1933 Act File No. 002-64536
1940 Act File No. 811-2924
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 23 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Amendment No. 21 [X]
LORD ABBETT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
Exact Name of Registrant as Specified in Charter
767 FIFTH AVENUE, NEW YORK, N. Y. 10153-0203
Address of Principal Executive Office
Registrant's Telephone Number (212) 848-1800
Paul A. Hilstad, Vice President & Secretary
767 FIFTH AVENUE, NEW YORK, N. Y. 10153
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
_____ immediately on filing pursuant to paragraph (b) of Rule 485
__X__ on November 1, 1997 pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a) (1) of Rule 485
_____ on (date) pursuant to paragraph (a) (1) of Rule 485
_____ 75 days after filing pursuant to paragraph (a) (2) of Rule 485
_____ on (date) pursuant to paragraph (a) (2) of Rule 485
If appropriate, check the following box:
_____ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
<PAGE>
LORD ABBETT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND, INC.
FORM N-1A
Cross Reference Sheet
Post-Effective Amendment No. 23
Pursuant to Rule 481(a)
Form N-1A Location In Prospectus or
Item No. Statement of Additional Information
1 Cover Page
2 Fee Table
3 (a) Financial Highlights; Performance
3 (b) N/A
4 (a) (i) Cover Page
4 (a) (ii) Investment Objective; How We Invest
4 (b) (c) How We Invest
5 (a) (b) (c) Our Management; Back Cover Page
5 (d) N/A
5 (e) Back Cover Page
5 (f) Our Management
5 (g) N/A
5 A Performance
6 (a) Cover Page
6 (b) (c) (d) N/A
6 (e) Cover Page
6 (f) (g) Dividends, Capital Gains
Distributions and Taxes
7 (a) Back Cover Page
7 (b) (c) (d)
(e) (f) Purchases
8 Redemptions and Repurchases
9 N/A
10 Cover Page
11 Cover Page - Table of Contents
12 N/A
13 Investment Objective and Policies
14 Directors and Officers
15 (a) (b) N/A
15 (c) Directors and Officers
16 (a) (i) Investment Advisory and Other Services
16 (a) (ii) Directors and Officers
16 (a) (iii) Investment Advisory and Other Services
16 (b) Investment Advisory and Other Services
16 (c) (d) (e)
(g) N/A
16 (f) Purchases, Redemptions
and Shareholder Services
16 (h) Investment Advisory and Other Services
2
<PAGE>
Form N-1A Location In Prospectus or
Item No. Statement of Additional Information
16 (i) N/A
17 (a) Portfolio Transactions
17 (b) N/A
17 (c) Portfolio Transactions
17 (d) Portfolio Transactions
17 (e) N/A
18 (a) Cover Page
18 (b) N/A
19 (a) (b) Purchases, Redemptions
and Shareholder Services
19 (c) N/A
20 Taxes
21 (a) Purchases, Redemptions
and Shareholder Services
21 (b) (c) N/A
22 (a) N/A
22 (b) Past Performance
23 Financial Statements
3
<PAGE>
This Prospectus sets forth concisely the information about Lord
Abbett U.S. Government Securities Money Market Fund, Inc. ("we" or the
"Fund") that you should know before investing. Please read this
Prospectus before investing and retain it for future reference.
The Fund has three classes of shares designated Class A, B and C,
which provide you with different purchasing choices. See "Purchases"
for a description of these choices.
The investment objective of the Fund is to provide high current
income and preservation of capital through investments in
high-quality, short-term liquid securities. There can be no assurance
that this objective will be achieved.
The Statement of Additional Information dated November 1, 1997
has been filed with the Securities and Exchange Commission and is
incorporated by reference into this Prospectus. You may obtain it,
without charge, by writing to the Fund or by calling 800-874-3733. Ask
for "Part B of the Prospectus -- the Statement of Additional
Information."
SHADED TERMS ARE DEFINED IN THE "GLOSSARY OF TERMS."
LIKE ALL MUTUAL FUND SHARES, THESE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
LORD ABBETT
U.S. GOVERNMENT SECURITIES
MONEY MARKET FUND, INC.
