statements (unaudited) (continued)
LARGE CAP VALUE FUND
| | Six Months Ended April 30, 2007 (unaudited) | | Year Ended October 31, 2006 | |
Class A Shares* | | Shares | | Amount | | Shares | | Amount | |
Shares sold | | | 341,348 | | | $ | 4,834,455 | | | | 551,597 | | | $ | 7,329,343 | | |
Converted from Class B** | | | 3,291 | | | | 46,915 | | | | 8,067 | | | | 103,442 | | |
Reinvestment of distributions | | | 51,019 | | | | 702,022 | | | | 34,254 | | | | 427,832 | | |
Shares reacquired | | | (144,875 | ) | | | (2,058,721 | ) | | | (225,895 | ) | | | (2,986,988 | ) | |
Increase | | | 250,783 | | | $ | 3,524,671 | | | | 368,023 | | | $ | 4,873,629 | | |
Class B Shares* | |
Shares sold | | | 55,142 | | | $ | 771,373 | | | | 107,056 | | | $ | 1,398,011 | | |
Reinvestment of distributions | | | 5,841 | | | | 79,380 | | | | 3,090 | | | | 38,191 | | |
Shares reacquired | | | (19,378 | ) | | | (268,057 | ) | | | (22,664 | ) | | | (299,212 | ) | |
Converted to Class A** | | | (3,338 | ) | | | (46,915 | ) | | | (8,174 | ) | | | (103,442 | ) | |
Increase | | | 38,267 | | | $ | 535,781 | | | | 79,308 | | | $ | 1,033,548 | | |
Class C Shares | |
Shares sold | | | 123,509 | | | $ | 1,726,937 | | | | 143,287 | | | $ | 1,862,312 | | |
Reinvestment of distributions | | | 8,451 | | | | 114,857 | | | | 5,552 | | | | 68,625 | | |
Shares reacquired | | | (36,970 | ) | | | (513,054 | ) | | | (66,790 | ) | | | (857,095 | ) | |
Increase | | | 94,990 | | | $ | 1,328,740 | | | | 82,049 | | | $ | 1,073,842 | | |
Class P Shares | |
Shares sold | | | 3 | | | $ | 50 | | | | - | | | | - | | |
Reinvestment of distributions | | | 37 | | | | 504 | | | | 32 | | | $ | 405 | | |
Increase | | | 40 | | | $ | 554 | | | | 32 | | | $ | 405 | | |
Class Y Shares | |
Shares sold | | | 14,312 | | | $ | 205,235 | | | | 743,022 | | | $ | 9,633,684 | | |
Reinvestment of distributions | | | 60,837 | | | | 840,158 | | | | 51,343 | | | | 642,815 | | |
Shares reacquired | | | (296,104 | ) | | | (4,188,543 | ) | | | (254,376 | ) | | | (3,456,282 | ) | |
Increase (decrease) | | | (220,955 | ) | | $ | (3,143,150 | ) | | | 539,989 | | | $ | 6,820,217 | | |
* Prior year amounts have been reclassified to conform with current presentation.
** Automatic conversion of Class B shares occurs approximately eight years after the initial purchase date.
88
Notes to Financial Statements (unaudited) (concluded)
VALUE OPPORTUNITIES FUND
| | Six Months Ended April 30, 2007 (unaudited) | | Year Ended October 31, 2006*** | |
Class A Shares* | | Shares | | Amount | | Shares | | Amount | |
Shares sold | | | 4,153,111 | | | $ | 52,946,947 | | | | 5,099,782 | | | $ | 58,822,938 | | |
Converted from Class B** | | | 11,057 | | | | 142,887 | | | | 19 | | | | 228 | | |
Reinvestment of distributions | | | 137,290 | | | | 1,701,024 | | | | - | | | | - | | |
Shares reacquired | | | (943,927 | ) | | | (11,902,789 | ) | | | (334,424 | ) | | | (3,950,610 | ) | |
Increase | | | 3,357,531 | | | $ | 42,888,069 | | | | 4,765,377 | | | $ | 54,872,556 | | |
Class B Shares* | |
Shares sold | | | 421,137 | | | $ | 5,369,952 | | | | 457,924 | | | $ | 5,312,712 | | |
Reinvestment of distributions | | | 11,238 | | | | 138,450 | | | | - | | | | - | | |
Shares reacquired | | | (32,664 | ) | | | (412,673 | ) | | | (18,051 | ) | | | (211,513 | ) | |
Converted to Class A** | | | (11,143 | ) | | | (142,887 | ) | | | (19 | ) | | | (228 | ) | |
Increase | | | 388,568 | | | $ | 4,952,842 | | | | 439,854 | | | $ | 5,100,971 | | |
Class C Shares | |
Shares sold | | | 1,514,456 | | | $ | 19,256,907 | | | | 1,224,624 | | | $ | 14,315,903 | | |
Reinvestment of distributions | | | 28,762 | | | | 354,353 | | | | - | | | | - | | |
Shares reacquired | | | (137,126 | ) | | | (1,726,189 | ) | | | (23,922 | ) | | | (278,321 | ) | |
Increase | | | 1,406,092 | | | $ | 17,885,071 | | | | 1,200,702 | | | $ | 14,037,582 | | |
Class P Shares | |
Shares sold | | | 185,025 | | | $ | 2,339,144 | | | | 1,000 | | | $ | 10,004 | | |
Reinvestment of distributions | | | 31 | | | | 384 | | | | - | | | | - | | |
Shares reacquired | | | (11,343 | ) | | | (149,260 | ) | | | - | | | | - | | |
Increase | | | 173,713 | | | $ | 2,190,268 | | | | 1,000 | | | $ | 10,004 | | |
Class Y Shares | |
Shares sold | | | 300,712 | | | $ | 3,835,301 | | | | 341,589 | | | $ | 3,821,562 | | |
Reinvestment of distributions | | | 10,921 | | | | 135,641 | | | | - | | | | - | | |
Shares reacquired | | | (32,681 | ) | | | (406,514 | ) | | | (73,378 | ) | | | (809,822 | ) | |
Increase | | | 278,952 | | | $ | 3,564,428 | | | | 268,211 | | | $ | 3,011,740 | | |
* Prior year amounts have been reclassified to conform with current presentation.
** Automatic conversion of Class B shares occurs approximately eight years after the initial purchase date.
*** For the period December 20, 2006 (commencement of investment operations) to October 31, 2006.
12. RECENT ACCOUNTING PRONOUNCEMENTS
In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position must meet before being recognized in the financial statements. The Fund will adopt FIN 48 no later than April 30, 2008 and the impact to the Fund's financial statements, if any, is currently being assessed.
In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
89
Underlying Fund Information (unaudited)
Alpha Strategy Fund invests in other funds ("Underlying Funds") managed by Lord Abbett. As of April 30, 2007, 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 Y | | | 24.54 | % | |
Lord Abbett Securities Trust – Lord Abbett International Opportunities Fund – Class Y | | | 49.72 | % | |
Lord Abbett Securities Trust – Lord Abbett Micro Cap Growth Fund – Class Y | | | 0.97 | % | |
Lord Abbett Securities Trust – Lord Abbett Micro Cap Value Fund – Class Y | | | 1.00 | % | |
Lord Abbett Research Fund, Inc. – Lord Abbett Small Cap Value Fund – Class Y | | | 23.77 | % | |
The Ten Largest Holdings and the Holdings by Sector, as of April 30, 2007, 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 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 the 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 800-821-5129.
Lord Abbett Developing Growth Fund, Inc.
Ten Largest Holdings | | % of Investments | |
SunPower Corp. | | | 1.68 | % | |
aQuantive, Inc. | | | 1.55 | % | |
Strayer Education, Inc. | | | 1.54 | % | |
Priceline.com, Inc. | | | 1.45 | % | |
Kyphon Inc. | | | 1.38 | % | |
Zumiez Inc. | | | 1.37 | % | |
Hologic, Inc. | | | 1.36 | % | |
BE Aerospace, Inc. | | | 1.35 | % | |
Dick's Sporting Goods, Inc. | | | 1.34 | % | |
NETGEAR, Inc. | | | 1.31 | % | |
Holdings by Sector | | % of Investments | |
Auto & Transportation | | | 1.58 | % | |
Consumer Discretionary | | | 31.45 | % | |
Financial Services | | | 10.23 | % | |
Healthcare | | | 16.68 | % | |
Materials & Processing | | | 4.76 | % | |
Other Energy | | | 6.15 | % | |
Producer Durables | | | 5.55 | % | |
Short-Term Investment | | | 3.24 | % | |
Technology | | | 19.34 | % | |
Utilities | | | 1.02 | % | |
Total | | | 100.00 | % | |
90
Underlying Fund Information (unaudited) (continued)
Lord Abbett Securities Trust – Lord Abbett International Opportunities Fund
Ten Largest Holdings | | % of Investments | |
BlueBay Asset Management | | | 2.94 | % | |
Neopost S.A. | | | 2.34 | % | |
EganaGoldpfeil (Holdings) Ltd. | | | 2.27 | % | |
Fresenius Medical Care AG & Co. | | | 1.95 | % | |
Arques Industries AG | | | 1.90 | % | |
Symrise GmbH & Co. AG | | | 1.87 | % | |
Burberry Group plc | | | 1.78 | % | |
Intertek Group plc | | | 1.77 | % | |
Wavin N.V. | | | 1.73 | % | |
Songa Offshore ASA | | | 1.72 | % | |
Holdings by Sector | | % of Investments | |
Basic Materials | | | 9.97 | % | |
Consumer Cyclicals | | | 14.61 | % | |
Consumer Non-Cyclicals | | | 5.81 | % | |
Diversified Financials | | | 7.75 | % | |
Energy | | | 6.08 | % | |
Healthcare | | | 4.06 | % | |
Industrial Goods & Services | | | 19.60 | % | |
Non-Property Financials | | | 11.87 | % | |
Property & Property Services | | | 4.36 | % | |
Short-Term Investment | | | 2.58 | % | |
Technology | | | 7.11 | % | |
Telecommunications | | | 2.08 | % | |
Transportation | | | 3.11 | % | |
Utilities | | | 1.01 | % | |
Total | | | 100.00 | % | |
Lord Abbett Securities Trust – Lord Abbett Micro Cap Growth Fund
Ten Largest Holdings | | % of Investments | |
LJ International Inc. | | | 2.21 | % | |
JA Solar Holdings Co., Ltd. ADR | | | 2.01 | % | |
Phase Foward Inc. | | | 1.87 | % | |
Advanced Analogic Technologies, Inc. | | | 1.80 | % | |
Darwin Professional Underwriters, Inc. | | | 1.75 | % | |
Synaptics Inc. | | | 1.71 | % | |
Systems Xcellence Inc. | | | 1.65 | % | |
Bankrate, Inc. | | | 1.63 | % | |
Heelys Inc. | | | 1.61 | % | |
Spartan Motors, Inc. | | | 1.61 | % | |
91
Underlying Fund Information (unaudited) (continued)
Holdings by Sector | | % of Investments | |
Auto & Transportation | | | 3.02 | % | |
Consumer Discretionary | | | 22.00 | % | |
Financial Services | | | 11.30 | % | |
Healthcare | | | 20.05 | % | |
Materials & Processing | | | 5.36 | % | |
Other Energy | | | 1.67 | % | |
Producer Durables | | | 3.44 | % | |
Short-Term Investment | | | 2.29 | % | |
Technology | | | 30.02 | % | |
Utilities | | | 0.85 | % | |
Total | | | 100.00 | % | |
Lord Abbett Securities Trust – Lord Abbett Micro Cap Value Fund
Ten Largest Holdings | | % of Investments | |
Exponent, Inc. | | | 2.64 | % | |
Radiant Systems, Inc. | | | 2.35 | % | |
Psychemedics Corp. | | | 2.20 | % | |
Applix, Inc. | | | 2.11 | % | |
Monro Muffler Brake, Inc. | | | 2.10 | % | |
Anaren, Inc. | | | 2.09 | % | |
Amerigon Inc. | | | 1.96 | % | |
Portec Rail Products, Inc. | | | 1.94 | % | |
Supertel Hospitality, Inc. | | | 1.92 | % | |
McGrath RentCorp | | | 1.84 | % | |
Holdings by Sector | | % of Investments | |
Auto & Transportation | | | 9.06 | % | |
Consumer Discretionary | | | 15.63 | % | |
Consumer Staples | | | 1.45 | % | |
Financial Services | | | 15.15 | % | |
Healthcare | | | 13.03 | % | |
Materials & Processing | | | 13.13 | % | |
Other Energy | | | 2.61 | % | |
Producer Durables | | | 9.13 | % | |
Short-Term Investment | | | 5.50 | % | |
Technology | | | 13.77 | % | |
Utilities | | | 1.54 | % | |
Total | | | 100.00 | % | |
92
Underlying Fund Information (unaudited) (concluded)
Lord Abbett Research Fund, Inc. – Lord Abbett Small Cap Value Fund
Ten Largest Holdings | | % of Investments | |
Anixter International, Inc. | | | 4.15 | % | |
PNM Resources, Inc. | | | 3.11 | % | |
Quanex Corp. | | | 2.83 | % | |
Curtiss-Wright Corp. | | | 2.71 | % | |
Hexcel Corp. | | | 2.57 | % | |
Shaw Group Inc. (The) | | | 2.41 | % | |
Trinity Industries, Inc. | | | 2.18 | % | |
Black Hills Corp. | | | 2.15 | % | |
Ruby Tuesday, Inc. | | | 1.84 | % | |
Rogers Corp. | | | 1.70 | % | |
Holdings by Sector | | % of Investments | |
Auto & Transportation | | | 5.94 | % | |
Consumer Discretionary | | | 8.42 | % | |
Consumer Staples | | | 1.29 | % | |
Financial Services | | | 13.84 | % | |
Healthcare | | | 4.76 | % | |
Materials & Processing | | | 20.74 | % | |
Other | | | 4.08 | % | |
Other Energy | | | 5.06 | % | |
Producer Durables | | | 7.78 | % | |
Short-Term Investment | | | 5.08 | % | |
Technology | | | 13.64 | % | |
Utilities | | | 9.37 | % | |
Total | | | 100.00 | % | |
93
Supplemental Proxy Information (unaudited)
A meeting of the Funds' shareholders was held on December 18, 2006. The meeting was held for the purpose of approving the election of the following nine (9) Directors:
• E. Thayer Bigelow
• William H.T. Bush
• Robert B. Calhoun, Jr.
• Robert S. Dow
• Daria L. Foster
• Julie A. Hill
• Franklin W. Hobbs
• Thomas J. Neff
• James L.L. Tullis
The results of the proxy solicitation on the preceding matter were as follows:
Matter | | Votes For | | Votes Against | | Votes Withheld | | Abstentions | |
E. Thayer Bigelow | | | 285,429,564.730 | | | | 1,367,690.253 | | | | - | | | | - | | |
William H.T. Bush | | | 285,400,666.651 | | | | 1,396,588.332 | | | | - | | | | - | | |
Robert B. Calhoun, Jr. | | | 285,534,913.987 | | | | 1,262,340.996 | | | | - | | | | - | | |
Robert S. Dow | | | 285,532,522.929 | | | | 1,264,732.054 | | | | - | | | | - | | |
Daria L. Foster | | | 285,558,511.212 | | | | 1,238,743.771 | | | | - | | | | - | | |
Julie A. Hill | | | 285,529,172.258 | | | | 1,268,082.725 | | | | - | | | | - | | |
Franklin W. Hobbs | | | 285,557,121.990 | | | | 1,240,132.993 | | | | - | | | | - | | |
Thomas J. Neff | | | 285,514,729.001 | | | | 1,282,525.982 | | | | - | | | | - | | |
James L.L. Tullis | | | 285,547,881.465 | | | | 1,249,373.518 | | | | - | | | | - | | |
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Approval of Advisory Contracts
At meetings on December 11 and 12, 2006, the Board, including all of the Directors who are not interested persons, considered whether to approve the continuation of the existing management agreement between each of the Funds and Lord Abbett. In addition to the materials the Board had reviewed throughout the course of the year, the Board received materials relating to the management agreement before the meeting and had the opportunity to ask questions and request further information in connection with its consideration. The Board also took into account its familiarity with Lord Abbett gained through its previous meetings and discussions, and the examination of the portfolio management teams conducted by members of the Contracts Committee during the year.
