1940 Act File No. 811-9597
1933 Act File No. 333-31432
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 1 [X]
LORD ABBETT LARGE-CAP GROWTH FUND
(Exact Name of Registrant as Specified in Charter)
(800) 201-6984
(Area Code and Telephone Number)
90 Hudson Street
Jersey City, New Jersey 07302-3972
(Address of Principal Executive offices
Number, Street, City,
State, Zip Code)
Lawrence H. Kaplan, Vice President
90 Hudson Street
Jersey City, New Jersey 07302-3972
(Address of Principal Executive offices
Number, Street, City, State, Zip Code)
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
TITLE OF THE SECURITIES BEING REGISTERED: SHARES OF BENEFICIAL INTEREST
WITH NO PAR VALUE. NO FILING FEE IS REQUIRED BECAUSE AN INDEFINITE NUMBER OF
SHARES HAVE PREVIOUSLY BEEN REGISTERED PURSUANT TO RULE 24F-2 UNDER THE
INVESTMENT COMPANY ACT OF 1940. A RULE 24F-2 NOTICE FOR THE REGISTRANT'S FISCAL
YEAR ENDED JULY 31, 2000 WILL BE FILED ON OR ABOUT OCTOBER 31, 2000
THIS FILING WILL BECOME EFFECTIVE UPON FILING, PURSUANT TO RULE 485(b)
<PAGE>
CROSS-REFERENCE SHEET
(Pursuant to Rule 481(a) under the Securities Act of 1933)
PART A (Combined Prospectus/Proxy Statement) is incorporated by
reference to the Registrant's Initial Registration Statement on
Form N-14 filed on March 31, 2000
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PART A ITEM CAPTION PROSPECTUS CAPTION
ITEM NO.
1 Beginning of Registration
Statement and Outside
Front Cover Page of Prospectus
2 Beginning and Outside Back Cover
Page of Prospectus
3 Fee Table, Synopsis Information, Fee Table; Summary of
and Risk Factor Proposal Capitalization
4 Information About the Transaction Information about the
Reorganization
5 Information About the Registrant Comparative Information
about the Large-Cap
Growth Fund and the
Equity Fund
6 Information About the Company Comparative Information
Being Acquired about the Large-Cap
Growth Fund and the
Equity Fund
7 Voting Information Additional Information
8 Interest of Certain Persons and Additional Information
Experts
9 Additional Information Required Not applicable
For Reoffering by Persons Deemed
to be Underwriters
PART B ITEM ITEM CAPTION STATEMENT OF ADDITIONAL
INFORMATION CAPTION
NO.
10 Cover Page Cover Page
11 Table of Contents Not applicable
12 Additional Information About Incorporated by reference
the Registrant
13 Additional Information About Incorporated by reference
the Company Being Acquired
14 Financial Statements Incorporated by reference
PART C ITEM PART C CAPTION
NO.
15 Indemnification Indemnification
16 Exhibits Exhibits
17 Undertakings
<PAGE>
PART A (Combined Prospectus/Proxy Statement)
is incorporated by reference to theRegistrant's
Initial Registration Statement on
Form N-14 filed on March 31, 2000
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 31, 2000
ACQUISITION OF THE ASSETS OF
Lord Abbett Equity Fund
90 Hudson Street
Jersey City, NJ 07302-3972
Telephone No. (800) 426-1130
BY AND IN EXCHANGE FOR CLASS A SHARES OF
Lord Abbett Large-Cap Growth Fund
90 Hudson Street
Jersey City, NJ 07302-3972
Telephone No. (800) 426-1130
This Statement of Additional Information, relating specifically to the
proposed transfer of the assets of the Lord Abbett Equity Fund (the Equity Fund)
to the Lord Abbett Large-Cap Growth Fund (the Large-Cap Growth Fund) in exchange
for Class A shares of the Large-Cap Growth Fund and the assumption by the
Large-Cap Growth Fund of the liabilities of the Equity Fund, consists of (i)
this cover page and (ii) the following described documents, each of which
accompanies this Statement of Additional Information and is incorporated herein
by reference:
1. Statement of Additional Information of the Equity Fund dated October 1,
1999.
2. Statement of Additional Information of the Large-Cap Growth Fund dated
December 30, 1999.
3. Annual Report to Shareholders of the Equity Fund dated August 8, 1999.
4. Semi-Annual Report to Shareholders of the Equity Fund dated February 7,
2000.
Financial statements for the Funds are contained in the Statements of
Additional Information referred to above, and are incorporated herein in
reliance upon the authority of Deloitte & Touche LLP as experts in auditing and
accounting.
This Statement of Additional Information is not a prospectus. A Combined
Prospectus/Proxy Statement dated the date hereof relating to this matter may be
obtained without charge by calling or writing the Large-Cap Growth Fund at the
telephone number or address set forth above. This Statement of Additional
Information should be read in conjunction with such Combined Prospectus/Proxy
Statement.
PART C
OTHER INFORMATION
Item 15 Indemnification
The Registrant is a Delaware Business Trust established under Chapter 38 of
Title 12 of the Delaware Code. The Registrant's Declaration and Instrument of
Trust at Section 4.3 relating to indemnification of Trustees, officers, etc.
states the following. The Trust shall indemnify each of its Trustees, officers,
employees and agents (including any individual who serves at its request as
director, officer, partner, trustee or the like of another organization in which
it has any interest as a shareholder, creditor or otherwise) against all
liabilities and expenses, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and counsel
fees reasonably incurred by him or her in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
before any court or administrative or legislative body in which he or she may be
or may have been involved as a party or otherwise or with which he or she may be
or may have been threatened, while acting as Trustee or as an officer, employee
or agent of the Trust or the Trustees, as the case may be, or thereafter, by
reason of his or her being or having been such a Trustee, officer, employee or
agent, except with respect to any matter as to which he or she shall have been
adjudicated not to have acted in good faith in the reasonable belief that his or
her action was in the best interests of the Trust or any Series thereof.
Notwithstanding anything herein to the contrary, if any matter which is the
subject of indemnification hereunder relates only to one Series (or to more than
one but not all of the Series of the Trust), then the indemnity shall be paid
only out of the assets of the affected Series. No individual shall be
indemnified hereunder against any liability to the Trust or any Series thereof
or the Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office. In addition, no such indemnity shall be provided with respect to any
matter disposed of by settlement or a compromise payment by such Trustee,
officer, employee or agent, pursuant to a consent decree or otherwise, either
for said payment or for any other expenses unless there has been a determination
that such compromise is in the best interests of the Trust or, if appropriate,
of any affected Series thereof and that such Person appears to have acted in
good faith in the reasonable belief that his or her action was in the best
interests of the Trust or, if appropriate, of any affected Series thereof, and
did not engage in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office. All
determinations that the applicable standards of conduct have been met for
indemnification hereunder shall be made by (a) a majority vote of a quorum
consisting of disinterested Trustees who are not parties to the proceeding
relating to indemnification, or (b) if such a quorum is not obtainable or, even
if obtainable, if a majority vote of such quorum so directs, by independent
legal counsel in a written opinion, or (c) a vote of Shareholders (excluding
Shares owned of record or beneficially by such individual). In addition, unless
a matter is disposed of with a court determination (i) on the merits that such
Trustee, officer, employee or agent was not liable or (ii) that such Person was
not guilty of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office, no
indemnification shall be provided hereunder unless there has been a
determination by independent legal counsel in a written opinion that such Person
did not engage in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office.
The Trustees may make advance payments out of the assets of the Trust or,
if appropriate, of the affected Series in connection with the expense of
defending any action with respect to which indemnification might be sought under
this Section 4.3. The indemnified Trustee, officer, employee or agent shall give
a written undertaking to reimburse the Trust or the Series in the event it is
subsequently determined that he or she is not entitled to such indemnification
and (a) the indemnified Trustee, officer, employee or agent shall provide
security for his or her undertaking, (b) the Trust shall be insured against
losses arising by reason of lawful advances, or (c)a majority of a quorum of
disinterested Trustees or an independent legal counsel in a written opinion
shall determine, based on a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe that the indemnitee
ultimately will be found entitled to indemnification. The rights accruing to any
Trustee, officer, employee or agent under these provisions shall not exclude any
other right to which he or she may be lawfully entitled and shall inure to the
benefit of his or her heirs, executors, administrators or other legal
representatives.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to Trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expense incurred
or paid by a Trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 16 Exhibits
(1) Declaration of Trust is incorporated by reference to the
Initial Registration Statement on Form N-1A filed on September
30, 1999.
(2) By-Laws are incorporated by reference to the Initial
Registration Statement on Form N-1A filed on September 30, 1999.
(3) Not applicable.
(4) Reorganization Agreement is incorporated by reference to the
Initial Registration Statement on Form N-14 filed on March 31,
2000, (filed as Appendix to Prospectus/Proxy Statement).
(5) Instruments Defining Rights of Security Holders not applicable.
(6) Management Agreement is incorporated by reference to the Initial
Registration Statement on Form N-1A filed on September 30, 1999.
(7) Distribution Agreement is incorporated by reference to the
Initial Registration Statement on Form N-1A filed on September
30, 1999.
(8) Bonus or Profit Sharing Contract is incorporated by reference to
Post-Effective Amendment No. 6 to the Registrant's Registration
Statement on Form N-1A filed on October 7, 1994.
(9) Custodian Agreement is incorporated by reference to Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A filed
on December 28, 1999.
(10) Rule 18f-3 Plan is incorporated by reference to the Initial
Registration Statement on Form N-1A filed on September 30, 1999.
Rule 12b-1 Plans are incorporated by reference to the Initial
Registration Statement on Form N-1A filed on September 30, 1999.
(11) Consent to Legal Opinion filed herewith.
(12) Consent of Deloitte & Touche LLP filed herewith (opinions filed
as part of annual reports of Funds).
(13) Not applicable.
(14) Form of Tax Opinion filed herewith.
(15) Not applicable.
(16) Not applicable.
(17) (a) Initial Capital Agreement is incorporated by reference to
Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A filed on December 28, 1999.
(b) Financial Data Schedule not applicable.
(c) Financial Statements are incorporated by reference to
Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A filed on December 28, 1999, to the Annual Report to
Shareholders of the Equity Fund dated August 17, 1999, and to the
Semi-Annual Report to Shareholders of the Equity Fund dated
February 7, 2000.
(d) Transfer Agency Agreement is incorporated by reference to
Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A filed on December 28, 1999.
(e) Proxy card is incorporated by reference to the Initial
Registration Statement on Form N-14 filed on March 31, 2000.
(f) Lord Abbett Large-Cap Growth Fund Prospectus dated December
30, 1999 is incorporated by reference to the Initial Registration
Statement on Form N-14 filed on March 31, 2000.
(g) Lord Abbett Large-Cap Growth Fund Statement of Additional
Information dated December 30, 1999 filed herewith.
(h) Lord Abbett Equity Fund 1999 Semi-Annual Report for the Six
Months Ending November 30, 1999 is incorporated by reference to
the Initial Registration Statement on Form N-14 filed on
March 31, 2000.
(i) Lord Abbett Equity Fund 1999 Annual Report is incorporated
by reference to the Initial Registration Statement on Form N-14
filed on March 31, 2000.