Investors should read and retain this Prospectus. Shareholder
inquiries should be made in writing to the Fund or by calling
800-821-5129. In addition, you can make inquiries through your
broker-dealer.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY. AN INVESTMENT IN THE FUND INVOLVES
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
TABLE OF CONTENTS
How We Invest 2
Portfolio Management 2
Investor Expenses 2
Financial Highlights 3
Purchases 4
Opening an Account 5
Shareholder Services 5
Redemptions 6
Dividends, Taxes and Yield 6
Our Management 7
Fund Performance 7
Glossary of Terms 7
IT IS THE FUND'S POLICY TO MAINTAIN, AND IT HAS MAINTAINED, A
CONSTANT NET ASSET VALUE OF $1.00 PER SHARE. HOWEVER, AN INVESTMENT IN
THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT AND
THERE CAN BE NO ASSURANCE THAT WE WILL BE ABLE TO MAINTAIN A STABLE
NET ASSET VALUE OF $1.00 PER SHARE.
<PAGE>
HOW WE INVEST
Under normal circumstances, we intend to invest at least 65% of our total assets
in U.S. GOVERNMENT SECURITIES, AGENCIES AND INSTRUMENTALITIES eligible as
investments for a money market fund. Up to 35% of our total assets may be
invested in other HIGH-QUALITY, SHORT-TERM SECURITIES.
Our investments must meet certain portfolio maturity, diversification and
quality requirements because we are a "money market fund" and use the amortized
cost method of valuing our portfolio securities. See "Net Asset Value."
MATURITY. The maturity requirements limit dollar-weighted average portfolio
maturity to not more than 90 days and the maturity of any single portfolio
instrument to not more than 397 days.
DIVERSIFICATION. Generally speaking, with certain exceptions, including
GOVERNMENT SECURITIES, the diversification requirements limit our investments as
follows: (i) the securities of any one issuer are limited to 5% of our total
assets, (ii) securities issued by or subject to puts from any single institution
are limited to 5% of our total assets, and (iii) securities that are neither
rated nor comparable in quality to securities that are rated in the highest
category are limited to 5% of our total assets.
QUALITY. We may invest only in securities that present minimal risks as
determined by the Board of Directors (or Lord, Abbett & Co. where delegable) and
that satisfy certain requirements relating to ratings by nationally-recognized
ratings organizations.
CONCENTRATION. No more than 25% of our total assets may be invested in
securities of any one industry, except there is no limitation on investments in
obligations issued or backed by the U.S. GOVERNMENT, ITS AGENCIES OR
INSTRUMENTALITIES.
We may enter into repurchase agreements with Federal Reserve member banks,
primary dealers in U.S. GOVERNMENT SECURITIES and broker-dealers. Repurchase
agreements must be collateralized by money market securities, may not exceed 30
days and must be marked daily to the repurchase price.
PORTFOLIO MANAGEMENT
The Fund's investment decisions are made by Robert Gerber. Mr. Gerber is
Executive Vice President and Portfolio Manager of the Fund, and has served in
this capacity since the date of this Prospectus.
He joined Lord Abbett in July 1997 as Director of High Grade Fixed Income. Prior
to joining Lord Abbett, Mr. Gerber served as a Senior Portfolio Manager of
Sanford C. Bernstein & Co., Inc. since 1992.
INVESTOR EXPENSES
The expenses shown below are based on historical expenses for the fiscal year
ended June 30, 1997. Future expenses may be greater or less than shown.
<TABLE>
<CAPTION>
Class A Class B Class C
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C> <C>
Maximum Sales Charge on Purchases
(as a % of offering price) None None None
Deferred Sales Charge(1)
(See "Purchases") None 5.00% None
ANNUAL FUND OPERATING EXPENSES
(as a % of average net assets)
Management Fees (See "Our Management") 0.50% 0.50% 0.50%
12b-1 Fees(2) None 0.75% None
Other Expenses (See "Our Management") 0.34% 0.34% 0.34%
Total Operating Expenses 0.84% 1.59% 0.84%
EXAMPLE: Assume an average annual return of 5% and no change in the level of
expenses. For a $1,000 investment with all dividends and distributions
reinvested, you would have paid the following total expenses assuming redemption
at the end of each time period indicated.
Share Class Year 1 Year 3 Year 5 Year 10
<S> <C> <C> <C> <C>
Class A shares $ 9 $ 27 $ 47 $ 104
Class B shares(3) $66 $ 80 $107 $ 169
Class C shares $19 $ 27 $ 47 $ 104
You would pay the following expenses on the same investment, assuming no
redemption:
<S> <C> <C> <C> <C>
Class A shares $ 9 $ 27 $ 47 $ 104
Class B shares(3) $16 $ 50 $ 87 $ 169
Class C shares $ 9 $ 27 $ 47 $ 104
This example is for comparison and is not a representation of the Fund's actual
expenses and returns, either past or present.