The materials received by the Board as to each Fund included, but were not limited to, (1) information provided by Lipper, Inc. regarding the investment performance of the Fund compared to the investment performance of one or more groups of funds with substantially similar investment objectives (the "performance universe") and to the investment performance of an appropriate securities index (if such an index existed), for various time periods each ending September 30, 2006, (2) information on the effective management fee rates and expense ratios for one or more groups of funds with similar objectives and similar size (the "peer expense group"), (3) sales and redemption information for the Fund, (4) information regarding Lord Abbett's financial condition, (5) an analysis of the relative profitability of the management agreement to Lord Abbett, (6) information regarding the distribution arrangements of the Fund, and (7) information regarding t he personnel and other resources devoted by Lord Abbett to managing the Fund.
The specific considerations for each Fund are set forth below.
All Value Fund
Investment Management Services Generally. The Board considered the investment management services provided by Lord Abbett to the Fund, including investment research, portfolio management, and trading, and Lord Abbett's commitment to compliance with all relevant legal requirements. The Board also observed that Lord Abbett was solely engaged in the investment management business and accordingly did not experience the conflicts of interest resulting from being engaged in other lines of business. The Board noted that Lord Abbett did not use brokerage commissions to purchase third-party research. The Board considered the investment advisory services provided by Lord Abbett to other clients, the fees charged for the services, and the differences in the nature of the services provided to the Fund and other Lord Abbett Funds, on the one hand, and the services provided to other clients, on the other.
Investment Performance and Compliance. The Board reviewed the Fund's investment performance as well as the performance of the performance universe of funds, both in terms of total return and in terms of other statistical measures. The Board observed that the investment performance of the Class A shares of the Fund was in the fourth quintile of its performance universe for the nine-month and one-year periods, in the third quintile for the three-year period, in the second quintile for the five-year period, and in the first quintile for the ten-year period. The Board also observed that the Fund's investment performance was below that of the Lipper Multi-Cap Value Index for the nine-month, one-year, and five-year periods and above that of the Index for the three-year and ten-year periods.
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Lord Abbett's Personnel and Methods. The Board considered the qualifications of the personnel providing investment management services to the Fund, in light of its investment objective and discipline. Among other things, they considered the size, experience, and turnover rates of Lord Abbett's investment management staff, Lord Abbett's investment methodology and philosophy, and Lord Abbett's approach to recruiting, training, and retaining investment management personnel. The Board determined that Lord Abbett had the expertise and resources to manage the Fund effectively.
Nature and Quality of Other Services. The Board considered the nature, quality, costs, and extent of compliance, administrative, and other services performed by Lord Abbett and Lord Abbett Distributor and the nature and extent of Lord Abbett's supervision of third party service providers, including the Fund's transfer agent and custodian.
Expenses. The Board considered the expense ratio of the Fund and the expense ratios of the peer expense groups. It also considered the amount and nature of the fees paid by shareholders. The Board observed that the contractual and actual management and administrative services fees were approximately six basis points below the median of the peer group. The Board also observed that the total expense ratio of Class A was approximately four basis points below the median of the peer group, the total expense ratios of Class B and Class C were approximately five basis points below the median of the peer group, the total expense ratio of Class P was approximately thirteen basis points below the median of the peer group, and the total expense ratio of Class Y was approximately three basis points below the median of the peer group.
Profitability. The Board considered the level of Lord Abbett's profits in managing the Fund, including a review of Lord Abbett's methodology for allocating its costs to its management of the Fund. The Board concluded that the allocation methodology had a reasonable basis and was appropriate. It considered the profits realized by Lord Abbett in connection with the operation of the Fund and whether the amount of profit was fair for the management of the Fund. The Board also considered the profits realized from other businesses of Lord Abbett, which may benefit from or be related to the Fund's business. The Board considered Lord Abbett's profit margins in comparison with available industry data, both accounting for and ignoring marketing and distribution expenses, and how those profit margins could affect Lord Abbett's ability to recruit and retain investment personn el. The Board recognized that Lord Abbett's profitability was a factor in enabling it to attract and retain qualified investment management personnel to provide services to the Fund. The Board noted that Lord Abbett's profitability had increased in recent years, in part due to an increase in assets under management, but concluded that Lord Abbett's profitability overall and as to the Fund was not excessive.
Economies of Scale. The Board considered whether there had been any economies of scale in managing the Fund, whether the Fund had appropriately benefited from any such economies of scale, and whether there was potential for realization of any further economies of scale. The Board concluded that the existing advisory fee schedule, with its breakpoints in the level of the advisory fee, adequately addressed any economies of scale in managing the Fund.
Other Benefits to Lord Abbett. The Board considered the character and amount of fees paid by the Fund and the Fund's shareholders to Lord Abbett and Lord Abbett Distributor for services other than investment advisory services. The Board also considered the revenues and profitability of Lord Abbett's investment advisory business apart from its mutual fund business, and the intangible benefits enjoyed by Lord Abbett by virtue of its relationship with the Fund. The Board observed that Lord Abbett Distributor receives 12b-1 fees from certain of the Lord Abbett Funds
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as to shares held in accounts for which there is no other broker of record, may retain a portion of the 12b-1 fees from the Funds, and receives a portion of the sales charges on sales and redemptions of some classes of shares. In addition, Lord Abbett accrues certain benefits for its business of providing investment advice to clients other than the Lord Abbett Funds, but that that business also benefits the Funds. The Board also noted that Lord Abbett, as disclosed in the prospectus of the Fund, has entered into revenue sharing arrangements with certain entities that distribute shares of the Funds.
Alternative Arrangements. The Board considered whether, instead of approving continuation of the management agreement, employing one or more alternative arrangements might be in the best interests of the Fund, such as continuing to employ Lord Abbett, but on different terms.
In considering whether to approve the continuation of the management agreement, the Board did not identify any single factor as paramount or controlling. This summary does not discuss in detail all matters considered. After considering all of the relevant factors, the Board unanimously found that continuation of the existing management agreement was in the best interests of the Fund and its shareholders and voted unanimously to approve the continuation of the management agreement.
Alpha Strategy Fund
Investment Management Services Generally. The Board considered the investment management services provided by Lord Abbett to the Fund, including investment research, portfolio management, and trading, and Lord Abbett's commitment to compliance with all relevant legal requirements. The Board also observed that Lord Abbett was solely engaged in the investment management business and accordingly did not experience the conflicts of interest resulting from being engaged in other lines of business. The Board noted that Lord Abbett did not use brokerage commissions to purchase third-party research. The Board considered the investment advisory services provided by Lord Abbett to other clients, the fees charged for the services, and the differences in the nature of the services provided to the Fund and other Lord Abbett Funds, on the one hand, and the services provided to other clients, on the other.
Investment Performance and Compliance. The Board reviewed the Fund's investment performance as well as the performance of the performance universe of funds, both in terms of total return and in terms of other statistical measures. The Board observed that the investment performance of the Class A shares of the Fund was in the second quintile of its performance universe for the nine-month period, in the first quintile for the one-year period, in the fourth quintile for the three-year period, and in the third quintile for the five-year period. The Board also observed that there was no Lipper index that would serve as an appropriate comparison for the Fund.
Lord Abbett's Personnel and Methods. The Board considered the qualifications of the personnel providing investment management services to the Fund, in light of its investment objective and discipline. Among other things, they considered the size, experience, and turnover rates of Lord Abbett's investment management staff, Lord Abbett's investment methodology and philosophy, and Lord Abbett's approach to recruiting, training, and retaining investment management personnel. The Board determined that Lord Abbett had the expertise and resources to manage the Fund effectively.
Nature and Quality of Other Services. The Board considered the nature, quality, costs, and extent of compliance, administrative, and other services performed by Lord Abbett and Lord
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Abbett Distributor and the nature and extent of Lord Abbett's supervision of third party service providers, including the Fund's transfer agent and custodian.
Expenses. The Board considered the management fees and total expenses of the Fund in comparison to two peer groups, the first consisting of funds of funds with the same investment classification and the second consisting of funds with the same investment classification that are not funds of funds. The Board noted that it and Lord Abbett had agreed to a management fee waiver and expense reimbursement agreement for the Fund that would limit the total expense ratio of Class A to not more than 1.50%, the total expense ratios of Class B and Class C to not more than 2.15%, the total expense ratio of Class P to not more than 1.60%, and the total expense ratio of Class Y to not more than 1.15%. The Board observed that the contractual and actual management fees were approximately the same as the median of the first peer group. The Board also observed that the total expense ratio of Class A was approximately twenty basis points below the median of the first peer group, the total expense ratios of Class B and Class C were approximately the same as the median of the peer group, and the total expense ratio of Class Y was the same as the median of the peer group. The Board also noted that although the Fund was authorized to issue Class P shares, there were no outstanding shares of Class P held by public investors and accordingly there were no Lipper expense comparisons for that class. The Board observed that, like other funds in the first peer group, the Fund indirectly pays the management fees and other expenses of the underlying funds in which it invests. The Board also observed that, taking into account these indirect expenses, the total expense ratio of Class A was approximately three basis points below the median of the peer group, the total expense ratios of Class B and Class C were approximately seven basis points below the median of the peer group, and the total expense ra tio of Class Y was approximately nine basis points below the median of the peer group. As to the second peer group, the Board observed that taking into account the indirect expenses, the total expense ratio of Class A was approximately twenty-seven basis points below the median of the peer group, the total expense ratios of Class B and Class C were approximately twenty-nine basis points below the median of the peer group, and the total expense ratio of Class Y was approximately thirteen basis points below the median of the peer group.
Profitability. The Board considered the level of Lord Abbett's profits in managing the Fund, including a review of Lord Abbett's methodology for allocating its costs to its management of the Fund. The Board concluded that the allocation methodology had a reasonable basis and was appropriate. It considered the profits realized by Lord Abbett in connection with the operation of the Fund and whether the amount of profit was fair for the management of the Fund. The Board also considered the profits realized from other businesses of Lord Abbett, which may benefit from or be related to the Fund's business. The Board considered Lord Abbett's profit margins in comparison with available industry data, both accounting for and ignoring marketing and distribution expenses, and how those profit margins could affect Lord Abbett's ability to recruit and retain investment personn el. The Board recognized that Lord Abbett's profitability was a factor in enabling it to attract and retain qualified investment management personnel to provide services to the Fund. The Board noted that Lord Abbett's profitability had increased in recent years, in part due to an increase in assets under management, but concluded that Lord Abbett's profitability overall and as to the Fund was not excessive.
Economies of Scale. The Board considered whether there had been any economies of scale in managing the Fund, whether the Fund had appropriately benefited from any such economies of scale, and whether there was potential for realization of any further economies of scale. The Board concluded that the existing advisory fee schedule, with its breakpoints in the level of the advisory fee, adequately addressed any economies of scale in managing the Fund.
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Other Benefits to Lord Abbett. The Board considered the character and amount of fees paid by the Fund and the Fund's shareholders to Lord Abbett and Lord Abbett Distributor for services other than investment advisory services. The Board also considered the revenues and profitability of Lord Abbett's investment advisory business apart from its mutual fund business, and the intangible benefits enjoyed by Lord Abbett by virtue of its relationship with the Fund. The Board observed that Lord Abbett Distributor receives 12b-1 fees from certain of the Lord Abbett Funds as to shares held in accounts for which there is no other broker of record, may retain a portion of the 12b-1 fees from the Funds, and receives a portion of the sales charges on sales and redemptions of some classes of shares. In addition, Lord Abbett accrues certain benefits for its business of providing investment advice to clients other than the Lord Abbett Funds, but that that business also benefits the Funds. The Board also noted that Lord Abbett, as disclosed in the prospectus of the Fund, has entered into revenue sharing arrangements with certain entities that distribute shares of the Fund.
Alternative Arrangements. The Board considered whether, instead of approving continuation of the management agreement, employing one or more alternative arrangements might be in the best interests of the Fund, such as continuing to employ Lord Abbett, but on different terms.
In considering whether to approve the continuation of the management agreement, the Board did not identify any single factor as paramount or controlling. This summary does not discuss in detail all matters considered. After considering all of the relevant factors, the Board unanimously found that continuation of the existing management agreement was in the best interests of the Fund and its shareholders and voted unanimously to approve the continuation of the management agreement.
International Core Equity Fund
Investment Management Services Generally. The Board considered the investment management services provided by Lord Abbett to the Fund, including investment research, portfolio management, and trading, and Lord Abbett's commitment to compliance with all relevant legal requirements. The Board also observed that Lord Abbett was solely engaged in the investment management business and accordingly did not experience the conflicts of interest resulting from being engaged in other lines of business. The Board noted that Lord Abbett did not use brokerage commissions to purchase third-party research. The Board considered the investment advisory services provided by Lord Abbett to other clients, the fees charged for the services, and the differences in the nature of the services provided to the Fund and other Lord Abbett Funds, on the one hand, and the services provided to other clients, on the other.
Investment Performance and Compliance. The Board reviewed the Fund's investment performance as well as the performance of the performance universe of funds, both in terms of total return and in terms of other statistical measures. The Board observed that the Fund had only been in existence since December 2003 and thus it was not possible to draw definitive conclusions regarding its relative investment performance. The Board further observed that the investment performance of the Class A shares of the Fund was in the fourth quintile of its performance universe for the nine-month period and the period since inception and in the second quintile for the one-year period. The Board also observed that the investment performance was below that of the Lipper International Multi-Cap Core Index for the nine-month period and the period since inception and above that of the In dex for the one-year period.
Lord Abbett's Personnel and Methods. The Board considered the qualifications of the personnel providing investment management services to the Fund, in light of its investment
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objective and discipline. Among other things, they considered the size, experience, and turnover rates of Lord Abbett's investment management staff, Lord Abbett's investment methodology and philosophy, and Lord Abbett's approach to recruiting, training, and retaining investment management personnel. The Board determined that Lord Abbett had the expertise and resources to manage the Fund effectively.
Nature and Quality of Other Services. The Board considered the nature, quality, costs, and extent of compliance, administrative, and other services performed by Lord Abbett and Lord Abbett Distributor and the nature and extent of Lord Abbett's supervision of third party service providers, including the Fund's transfer agent and custodian.
Expenses. The Board considered the expense ratio of the Fund and the expense ratios of the peer expense groups. It also considered the amount and nature of the fees paid by shareholders. The Board observed that the contractual and actual management and administrative services fees were approximately six basis points below the median of the peer group. The Board observed that the total expense ratio of Class A was approximately one basis point above the median of the peer group, the total expense ratios of Class B and Class C were approximately twenty-one basis points below the median of the peer group, the total expense ratio of Class P was approximately ten basis points above the median of the peer group, and the total expense ratio of Class Y was approximately six basis points above the median of the peer group.
Profitability. The Board considered the level of Lord Abbett's profits in managing the Fund, including a review of Lord Abbett's methodology for allocating its costs to its management of the Fund. The Board concluded that the allocation methodology had a reasonable basis and was appropriate. It considered the profits realized by Lord Abbett in connection with the operation of the Fund and whether the amount of profit was fair for the management of the Fund. The Board also considered the profits realized from other businesses of Lord Abbett, which may benefit from or be related to the Fund's business. The Board considered Lord Abbett's profit margins in comparison with available industry data, both accounting for and ignoring marketing and distribution expenses, and how those profit margins could affect Lord Abbett's ability to recruit and retain investment personn el. The Board recognized that Lord Abbett's profitability was a factor in enabling it to attract and retain qualified investment management personnel to provide services to the Fund. The Board noted that Lord Abbett's profitability had increased in recent years, in part due to an increase in assets under management, but concluded that Lord Abbett's profitability overall and as to the Fund was not excessive.
Economies of Scale. The Board considered whether there had been any economies of scale in managing the Fund, whether the Fund had appropriately benefited from any such economies of scale, and whether there was potential for realization of any further economies of scale. The Board concluded that the existing advisory fee schedule, with its breakpoints in the level of the advisory fee, adequately addressed any economies of scale in managing the Fund.
Other Benefits to Lord Abbett. The Board considered the character and amount of fees paid by the Fund and the Fund's shareholders to Lord Abbett and Lord Abbett Distributor for services other than investment advisory services. The Board also considered the revenues and profitability of Lord Abbett's investment advisory business apart from its mutual fund business, and the intangible benefits enjoyed by Lord Abbett by virtue of its relationship with the Fund. The Board observed that Lord Abbett Distributor receives 12b-1 fees from certain of the Lord Abbett Funds as to shares held in accounts for which there is no other broker of record, may retain a portion of the 12b-1 fees from the Funds, and receives a portion of the sales charges on sales and
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redemptions of some classes of shares. In addition, Lord Abbett accrues certain benefits for its business of providing investment advice to clients other than the Lord Abbett Funds, but that that business also benefits the Funds. The Board also noted that Lord Abbett, as disclosed in the prospectus of the Fund, has entered into revenue sharing arrangements with certain entities that distribute shares of the Funds.
