As filed with the Securities and Exchange Commission on October 13, 2000
Securities Act File No. 33-
Investment Company Act File No. 811-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No.
(Check appropriate box or boxes)
LORD ABBETT DELTA FUND
(Exact Name of Registrant as Specified in Charter)
90 Hudson Street
Jersey City, New Jersey 07302-3973
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code: (201) 395-2000
Christina T. Simmons, Esq.
Vice President and Assistant General Counsel
Lord, Abbett & Co.
90 Hudson Street
Jersey City, New Jersey 07302-3973
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement is declared effective.
--------------------------
Pursuant to Regulation 270.24f-2 under the Investment Company Act of 1940, the
Registrant hereby elects to register an indefinite number of shares of
beneficial interest.
<PAGE>
LORD
ABBETT DELTA FUND
PROSPECTUS
2000
[LOGO] LORD, ABBETT & CO.
INVESTMENT MANAGEMENT
A Tradition of Performance Through Disciplined Investing
As with all mutual funds, the Securities and Exchange Commission
has not approved or disapproved these securities or passed upon
the adequacy of this prospectus. Any representation to the
contrary is a criminal offense.
<PAGE>
Table of Contents
The Fund
What you should know Goal 2
about the Fund Principal Strategy 2
Main Risks 2
Performance 3
Fees and Expenses 3
Your Investment
Information for managing Purchases 4
your Fund account Sales Compensation 6
Opening Your Account 7
Redemptions 8
Distributions and Taxes 9
Services For Fund Investors 9
Management 10
For More Information
How to learn more Other Investment Techniques 11
about the Fund Glossary of Shaded Terms 12
Compensation For Your Dealer 14
How to learn more about the Back Cover
Fund and other Lord Abbett Funds
<PAGE>
The Fund
While typically fully invested, at times the Fund may invest temporarily in
such short-term fixed income securities as U.S. Government obligations,
commercial paper and repurchase agreements. This could reduce the benefit
from any upswing in the market and prevent the Fund from achieving its
investment objective.
MAIN RISKS
The Fund is subject to the general risks and considerations associated with
equity investing. The value of your investment will fluctuate in response
to movements in the stock market in general and to the changing prospects
of individual companies in which the Fund invests. Different types of
stocks shift in and out of favor depending on market, economic, political
or other conditions. Some of the small-capitalized companies in which the
Fund may invest may be more volatile in price than larger issuers. Smaller
companies may have more limited product lines, markets or financial
resources. In addition, if the Fund's focus on a particular theme for
investment or its assessment of an economic sector, industry or company's
potential for growth is wrong, the Fund could suffer losses or produce poor
performance relative to other funds, even in a rising market.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. The Fund is not a complete investment program and may
not be appropriate for all investors. You could lose money by investing in
the Fund.
WE OR THE FUND refers to Lord Abbett Delta Fund.
ABOUT THE FUND. The Fund is a professionally managed portfolio primarily holding
securities purchased with the pooled money of investors. It strives to reach its
stated goal, although as with all funds, it cannot guarantee results.
BOTTOM-UP RESEARCH looks for expected high performing stocks of individual
companies before considering the impact of economic trends. Companies might be
identified from investment research analysis or personal knowledge of their
products and services. This approach considers that a company can do well even
if it is part of a sector or industry that, as a whole, is not performing well.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describes the other investment strategies used by the Fund and
their risks.
2 The Fund
<PAGE>
DELTA FUND
PERFORMANCE
The Fund does not show any performance because it has not completed a full
calendar year of operations.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
<TABLE>
<CAPTION>
==============================================================================================================
FEE TABLE
==============================================================================================================
<S> <C> <C> <C> <C>
CLASS A CLASS B(2) CLASS C CLASS P
SHAREHOLDER FEES (Fees paid directly from your investment)
--------------------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
--------------------------------------------------------------------------------------------------------------
(as a % of offering price) 5.75% none none none
--------------------------------------------------------------------------------------------------------------
MAXIMUM DEFERRED SALES CHARGE none(1) 5.00% 1.00%(1) none
--------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS) (AS A % OF AVERAGE NET ASSETS)(3)
--------------------------------------------------------------------------------------------------------------
Management Fees (See "Management")
--------------------------------------------------------------------------------------------------------------
DISTRIBUTION (12B-1) AND SERVICE FEES(4)
--------------------------------------------------------------------------------------------------------------
Other Expenses
--------------------------------------------------------------------------------------------------------------
Total Operating Expenses
--------------------------------------------------------------------------------------------------------------
</TABLE>
(1) A contingent deferred sales charge of 1.00% may be assessed on certain
redemptions (a) of Class A shares made within 24 months following any purchases
made without a sales charge, and (b) Class C shares if they are redeemed before
the first anniversary of their purchase.
(2) Class B shares will convert to Class A shares on the eighth anniversary of
your original purchase of Class B shares.
(3) The annual operating expenses are based on estimated expenses for the
current fiscal year. (4) Because 12b-1 fees are paid out on an ongoing basis,
over time they will increase the cost of your investment and may cost you more
than paying other types of sales charges.
================================================================================
EXAMPLE
================================================================================
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. This example, like that in
other funds' prospectuses, assumes that you invest $10,000 in the Fund at
maximum sales charge, if any, for the time periods indicated and then redeem all
of your shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs (including any applicable contingent deferred sales
charges) would be:
SHARE CLASS 1 YEAR 3 YEARS
--------------------------------------------------------------------------------
Class A shares
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------
Class P shares
--------------------------------------------------------------------------------
You would have paid the following expenses if you did not redeem your shares:
Class A shares
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------
Class P shares
--------------------------------------------------------------------------------
MANAGEMENT FEES are payable
to Lord, Abbett & Co. ("Lord Abbett") for the Fund's investment management.
12B-1 FEES refer to fees incurred for activities that are primarily intended to
result in the sale of Fund shares and service fees for shareholder account
service and maintenance.
OTHER EXPENSES include fees paid
for miscellaneous items such as shareholder service fees and
professional fees.
The Fund | 3
<PAGE>
YOUR INVESTMENT
PURCHASES
The Fund offers in this prospectus four classes of shares: Class A, B, C
and P, each with different expenses and dividends. You may purchase shares
at the net asset value ("NAV") per share determined after we receive your
purchase order submitted in proper form. A front-end sales charge may be
added to the NAV in the case of the Class A shares. There is no front-end
sales charge in the case of Class B, C and P shares, although there may be
a contingent deferred sales charge ("CDSC") as described below.
You should read this section carefully to determine which class of shares
represents the best investment option for your particular situation. 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. You should discuss purchase options with your investment
professional.
For more information, see "Alternative Sales Arrangements" in the Statement
of Additional Information.
We reserve the right to withdraw all or any part of the offering made by
this prospectus or to reject any purchase order. We also reserve the right
to waive or change minimum investment requirements. All purchase orders are
subject to our acceptance and are not binding until confirmed or accepted
in writing.
================================================================================
SHARE CLASSES
================================================================================
CLASS A o normally offered with a front-end sales charge
CLASS B o no front-end sales charge, however, a CDSC is applied to shares
sold prior to the sixth anniversary of purchase
o higher annual expenses than Class A shares
o automatically converts to Class A shares after eight years
CLASS C o no front-end sales charge, however, a CDSC is applied to shares
sold prior to the first anniversary of purchase
o higher annual expenses than Class A shares
CLASS P o available to certain pension or retirement plans and pursuant to
a Mutual Fund Fee Based Program
================================================================================
FRONT-END SALES CHARGES - CLASS A SHARES
================================================================================
TO COMPUTE
AS A % OF AS A % OF OFFERINGPRICE
YOUR INVESTMENT OFFERING PRICE YOUR INVESTMENT DIVIDE NAV BY
================================================================================
Less than $50,000 5.75% 6.10% .9425
================================================================================
$50,000 to $99,999 4.75% 4.99% .9525
================================================================================
$100,000 to $249,999 3.95% 4.11% .9605
================================================================================
$250,000 to $499,999 2.75% 2.83% .9725
================================================================================
$500,000 to $999,999 1.95% 1.99% .9805
================================================================================
$1,000,000 and over No Sales Charge 1.0000
================================================================================
NAV per share for each class of Fund shares is calculated each business day at
the close of regular trading on the New York Stock Exchange ("NYSE"), normally
4:00 p.m. Eastern time. Purchases and sales of Fund shares are executed at the
NAV next determined after the Fund receives your order in proper form. In
calculating NAV, securities for which market quotations are available are valued
at those quotations. Securities for which such quotations are not available are
valued at fair value under procedures approved by the Board of the Fund.
4 | Your Investment
<PAGE>
REDUCING YOUR CLASS A FRONT-END SALES CHARGES. Class A shares may be
purchased at a discount if you qualify under either of the following
conditions:
o RIGHTS OF ACCUMULATION -- A Purchaser may apply the value of the
shares already owned to a new purchase of Class A shares of any
Eligible Fund in order to reduce the sales charge.
o LETTER OF INTENTION -- A Purchaser of Class A shares can purchase
additional shares of any Eligible Fund over a 13-month period and
receive the same sales charge as if all shares were purchased at once.
Shares purchased through reinvestment of dividends or distributions
are not included. A Letter of Intention can be backdated 90 days.
Current holdings under Rights of Accumulation may be included in a
Letter of Intention.
For more information on eligibility for these privileges, read the applicable
sections in the attached application.
CLASS A SHARE PURCHASES WITHOUT A FRONT-END SALES CHARGE. Class A shares may be
purchased without a front-end sales charge under any of the following
conditions:
o purchases of $1 million or more O
o purchases by Retirement Plans with at least 100 eligible employees O
o purchases under a Special Retirement Wrap Program O
o purchases made with dividends and distributions on Class A shares of
another Eligible Fund
o purchases representing repayment under the loan feature of the Lord Abbett-
sponsored prototype 403(b) Plan for Class A shares
o purchases by employees of any consenting securities dealer having a sales
agreement with Lord Abbett Distributor
o purchases under a Mutual Fund Fee Based Program
o purchases by trustees or custodians of any pension or profit sharing plan,
or payroll deduction IRA for employees of any consenting securities dealer
having a sales agreement with Lord Abbett Distributor
o purchases by each Lord Abbett-sponsored fund's Directors or Trustees
(including retired Directors or Trustees), officers of each Lord
Abbett-sponsored fund, employees and partners of Lord Abbett. These
categories of Purchasers also include family members of such Purchasers.
See the Statement of Additional Information for a listing of other categories of
purchasers who qualify for Class A share purchases without a front-end sales
charge.
* These categories may be subject to a CDSC.
CLASS A SHARE CDSC. If you buy Class A shares under one of the starred (O)
categories listed above and you redeem any within 24 months after the month in
which you initially purchased them, the Fund will normally collect a CDSC of 1%.
The Class A share CDSC generally will be waived for the following conditions:
o benefit payments under Retirement Plans in connection with loans, hardship
withdrawals, death, disability, retirement, separation from service or any
excess distribution under Retirement Plans (documentation may be required)
o redemptions continuing as investments in another fund participating in a
SPECIAL RETIREMENT WRAP PROGRAM
RETIREMENT PLANS include employer-sponsored retirement plans under the Internal
Revenue Code, excluding Individual Retirement Accounts.
Lord Abbett offers a variety of Retirement Plans. Call 800-253-7299 for
information about:
o Traditional, Rollover, Roth and Education IRAs
o Simple IRAs, SEP-IRAs, 401(k) and 403(b) accounts
o Defined Contribution Plans
LORD ABBETT DISTRIBUTOR LLC ("Lord Abbett Distributor") acts as agent
for the Fund to work with investment professionals that buy and/or sell shares
of the Fund on behalf of their clients. Generally, Lord Abbett Distributor does
not sell Fund shares directly to investors.
BENEFIT PAYMENT DOCUMENTATION.
(Class A CDSC only)
o under $50,000 - no documentation necessary
o over $50,000 - reason for benefit payment must be received in writing. Use
the address indicated under "Opening your Account."
Your Investment | 5
<PAGE>
CDSC, regardless of class, is not charged on shares acquired
through reinvestment of dividends or capital gains
distributions and is charged on the original purchase cost
or the current market value of the shares at the time they
are being sold, which-ever is lower. In addition, repayment
of loans under Retirement Plans and 403(b) Plans will
constitute new sales for purposes of assessing the CDSC.
To minimize the amount of any CDSC, the Fund redeems shares
in the following order:
1. shares acquired by reinvestment of dividends and
capital gains (always free of a CDSC)
2. shares held for six years or more (Class B) or two
years or more after the month of purchase (Class A) or
one year or more (Class C)
3. shares held the longest before the sixth anniversary of
their purchase (Class B) or before the second
anniversary after the month of purchase (Class A) or
before the first anniversary of their purchase (Class
C)
CLASS B SHARE CDSC. The CDSC for Class B shares normally applies if you
redeem your shares before the sixth anniversary of their initial purchase.
The CDSC declines the longer you own your shares, according to the
following schedule:
===============================================================================
CONTINGENT DEFERRED SALES CHARGES - CLASS B SHARES
===============================================================================
ANNIVERSARY(1) OF THE DAY ON CONTINGENT DEFERRED SALES CHARGE
WHICH THE PURCHASE ORDER ON REDEMPTION (AS % OF AMOUNT
WAS ACCEPTED SUBJECT TO CHARGE)
On Before
===============================================================================
1st 5.0%
===============================================================================
1st 2nd 4.0%
===============================================================================
2nd 3rd 3.0%
===============================================================================
3rd 4th 3.0%
===============================================================================
4th 5th 2.0%
===============================================================================
5th 6th 1.0%
===============================================================================
ON OR AFTER THE 6TH(2) None
===============================================================================
(1) The anniversary is the same calendar day in each respective year after the
date of purchase. For example, the anniversaries for shares purchased on
May 1 will be May 1 of each succeeding year.
(2) Class B shares will automatically convert to Class A shares on the eighth
anniversary of the purchase of Class B shares.