Item 17 Undertakings
(1) The undersigned Registrant agrees that prior to any public reoffering of
the securities registered through the use of a prospectus which is a part
of this registration statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act, the
reoffering prospectus will contain the information called for by the
applicable registration form for the reofferings by persons who may be
deemed underwriters, in addition to the information called for by the other
items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the 1933 Act, each
post-effective amendment shall be deemed to be a new registration statement
for the initial bona fide offering of them.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this Post-Effective Registration
Statement has been signed on behalf of the Registrant in Jersey City, New
Jersey, on the 11th day of May, 2000.
LORD ABBETT LARGE-CAP GROWTH FUND
By: /s/ LAWRENCE H. KAPLAN
Lawrence H. Kaplan
Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
Chairman, President
/s/ Robert S. Dow and Director/Trustee May 11, 2000
- ------------------------------------ --------------------- --------------
Robert S. Dow
/s/ E. Thayer Bigelow Director/Trustee May 11, 2000
- ------------------------------------ --------------------- ---------------
E. Thayer Bigelow
/s/ William H. T. Bush Director/Trustee May 11, 2000
- ------------------------------------ --------------------- --------------
William H. T. Bush
/s/ Robert B. Calhoun, Jr. Director/Trustee May 11, 2000
- ------------------------------------ --------------------- --------------
Robert B. Calhoun, Jr.
/s/ Stewart S. Dixon Director/Trustee May 11, 2000
- ------------------------------------ --------------------- --------------
Stewart S. Dixon
/s/ John C. Jansing Director/Trustee May 11, 2000
- ------------------------------------ --------------------- --------------
John C. Jansing
/s/ C. Alan MacDonald Director/Trustee May 11, 2000
- ------------------------------------ --------------------- --------------
C. Alan MacDonald
/s/ Hansel B. Millican, Jr. Director/Trustee May 11, 2000
- ------------------------------------ --------------------- --------------
Hansel B. Millican, Jr.
/s/ Thomas J. Neff Director/Trustee May 11, 2000
- ------------------------------------ --------------------- --------------
Thomas J. Neff
/s/ Donna M. McManus Chief Financial Officer May 11, 2000
- ------------------------------------ --------------------- --------------
Donna M. McManus
<PAGE>
EXHIBIT 11
May 3, 2000
Lord Abbett Large-Cap Growth Fund
90 Hudson Street
Jersey City, New Jersey 07302-3972
Dear Sirs:
You have requested our opinion in connection with your filing of Amendment
No. 1 to the Registration Statement on Form N-14 ("the Amendment") under the
Investment Company Act of 1940, as amended (the "Act"), for the Lord Abbett
Large-Cap Growth Fund, a Delaware business trust (the "Company"), and in
connection therewith your registration of Class A shares of beneficial interest,
without par value, of the Company (collectively, the "Shares").
We have examined and relied upon originals, or copies certified to our
satisfaction, of such company records, documents, certificates, and other
instruments as in our judgment are necessary or appropriate to enable us to
render the opinion set forth below.
We are of the opinion that the Shares issued in the continuous offering
have been duly authorized and, assuming the issuance of the Shares for cash at
net asset value and receipt by the Company of the consideration therefor as set
forth in the Amendment, the Shares will be validly issued, fully paid, and
nonassessable.
We express no opinion as to matters governed by any laws other than the
Title 12 of the Delaware Code. We consent to the filing of this opinion solely
in connection with the Amendment. In giving such consent, we do not hereby admit
that we come within the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
WILMER, CUTLER & PICKERING
By: /s/ James E. Anderson
James E. Anderson, a partner
<PAGE>
EXHIBIT 12
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Post-Effective Amendment No. 1 to
Registration Statement No. 811-9597 of Lord Abbett Large-Cap Growth Fund on Form
N-14 of our report dated December 15, 1999, on the Statement of Net Assets of
Lord Abbett Large-Cap Growth Fund as of December 14, 1999 appearing in such
Registration Statement, and of our report dated July 9, 1999 appearing (and
incorporated by reference) in the annual report to shareholders of Lord Abbett
Equity Fund for the year ended May 31, 1999 and to the references to us under
the heading "Agreement and Plan of Reorganization" in the Combined
Prospectus/Proxy Statement and on the cover page of the Statement of Additional
Information, both of which are part of such Registration Statement.
New York, New York
May 10, 2000
<PAGE>
EXHIBIT 14
FORM OF TAX OPINION
[DATE]
Lord Abbett Large-Cap Growth Fund
90 Hudson Street
Jersey City, New Jersey 07302
Lord Abbett Equity Fund
90 Hudson Street
Jersey City, New Jersey 07302
Ladies and Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences to Lord Abbett Large-Cap Growth Fund, a Delaware business trust
("Growth Fund"), and Lord Abbett Equity Fund, a Massachusetts business trust
("Equity Fund"), and the shareholders of Equity Fund of transactions undertaken
pursuant to the Agreement and Plan of Reorganization by and between Growth Fund
and Equity Fund, dated as of March 31, 2000 (the "Plan"). Pursuant to the Plan,
Equity Fund will (1) transfer of all of its assets to Growth Fund in exchange
solely for voting Class A shares of Growth Fund and the assumption by Growth
Fund of all of the liabilities of Equity Fund; and (2) distribute the Class A
shares of Growth Fund received in the exchange to Equity Fund's shareholders in
liquidation of Equity Fund. These transactions, taken together, are sometimes
referred to herein as the "Reorganization."
We have reviewed and rely on the following documents: (1) the Plan; (2) the
Registration Statement on Form N-14, including all exhibits thereto, filed with
the Securities and Exchange Commission on March 1, 2000, as amended on [DATE]
(the "Registration Statement"); and (3) such other documents, instruments, and
records pertaining to the Reorganization as we have deemed relevant for purposes
of rendering our opinion. In our examination of these documents, we have
assumed, without independent inquiry, the genuineness of all signatures, the
proper execution of all documents, the authenticity of all documents submitted
to us as originals, the conformity to originals of all documents submitted to us
as copies, the authenticity of the originals of any such copies, and the legal
capacity of all natural persons. We have further assumed that the transactions
contemplated by the Plan will be consummated in accordance therewith and as
described in the Registration Statement.
We have also relied on the accuracy of the representations contained in the
letter to us from Growth Fund and Equity Fund dated [DATE]. We have not
attempted to verify independently such representations, but nothing has come to
our attention that would cause us to question the accuracy thereof.
Based on and subject to the foregoing, and on our consideration of such
other matters of fact and law as we have deemed necessary or appropriate, it is
our opinion that:
1. The acquisition by Growth Fund of substantially all the assets of Equity
Fund in exchange for voting Class A shares of Growth Fund and Growth Fund's
assumption of Equity Fund's liabilities, followed by the distribution by
Equity Fund to its shareholders of the Growth Fund shares, in complete
liquidation, will constitute a reorganization within the meaning of section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
Growth Fund and Equity Fund will each be "a party to a reorganization"
within the meaning of section 368(b) of the Code.
2. No gain or loss will be recognized by Equity Fund upon the transfer of
substantially all of its assets to Growth Fund solely in exchange for Class
A shares of Growth Fund and Growth Fund's assumption of Equity Fund's
liabilities or upon the distribution of such Growth Fund shares to Equity
Fund shareholders.
3. Growth Fund will recognize no gain or loss upon the receipt of
substantially all of the assets of Equity Fund in exchange solely for
voting Class A shares of Growth Fund and the assumption of Equity Fund's
liabilities.
4. The shareholders of Equity Fund will recognize no gain or loss on the
receipt of Class A shares of Growth Fund (including any fractional share
interests to which they may be entitled) solely in exchange for their
Equity Fund shares.
5. The basis of the assets of Equity Fund in the hands of Growth Fund will be
the same as the basis of such assets in the hands of Equity Fund
immediately prior to the transfer.
6. The holding period of the assets of Equity Fund in the hands of Growth Fund
will include the period during which those assets were held by Equity Fund.
7. The basis of the Growth Fund shares received by each Equity Fund
shareholder will be the same as the basis of the Equity Fund shares
surrendered in exchange therefor.
8. The holding period of the Class A shares of Growth Fund received by each
Equity Fund shareholder in exchange for Equity Fund shares (including
fractional shares to which such a shareholder may be entitled) will include
the period that the shareholder held the Equity Fund shares exchanged
therefor, provided that the shareholder held such shares as a capital asset
on the date of the exchange.
We express no opinion concerning any tax consequences of the Reorganization
other than those specifically set forth herein. Further, no opinion is expressed
as to the tax consequences of the Reorganization under any foreign, state, or
local tax law.
The foregoing opinions are based on relevant provisions of the Code, the
Treasury Regulations promulgated thereunder, court decisions, and administrative
determinations as currently in effect, all of which are subject to change, with
or without retroactive effect, at any time. We undertake no obligation to update
or supplement this opinion to reflect any changes in laws that may occur after
the date of this opinion.
This opinion should not be quoted in whole or in part nor otherwise
referred to, nor otherwise be filed with or furnished to any governmental agency
or other person or entity, without our express prior written consent. We hereby
consent to the filing of this opinion letter as an exhibit to the Registration
Statement and to the reference to our firm under the caption "Legal Matters" in
the Proxy Statement and Prospectus included therein.
Sincerely,
WILMER, CUTLER & PICKERING
By:
Erik H. Corwin
A Partner
<PAGE>
EXHIBIT17(g)
STATEMENT OF ADDITIONAL INFORMATION
OF
LORD ABBETT LARGE-CAP GROWTH FUND
dated December, 1999
LORD ABBETT
Statement of Additional Information December 30, 1999
LORD ABBETT
Large-Cap Growth Fund
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from your securities dealer or from Lord Abbett Distributor LLC
("Lord Abbett Distributor") at The General Motors Building, 767 Fifth Avenue,
New York, New York 10153-0203. On or about January 17, 2000, the new address
will be 90 Hudson St., Jersey City, NJ 07302-3973. This Statement of Additional
Information relates to, and should be read in conjunction with, the Prospectus
dated December 30, 1999.
Shareholder inquiries should be made by directly contacting the Fund or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
1. Investment Policies 2
2. Trustees and Officers 5
3. Investment Advisory and Other Services 9
4. Portfolio Transactions 9
5. Purchases, Redemptions
and Shareholder Services 11
6. Performance 18
7. Taxes 19
8. Information About The Company 20
9. Financial Statements 20
1
<PAGE>
1.
Investment Policies
The Lord Abbett Large-Cap Growth Fund (the "Company" or the "Fund") is a
diversified open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "Act").
FUNDAMENTAL INVESTMENT RESTRICTIONS. The Fund is subject to the following
fundamental investment restrictions, which cannot be changed without approval of
a majority of the Fund's outstanding shares.