Alternative Arrangements. The Board considered whether, instead of approving continuation of the management agreement, employing one or more alternative arrangements might be in the best interests of the Fund, such as continuing to employ Lord Abbett, but on different terms.
In considering whether to approve the continuation of the management agreement, the Board did not identify any single factor as paramount or controlling. This summary does not discuss in detail all matters considered. After considering all of the relevant factors, the Board unanimously found that continuation of the existing management agreement was in the best interests of the Fund and its shareholders and voted unanimously to approve the continuation of the management agreement.
International Opportunities Fund
Investment Management Services Generally. The Board considered the investment management services provided by Lord Abbett to the Fund, including investment research, portfolio management, and trading, and Lord Abbett's commitment to compliance with all relevant legal requirements. The Board also observed that Lord Abbett was solely engaged in the investment management business and accordingly did not experience the conflicts of interest resulting from being engaged in other lines of business. The Board noted that Lord Abbett did not use brokerage commissions to purchase third-party research. The Board considered the investment advisory services provided by Lord Abbett to other clients, the fees charged for the services, and the differences in the nature of the services provided to the Fund and other Lord Abbett Funds, on the one hand, and the services provided to other clients, on the other.
Investment Performance and Compliance. The Board reviewed the Fund's investment performance as well as the performance of the performance universe of funds, both in terms of total return and in terms of other statistical measures. The Board observed observed that the investment performance of the Class A shares of the Fund was in the second quintile of its performance universe for the nine-month and one-year periods, in the fourth quintile for the three-year period, and in the fifth quintile for the five-year period. The Board also observed that the investment performance was above that of the Lipper International Small/Mid-Cap Growth Index for the nine-month and one-year periods, and below that of the Index for the three-year and five-year periods.
Lord Abbett's Personnel and Methods. The Board considered the qualifications of the personnel providing investment management services to the Fund, in light of its investment objective and discipline. Among other things, they considered the size, experience, and turnover rates of Lord Abbett's investment management staff, Lord Abbett's investment methodology and philosophy, and Lord Abbett's approach to recruiting, training, and retaining investment management personnel. The Board also observed that in 2005 Lord Abbett had made significant changes in the personnel managing the Fund, transferring lead portfolio management responsibilities from Ingrid Holm to Todd Jacobson. The Board determined that Lord Abbett had the expertise and resources to manage the Fund effectively.
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Nature and Quality of Other Services. The Board considered the nature, quality, costs, and extent of compliance, administrative, and other services performed by Lord Abbett and Lord Abbett Distributor and the nature and extent of Lord Abbett's supervision of third party service providers, including the Fund's transfer agent and custodian.
Expenses. The Board considered the expense ratio of the Fund and the expense ratios of the peer expense groups. It also considered the amount and nature of the fees paid by shareholders. The Board observed that the contractual and actual management and administrative services fees were approximately eleven basis points below the median of the peer group. The Board observed that the total expense ratio of Class A was approximately twelve basis points below the median of the peer group, the total expense ratios of Class B and Class C were approximately nine basis points below the median of the peer group, the total expense ratio of Class P was approximately the same as the median of the peer group, and the total expense ratio of Class Y was approximately one basis point below the median of the peer group.
Profitability. The Board considered the level of Lord Abbett's profits in managing the Fund, including a review of Lord Abbett's methodology for allocating its costs to its management of the Fund. The Board concluded that the allocation methodology had a reasonable basis and was appropriate. It considered the profits realized by Lord Abbett in connection with the operation of the Fund and whether the amount of profit was fair for the management of the Fund. The Board also considered the profits realized from other businesses of Lord Abbett, which may benefit from or be related to the Fund's business. The Board considered Lord Abbett's profit margins in comparison with available industry data, both accounting for and ignoring marketing and distribution expenses, and how those profit margins could affect Lord Abbett's ability to recruit and retain investment personn el. The Board recognized that Lord Abbett's profitability was a factor in enabling it to attract and retain qualified investment management personnel to provide services to the Fund. The Board noted that Lord Abbett's profitability had increased in recent years, in part due to an increase in assets under management, but concluded that Lord Abbett's profitability overall and as to the Fund was not excessive.
Economies of Scale. The Board considered whether there had been any economies of scale in managing the Fund, whether the Fund had appropriately benefited from any such economies of scale, and whether there was potential for realization of any further economies of scale. The Board concluded that the existing advisory fee schedule, with its breakpoints in the level of the advisory fee, adequately addressed any economies of scale in managing the Fund.
Other Benefits to Lord Abbett. The Board considered the character and amount of fees paid by the Fund and the Fund's shareholders to Lord Abbett and Lord Abbett Distributor for services other than investment advisory services. The Board also considered the revenues and profitability of Lord Abbett's investment advisory business apart from its mutual fund business, and the intangible benefits enjoyed by Lord Abbett by virtue of its relationship with the Fund. The Board observed that Lord Abbett Distributor receives 12b-1 fees from certain of the Lord Abbett Funds as to shares held in accounts for which there is no other broker of record, may retain a portion of the 12b-1 fees from the Funds, and receives a portion of the sales charges on sales and redemptions of some classes of shares. In addition, Lord Abbett accrues certain benefits for its business of providing investment advice to clients other than the Lord Abbett Funds, but that that business also benefits the Funds. The Board also noted that Lord Abbett, as disclosed in the prospectus of the Fund, has entered into revenue sharing arrangements with certain entities that distribute shares of the Fund.
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Alternative Arrangements. The Board considered whether, instead of approving continuation of the management agreement, employing one or more alternative arrangements might be in the best interests of the Fund, such as continuing to employ Lord Abbett, but on different terms.
In considering whether to approve the continuation of the management agreement, the Board did not identify any single factor as paramount or controlling. This summary does not discuss in detail all matters considered. After considering all of the relevant factors, the Board unanimously found that continuation of the existing management agreement was in the best interests of the Fund and its shareholders and voted unanimously to approve the continuation of the management agreement.
Large Cap Value Fund
Investment Management Services Generally. The Board considered the investment management services provided by Lord Abbett to the Fund, including investment research, portfolio management, and trading, and Lord Abbett's commitment to compliance with all relevant legal requirements. The Board also observed that Lord Abbett was solely engaged in the investment management business and accordingly did not experience the conflicts of interest resulting from being engaged in other lines of business. The Board noted that Lord Abbett did not use brokerage commissions to purchase third-party research. The Board considered the investment advisory services provided by Lord Abbett to other clients, the fees charged for the services, and the differences in the nature of the services provided to the Fund and other Lord Abbett Funds, on the one hand, and the services provided to other clients, on the other.
Investment Performance and Compliance. The Board reviewed the Fund's investment performance as well as the performance of the performance universe of funds, both in terms of total return and in terms of other statistical measures. The Board observed that the investment performance of the Class A shares of the Fund was in the second quintile of its performance universe for the nine-month and one-year periods and in the fourth quintile for the three-year period. The Board also observed that the investment performance was above that of the Lipper Large-Cap Value Index for the nine-month and one-year periods and below that of the Index for the three-year period. The Board also noted that because the Fund did not have five or more years of investment operations, it was difficult to draw definitive conclusions regarding its investment performance.
Lord Abbett's Personnel and Methods. The Board considered the qualifications of the personnel providing investment management services to the Fund, in light of its investment objective and discipline. Among other things, they considered the size, experience, and turnover rates of Lord Abbett's investment management staff, Lord Abbett's investment methodology and philosophy, and Lord Abbett's approach to recruiting, training, and retaining investment management personnel. The Board determined that Lord Abbett had the expertise and resources to manage the Fund effectively.
Nature and Quality of Other Services. The Board considered the nature, quality, costs, and extent of compliance, administrative, and other services performed by Lord Abbett and Lord Abbett Distributor and the nature and extent of Lord Abbett's supervision of third party service providers, including the Fund's transfer agent and custodian.
Expenses. The Board considered the expense ratio of the Fund and the expense ratios of the peer expense groups. It also considered the amount and nature of the fees paid by shareholders. The Board observed that, since the Fund's inception, Lord Abbett had agreed to an expense
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reimbursement agreement that limited the Fund's total expense ratio of Class A to not more than 0.95%, the total expense ratios of Class B and Class C to not more than 1.60%, the total expense ratio of Class P to not more than 1.05%, and the total expense ratio of Class Y to not more than 0.60%, and that the Board and Lord Abbett had agreed to a new expense reimbursement agreement with the same terms. The Board also observed that the contractual and actual management and administrative services fees were approximately eighteen basis points below the median of the peer group. The Board observed that the total expense ratio of Class A was approximately twenty-three basis points below the median of the peer group, the total expense ratios of Class B and Class C were approximately thirty-two basis points below the median of the peer group, the total expense ratio of Class P was approximately seven basis points below the median of the peer group, and the total expense ratio of Class Y was approximately twenty-five basis points below the median of the peer group.
Profitability. The Board considered the level of Lord Abbett's profits in managing the Fund, including a review of Lord Abbett's methodology for allocating its costs to its management of the Fund. The Board concluded that the allocation methodology had a reasonable basis and was appropriate. It considered the profits realized by Lord Abbett in connection with the operation of the Fund and whether the amount of profit was fair for the management of the Fund. The Board also considered the profits realized from other businesses of Lord Abbett, which may benefit from or be related to the Fund's business. The Board considered Lord Abbett's profit margins in comparison with available industry data, both accounting for and ignoring marketing and distribution expenses, and how those profit margins could affect Lord Abbett's ability to recruit and retain investment personn el. The Board recognized that Lord Abbett's profitability was a factor in enabling it to attract and retain qualified investment management personnel to provide services to the Fund. The Board noted that Lord Abbett's profitability had increased in recent years, in part due to an increase in assets under management, but concluded that Lord Abbett's profitability overall and as to the Fund was not excessive.
Economies of Scale. The Board considered whether there had been any economies of scale in managing the Fund, whether the Fund had appropriately benefited from any such economies of scale, and whether there was potential for realization of any further economies of scale. The Board concluded that the existing advisory fee schedule, with its breakpoints in the level of the advisory fee, adequately addressed any economies of scale in managing the Fund.
Other Benefits to Lord Abbett. The Board considered the character and amount of fees paid by the Fund and the Fund's shareholders to Lord Abbett and Lord Abbett Distributor for services other than investment advisory services. The Board also considered the revenues and profitability of Lord Abbett's investment advisory business apart from its mutual fund business, and the intangible benefits enjoyed by Lord Abbett by virtue of its relationship with the Fund. The Board observed that Lord Abbett Distributor receives 12b-1 fees from certain of the Lord Abbett Funds as to shares held in accounts for which there is no other broker of record, may retain a portion of the 12b-1 fees from the Funds, and receives a portion of the sales charges on sales and redemptions of some classes of shares. In addition, Lord Abbett accrues certain benefits for its business of providing investment advice to clients other than the Lord Abbett Funds, but that that business also benefits the Funds. The Board also noted that Lord Abbett, as disclosed in the prospectus of the Fund, has entered into revenue sharing arrangements with certain entities that distribute shares of the Funds.
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Alternative Arrangements. The Board considered whether, instead of approving continuation of the management agreement, employing one or more alternative arrangements might be in the best interests of the Fund, such as continuing to employ Lord Abbett, but on different terms.
In considering whether to approve the continuation of the management agreement, the Board did not identify any single factor as paramount or controlling. This summary does not discuss in detail all matters considered. After considering all of the relevant factors, the Board unanimously found that continuation of the existing management agreement was in the best interests of the Fund and its shareholders and voted unanimously to approve the continuation of the management agreement.
Value Opportunities Fund
Investment Management Services Generally. The Board considered the investment management services provided by Lord Abbett to the Fund, including investment research, portfolio management, and trading, and Lord Abbett's commitment to compliance with all relevant legal requirements. The Board also observed that Lord Abbett was solely engaged in the investment management business and accordingly did not experience the conflicts of interest resulting from being engaged in other lines of business. The Board noted that Lord Abbett did not use brokerage commissions to purchase third-party research. The Board considered the investment advisory services provided by Lord Abbett to other clients, the fees charged for the services, and the differences in the nature of the services provided to the Fund and other Lord Abbett Funds, on the one hand, and the services provided to other clients, on the other.
Investment Performance and Compliance. The Board reviewed the Fund's investment performance as well as the performance of the performance universe of funds, both in terms of total return and in terms of other statistical measures. considered the investment performance of the Fund in relation to two different performance universes, the first consisting of mid-cap value funds and the second consisting of mid-cap core funds. The Board observed that the Fund had commenced investment operations in December 2005 and accordingly it was not possible to draw conclusions regarding its investment performance. The Board observed that the investment performance of the Class A shares of the Fund was in the first quintile of both performance universes and also above that of the Lipper Mid-Cap Value Index and the Lipper Mid-Cap Core Index for the nine-month period since inception .
Lord Abbett's Personnel and Methods. The Board considered the qualifications of the personnel providing investment management services to the Fund, in light of its investment objective and discipline. Among other things, they considered the size, experience, and turnover rates of Lord Abbett's investment management staff, Lord Abbett's investment methodology and philosophy, and Lord Abbett's approach to recruiting, training, and retaining investment management personnel. The Board determined that Lord Abbett had the expertise and resources to manage the Fund effectively.
Nature and Quality of Other Services. The Board considered the nature, quality, costs, and extent of compliance, administrative, and other services performed by Lord Abbett and Lord Abbett Distributor and the nature and extent of Lord Abbett's supervision of third party service providers, including the Fund's transfer agent and custodian.
Expenses. The Board considered the management fees and total expenses of the Fund in comparison to two peer groups, the first consisting of mid-cap value funds and the second consisting of mid-cap core funds. The Board observed Lord Abbett had agreed to an expense
105
reimbursement agreement that limited the total expense ratio of Class A to not more than 1.30%, the total expense ratios of Class B and Class C to not more than 1.95%, the total expense ratio of Class P to not more than 1.40%, and the total expense ratio of Class Y to not more than 0.95%, and that the Board and Lord Abbett had agreed to a new expense reimbursement agreement with the same terms. As to the first peer group, the Board observed that the contractual and actual management and administrative services fees were approximately two basis points below the median of the peer group. The Board observed that the total expense ratio of Class A was approximately the same as the median of the peer group, the total expense ratios of Class B and Class C were approximately eight basis points below the median of the peer group, the total expense ratio of Class P was approximately three basis points above the median of the peer group, and the total expense ratio of Class Y was approximately two basis points below the median of the peer group. As to the second peer group, the Board observed that the contractual and actual management and administrative services fees were approximately two basis points above the median of the peer group. The Board observed that the total expense ratio of Class A was approximately nine basis points below the median of the peer group, the total expense ratios of Class B and Class C were approximately twelve basis points below the median of the peer group, and total expense ratio of Class Y was approximately twenty basis points below the median of the peer group.
Profitability. The Board considered the level of Lord Abbett's profits in managing the Fund, including a review of Lord Abbett's methodology for allocating its costs to its management of the Fund. The Board concluded that the allocation methodology had a reasonable basis and was appropriate. It considered the profits realized by Lord Abbett in connection with the operation of the Fund and whether the amount of profit was fair for the management of the Fund. The Board also considered the profits realized from other businesses of Lord Abbett, which may benefit from or be related to the Fund's business. The Board considered Lord Abbett's profit margins in comparison with available industry data, both accounting for and ignoring marketing and distribution expenses, and how those profit margins could affect Lord Abbett's ability to recruit and retain investment personn el. The Board recognized that Lord Abbett's profitability was a factor in enabling it to attract and retain qualified investment management personnel to provide services to the Fund. The Board noted that Lord Abbett's profitability had increased in recent years, in part due to an increase in assets under management, but concluded that Lord Abbett's profitability overall and as to the Fund was not excessive.
Economies of Scale. The Board considered whether there had been any economies of scale in managing the Fund, whether the Fund had appropriately benefited from any such economies of scale, and whether there was potential for realization of any further economies of scale. The Board concluded that the existing advisory fee schedule, with its breakpoints in the level of the advisory fee, adequately addressed any economies of scale in managing the Fund.
Other Benefits to Lord Abbett. The Board considered the character and amount of fees paid by the Fund and the Fund's shareholders to Lord Abbett and Lord Abbett Distributor for services other than investment advisory services. The Board also considered the revenues and profitability of Lord Abbett's investment advisory business apart from its mutual fund business, and the intangible benefits enjoyed by Lord Abbett by virtue of its relationship with the Fund. The Board observed that Lord Abbett Distributor receives 12b-1 fees from certain of the Lord Abbett Funds as to shares held in accounts for which there is no other broker of record, may retain a portion of the 12b-1 fees from the Funds, and receives a portion of the sales charges on sales and redemptions of some classes of shares. In addition, Lord Abbett accrues certain benefits for its business of providing investment advice to clients other than the Lord Abbett Funds, but that
106
that business also benefits the Funds. The Board also noted that Lord Abbett, as disclosed in the prospectus of the Fund, has entered into revenue sharing arrangements with certain entities that distribute shares of the Fund.