The Class B share CDSC generally will be waived under the following
circumstances:
o benefit payments under Retirement Plans in connection with loans,
hardship withdrawals, death, disability, retirement, separation from
service or any excess contribution or distribution under Retirement
Plans
o Eligible Mandatory Distributions under 403(b) Plans and individual
retirement accounts
o death of the shareholder
o redemptions of shares in connection with Div-Move and Systematic
Withdrawal Plans (up to 12% per year)
See "Systematic Withdrawal Plan" under "Services For Fund Investors" below
for more information on CDSCs with respect to Class B shares.
CLASS C SHARE CDSC. The 1% CDSC for Class C shares normally applies if you
redeem your shares before the first anniversary of the purchase of such
shares.
CLASS P SHARES. Class P shares have lower annual expenses than Class B and
Class C shares, no front-end sales charge, and no CDSC. Class P shares are
currently sold and redeemed at NAV (a) pursuant to a Mutual Fund Fee Based
Program, or (b) to the trustees of, or employer-sponsors with respect to,
pension or retirement plans with at least 100 eligible employees (such as a
plan under Section 401(a), 401(k) or 457(b) of the Internal Revenue Code)
which engage an investment professional providing or participating in an
agreement to provide certain recordkeeping, administrative and/or
sub-transfer agency services to the Fund on behalf of the Class P
shareholders.
SALES COMPENSATION
As part of its plan for distributing shares, the Fund and Lord Abbett
Distributor pay sales and service compensation to Authorized Institutions
that sell the Fund's shares and service its shareholder accounts. Sales
compensation originates from two sources, as shown in the table "Fees and
Expenses": sales charges which are paid directly by shareholders; and 12b-1
distribution
6 | Your Investment
<PAGE>
fees that are paid out of the Fund's assets. Service compensation
originates from 12b-1 service fees. The total 12b-1 fees payable with
respect to each share class are up to .35% of Class A shares (plus
distribution fees of up to 1.00% on certain qualifying purchases), 1.00% of
Class B and C shares, and .45% of Class P shares. The amounts payable as
compensation to Authorized Institutions, such as your dealer, are shown in
the chart at the end of this prospectus. The portion of such compensation
paid to Lord Abbett Distributor is discussed under "Sales Activities" and
"Service Activities." Sometimes we do not pay compensation where tracking
data is not available for certain accounts or where the Authorized
Institution waives part of the compensation. In such cases, we may not
require payment of any otherwise applicable CDSC.
We may pay Additional Concessions to Authorized Institutions from time to
time. SALES ACTIVITIES. We may use 12b-1 distribution fees to pay
Authorized Institutions to finance any activity which is primarily intended
to result in the sale of shares. Lord Abbett Distributor uses its portion
of the distribution fees attributable to the Fund's Class A and Class C
shares for activities which are primarily intended to result in the sale of
such Class A and Class C shares, respectively. These activities include,
but are not limited to, printing of prospectuses and statements of
additional information and reports for other than existing shareholders,
preparation and distribution of advertising and sales material, expenses of
organizing and conducting sales seminars, Additional Concessions to
Authorized Institutions, the cost necessary to provide distribution-related
services or personnel, travel, office expenses, equipment and other
allocable overhead. SERVICE ACTIVITIES. We may pay 12b-1 service fees to
Authorized Institutions for any activity which is primarily intended to
result in personal service and/or the maintenance of shareholder accounts.
Any portion of the service fees paid to Lord Abbett Distributor will be
used to service and maintain shareholder accounts.
OPENING YOUR ACCOUNT
MINIMUM INITIAL INVESTMENT
o Regular Account $250
--------------------------------------------------------------------------------
o Individual Retirement Accounts and
403(b) Plans under the Internal Revenue Code $250
--------------------------------------------------------------------------------
o Uniform Gift to Minor Account $250
--------------------------------------------------------------------------------
o Invest-A-Matic $250
--------------------------------------------------------------------------------
For Retirement Plans and Mutual Fund Fee Based Programs no minimum
investment is required, regardless of share class.
You may purchase shares through any independent securities dealer who has a
sales agreement with Lord Abbett Distributor or you can fill out the
attached application and send it to the Fund at the address stated below.
You should carefully read the paragraph below entitled "Proper Form" before
placing your order to ensure that your order will be accepted.
LORD ABBETT DELTA FUND
P.O. Box 219100
Kansas City, MO 64121
PROPER FORM. An order submitted directly to the Fund must contain: (1) a
completed application, and (2) payment by check. When purchases are made by
check, redemption proceeds will not be paid until the Fund or transfer
agent is advised that the check has
Your Investment | 7
<PAGE>
cleared, which may take up to 15 calendar days. For more information call
the Fund at 800-821-5129.
BY EXCHANGE. Telephone the Fund at 800-821-5129 to request an exchange from
any eligible Lord Abbett-sponsored fund.
REDEMPTIONS
BY BROKER. Call your investment professional for instructions on how to
redeem your shares.
BY TELEPHONE. To obtain the proceeds of a redemption of $50,000 or less
from your account, you or your representative should call the Fund at
800-821-5129.
BY MAIL. Submit a written redemption request indicating the name(s) in
which the account is registered, the Fund's name, the class of shares, your
account number, and the dollar value or number of shares you wish to sell.
Include all necessary signatures. If the signer has any Legal Capacity, the
signature and capacity must be guaranteed by an Eligible Guarantor. Certain
other legal documentation may be required. For more information regarding
proper documentation call 800-821-5129.
Normally a check will be mailed to the name(s) and address in which the
account is registered (or otherwise according to your instruction) within
three business days after receipt of your redemption request. Your account
balance must be sufficient to cover the amount being redeemed or your
redemption order will not be processed. Under unusual circumstances, the
Fund may suspend redemptions, or postpone payment for more than seven days,
as permitted by federal securities laws.
To determine if a CDSC applies to a redemption, see "Class A share CDSC,"
"Class B share CDSC" or "Class C share CDSC."
DISTRIBUTIONS AND TAXES
The Fund expects to pay its shareholders dividends from its net investment
income and distribute its net capital gains (if any) as "capital gains
distributions," on an annual basis. Your distributions will be reinvested
in the Fund unless you instruct the Fund to pay them to you in cash. There
are no sales charges on such reinvestments. The tax status of distributions
is the same for all shareholders regardless of how long they have owned
Fund shares or whether distributions are reinvested or paid in cash.
Except in tax-advantaged accounts, any sale, redemption or exchange of Fund
shares may be taxable to the shareholder.
Information on the tax treatment of distributions, including the source of
dividends and distributions of capital gains by the Fund, will be mailed to
shareholders each year. Because everyone's tax situation is unique, you
should consult your tax adviser regarding the treatment of distributions
under the federal, state and local tax rules that apply to you, as well as
the tax consequences of gains or losses from the redemption or exchange of
your shares.
EXCHANGE LIMITATIONS. Exchanges should not be used to try to take
advantage of short-term swings in the market. Frequent exchanges
create higher expenses for the Fund. Accordingly, the Fund reserves
the right to limit or terminate this privilege for any shareholder
making frequent exchanges or abusing the privilege. The Fund also may
revoke the privilege for all shareholders upon 60 days' written
notice.
SMALL ACCOUNTS. Our Board may authorize closing any account in which
there are fewer than 25 shares if it is in the Fund's best interest to
do so.
ELIGIBLE GUARANTOR is any broker or bank that is a member of the
medallion stamp program. Most major securities FIRMS AND BANKS ARE
MEMBERS OF THIS PROGRAM. A NOTARY PUBLIC IS NOT AN ELIGIBLE GUARANTOR.
8 | Your Investment
<PAGE>
SERVICES FOR FUND INVESTORS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described
below. With each service, you select a schedule and amount, subject to
certain restrictions. You may set up most of these services when filling
out your application or by calling 800-821-5129.
--------------------------------------------------------------------------------
For Investing
INVEST-A-MATIC
(Dollar-cost
averaging)
You may make fixed, periodic investments ($50 minimum) into your Fund account by
means of automatic money transfers from your bank checking account. See the
attached application for instructions.
DIV-MOVE
You may automatically reinvest the dividends and distributions from your account
into another account in any Eligible Fund ($50 minimum).
For selling shares
SYSTEMATIC
WITHDRAWAL
PLAN ("SWP")
You can make regular withdrawals from most Lord Abbett Funds. Automatic cash
withdrawals will be paid to you from your account in fixed or variable
amounts. To establish a plan, the value of your shares must be at least $10,000,
except for Retirement Plans for which there is no minimum. Your shares must be
in non-certificate form.
CLASS B SHARES
The CDSC will be waived on redemptions of up to 12% of the current net
asset value of your account at the time of your SWPrequest. For Class B share
redemptions over 12% per year, the CDSC will apply to the entire redemption.
Please contact the Fund for assistance in minimizing the CDSC in this situation.
CLASS B AND
C SHARES
Redemption proceeds due to a SWP for Class B and Class C shares will be redeemed
in the order described under "CDSC" under "Purchases."
--------------------------------------------------------------------------------
OTHER SERVICES
TELEPHONE INVESTING. After we have received the attached application
(selecting "yes" under Section 8C and completing Section 7), you may
instruct us by phone to have money transferred from your bank account to
purchase shares of the Fund for an existing account. The Fund will purchase
the requested shares when it receives the money from your bank.
EXCHANGES. You or your investment professional may instruct the Fund to
exchange shares of any class for shares of the same class of any Eligible
Fund. Instruction may be provided in writing or by telephone, with proper
identification, by calling 800-821-5129. The Fund must receive instructions
for the exchange before the close of the NYSE on the day of your call in
which case you will get the NAV per share of the Eligible Fund determined
on that day. Exchanges will be treated as a sale for federal tax purposes.
Be sure to read the current prospectus for any fund into which you are
exchanging.
REINVESTMENT PRIVILEGE. If you sell shares of the Fund, you have a one-time
right to reinvest some or all of the proceeds in the same class of any
Eligible Fund within 60 days without a sales charge. If you paid a CDSC
when you sold your shares, you will be credited with the amount of the
CDSC. All accounts involved must have the same registration.
ACCOUNT STATEMENTS. Every Lord Abbett investor automatically receives
quarterly account statements.
HOUSEHOLDING. Shareholders with the same last name and address will receive
a single copy of a prospectus and an annual and semi-annual report, unless
additional reports are specifically requested in writing to the Fund.
TELEPHONE TRANSACTIONS. You have this privilege unless you refuse
it in writing. For your security, telephone transaction requests
are recorded. We will take measures to verify the identity of the
caller, such as asking for your name, account number, social
security or taxpayer identification number and other relevant
information. The Fund will not be liable for following
instructions communicated by telephone that it reasonably
believes to be genuine.
Transactions by telephone may be difficult to implement in times
of drastic economic or market change.
Your Investment | 9
<PAGE>
ACCOUNT CHANGES. For any changes you need to make to your account, consult
your investment professional or call the Fund at 800-821-5129.
SYSTEMATIC EXCHANGE. You or your investment professional can establish a
schedule of exchanges between the same classes of any Eligible Fund.
MANAGEMENT
The Fund's investment adviser is Lord, Abbett & Co., located at 90 Hudson
St., Jersey City, NJ 07302-3973. Founded in 1929, Lord Abbett manages one
of the nation's oldest mutual fund complexes, with approximately $33
billion in more than 40 mutual fund portfolios and other advisory accounts.
For more information about the services Lord Abbett provides to the Fund,
see the Statement of Additional Information.
Lord Abbett is entitled to a monthly fee based on the Fund's average daily
net assets.
The fee is calculated and payable monthly. In addition, the Fund pays all
expenses not expressly assumed by Lord Abbett.
INVESTMENT MANAGERS. Lord Abbett uses a team of investment managers and
analysts acting together to manage the Fund's investments.
(INFORMATION ON TEAM MEMBERS AND THEIR BACKGROUNDS
TO BE SUPPLIED)
10 | Your Investment
<PAGE>
FOR MORE INFORMATION
OTHER INVESTMENT TECHNIQUES
This section describes some of the investment techniques that might be used
by the Fund and their risks.
ADJUSTING INVESTMENT EXPOSURE. The Fund may, but is not required to, use
various strategies to change its investment exposure to adjust to changing
security prices, interest rates, currency exchange rates, commodity prices
and other factors. The Fund may use these transactions to change the risk
and return characteristics of the Fund's portfolio. If we judge market
conditions incorrectly or use a strategy that does not correlate well with
the Fund's investments, it could result in a loss, even if we intended to
lessen risk or enhance returns. These transactions may involve a small
investment of cash compared to the magnitude of the risk assumed and could
produce disproportionate gains or losses.
FOREIGN SECURITIES. The Fund may invest up to 10% of its net assets in
foreign securities which are primarily traded outside the United States.
Foreign markets may not be subject to the same degree of regulation as U.S.
markets. Securities clearance, settlement procedures and trading practices
may be different, and transaction costs higher, in foreign countries. There
may be less trading volume and liquidity in foreign markets, subjecting the
securities traded in them to higher price fluctuations. Foreign investments
also may be affected by changes in currency rates or currency controls.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The Fund may enter into
financial futures contracts and related options transactions for bona fide
hedging purposes or to pursue risk management strategies. These
transactions involve the purchase or sale of a contract to buy or sell a
specified financial instrument at a specific future date and price on an
exchange or in over the counter market ("OTC"). The Fund may not purchase
or sell futures contracts, options on futures contracts or options on
currencies traded on a CFTC-regulated exchange for non-bona fide hedging
purposes if the aggregated initial margin and premiums required to
establish such positions would exceed 5% of the liquidation value of the
Fund's portfolio, after taking into account unrealized profits and losses
on any such contracts it has entered into, after taking into account
unrealized profits and unrealized losses on any such contracts it has
entered into.
OPTIONS TRANSACTIONS. The Fund may purchase and write put and call options
on equity securities that are traded on national securities exchanges.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. The Fund may only sell (write) covered put options to the extent
that cover for such options does not exceed 15% of its net assets. The Fund
may only sell (write) covered call options. Having an aggregate market
value of less than 25% of its total assets.