<FN>
(1)See "Purchases" for a description of sales charges, the Contingent Deferred
Sales Charge ("CDSC") payable on certain redemptions and separate Rule 12b-1
plans applicable to each class of shares.
(2)Because of the 12b-1 fees, long-term shareholders may indirectly pay more
than the equivalent of the maximum front-end sales charge permitted by the
National Association of Securities Dealers, Inc. While there are 12b-1 Plans for
Class A and C, they are currently inactive.
(3)Class B shares will automatically convert to Class A shares on the eighth
anniversary of your original purchase of Class B shares.
</FN>
</TABLE>
The purpose of the table is to assist you in understanding the various costs and
expenses that you will bear directly or indirectly as an investor in the Fund.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table has been audited by Deloitte & Touche llp, independent
accountants, in connection with their annual audit of the Fund's Financial
Statements, whose report thereon may be obtained on request.
<TABLE>
<CAPTION>
PER CLASS A SHARE OPERATING YEAR ENDED JUNE 30,
PERFORMANCE: 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .046 .048 .046 .025 .024 .038 .064 .077 .080 .062
LESS DISTRIBUTIONS
Dividends from net investment income (.046) (.048) (.046) (.025) (.024) (.038) (.064) (.077) (.080) (.062)
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Total Return(a) 4.66% 4.85% 4.65% 2.54% 2.43% 3.87% 6.55% 8.01% 8.32% 6.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $143,197 $152,531 $140,642 $156,069 $122,782 $147,229 $195,134 $195,547 $212,001 $211,795
Ratios to Average Net Assets:
Expenses, including waiver 0.84% 0.81% 0.86% 0.85% 0.87% 1.01% 0.95% 0.90% 0.87% 0.88%
Expenses, excluding waiver 0.84% 0.81% 0.86% 0.90% 0.96% 1.02% 0.95% 0.90% 0.87% 0.88%
Net investment income 4.57% 4.75% 4.54% 2.56% 2.41% 3.86% 6.40% 7.74% 8.02% 6.17%
PER CLASS SHARE OPERATING CLASS B SHARES CLASS C SHARES
PERFORMANCE: August 1, 1996(b)(d) to June 30, 1997 July 15, 1996(b) to June 30, 1997
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .024 .044
LESS DISTRIBUTIONS
Dividends from net investment income (.024) (.044)
NET ASSET VALUE, END OF PERIOD $1.00 $1.00
TOTAL RETURN(a) 2.39%(c) 4.47%(c)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $244 $791
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.99%(c) 0.81%(c)
Net investment income 2.38%(c) 4.39%(c)
<FN>
(a) Total return does not consider the effects of front-end or contingent
deferred sales charges.
(b) Commencement of offering Class shares.
(c) Not annualized.
(d) November 15, 1996 commencement of operations.
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
PURCHASES
The Fund offers three classes of shares, Class A, B and C. Our shares are
continuously offered at their net asset value (normally $1.00 per share). You
may purchase shares at the net asset value next determined after the Fund
accepts your purchase order submitted in proper form. Different classes of
shares represent investments in the same portfolio of securities but are subject
to different expenses and have different dividends and yields. Investors should
read this section carefully to determine which class of shares represents the
best investment option for their particular situation.
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,
increase or establish minimum investment requirements. All purchase orders are
subject to our acceptance and are not binding until confirmed or accepted in
writing.
CLASS A - PURCHASED DIRECTLY OR ACQUIRED BY EXCHANGE.
- - Offered without a sales charge.
- - Lower annual expenses than Class B shares.
CLASS B - ACQUIRED BY EXCHANGE ONLY.
- - No front-end sales charge.
- - Higher annual expenses than Class A shares.
- - A contingent deferred sales charge is applied to shares sold prior to sixth
anniversary of purchase.
- - Automatically convert to Class A shares after eight years.
- - Asset-based sales charge 0.75 of 1%. See "Class B Rule 12b-1 Plan."
CLASS C - ACQUIRED BY EXCHANGE ONLY.
- - No front-end sales charge.
- - Lower annual expenses than Class B shares.