Alternative Arrangements. The Board considered whether, instead of approving continuation of the management agreement, employing one or more alternative arrangements might be in the best interests of the Fund, such as continuing to employ Lord Abbett, but on different terms.
In considering whether to approve the continuation of the management agreement, the Board did not identify any single factor as paramount or controlling. This summary does not discuss in detail all matters considered. After considering all of the relevant factors, the Board unanimously found that continuation of the existing management agreement was in the best interests of the Fund and its shareholders and voted unanimously to approve the continuation of the management agreement.
107
Householding
The Trust has adopted a policy that allows it to send only one copy of the Funds' Prospectuses, proxy material, annual report and semiannual report to certain shareholders residing at the same "household." This reduces Trust expenses, which benefits you and other shareholders. If you need additional copies or do not want your mailings to be "householded," please call Lord Abbett at 800-821-5129 or send a written request with your name, the name of your fund or funds and your account number or numbers to Lord Abbett Family of Funds, P.O. Box 219336, Kansas City, MO 64121.
Proxy Voting Policies, Procedures and Record
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) or 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 800-821-5129. You can also obtain copies of Form N-Q by (i) 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); (ii) sending your request and duplicating fee to the SEC's Public Reference Room, Washington, DC 20549-0102; or (iii) sending your request electronically to publicinfo@sec.gov.
108
LST-3-0407
(06/07)
Lord Abbett Securities Trust
Lord Abbett All Value Fund
Lord Abbett Alpha Strategy Fund
Lord Abbett International Core Equity Fund
Lord Abbett International Opportunities Fund
Lord Abbett Large-Cap Value 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.
2007
LORD ABBETT
SEMIANNUAL REPORT
Lord Abbett
Micro Cap Growth Fund
Micro Cap Value Fund
For the six-month period ended April 30, 2007
Lord Abbett Micro Cap Growth Fund
and Micro Cap Value Fund Semiannual Report
For the six-month period ended April 30, 2007
Dear Shareholders: We are pleased to provide you with this overview of Lord Abbett Micro Cap Growth Fund's and Lord Abbett Micro Cap Value Fund's performance for the six-month period ended April 30, 2007. On this page and the following pages, we discuss the major factors that influenced 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 by the Funds' portfolio managers.
General information about Lord Abbett mutual funds, as well as in-depth discussions of market trends and investment strategies, is also provided in Lord Abbett Insights, a newsletter accompanying your quarterly account statements. We also encourage you to call Lord Abbett at 888-522-2388 and speak to one of our professionals if you would like more information.
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,
Robert S. Dow
Chairman
From left to right: Robert S. Dow, Director and Chairman of the Lord Abbett Funds; E. Thayer Bigelow, Independent Lead Director of the Lord Abbett Funds; and Daria L. Foster, Director and President of the Lord Abbett Funds.
Q: What were the overall market conditions during the six-month period ended April 30, 2007?
A: Although there was a brief, but sharp, sell-off in late February, equity returns were positive for the six-month period ended April 30, 2007. Share prices rose in excess of 7.4% (on a total return basis relative to the S&P headline indexes*).
Inflation, after trending lower in late 2006, rose in the first few months of 2007. Nevertheless, the Federal Reserve Board (the Fed) held interest rates steady, while the 10-year Treasury yield fluctuated between 4.4% and 4.9%.
Within the equity market, the performance of companies with mega-capitalizations (defined by the S&P 100®
1
Index1) trailed that of their smaller capitalized peers, with mid caps, in particular, leading the pack; however, this trend of small cap outperformance did not extend to the micro cap segment of the equity market. Broadly speaking, the value style of investing outperformed the growth style; however, the performance gap narrowed in the February–April period.
In the S&P Composite 1500® Index,2 the top performing sectors were materials, utilities, and energy. Rising material prices sent the materials sector soaring approximately 20% during the six-month period ended April 30, 2007. The worst performing sectors were financials and consumer discretionary. Financials, especially banks and money lending centers, lagged, as net interest margin (the difference between interest rates paid on deposits and those received on loans) continued to be problematic.
Lord Abbett Micro Cap Growth Fund
Q: How did the Micro Cap Growth Fund perform during the six-month period ended April 30, 2007?
A: The Fund returned 19.4%, reflecting performance at the net asset value (NAV) of Class A shares with all distributions reinvested, compared to its benchmark, the Russell 2000® Growth Index,3 which returned 7.4% over the same period.
Q: What were the most significant factors affecting performance?
A: The healthcare sector was the greatest contributor to the Fund's performance relative to its benchmark for the six-month period, followed by the materials and processing and the consumer staples sectors.
Among the individual holdings that contributed to the Fund's performance were materials and processing holding Force Protection, Inc. (the Fund's number-one contributor), a maker of vehicles that protect and save lives and property, including mine-protected vehicles used by the military; consumer staples company Jones Soda Co., which manufactures and distributes a variety of soda and juice beverages; technology holdings Omniture, Inc., a provider of online business optimization software to manage online, offline and multi-channel business initiatives, and Blue Coat Systems, Inc., a provider of Web security solutions that increase the protection and control of enterprise Web infrastructures; and utilities holding Eschelon Telecom, Inc., a telecommunications services provider.
Only two sectors detracted from the Fund's relative performance for the period: consumer discretionary and (owing to an underweight position) producer durables.
Among the individual holdings that detracted from the Fund's performance were consumer discretionary holdings PeopleSupport Inc., a provider of business process outsourcing, and Travelzoo Inc., a supplier of online marketing solutions to the travel industry; and technology holdings STEC Inc., a designer of technology solutions that offers products based on dynamic random access memory, static random assess memory, and Flash
2
memory technologies, and RRSat Global Communications Network Ltd., a distributor of video and audio programming by satellite; and healthcare holding Xtent, Inc., a medical device company.
The Fund's portfolio is actively managed and, therefore, its holdings and weightings of a particular issuer or particular sector as a percentage of portfolio assets are subject to change. Sectors may include many industries.
Lord Abbett Micro Cap Value Fund
Q: How did the Micro Cap Value Fund perform during the six-month period ended April 30, 2007?
A: The Fund returned 10.5%, reflecting performance at the net asset value (NAV) of Class A shares with all distributions reinvested, compared to its benchmark, the Russell 2000® Value Index,4 which returned 6.4% over the same period.
Q: What were the most significant factors affecting performance?
A: The producer durables sector was the greatest contributor to the Fund's performance relative to its benchmark for the six-month period, followed by the financial services (in which the Fund was underweight) and the healthcare sectors.
Among the individual holdings that contributed to performance were healthcare holding Molecular Devices Corp. (the Fund's number-one contributor), a bioanalytical measurement systems supplier; producer durables holding Twin Disc, Inc., a provider of heavy duty off-highway power transmission equipment to the marine, energy, heavy equipment, and other markets; consumer discretionary holding Carriage Services, Inc., a U.S. operator of funeral homes and cemeteries; Amerigon Inc., an auto and transportation sector holding that supplies high-technology products for automotive original manufacturers; and materials and processing holding Lydall, Inc., a developer of engineered materials for a variety of applications.
The most significant detractor to the Fund's relative performance was the consumer staples sector (in which the Fund was underweight), followed by the materials and processing sector and the consumer discretionary sector.
Among individual holdings that detracted from the Fund's performance were Ultralife Batteries, Inc. (the Fund's number-one detractor), a manufacturer of a comprehensive line of lithium batteries; Susser Holdings Corp., an operator of convenience stores and distributor of nonrefining motor fuels; Interstate Hotels & Resorts, Inc., an operator of various hotel assets; financial services holding Donegal Group Inc., an insurance holding company offering property and casualty insurance in five states; and healthcare holding Kensey Nash Corp., a manufacturer of a line of absorbable medical devices.
The Fund's portfolio is actively managed and, therefore, its holdings and weightings of a particular issuer or particular sector as a percentage of portfolio assets are subject to change. Sectors may include many industries.
3
A prospectus contains important information about a fund, including its investment objectives, risks, charges, and ongoing expenses, which an investor should carefully consider before investing. To obtain a prospectus for any Lord Abbett mutual fund, please contact your investment professional or Lord Abbett Distributor LLC at 888-522-2388 or visit our Website at www.lordabbett.com. Read the prospectus carefully before investing.
* The S&P U.S. headline indexes include the S&P Composite 1500®, S&P 500®, S&P 500® Equal Weight, S&P Mid Cap®, S&am p;P Small Cap®, and the S&P 100®.
1 The S&P 100® Index is a market capitalization-weighted index made up of 100 major, blue-chip stocks across diverse industry groups.
2 The S&P Composite 1500® Index combines the S&P 500®, S&P MidCap 400®, and S&P Small Cap 600® indexes in an efficient way to create a broad market portfolio representing 90% of U.S. equities.
3 The Russell 2000® Growth Index measures the performance of those Russell 2000® Index 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® Index companies with lower price-to-book ratios and lower forecasted growth values.
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 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 the Funds 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 our Website at 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 additional 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 reimbursements were in place. Without such expense reimbursements, the Funds' returns would have been lower.
The views of each Fund's management and the portfolio holdings described in this report are as of April 30, 2007; these views and portfolio holdings may have changed subsequent to this date, and they do not guarantee the future performance of the markets or the Funds. Information provided in this report should not be considered a recommendation to purchase or sell securities.
A Note about Risk: See Notes to Financial Statements for a discussion of investment risks. For a more detailed discussion of the risks associated with the Funds, please see each Fund's prospectus.
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
Expense Examples
As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including sales charges 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. The Examples are 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 Examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period (November 1, 2006 through April 30, 2007).
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 the Period 11/1/06 – 4/30/07" 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.
5
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. 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† | |
| | 11/1/06 | | 4/30/07 | | 11/1/06 – 4/30/07 | |
Class A | |
Actual | | $ | 1,000.00 | | | $ | 1,194.30 | | | $ | 11.43 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,014.40 | | | $ | 10.49 | | |
Class Y | |
Actual | | $ | 1,000.00 | | | $ | 1,195.20 | | | $ | 10.07 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,015.61 | | | $ | 9.25 | | |
† For each class of the Fund, expenses are equal to the annualized expense ratio for such class (2.10% for Class A, and 1.85% for Class Y) multiplied by the average account value over the period, multiplied by 181/365 (to reflect one-half year period).
Portfolio Holdings Presented by Sector
April 30, 2007
Sector* | | %** | |
Auto & Transportation | | | 3.02 | % | |
Consumer Discretionary | | | 22.00 | % | |
Financial Services | | | 11.30 | % | |
Healthcare | | | 20.05 | % | |
Materials & Processing | | | 5.36 | % | |
Other Energy | | | 1.67 | % | |
Producer Durables | | | 3.44 | % | |
Technology | | | 30.02 | % | |
Utilities | | | 0.85 | % | |
Short-Term Investment | | | 2.29 | % | |
Total | | | 100.00 | % | |
* A sector may comprise several industries.
** Represents percent of total investments.
6
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. 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† | |
| | 11/1/06 | | 4/30/07 | | 11/1/06 – 4/30/07 | |
Class A | |
Actual | | $ | 1,000.00 | | | $ | 1,104.60 | | | $ | 10.96 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,014.40 | | | $ | 10.49 | | |
Class Y | |
Actual | | $ | 1,000.00 | | | $ | 1,106.00 | | | $ | 9.66 | | |
Hypothetical (5% Return Before Expenses) | | $ | 1,000.00 | | | $ | 1,015.64 | | | $ | 9.25 | | |
† For each class of the Fund, expenses are equal to the annualized expense ratio for such class (2.10% for Class A, and 1.85% for Class Y) multiplied by the average account value over the period, multiplied by 181/365 (to reflect one-half year period).
Portfolio Holdings Presented by Sector
April 30, 2007
Sector* | | %** | |
Auto & Transportation | | | 9.06 | % | |
Consumer Discretionary | | | 15.63 | % | |
Consumer Staples | | | 1.45 | % | |
Financial Services | | | 15.15 | % | |
Healthcare | | | 13.03 | % | |
Materials & Processing | | | 13.13 | % | |
Other Energy | | | 2.61 | % | |
Producer Durables | | | 9.13 | % | |
Technology | | | 13.77 | % | |
Utilities | | | 1.54 | % | |
Short-Term Investment | | | 5.50 | % | |
Total | | | 100.00 | % | |
* A sector may comprise several industries.
** Represents percent of total investments.
7
Schedule of Investments (unaudited)
MICRO CAP GROWTH FUND April 30, 2007
Investments | | Shares | | Value (000) | |
COMMON STOCKS 95.67% | |
Air Transportation 1.38% | |
Allegiant Travel Co.* | | | 6,300 | | | $ | 202 | | |
Auto Components 1.58% | |
Spartan Motors, Inc. | | | 8,100 | | | | 231 | | |
Banks 1.12% | |
Pinnacle Financial Partners, Inc.* | | | 5,600 | | | | 164 | | |
Biotechnology Research & Production 2.80% | |
Allos Therapeutics, Inc.* | | | 24,700 | | | | 145 | | |
Array BioPharma Inc.* | | | 8,600 | | | | 120 | | |
Enzon Pharmaceuticals, Inc.* | | | 17,200 | | | | 146 | | |
Total | | | | | | | 411 | | |
Casinos & Gambling 1.09% | |
GameTech International, Inc.* | | | 14,000 | | | | 160 | | |
Communications Technology 3.50% | |
Acme Packet, Inc.* | | | 10,900 | | | | 147 | | |
Oplink Communications, Inc.* | | | 4,000 | | | | 66 | | |
Terremark Worldwide, Inc.* | | | 24,100 | | | | 200 | | |
UCN, Inc.* | | | 24,800 | | | | 100 | | |
Total | | | | | | | 513 | | |
Computer Services, Software & Systems 10.73% | |
Applix, Inc.* | | | 8,500 | | | | 112 | | |
Glu Mobile Inc.* | | | 15,700 | | | | 176 | | |
Internet Capital Group, Inc.* | | | 12,500 | | | | 150 | | |
KANA Software, Inc.* | | | 63,200 | | | | 226 | | |
LivePerson, Inc.* | | | 15,800 | | | | 111 | | |
Omniture, Inc.* | | | 3,800 | | | | 72 | | |
Salary.com, Inc.* | | | 13,400 | | | | 161 | | |
Investments | | Shares | | Value (000) | |
Synchronoss Technologies, Inc.* | | | 8,400 | | | $ | 188 | | |
Taleo Corp. Class A* | | | 13,000 | | | | 198 | | |
Unica Corp.* | | | 14,000 | | | | 178 | | |
Total | | | | | | | 1,572 | | |
Computer Technology 4.22% | |
Advanced Analogic Technologies, Inc.* | | | 31,800 | | | | 258 | | |
Stratasys, Inc.* | | | 2,400 | | | | 114 | | |
Synaptics Inc.* | | | 8,200 | | | | 246 | | |
Total | | | | | | | 618 | | |
Drugs & Pharmaceuticals 1.57% | |
CollaGenex Pharmaceuticals, Inc.* | | | 7,400 | | | | 101 | | |
SuperGen, Inc.* | | | 20,300 | | | | 129 | | |
Total | | | | | | | 230 | | |
Education Services 0.48% | |
Capella Education Co.* | | | 2,000 | | | | 70 | | |
Electrical Equipment & Components 1.53% | |
Color Kinetics Inc.* | | | 5,800 | | | | 118 | | |
Powell Industries, Inc.* | | | 3,400 | | | | 107 | | |
Total | | | | | | | 225 | | |
Electronics 0.73% | |
Daktronics, Inc. | | | 4,700 | | | | 107 | | |
Electronics: Instruments, Gauges & Meters 1.02% | |
FARO Technologies, Inc.* | | | 4,700 | | | | 150 | | |
Electronics: Medical Systems 4.38% | |
Luminex Corp.* | | | 9,300 | | | | 129 | | |
Natus Medical Inc.* | | | 8,300 | | | | 148 | | |
NxStage Medical, Inc.* | | | 16,100 | | | | 213 | | |
Zoll Medical Corp.* | | | 6,300 | | | | 152 | | |
Total | | | | | | | 642 | | |
See Notes to Financial Statements.