RISKS OF FUTURES CONTRACTS AND OPTIONS TRANSACTIONS. The Fund's
transactions, if any, in futures, options on futures and other options
involve additional risk of loss. Loss may result from a lack of correlation
between changes in the value of these derivative instruments and the Fund's
assets being hedged, the potential illiquidity of the markets for
derivative instruments, or the risks arising from margin requirements and
related leverage factors associated with such transactions. The use of
these investment techniques
For More Information | 11
<PAGE>
also involves the risk of loss if Lord Abbett is incorrect in its
expectation of fluctuations in securities prices. In addition, the loss
that may be incurred by the Fund in entering into futures contracts and in
writing call options is potentially unlimited and may exceed the amount of
any premium received.
GLOSSARY OF SHADED TERMS
ADDITIONAL CONCESSIONS. Lord Abbett Distributor may, for specified periods,
allow dealers to retain the full sales charge for sales of shares or may
pay an additional concession to a dealer who sells a minimum dollar amount
of our shares and/or shares of other Lord Abbett-sponsored funds. In some
instances, such additional concessions will be offered only to certain
dealers expected to sell significant amounts of shares. Additional payments
may be paid from Lord Abbett Distributor's own resources or from
distribution fees received from a fund and will be made in the form of cash
or, if permitted, non-cash payments. The non-cash payments will include
business seminars at Lord Abbett's headquarters or other locations,
including meals and entertainment, or the receipt of merchandise. The cash
payments may include payment of various business expenses of the dealer. In
selecting dealers to execute portfolio transactions for the Fund's
portfolio, if two or more dealers are considered capable of obtaining best
execution, we may prefer the dealer who has sold our shares and/or shares
of other Lord Abbett-sponsored funds.
AUTHORIZED INSTITUTIONS. Institutions and persons permitted by law to
receive service and/or distribution fees under a Rule 12b-1 Plan are
"Authorized Institutions." Lord Abbett Distributor is an Authorized
Institution.
ELIGIBLE FUND. An Eligible Fund is any Lord Abbett-sponsored fund except
for (1) certain tax-free, single-state funds where the exchanging
shareholder is a resident of a state in which such a Fund is not offered
for sale; (2) Lord Abbett Series Fund; (3) Lord Abbett U.S. Government
Securities Money Market Fund ("GSMMF") (except for holdings in GSMMF which
are attributable to any shares exchanged from the Lord Abbett Family of
Funds). An Eligible Fund also is any Authorized Institution's affiliated
money market fund satisfying Lord Abbett Distributor as to certain omnibus
account and other criteria.
ELIGIBLE MANDATORY DISTRIBUTIONS. If Class B shares represent a part of an
individual's total IRA or 403(b) investment, the CDSC will be waived only
for that part of a manda-tory distribution which bears the same relation to
the entire mandatory distribution as the Class B share investment bears to
the total investment.
LEGAL CAPACITY. With respect to a redemption request, if (for example) the
request is on behalf of the estate of a deceased shareholder, John W. Doe,
by a person (Robert A. Doe) who has the legal capacity to act for the
estate of the deceased shareholder because he is the executor of the
estate, then the request must be executed as follows: Robert A.Doe,
Executor of the Estate of John W. Doe. That signature using that capacity
must be guaranteed by an Eligible Guarantor. Similarly, if (for example)
the redemption request is on behalf of the ABC Corporation by a person
(Mary B. Doe) that has the legal capacity to act on behalf of this
corporation, because she is the President of the corporation, then the
request must be executed as follows: ABC Corporation by Mary B.Doe,
President. That signature using that capacity must be guaranteed by an
Eligible Guarantor (see example in right column, on the prior page).
MUTUAL FUND FEE BASED PROGRAM. Certain unaffiliated authorized brokers,
dealers, registered investment advisers or other financial institutions
("entities") who either (1)
12 | For Your Information
<PAGE>
have an arrangement with Lord Abbett Distributor in accordance with certain
standards approved by Lord Abbett Distributor, providing specifically for
the use of our shares (and sometimes providing for acceptance of orders for
such shares on our behalf) in particular investment products made available
for a fee to clients of such entities, or (2) charge an advisory,
consulting or other fee for their services and buy shares for their own
accounts or the accounts of their clients.
PURCHASER. The term "purchaser" includes: (1) an individual,(2) an
individual and his or her spouse and children under the age of 21, and (3)
a trustee or other fiduciary purchasing shares for a single trust estate or
single fiduciary account (including a pension, profit-sharing, or other
employee benefit trust qualified under Section 401 of the Internal Revenue
Code - more than one qualified employee benefit trust of a single employer,
including its consolidated subsidiaries, may be considered a single trust,
as may qualified plans of multiple employers registered in the name of a
single bank trustee as one account), although more than one beneficiary is
involved.
SPECIAL RETIREMENT WRAP PROGRAM. 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 Fee Based 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 the Class A 12b-1 Plan and the fact that the program relates to
participant-directed Retirement Plans.
GUARANTEED SIGNATURE. An acceptable form of guarantee would be as follows:
In the case of the estate --
Robert A. Doe
Executor of the Estate of
John W. Doe
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
[SIGNATURE ILLEGIBLE]
--------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
In the case of the corporation --
ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
[SIGNATURE ILLEGIBLE]
--------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
For More Information | 13
<PAGE>
FINANCIAL INFORMATION
COMPENSATION FOR YOUR DEALER
<TABLE>
<CAPTION>
====================================================================================================================================
FIRST YEAR COMPENSATION
Front-end
sales charge Dealer's
paid by investors concession Service fee(1) Total compensation(2)
Class A investments (% of offering price) (% of offering price) (% of net investment) (% of offering price)
====================================================================================================================================
<S> <C> <C> <C> <C>
Less than $50,000 5.75% 5.00% 0.25% 5.24%
====================================================================================================================================
$50,000 - $99,999 4.75% 4.00% 0.25% 4.24%
====================================================================================================================================
$100,000 - $249,999 3.95% 3.25% 0.25% 3.49%
====================================================================================================================================
$250,000 - $499,999 2.75% 2.25% 0.25% 2.49%
====================================================================================================================================
$500,000 - $999,999 1.95% 1.75% 0.25% 2.00%
====================================================================================================================================
$1 million or more(3) or Retirement Plan - 100 or more eligible employees(3) or
Special Retirement Wrap Program(3)
====================================================================================================================================
First $5 million no front-end sales charge 1.00% 0.25% 1.25%
====================================================================================================================================
Next $5 million above that no front-end sales charge 0.55% 0.25% 0.80%
====================================================================================================================================
Next $40 million above that no front-end sales charge 0.50% 0.25% 0.75%
====================================================================================================================================
Over $50 million no front-end sales charge 0.25% 0.25% 0.50%
Class B investments(4) Paid at time of sale (% of net asset value)
------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 3.75% 0.25% 4.00%
Class C investments(4)
------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.75% 0.25% 1.00%
Class P investments Percentage of average net assets
------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
====================================================================================================================================
====================================================================================================================================
ANNUAL COMPENSATION AFTER FIRST YEAR
Class A investments Percentage of average net assets(5)
------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.25% 0.25%
------------------------------------------------------------------------------------------------------------------------------------
Class B investments(4)
------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.25% 0.25%
------------------------------------------------------------------------------------------------------------------------------------
Class C investments(4)
------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.75% 0.25% 1.00%
------------------------------------------------------------------------------------------------------------------------------------
Class P investments
------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
====================================================================================================================================
</TABLE>
(1) The service fees for Class A and P shares are paid quarterly. The first
year's service fees on Class B and C shares are paid at the time of sale.
(2) Reallowance/concession percentages and service fee percentages are
calculated from different amounts, and therefore may not equal total
compensation percentages if combined using simple addition. Additional
Concessions may be paid to Authorized Institutions, such as your dealer,
from time to time.
(3) Concessions are paid at the time of sale on all Class A shares sold during
any 12-month period starting from the day of the first net asset value
sale. With respect to (a) Class A share purchases at $1 million or more,
sales qualifying at such level under rights of accumulation and Letter of
Intention privileges are included and (b) for Special Retirement Wrap
Programs, only new sales are eligible and exchanges into the Fund are
excluded. Certain purchases of Class A shares are subject to a CDSC.
(4) Class B and C shares are subject to CDSCs.
(5) With respect to Class B, C and P shares, 0.25%, 1.00% and 0.45%,
respectively, of the average annual net asset value of such shares
outstanding during the quarter (including distribution reinvestment shares
after the first anniversary of their issuance) is paid to Authorized
Institutions, such as your dealer. These fees are paid quarterly in
arrears.
14 | Financial Information
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
More information on the Fund is available free upon request, including the
following:
ANNUAL/SEMI-ANNUAL REPORT
Describes the Fund, lists portfolio holdings and contains a letter from the
Fund's manager discussing recent market conditions and the Fund's
investment strategies.
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
Provides more details about the Fund and its policies. A current SAI is on
file with the Securities and Exchange Commission ("SEC") and is
incorporated by reference (is legally considered part of this prospectus).
To obtain information:
By telephone. Call the Fund at:
800-426-1130
By mail. Write to the Fund at:
The Lord Abbett Family of Funds
90 Hudson Street
Jersey City, NJ 07302-3973
Via the Internet.
Lord, Abbett & Co.
www.lordabbett.com
Text only versions of Fund documents
can be viewed online or
downloaded from:
SEC
www.sec.gov
You can also obtain copies by
visiting the SEC's Public Reference Room in Washington, DC (phone
202-942-8090) or by sending your request and a duplicating fee to
the SEC's Public Reference Section, Washington, DC 20549-6009 or by sending your
request electronically to [email protected].
Lord Abbett Delta Fund
90 Hudson Street LAD-1-900
Jersey City, NJ 07302-3973 (10/00)
--------------------------------------------------------------------------------
SEC file number: 811-?
<PAGE>
LORD ABBETT
Statement of Additional Information December , 2000
LORD ABBETT
Delta 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 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 , 2000.
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.
TABLE OF CONTENTS PAGE
1. Fund History 2
2. Investment Policies 2
3. Management of the Fund 7
4. Control Persons and Principal Holders of Securities 10
5. Investment Advisory and Other Services 10
6. Brokerage Allocations and Other Practices 11
7. Capital Stock & Other Securities 12
8. Purchase, Redemption & Pricing 17
9. Taxation of the Fund 20
10. Underwriter 21
11. Performance 21
12. Financial Statements 22
<PAGE>
1.
Fund History
The Lord Abbett Delta Fund (the "Fund") is a diversified open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "Act"). The Fund was formed as a business trust under Delaware law
on October 2, 2000. The Fund offers five classes of shares: Class A, Class B,
Class C, Class P, and Class Y. Only the Fund's Class A, B, C, and P are offered
in this Statement of Additional Information.
2.
Investment Policies
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 above will be determined at the time
of purchase or sale of the portfolio.
2
<PAGE>
Non-Fundamental Investment Restrictions. In addition to the policies in the
Prospectus and the investment restrictions above which cannot be changed without
shareholder approval, the Fund is 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;
(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.
Additional Information on Portfolio Risks, Investments and Techniques. The
following sections provide further information on certain types of investments
and investment techniques that may be used by the Fund, including their
associated risks.
Borrowings. The Fund may borrow money for temporary or emergency purposes from
banks and other financial institutions in amounts not exceeding one-third of its
total assets.
Convertible Securities. The Fund may invest in convertible securities.
Convertible securities are preferred stocks or debt obligations that are
convertible into common stock. They generally offer lower interest or dividend
yields than non-convertible securities of similar quality. Convertible
securities have both equity and fixed income risk characteristics. Like all
fixed income securities, the value of convertible securities is susceptible to
the risk of market losses attributable to changes in interest rates. Generally,
the market value of convertible securities tends to decline as interest rates
increase and, conversely, to increase as interest rates decline. However, when
the market price of the common stock underlying a convertible security exceeds
the conversion price of the convertible security, the convertible security tends
to reflect the market price of the underlying common stock. As the market price
of the underlying common stock declines, the convertible security, like a fixed
income security, tends to trade increasingly on a yield basis, and thus, may not
decline in price to the same extent as the underlying common stock.
Depository Receipts. The Fund may invest in sponsored and unsponsored American
Depository Receipts ("ADRs") and similar depository receipts. ADRs, typically
issued by a financial institution (a "depository"), evidence ownership interests
in a security or a pool of securities issued by a foreign issuer and deposited
with the depository. Prices of ADRs are quoted in U.S. dollars, and ADRs are
traded in the United States.
Equity Securities. As stated in the Prospectus, under normal circumstances, the
Fund invests at least 65% of its total assets in equity securities. These
include common stocks, preferred stocks, convertible securities, warrants, stock
purchase rights, and similar instruments. Common and preferred stocks represent
an ownership interest in a corporation. In general, stock values fluctuate in
response to the activities of individual companies and in response to general
market and economic conditions. Accordingly, the value of the stocks that the
Fund holds may decline over short or extended periods. The stock markets tend to
be cyclical, with periods of generally rising stock prices and other periods of
generally declining prices. The volatility of equity securities means that the
value of an investment in the Fund may increase or decrease. As of the date
hereof, certain stock markets were trading at or close to record high levels.
There can be no guarantee that such levels will continue.
3
<PAGE>
Foreign Securities. The Fund may invest up to 10% of its net assets in foreign
securities which are primarily traded outside the United States. Foreign
investments involve special risks that are not typically associated with U.S.
dollar denominated or quoted securities of U.S. issuers. Foreign investments may
be affected by changes in currency rates, changes in foreign or U.S. laws or
restrictions applicable to such investments and changes in exchange control
regulations (i.e., currency blockage). A decline in the exchange rate of the
currency (i.e., weakening of the currency against the U.S. dollar) in which a
portfolio security is quoted or denominated relative to the U.S. dollar would
reduce the value of the portfolio security.