The Fund may not:
(1) borrow money, issue senior securities or mortgage, pledge or
hypothecate its assets except to the extent permitted under the Act;
(2) engage in the underwriting of securities, except to the extent that,
in connection with the disposition of its portfolio securities or as
otherwise permitted under applicable law, it may be deemed to be an
underwriter under federal securities laws;
(3) invest more than 25% of the value of its total assets in the
securities of issuers in any particular industry (excluding
obligations issued or guaranteed by the U.S. Government, any state,
territory or possession of the United States, the District of Columbia
or any of their authorities, agencies, instrumentalities or political
subdivisions);
(4) buy or sell real estate (except that the Fund may invest in securities
directly or indirectly secured by real estate or interests therein or
issued by companies which invest in real estate or interests therein)
or commodities or commodity contracts (except to the extent the Fund
may do so in accordance with applicable law and without registering as
a commodity pool operator under the Commodity Exchange Act as, for
example, with futures contracts);
(5) make loans, except that the acquisition of or investment in debt
securities, repurchase agreements or similar instruments shall not be
subject to this restriction, and except further that the Fund may lend
its portfolio securities, provided that the lending of portfolio
securities may be made only in accordance with applicable law; and
(6) with respect to 75% of the value of the total assets of the Fund, (i)
buy securities of any one issuer representing more than 5% of the
value of its total assets, except securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities or (ii) own
more than 10% of the voting securities of such issuer.
Compliance with the investment restrictions in this section 1 will be determined
at the time of the purchase or sale of the portfolio investments.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. In addition to policies in the
Prospectus and the investment restrictions above which cannot be changed without
shareholder approval, the Fund is also subject to the following non-fundamental
investment policies which may be changed by the Board of Trustees without
shareholder approval.
The Fund may not:
(1) make short sales of securities or maintain a short position except to
the extent permitted by applicable law;
(2) invest knowingly more than 15% of its net assets (at the time of
investment) in illiquid securities, except for securities qualifying
for resale under Rule 144A of the Securities Act of 1933 ("Rule 144A")
deemed to be liquid by the Board of Trustees;
2
<PAGE>
(3) invest in the securities of other investment companies as defined in
the Act, except as permitted by applicable law;
(4) write, purchase or sell puts, calls, straddles, spreads or
combinations thereof, except to the extent permitted in the Fund's
Prospectus and statement of additional information, as they may be
amended from time to time; and
(5) buy from or sell to any of the Fund's officers, trustees, employees,
or its investment adviser any securities other than shares of the
Fund.
Rights And Warrants. The Fund may invest in rights and warrants to purchase
securities, including warrants which are not listed on the NYSE or American
Stock Exchange in an amount not to exceed 5% of the value of the Fund's gross
assets.
Rights represent a privilege offered to holders of record of issued securities
to subscribe (usually on a pro rata basis) for additional securities of the same
class, of a different class or of a different issuer, as the case may be.
Warrants represent the privilege to purchase securities at a stipulated price
and are usually valid for several years. Rights and warrants generally do not
entitle a holder to dividends or voting rights with respect to the underlying
securities nor do they represent any rights in the assets of the issuing
company.
Also, the value of a right or warrant may not necessarily change with the value
of the underlying securities and rights and warrants cease to have value if they
are not exercised prior to their expiration date.
OPTIONS AND FINANCIAL FUTURES TRANSACTIONS. The Fund may engage in options and
financial futures transactions in accordance with its investment objective and
policies. Although the Fund is not currently employing such options and
financial futures transactions, it may engage in such transactions in the future
if it appears advantageous to us to do so, in order to cushion the effects of
fluctuating interest rates and adverse market conditions. The use of options and
financial futures, and possible benefits and attendant risks, are discussed
below, along with information concerning certain other investment policies and
techniques.
FINANCIAL FUTURES CONTRACTS. The Fund may enter into contracts for the future
delivery of a financial instrument, such as a security or the cash value of a
securities index. This investment technique is designed primarily to hedge
(i.e., protect) against anticipated future changes in interest rates or market
conditions which otherwise might adversely affect the value of securities which
the Fund holds or intends to purchase. A "sale" of a futures contract means the
undertaking of a contractual obligation to deliver the securities or the cash
value of an index called for by the contract at a specified price during a
specified delivery period. A "purchase" of a futures contract means the
undertaking of a contractual obligation to acquire the securities or cash value
of an index at a specified price during a specified delivery period. At the time
of delivery pursuant to the contract, adjustments are made to recognize
differences in value arising from the delivery of securities which differ from
those specified in the contract. In some cases, securities called for by a
futures contract may not have been issued at the time the contract was written.
The Fund will not enter into any futures contracts or options on futures
contracts if the aggregate of the market value of the securities covered by such
outstanding contracts and options would exceed 50% of its total assets.
Although some financial futures contracts by their terms call for the actual
delivery or acquisition of securities, in most cases, a party will close out the
contractual commitment before delivery without having to make or take delivery
of the security by purchasing (or selling, as the case may be) on a commodities
exchange an identical futures contract calling for delivery in the same month.
Such a transaction, if effected through a member of an exchange, cancels the
obligation to make or take delivery of the securities. All transactions in the
futures market are made, offset or fulfilled through a clearing house associated
with the exchange on which the contracts are traded. The Fund will incur
brokerage fees when it purchases or sells contracts and will be required to
maintain margin deposits. At the time it enters into a futures contract, it is
required to deposit with the custodian, on behalf of the broker, a specified
amount of cash or eligible securities called "initial margin." The initial
margin required for a futures contract is set by the exchange on which the
contract is traded. Subsequent payments, called "variation margin," to and from
the broker are made on a daily basis as the market price of the futures contract
fluctuates. The costs incurred in connection with futures transactions could
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<PAGE>
reduce our return. Futures contracts entail risks. If the investment adviser's
judgment about the general direction of interest rates or markets is wrong, the
overall performance may be poorer than if no such contracts had been entered
into.
There may be an imperfect correlation between movements in prices of futures
contracts and portfolio securities being hedged. The degree of difference in
price movements between futures contracts and the securities (or securities
indices) being hedged depends upon such things as variations in demand for
futures contracts and securities underlying the contracts and differences
between the liquidity of the markets for such contracts and the securities
underlying them. In addition, the market prices of futures contracts may be
affected by certain factors not directly related to the underlying securities.
At any given time, the availability of futures contracts, and hence their
prices, are influenced by credit conditions and margin requirements. Due to the
possibility of price distortions in the futures market and because of the
imperfect correlation between movements in the prices of securities and
movements in the prices of futures contracts, a correct forecast of market
trends by the investment adviser may not result in a successful hedging
transaction.
CALL OPTIONS ON STOCK. The Fund may, from time to time, write call options on
its portfolio securities. The Fund may write only call options which are
"covered," meaning that the Fund either owns the underlying security or has an
absolute and immediate right to acquire that security, without additional cash
consideration, upon conversion or exchange of other securities currently held in
its portfolio. In addition, the Fund will not permit the call to become
uncovered prior to the expiration of the option or termination through a closing
purchase transaction as described below. If the Fund writes a call option, the
purchaser of the option has the right to buy (and the Fund has the obligation to
sell) the underlying security at the exercise price throughout the term of the
option. The amount paid to the Fund by the purchaser of the option is the
"premium." The Fund's obligation to deliver the underlying security against
payment of the exercise price would terminate either upon expiration of the
option or earlier if the Fund were to effect a "closing purchase transaction"
through the purchase of an equivalent option on an exchange. There can be no
assurance that a closing purchase transaction can be effected. The Fund does not
intend to write covered call options with respect to securities with an
aggregate market value of more than 5% of its gross assets at the time an option
is written.
The Fund will not be able to effect a closing purchase transaction after it
receives notice of exercise. In order to write a call option, the Fund is
required to comply with the rules of The Options Clearing Corporation and the
various exchanges with respect to collateral requirements. The Fund may not
purchase call options except in connection with a closing purchase transaction.
It is possible that the cost of effecting a closing purchase transaction may be
greater than the premium received by the Fund for writing the option.
Generally, the Fund intends to write listed covered call options during periods
when it anticipates declines in the market values of portfolio securities
because the premiums received may offset to some extent the decline in the
Fund's net asset value occasioned by such declines in market value. Except as
part of the "sell discipline" described below, the Fund will generally not write
listed covered call options when it anticipates that the market values of its
portfolio securities will increase.
One reason for the Fund to write call options is as part of a "sell discipline."
If the Fund decides that a portfolio security would be overvalued and should be
sold at a certain price higher than the current price, it could write an option
on the stock at the higher price. Should the stock subsequently reach that price
and the option be exercised, the Fund would, in effect, have increased the
selling price of that stock, which it would have sold at that price in any
event, by the amount of the premium. In the event the market price of the stock
declined and the option were not exercised, the premium would offset all or some
portion of the decline. It is possible that the price of the stock could
increase beyond the exercise price; in that event, the Fund would forego the
opportunity to sell the stock at that higher price.
In addition, call options may be used as part of a different strategy in
connection with sales of portfolio securities. If, in the judgment of the Fund
Management, the market price of a stock is overvalued and it should be sold, the
Fund may elect to write a call option with an exercise price substantially below
the current market price. As long as the value of the underlying security
remains above the exercise price during the term of the option, the option will,
in all probability, be exercised, in which case the Fund will be required to
sell the stock at the exercise price. If the sum of the premium and the exercise
price exceeds the market price of the stock at the time the call option is
written, the Fund would,
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<PAGE>
in effect, have increased the selling price of the stock. The Fund would not
write a call option in these circumstances if the sum of the premium and the
exercise price were less than the current market price of the stock.
PUT OPTIONS ON STOCK. The Fund may also write listed put options. If the Fund
writes a put option, it is obligated to purchase a given security at a specified
price at any time during the term of the option.
Writing listed put options is a useful portfolio investment strategy when the
Fund has cash or other reserves available for investment as a result of sales of
Fund shares or, more importantly, because Fund Management believes a more
defensive and less fully invested position is desirable in light of market
conditions. If the Fund Management wishes to invest its cash or reserves in a
particular security at a price lower than current market value, it may write a
put option on that security at an exercise price which reflects the lower price
it is willing to pay. The buyer of the put option generally will not exercise
the option unless the market price of the underlying security declines to a
price near or below the exercise price. If the Fund writes a listed put, the
price of the underlying stock declines and the option is exercised, the premium,
net of transaction charges, will reduce the purchase price paid by the Fund for
the stock. The price of the stock may decline by an amount in excess of the
premium, in which event the Fund would have foregone an opportunity to purchase
the stock at a lower price.
If, prior to the exercise of a put option, the Fund determines that it no longer
wishes to invest in the stock on which the put option had been written, the Fund
may be able to effect a closing purchase transaction on an exchange by
purchasing a put option of the same series as the one which it has previously
written. The cost of effecting a closing purchase transaction may be greater
than the premium received on writing the put option and there is no guarantee
that a closing purchase transaction can be effected.
The Fund may only write covered put options to the extent that cover for such
options does not exceed 15% of its net assets. The Fund will not purchase an
option if, as a result of such purchase, more than 10% of its total assets would
be invested in premiums for such options.
Unless the Fund has other liquid assets that are sufficient to satisfy the
exercise of a call, the Fund would be required to liquidate portfolio securities
in order to satisfy the exercise. Because an exercise must be settled within
hours after receiving the notice of exercise, if the Fund fails to anticipate an
exercise, it may have to borrow (in amounts not exceeding 20% of the Fund's
total assets) pending settlement of the sale of securities in its portfolio and
would incur interest charges thereon.