8
Schedule of Investments (unaudited) (continued)
MICRO CAP GROWTH FUND April 30, 2007
Investments | | Shares | | Value (000) | |
Electronics: Semiconductors/ Components 4.78% | |
ANADIGICS, Inc.* | | | 19,700 | | | $ | 211 | | |
MIPS Technologies, Inc.* | | | 16,700 | | | | 143 | | |
Monolithic Power Systems, Inc.* | | | 13,900 | | | | 190 | | |
Sipex Corp.* | | | 16,350 | | | | 156 | | |
Total | | | | | | | 700 | | |
Energy: Miscellaneous 0.77% | |
Dawson Geophysical Co.* | | | 2,200 | | | | 113 | | |
Engineering & Contracting Services 0.98% | |
Layne Christensen Co.* | | | 3,800 | | | | 144 | | |
Finance Companies 0.87% | |
NewStar Financial, Inc.* | | | 7,900 | | | | 127 | | |
Finance: Small Loan 1.29% | |
Dollar Financial Corp.* | | | 6,500 | | | | 189 | | |
Financial Data Processing Services & Systems 1.21% | |
ExlService Holdings, Inc.* | | | 8,500 | | | | 177 | | |
Financial Information Services 1.60% | |
Bankrate, Inc.* | | | 5,800 | | | | 234 | | |
Financial: Miscellaneous 0.83% | |
FCStone Group, Inc.* | | | 2,700 | | | | 122 | | |
Health & Personal Care 1.23% | |
Bio-Reference Laboratories, Inc.* | | | 6,700 | | | | 181 | | |
Healthcare Management Services 3.04% | |
HMS Holdings Corp.* | | | 8,000 | | | | 177 | | |
Phase Foward Inc.* | | | 16,900 | | | | 269 | | |
Total | | | | | | | 446 | | |
Insurance: Property-Casualty 1.71% | |
Darwin Professional Underwriters, Inc.* | | | 9,652 | | | | 251 | | |
Investments | | Shares | | Value (000) | |
Jewelry Watches & Gemstones 2.16% | |
LJ International Inc. (Hong Kong)*(a) | | | 32,300 | | | $ | 317 | | |
Leisure Time 0.95% | |
Town Sports International Holdings, Inc.* | | | 6,100 | | | | 139 | | |
Machine Tools 0.81% | |
Hurco Cos. Inc.* | | | 2,700 | | | | 119 | | |
Medical & Dental Instruments & Supplies 6.60% | |
Cambridge Heart, Inc.* | | | 54,700 | | | | 178 | | |
Conceptus, Inc.* | | | 6,700 | | | | 139 | | |
I-Flow Corp.* | | | 8,800 | | | | 136 | | |
Northstar Neuroscience, Inc.* | | | 11,400 | | | | 155 | | |
NuVasive, Inc.* | | | 6,300 | | | | 162 | | |
Volcano Corp.* | | | 9,800 | | | | 198 | | |
Total | | | | | | | 968 | | |
Metal Fabricating 0.83% | |
RBC Bearings Inc.* | | | 3,200 | | | | 122 | | |
Miscellaneous: Technology 0.95% | |
Vocus, Inc.* | | | 6,200 | | | | 139 | | |
Oil & Gas Production 0.86% | |
Kodiak Oil & Gas Corp.* | | | 20,300 | | | | 126 | | |
Packaged Software 1.62% | |
Systems Xcellence Inc. (Canada)*(a) | | | 10,400 | | | | 237 | | |
Restaurants 4.09% | |
Buffalo Wild Wings, Inc.* | | | 3,400 | | | | 222 | | |
Jamba Inc.* | | | 25,400 | | | | 223 | | |
Noble Roman's, Inc.* | | | 29,200 | | | | 155 | | |
Total | | | | | | | 600 | | |
Retail 5.51% | |
Blue Nile, Inc.* | | | 3,400 | | | | 160 | | |
See Notes to Financial Statements.
9
Schedule of Investments (unaudited) (concluded)
MICRO CAP GROWTH FUND April 30, 2007
Investments | | Shares | | Value (000) | |
Retail (continued) | |
Gaiam, Inc.* | | | 13,300 | | | $ | 202 | | |
Shutterfly, Inc.* | | | 13,700 | | | | 222 | | |
Volcom, Inc.* | | | 5,300 | | | | 223 | | |
Total | | | | | | | 807 | | |
Securities Brokerage & Services 2.45% | |
MarketAxess Holdings, Inc.* | | | 9,000 | | | | 147 | | |
Penson Worldwide, Inc.* | | | 3,900 | | | | 105 | | |
Thomas Weisel Partners Group* | | | 5,400 | | | | 107 | | |
Total | | | | | | | 359 | | |
Services: Commercial 4.21% | |
51job, Inc. ADR* | | | 13,600 | | | | 219 | | |
Forrester Research, Inc.* | | | 3,600 | | | | 93 | | |
Knot, Inc. (The)* | | | 3,560 | | | | 76 | | |
Liquidity Services Inc.* | | | 11,000 | | | | 229 | | |
Total | | | | | | | 617 | | |
Semi-Conductors 2.87% | |
JA Solar Holdings Co., Ltd. ADR* | | | 11,800 | | | | 288 | | |
Trina Solar Ltd. ADR* | | | 2,500 | | | | 133 | | |
| | | | | | | 421 | | |
Shoes 1.58% | |
Heelys Inc.* | | | 7,000 | | | | 232 | | |
Steel 3.44% | |
Claymont Steel Holdings, Inc.* | | | 7,000 | | | | 162 | | |
Olympic Steel, Inc. | | | 4,000 | | | | 133 | | |
Universal Stainless & Alloy Products Inc.* | | | 4,700 | | | | 209 | | |
Total | | | | | | | 504 | | |
Utilities-Electrical 0.83% | |
Ocean Power Technologies, Inc.* | | | 8,500 | | | | 122 | | |
Investments | | Shares | | Value (000) | |
Wholesalers 1.47% | |
Houston Wire & Cable Co.* | | | 7,300 | | | $ | 215 | | |
Total Common Stocks (cost $13,304,848) | | | | | 14,023 | | |
| | Principal Amount (000) | | | |
SHORT-TERM INVESTMENT 2.24% | |
Repurchase Agreement | |
Repurchase Agreement dated 4/30/2007, 4.70% due 5/1/2007 with State Street Bank & Trust Co. collateralized by $340,000 of Federal Home Loan Mor tgage Corp. at Zero Coupon due 5/31/2007; value: $338,300; proceeds: $328,152 (cost $328,110) | | $ | 328 | | | | 328 | | |
Total Investments in Securities 97.91% (cost $13,632,958) | | | | | 14,351 | | |
Cash and Other Assets in Excess of Liabilities 2.09% | | | | | 306 | | |
Net Assets 100.00% | | | | $ | 14,657 | | |
ADR American Depositary Receipt.
* Non-income producing security.
(a) Foreign security traded in U.S. dollars.
See Notes to Financial Statements.
10
Schedule of Investments (unaudited)
MICRO CAP VALUE FUND April 30, 2007
Investments | | Shares | | Value (000) | |
COMMON STOCKS 95.61% | |
Aerospace 1.95% | |
Ladish Co., Inc.* | | | 6,795 | | | $ | 276 | | |
LMI Aerospace, Inc.* | | | 18,000 | | | | 350 | | |
Total | | | | | | | 626 | | |
Air Transportation 0.26% | |
Frontier Airlines Holdings* | | | 14,100 | | | | 83 | | |
Auto Parts: After Market 0.63% | |
Keystone Automotive Industries, Inc.* | | | 6,100 | | | | 203 | | |
Auto Parts: Original Equipment 3.24% | |
Amerigon Inc.* | | | 49,600 | | | | 638 | | |
Strattec Security Corp.* | | | 8,500 | | | | 403 | | |
Total | | | | | | | 1,041 | | |
Banks 6.02% | |
CoBiz, Inc. | | | 18,950 | | | | 348 | | |
Columbia Bancorp | | | 12,060 | | | | 249 | | |
Dearborn Bancorp, Inc.* | | | 3,274 | | | | 51 | | |
Franklin Bank Corp.* | | | 10,600 | | | | 165 | | |
Pennsylvania Commerce Bancorp, Inc.* | | | 15,900 | | | | 414 | | |
Southwest Bancorp, Inc. | | | 16,300 | | | | 399 | | |
Umpqua Holdings Corp. | | | 12,372 | | | | 309 | | |
Total | | | | | | | 1,935 | | |
Biotechnology Research & Production 1.25% | |
Kensey Nash Corp.* | | | 15,600 | | | | 401 | | |
Building: Cement 1.63% | |
U.S. Concrete, Inc.* | | | 61,500 | | | | 523 | | |
Chemicals 6.63% | |
Landec Corp.* | | | 24,600 | | | | 313 | | |
NuCo2, Inc.* | | | 19,100 | | | | 475 | | |
Penford Corp. | | | 12,100 | | | | 237 | | |
Quaker Chemical Corp. | | | 22,600 | | | | 517 | | |
Investments | | Shares | | Value (000) | |
Ultralife Batteries, Inc.* | | | 63,000 | | | $ | 591 | | |
Total | | | | | | | 2,133 | | |
Communications Technology 2.12% | |
Anaren, Inc.* | | | 36,000 | | | | 681 | | |
Computer Services, Software & Systems 8.56% | |
Applix, Inc.* | | | 52,100 | | | | 685 | | |
COMSYS IT Partners Inc.* | | | 14,700 | | | | 335 | | |
Mercury Computer Systems, Inc.* | | | 25,462 | | | | 345 | | |
Moldflow Corp.* | | | 33,100 | | | | 505 | | |
SI International, Inc.* | | | 16,000 | | | | 423 | | |
TechTeam Global, Inc.* | | | 34,100 | | | | 459 | | |
Total | | | | | | | 2,752 | | |
Computer Technology 3.25% | |
Radiant Systems, Inc.* | | | 56,900 | | | | 766 | | |
Rimage Corp.* | | | 10,200 | | | | 281 | | |
Total | | | | | | | 1,047 | | |
Construction 0.77% | |
Meadow Valley Corp.* | | | 18,500 | | | | 248 | | |
Consumer Electronics 1.18% | |
LoJack Corp.* | | | 20,700 | | | | 381 | | |
Drug & Grocery Store Chains 1.46% | |
Susser Holdings Corp.* | | | 31,100 | | | | 471 | | |
Electrical Equipment & Components 1.13% | |
AZZ Inc.* | | | 1,600 | | | | 91 | | |
Powell Industries, Inc.* | | | 8,700 | | | | 274 | | |
Total | | | | | | | 365 | | |
Engineering & Contracting Services 1.19% | |
Michael Baker Corp.* | | | 13,000 | | | | 382 | | |
See Notes to Financial Statements.
11
Schedule of Investments (unaudited) (continued)
MICRO CAP VALUE FUND April 30, 2007
Investments | | Shares | | Value (000) | |
Financial: Miscellaneous 1.62% | |
Federal Agricultural Mortgage Corp. Class C | | | 18,990 | | | $ | 520 | | |
Funeral Parlors & Cemetery 1.12% | |
Carriage Services, Inc.* | | | 25,700 | | | | 210 | | |
Rock of Ages Corp.* | | | 30,200 | | | | 150 | | |
Total | | | | | | | 360 | | |
Health & Personal Care 2.22% | |
Psychemedics Corp. | | | 39,500 | | | | 715 | | |
Healthcare Facilities 0.22% | |
Capital Senior Living Corp.* | | | 6,100 | | | | 71 | | |
Healthcare Management Services 3.50% | |
American Dental Partners, Inc.* | | | 24,900 | | | | 532 | | |
National Medical Health Card Systems, Inc.* | | | 36,800 | | | | 594 | | |
Total | | | | | | | 1,126 | | |
Hotel/Motel 0.43% | |
Interstate Hotels & Resorts, Inc.* | | | 26,800 | | | | 138 | | |
Household Furnishings 0.65% | |
Hooker Furniture Corp. | | | 9,500 | | | | 209 | | |
Insurance: Property-Casualty 2.08% | |
Donegal Group Inc. | | | 27,233 | | | | 413 | | |
Navigators Group, Inc. (The)* | | | 5,000 | | | | 255 | | |
Total | | | | | | | 668 | | |
Machinery: Industrial/Specialty 5.13% | |
Graham Corp. | | | 29,430 | | | | 504 | | |
Key Technology, Inc.* | | | 17,500 | | | | 311 | | |
Tennant Co. | | | 9,600 | | | | 307 | | |
Twin Disc, Inc. | | | 8,700 | | | | 527 | | |
Total | | | | | | | 1,649 | | |
Investments | | Shares | | Value (000) | |
Machinery: Oil Well Equipment & Services 1.12% | |
Lufkin Industries, Inc. | | | 5,800 | | | $ | 361 | | |
Medical & Dental Instruments & Supplies 5.99% | |
Abaxis, Inc.* | | | 25,300 | | | | 578 | | |
Cardiac Science Corp.* | | | 50,200 | | | | 527 | | |
Medical Action Industries, Inc.* | | | 20,470 | | | | 466 | | |
Merit Medical Systems, Inc.* | | | 14,100 | | | | 163 | | |
Orthovita, Inc.* | | | 64,100 | | | | 192 | | |
Total | | | | | | | 1,926 | | |
Metal Fabricating 1.34% | |
NN, Inc. | | | 36,100 | | | | 431 | | |
Metals & Minerals Miscellaneous 1.05% | |
A.M. Castle & Co. | | | 10,000 | | | | 339 | | |
Miscellaneous: Materials & Commodities 0.52% | |
Lydall, Inc.* | | | 11,600 | | | | 169 | | |
Oil: Crude Producers 1.52% | |
Bronco Drilling Co., Inc.* | | | 23,700 | | | | 428 | | |
Pioneer Drilling Co.* | | | 4,500 | | | | 62 | | |
Total | | | | | | | 490 | | |
Pollution Control & Environmental Services 1.03% | |
Team, Inc.* | | | 9,600 | | | | 330 | | |
Railroad Equipment 1.96% | |
Portec Rail Products, Inc. | | | 52,900 | | | | 632 | | |
Real Estate Investment Trusts 2.10% | |
Agree Realty Corp. | | | 1,500 | | | | 51 | | |
Supertel Hospitality, Inc. | | | 77,600 | | | | 624 | | |
Total | | | | | | | 675 | | |
See Notes to Financial Statements.
12
Schedule of Investments (unaudited) (concluded)
MICRO CAP VALUE FUND April 30, 2007
Investments | | Shares | | Value (000) | |
Rental & Leasing Services: Commercial 3.53% | |
Marlin Business Services Corp.* | | | 22,800 | | | $ | 534 | | |
McGrath RentCorp | | | 19,900 | | | | 600 | | |
Total | | | | | | | 1,134 | | |
Retail 1.45% | |
Rush Enterprises, Inc. Class B* | | | 24,200 | | | | 466 | | |
Services: Commercial 8.37% | |
Ambassadors International, Inc. | | | 13,900 | | | | 466 | | |
Collectors Universe, Inc. | | | 26,500 | | | | 378 | | |
Exponent, Inc.* | | | 40,600 | | | | 859 | | |
Monro Muffler Brake, Inc. | | | 19,500 | | | | 682 | | |
Waste Industries USA, Inc. | | | 11,700 | | | | 307 | | |
Total | | | | | | | 2,692 | | |
Steel 0.15% | |
Universal Stainless & Alloy Products, Inc.* | | | 1,100 | | | | 49 | | |
Textiles Apparel Manufacturers 2.61% | |
Hartmarx Corp.* | | | 63,800 | | | | 420 | | |
Lakeland Industries, Inc.* | | | 32,100 | | | | 419 | | |
Total | | | | | | | 839 | | |
Transportation: Miscellaneous 1.27% | |
Quixote Corp. | | | 20,400 | | | | 408 | | |
Truckers 1.81% | |
Marten Transport, Ltd.* | | | 32,300 | | | | 583 | | |
Utilities: Gas Distributors 1.55% | |
Chesapeake Utilities Corp. | | | 15,700 | | | | 500 | | |
Total Common Stocks (cost $25,246,938) | | | | | | | 30,752 | | |
Investments | | Principal Amount (000) | | Value (000) | |
SHORT-TERM INVESTMENT 5.57% | |
Repurchase Agreement | |
Repurchase Agreement dated 4/30/2007, 4.70% due 5/1/2007 with State Street Bank & Trust Co. collateralized by $1,815,000 of Federal Home Loan B ank at 5.33% due 3/6/2012; value: $1,830,899; proceeds: $1,791,086 (cost $1,790,852) | | $ | 1,791 | | | $ | 1,791 | | |
Total Investments in Securities 101.18% (cost $27,037,790) | | | | | 32,543 | | |
Liabilities in Excess of Other Assets (1.18%) | | | | | (378 | ) | |
Net Assets 100.00% | | | | $ | 32,165 | | |
* Non-income producing security.