Brokerage commissions, custodial services and other costs relating to investment
in international securities markets generally are more expensive than in the
United States. Clearance and settlement procedures may be different in foreign
countries and, in certain markets, such procedures have been unable to keep pace
with the volume of securities transactions, thus making it difficult to conduct
such transactions.
Foreign issuers are not generally subject to uniform accounting, auditing and
financial reporting standards comparable to those applicable to U.S. issuers.
There may be less publicly available information about a foreign issuer than
about a U.S. issuer. In addition, there is generally less government regulation
of foreign markets, companies and securities dealers than in the United States.
Foreign securities markets may have substantially less volume than U.S.
securities markets and securities of many foreign issuers are less liquid and
more volatile than securities of comparable domestic issuers. The Fund may hold
foreign securities which trade on days when the Fund does not sell shares. As a
result, the value of the Fund's portfolio securities may change on days an
investor may not be able to purchase or redeem Fund shares. With respect to
certain foreign countries, there is a possibility of nationalization,
expropriation or confiscatory taxation, imposition of withholding or other taxes
on dividend or interest payments (or, in some cases, capital gains), limitations
on the removal of funds or other assets of the Fund, and political or social
instability or diplomatic developments which could affect investments in those
countries.
Futures Contracts and Options on Futures Contracts. Although the Fund is
authorized to engage in futures and options on futures transactions in
accordance with its investment objective and policies, it currently has no
intention to do so.
Futures contracts are standardized exchange-traded contracts that provide for
the sale or purchase of a specified financial instrument at a future time at a
specified price. An option on a futures contract gives the purchaser the right
(and the writer of the option the obligation) to assume a position in a futures
contract at a specified exercise price within a specified period of time. In
addition to incurring fees in connection with futures and options, an investor
is required to maintain margin deposits. At the time of entering into a futures
transaction or writing an option, an investor is required to deposit, on behalf
of the broker, a specified amount of cash or eligible securities called "initial
margin." The required initial margin is set by the exchange on which the
contract is traded although the broker can require an increased amount.
Subsequent payments, called "variation margin," to and from the broker are made
on a daily basis as the market price of the futures contract or option
fluctuates.
The Fund may purchase and sell futures contracts, and purchase and write call
and put options on futures contracts, for bona fide hedging purposes, including
to hedge against changes in interest rates, securities prices, or to the extent
the Fund invests in foreign securities, currency exchange rates, or in order to
pursue risk management strategies, including gaining efficient exposure to
markets and minimizing transaction costs. The Fund may also enter into closing
purchase and sale transactions with respect to such contracts and options. The
Fund may not purchase or sell futures contracts, options on futures contracts or
options on currencies traded on a CFTC-regulated exchange for non-bona fide
hedging purposes if the aggregated initial margin and premiums required to
establish such positions would exceed 5% of the liquidation value of the Fund's
portfolio, after taking into account unrealized profits and losses on any such
contracts it has entered into, after taking into account unrealized profits and
unrealized losses on any such contracts it has entered into.
Futures contracts and options on futures contracts present the following risks:
o While the Fund may benefit from the use of futures and related
options, unanticipated changes in interest rates, securities prices or
currency exchange rates may result in poorer overall performance than
if the Fund had not entered into any futures or related options
transaction.
4
<PAGE>
o Because perfect correlation between a futures position and a portfolio
position that is intended to be protected is impossible to achieve,
the desired protection may not be obtained and the Fund may be exposed
to additional risk of loss.
o The loss that the Fund may incur in entering into futures contracts
and in writing call options on futures is potentially unlimited and
may exceed the amount of the premium received.
o Futures markets are highly volatile and the use of futures may
increase the volatility of the Fund's NAV.
o As a result of the low margin deposits normally required in futures
and options on futures trading, a relatively small price movement in a
contract may result in substantial losses to the Fund.
o Futures contracts and related options may be illiquid, and exchanges
may limit fluctuations in futures contract prices during a single day.
Illiquid Securities. The Fund may invest up to 15% of its net assets in illiquid
securities, which cannot be disposed of in seven days in the ordinary course of
business at fair value. Illiquid securities include:
o Domestic and foreign securities that are not readily marketable.
o Repurchase agreements and time deposits with a notice or demand period
of more than seven days.
o Certain restricted securities, unless the Board of Trustees has
determined, based upon a review of the trading markets for a specific
restricted security, that such restricted security is eligible for
resale pursuant to Rule 144A under the Securities Act of 1933 ("144A
Securities") and, therefore, is liquid.
Securities may be resold to a qualified institutional buyer without registration
and without regard to whether the seller originally purchased the security for
investment. Investing in 144A Securities may decrease the liquidity of the
Fund's portfolio to the extent that qualified institutional buyers become for a
time uninterested in purchasing these securities. The purchase price and
subsequent valuation of restricted and illiquid securities normally reflect a
discount, which may be significant, from the market price of comparable
securities for which a liquid market exists.
Investment Companies. The Fund may invest in securities of other investment
companies subject to limitations prescribed by the Act. These limitations
include a prohibition on the Fund acquiring more than 3% of the voting shares of
any other investment company, and a prohibition on investing more than 5% of the
Fund's total assets in securities of any one investment company or more than 10%
of its total assets in securities of all investment companies. The Fund will
indirectly bear its proportionate share of any management fees and other
expenses paid by the investment companies in which it invests. Such investment
companies will have investment objectives, policies and restrictions
substantially similar to those of the Fund and will be subject to substantially
the same risks.
Lending of Portfolio Securities. Although the Fund has no current intention of
doing so, it is authorized to engage in securities lending to increase its
income. Securities lending involves the lending of securities owned by the Fund
to financial institutions such as certain broker-dealers. The borrowers are
required to secure their loan continuously with cash, cash equivalents, U.S.
government securities or letters of credit in an amount at least equal to the
market value of the securities loaned. Cash collateral may be invested in cash
equivalents. To the extent that cash collateral is invested in other investment
securities, such collateral will be subject to market depreciation or
appreciation, and the Fund will be responsible for any loss that might result
from its investment of the borrowers' collateral. The Fund may experience delay
in the recovery of its securities if the borrowing institution breaches its
agreement with the Fund. If the investment manager decides to engage in
securities loan transactions, the value of the securities loaned may not exceed
one-third of the value of the total assets of the Fund (including the loan
collateral).
Options on Securities Transactions. The Fund may engage in option transactions
in accordance with its investment objective and policies although it currently
does not intend to do so. The Fund may purchase and write (sell) put and call
options on equity securities that are traded on national securities exchanges.
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. The Fund
may write (sell) covered put options to the extent that cover for such options
does not exceed 15% of its net assets. The Fund may write (sell) covered call
options having an aggregate market value of less than 25% of its net assets.
5
<PAGE>
A put option gives the purchaser of the option the right to sell, and obligates
the writer to buy, the underlying securities at the exercise price at any time
during the option period. A put option is covered when, among other things, the
Fund segregates permissible liquid assets having a value equal to or greater
than the exercise price of the option to fulfill the obligation undertaken.
Writing listed put options may be 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 when the investment manager believes a more defensive
and less fully invested position is desirable in light of market conditions.
A call option gives the purchaser of the option the right to buy, and obligates
the writer to sell, the underlying securities at the exercise price at any time
during the option period. When the Fund writes a covered call option, it owns
the underlying security or has an absolute and immediate right to acquire that
security, without additional cash consideration. The Fund generally intends to
write listed covered call options during periods when it anticipates declines in
the market values of portfolio securities.
The purchase and writing of options is a highly specialized activity which
involves special investment risks. Options may be used for hedging or
cross-hedging purposes, or to seek to increase total return (which is considered
a speculative activity). The successful use of options depends in part on the
ability of the investment manager to manage future price fluctuations and the
degree of correlation between the options and securities markets. If the
investment manager is incorrect in its expectation of changes in market prices
or determination of the correlation between the securities on which options are
based and the Fund's portfolio securities, the Fund may incur losses that it
would not otherwise incur. The use of options can also increase the Fund's
transaction costs.
Preferred Stock, Warrants and Rights. The Fund may invest in preferred stock,
warrants and rights. Preferred stocks are securities that represent an ownership
interest providing the holder with claims on the issuer's earnings and assets
before common stockholders but after bond owners. Unlike debt securities, the
obligations of an issuer of preferred stock, including dividend and other
payment obligations, may not typically be accelerated by the holders of such
preferred stock on the occurrence of an event of default or other non-compliance
by the issuer of the preferred stock.
Warrants are options to buy a stated number of shares of common stock at a
specified price at any time during the life of the warrant. 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. The holders of
warrants and rights have no voting rights, receive no dividends and have no
rights with respect to the assets of the issuer. The value of a warrant or right
may not necessarily change with the value of the underlying securities. Warrants
and rights cease to have value if they are not exercised prior to their
expiration date.
Short-Term Fixed Income Securities. The Fund is authorized to invest temporarily
in various short-term fixed income securities. Such securities may be used to
invest uncommitted cash balances, to maintain liquidity to meet shareholder
redemptions, or to take a temporary defensive position against market declines.
These securities include:
o Obligations of the U.S. Government and its agencies and
instrumentalities
o Commercial paper
o Bank certificates of deposit and time deposits
o Bankers' acceptances
o Repurchase agreements collateralized by these securities.
6
<PAGE>
3.
Management of the Fund
The Board of Trustees of the Fund is responsible for the management of the
business and affairs of the Fund.
The following Trustee is the managing partner of Lord, Abbett & Co. ("Lord
Abbett"), 90 Hudson Street, Jersey City, New Jersey 07302-3973. 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.
*Robert S. Dow, age 55, 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
245 Park Avenue, Suite 2414
New York, New York
Senior Adviser, Time Warner Inc. (since 1998); Acting Chief Executive Officer of
Courtroom Television Network (1997 - 1998). President and Chief Executive
Officer of Time Warner Cable Programming, Inc. (1991 - 1997). Age 59.
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 62.
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 69.
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 74.
7
<PAGE>
C. Alan MacDonald, Trustee
415 Round Hill Road
Greenwich, Connecticut
President of Club Management Co., LLC, consultants on golf development
management (since 1999); Managing Director of The Directorship Group Inc., a
consultancy in board management and corporate governance (1997-1999); General
Partner of The Marketing Partnership, Inc., a full service marketing consulting
firm (1995-1997). Age 67.
Hansel B. Millican, Jr., Trustee
The Rochester Button Co.
1350 Broadway (Suite 1906)
New York, New York
President and Chief Executive Officer of Rochester Button Company (since 1991).
Age 72.
Thomas J. Neff, Trustee
Spencer Stuart, U.S.
277 Park Avenue
New York, New York
Chairman of Spencer Stuart U.S., an executive search consulting firm (since
1976). Age 62.
Compensation Disclosure
The following table summarizes the compensation for each of the
Directors/Trustees for the Fund and for all Lord Abbett-sponsored funds.
The second column of the following table sets forth the compensation accrued by
the Fund for outside directors. The third column sets forth information with
respect to the benefits accrued by all Lord Abbett-sponsored funds for outside
directors/trustees under the Fund's retirement plans, which will terminate
effective October 31, 2000. The fourth column sets forth the total compensation
paid by all Lord Abbett-sponsored funds to the outside directors/trustees, and
amounts payable but deferred at the option of the director/trustee, but does not
include amounts accrued under the third column. 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.
<TABLE>
<CAPTION>
For the Fiscal Year Ended_______
(1) (2) (3) (4)
Equity-Based For Year Ended
Retirement Benefits December 31, 1999
Accrued by the Total Compensation
Aggregate Fund and Paid by the Fund and
Compensation Thirteen Other Lord Thirteen Other Lord
Accrued by Abbett-sponsored Abbett-sponsored
Name of Trustee the Fund/1 Funds/2 Funds/3
--------------- ---------------- ------------------- ---------------------
<S> <C> <C> <C>
E. Thayer Bigelow New Fund $17,622 $57,720
William H.T. Bush New Fund $15,846 $58,000
Robert B. Calhoun, Jr. New Fund $12,276 $57,000
Stewart S. Dixon New Fund $32,420 $58,500
John C. Jansing New Fund $41,108(4) $57,250
C. Alan MacDonald New Fund $26,763 $57,500
Hansel B. Millican, Jr. New Fund $37,822 $57,500
Thomas J. Neff New Fund $20,313 $59,660
</TABLE>
8
<PAGE>
1. Outside directors'/trustees' fees, including attendance fees for board and
committee meetings, are allocated among all Lord Abbett-sponsored funds
based on the net assets of each fund. A portion of the fees payable by the
Fund to its outside directors/trustees may be deferred at the option of a
director/trustee under an equity-based (the "equity-based plan") that deems
the deferred amounts to be invested in shares of the Fund for later
distribution to the directors/trustees. Effective November 1, 2000, each
director/trustee will receive an additional annual $25,000 retainer the
full amount of which must be deferred under the equity-based plan. The
amounts ultimately received by the directors/trustees under the
equity-based plan will be directly linked to the investment performance of
the funds. Since the Fund is new, no compensation has yet been paid to its
Trustees.
2. The amounts in Column 3 were accrued by the Lord Abbett-sponsored funds for
the 12 months ended October 31, 1999.
3. The fourth column shows aggregate compensation, including
directors'/trustees' fees and attendance fees for board and committee
meetings, of a nature referred to in footnote one, accrued by the Lord
Abbett-sponsored funds during the year ended December 31, 1999, including
fees directors/trustees have chosen to defer, but does not include amounts
accrued under the equity-based plans and shown in Column 3.
4. The equity-based plans superseded a previously approved retirement plan for
all director/trustees. Directors had the option to convert their accrued
benefits under the retirement plan. All of the then current outside
directors/trustees except one made such election. Mr. Jansing chose to
continue to receive 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 Fund have been
associated with Lord Abbett for over five years. Messrs. Carper, Hilstad, and
Morris, and Ms. Binstock are partners of Lord Abbett; the others are employees.
None have received compensation from the Fund.
Executive Vice President: (To be determined)
Vice Presidents:
Joan A. Binstock, age 46 (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 48
Paul A. Hilstad, age 57, Vice President and Secretary
Lawrence H. Kaplan, age 43 (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 55
A. Edward Oberhaus, age 40
Tracie E. Richter, age 32 (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).