- - A contingent deferred sales charge is applied to shares sold prior to the
first anniversary of purchase.
CONTINGENT DEFERRED SALES CHARGE ("CDSC")
If you acquire shares through an exchange from another Lord Abbett-sponsored
fund in which a CDSC applies and you subsequently redeem them, the Fund will
collect and remit the CDSC to the fund in which you originally purchased the
shares, in the case of Class A and C shares. The CDSC will be remitted to Lord
Abbett Distributor llc ("Lord Abbett Distributor"), in the case of Class B
shares. The CDSC is based on the original purchase cost or the current market
value of the shares being sold, whichever is less. There is no CDSC on shares
acquired through reinvestment of dividends.
CLASS A SHARE CDSC. If you buy Class A shares, you pay no sales charge. If you
acquire Class A shares in exchange for shares of the same class of another Lord
Abbett-sponsored fund subject to a CDSC and you redeem any of the Class A shares
within 24 months after the month in which you initially purchased shares of such
fund, the Fund will collect a CDSC of 1%.
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
varies depending on how long you own your shares as shown below.
ANNIVERSARY CONTINGENT DEFERRED SALES
OF THE DAY ON CHARGE ON REDEMPTIONS
WHICH THE PURCHASE (AS % OF AMOUNT
ORDER 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 None
6th anniversary
CLASS B SHARE CDSC WAIVER. The CDSC will generally be waived under the following
circumstances: u death of the shareholder (natural person);
- - on redemptions of shares in connection with Div-Move and Systematic Withdrawal
Plans (up to 12% per year);
- - benefit payments such as Plan loans, hardship withdrawals, death,
disability, retirement, separation from service or any
excess distribution under Retirement Plans;
- - eligible mandatory distributions under 403(b) plans and Individual Retirement
Accounts.
See "Systematic Withdrawal Plan" 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 your original purchase.
SALES COMPENSATION
Compensation payments originate from two sources: from CDSCs and from 12b-1 fees
that are paid out of the Fund's assets. The Fund is currently not making 12b-1
fee payments under the Class A and Class C share Rule 12b-1 plans. See the
"Investor Expenses" table for more detailed information on CDSCs and 12b-1 fees
for Class B shares.
CLASS B RULE 12B-1 PLAN. The Fund has adopted a Class B share Rule
12b-1 Plan under which we periodically pay Lord Abbett Distributor an
annual distribution fee of 0.75 of 1% of the average daily net asset value of
the Class B shares.
The distribution fee is paid to Lord Abbett Distributor to compensate it for its
services rendered in connection with the distribution of Class B shares,
including the payment and financing of sales commissions on Class B shares at
the time of their original purchase.
<PAGE>
OPENING AN ACCOUNT
MINIMUM INITIAL INVESTMENT
Regular accounts $1,000
Individual Retirement Accounts, 403(b)
and employer-sponsored retirement plans
under the Internal Revenue Code $250
Invest-A-Matic and Div-Move $250 initial
$50 subsequent minimum
BY CHECK. To purchase Class A shares by mail, send the completed attached
Application Form, together with a check (U.S. dollars), to:
LORD ABBETT U.S. GOVERNMENT SECURITIES
MONEY MARKET FUND, INC.
P.O. Box 419576 u Kansas City, MO 64141
BY WIRE. Telephone the Fund to obtain an account number. You can then instruct
your bank to wire the amount of your investment to:
UNITED MISSOURI BANK OF KANSAS CITY, N.A.
Tenth and Grand u Kansas City, MO 64141
Account # 980103352-2
ABA # 1010-0069-5
Specify the name of the Fund, your account number and the name(s) in which the
account is registered. Your bank may charge you a fee to wire funds. Wires
received prior to 12 noon Eastern Time will receive the dividends for that day.
Otherwise, dividends will begin accruing on the next business day.
BY EXCHANGE. Telephone the Fund to request an exchange from any eligible Lord
Abbett-sponsored fund.
"PROPER FORM." Your account will begin accruing dividends on the day on which
your purchase order is accepted by the Fund as being in proper form. To be in
proper form, the order must contain all information and documentation required
by the Application Form or supplementally by the Fund, and payment must be
credited to our custodian bank's account. Checks drawn on foreign banks will not
be credited to our custodian bank's account unless cleared in U.S. dollars by a
U.S. bank. FOR MORE INFORMATION REGARDING PROPER FORM OF A PURCHASE ORDER, CALL
THE FUND AT 800-821-5129.