See Notes to Financial Statements.
13
Statements of Assets and Liabilities (unaudited)
April 30, 2007
| | Micro Cap Growth Fund | | Micro Cap Value Fund | |
ASSETS: | |
Investments in securities, at cost | | $ | 13,632,958 | | | $ | 27,037,790 | | |
Investments in securities, at value | | $ | 14,350,516 | | | $ | 32,543,350 | | |
Cash | | | 35,757 | | | | – | | |
Receivables: | |
Interest and dividends | | | 43 | | | | 5,007 | | |
Investment securities sold | | | 972,079 | | | | 118,370 | | |
Capital shares sold | | | 10,701 | | | | 27,636 | | |
From advisor (See Note 3) | | | 4,014 | | | | 2,875 | | |
Prepaid expenses | | | 1,214 | | | | 9,159 | | |
Total assets | | | 15,374,324 | | | | 32,706,397 | | |
LIABILITIES: | |
Payables: | |
Investment securities purchased | | | 653,753 | | | | 439,841 | | |
Capital shares reacquired | | | 7,218 | | | | – | | |
Management fees | | | 14,874 | | | | 36,633 | | |
12b-1 distribution fees | | | 1,881 | | | | 5,181 | | |
Fund administration | | | 397 | | | | 977 | | |
Trustees' fees | | | 744 | | | | 1,535 | | |
To affiliates (See Note 3) | | | 110 | | | | 110 | | |
Accrued expenses and other liabilities | | | 38,498 | | | | 57,261 | | |
Total liabilities | | | 717,475 | | | | 541,538 | | |
NET ASSETS | | $ | 14,656,849 | | | $ | 32,164,859 | | |
COMPOSITION OF NET ASSETS: | |
Paid-in capital | | $ | 12,551,478 | | | $ | 24,895,397 | | |
Accumulated net investment loss | | | (79,588 | ) | | | (144,688 | ) | |
Accumulated net realized gain on investments | | | 1,467,401 | | | | 1,908,590 | | |
Net unrealized appreciation on investments | | | 717,558 | | | | 5,505,560 | | |
Net Assets | | $ | 14,656,849 | | | $ | 32,164,859 | | |
Net assets by class: | |
Class A Shares | | $ | 8,161,402 | | | $ | 22,831,626 | | |
Class Y Shares | | $ | 6,495,447 | | | $ | 9,333,233 | | |
Outstanding shares by class (unlimited number of authorized shares of beneficial interest): | | | |
Class A Shares | | | 571,601 | | | | 850,002 | | |
Class Y Shares | | | 445,069 | | | | 342,462 | | |
Net asset value, offering and redemption price per share (Net assets divided by outstanding shares): | | | |
Class A Shares–Net asset value | | $ | 14.28 | | | $ | 26.86 | | |
Class A Shares–Maximum offering price | |
(Net asset value plus sales charge of 5.75%) | | $ | 15.15 | | | $ | 28.50 | | |
Class Y Shares–Net asset value | | $ | 14.59 | | | $ | 27.25 | | |
See Notes to Financial Statements.
14
Statements of Operations (unaudited)
For the Six Months Ended April 30, 2007
| | Micro Cap Growth Fund | | Micro Cap Value Fund | |
Investment income: | |
Dividends | | $ | 512 | | | $ | 85,448 | | |
Interest | | | 14,607 | | | | 29,995 | | |
Total investment income | | | 15,119 | | | | 115,443 | | |
Expenses: | |
Management fees | | | 69,225 | | | | 189,179 | | |
12b-1 distribution plan–Class A | | | 8,496 | | | | 25,166 | | |
Shareholder servicing | | | 3,920 | | | | 7,255 | | |
Professional | | | 17,351 | | | | 16,390 | | |
Reports to shareholders | | | 5,366 | | | | 14,340 | | |
Fund administration | | | 1,846 | | | | 5,045 | | |
Custody | | | 5,564 | | | | 7,702 | | |
Trustees' fees | | | 106 | | | | 322 | | |
Registration | | | 12,192 | | | | 12,826 | | |
Subsidy (See Note 3) | | | 110 | | | | 110 | | |
Other | | | 394 | | | | 446 | | |
Gross expenses | | | 124,570 | | | | 278,781 | | |
Expense reductions (See Note 7) | | | (276 | ) | | | (777 | ) | |
Expenses assumed by advisor (See Note 3) | | | (30,421 | ) | | | (19,519 | ) | |
Net expenses | | | 93,873 | | | | 258,485 | | |
Net investment loss | | | (78,754 | ) | | | (143,042 | ) | |
Net realized and unrealized gain (loss): | |
Net realized gain on investments | | | 1,495,405 | | | | 1,922,091 | | |
Net increase from payment by an affiliate for net losses realized on disposal of investments in violation of an investment restriction (See Note 3) | | | 1,269 | | | | – | | |
Net change in unrealized appreciation (depreciation) on investments | | | (8,128 | ) | | | 773,196 | | |
Net realized and unrealized gain | | | 1,488,546 | | | | 2,695,287 | | |
Net Increase in Net Assets Resulting From Operations | | $ | 1,409,792 | | | $ | 2,552,245 | | |
See Notes to Financial Statements.
15
Statements of Changes in Net Assets
| | Micro Cap Growth Fund | |
INCREASE (DECREASE) IN NET ASSETS | | For the Six Months Ended April 30, 2007 (unaudited) | | For the Year Ended October 31, 2006 | |
Operations: | |
Net investment loss | | $ | (78,754 | ) | | $ | (131,218 | ) | |
Net realized gain on investments | | | 1,495,405 | | | | 1,309,647 | | |
Net increase from payment by an affiliate for net losses realized on disposal of investments in violation of an investment restriction (See Note 3) | | | 1,269 | | | | – | | |
Net change in unrealized depreciation on investments | | | (8,128 | ) | | | (183,526 | ) | |
Net increase in net assets resulting from operations | | | 1,409,792 | | | | 994,903 | | |
Distributions to shareholders from: | |
Net realized gain | |
Class A | | | (907,029 | ) | | | (782,352 | ) | |
Class Y | | | (315,156 | ) | | | (175,989 | ) | |
Total distributions to shareholders | | | (1,222,185 | ) | | | (958,341 | ) | |
Capital share transactions (See Note 11): | |
Net proceeds from sales of shares | | | 7,642,266 | | | | 1,000,029 | | |
Reinvestment of distributions | | | 1,221,501 | | | | 956,192 | | |
Cost of shares reacquired | | | (1,538,366 | ) | | | (2,007,854 | ) | |
Net increase (decrease) in net assets resulting from capital share transactions | | | 7,325,401 | | | | (51,633 | ) | |
Net increase (decrease) in net assets | | | 7,513,008 | | | | (15,071 | ) | |
NET ASSETS: | |
Beginning of period | | $ | 7,143,841 | | | $ | 7,158,912 | | |
End of period | | $ | 14,656,849 | | | $ | 7,143,841 | | |
Accumulated net investment loss | | $ | (79,588 | ) | | $ | (834 | ) | |
See Notes to Financial Statements.
16
Statements of Changes in Net Assets
| | Micro Cap Value Fund | |
INCREASE IN NET ASSETS | | For the Six Months Ended April 30, 2007 (unaudited) | | For the Year Ended October 31, 2006 | |
Operations: | |
Net investment loss | | $ | (143,042 | ) | | $ | (268,745 | ) | |
Net realized gain on investments | | | 1,922,091 | | | | 3,707,862 | | |
Net change in unrealized appreciation on investments | | | 773,196 | | | | 441,312 | | |
Net increase in net assets resulting from operations | | | 2,552,245 | | | | 3,880,429 | | |
Distributions to shareholders from: | |
Net realized gain | |
Class A | | | (2,759,331 | ) | | | (1,784,117 | ) | |
Class Y | | | (690,568 | ) | | | (403,319 | ) | |
Total distributions to shareholders | | | (3,449,899 | ) | | | (2,187,436 | ) | |
Capital share transactions (See Note 11): | |
Net proceeds from sales of shares | | | 8,187,293 | | | | 3,423,840 | | |
Reinvestment of distributions | | | 3,449,878 | | | | 2,186,918 | | |
Cost of shares reacquired | | | (602,599 | ) | | | (4,286,302 | ) | |
Net increase in net assets resulting from capital share transactions | | | 11,034,572 | | | | 1,324,456 | | |
Net increase in net assets | | | 10,136,918 | | | | 3,017,449 | | |
NET ASSETS: | |
Beginning of period | | $ | 22,027,941 | | | $ | 19,010,492 | | |
End of period | | $ | 32,164,859 | | | $ | 22,027,941 | | |
Accumulated net investment loss | | $ | (144,688 | ) | | $ | (1,646 | ) | |
See Notes to Financial Statements.
17
Financial Highlights
MICRO CAP GROWTH FUND
| | Class A Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 14.18 | | | $ | 14.24 | | | $ | 11.88 | | | $ | 10.87 | | | $ | 7.51 | | | $ | 9.49 | | |
Investment operations: | |
Net investment loss(a) | | | (.12 | ) | | | (.24 | ) | | | (.25 | ) | | | (.23 | ) | | | (.14 | ) | | | (.02 | ) | |
Net increase from payment by an affiliate for net losses realized on disposal of investments in violations of an investment restriction | | | – | (c) | | | – | | | | – | | | | – | | | | – | | | | – | | |
Net realized and unrealized gain (loss) | | | 2.61 | | | | 2.05 | | | | 2.96 | | | | 1.24 | | | | 3.50 | | | | (1.95 | ) | |
Total from investment operations | | | 2.49 | | | | 1.81 | | | | 2.71 | | | | 1.01 | | | | 3.36 | | | | (1.97 | ) | |
Distributions to shareholders from: | |
Net investment income | | | – | | | | – | | | | – | | | | – | | | | – | | | | (.01 | ) | |
Net realized gain | | | (2.39 | ) | | | (1.87 | ) | | | (.35 | ) | | | – | | | | – | | | | – | | |
Total distributions | | | (2.39 | ) | | | (1.87 | ) | | | (.35 | ) | | | – | | | | – | | | | (.01 | ) | |
Net asset value, end of period | | $ | 14.28 | | | $ | 14.18 | | | $ | 14.24 | | | $ | 11.88 | | | $ | 10.87 | | | $ | 7.51 | | |
Total Return(b) | | | 19.43 | %(d)(e) | | | 14.29 | % | | | 23.21 | % | | | 9.29 | % | | | 44.74 | % | | | (20.81 | )% | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | 1.04 | %(e) | | | 2.10 | % | | | 2.10 | % | | | 2.10 | % | | | 1.75 | % | | | .38 | % | |
Expenses, excluding expense reductions and including expenses assumed | | | 1.04 | %(e) | | | 2.10 | % | | | 2.10 | % | | | 2.10 | % | | | 1.75 | % | | | .38 | % | |
Expenses, excluding expense reductions and expenses assumed | | | 1.37 | %(e) | | | 3.26 | % | | | 2.51 | % | | | 2.52 | % | | | 2.84 | % | | | 2.99 | % | |
Net investment loss | | | (.88 | )%(e) | | | (1.83 | )% | | | (1.92 | )% | | | (1.91 | )% | | | (1.60 | )% | | | (.24 | )% | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 8,161 | | | $ | 5,445 | | | $ | 5,938 | | | $ | 4,726 | | | $ | 4,655 | | | $ | 2,698 | | |
Portfolio turnover rate | | | 152.06 | %(e) | | | 222.48 | % | | | 64.79 | % | | | 79.07 | % | | | 126.71 | % | | | 34.08 | % | |
See Notes to Financial Statements.
18
Financial Highlights (concluded)
MICRO CAP GROWTH FUND
| | Class Y Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 14.43 | | | $ | 14.43 | | | $ | 12.00 | | | $ | 10.96 | | | $ | 7.55 | | | $ | 9.52 | | |
Investment operations: | |
Net investment income (loss)(a) | | | (.10 | ) | | | (.22 | ) | | | (.22 | ) | | | (.20 | ) | | | (.11 | ) | | | .01 | | |
Net increase from payment by an affiliate for net losses realized on disposal of investments in violations of an investment restriction | | | – | (c) | | | – | | | | – | | | | – | | | | – | | | | – | | |
Net realized and unrealized gain (loss) | | | 2.65 | | | | 2.09 | | | | 3.00 | | | | 1.24 | | | | 3.52 | | | | (1.95 | ) | |
Total from investment operations | | | 2.55 | | | | 1.87 | | | | 2.78 | | | | 1.04 | | | | 3.41 | | | | (1.94 | ) | |
Distributions to shareholders from: | |
Net investment income | | | – | | | | – | | | | – | | | | – | | | | – | | | | (.03 | ) | |
Net realized gain | | | (2.39 | ) | | | (1.87 | ) | | | (.35 | ) | | | – | | | | – | | | | – | | |
Total distributions | | | (2.39 | ) | | | (1.87 | ) | | | (.35 | ) | | | – | | | | – | | | | (.03 | ) | |
Net asset value, end of period | | $ | 14.59 | | | $ | 14.43 | | | $ | 14.43 | | | $ | 12.00 | | | $ | 10.96 | | | $ | 7.55 | | |
Total Return(b) | | | 19.52 | %(d)(e) | | | 14.56 | % | | | 23.57 | % | | | 9.49 | % | | | 45.17 | % | | | (20.42 | )% | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | .91 | %(e) | | | 1.85 | % | | | 1.85 | % | | | 1.85 | %† | | | 1.42 | % | | | .00 | % | |
Expenses, excluding expense reductions and including expenses assumed | | | .91 | %(e) | | | 1.85 | % | | | 1.85 | % | | | 1.85 | %† | | | 1.42 | % | | | .00 | % | |
Expenses, excluding expense reductions and expenses assumed | | | 1.22 | %(e) | | | 3.04 | % | | | 2.25 | % | | | 2.27 | %† | | | 2.51 | % | | | 2.61 | % | |
Net investment income (loss) | | | (.73 | )%(e) | | | (1.59 | )% | | | (1.67 | )% | | | (1.66 | )%† | | | (1.27 | )% | | | .14 | % | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 6,496 | | | $ | 1,699 | | | $ | 1,221 | | | $ | 1,018 | | | $ | 8 | | | $ | 6 | | |
Portfolio turnover rate | | | 152.06 | %(e) | | | 222.48 | % | | | 64.79 | % | | | 79.07 | % | | | 126.71 | % | | | 34.08 | % | |
† The ratios have been determined on a Fund basis.
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.
(c) Amount represents less than $.01.
(d) The effect of payment by an affiliated for violation of an investment restriction on total return is less than .01%.
(e) Not annualized.
See Notes to Financial Statements.
19
Financial Highlights
MICRO CAP VALUE FUND
| | Class A Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 28.67 | | | $ | 26.96 | | | $ | 23.89 | | | $ | 21.43 | | | $ | 15.56 | | | $ | 15.68 | | |
Investment operations: | |
Net investment income (loss)(a) | | | (.15 | ) | | | (.34 | ) | | | (.32 | ) | | | (.27 | ) | | | (.14 | ) | | | .05 | | |
Net realized and unrealized gain | | | 2.72 | | | | 5.18 | | | | 6.12 | | | | 4.31 | | | | 6.69 | | | | .60 | | |
Total from investment operations | | | 2.57 | | | | 4.84 | | | | 5.80 | | | | 4.04 | | | | 6.55 | | | | .65 | | |
Distributions to shareholders from: | |
Net investment income | | | – | | | | – | | | | – | | | | (.30 | ) | | | (.05 | ) | | | (.05 | ) | |
Net realized gain | | | (4.38 | ) | | | (3.13 | ) | | | (2.73 | ) | | | (1.28 | ) | | | (.63 | ) | | | (.72 | ) | |
Total distributions | | | (4.38 | ) | | | (3.13 | ) | | | (2.73 | ) | | | (1.58 | ) | | | (.68 | ) | | | (.77 | ) | |
Net asset value, end of period | | $ | 26.86 | | | $ | 28.67 | | | $ | 26.96 | | | $ | 23.89 | | | $ | 21.43 | | | $ | 15.56 | | |
Total Return(b) | | | 10.46 | %(c) | | | 20.09 | % | | | 26.45 | % | | | 20.08 | % | | | 43.80 | % | | | 4.12 | % | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | 1.04 | %(c) | | | 2.10 | % | | | 2.10 | % | | | 2.10 | % | | | 1.73 | % | | | .38 | % | |
Expenses, excluding expense reductions and including expenses assumed | | | 1.04 | %(c) | | | 2.10 | % | | | 2.10 | % | | | 2.10 | % | | | 1.73 | % | | | .38 | % | |
Expenses, excluding expense reductions and expenses assumed | | | 1.12 | %(c) | | | 2.45 | % | | | 2.35 | % | | | 2.27 | % | | | 2.18 | % | | | 2.76 | % | |
Net investment income (loss) | | | (.59 | )%(c) | | | (1.29 | )% | | | (1.30 | )% | | | (1.22 | )% | | | (.84 | )% | | | .31 | % | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 22,832 | | | $ | 18,156 | | | $ | 15,384 | | | $ | 10,838 | | | $ | 8,892 | | | $ | 5,442 | | |
Portfolio turnover rate | | | 20.93 | %(c) | | | 50.45 | % | | | 34.59 | % | | | 36.97 | % | | | 48.55 | % | | | 36.02 | % | |
See Notes to Financial Statements.