9
<PAGE>
Christina T. Simmons, age 42 (with Lord Abbett since 1999, formerly Assistant
General Counsel of Prudential Investments from 1998 to 1999, prior thereto
Counsel of Drinker, Biddle & Reath LLP, a law firm, from 1985 to 1998)
Treasurer:
Francie W. Tai, age 35 (with Lord Abbett since 2000, formerly Manager of Goldman
Sachs from 1997 to 2000, prior thereto Assistant Vice President of Bankers Trust
from 1994 to 1997).
Code of Ethics
The directors, trustees and officers of Lord Abbett-sponsored 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 fund to the extent
contemplated by the recommendations of such Advisory Group.
4.
Control Persons and Principal Holders of Securities
It is anticipated that our officers and trustees, as a group, will own
approximately 100% of the Fund's outstanding Class A shares. As of the date
hereof there were no other record holders of 5% or more of the Fund's
outstanding shares. The ownership of the Fund's outstanding shares of Class A
will represent the initial investment. It is anticipated that over time this
percentage of ownership will decrease.
5.
Investment Advisory And Other Services
Investment Manager
As described under "Management" in the Prospectus, Lord Abbett is the Fund's
investment manager. Of the general partners of Lord Abbett, the following are
officers and/or trustees of the Fund: Joan A. Binstock, Daniel E. Carper, Robert
S. Dow, Paul A. Hilstad, and Robert G. Morris. The other general partners are:
Stephen I. Allen, Zane E. Brown, John E. Erard, Robert P. Fetch, Daria L.
Foster, Robert I. Gerber, W. Thomas Hudson, Stephen J. McGruder, Michael B.
McLaughlin, Robert J. Noelke, R. Mark Pennington, Eli Salzmann, and Christopher
J. Towle. The address of each partner is 90 Hudson Street, Jersey City, New
Jersey 07302-3973.
The services performed by Lord Abbett are described under "Management" in the
Prospectus. Under the Management Agreement, the Fund pays Lord Abbett a monthly
fee, based on average daily net assets for each month at an annual rate of
________. 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.
10
<PAGE>
Principal Underwriter
Lord Abbett Distributor LLC, a New York limited liability company and subsidiary
of Lord Abbett, 90 Hudson Street, Jersey City, New Jersey 07302-3973, serves as
the principal underwriter for the Fund.
Custodian
The Bank of New York ("BNY"), 48 Wall Street, New York, New York, is the Fund's
custodian. In accordance with the requirements of Rule 17f-5, the Fund's Board
of Trustees has 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.
Transfer Agent
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 Fund.
Independent Auditors
(To be provided)
6.
Brokerage Allocations and Other Practices
The Fund'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, the Fund generally pays, 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 employees of Lord Abbett. These traders do
the trading as well for other accounts -- investment companies and other
investment clients -- managed by Lord Abbett. They are responsible for obtaining
best execution.
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.
11
<PAGE>
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.
When, in the opinion of Fund Management, two or more broker-dealers (either
directly or through their correspondent clearing agents) are in a position to
obtain the best price and execution, preference may be given to brokers who have
sold shares of the Fund and/or shares of other Lord Abbett-sponsored funds, or
who have provided investment research, statistical, or other related services to
the Fund.
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.
7.
Capital Stock and Other Securities
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.
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 Fund
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 auditors,
the approval of a contract with a principal underwriter and the election of
trustees from the separate voting requirements.
The Fund 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
Fund's Declaration of Trust, shareholder meetings may be called at any time by
certain officers of the Fund or by a majority of the trustees (i) for the
purpose of taking action upon any matter requiring the vote or authority of the
Fund'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
Fund's outstanding shares and entitled to vote at the meeting.
12
<PAGE>
Class A Shares. If you buy Class A shares, you may 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 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 the Fund's prospectus.
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. 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 the Fund's prospectus.
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.
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 Class C shares are described in the Fund's prospectus.
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 Fund's prospectus. Class P
shares are available to a limited number of investors.
Rule 12b-1 Plans
Class A, B, C, and P. 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 all 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, maintaining records,
and assisting shareholders in making redemptions, transfers, additional
purchases and exchanges and (ii) their assistance in distributing shares of the
Fund.
13
<PAGE>
Each Plan requires the Board of 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")
applies upon early redemption of shares regardless of class, and (i) 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 (ii) 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 Class 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 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 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 minimize the effects of the CDSC or 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 CDSC will depend on the number of years since you invested and
the dollar amount being redeemed, according to the following schedule:
<TABLE>
<CAPTION>
Anniversary of the Day on Contingent Deferred Sales Charge
Which the Purchase Order Was Accepted on Redemptions (As % of Amount Subject to Charge)
<S> <C>
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
</TABLE>
In the table, an "anniversary" is the same calendar day in each respective year
after the date of purchase. All purchases are considered to have been made on
the business day on which the purchase order was accepted.
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.
14
<PAGE>
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.
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 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.
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
generally 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.
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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.
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.
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 Class 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.
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8.
Purchases, Redemptions and Pricing
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 Fund 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 any national securities exchange 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 price, 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.
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 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 Lord Abbett Series Fund ("LASF") which offers
its shares only in connection with certain variable annuity contracts, (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.
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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) Lord Abbett U.S. Government
Securities Money Market Fund, Inc. ("GSMMF"), or (iii) 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", 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 in proper
form prior to the close of the NYSE. 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 LASF which offers its shares only in connection with
certain variable annuity contracts.
The other funds and series which participate in the Telephone Exchange Privilege
[except (a) 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) 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 -sponsored
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.
Letter of Intention. Under the terms of the Letter 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 LASF, 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 Letter 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 Letter of Intention
is not completed. The Letter of Intention is neither a binding obligation on you
to buy, nor on the Fund to sell, the full amount indicated.
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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 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.
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 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.
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9.
Taxation of the Fund
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 timely 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 out of short-term capital gains are taxable to its shareholders as
ordinary income from dividends, whether received in cash or reinvested in
additional shares of the Fund. Distributions paid by the Fund of its net
realized long-term capital gains are taxable to shareholders as capital gains,
also whether received in cash or reinvested in shares. The Fund will send its
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 United States 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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If the Fund purchases shares in certain foreign investment entities called
"passive foreign investment companies," the Fund may be subject to United States
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 the Fund 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. Alternatively, if the Fund were to make a "mark-to-market" election
with respect to its investment in a passive foreign investment company, gain or
loss with respect to the investment would be considered realized at the end of
each taxable year of the Fund even if the Fund continued to hold the investment,
and would be treated as ordinary income or loss to the Fund.
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to United States persons (United States citizens or residents and
United States domestic corporations, partnerships, trusts and estates). Each
shareholder who is not a United States person should consult his tax adviser
regarding the U.S. and foreign tax consequences of the ownership of shares of
the 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.
10.
Underwriter
Lord Abbett Distributor LLC, a New York limited liability company and subsidiary
of Lord Abbett, 90 Hudson Street, Jersey City, New Jersey 07302-3973, serves as
the principal underwriter for the Fund. The Fund has entered into a distribution
agreement with Lord Abbett Distributor, 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.
11.
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.
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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.
12.
Financial Statements
Not applicable.
<PAGE>
LORD
ABBETT DELTA FUND
CLASS Y SHARES
PROSPECTUS
, 2000
THE FUND
As with all mutual funds, the Securities and Exchange Commission
has not approved or disapproved these securities or passed upon
the adequacy of this prospectus. Any representation to the
contrary is a criminal offense.
Class Y shares of the Fund are neither offered to the general
public nor are available in all states. Please call 800-821-5219
for further information
<PAGE>
Table of Contents
The Fund
Goal 2
What you should know Principal Strategy 2
about the Fund Main Risks 2
Performance 3
Fees and Expenses 3
Your Investment
Information for managing Purchases 4
your Fund account Redemptions 5
Distributions and Taxes 5
Services For Fund Investors 6
Management 6
For More Information
How to learn more Other Investment Techniques 7
about the Fund Glossary of Shaded Terms 8
Back Cover
<PAGE>
Goal
The Fund's investment objective is to seek long-term capital growth.
Principal Strategy
To pursue its goal, the Fund invests primarily in companies it believes are
best positioned to benefit from themes that generate pervasive changes in
economic infrastructure. These themes may be the result of technological,
social or cultural changes. The Fund will be focused, generally investing
in one or two themes at a time. To identify attractive companies for
investment, the Fund uses a "bottom up" investment research approach
involving:
o thematic research to examine product and technological innovations,
demographics, social attitudes and lifestyles, legislative actions and
similar factors and trends that may benefit particular economic
sectors, industries and companies
o fundamental research to learn about a company's operating environment,
financial condition, leadership position within its industry,
resources and strategic plans and to assess its prospects for
exceeding earnings expectations
o quantitative research to identify companies with expected earnings
growth potential and consistency, and those that are undervalued in
the market
The Fund also incorporates business cycle analysis to determine how buying
or selling securities changes the Fund's overall sensitivity to economic
and market conditions.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in equity securities. These securities may include common stocks,
convertible bonds, convertible preferred stocks and warrants of companies
within a broad range of market capitalizations. Although the Fund invests
primarily in companies with market capitalizations of at least $1 billion,
it may invest in smaller companies. The Fund may also invest in foreign
securities.
While typically fully invested, at times the Fund may invest temporarily in
such short-term fixed income securities as U.S. Government obligations,
commercial paper and repurchase agreements. This could reduce the benefit
from any upswing in the market and prevent the Fund from achieving its
investment objective.
Main Risks
The Fund is subject to the general risks and considerations associated with
equity investing. The value of your investment will fluctuate in response
to movements in the stock market in general and to the changing prospects
of individual companies in which the Fund invests. Different types of
stocks shift in and out of favor depending on market, economic, political
or other conditions. Some of the small-capitalized companies in which the
Fund may invest may be more volatile in price than larger issuers. Smaller
companies may have more limited product lines, markets or financial
resources. In addition, if the Fund's focus on a particular theme for
investment or its assessment of an economic sector, industry or company's
potential for growth is wrong, the Fund could suffer losses or produce poor
performance relative to other funds, even in a rising market.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. The Fund is not a complete investment program and may
not be appropriate for all investors. You could lose money by investing in
the Fund.
We or the Fund refers to Lord Abbett Delta Fund.
About the Fund. The Fund is a professionally managed portfolio primarily holding
securities purchased with the pooled money of investors. It strives to reach its
stated goal, although as with all funds, it cannot guarantee results.
Bottom-up research looks for expected high performing stocks of individual
companies before considering the impact of economic trends. Companies might be
identified from investment research analysis or personal knowledge of their
products and services. This approach considers that a company can do well even
if it is part of a sector or industry that, as a whole, is not performing well.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describes the other investment strategies used by the Fund and
their risks.
2 The Fund
<PAGE>
Delta Fund
PERFORMANCE
The Fund does not show any performance because it has not completed a full
calendar year of operations.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
================================================================================
Fee Table
================================================================================
Class Y
Shareholder Fees (Fees paid directly from your investment)
--------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
--------------------------------------------------------------------------------
(as a % of offering price) none
--------------------------------------------------------------------------------
Maximum Deferred Sales Charge none
--------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from Fund assets)
(as a % of average net assets)
--------------------------------------------------------------------------------
Management Fees (See "Management")
--------------------------------------------------------------------------------
Distribution (12b-1) and Service Fees
--------------------------------------------------------------------------------
Other Expenses
--------------------------------------------------------------------------------
Total Operating Expenses
--------------------------------------------------------------------------------
================================================================================
Example
================================================================================
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. This example, like that in
other funds' prospectuses, assumes that you invest $10,000 in the Fund for the
time periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
Share Class 1 Year 3 Years
Class Y shares
--------------------------------------------------------------------------------
Management fees are payable to Lord, Abbett & Co. ("Lord Abbett") for the Fund's
investment management.
Other expenses include fees paid for miscellaneous items such as shareholder
service fees and professional fees.
The Fund 3
<PAGE>
Your Investment
PURCHASES
Class Y shares. You may purchase Class Y shares at the net asset value
("NAV") per share next determined after we receive and accept your purchase
order submitted in a proper form. No sales charges apply.
We reserve the right to withdraw all or part of the offering made by this
prospectus or to reject any purchase order. We also reserve the right to
waive or change minimum investment requirements. All purchase orders are
subject to our acceptance and are binding until confirmed or accepted in
writing.
Who May Invest? Eligible purchasers of Class Y shares include: (1) certain
authorized brokers, dealers, registered investment advisers or other
financial institutions ("entities") who either (a) have an arrangement with
Lord Abbett Distributor in accordance with certain standards approved by
Lord Abbett Distributor, providing specifically for the use of our Class Y
shares in particular investment products made available for a fee to
clients of such entities or (b) charge an advisory, consulting or other fee
for their services and buy shares for their own accounts or the accounts of
their clients ("Mutual Fund Fee Based Programs"); (2) the trustee or
custodian under any deferred compensation or pension or profit-sharing plan
or payroll deduction IRA established for the benefit of the employees of
any company with an account(s) in excess of $10 million managed by Lord
Abbett or its sub-advisers on a private-advisory-account basis; (3)
institutional investors, such as retirement plans, companies, foundations,
trusts, endowments and other entities where the total amount of potential
investable assets exceeds $50 million that were not introduced to Lord
Abbett by persons associated with a broker or dealer primarily involved in
the retail securities business. Additional payments may be made by Lord
Abbett out of its own resources with respect to certain of these sales.
How Much Must You Invest? You may buy our shares through any independent
securities dealer having a sales agreement with Lord Abbett Distributor,
our exclusive selling agent. Place your order with your investment dealer
or send the money to the Fund you selected (P.O. Box 219100, Kansas City,
Missouri 64121). The minimum initial investment is $1 million except for
Mutual Fund Fee Based Program, which has no minimum. This offering may be
suspended, changed or withdrawn by Lord Abbett Distributor which reserves
the right to reject any order.