When the Fund has written a call, there is also a risk that the market may
decline between the time the call is written and the time the Fund is able to
sell stocks in its portfolio. As with stock options, the Fund will not learn
that an index option has been exercised until the day following the exercise
date but, unlike a call on stock where the Fund would be able to deliver the
underlying securities in settlement, the Fund may have to sell part of its stock
portfolio in order to make settlement in cash, and the price of such stocks
might decline before they can be sold. This timing risk makes certain strategies
involving more than one option substantially more risky with index options than
with stock options. For example, even if an index call which the Fund has
written is "covered" by an index call held by the Fund with the same strike
price, the Fund will bear the risk that the level of the index may decline
between the close of trading on the date the exercise notice is filed with the
clearing corporation and the close of trading on the date the Fund exercises the
call it holds or the time the Fund sells the call which in either case would
occur no earlier than the day following the day the exercise notice was filed.
2.
Trustees And Officers
The Board of Trustees of the Fund is responsible for the management of the
business and affairs of the Fund.
The following trustee is a partner of Lord, Abbett & Co. ("Lord Abbett"), The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. He has
been associated with Lord Abbett for over five years and is also an officer,
director, or trustee of thirteen other Lord Abbett-sponsored funds.
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*Robert S. Dow, age 54, Chairman and President
*Mr. Dow is an "interested person" as defined in the Act.
The following outside trustees are also directors or trustees of thirteen other
Lord Abbett-sponsored funds referred to above.
E. Thayer Bigelow, Trustee
Time Warner Inc.
1271 Avenue of the Americas
New York, New York
Senior Adviser, Time Warner Inc. (since 1998). Formerly, Acting Chief Executive
Officer of Courtroom Television Network (1997 - 1998). Formerly, President and
Chief Executive Officer of Time Warner Cable Programming, Inc. (1991 - 1997).
Prior to that, President and Chief Operating Officer of Home Box Office, Inc.
Age 58.
William H.T. Bush, Trustee
Bush-O'Donnell & Co., Inc.
101 South Hanley Road, Suite 1025
St. Louis, Missouri
Co-founder and Chairman of the Board of financial advisory firm of
Bush-O'Donnell & Company (since 1986). Age 61.
Robert B. Calhoun, Jr., Trustee
Monitor Clipper Partners
650 Madison Avenue, 9th Floor
New York, New York
Managing Director of Monitor Clipper Partners (since 1997) and President of The
Clipper Group L.P., both private equity investment funds (since 1990). Age 57.
Stewart S. Dixon, Trustee
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon (since 1990). Age 68.
John C. Jansing, Trustee
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 73.
C. Alan MacDonald, Trustee
Directorship Inc.
8 Sound Shore Drive
Greenwich, Connecticut
Currently involved in golf development management on a consultancy basis (since
1999). Formerly, Managing Director of The Directorship Inc., a consultancy in
board management and corporate governance (1997-1999). Prior to that, General
Partner of The Marketing Partnership, Inc., a full service marketing consulting
firm (1994-1997). Prior to that, Chairman and Chief Executive Officer of Lincoln
Snacks, Inc., manufacturer of branded snack foods (1992-1994). His
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<PAGE>
career spans 36 years at Stouffers and Nestle with 18 of the years as Chief
Executive Officer. Currently serves as Director of DenAmerica Corp., J. B.
Williams Company, Inc., Fountainhead Water Company and Exigent Diagnostics. Age
66.
Hansel B. Millican, Jr., Trustee
Rochester Button Company
1328 Broadway (Suite 816)
New York, New York
President and Chief Executive Officer of Rochester Button Company (since 1991).
Age 71.
Thomas J. Neff, Trustee
Spencer Stuart
277 Park Avenue
New York, New York
Chairman of Spencer Stuart, an executive search consulting firm (since 1976).
Currently serves as a Director of Ace, Ltd. (NYSE). Age 62.
The second column of the following table sets forth the compensation accrued for
outside trustees. The third column sets forth information with respect to the
pension or retirement benefits accrued for outside directors/trustees maintained
by the Lord Abbett-sponsored funds. No director/trustee of the funds associated
with Lord Abbett and no officer of the funds received any compensation from the
funds for acting as a director/trustee or officer.
For the Fiscal Year July 31, 1998
---------------------------------
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Pension or For Year Ended
Retirement Benefits December 31, 1998
Accrued by the Total Compensation
Aggregate Company and Paid by the Company and
Compensation Thirteen Other Lord Thirteen Other Lord
Accrued by Abbett-sponsored Abbett-sponsored
Name of the Company(1) Companies(2) Companies(3)
Trustee
<S> <C> <C> <C>
E. Thayer Bigelow None $17,622 $57,400
William H.T. Bush* None $15,846 $27,500
Robert B. Calhoun, Jr.** None $12,276 $33,500
Stewart S. Dixon None $32,420 $56,500
John C. Jansing None $41,108(4) $55,500
C. Alan MacDonald None $26,763 $55,000
Hansel B. Millican, Jr. None $37,822 $55,500
Thomas J. Neff None $20,313 $56,500
*Elected as of August 13, 1998
**Elected as of June 17, 1998
</TABLE>
1. Outside directors/trustees' fees, including attendance fees for board and
committee meetings, are allocated among all Lord Abbett-sponsored companies
based on the net assets of each fund. A portion of the fees payable by the
Company to its outside trustees is being deferred under a plan ("equity
based plan") that deems the deferred amounts to be invested in shares of
the Company for later distribution to the trustees. Since the Lord Abbett
Large-Cap Growth Fund is new, no compensation has yet been paid to its
trustees.
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<PAGE>
2. The amounts in Column 3 were accrued by the Lord Abbett-sponsored Funds for
the 12 months ended October 31, 1999 with respect to the equity based plan
established for independent directors/trustees in 1996. This plan
supercedes a previously approved retirement plan for all future
directors/trustees. Current directors had the option to convert their
accrued benefits under the retirement plan. All of the outside directors
except one made such an election. Each plan also provides for a
pre-retirement death benefit and actuarially reduced joint-and-survivor
spousal benefits.
3. This column shows aggregate compensation, including directors/trustees'
fees and attendance fees for board and committee meetings, of a nature
referred to in footnote one, paid by the Lord Abbett-sponsored funds during
the year ended December 31, 1998 but does not include amounts accrued under
the equity based plan and shown in Column 3.
4. Mr. Jansing chose to continue to receive benefits under the retirement
plan, which provides that outside directors/ trustees may receive annual
retirement benefits for life equal to their final annual retainer following
retirement at or after age 72 with at least ten years of service. Thus, if
Mr. Jansing were to retire and the annual retainer payable by the funds
were the same as it is today, he would receive annual retirement benefits
of $50,000.
Except where indicated, the following executive officers of the Company have
been associated with Lord Abbett for over five years. Messrs. Carper, Hilstad,
and Morris are partners of Lord Abbett; the others are employees. None have
received compensation from the Fund.
Executive Vice President:
Stephen Humphrey, age 55 (with Lord Abbett since 1999, formerly Vice President
and Portfolio Manager at Chase Manhattan Bank from 1976 - 1999)
Vice Presidents:
Joan A. Binstock, age 45 (with Lord Abbett since 1999, formerly Chief Operating
Officer of Morgan Grenfell from 1996 to 1999, prior thereto Principal of Ernst &
Young LLP)
Daniel E. Carper, age 47
Paul A. Hilstad, age 56, Vice President and Secretary (with Lord Abbett since
1995; formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.)
Lawrence H. Kaplan, age 42 (with Lord Abbett since 1997 - formerly Vice
President and Chief Counsel of Salomon Brothers Asset Management Inc. from 1995
to 1997, prior thereto Senior Vice President, Director and General Counsel of
Kidder Peabody Asset Management, Inc.)
Robert G. Morris, age 54
A. Edward Oberhaus, age 39
Tracie E. Richter, age 31 (with Lord Abbett since 1999, formerly Vice President
- - Head of Fund Administration of Morgan Grenfell from 1998 to 1999, Vice
President of Bankers Trust from 1996 to 1998, prior thereto Tax Associate of
Goldman Sachs).
Treasurer:
Donna M. McManus, age 38 (with Lord Abbett since 1996, formerly a Senior Manager
at Deloitte & Touche LLP).
As of the date hereof, our officers and trustees, as a group, owned less than 1%
of the Fund's outstanding shares and there were no record holders of 5% or more
of the Fund's outstanding shares, other than Lord Abbett Distributor.
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<PAGE>
3.
Investment Advisory And Other Services
The services performed by Lord Abbett are described under "Management" in the
Prospectus. Under the Management Agreement, we are obligated to pay Lord Abbett
a monthly fee, based on average daily net assets for each month at an annual
rate of .75 of 1% for the Lord Abbett Large-Cap Growth Fund. This fee is
allocated among the classes of the Fund based on the Fund's average daily net
assets.
The Fund pays all expenses not expressly assumed by Lord Abbett, including,
without limitation, 12b-1 expenses, outside trustees' fees and expenses,
association membership dues, legal and auditing fees, taxes, transfer and
dividend disbursing agent fees, shareholder servicing costs, expenses relating
to shareholder meetings, expenses of preparing, printing and mailing stock
certificates and shareholder reports, expenses of registering our shares under
federal and state securities laws, expenses of preparing, printing and mailing
prospectuses to existing shareholders, insurance premiums, brokerage and other
expenses connected with executing portfolio transactions.
Although not obligated to do so, Lord Abbett may waive all or a part of its
management fees and or may assume other expenses of the Fund.
Lord Abbett Distributor LLC, General Motors Building, 767 Fifth Avenue, The
General Motors Building, New York, New York 10153-0203, serves as the principal
underwriter for the Company.
The Bank of New York ("BNY"), 48 Wall Street, New York, New York, is the
Company's custodian. In accordance with the requirements of Rule 17f-5, the
Company's Board of Trustees have approved arrangements permitting the Fund's
foreign assets not held by BNY or its foreign branches to be held by certain
qualified foreign banks and depositories.
Deloitte & Touche LLP, Two World Financial Center, New York, New York, are the
independent auditors of the Company and must be approved at least annually by
our Board of Trustees to continue in such capacity. Deloitte & Touche LLP
perform audit services for the Fund, including the examination of financial
statements included in the Fund's Annual Report to Shareholders.
United Missouri Bank of Kansas City, N.A., Tenth and Grand, Kansas City,
Missouri, acts as the transfer agent and dividend disbursing agent for the
Company.
4.
Portfolio Transactions
The Company's policy is to obtain best execution on all our portfolio
transactions, which means that it seeks to have purchases and sales of portfolio
securities executed at the most favorable prices, considering all costs of the
transaction including brokerage commissions and dealer markups and markdowns and
taking into account the full range and quality of the brokers' services.
Consistent with obtaining best execution, we generally pay, as described below,
a higher commission than some brokers might charge on the same transaction. Our
policy with respect to best execution governs the selection of brokers or
dealers and the market in which the transaction is executed. To the extent
permitted by law, we may, if considered advantageous, make a purchase from or
sale to another Lord Abbett-sponsored fund without the intervention of any
broker-dealer.