20
Financial Highlights (concluded)
MICRO CAP VALUE FUND
| | Class Y Shares | |
| | Six Months Ended 4/30/2007 | | Year Ended 10/31 | |
| | (unaudited) | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 | |
Per Share Operating Performance | |
Net asset value, beginning of period | | $ | 28.99 | | | $ | 27.17 | | | $ | 24.00 | | | $ | 21.53 | | | $ | 15.63 | | | $ | 15.72 | | |
Investment operations: | |
Net investment income (loss)(a) | | | (.12 | ) | | | (.28 | ) | | | (.26 | ) | | | (.22 | ) | | | (.09 | ) | | | .12 | | |
Net realized and unrealized gain | | | 2.76 | | | | 5.23 | | | | 6.16 | | | | 4.32 | | | | 6.73 | | | | .59 | | |
Total from investment operations | | | 2.64 | | | | 4.95 | | | | 5.90 | | | | 4.10 | | | | 6.64 | | | | .71 | | |
Distributions to shareholders from: | |
Net investment income | | | – | | | | – | | | | – | | | | (.35 | ) | | | (.11 | ) | | | (.08 | ) | |
Net realized gain | | | (4.38 | ) | | | (3.13 | ) | | | (2.73 | ) | | | (1.28 | ) | | | (.63 | ) | | | (.72 | ) | |
Total distributions | | | (4.38 | ) | | | (3.13 | ) | | | (2.73 | ) | | | (1.63 | ) | | | (.74 | ) | | | (.80 | ) | |
Net asset value, end of period | | $ | 27.25 | | | $ | 28.99 | | | $ | 27.17 | | | $ | 24.00 | | | $ | 21.53 | | | $ | 15.63 | | |
Total Return(b) | | | 10.60 | %(c) | | | 20.38 | % | | | 26.78 | % | | | 20.36 | % | | | 44.35 | % | | | 4.51 | % | |
Ratios to Average Net Assets: | |
Expenses, including expense reductions and expenses assumed | | | .91 | %(c) | | | 1.85 | % | | | 1.85 | % | | | 1.85 | %† | | | 1.41 | % | | | .00 | % | |
Expenses, excluding expense reductions and including expenses assumed | | | .91 | %(c) | | | 1.85 | % | | | 1.85 | % | | | 1.85 | %† | | | 1.41 | % | | | .00 | % | |
Expenses, excluding expense reductions and expenses assumed | | | .99 | %(c) | | | 2.20 | % | | | 2.11 | % | | | 2.02 | %† | | | 1.86 | % | | | 2.38 | % | |
Net investment income (loss) | | | (.45 | )%(c) | | | (1.05 | )% | | | (1.06 | )% | | | (.97 | )%† | | | (.52 | )% | | | .69 | % | |
Supplemental Data: | |
Net assets, end of period (000) | | $ | 9,333 | | | $ | 3,872 | | | $ | 3,627 | | | $ | 1,763 | | | $ | 21 | | | $ | 15 | | |
Portfolio turnover rate | | | 20.93 | %(c) | | | 50.45 | % | | | 34.59 | % | | | 36.97 | % | | | 48.55 | % | | | 36.02 | % | |
† The ratios have been determined on a Fund basis.
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.
(c) Not annualized.
See Notes to Financial Statements.
21
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Lord Abbett Securities Trust (the "Trust") is registered under the Investment Company Act of 1940 (the "Act") as an open-end management investment company organized as a Delaware statutory trust on February 26, 1993. The Trust currently consists of eight funds. This report covers the following two funds and their respective classes (separately, a "Fund" and collectively, the "Funds"): Lord Abbett Micro-Cap Growth Fund ("Micro Cap Growth Fund"), Class A and Y shares and Lord Abbett Micro-Cap Value Fund ("Micro Cap Value Fund"), Class A and Y shares. The investment objective of both Micro Cap Growth Fund and Micro Cap Value Fund is long-term capital appreciation.
Each class of shares has different expenses and dividends. A front-end sales charge is normally added to the Net Asset Value ("NAV") for Class A shares. There is no front-end sales charge in the case of Class Y shares, although there may be a contingent deferred sales charge ("CDSC") for certain redemptions of Class A shares made within 12 months following certain purchases made without a sales charge.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Investment Valuation–Securities traded on any recognized U.S. or non-U.S. exchange or on NASDAQ, Inc. 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 the trading on non-U.S. exchanges may result in adjustments to the valuation of foreign securities to more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange. The Funds 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 market quo tations are not readily available are valued at fair value as determined by management and approved in good faith by the Board of Trustees. Short-term securities with 60 days or less remaining to maturity are valued using the amortized cost method, which approximates current market value.
(b) Security Transactions–Security transactions are recorded as of the date that the securities are purchased or sold (trade date). Realized gains and losses on sales of portfolio securities are calculated using the identified-cost method. Realized and unrealized gains (losses) are allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day.
(c) Investment Income–Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis. Discounts are accreted and premiums are amortized using the effective interest method. Investment income is allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day.
22
Notes to Financial Statements (unaudited)(continued)
(d) Federal Taxes–It is the policy of each Fund to meet the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all taxable income and capital gains to its shareholders. Therefore, no Federal income tax provision is required.
(e) Expenses–Expenses incurred by the Trust that do not specifically relate to an individual fund are generally allocated to the Funds within the Trust on a pro rata basis. Expenses, excluding class specific expenses, are allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day. Class A shares bear their class-specific share of all expenses and fees relating to the Funds' 12b-1 Distribution Plans.
(f) Repurchase Agreements–Each Fund may enter into repurchase agreements with respect to securities. A repurchase agreement is a transaction in which the 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 value of these securities has d eclined, the Funds may incur a loss upon disposition of the securities.
3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management Fees
The Trust has a management agreement with Lord, Abbett & Co. LLC ("Lord Abbett") pursuant to which Lord Abbett supplies the Trust with investment management services and executive and other personnel, pays the remuneration of officers, provides office space and pays for ordinary and necessary office and clerical expenses relating to research and statistical work and supervision of the Trust's investment portfolios.
The management fee for the Funds is based on average daily net assets at an annual rate of 1.50%.
For the six months ended April 30, 2007, the effective management fee paid to Lord Abbett was at a rate of 1.50% of the Funds' average daily net assets.
Lord Abbett provides certain administrative services to the Funds pursuant to an Administrative Services Agreement at an annual rate of .04% of each Fund's average daily net assets.
For the period November 1, 2006 through October 31, 2007, Lord Abbett contractually agreed to reimburse each Fund to the extent necessary so that each class' annual net operating expenses do not exceed the following annualized rates:
Class | | % of Average Daily Net Assets | |
A | | | 2.10 | % | |
Y | | | 1.85 | % | |
The Funds, along with certain other funds managed by Lord Abbett (the "Underlying Funds") have entered into a Servicing Arrangement with Lord Abbett Alpha Strategy Fund of Lord Abbett Securities Trust (the "Alpha Strategy Fund"), pursuant to which each Underlying Fund pays a portion of the expenses (excluding management fees and distribution and service fees) of Alpha
23
Notes to Financial Statements (unaudited)(continued)
Strategy Fund in proportion to the average daily value of Underlying Fund shares owned by the 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 affiliates on each Fund's Statement of Assets and Liabilities.
Micro Cap Growth Fund purchased certain securities with market capitalizations that were not within the Fund's specified investment capitalization range of $50 million and $500 million ("micro-cap companies") at a time while less than 80% of its net assets were invested in micro-cap companies, which constituted a violation of one of the Fund's investment restrictions. The Fund promptly identified the violation and sold the securities. Lord Abbett reimbursed the Fund in the amount of $1,269, representing the losses realized from the sales and the commissions on the purchase and sale transactions. This amount is reflected as a net increase from a payment by an affiliate for net losses realized on the disposal of investments in violation of an investment restriction on the Statement of Operations. Effective March 1, 2007, this investment restriction was changed.
12b-1 Distribution Plan
Each Fund has adopted a distribution plan with respect to the Class A shares pursuant to Rule 12b-1 of the Act, which provides for the payment of ongoing distribution and service fees to Lord Abbett Distributor LLC ("Distributor"), an affiliate of Lord Abbett. The fees are accrued daily based upon the average daily net assets attributable to Class A at an annual rate of .25%.
Class Y does not have a distribution plan.
Two Trustees and certain of the Trust's officers have an interest in Lord Abbett.
4. DISTRIBUTIONS AND CAPITAL LOSS CARRYFORWARDS
Dividends from net investment income, if any, are declared and paid at least annually. Taxable net realized gains from investment transactions, reduced by capital loss carryforwards, if any, are 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 amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with Federal income tax regulations which may differ from accounting principles generally accepted in the United States of America. These book/tax differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the components of net assets based on their federal tax basis treatment; temporary di fferences do not require reclassification. Dividends and distributions, which exceed earnings and profits for tax purposes, are reported as a tax return of capital.
The tax character of distributions paid during the six months ended April 30, 2007 and the year ended October 31, 2006 were as follows:
| | Micro Cap Growth Fund | | Micro Cap Value Fund | |
| | 4/30/2007 (unaudited) | | 10/31/2006 | | 4/30/2007 (unaudited) | | 10/31/2006 | |
Distributions paid from: | |
Ordinary income | | $ | – | | | $ | 303,120 | | | $ | 115,252 | | | $ | 63,337 | | |
Net long-term capital gains | | | 1,222,185 | | | | 655,221 | | | | 3,334,647 | | | | 2,124,099 | | |
Total distributions paid | | $ | 1,222,185 | | | $ | 958,341 | | | $ | 3,449,899 | | | $ | 2,187,436 | | |
24
Notes to Financial Statements (unaudited)(continued)
As of April 30, 2007, the aggregate unrealized security gains and losses based on cost for U.S. Federal income tax purposes are as follows:
| | Micro Cap Growth Fund | | Micro Cap Value Fund | |
Tax cost | | $ | 13,662,189 | | | $ | 27,039,324 | | |
Gross unrealized gain | | | 963,594 | | | | 5,952,332 | | |
Gross unrealized loss | | | (275,267 | ) | | | (448,306 | ) | |
Net unrealized security gain | | $ | 688,327 | | | $ | 5,504,026 | | |
The difference between book-basis and tax-basis unrealized gains (losses) is primarily attributable to wash sales.
5. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments) for the six months ended April 30, 2007 are as follows:
| | Purchases | | Sales | |
Micro Cap Growth | | $ | 19,662,773 | | | $ | 14,047,812 | | |
Micro Cap Value | | | 11,454,464 | | | | 5,191,611 | | |
There were no purchases or sales of U.S. Government securities for the six months ended April 30, 2007.
6. TRUSTEES' REMUNERATION
The Trust's officers and the two Trustees who are associated with Lord Abbett do not receive any compensation from the Trust for serving in such capacities. Outside Trustees' fees are allocated among all Lord Abbett-sponsored funds based on the net assets of each fund. There is an equity based plan available to all outside Trustees under which outside Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of Trustees' fees. The deferred amounts are treated as though equivalent dollar amounts have been invested proportionately in the funds. Such amounts and earnings accrued thereon are included in Trustees' fees on the Statement of Operations and in Trustees' fees payable on the Statement of Assets and Liabilities and are not deductible for U.S. Federal income tax purposes until such amounts are paid.
7. EXPENSE REDUCTIONS
The Trust has entered into arrangements with its transfer agent and custodian, whereby credits realized as a result of uninvested cash balances are used to reduce a portion of each Fund's expenses.
8. LINE OF CREDIT
The Funds, along with certain other funds managed by Lord Abbett, has available a $250,000,000 unsecured revolving credit facility ("Facility") from a consortium of banks, to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Any borrowings under this Facility will bear interest at current market rates as defined in the agreement. The fee for this Facility is at an annual rate of .08%. As of April 30, 2007, there were no loans outstanding pursuant to this Facility nor was the Facility utilized at any time during the six months ended April 30, 2007.
25
Notes to Financial Statements (unaudited)(continued)
9. CUSTODIAN AND ACCOUNTING AGENT
State Street Bank & Trust Company ("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.
10. INVESTMENT RISKS
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 will fluctuate in response to movements in the stock market in general and to the changing prospects of individual companies in which the Funds invest. Micro-cap companies may be subject to greater risks and may be more sensitive to changes in economic conditions than larger, more established companies. There may be less liquidity in micro-cap company stocks, subjecting them to greater price fluctuations than larger company stocks. In the case of Micro Cap Growth Fund, the growth stocks in which it generally invests may add to the Fund's volatility. In the case of the Micro Cap Value Fund, the intrinsic value of particular value stocks may not be recognized for a long time.
These factors can affect each Fund's performance.
11. SUMMARY OF CAPITAL TRANSACTIONS
Transactions in shares of beneficial interest are as follows:
MICRO CAP GROWTH FUND
| | Six Months Ended April 30, 2007 (unaudited) | | Year Ended October 31, 2006 | |
Class A Shares | | Shares | | Amount | | Shares | | Amount | |
Shares sold | | | 217,444 | | | $ | 2,957,292 | | | | 18,917 | | | $ | 258,335 | | |
Reinvestment of distributions | | | 70,478 | | | | 906,345 | | | | 61,644 | | | | 780,421 | | |
Shares reacquired | | | (100,377 | ) | | | (1,378,261 | ) | | | (113,360 | ) | | | (1,520,826 | ) | |
Increase (decrease) | | | 187,545 | | | $ | 2,485,376 | | | | (32,799 | ) | | $ | (482,070 | ) | |
Class Y Shares | |
Shares sold | | | 315,043 | | | $ | 4,684,974 | | | | 54,349 | | | $ | 741,694 | | |
Reinvestment of distributions | | | 24,003 | | | | 315,156 | | | | 13,679 | | | | 175,771 | | |
Shares reacquired | | | (11,737 | ) | | | (160,105 | ) | | | (34,890 | ) | | | (487,028 | ) | |
Increase | | | 327,309 | | | $ | 4,840,025 | | | | 33,138 | | | $ | 430,437 | | |
26
Notes to Financial Statements (unaudited)(concluded)
MICRO CAP VALUE FUND
| | Six Months Ended April 30, 2007 (unaudited) | | Year Ended October 31, 2006 | |
Class A Shares | | Shares | | Amount | | Shares | | Amount | |
Shares sold | | | 117,940 | | | $ | 2,977,571 | | | | 80,914 | | | $ | 2,144,950 | | |
Reinvestment of distributions | | | 112,855 | | | | 2,759,310 | | | | 73,709 | | | | 1,783,751 | | |
Shares reacquired | | | (14,104 | ) | | | (370,476 | ) | | | (91,815 | ) | | | (2,527,161 | ) | |
Increase | | | 216,691 | | | $ | 5,366,405 | | | | 62,808 | | | $ | 1,401,540 | | |
Class Y Shares | |
Shares sold | | | 190,212 | | | $ | 5,209,722 | | | | 49,008 | | | $ | 1,278,890 | | |
Reinvestment of distributions | | | 27,868 | | | | 690,568 | | | | 16,517 | | | | 403,167 | | |
Shares reacquired | | | (9,170 | ) | | | (232,123 | ) | | | (65,441 | ) | | | (1,759,141 | ) | |
Increase (decrease) | | | 208,910 | | | $ | 5,668,167 | | | | 84 | | | $ | (77,084 | ) | |
All of the outstanding capital shares of Micro Cap Growth Fund and Micro Cap Value Fund are held by Lord Abbett and partners and employees of Lord Abbett.