SHAREHOLDER SERVICES
TELEPHONE EXCHANGES. You can instruct the Fund by telephone to exchange your
Class A shares, purchased directly, for Class A, B or C shares of any ELIGIBLE
FUND. Class B and C shares may only be acquired by exchange for shares of the
same class of any ELIGIBLE FUND. Certain of the tax-free, single-state series
may not be offered in your state. Instructions must be received by the Fund in
Kansas City by calling 800-821-5129 before the close of the New York Stock
Exchange ("NYSE") to exchange at the net asset value on that day.
For your protection, telephone requests for exchanges 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. Expedited exchanges by telephone may be difficult to implement in times
of drastic economic or market change. The exchange privilege should not be used
to take advantage of short-term swings in the market. The Fund reserves the
right to limit or terminate this privilege for any shareholder making frequent
exchanges and may revoke the privilege for all shareholders upon 60 days' prior
written notice. You have this privilege unless you refuse it in writing.
You should read the prospectus of the other Lord Abbett-sponsored fund(s)
selected before making an exchange.
INVEST-A-MATIC. You can make fixed, periodic investments ($50 minimum
investment) into an existing account in any Eligible Fund by means of automatic
money transfers from your bank checking account. You should read the prospectus
of the other fund before investing.
DIV-MOVE. You can invest the dividends paid on your account ($250 initial and
$50 subsequent minimum) into any new or existing account, within the same class,
in any Eligible Fund. The account must be either your account, your joint
account with another, or a custodial account for your minor child.
SYSTEMATIC WITHDRAWAL PLAN ("SWP"). You can make periodic cash withdrawals from
your account which are automatically paid to you in fixed or variable amounts.
To participate, the value of your shares must be at least $10,000, except for
retirement plans for which there is no minimum.
With respect to 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 SWP
request. 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.
Redemption proceeds due to a SWP for Class B (up to 12% per year) and Class C
shares, will be redeemed in the order described under "Redemptions."
RETIREMENT PLANS. The Lord Abbett Family of Funds offers a range of qualified
retirement plans, including IRAs, SIMPLE IRAs, Simplified Employee Pension
Plans, 403(b) and pension and profit-sharing plans, including 401(k) plans. To
find out more about these plans, call the Fund at 800-842-0828.
SHARE CERTIFICATES. All shares are electronically recorded. Certificated shares
are no longer available for any Class of the Fund.
ACCOUNT CHANGES. For any changes you need to make to your account, consult your
financial representative or call the Fund at 800-821-5129.
HOUSEHOLDING. Shareholders with the same last name and address will receive one
copy of annual or semi-annual reports, unless they request additional reports in
writing.
<PAGE>
REDEMPTIONS
REGULAR PROCEDURE. To redeem shares you must submit a written redemption request
indicating your share class, your account number, the name(s) in which the
account is registered and the dollar value or number of shares you wish to sell.
Include all necessary signatures and any additional documents that may be
required. 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, telephone the
Fund.
We will verify that the shares being redeemed were purchased more than 15 days
earlier or were purchased by wire and represent an amount sufficient to cover
the amount being redeemed.
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 one business
day after receipt of your redemption request. The Fund reserves the right to
make payment within three business days.
EXPEDITED PROCEDURE. To be eligible for this procedure, you must have filled out
the "Expedited Telephone Redemption" section of your Application Form. To verify
whether the expedited telephone redemption privilege is in place on an account,
or to request an Application Form to add it, or to change information for an
existing account, call your financial representative or the Fund.
- - Telephone the Fund at 800-821-5129 and ask for "Expedited Redemptions." All
proceeds will be paid to the same bank account designated on your Application
Form.
- - Amounts of $1,000 or more normally will be wired to the designated account on
the same day if your order is accepted before 12 noon Eastern Time or on the
next business day if accepted after such time.
- - Amounts of less than $1,000 normally will be mailed by check on the next
business day after your order is accepted.
- - To receive the dividend for the same day you sell, your order must be accepted
after 12 noon Eastern Time.
The Fund will not be liable for following instructions communicated by telephone
that it reasonably believes to be genuine.
CHECKWRITING. To be eligible for this privilege, you must have filled out the
"Checkwriting" section of your Application Form. To verify whether the
checkwriting privilege is in place on an account, or to request an Application
Form to add it to an existing account, call your financial representative or the
Fund. You can write a check for no less than $500 and no more than $5,000,000.