Broker-dealers are selected on the basis of their professional capability and
the value and quality of their brokerage and research services. Normally, the
selection is made by traders who are officers of each Lord Abbett-sponsored fund
and also are employees of Lord Abbett. These traders do the trading as well for
other accounts -- investment companies (of which they are also officers) and
other investment clients -- managed by Lord Abbett. They are responsible for
obtaining best execution.
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<PAGE>
We pay a commission rate that we believe is appropriate to give maximum
assurance that our brokers will provide us, on a continuing basis, the highest
level of brokerage services available. While we do not always seek the lowest
possible commissions on particular trades, we believe that our commission rates
are in line with the rates that many other institutions pay. Our traders are
authorized to pay brokerage commissions in excess of those that other brokers
might accept on the same transactions in recognition of the value of the
services performed by the executing brokers, viewed in terms of either the
particular transaction or the overall responsibilities of Lord Abbett with
respect to us and the other accounts they manage. Such services include showing
us trading opportunities including blocks, a willingness and ability to take
positions in securities, knowledge of a particular security or market proven
ability to handle a particular type of trade, confidential treatment, promptness
and reliability.
Some of these brokers also provide research services at least some of which are
useful to Lord Abbett in their overall responsibilities with respect to us and
the other accounts they manage. Research includes the furnishing of analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts and trading equipment and
computer software packages, acquired from third-party suppliers, that enable
Lord Abbett to access various information bases. Such services may be used by
Lord Abbett in servicing all their accounts, and not all of such services will
necessarily be used by Lord Abbett in connection with their management of the
Fund; conversely, such services furnished in connection with brokerage on other
accounts managed by Lord Abbett may be used in connection with their management
of the Fund, and not all of such services will necessarily be used by Lord
Abbett in connection with their advisory services to such other accounts. We
have been advised by Lord Abbett that research services received from brokers
cannot be allocated to any particular account, are not a substitute for Lord
Abbett's services but are supplemental to their own research effort and, when
utilized, are subject to internal analysis before being incorporated by Lord
Abbett into their investment process. As a practical matter, it would not be
possible for Lord Abbett to generate all of the information presently provided
by brokers. While receipt of research services from brokerage firms has not
reduced Lord Abbett's normal research activities, the expenses of Lord Abbett
could be materially increased if it attempted to generate such additional
information through its own staff and purchased such equipment and software
packages directly from the suppliers.
No commitments are made regarding the allocation of brokerage business to or
among brokers, and trades are executed only when they are dictated by investment
decisions of the Lord Abbett-sponsored funds to purchase or sell portfolio
securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold the Lord
Abbett-sponsored funds' shares and/or shares of other Lord Abbett-sponsored
funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as a Lord Abbett-sponsored fund does, transactions will, to the extent
practicable, be allocated among all participating accounts in proportion to the
amount of each order and will be executed daily until filled so that each
account shares the average price and commission cost of each day. Other clients
who direct that their brokerage business be placed with specific brokers or who
invest through wrap accounts introduced to Lord Abbett by certain brokers may
not participate with a Lord Abbett-sponsored fund in the buying and selling of
the same securities as described above. If these clients wish to buy or sell the
same security as a Lord Abbett-sponsored fund does, they may have their
transactions executed at times different from our transactions and thus may not
receive the same price or incur the same commission cost as a Lord
Abbett-sponsored fund does.
The Lord Abbett-sponsored funds will not seek "reciprocal" dealer business (for
the purpose of applying commissions in whole or in part for their benefit or
otherwise) from dealers as consideration for the direction to them of portfolio
business.
10
<PAGE>
5.
Purchases, Redemptions
And Shareholder Services
Information concerning how we value our shares for the purchase and redemption
of our shares is contained in the Prospectus under "Purchases" and
"Redemptions," respectively.
As disclosed in the Prospectus, we calculate our net asset value as of the close
of the New York Stock Exchange ("NYSE") on each day that the NYSE is open for
trading by dividing our total net assets by the number of shares outstanding at
the time of calculation. The NYSE is closed on Saturdays and Sundays and the
following holidays -- New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
The Company values its portfolio securities at market value as of the close of
the NYSE. Market value will be determined as follows: securities listed or
admitted to trading privileges on the NYSE or American Stock Exchange or on the
NASDAQ National Market System are valued at the last sales price, or, if there
is no sale on that day, at the mean between the last bid and asked prices, or,
in the case of bonds, in the over-the-counter market if, in the judgment of the
Fund's officers, that market more accurately reflects the market value of the
bonds. Over-the-counter securities not traded on the NASDAQ National Market
System are valued at the mean between the last bid and asked prices. Securities
for which market quotations are not available are valued at fair market value
under procedures approved by the Board of Trustees.
For each class of shares, the net asset value will be determined by taking the
net assets and dividing by the number of shares outstanding.
The Fund has entered into a distribution agreement with Lord Abbett Distributor
LLC, a New York limited liability company ("Lord Abbett Distributor") and
subsidiary of Lord Abbett under which Lord Abbett Distributor is obligated to
use its best efforts to find purchasers for the shares of the Fund, and to make
reasonable efforts to sell Fund shares so long as, in Lord Abbett Distributor's
judgment, a substantial distribution can be obtained by reasonable efforts. the
CONVERSION OF CLASS B SHARES. The conversion of Class B shares on the eighth
anniversary of their purchase is subject to the continuing availability of a
private letter ruling from the Internal Revenue Service, or an opinion of
counsel or tax adviser, to the effect that the conversion of Class B shares does
not constitute a taxable event for the holder under Federal income tax law. If
such a revenue ruling or opinion is no longer available, the automatic
conversion feature may be suspended, in which event no further conversions of
Class B shares would occur while such suspension remained in effect. Although
Class B shares could then be exchanged for Class A shares on the basis of
relative net asset value of the two classes, without the imposition of a sales
charge or fee, such exchange could constitute a taxable event for the holder.
ALTERNATIVE SALES ARRANGEMENTS
CLASSES OF SHARES. The Fund offers investors four different classes of shares in
this Statement of Additional Information. The different classes of shares
represent investments in the same portfolio of securities but are subject to
different expenses and will likely have different share prices. Investors should
read this section carefully to determine which class represents the best
investment option for their particular situation.
CLASS A SHARES. If you buy Class A shares, you pay an initial sales charge on
investments of less than $1 million (or on investments for employer-sponsored
retirement plans under the Internal Revenue Code (hereinafter referred to as
"Retirement Plans") with less than 100 eligible employees or on investments that
do not qualify to be under a "special retirement wrap program" as a program
sponsored by an authorized institution showing one or more characteristics
distinguishing it, in the opinion of Lord Abbett Distributor from a mutual fund
wrap fee program). If you purchase Class A shares as part of an investment of at
least $1 million (or for Retirement Plans with at least 100 eligible employees
or under a special retirement wrap program) in shares of one or more Lord
Abbett-sponsored funds, you will not pay
11
<PAGE>
an initial sales charge, but if you redeem any of those shares within 24 months
after the month in which you buy them, you may pay to the Fund a contingent
deferred sales charge ("CDSC") of 1% except for redemptions under a special
retirement wrap program. Class A shares are subject to service and distribution
fees that are currently estimated to total annually approximately .35 of 1% of
the annual net asset value of the Class A shares. The initial sales charge
rates, the CDSC and the Rule 12b-1 plan applicable to the Class A shares are
described in "Buying Class A Shares" below.
CLASS B SHARES. If you buy Class B shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the sixth anniversary of
buying them, you will normally pay a CDSC to Lord Abbett Distributor LLC ("Lord
Abbett Distributor"). That CDSC varies depending on how long you own shares.
Class B shares are subject to service and distribution fees at an annual rate of
1% of the annual net asset value of the Class B shares. The CDSC and the Rule
12b-1 plan applicable to the Class B shares are described in "Buying Class B
Shares" below.
CLASS C SHARES. If you buy Class C shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the first anniversary of
buying them, you will normally pay the Fund a CDSC of 1%. Class C shares are
subject to service and distribution fees at an annual rate of 1% of the annual
net asset value of the Class C shares. The CDSC and the Rule 12b-1 plan
applicable to the C shares are described in "Buying Class C Shares" below.
CLASS P SHARES. If you buy Class P shares, you pay no sales charge at the time
of purchase, and if you redeem your shares you pay no CDSC. Class P shares are
subject to service and distribution fees at an annual rate of .45 of 1% of the
average daily net asset value of the Class P shares. The Rule 12b-1 plan
applicable to the Class P shares is described in the "Class P Rule 12b-1 Plan."
Class P shares are available to a limited number of investors.
Which Class of Shares Should You Choose? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial adviser. The Fund's class-specific expenses and the
effect of the different types of sales charges on your investment will affect
your investment results over time. The most important factors are how much you
plan to invest and how long you plan to hold your investment. If your goals and
objectives change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider another class of
shares.
In the following discussion, to help provide you and your financial adviser with
a framework in which to choose a class, we have made some assumptions using a
hypothetical investment in the Fund. We used the sales charge rates that apply
to Class A, Class B, and Class C, and considered the effect of the higher
distribution fees on Class B and Class C expenses (which will affect your
investment return). Of course, the actual performance of your investment cannot
be predicted and will vary, based on the Fund's actual investment returns, the
operating expenses borne by each class of shares, and the class of shares you
purchase. The factors briefly discussed below are not intended to be investment
advice, guidelines or recommendations, because each investor's financial
considerations are different. The discussion below of the factors to consider in
purchasing a particular class of shares assumes that you will purchase only one
class of shares and not a combination of shares of different classes.
HOW LONG DO YOU EXPECT TO HOLD YOUR INVESTMENT? While future financial needs
cannot be predicted with certainty, knowing how long you expect to hold your
investment will assist you in selecting the appropriate class of shares. For
example, over time, the reduced sales charges available for larger purchases of
Class A shares may offset the effect of paying an initial sales charge on your
investment, compared to the effect over time of higher class-specific expenses
on Class B or Class C shares for which no initial sales charge is paid. Because
of the effect of class-based expenses, your choice should also depend on how
much you plan to invest.
INVESTING FOR THE SHORT TERM. If you have a short-term investment horizon (that
is, you plan to hold your shares for not more than six years), you should
probably consider purchasing Class A or Class C shares rather than Class B
shares. This is because of the effect of the Class B CDSC if you redeem before
the sixth anniversary of your purchase, as well as the effect of the Class B
distribution fee on the investment return for that class in the short term.
Class C shares might be the appropriate choice (especially for investments of
less than $100,000), because there is no initial sales charge on Class C shares,
and the CDSC does not apply to amounts you redeem after holding them one year.
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However, if you plan to invest more than $100,000 for the short term, then the
more you invest and the more your investment horizon increases toward six years,
the more attractive the Class A share option may become. This is because the
annual distribution fee on Class C shares will have a greater impact on your
account over the longer term than the reduced front-end sales charge available
for larger purchases of Class A shares. For example, Class A might be more
appropriate than Class C for investments of more than $100,000 expected to be
held for 5 or 6 years (or more). For investments over $250,000 expected to be
held 4 to 6 years (or more), Class A shares may become more appropriate than
Class C. If you are investing $500,000 or more, Class A may become more
desirable as your investment horizon approaches 3 years or more.