Buying Shares Through Your Dealer. Orders for shares received by the Fund
prior to the close of the NYSE, or received by dealers prior to such close
and received by Lord Abbett Distributor prior to the close of its business
day, will be confirmed at NAV effective at such NYSE close. Orders received
by dealers after the NYSE closes and received by Lord Abbett Distributor in
proper form prior to the close of its next business day are executed at the
NAV effective as of the close of the NYSE on that next business day. The
dealer is responsible for the timely transmission of orders to Lord Abbett
Distributor. A business day is a day on which the NYSE is open for trading.
Buying Shares By Wire. To open an account, call 800-821-5129 Ext. 34028,
Institutional Trade Dept., to set up your account and to arrange a wire
transaction. Wire to: United Missouri Bank of Kansas City, N.A., Routing
number - 101000695, bank account number: 9878002611, FBO: (account name)
and (your Lord Abbett account number). Specify the complete name of the
Fund, note Class Y shares and include your new account number
NAV per share for the Fund is calculated each business day at the close of
regular trading on the New York Stock Exchange ("NYSE"), normally 4:00 p.m.
Eastern Time. Purchases and sales of Fund shares are executed at the NAV next
determined after the Fund receives your order in proper form. In calculating
NAV, securities for which market quotations are available are valued at those
quotations. Securities for which such quotations are not available are valued at
fair value under procedures approved by the Board.
Lord Abbett Distributor LLC ("Lord Abbett Distributor") acts as agent for the
Fund to work with investment professionals that buy and/or sell shares of the
Fund on behalf of their clients. Generally, Lord Abbett Distributor does not
sell Fund shares directly to investors.
Exchange Limitations. Exchanges should not be used to try to take advantage of
short-term swings in the market. Frequent exchanges create higher expenses for
the Funds. Accordingly, the Fund reserves the right to limit or ter- minate this
privilege for any shareholder making frequent exchanges or abusing the
privilege. The Fund also may revoke the privilege for all shareholders upon 60
days' written notice.
4 Your Investment
<PAGE>
and your name. To add to an existing account, wire to: United Missouri Bank
of Kansas City, N.A., routing number - 101000695, bank account number:
9878002611, FBO: (account name) and (your Lord Abbett account number).
Specify the complete name of the Fund, note Class Y shares and include your
account number and your name.
REDEMPTIONS
By Broker. Call your investment professional for directions on how to
redeem your shares.
By Telephone. To obtain the proceeds of a redemption of $50,000 or less
from your account, you or your representative can call the Funds at
800-821-5129.
By Mail. Submit a written redemption request indicating, the name(s) in
which the account is registered, the Fund's name, the class of shares, your
account number, and the dollar value or number of shares you wish to sell.
Include all necessary signatures. If the signer has any Legal Capacity, the
signature and capacity must be guaranteed by an Eligible Guarantor. Certain
other legal documentation may be required. For more information regarding
proper documentation call 800-821-5129.
Normally a check will be mailed to the name and address in which the
account is registered (or otherwise according to your instruction) within
three business days after receipt of your redemption request. Your account
balance must be sufficient to cover the amount being redeemed or your
redemption order will not be processed. Under unusual circumstances, each
Fund may suspend redemptions, or postpone payment for more than seven days,
as permitted by federal securities laws.
By Wire. In order to receive funds by wire, our servicing agent must have
the wiring instructions on file. To verify that this feature is in place,
call 800-821-5129 Ext. 34028, Institutional Trading Dept. (minimum wire:
$1,000). Your wire redemption request must be received by the Fund before
the close of the NYSE for money to be wired on the next business day.
DISTRIBUTIONS AND TAXES
The Fund normally pays its shareholders dividends from its net investment
income and distributes its net capital gains (if any) as "capital gains
distributions" on an annual basis. Your distributions will be reinvested in
your Fund unless you instruct the Fund to pay them to you in cash. The tax
status of distributions is the same for all shareholders regardless of how
long they have owned Fund shares or whether distributions are reinvested or
paid in cash.
Except in tax-advantaged accounts, any sale, redemption or exchange of Fund
shares may be taxable to the shareholder.
Information on the tax treatment of distributions, including the source of
dividends and distributions of capital gains by the Funds, will be mailed
to shareholders each year. Because everyone's tax situation is unique, you
should consult your tax adviser regarding the treatment of distributions
under the federal, state and local tax rules that apply to you, as well as
the tax consequences of gains or losses from the redemption or exchange of
your shares.
Eligible Guarantor is any broker or bank that is a member of the medallion stamp
program. Most major securities firms and banks are members of this program. A
notary public is not an Eligible Guarantor.
Your Investment 5
<PAGE>
SERVICES FOR FUND INVESTORS
AUTOMATIC SERVICES
We offer the following shareholder services:
Telephone Exchange Privilege. Class Y shares may be exchanged without a
service charge for Class Y shares of any Eligible Fund among the Lord
Abbett-sponsored funds.
Account Statements. Every Lord Abbett investor automatically receives
quarterly account statements.
Householding. Shareholders with the same last name and address will receive
a single copy of a prospectus and an annual or semi-annual report, unless
additional reports are specifically requested in writing to the Fund.
Account Changes. For any changes you need to make to your account, consult
your investment professional or call the Fund at 800-821-5129.
Systematic Exchange. You or your investment professional can establish a
schedule of exchanges between the same classes of any Eligible Fund.
MANAGEMENT
The Fund's investment adviser is Lord, Abbett & Co., located at 90 Hudson
St., Jersey City, NJ 07302-3973. Founded in 1929, Lord Abbett manages one
of the nation's oldest mutual fund complexes, with approximately $35
billion in more than 40 mutual fund portfolios and other advisory accounts.
For more information about the services Lord Abbett provides to the Fund,
see the Statement of Additional Information.
Lord Abbett is entitled to a monthly management fee based on the Fund's
average daily net assets. The fee is calculated and payable monthly. In
addition, the Fund pays all expenses not expressly assumed by Lord Abbett.
Investment Managers. Lord Abbett uses a team of investment managers and
analysts acting together to manage the Fund's investments.
(Information on team members and their backgrounds
to be supplied)
Telephone Transactions. You have this privilege unless you refuse it in writing.
For your security, telephone transaction requests are recorded. We will take
measures to verify the identity of the caller, such as asking for your name,
account number, social security or taxpayer identification number and other
relevant information. The Fund will not be liable for following instructions
communicated by telephone that it reasonably believes to be genuine.
Transactions by telephone may be difficult to implement in times of drastic
economic or market change.
6 Your Investment
<PAGE>
For More Information
OTHER INVESTMENT TECHNIQUEs
This section describes some of the investment techniques that might be used
by the Fund and their risks.
Adjusting Investment Exposure. The Fund may, but is not required to, use
various strategies to change its investment exposure to adjust to changing
security prices, interest rates, currency exchange rates, commodity prices
and other factors. The Fund may use these transactions to change the risk
and return characteristics of the Fund's portfolio. If we judge market
conditions incorrectly or use a strategy that does not correlate well with
the Fund's investments, it could result in a loss, even if we intended to
lessen risk or enhance returns. These transactions may involve a small
investment of cash compared to the magnitude of the risk assumed and could
produce disproportionate gains or losses.
Foreign Securities. The Fund may invest up to 10% of its net assets in
foreign securities which are primarily traded outside the United States.
Foreign markets may not be subject to the same degree of regulation as U.S.
markets. Securities clearance, settlement procedures and trading practices
may be different, and transaction costs higher, in foreign countries. There
may be less trading volume and liquidity in foreign markets, subjecting the
securities traded in them to higher price fluctuations. Foreign investments
also may be affected by changes in currency rates or currency controls.
Futures Contracts and Options on Futures Contracts. The Fund may enter into
financial futures contracts and related options transactions for bona fide
hedging purposes or to pursue risk management strategies. These
transactions involve the purchase or sale of a contract to buy or sell a
specified financial instrument at a specific future date and price on an
exchange or in over the counter market ("OTC"). The Fund may not purchase
or sell futures contracts, options on futures contracts or options on
currencies traded on a CFTC-regulated exchange for non-bona fide hedging
purposes if the aggregated initial margin and premiums required to
establish such positions would exceed 5% of the liquidation value of the
Fund's portfolio, after taking into account unrealized profits and losses
on any such contracts it has entered into, after taking into account
unrealized profits and unrealized losses on any such contracts it has
entered into.
Options Transactions. The Fund may purchase and write put and call options
on equity securities that are traded on national securities exchanges. 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. The Fund may only sell (write) covered put options to the extent
that cover for such options does not exceed 15% of its net assets. The Fund
may only sell (write) covered call options. Having an aggregate market
value of less than 25% of its total assets.
Risks of Futures Contracts and Options Transactions. The Fund's
transactions, if any, in futures, options on futures and other options
involve additional risk of loss. Loss may result from a lack of correlation
between changes in the value of these derivative instruments and the Fund's
assets being hedged, the potential illiquidity of the markets for
derivative instruments, or the risks arising from margin requirements and
related leverage factors associated with such transactions. The use of
these investment techniques
For More Information 7
<PAGE>
also involves the risk of loss if Lord Abbett is incorrect in its
expectation of fluctuations in securities prices. In addition, the loss
that may be incurred by the Fund in entering into futures contracts and in
writing call options is potentially unlimited and may exceed the amount of
any premium received.
GLOSSARY OF SHADED TERMS
Eligible Fund. An Eligible Fund is any Lord Abbett-sponsored fund offering
Class Y shares.
Legal Capacity. This term refers to the authority of an individual to act
on behalf of an entity or other person(s). For example, if a redemption
request were to be made on behalf of the estate of a deceased shareholder,
John W. Doe, by a person (Robert A. Doe) who has the legal capacity to act
for the estate of the deceased shareholder because he is the executor of
the estate, then the request must be executed as follows: Robert A. Doe,
Executor of the Estate of John W. Doe. That signature using that capacity
must be guaranteed by an Eligible Guarantor.
To give another example, if a redemption request were to be made on behalf
of the ABC Corporation by a person (Mary B. Doe) who has the legal capacity
to act on behalf of the Corporation, because she is the president of the
corporation, the request must be executed as follows: ABC Corporation by
Mary B. Doe, President. That signature using that capacity must be
guaranteed by an Eligible Guarantor (see example in right column).
Mutual Fund Fee Based Program. Certain unaffiliated authorized brokers,
dealers, registered investment advisers or other financial institutions
("entities") who either (1) have an arrangement with Lord Abbett
Distributor in accordance with certain standards approved by Lord Abbett
Distributor, providing specifically for the use of our shares (and
sometimes providing for acceptance of orders for such shares on our behalf)
in particular investment products made available for a fee to clients of
such entities, or (2) charge an advisory, consulting or other fee for their
services and buy shares for their own accounts or the accounts of their
clients.
GUARANTEED SIGNATURE. An acceptable form of guarantee would be as follows:
In the case of the estate --
Robert A. Doe
Executor of the Estate of
John W. Doe
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
[SIGNATURE ILLEGIBLE]
--------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
In the case of the corporation --
ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
[SIGNATURE ILLEGIBLE]
--------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
8 For More Information
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
More information on the Fund is available free upon request, including the
following:
ANNUAL/SEMI-ANNUAL REPORT
Describes the Fund, lists portfolio holdings and contains a letter from the
Fund's manager discussing recent market conditions and the Fund's
investment strategies.
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
Provides more details about the Fund and its policies. A current SAI is on
file with the Securities and Exchange Commission ("SEC") and is
incorporated by reference (is legally considered part of this prospectus).
To obtain information:
By telephone. Call the Fund at:
800-426-1130
By mail. Write to the Fund at:
The Lord Abbett Family of Funds
90 Hudson Street
Jersey City, NJ 07302-3973
Via the Internet.
Lord, Abbett & Co.
www.lordabbett.com
Text only versions of Fund documents
can be viewed online or
downloaded from:
SEC
www.sec.gov
You can also obtain copies by
visiting the SEC's Public Reference Room in Washington, DC (phone
202-942-8090) or by sending your request and a duplicating fee to
the SEC's Public Reference Section, Washington, DC 20549-6009 or by sending your
request electronically to [email protected].
Lord Abbett Delta Fund
90 Hudson Street LAD-Y-1-900
Jersey City, NJ 07302-3973 (10/00)
--------------------------------------------------------------------------------
SEC file number: 811-?
<PAGE>
LORD ABBETT
Statement of Additional Information December , 2000
LORD ABBETT
Delta Fund
Class Y Shares
This Statement of Additional Information is not a Prospectus. A Prospectus for
the Class Y shares of Lord Abbett Delta Fund may be obtained from your
securities dealer or from Lord Abbett Distributor LLC ("Lord Abbett
Distributor") at 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 , 2000.
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.
TABLE OF CONTENTS PAGE
1. Fund History 2
2. Investment Policies 2
3. Management of the Fund 6
4. Control Persons and Principal Holders of Securities 10
5. Investment Advisory and Other Services 10
6. Brokerage Allocations and Other Practices 11
7. Capital Stock & Other Securities 12
8. Purchase, Redemption & Pricing 12
9. Taxation of the Fund 13
10. Underwriter 14
11. Performance 15
12. Financial Statements 15
1
<PAGE>
1.
Fund History
The Lord Abbett Delta Fund (the "Fund") is a diversified open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "Act"). The Fund was formed as a business trust under Delaware law
on October 2, 2000. The Fund offers five classes of shares: Class A, Class B,
Class C, Class P, and Class Y. Only the Fund's Class Y is offered in this
Statement of Additional Information.
2.
Investment Policies
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 above will be determined at the time
of purchase or sale of the portfolio.
2
<PAGE>
Non-Fundamental Investment Restrictions. In addition to the policies in the
Prospectus and the investment restrictions above which cannot be changed without
shareholder approval, the Fund is 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;
(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.
Additional Information on Portfolio Risks, Investments and Techniques. The
following sections provide further information on certain types of investments
and investment techniques that may be used by the Fund, including their
associated risks.