12. RECENT ACCOUNTING PRONOUNCEMENTS
In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position must meet before being recognized in the financial statements. The Funds will adopt FIN 48 no later than April 30, 2008 and the impact to each Fund's financial statements, if any, is currently being assessed.
In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on each Fund's financial statement disclosures.
27
Supplemental Proxy Information (unaudited)
A meeting of the Funds' shareholders was held on December 18, 2006. The meeting was held for the purpose of approving the election of the following nine (9) Directors:
• E. Thayer Bigelow
• William H.T. Bush
• Robert B. Calhoun, Jr.
• Robert S. Dow
• Daria L. Foster
• Julie A. Hill
• Franklin W. Hobbs
• Thomas J. Neff
• James L.L. Tullis
The results of the proxy solicitation on the preceding matter were as follows:
Matter | | Votes For | | Votes Against | | Votes Withheld | | Abstentions | |
E. Thayer Bigelow | | | 285,429,564.730 | | | | 1,367,690.253 | | | | – | | | | – | | |
William H.T. Bush | | | 285,400,666.651 | | | | 1,396,588.332 | | | | – | | | | – | | |
Robert B. Calhoun, Jr. | | | 285,534,913.987 | | | | 1,262,340.996 | | | | – | | | | – | | |
Robert S. Dow | | | 285,532,522.929 | | | | 1,264,732.054 | | | | – | | | | – | | |
Daria L. Foster | | | 285,558,511.212 | | | | 1,238,743.771 | | | | – | | | | – | | |
Julie A. Hill | | | 285,529,172.258 | | | | 1,268,082.725 | | | | – | | | | – | | |
Franklin W. Hobbs | | | 285,557,121.990 | | | | 1,240,132.993 | | | | – | | | | – | | |
Thomas J. Neff | | | 285,514,729.001 | | | | 1,282,525.982 | | | | – | | | | – | | |
James L.L. Tullis | | | 285,547,881.465 | | | | 1,249,373.518 | | | | – | | | | – | | |
28
Approval of Advisory Contracts
At meetings on December 11 and 12, 2006, the Board, including all of the Directors who are not interested persons, considered whether to approve the continuation of the existing management agreement between each of the Funds and Lord Abbett. In addition to the materials the Board had reviewed throughout the course of the year, the Board received materials relating to the management agreement before the meeting and had the opportunity to ask questions and request further information in connection with its consideration. The Board also took into account its familiarity with Lord Abbett gained through its previous meetings and discussions, and the examination of the portfolio management teams conducted by members of the Contract Committee during the year.
The materials received by the Board as to each Fund included, but were not limited to, (1) information provided by Lipper Analytical Services, Inc. regarding the investment performance of the Fund compared to the investment performance of one or more groups of funds with substantially similar investment objectives (the "performance universe") and to the investment performance of an appropriate securities index (if such an index existed), for various time periods each ending September 30, 2006, (2) information on the effective management fee rates and expense ratios for one or more groups of funds with similar objectives and similar size (the "peer expense group"), (3) sales and redemption information for the Fund, (4) information regarding Lord Abbett's financial condition, (5) an analysis of the relative profitability of the management agreement to Lord Abbett, (6) information regarding the distribution arrangements of the Fund, (7) informa tion regarding the personnel and other resources devoted by Lord Abbett to managing the Fund.
The specific considerations for each Fund are set forth below.
Micro Cap Value Fund
Investment Management Services Generally. The Board considered the investment management services provided by Lord Abbett to the Fund, including investment research, portfolio management, and trading, and Lord Abbett's commitment to compliance with all relevant legal requirements. The Board also observed that Lord Abbett was solely engaged in the investment management business and accordingly did not experience the conflicts of interest resulting from being engaged in other lines of business. The Board noted that Lord Abbett did not use brokerage commissions to purchase third-party research. The Board considered the investment advisory services provided by Lord Abbett to other clients, the fees charged for the services, and the differences in the nature of the services provided to the Fund and other Lord Abbett Funds, on the one hand, and the services provided to other clients, on the other.
Investment Performance and Compliance. The Board reviewed the Fund's investment performance as well as the performance of the performance universe of funds, both in terms of total return and in terms of other statistical measures. The Board observed the difficulty of comparing the Fund to an appropriate performance universe, given the limited number of registered investment companies having a similar investment objective, and considered the investment performance of the Fund in relation to a performance universe consisting of small-cap core funds. The Board observed that the investment performance of the Class A shares of the Fund was in the first quintile of the performance universe for the nine-month, one-year, three-year, and five-year periods. The Board also observed that the investment performance was above that of the Lipper Small-Cap Core Index for each of those periods.
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Lord Abbett's Personnel and Methods. The Board considered the qualifications of the personnel providing investment management services to the Fund, in light of its investment objective and discipline. Among other things, they considered the size, experience, and turnover rates of Lord Abbett's investment management staff, Lord Abbett's investment methodology and philosophy, and Lord Abbett's approach to recruiting, training, and retaining investment management personnel. The Board determined that Lord Abbett had the expertise and resources to manage the Fund effectively.
Nature and Quality of Other Services. The Board considered the nature, quality, costs, and extent of compliance, administrative, and other services performed by Lord Abbett and Lord Abbett Distributor and the nature and extent of Lord Abbett's supervision of third party service providers, including the Fund's transfer agent and custodian.
Expenses. The Board noted the difficulty in finding an appropriate universe of funds for purposes of expense comparisons, given the limited number of the registered investment companies having a similar investment objective, and instead considered the relationship of the Fund's expenses to those of a group of small-cap core funds. The Board observed that the contractual and actual management and administrative services fees were approximately thirty-five basis points above the median of the peer group. The Board also observed that Lord Abbett had agreed to an expense reimbursement agreement that reduced the total expense ratio of Class A to 2.10% and the total expense ratio of Class Y to 1.85%, and that the Board and Lord Abbett had agreed to a new expense reimbursement agreement with the same terms. The Board observed that the total expense ratio of Class A was a pproximately thirty-five basis points above the median of the peer group and the total expense ratio of Class Y was approximately thirty-six basis points above the median of the peer group. The Board also observed the Fund was offered only to institutional investors and employees of Lord Abbett.
Profitability. The Board considered the level of Lord Abbett's profits in managing the Fund, including a review of Lord Abbett's methodology for allocating its costs to its management of the Fund. The Board concluded that the allocation methodology had a reasonable basis and was appropriate. It considered the profits realized by Lord Abbett in connection with the operation of the Fund and whether the amount of profit was fair for the management of the Fund. The Board also considered the profits realized from other businesses of Lord Abbett, which may benefit from or be related to the Fund's business. The Board considered Lord Abbett's profit margins in comparison with available industry data, both accounting for and ignoring marketing and distribution expenses, and how those profit margins could affect Lord Abbett's ability to recruit and retain investment personn el. The Board recognized that Lord Abbett's profitability was a factor in enabling it to attract and retain qualified investment management personnel to provide services to the Fund. The Board noted that Lord Abbett's profitability had increased in recent years, in part due to an increase in assets under management, but concluded that Lord Abbett's profitability overall and as to the Fund was not excessive.
Economies of Scale. The Board considered whether there had been any economies of scale in managing the Fund, whether the Fund had appropriately benefited from any such economies of scale, and whether there was potential for realization of any further economies of scale. The Board concluded that the existing advisory fee schedule adequately addressed any economies of scale in managing the Fund. In reaching that conclusion, the Board noted that the schedule did not have breakpoints, but that the Fund's size was necessarily limited by the size of the market in which it invests.
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Other Benefits to Lord Abbett. The Board considered the character and amount of fees paid by the Fund and the Fund's shareholders to Lord Abbett and Lord Abbett Distributor for services other than investment advisory services. The Board also considered the revenues and profitability of Lord Abbett's investment advisory business apart from its mutual fund business, and the intangible benefits enjoyed by Lord Abbett by virtue of its relationship with the Fund. The Board observed that Lord Abbett Distributor receives 12b-1 fees from certain of the Lord Abbett Funds as to shares held in accounts for which there is no other broker of record, may retain a portion of the 12b-1 fees from the Funds, and receives a portion of the sales charges on sales and redemptions of some classes of shares. In addition, Lord Abbett accrues certain benefits for its business of providing investment advice to clients other than the Lord Abbett Funds, but that that business also benefits the Funds. The Board also noted that Lord Abbett, as disclosed in the prospectus of the Fund, has entered into revenue sharing arrangements with certain entities that distribute shares of the Funds.
Alternative Arrangements. The Board considered whether, instead of approving continuation of the management agreement, employing one or more alternative arrangements might be in the best interests of the Fund, such as continuing to employ Lord Abbett, but on different terms.
In considering whether to approve the continuation of the management agreement, the Board did not identify any single factor as paramount or controlling. This summary does not discuss in detail all matters considered. After considering all of the relevant factors, the Board unanimously found that continuation of the existing management agreement was in the best interests of the Fund and its shareholders and voted unanimously to approve the continuation of the management agreement.
Micro Cap Growth Fund
Investment Management Services Generally. The Board considered the investment management services provided by Lord Abbett to the Fund, including investment research, portfolio management, and trading, and Lord Abbett's commitment to compliance with all relevant legal requirements. The Board also observed that Lord Abbett was solely engaged in the investment management business and accordingly did not experience the conflicts of interest resulting from being engaged in other lines of business. The Board noted that Lord Abbett did not use brokerage commissions to purchase third-party research. The Board considered the investment advisory services provided by Lord Abbett to other clients, the fees charged for the services, and the differences in the nature of the services provided to the Fund and other Lord Abbett Funds, on the one hand, and the services provided to other clients, on the other.
Investment Performance and Compliance. The Board observed the difficulty of comparing the Fund to an appropriate performance universe, given the limited number of registered investment companies having a similar investment objective, and considered the investment performance of the Fund in comparison to a performance universe of small-cap core funds. The Board observed that the investment performance of the Class A shares of the Fund was in the third quintile of the first performance universe for the nine-month and one-year periods and in the fourth quintile for the three-year and five-year periods. The Board also observed that the investment performance was above that of the Lipper Small-Cap Core Index for the nine-month and one-year periods and below that of the Index for the three-year and five-year periods.
Lord Abbett's Personnel and Methods. The Board considered the qualifications of the personnel providing investment management services to the Fund, in light of its investment objective and discipline. Among other things, they considered the size, experience, and turnover
31
rates of Lord Abbett's investment management staff, Lord Abbett's investment methodology and philosophy, and Lord Abbett's approach to recruiting, training, and retaining investment management personnel. The Board determined that Lord Abbett had the expertise and resources to manage the Fund effectively.
Nature and Quality of Other Services. The Board considered the nature, quality, costs, and extent of compliance, administrative, and other services performed by Lord Abbett and Lord Abbett Distributor and the nature and extent of Lord Abbett's supervision of third party service providers, including the Fund's transfer agent and custodian.
Expenses. The Board noted the difficulty in finding an appropriate universe of funds for purposes of expense comparisons, given the limited number of the registered investment companies having a similar investment objective, and instead considered the relationship of the Fund's expenses to those of a group of small-cap core funds. The Board observed that Lord Abbett had agreed to an expense reimbursement agreement for the Fund that limited the total expense ratio of Class A to not more than 2.10% and the total expense ratio of Class Y to not more than 1.85%. The Board observed that the actual and contractual management and administrative services fees were approximately thirty-five basis points above the median of the peer group. The Board observed that the total expense ratio of Class A was approximately thirty-five basis points above the median of the peer group and the total expense ratio of Class Y was approximately forty-two basis points above the median of the peer group. The Board also observed the Fund was offered only to institutional investors and employees of Lord Abbett.
Profitability. The Board considered the level of Lord Abbett's profits in managing the Fund, including a review of Lord Abbett's methodology for allocating its costs to its management of the Fund. The Board concluded that the allocation methodology had a reasonable basis and was appropriate. It considered the profits realized by Lord Abbett in connection with the operation of the Fund and whether the amount of profit was fair for the management of the Fund. The Board also considered the profits realized from other businesses of Lord Abbett, which may benefit from or be related to the Fund's business. The Board considered Lord Abbett's profit margins in comparison with available industry data, both accounting for and ignoring marketing and distribution expenses, and how those profit margins could affect Lord Abbett's ability to recruit and retain investment personn el. The Board recognized that Lord Abbett's profitability was a factor in enabling it to attract and retain qualified investment management personnel to provide services to the Fund. The Board noted that Lord Abbett's profitability had increased in recent years, in part due to an increase in assets under management, but concluded that Lord Abbett's profitability overall and as to the Fund was not excessive.
Economies of Scale. The Board considered whether there had been any economies of scale in managing the Fund, whether the Fund had appropriately benefited from any such economies of scale, and whether there was potential for realization of any further economies of scale. The Board concluded that the existing advisory fee schedule adequately addressed any economies of scale in managing the Fund. In reaching that conclusion, the Board noted that the schedule did not have breakpoints, but the Fund's size was necessarily limited by the size of the market in which it invests.
Other Benefits to Lord Abbett. The Board considered the character and amount of fees paid by the Fund and the Fund's shareholders to Lord Abbett and Lord Abbett Distributor for services other than investment advisory services. The Board also considered the revenues and profitability of Lord Abbett's investment advisory business apart from its mutual fund business, and the
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intangible benefits enjoyed by Lord Abbett by virtue of its relationship with the Fund. The Board observed that Lord Abbett Distributor receives 12b-1 fees from certain of the Lord Abbett Funds as to shares held in accounts for which there is no other broker of record, may retain a portion of the 12b-1 fees from the Funds, and receives a portion of the sales charges on sales and redemptions of some classes of shares. In addition, Lord Abbett accrues certain benefits for its business of providing investment advice to clients other than the Lord Abbett Funds, but that that business also benefits the Funds. The Board also noted that Lord Abbett, as disclosed in the prospectus of the Fund, has entered into revenue sharing arrangements with certain entities that distribute shares of the Fund.
Alternative Arrangements. The Board considered whether, instead of approving continuation of the management agreement, employing one or more alternative arrangements might be in the best interests of the Fund, such as continuing to employ Lord Abbett, but on different terms.
In considering whether to approve the continuation of the management agreement, the Board did not identify any single factor as paramount or controlling. This summary does not discuss in detail all matters considered. After considering all of the relevant factors, the Board unanimously found that continuation of the existing management agreement was in the best interests of the Fund and its shareholders and voted unanimously to approve the continuation of the management agreement.
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Householding
The Trust has adopted a policy that allows it to send only one copy of the Funds' Prospectuses, proxy material, annual report and semiannual report to certain shareholders residing at the same "household." This reduces Trust expenses, which benefits you and other shareholders. If you need additional copies or do not want your mailings to be "householded," please call Lord Abbett at 800-821-5129 or send a written request with your name, the name of your fund or funds and your account number or numbers to Lord Abbett Family of Funds, P.O. Box 219100, Kansas City, MO 64121.
Proxy Voting Policies, Procedures and Record
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) or 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 available without charge, upon request on the SEC's website at www.sec.gov and may be available by calling Lord Abbett at 800-821-5129. You can also obtain copies of Form N-Q by (i) 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); (ii) sending your request and duplicating fee to the SEC's Public Reference Room, Washington, DC 20549-0102; or (iii) sending your request electronically to publicinfo@sec.gov.
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LAMCVF-3-0407
(06/07)
Lord Abbett Securities Trust
Micro-Cap Growth Fund
Micro-Cap Value 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.
Item 2: Code of Ethics.
Not applicable.
Item 3: Audit Committee Financial Expert.
Not applicable.
Item 4: Principal Accountant Fees and Services.
Not applicable.
Item 5: Audit Committee of Listed Registrants.
Not applicable.
Item 6: Schedule of Investments.
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 significant 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.
Item 12: Exhibits.
(a)(1) Amendments to Code of Ethics – Not applicable.
(a)(2) Certification of each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2) is attached hereto as a part of EX-99.CERT.
(a)(3) Not applicable.
(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 attached hereto 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 |
| |
| |
| /s/ Robert S. Dow | |
| Robert S. Dow |
| Chief Executive Officer, |
| Chairman |
| |
| |
| /s/ Joan A. Binstock | |
| Joan A. Binstock |
| Chief Financial Officer and Vice President |
| |
| |
Date: June 26, 2007 | |
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.
| |
| LORD ABBETT SECURITIES TRUST |
| |
| |
| /s/ Robert S. Dow | |
| Robert S. Dow |
| Chief Executive Officer, |
| Chairman |
| |
| |
| /s/ Joan A. Binstock | |
| Joan A. Binstock |
| Chief Financial Officer and Vice President |
| |
| |
Date: June 26, 2007 | |