For most investors who invest $1 million or more or for Retirement Plans with at
least 100 eligible employees or for investments pursuant to a special retirement
wrap program, in most cases Class A shares will be the most advantageous choice,
no matter how long you intend to hold your shares. For that reason, it may not
be suitable for you to place a purchase order for Class B shares of $500,000 or
more or a purchase order for Class C shares of $1,000,000 or more. In addition,
it may not be suitable for you to place an order for Class B or C shares for a
Retirement Plan with at least 100 eligible employees or for a special retirement
wrap program. You should discuss this with your financial advisor.
INVESTING FOR THE LONGER TERM. If you are investing for the longer term (for
example, to provide for future college expenses for your child) and do not
expect to need access to your money for seven years or more, Class B shares may
be an appropriate investment option, if you plan to invest less than $100,000.
If you plan to invest more than $100,000 over the long term, Class A shares will
likely be more advantageous than Class B shares or Class C shares, as discussed
above, because of the effect of the expected lower expenses for Class A shares
and the reduced initial sales charges available for larger investments in Class
A shares under the Fund's Rights of Accumulation.
Of course, these examples are based on approximations of the effect of current
sales charges and expenses on a hypothetical investment over time, and should
not be relied on as rigid guidelines.
ARE THERE DIFFERENCES IN ACCOUNT FEATURES THAT MATTER TO YOU? Some account
features are available in whole or in part to Class A, Class B and Class C
shareholders. Other features (such as Systematic Withdrawal Plans) might not be
advisable in non-Retirement Plan accounts for Class B shareholders (because of
the effect of the CDSC on the entire amount of a withdrawal if it exceeds 12%
annually) and in any account for Class C shareholders during the first year of
share ownership (due to the CDSC on withdrawals during that year). See
"Systematic Withdrawal Plan" under "Shareholder Services" in the Prospectus for
more information about the 12% annual waiver of the CDSC. You should carefully
review how you plan to use your investment account before deciding which class
of shares you buy. For example, the dividends payable to Class B and Class C
shareholders will be reduced by the expenses borne solely by each of these
classes, such as the higher distribution fee to which Class B and Class C shares
are subject, as described below.
HOW DOES IT AFFECT PAYMENTS TO MY BROKER? A salesperson, such as a broker, or
any other person who is entitled to receive compensation for selling Fund shares
may receive different compensation for selling one class than for selling
another class. As discussed in more detail below, such compensation is primarily
paid at the time of sale in the case of Class A and B shares and is paid over
time, so long as shares remain outstanding, in the case of Class C shares. It is
important that investors understand that the primary purpose of the CDSC for the
Class B shares and the distribution fee for Class B and Class C shares is the
same as the purpose of the front-end sales charge on sales of Class A shares: to
compensate brokers and other persons selling such shares. The CDSC, if payable,
supplements the Class B distribution fee and reduces the Class C distribution
fee expenses for the Fund and Class C shareholders.
Class A, B, C and P Rule 12b-1 Plans. As described in the Prospectus, the Fund
has adopted a Distribution Plan and Agreement pursuant to Rule 12b-1 of the Act
for four Fund Classes: the "A Plan," the "B Plan," the "C Plan," and the "P
Plan," respectively. In adopting each Plan and in approving its continuance, the
Board of Trustees has concluded that there is a reasonable likelihood that each
Plan will benefit its respective Class and such Class' shareholders. The
expected benefits include greater sales and lower redemptions of Class shares,
which should allow each Class to maintain a consistent cash flow, and a higher
quality of service to shareholders by authorized institutions than would
otherwise be the case. Lord Abbett uses amounts received under each Plan as
described in the Prospectus and for payments to dealers for (i) providing
continuous services to shareholders, such as answering shareholder inquiries,
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maintaining records, and assisting shareholders in making redemptions,
transfers, additional purchases and exchanges and (ii) their assistance in
distributing shares of the Fund.
Each Plan requires the trustees to review, on a quarterly basis, written reports
of all amounts expended pursuant to the Plan and the purposes for which such
expenditures were made. Each Plan shall continue in effect only if its
continuance is specifically approved at least annually by vote of the trustees,
including a majority of the trustees who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related to the Plan ("outside trustees"), cast in
person at a meeting called for the purpose of voting on the Plan. No Plan may be
amended to increase materially above the limits set forth therein the amount
spent for distribution expenses thereunder without approval by a majority of the
outstanding voting securities of the applicable class and the approval of a
majority of the trustees, including a majority of the outside trustees. Each
Plan may be terminated at any time by vote of a majority of the outside trustees
or by vote of a majority of its Class's outstanding voting securities.
CONTINGENT DEFERRED SALES CHARGES. A Contingent Deferred Sales Charge ("CDSC")
(i) applies regardless of class, (ii) will not apply to shares purchased by the
reinvestment of dividends or capital gains distributions; (iii) will be assessed
on the lesser of the net asset value of the shares at the time of redemption or
the original purchase price and (iv) will not be imposed on the amount of your
account value represented by the increase in net asset value over the initial
purchase price (including increases due to the reinvestment of dividends and
capital gains distributions) and upon early redemption of shares. In the case of
Class A shares, this increase is represented by shares having an aggregate
dollar value in your account. In the case of Class B and C shares, this increase
is represented by that percentage of each share redeemed where the net asset
value exceeded the initial purchase price.
CLASS A SHARES. As stated in the Prospectus, subject to certain exceptions, a
CDSC of 1% is imposed with respect to those Class A shares (or Class A shares of
another Lord Abbett-sponsored fund or series acquired through exchange of such
shares) on which the Fund has paid the one-time distribution fee of 1% if such
shares are redeemed out of the Lord Abbett-sponsored family of funds within a
period of 24 months from the end of the month in which the original sale
occurred.
CLASS B SHARES. As stated in the Prospectus, subject to certain exceptions, if
Class B shares (or Class B shares of another Lord Abbett-sponsored fund or
series acquired through exchange of such shares) are redeemed out of the Lord
Abbett-sponsored family of funds for cash before the sixth anniversary of their
purchase, a CDSC will be deducted from the redemption proceeds. The Class B CDSC
is paid to Lord Abbett Distributor to reimburse its expenses, in whole or in
part, for providing distribution-related service to the Fund in connection with
the sale of Class B shares.
To determine whether the CDSC applies to a redemption, the Fund redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held on or after the sixth anniversary
of their purchase, and (3) shares held the longest before such sixth
anniversary.
The amount of the contingent deferred sales charge will depend on the number of
years since you invested and the dollar amount being redeemed, according to the
following schedule:
Anniversary of the Day on Contingent Deferred Sales Charge
Which the Purchase Order Was Accepted on Redemptions (As % of Amount
Subject to Charge)
Before the 1st 5.0%
On the 1st, before the 2nd 4.0%
On the 2nd, before the 3rd 3.0%
On the 3rd, before the 4th 3.0%
On the 4th, before the 5th 2.0%
On the 5th, before the 6th 1.0%
On or after the 6th anniversary None
In the table, an "anniversary" is the 365th day subsequent to the acceptance of
a purchase order or a prior anniversary. All purchases are considered to have
been made on the business day on which the purchase order was accepted.
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CLASS C SHARES. As stated in the Prospectus, subject to certain exceptions if
Class C shares are redeemed for cash before the first anniversary of their
purchase, the redeeming shareholder normally will be required to pay to the Fund
on behalf of Class C shares a CDSC of 1% of the lower of cost or the then net
asset value of Class C shares redeemed. If such shares are exchanged into the
same class of another Lord Abbett-sponsored fund and subsequently redeemed
before the first anniversary of their original purchase, the charge will be
collected by the other fund on behalf of this Fund's Class C shares.
GENERAL. The percentage (1% in the case of Class A and C shares and 5% through
1% in the case of Class B shares) used to calculate CDSCs described above for
the Class A, Class B and Class C shares is sometimes hereinafter referred to as
the "Applicable Percentage."
With respect to Class A and Class B shares, no CDSC is payable on redemptions by
participants or beneficiaries from employer-sponsored retirement plans under the
Internal Revenue Code for benefit payments due to plan loans, hardship
withdrawals, death, retirement or separation from service and for returns of
excess contributions to retirement plan sponsors. With respect to Class A shares
purchased pursuant to a special retirement wrap program, no CDSC is payable on
redemptions which continue as investments in another fund participating in the
program. With respect to Class B shares, no CDSC is payable for redemptions (i)
in connection with Systematic Withdrawal Plan and Div-Move services as described
below under those headings, (ii) in connection with mandatory distribution under
403(b) plans and IRAs and (iii) in connection with death of the shareholder. In
the case of Class A and Class C shares, the CDSC is received by the Fund and is
intended to reimburse all or a portion of the amount paid by the Fund if the
shares are redeemed before the Fund has had an opportunity to realize the
anticipated benefits of having a long-term shareholder account in the Fund. In
the case of Class B shares, the CDSC is received by Lord Abbett Distributor and
is intended to reimburse its expenses of providing distribution-related service
to the Fund (including recoupment of the commission payments made) in connection
with the sale of Class B shares before Lord Abbett Distributor has had an
opportunity to realize its anticipated reimbursement by having such a long-term
shareholder account subject to the B Plan distribution fee.
The other funds and series which participate in the Telephone Exchange Privilege
(except (a) Lord Abbett U.S. Government Securities Money Market Fund, Inc.
("GSMMF"), (b) certain series of Lord Abbett Tax-Free Income Fund and Lord
Abbett Tax-Free Income Trust for which a Rule 12b-1 Plan is not yet in effect,
and (c) any authorized institution's affiliated money market fund satisfying
Lord Abbett Distributor as to certain omnibus account and other criteria,
hereinafter referred to as an "authorized money market fund" or "AMMF"
(collectively, the "Non-12b-1 Funds")) have instituted a CDSC for each class on
the same terms and conditions. No CDSC will be charged on an exchange of shares
of the same class between Lord Abbett funds or between such funds and AMMF. Upon
redemption of shares out of the Lord Abbett family of funds or out of AMMF, the
CDSC will be charged on behalf of and paid: (i) to the fund in which the
original purchase (subject to a CDSC) occurred, in the case of the Class A and
Class C shares and (ii) to Lord Abbett Distributor if the original purchase was
subject to a CDSC, in the case of the Class B shares. Thus, if shares of a Lord
Abbett fund are exchanged for shares of the same class of another such fund and
the shares of the same class tendered ("Exchanged Shares") are subject to a
CDSC, the CDSC will carry over to the shares of the same class being acquired,
including GSMMF and AMMF ("Acquired Shares"). Any CDSC that is carried over to
Acquired Shares is calculated as if the holder of the Acquired Shares had held
those shares from the date on which he or she became the holder of the Exchanged
Shares. Although the Non-12b-1 Funds will not pay a distribution fee on their
own shares, and will, therefore, not impose their own CDSC, the Non-12b-1 Funds
will collect the CDSC (a) on behalf of other Lord Abbett funds, in the case of
the Class A and Class C shares and (b) on behalf of Lord Abbett Distributor, in
the case of the Class B shares. Acquired Shares held in GSMMF and AMMF which are
subject to a CDSC will be credited with the time such shares are held in GSMMF
but will not be credited with the time such shares are held in AMMF. Therefore,
if your Acquired Shares held in AMMF qualified for no CDSC or a lower Applicable
Percentage at the time of exchange into AMMF, that Applicable Percentage will
apply to redemptions for cash from AMMF, regardless of the time you have held
Acquired Shares in AMMF.