Borrowings. The Fund may borrow money for temporary or emergency purposes from
banks and other financial institutions in amounts not exceeding one-third of its
total assets.
Convertible Securities. The Fund may invest in convertible securities.
Convertible securities are preferred stocks or debt obligations that are
convertible into common stock. They generally offer lower interest or dividend
yields than non-convertible securities of similar quality. Convertible
securities have both equity and fixed income risk characteristics. Like all
fixed income securities, the value of convertible securities is susceptible to
the risk of market losses attributable to changes in interest rates. Generally,
the market value of convertible securities tends to decline as interest rates
increase and, conversely, to increase as interest rates decline. However, when
the market price of the common stock underlying a convertible security exceeds
the conversion price of the convertible security, the convertible security tends
to reflect the market price of the underlying common stock. As the market price
of the underlying common stock declines, the convertible security, like a fixed
income security, tends to trade increasingly on a yield basis, and thus, may not
decline in price to the same extent as the underlying common stock.
Depository Receipts. The Fund may invest in sponsored and unsponsored American
Depository Receipts ("ADRs") and similar depository receipts. ADRs, typically
issued by a financial institution (a "depository"), evidence ownership interests
in a security or a pool of securities issued by a foreign issuer and deposited
with the depository. Prices of ADRs are quoted in U.S. dollars, and ADRs are
traded in the United States.
Equity Securities. As stated in the Prospectus, under normal circumstances, the
Fund invests at least 65% of its total assets in equity securities. These
include common stocks, preferred stocks, convertible securities, warrants, stock
purchase rights, and similar instruments. Common and preferred stocks represent
an ownership interest in a corporation. In general, stock values fluctuate in
response to the activities of individual companies and in response to general
market and economic conditions. Accordingly, the value of the stocks that the
Fund holds may decline over short or extended periods. The stock markets tend to
be cyclical, with periods of generally rising stock prices and other periods of
generally declining prices. The volatility of equity securities means that the
value of an investment in the Fund may increase or decrease. As of the date
hereof, certain stock markets were trading at or close to record high levels.
There can be no guarantee that such levels will continue.
3
<PAGE>
Foreign Securities. The Fund may invest up to 10% of its net assets in foreign
securities which are primarily traded outside the United States. Foreign
investments involve special risks that are not typically associated with U.S.
dollar denominated or quoted securities of U.S. issuers. Foreign investments may
be affected by changes in currency rates, changes in foreign or U.S. laws or
restrictions applicable to such investments and changes in exchange control
regulations (i.e., currency blockage). A decline in the exchange rate of the
currency (i.e., weakening of the currency against the U.S. dollar) in which a
portfolio security is quoted or denominated relative to the U.S. dollar would
reduce the value of the portfolio security.
Brokerage commissions, custodial services and other costs relating to investment
in international securities markets generally are more expensive than in the
United States. Clearance and settlement procedures may be different in foreign
countries and, in certain markets, such procedures have been unable to keep pace
with the volume of securities transactions, thus making it difficult to conduct
such transactions.
Foreign issuers are not generally subject to uniform accounting, auditing and
financial reporting standards comparable to those applicable to U.S. issuers.
There may be less publicly available information about a foreign issuer than
about a U.S. issuer. In addition, there is generally less government regulation
of foreign markets, companies and securities dealers than in the United States.
Foreign securities markets may have substantially less volume than U.S.
securities markets and securities of many foreign issuers are less liquid and
more volatile than securities of comparable domestic issuers. The Fund may hold
foreign securities which trade on days when the Fund does not sell shares. As a
result, the value of the Fund's portfolio securities may change on days an
investor may not be able to purchase or redeem Fund shares. With respect to
certain foreign countries, there is a possibility of nationalization,
expropriation or confiscatory taxation, imposition of withholding or other taxes
on dividend or interest payments (or, in some cases, capital gains), limitations
on the removal of funds or other assets of the Fund, and political or social
instability or diplomatic developments which could affect investments in those
countries.
Futures Contracts and Options on Futures Contracts. Although the Fund is
authorized to engage in futures and options on futures transactions in
accordance with its investment objective and policies, it currently has no
intention to do so.
Futures contracts are standardized exchange-traded contracts that provide for
the sale or purchase of a specified financial instrument at a future time at a
specified price. An option on a futures contract gives the purchaser the right
(and the writer of the option the obligation) to assume a position in a futures
contract at a specified exercise price within a specified period of time. In
addition to incurring fees in connection with futures and options, an investor
is required to maintain margin deposits. At the time of entering into a futures
transaction or writing an option, an investor is required to deposit, on behalf
of the broker, a specified amount of cash or eligible securities called "initial
margin." The required initial margin is set by the exchange on which the
contract is traded although the broker can require an increased amount.
Subsequent payments, called "variation margin," to and from the broker are made
on a daily basis as the market price of the futures contract or option
fluctuates.
The Fund may purchase and sell futures contracts, and purchase and write call
and put options on futures contracts, for bona fide hedging purposes, including
to hedge against changes in interest rates, securities prices, or to the extent
the Fund invests in foreign securities, currency exchange rates, or in order to
pursue risk management strategies, including gaining efficient exposure to
markets and minimizing transaction costs. The Fund may also enter into closing
purchase and sale transactions with respect to such contracts and options. The
Fund may not purchase or sell futures contracts, options on futures contracts or
options on currencies traded on a CFTC-regulated exchange for non-bona fide
hedging purposes if the aggregated initial margin and premiums required to
establish such positions would exceed 5% of the liquidation value of the Fund's
portfolio, after taking into account unrealized profits and losses on any such
contracts it has entered into, after taking into account unrealized profits and
unrealized losses on any such contracts it has entered into.
Futures contracts and options on futures contracts present the following risks:
o While the Fund may benefit from the use of futures and related
options, unanticipated changes in interest rates, securities prices or
currency exchange rates may result in poorer overall performance than
if the Fund had not entered into any futures or related options
transaction.
4
<PAGE>
o Because perfect correlation between a futures position and a portfolio
position that is intended to be protected is impossible to achieve,
the desired protection may not be obtained and the Fund may be exposed
to additional risk of loss.
o The loss that the Fund may incur in entering into futures contracts
and in writing call options on futures is potentially unlimited and
may exceed the amount of the premium received.
o Futures markets are highly volatile and the use of futures may
increase the volatility of the Fund's NAV.
o As a result of the low margin deposits normally required in futures
and options on futures trading, a relatively small price movement in a
contract may result in substantial losses to the Fund.
o Futures contracts and related options may be illiquid, and exchanges
may limit fluctuations in futures contract prices during a single day.
Illiquid Securities. The Fund may invest up to 15% of its net assets in illiquid
securities, which cannot be disposed of in seven days in the ordinary course of
business at fair value. Illiquid securities include:
o Domestic and foreign securities that are not readily marketable.
o Repurchase agreements and time deposits with a notice or demand period
of more than seven days.
o Certain restricted securities, unless the Board of Trustees has
determined, based upon a review of the trading markets for a specific
restricted security, that such restricted security is eligible for
resale pursuant to Rule 144A under the Securities Act of 1933 ("144A
Securities") and, therefore, is liquid.
Securities may be resold to a qualified institutional buyer without registration
and without regard to whether the seller originally purchased the security for
investment. Investing in 144A Securities may decrease the liquidity of the
Fund's portfolio to the extent that qualified institutional buyers become for a
time uninterested in purchasing these securities. The purchase price and
subsequent valuation of restricted and illiquid securities normally reflect a
discount, which may be significant, from the market price of comparable
securities for which a liquid market exists.
Investment Companies. The Fund may invest in securities of other investment
companies subject to limitations prescribed by the Act. These limitations
include a prohibition on the Fund acquiring more than 3% of the voting shares of
any other investment company, and a prohibition on investing more than 5% of the
Fund's total assets in securities of any one investment company or more than 10%
of its total assets in securities of all investment companies. The Fund will
indirectly bear its proportionate share of any management fees and other
expenses paid by the investment companies in which it invests. Such investment
companies will have investment objectives, policies and restrictions
substantially similar to those of the Fund and will be subject to substantially
the same risks.
Lending of Portfolio Securities. Although the Fund has no current intention of
doing so, it is authorized to engage in securities lending to increase its
income. Securities lending involves the lending of securities owned by the Fund
to financial institutions such as certain broker-dealers. The borrowers are
required to secure their loan continuously with cash, cash equivalents, U.S.
government securities or letters of credit in an amount at least equal to the
market value of the securities loaned. Cash collateral may be invested in cash
equivalents. To the extent that cash collateral is invested in other investment
securities, such collateral will be subject to market depreciation or
appreciation, and the Fund will be responsible for any loss that might result
from its investment of the borrowers' collateral. The Fund may experience delay
in the recovery of its securities if the borrowing institution breaches its
agreement with the Fund. If the investment manager decides to engage in
securities loan transactions, the value of the securities loaned may not exceed
one-third of the value of the total assets of the Fund (including the loan
collateral).
5
<PAGE>
Options on Securities Transactions. The Fund may engage in option transactions
in accordance with its investment objective and policies although it currently
does not intend to do so. The Fund may purchase and write (sell) put and call
options on equity securities that are traded on national securities exchanges.
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. The Fund
may write (sell) covered put options to the extent that cover for such options
does not exceed 15% of its net assets. The Fund may write (sell) covered call
options having an aggregate market value of less than 25% of its net assets.
A put option gives the purchaser of the option the right to sell, and obligates
the writer to buy, the underlying securities at the exercise price at any time
during the option period. A put option is covered when, among other things, the
Fund segregates permissible liquid assets having a value equal to or greater
than the exercise price of the option to fulfill the obligation undertaken.
Writing listed put options may be 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 when the investment manager believes a more defensive
and less fully invested position is desirable in light of market conditions.
A call option gives the purchaser of the option the right to buy, and obligates
the writer to sell, the underlying securities at the exercise price at any time
during the option period. When the Fund writes a covered call option, it owns
the underlying security or has an absolute and immediate right to acquire that
security, without additional cash consideration. The Fund generally intends to
write listed covered call options during periods when it anticipates declines in
the market values of portfolio securities.
The purchase and writing of options is a highly specialized activity which
involves special investment risks. Options may be used for hedging or
cross-hedging purposes, or to seek to increase total return (which is considered
a speculative activity). The successful use of options depends in part on the
ability of the investment manager to manage future price fluctuations and the
degree of correlation between the options and securities markets. If the
investment manager is incorrect in its expectation of changes in market prices
or determination of the correlation between the securities on which options are
based and the Fund's portfolio securities, the Fund may incur losses that it
would not otherwise incur. The use of options can also increase the Fund's
transaction costs.
Preferred Stock, Warrants and Rights. The Fund may invest in preferred stock,
warrants and rights. Preferred stocks are securities that represent an ownership
interest providing the holder with claims on the issuer's earnings and assets
before common stockholders but after bond owners. Unlike debt securities, the
obligations of an issuer of preferred stock, including dividend and other
payment obligations, may not typically be accelerated by the holders of such
preferred stock on the occurrence of an event of default or other non-compliance
by the issuer of the preferred stock.
Warrants are options to buy a stated number of shares of common stock at a
specified price at any time during the life of the warrant. 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. The holders of
warrants and rights have no voting rights, receive no dividends and have no
rights with respect to the assets of the issuer. The value of a warrant or right
may not necessarily change with the value of the underlying securities. Warrants
and rights cease to have value if they are not exercised prior to their
expiration date.
Short-Term Fixed Income Securities. The Fund is authorized to invest temporarily
in various short-term fixed income securities. Such securities may be used to
invest uncommitted cash balances, to maintain liquidity to meet shareholder
redemptions, or to take a temporary defensive position against market declines.
These securities include:
o Obligations of the U.S. Government and its agencies and
instrumentalities
o Commercial paper
o Bank certificates of deposit and time deposits
o Bankers' acceptances
o Repurchase agreements collateralized by these securities.
6
<PAGE>
3.
Management of the Fund
The Board of Trustees of the Fund is responsible for the management of the
business and affairs of the Fund.
The following Trustee is the managing partner of Lord, Abbett & Co. ("Lord
Abbett"), 90 Hudson Street, Jersey City, New Jersey 07302-3973. 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.
*Robert S. Dow, age 55, 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
245 Park Avenue, Suite 2414
New York, New York
Senior Adviser, Time Warner Inc. (since 1998); Acting Chief Executive Officer of
Courtroom Television Network (1997 - 1998). President and Chief Executive
Officer of Time Warner Cable Programming, Inc. (1991 - 1997). Age 59.
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 62.
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 69.
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 74.
7
<PAGE>
C. Alan MacDonald, Trustee
415 Round Hill Road
Greenwich, Connecticut
President of Club Management Co., LLC, consultants on golf development
management (since 1999); Managing Director of The Directorship Group Inc., a
consultancy in board management and corporate governance (1997-1999); General
Partner of The Marketing Partnership, Inc., a full service marketing consulting
firm (1995-1997). Age 67.
Hansel B. Millican, Jr., Trustee
The Rochester Button Co.
1350 Broadway (Suite 1906)
New York, New York
President and Chief Executive Officer of Rochester Button Company (since 1991).
Age 72.
Thomas J. Neff, Trustee
Spencer Stuart, U.S.
277 Park Avenue
New York, New York
Chairman of Spencer Stuart U.S., an executive search consulting firm (since
1976). Age 62.
Compensation Disclosure
The following table summarizes the compensation for each of the
Directors/Trustees for the Fund and for all Lord Abbett-sponsored funds.
The second column of the following table sets forth the compensation accrued by
the Fund for outside directors. The third column sets forth information with
respect to the benefits accrued by all Lord Abbett-sponsored funds for outside
directors/trustees under the Fund's retirement plans, which were terminated
effective October 31, 2000. The fourth column sets forth the total compensation
paid by all Lord Abbett-sponsored funds to the outside directors/trustees, and
amounts payable but deferred at the option of the director/trustee, but does not
include amounts accrued under the third column. 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.