In no event will the amount of the CDSC exceed the Applicable Percentage of the
lesser of (i) the net asset value of the shares redeemed or (ii) the original
cost of such shares (or of the Exchanged Shares for which such shares were
acquired). No CDSC will be imposed when the investor redeems (i) shares
representing an aggregate dollar amount of your account, in the case of Class A
shares, (ii) that percentage of each share redeemed, in the case of Class B and
C shares, derived from increases in the value of the shares above the total cost
of shares being redeemed due to increases
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in net asset value, (iii) shares with respect to which no Lord Abbett fund paid
a 12b-1 fee and, in the case of Class B shares, Lord Abbett Distributor paid no
sales charge or service fee (including shares acquired through reinvestment of
dividend income and capital gains distributions) or (iv) shares which, together
with Exchanged Shares, have been held continuously for 24 months from the end of
the month in which the original sale occurred (in the case of Class A shares);
for six years or more (in the case of Class B shares) and for one year or more
(in the case of Class C shares). In determining whether a CDSC is payable, (a)
shares not subject to the CDSC will be redeemed before shares subject to the
CDSC and (b) of the shares subject to a CDSC, those held the longest will be the
first to be redeemed.
EXCHANGES. The Prospectus briefly describes the Telephone Exchange Privilege.
You may exchange some or all of your shares of any class for those in the same
class of: (i) Lord Abbett-sponsored funds currently offered to the public with a
sales charge (front-end, back-end or level ), (ii) GSMMF or (iii) AMMF, to the
extent offers and sales may be made in your state. You should read the
prospectus of the other fund before exchanging. In establishing a new account by
exchange, shares of the Fund being exchanged must have a value equal to at least
the minimum initial investment required for the other fund into which the
exchange is made.
Shareholders in other Lord Abbett-sponsored funds and AMMF have the same right
to exchange their shares for the corresponding class of the Fund's shares.
Exchanges are based on relative net asset values on the day instructions are
received by the Fund in Kansas City if the instructions are received prior to
the close of the NYSE in proper form. No sales charges are imposed except in the
case of exchanges out of GSMMF or AMMF (unless a sales charge (front-end,
back-end or level) was paid on the initial investment in a Lord Abbett-sponsored
fund). Exercise of the exchange privilege will be treated as a sale for federal
income tax purposes, and, depending on the circumstances, a gain or loss may be
recognized. In the case of an exchange of shares that have been held for 90 days
or less where no sales charge is payable on the exchange, the original sales
charge incurred with respect to the exchanged shares will be taken into account
in determining gain or loss on the exchange only to the extent such charge
exceeds the sales charge that would have been payable on the acquired shares had
they been acquired for cash rather than by exchange. The portion of the original
sales charge not so taken into account will increase the basis of the acquired
shares.
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as a means for taking advantage of
short-term swings in the market, and we reserve the right to terminate or limit
the privilege of any shareholder who makes frequent exchanges. We can revoke or
modify the privilege for all shareholders upon 60 days' prior notice. "Eligible
Funds" are AMMF and other Lord Abbett-sponsored funds which are eligible for the
exchange privilege, except Lord Abbett Series Fund ("LASF") which offers its
shares only in connection with certain variable annuity contracts and Lord
Abbett Equity Fund ("LAEF") which is not issuing shares.
STATEMENT OF INTENTION. Under the terms of the Statement of Intention as
described in the Prospectus you may invest $100,000 or more over a 13-month
period in shares of a Lord Abbett-sponsored fund (other than shares of LAEF,
LASF, LARF, GSMMF and AMMF, unless holdings in GSMMF and AMMF are attributable
to shares exchanged from a Lord Abbett-sponsored fund offered with a front-end,
back-end or level sales charge). Shares currently owned by you are credited as
purchases (at their current offering prices on the date the Statement is signed)
toward achieving the stated investment and reduced initial sales charge for
Class A shares. Class A shares valued at 5% of the amount of intended purchases
are escrowed and may be redeemed to cover the additional sales charge payable if
the Statement of Intention is not completed. The Statement of Intention is
neither a binding obligation on you to buy, nor on the Fund to sell, the full
amount indicated.
RIGHTS OF ACCUMULATION. As stated in the Prospectus, purchasers (as defined in
the Prospectus) may accumulate their investment in Lord Abbett-sponsored funds
(other than LAEF, LARF, LASF, GSMMF, and AMMF unless holdings in GSMMF or AMMF
are attributable to shares exchanged from a Lord Abbett-sponsored fund offered
with a front-end, back-end or level sales charge) so that a current investment,
plus the purchaser's holdings valued at the current maximum offering price,
reach a level eligible for a discounted sales charge for Class A shares.
NET ASSET VALUE PURCHASES OF CLASS A SHARES. As stated in the Prospectus, our
Class A shares may be purchased at net asset value by our trustees, employees of
Lord Abbett, employees of our shareholder servicing agent and employees of any
securities dealer having a sales agreement with Lord Abbett who consents to such
purchases or by the director or custodian under any pension or profit-sharing
plan or Payroll Deduction IRA established for the benefit of such
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persons or for the benefit of employees of any national securities trade
organization to which Lord Abbett belongs or any company with an account(s) in
excess of $10 million managed by Lord Abbett on a private-advisory-account
basis. For purposes of this paragraph, the terms "directors" and "employees"
include a director's or employee's spouse (including the surviving spouse of a
deceased director or employee). The terms "our directors" and "employees of Lord
Abbett" also include retired directors and employees and other family members
thereof.
Our Class A shares also may be purchased at net asset value (a) at $1 million or
more, (b) with dividends and distributions from Class A shares of other Lord
Abbett-sponsored funds, except for LARF, LAEF and LASF, (c) under the loan
feature of the Lord Abbett-sponsored prototype 403(b) plan for share purchases
representing the repayment of principal and interest, (d) by certain authorized
brokers, dealers, registered investment advisers or other financial institutions
who have entered into an agreement with Lord Abbett Distributor in accordance
with certain standards approved by Lord Abbett Distributor, providing
specifically for the use of our shares in particular investment products made
available for a fee to clients of such brokers, dealers, registered investment
advisers and other financial institutions, ("mutual fund wrap fee program"), (e)
by employees, partners and owners of unaffiliated consultants and advisors to
Lord Abbett, Lord Abbett Distributor or Lord Abbett-sponsored funds who consent
to such purchase if such persons provide service to Lord Abbett, Lord Abbett
Distributor or such funds on a continuing basis and are familiar with such
funds, (f) through Retirement Plans with at least 100 eligible employees, (g) in
connection with a merger, acquisition or other reorganization (h) through a
"special retirement wrap program" sponsored by an authorized institution having
one or more characteristics distinguishing it, in the opinion of Lord Abbett
Distributor, from a mutual fund wrap program. Such characteristics include,
among other things, the fact that an authorized institution does not charge its
clients any fee of a consulting or advisory nature that is economically
equivalent to the distribution fee under Class A 12b-1 Plan and the fact that
the program relates to participant-directed Retirement Plan. Shares are offered
at net asset value to these investors for the purpose of promoting goodwill with
employees and others with whom Lord Abbett Distributor and/or the Fund has
business relationships.
REDEMPTIONS. A redemption order is in proper form when it contains all of the
information and documentation required by the order form or supplementally by
Lord Abbett Distributor or the Fund to carry out the order. The signature(s) and
any legal capacity of the signer(s) must be guaranteed by an eligible guarantor.
See the Prospectus for expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Trustees may authorize redemption of all of the shares in any
account in which there are fewer than 25 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least 6 months' prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
DIV-MOVE. Under the Div-Move service described in the Prospectus, you can invest
the dividends paid on your account of any class into an existing account of the
same class in any other Eligible Fund. The account must be either your account,
a joint account for you and your spouse, a single account for your spouse, or a
custodial account for your minor child under the age of 21. You should read the
prospectus of the other fund before investing.
INVEST-A-MATIC. The Invest-A-Matic method of investing in the Fund and/or any
other Eligible Fund is described in the Prospectus. To avail yourself of this
method you must complete the application form, selecting the time and amount of
your bank checking account withdrawals and the funds for investment, include a
voided, unsigned check and complete the bank authorization.
SYSTEMATIC WITHDRAWAL PLANS. The Systematic Withdrawal Plan ("SWP") also is
described in the Prospectus. You may establish a SWP if you own or purchase
uncertificated shares having a current offering price value of at least $10,000.
Lord Abbett prototype retirement plans have no such minimum. With respect to
Class B shares the CDSC will be waived on redemptions of up to 12% per year of
the current net asset value of your account at the time the SWP is
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established. For Class B share redemptions over 12% per year, the CDSC will
apply to the entire redemption. Therefore, please contact the Fund for
assistance in minimizing the CDSC in this situation. With respect to Class C
shares, the CDSC will be waived on and after the first anniversary of their
purchase. The SWP involves the planned redemption of shares on a periodic basis
by receiving either fixed or variable amounts at periodic intervals. Since the
value of shares redeemed may be more or less than their cost, gain or loss may
be recognized for income tax purposes on each periodic payment. Normally, you
may not make regular investments at the same time you are receiving systematic
withdrawal payments because it is not in your interest to pay a sales charge on
new investments when in effect a portion of that new investment is soon
withdrawn. The minimum investment accepted while a withdrawal plan is in effect
is $1,000. The SWP may be terminated by you or by us at any time by written
notice.
RETIREMENT PLANS. The Prospectus indicates the types of retirement plans for
which Lord Abbett provides forms and explanations. Lord Abbett makes available
the retirement plan forms including 401(k) plans and custodial agreements for
IRAs (Individual Retirement Accounts, including Traditional, Education, Roth and
SIMPLE IRAs and Simplified Employee Pensions), 403(b) plans and qualified
pension and profit-sharing plans. The forms name Investors Fiduciary Trust
Company as custodian and contain specific information about the plans excluding
401(k) plans. Explanations of the eligibility requirements, annual custodial
fees and allowable tax advantages and penalties are set forth in the relevant
plan documents. Adoption of any of these plans should be on the advice of your
legal counsel or qualified tax adviser.
6.
Performance
The Fund computes the average annual compounded rate of total return for each
class during specified periods that would equate the initial amount invested to
the ending redeemable value of such investment by adding one to the computed
average annual total return, raising the sum to a power equal to the number of
years covered by the computation and multiplying the result by one thousand
dollars which represents a hypothetical initial investment. The calculation
assumes deduction of the maximum sales charge (as described in the next
paragraph) from the amount invested and reinvestment of all income dividends and
capital gains distributions on the reinvestment dates at prices calculated as
stated in the Prospectus. The ending redeemable value is determined by assuming
a complete redemption at the end of the period covered by the average annual
total return computation.