<TABLE>
<CAPTION>
For the Fiscal Year July 31
(1) (2) (3) (4)
Equity-Based For Year Ended
Retirement Benefits December 31, 1999
Accrued by the Total Compensation
Aggregate Fund and Paid by the Fund and
Compensation Thirteen Other Lord Thirteen Other Lord
Accrued by Abbett-sponsored Abbett-sponsored
Name of Trustee the Fund/1 Funds/2 Funds/3
--------------- ---------------- ------------------- ------------------------
<S> <C> <C> <C>
E. Thayer Bigelow New Fund $17,622 $57,720
William H.T. Bush New Fund $15,846 $58,000
Robert B. Calhoun, Jr. New Fund $12,276 $57,000
Stewart S. Dixon New Fund $32,420 $58.500
John C. Jansing New Fund $41,108 (4) $57,250
C. Alan MacDonald New Fund $26,763 $57,500
Hansel B. Millican, Jr. New Fund $37,822 $57,500
Thomas J. Neff New Fund $20,313 $59,660
</TABLE>
8
<PAGE>
1. Outside directors'/trustees' fees, including attendance fees for board and
committee meetings, are allocated among all Lord Abbett-sponsored funds
based on the net assets of each fund. A portion of the fees payable by the
Fund to its outside directors/trustees may be deferred at the option of a
director/trustee under an equity-based (the "equity-based plan") that deems
the deferred amounts to be invested in shares of the Fund for later
distribution to the directors/trustees. Effective November 1, 2000, each
director/trustee will receive an additional annual $25,000 retainer the
full amount of which must be deferred under the equity-based plan. The
amounts ultimately received by the directors/trustees under the
equity-based plan will be directly linked to the investment performance of
the funds. Since the Fund is new, no compensation has yet been paid to its
Trustee.
2. The amounts in Column 3 were accrued by the Lord Abbett-sponsored funds for
the 12 months ended July 31, 2000. In 1996, the equity-based plans
superseded the retirement plans for all directors/trustees, although
accruals continued under the retirement plan until October 31, 2000. All of
the current directors/trustees elected to convert their accrued benefits
under the retirement plan into amounts deemed invested in shares of Lord
Abbett-sponsored funds.
3. The fourth column shows aggregate compensation, including
directors'/trustees' fees and attendance fees for board and committee
meetings, of a nature referred to in footnote one, accrued by the Lord
Abbett-sponsored funds during the year ended December 31, 1999, including
fees directors/trustees have chosen to defer, but does not include amounts
accrued under the equity-based plans and shown in Column 3.
4. Except where indicated, the following executive officers of the Fund have
been associated with Lord Abbett for over five years. Messrs. Carper,
Hilstad, and Morris and Ms. Binstock are partners of Lord Abbett; the
others are employees. None have received compensation from the Fund.
Executive Vice President: (To be determined)
Vice Presidents:
Joan A. Binstock, age 46 (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 48
Paul A. Hilstad, age 57, Vice President and Secretary
Lawrence H. Kaplan, age 43 (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 55
A. Edward Oberhaus, age 40
Tracie E. Richter, age 32 (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).
Christina T. Simmons, age 42 (with Lord Abbett since 1999, formerly Assistant
General Counsel of Prudential Investments from 1998 to 1999, prior thereto
Counsel of Drinker, Biddle & Reath LLP, a law firm, from 1985 to 1998)
9
<PAGE>
Treasurer:
Francie W. Tai, age 35 (with Lord Abbett since 2000, formerly Manager of Goldman
Sachs from 1997 to 2000, prior thereto Assistant Vice President of Bankers Trust
from 1994 to 1997).
Code of Ethics
The directors, trustees and officers of Lord Abbett-sponsored 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 fund to the extent
contemplated by the recommendations of such Advisory Group.
4.
Control Persons and Principal Holders of Securities
It is anticipated that our officers and trustees, as a group, owned
approximately 100% of the Fund's outstanding Class A shares. As of December ,
2000 there were no other record holders of 5% or more of the Fund's outstanding
shares. The ownership of the Fund's outstanding shares of Class Y represents the
initial investment. It is anticipated that over time this percentage of
ownership will decrease.
5.
Investment Advisory And Other Services
Investment Manager
As described under "Management" in the Prospectus, Lord Abbett is the Fund's
investment manager. Of the general partners of Lord Abbett, the following are
officers and/or trustees of the Fund: Joan A. Binstock, Daniel E. Carper, Robert
S. Dow, Paul A. Hilstad, and Robert G. Morris. The other general partners are:
Stephen I. Allen, Zane E. Brown, John E. Erard, Robert P. Fetch, Daria L.
Foster, Robert I. Gerber, W. Thomas Hudson, Stephen J. McGruder, Michael B.
McLaughlin, Robert J. Noelke, R. Mark Pennington, Eli Salzmann, and Christopher
J. Towle. The address of each partner is 90 Hudson Street, Jersey City, New
Jersey 07302-3973.
The services performed by Lord Abbett are described under "Management" in the
Prospectus. Under the Management Agreement, the Fund pays Lord Abbett a monthly
fee, based on average daily net assets for each month at an annual rate of
________. 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.
10
<PAGE>
Principal Underwriter
Lord Abbett Distributor LLC, a New York limited liability company and subsidiary
of Lord Abbett, 90 Hudson Street, Jersey City, New Jersey 07302-3973, serves as
the principal underwriter for the Fund.
Custodian
The Bank of New York ("BNY"), 48 Wall Street, New York, New York, is the Fund's
custodian. In accordance with the requirements of Rule 17f-5, the Fund's Board
of Trustees has 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.
Transfer Agent
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 Fund.
Independent Auditors
(To be provided)
6.
Brokerage Allocations and Other Practices
The Fund'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, the Fund generally pays, 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 employees of Lord Abbett. These traders do
the trading as well for other accounts -- investment companies and other
investment clients -- managed by Lord Abbett. They are responsible for obtaining
best execution.
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.
11
<PAGE>
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.
When, in the opinion of Fund Management, two or more broker-dealers (either
directly or through their correspondent clearing agents) are in a position to
obtain the best price and execution, preference may be given to brokers who have
sold shares of the Fund and/or shares of other Lord Abbett-sponsored funds, or
who have provided investment research, statistical, or other related services to
the Fund.
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.
7.
Capital Stock and Other Securities
Classes of Shares. The Fund offers investors five different classes of shares,
only Class Y shares are offered 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.
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 Fund
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 auditors,
the approval of a contract with a principal underwriter and the election of
trustees from the separate voting requirements.
The Fund 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
Fund's Declaration of Trust, shareholder meetings may be called at any time by
certain officers of the Fund or by a majority of the trustees (i) for the
purpose of taking action upon any matter requiring the vote or authority of the
Fund'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
Fund's outstanding shares and entitled to vote at the meeting.
12
<PAGE>
8.
Purchases, Redemptions and Pricing
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 Fund 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 any national securities exchange 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 price, 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.
The net asset value per share for the Class Y shares will be determined by
taking the net assets and dividing by the number of Class Y shares outstanding.
Our Class Y shares will be offered at net asset value.
Class Y Share Exchanges. The Prospectus briefly describes the Telephone Exchange
Privilege. You may exchange some or all of your Class Y shares for Class Y
shares of any Lord Abbett-sponsored funds currently offering Class Y shares to
the public. 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.
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.
9.
Taxation of the Fund
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 timely 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.
13
<PAGE>
The Fund contemplates declaring as dividends substantially all of its net
investment income. Dividends paid by the Fund from its investment income and
distributions out of short-term capital gains are taxable to its shareholders as
ordinary income from dividends, whether received in cash or reinvested in
additional shares of the Fund. Distributions paid by the Fund of its net
realized long-term capital gains are taxable to shareholders as capital gains,
also whether received in cash or reinvested in shares. The Fund will send its
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 United States 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.
If the Fund purchases shares in certain foreign investment entities called
"passive foreign investment companies," the Fund may be subject to United States
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 the Fund 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. Alternatively, if the Fund were to make a "mark-to-market" election
with respect to its investment in a passive foreign investment company, gain or
loss with respect to the investment would be considered realized at the end of
each taxable year of the Fund even if the Fund continued to hold the investment,
and would be treated as ordinary income or loss to the Fund.
14
<PAGE>
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to United States persons (United States citizens or residents and
United States domestic corporations, partnerships, trusts and estates). Each
shareholder who is not a United States person should consult his tax adviser
regarding the U.S. and foreign tax consequences of the ownership of shares of
the 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.
10.
Underwriter
Lord Abbett Distributor LLC, a New York limited liability company and subsidiary
of Lord Abbett, 90 Hudson Street, Jersey City, New Jersey 07302-3973, serves as
the principal underwriter for the Fund. The Fund has entered into a distribution
agreement with Lord Abbett Distributor, 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.
11.
Performance
The Fund computes the average annual compounded rate of total return for Class Y
shares 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 no sales charge from the initial 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(s) covered by the average annual total return computation.
In calculating total returns for Class Y shares no sales charge is deducted from
the initial investment and the return is shown at net assets 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 Class Y shares is based on a 30-day period ended on a
specified date, computed by dividing the net investment income per share earned
during the period by the net asset value per share of such class on the last day
of the period. This is determined by finding the following quotient: Take the
dividends and interest earned during the period for the class minus its expenses
accrued for the period and divide by the product of (i) the average daily number
of class shares outstanding during the period that were entitled to receive
dividends and (ii) the net asset value 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 Y shares do not reflect the
deduction of any sales charge.
Figures represent past performance, and an investor should be aware that the
investment return and principal value of a Fund's investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Therefore, there is no assurance that past performance will be
repeated in the future.
12.
Financial Statements
Not applicable.
15
<PAGE>
LORD ABBETT DELTA FUND
PART C
OTHER INFORMATION
Item 23 Exhibits
(a) Declaration of Trust. Filed herein.
(b) By-Laws. Filed herewith.
(c) Instruments Defining Rights of Security Holders. Not applicable.
(d) Management Agreement. To be filed.
(e) Distribution Agreement. To be filed.
(f) Bonus or Profit Sharing Contracts. To be filed.
(g) Custodian Agreements. To be filed.
(h) Other Material Contracts. To be filed.
(i) Legal Opinion. To be filed.
(j) Other Opinion. To be filed.
(k) Omitted Financial Statements. Not applicable.
(l) Initial Capital Agreements. To be filed.
(m) Rule 12b-1 Plans To be filed.
(n) Financial Data Schedule. Not applicable.
(o) Rule 18f-3 Plan. To be filed.
(p) Code of Ethics. To be filed.
Item 24 Persons Controlled by or Under Common Control with the Fund
None.
<PAGE>
Item 25 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.
<PAGE>
Item 26 Business and Other Connections of Investment Adviser
Lord, Abbett & Co. acts as investment adviser for the Lord Abbett
registered investment companies and provides investment management
services to various pension plans, institutions and individuals.
Lord Abbett Distributor LLC, a limited liability corporation,
serves as their distributor and principal underwriter. Other than
acting as trustees, directors and/or officers of open-end
investment companies managed by Lord, Abbett & Co., none of Lord,
Abbett & Co.'s partners has, in the past two fiscal years, engaged
in any other business, profession, vocation or employment of a
substantial nature for his or her own account or in the capacity
of director, trustee, officer, employee, or partner of any entity.
Item 27 Principal Underwriters
(a) Lord Abbett Distributor LLC serves as principal underwriter for
the Registrant. Lord Abbett Distributor LLC also serves as
principal underwriter for the following Lord Abbett-sponsored
funds:
Lord Abbett Affiliated Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett Investment Trust
Lord Abbett Large-Cap Growth Fund
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Research Fund, Inc.
Lord Abbett Securities Trust
Lord Abbett Series Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Tax-Free Income Trust
Lord Abbett U.S. Government Money Market Fund, Inc.
(b) Lord Abbett Distributor LLC is a wholly-owned subsidiary of Lord,
Abbett & Co. The partners of Lord, Abbett & Co. who are also
officers of the Registrant are:
Name and Principal Positions and Offices
Business Address with Registrant
------------------- ---------------
Robert S. Dow Chairman and President
Paul A. Hilstad Vice President & Secretary
Joan A. Binstock Vice President
Daniel E. Carper Vice President
Robert G. Morris Vice President
The other general partners of Lord, Abbett & Co. who are neither
officers nor directors of the Registrant are Stephen I. Allen,
Zane E. Brown, John E. Erard, Robert P. Fetch, Daria L. Foster,
Robert I. Gerber, W. Thomas Hudson, Jr., Stephen I. McGruder,
Michael B. McLaughlin, Robert J. Noelke, R. Mark Pennington, Eli
M. Salzmann and Christopher J. Towle.
Each of the above has a principal business address:
90 Hudson Street, Jersey City, New Jersey 07302-3973
(c) Not applicable
<PAGE>
Item 28 Location of Accounts and Records
Registrant maintains the records, required by Rules 31a - 1(a) and
(b), and 31a - 2(a) at its main office.
Lord, Abbett & Co. maintains the records required by Rules 31a -
1(f) and 31a - 2(e) at its main office.
Certain records such as cancelled stock certificates and
correspondence may be physically maintained at the main office of
the Registrant's Transfer Agent, Custodian, or Shareholder
Servicing Agent within the requirements of Rule 31a-3.
Item 29 Management Services
None
Item 30 Undertakings
The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
The Registrant undertakes, if requested to do so by the holders of
at least 10% of the Registrant's outstanding shares, to call a
meeting of shareholders for the purpose of voting upon the
question of removal of a director or directors and to assist in
communications with other shareholders as required by Section
16(c) of the Investment Company Act of 1940, as amended.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereon
duly authorized, in the City of Jersey City, State of New Jersey, on the 13 day
of October, 2000.
<TABLE>
<CAPTION>
LORD ABBETT DELTA FUND
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ PAUL S. HILSTAD Trustee October 13, 2000
Paul A. Hilstad (Chief Executive Officer)
/s/ CHRISTINA T. SIMMONS Trustee October 13, 2000
Christina T. Simmons (Chief Financial and Account Officer
</TABLE>