In calculating total returns for Class A shares, the current maximum sales
charge of 5.75% (as a percentage of the offering price) is deducted from the
initial investment (unless the return is shown at net asset value). For Class B
shares, the payment of the applicable CDSC (5.0% prior to the first anniversary
of purchase, 4.0% prior to the second anniversary of purchase, 3.0% prior to the
third and fourth anniversaries of purchase, 2.0% prior to the fifth anniversary
of purchase, 1.0% prior to the sixth anniversary of purchase and no CDSC on and
after the sixth anniversary of purchase) is applied to the Fund's investment
result for that class for the time period shown (unless the total return is
shown at net asset value). For Class C shares, the 1.0% CDSC is applied to the
Fund's investment result for that class for the time period shown prior to the
first anniversary of purchase (unless the total return is shown at net asset
value). Total returns also assume that all dividends and capital gains
distributions during the period are reinvested at net asset value per share, and
that the investment is redeemed at the end of the period.
Yield quotation for each Class is based on a 30-day period ended on a specified
date, computed by dividing our net investment income per share earned during the
period by the maximum offering price per share of such Class on the last day of
the period. This is determined by finding the following quotient: take the
Class' dividends and interest earned during the period minus its expenses
accrued for the period and divide by the product of (i) the average daily number
of shares of such Class outstanding during the period that were entitled to
receive dividends and (ii) the maximum offering price per share of such Class on
the last day of the period. To this quotient add one. This sum is multiplied by
itself five times. Then one is subtracted from the product of this
multiplication and the remainder is multiplied by two. Yield for the Class A
shares reflects the deduction of the maximum initial sales charge, but may also
be shown based on the Fund's net asset value per share. Yields for Class B and C
shares do not reflect the deduction of the CDSC.
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7.
Taxes
The Fund intends to elect and to qualify for special tax treatment afforded
regulated investment companies under the Internal Revenue Code of 1986 (the
"Code"). If it so qualifies, the Fund (but not its shareholders) will be
relieved of federal income taxes on the amount it distributes to shareholders.
If in any taxable year the Fund does not qualify as a regulated investment
company, all of its taxable income will be taxed to the Fund at regular
corporate rates.
The Fund contemplates declaring as dividends substantially all of its net
investment income. Dividends paid by the Fund from its investment income and
distributions of its net realized short-term capital gains are taxable to
shareholders as ordinary income or capital gain, whether received in cash or
reinvested in additional shares of the Fund. The Fund will send each shareholder
annual information concerning the tax treatment of dividends and other
distributions.
Upon sale, exchange or redemption of shares of the Fund, a shareholder will
recognize short- or long-term capital gain or loss, depending upon the
shareholder's holding period in the Fund's shares. However, if a shareholder's
holding period in his shares is six months or less, any capital loss realized
from a sale or exchange of such shares must be treated as long-term capital loss
to the extent of dividends classified as "capital gains dividends" received with
respect to such shares. The maximum tax rates applicable to net capital gains
recognized by individuals and other non-corporate taxpayers are (i) the same as
ordinary income rates for capital assets held for one year or less and (ii) 20%
for capital assets held for more than one year. Capital gains or losses
recognized by corporate shareholders are subject to tax at the ordinary income
tax rates applicable to corporations.
Losses on the sale of shares are not deductible if, within a period beginning 30
days before the date of the sale and ending 30 days after the date of the sale,
the taxpayer acquires shares that are substantially identical.
Some shareholders may be subject to a 31% withholding tax on reportable
dividends, capital gains distributions and redemption payments ("backup
withholding"). Generally, shareholders subject to backup withholding will be
those for whom a certified taxpayer identification number is not on file with
the Fund or who, to the Fund's knowledge, have furnished an incorrect number.
When establishing an account, an investor must certify under penalties of
perjury that such number is correct and that he is not otherwise subject to
backup withholding.
The writing of call options and other investment techniques and practices which
the Fund may utilize may affect the character and timing of the recognition of
gains and losses. Such transactions may increase the amount of short-term
capital gain realized by the Fund, which is taxed as ordinary income when
distributed to shareholders.
The Fund may be subject to foreign withholding taxes, which would reduce the
yield on its investments. It is generally expected that Fund shareholders who
are subject to U.S. federal income tax will not be entitled to claim a federal
income tax credit or deduction for foreign income taxes paid by the Fund.
The Fund will also be subject to a 4% non-deductible excise tax on certain
amounts not distributed or treated as having been distributed on a timely basis
each calendar year. The Fund intends to distribute to shareholders each year an
amount adequate to avoid the imposition of such excise tax.
Dividends paid by the Fund will qualify for the dividends-received deduction for
corporations to the extent they are derived from dividends paid by domestic
corporations. Corporate shareholders must have held their shares in the Fund for
more than 45 days to qualify for the deduction on dividends paid by the Fund.
Gain and loss realized by the Fund on certain transactions, including sales of
foreign debt securities and certain transactions involving foreign currency,
will be treated as ordinary income or loss for federal income tax purposes to
the extent, if any, that such gain or loss is attributable to changes in
exchange rates for foreign currencies. Accordingly, distributions taxable as
ordinary income will include the net amount, if any, of such foreign exchange
gain and will be reduced by the net amount, if any, of such foreign exchange
loss.
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<PAGE>
If the Fund purchases shares in certain foreign investment entities called
"passive foreign investment companies," the Fund may be subject to U.S. federal
income tax on a portion of any "excess distribution" or gain from the
disposition of such shares, even if such income is distributed as a taxable
dividend by the Fund to its shareholders. Additional charges in the nature of
interest may be imposed on either the Fund or its shareholders in respect of
deferred taxes arising from such distributions or gains. If the Fund were to
make a "qualified electing fund" election with respect to its investment in a
passive foreign investment company, in lieu of the foregoing requirements, the
Fund might be required to include in income each year a portion of the ordinary
earnings and net capital gains of the qualified electing fund, even if such
amount were not distributed to the Fund.
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to U.S. persons (U.S. citizens or residents and United States
domestic corporations, partnerships, trusts and estates). Each shareholder who
is not a U.S. person should consult his tax adviser regarding the U.S. and
foreign tax consequences of the ownership of shares of a Fund, including the
applicable rate of U.S. withholding tax on dividends representing ordinary
income and net short-term capital gains, and the applicability of U.S. gift and
estate taxes.
20
<PAGE>
8.
Information About the Company
The Company was formed as a business trust under Delaware law on September 29,
1999. The Company offers five classes of shares: Class A, Class B, Class C,
Class P, and Class Y. Only the Fund's Classes A, B, C and P are offered in this
Statement of Additional Information. All shares have equal noncumulative voting
rights and equal rights with respect to dividends, assets and liquidation,
except for certain class-specific expenses. They are fully paid and
nonassessable when issued and have no preemptive or conversion rights.
Additional classes or funds may be added in the future. The Act requires that
where more than one class or fund exists, each class or fund must be preferred
over all other classes or funds in respect of assets specifically allocated to
such class or fund.
Rule 18f-2 under the Act provides that any matter required to be submitted, by
the provisions of the Act or applicable state law, or otherwise, to the holders
of the outstanding voting securities of an investment company such as the
Company shall not be deemed to have been effectively acted upon unless approved
by the holders of a majority of the outstanding shares of each class affected by
such matter. Rule 18f-2 further provides that a class shall be deemed to be
affected by a matter unless the interests of each class or fund in the matter
are substantially identical or the matter does not affect any interest of such
class or fund. However, the Rule exempts the selection of independent public
accountants, the approval of a contract with a principal underwriter and the
election of trustees from the separate voting requirements.
The Company does not hold annual meetings of shareholders unless one or more
matters are required to be acted on by shareholders under the Act. Under the
Company's Declaration of Trust, shareholder meetings may be called at any time
by certain officers of the Company or by a majority of the trustees (i) for the
purpose of taking action upon any matter requiring the vote or authority of the
Company's shareholders or upon other matters deemed to be necessary or desirable
or (ii) upon the written request of the holders of at least one-quarter of the
shares of the Company's outstanding and entitled to vote at the meeting.
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment accounts. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Fund's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security 7 days
before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account
considers a trade or trades in such security, prohibiting profiting on trades of
the same security within 60 days and trading on material and non-public
information. The Code imposes certain similar requirements and restrictions on
the independent directors and trustees of each Lord Abbett-sponsored mutual fund
to the extent contemplated by the recommendations of such Advisory Group.
9.
Financial Statements
The Statement of Net Assets at December 14, 1999 and the report of Deloitte &
Touche LLP, independent auditors, on such statements are attached hereto.
21
<PAGE>
LORD ABBETT LARGE-CAP GROWTH FUND
STATEMENT OF NET ASSETS
December 14, 1999
<TABLE>
<CAPTION>
Assets:
<S> <C>
Cash $ 100,000
Prepaid offering costs (3).............................................................. 3,000
-------
Total Assets............................................................................$ 103,000
=======
Liabilities:
Liabilities and accrued expenses 3,000
-------
Net Assets:.............................................................................$ 100,000
Net Assets Consist of:
Class A Shares of beneficial interest, $0.00 par value,
100,000,000 shares authorized........................................................$ 0.00
Class B Shares of beneficial interest, $0.00 par value,
100,000,000 shares authorized........................................................ 0.00
Class C Shares of beneficial interest, $0.00 par value,
100,000,000 shares authorized........................................................ 0.00
Class P Shares of beneficial interest, $0.00 par value,
100,000,000 shares authorized........................................................ 0.00
Class Y Shares of beneficial interest, $0.00 par value,
100,000,000 shares authorized........................................................ 0.00
Paid-in Capital in excess of par........................................................ 100,000
-------
Net Assets:.............................................................................$ 100,000
=======
Net Asset Value:
Class A - Based on net assets of $ 96,000 and 9,600 shares outstanding $ 10.00
=====
Class B - Based on net assets of $ 1,000 and 100 shares outstanding.....................$ 10.00
=====
Class C - Based on net assets of $ 1,000 and 100 shares outstanding.....................$ 10.00
=====
Class P - Based on net assets of $ 1,000 and 100 shares outstanding.....................$ 10.00
=====
Class Y - Based on net assets of $ 1,000 and 100 shares outstanding.....................$ 10.00
=====
</TABLE>
Notes to Financial Statements
(1) Lord Abbett Large-Cap Growth Fund (the "Fund") was organized as a Delaware
business trust on September 29, 1999 and is registered under the Investment
Company Act of 1940. To date, the Fund
22
<PAGE>
has not had any transactions other than those relating to organizational
matters and the sale of Class A, Class B, Class C, Class P and Class Y
shares to Lord, Abbett & Co. ("LA").
(2) The Fund has entered into an investment advisory agreement with LA and a
distribution agreement with Lord, Abbett Distributor, LLC (the
"Distributor"). (See "Management of the Funds - Management and Advisory
Arrangements" in the Statement of Additional Information.)
(3) Prepaid offering cost consist of legal fees related to preparing the
initial registration statement, and will be amortized over a 12 month
period beginning with the commencement of operations of the Fund. The
Investment Adviser has agreed to bear all the costs of organizing the Fund,
estimated to be $13,200.
<PAGE>