SHARES IN AN ACCOUNT OF A DIFFERENT CLASS THAN THOSE IN THE ACCOUNT ON WHICH THE
CHECK IS DRAWN WILL NOT BE REDEEMED TO COVER SUCH CHECK.
This privilege should not be used to close an account because you earn dividends
until the check clears.
To determine if a CDSC applies to a redemption, the Fund redeems shares in the
following order:
1- shares acquired by reinvestment of dividends and capital gains;
2- shares held for six years or more (Class B) or one year or more
(Class C); and
3- shares held the longest before the sixth anniversary of their purchase
(Class B) or before the first anniversary of their purchase (Class C).
NET ASSET VALUE. The net asset value of each class of shares is calculated at 12
noon and 2 p.m. Eastern Time each day that the NYSE is open for trading.
Securities are valued at cost plus (minus) amortized discount (premium), if any,
pursuant to the requirements for money market funds.
DIVIDENDS, TAXES AND YIELD
Dividends. Our net income will be declared as a dividend to shareholders of
record as of 12 noon Eastern Time on each day the NYSE is open for trading.
Unless you elect to receive cash, dividends will be reinvested in additional
shares on the monthly reinvestment date. If you elect cash, a check will be
mailed to you as soon as possible after the reinvestment date or, if you arrange
for direct deposit, your payment will be electronically transferred directly to
your bank account within two days after the payable date.
If you redeem your entire account, all dividends declared to the time of
redemption will be paid to you.
TAXES. The Fund pays no federal income tax on the earnings it distributes to
shareholders. Consequently, dividends you receive from the Fund, whether
reinvested or taken in cash, are generally considered taxable. Dividends
declared in December of any year will be treated for federal income tax purposes
as having been received by shareholders in that year if they are paid before
February 1 of the following year.
Each January you should receive, if applicable, a Form 1099 tax
information statement detailing your dividends and their federal tax category.
You should consult your tax adviser concerning applicable state and local taxes.
Shareholders may be subject to a $50 penalty under the Internal Revenue Code and
we may be required to withhold and remit to the U.S. Treasury a portion (31%) of
any redemption proceeds (including the value of shares exchanged into another
Lord Abbett-sponsored fund), and of any dividend or distribution on any account
where the payee failed to provide a correct taxpayer identification number or to
make certain required certifications.
For more information about the tax consequences from dividends and
distributions, see the Statement of Additional Information.
YIELD. The Fund's "yield" refers to the income generated by an investment in the
Fund over a seven-day period, which is then annualized. The "effective yield" is
calculated similarly but, when annualized, the income earned is assumed to be
reinvested and will therefore be slightly higher. Both yield figures are based
on historical earnings and are not intended to indicate future performance.
For the seven-day period ending June 30, 1997, the Class A, B and C share yields
were 4.67%, 3.91% and 4.67%, respectively. For the same period, the effective
yield for Class A, B and C shares were 4.78%, 3.99% and 4.78%, respectively. On
that day, the portfolio's dollar-weighted life to maturity was 33 days.
<PAGE>
Yield information is useful in reviewing the Fund's performance but, because
yields will fluctuate, such information may not provide a basis for comparison
with bank deposits and other investments that pay a fixed yield for a stated
period of time or with other investment companies which may use a different
method of computing yield.
OUR MANAGEMENT
The Fund is supervised by a board of directors, an independent body which has
ultimate responsibility for the Fund's activities. The board has retained Lord
Abbett as investment manager pursuant to a Management Agreement. Lord Abbett has
been an investment manager for over 67 years and currently manages over $24
billion in a family of mutual funds and other advisory accounts. Lord Abbett
provides similar services to twelve other funds having various investment
objectives and also advises other investment clients. For more information about
the services Lord Abbett provides to the Fund, see the Statement of Additional
Information.
The Fund pays Lord Abbett a monthly fee based on average daily net assets for
each month. For the fiscal year ended June 30, 1997, the fee paid to Lord Abbett
was at an annual rate of 0.50 of 1%. In addition, the Fund pays all expenses not
expressly assumed by Lord Abbett. Our Class A share ratio of expenses, including
management fee expenses, to average net assets for the same period was 0.84 of
1%.
THE FUND. The Fund is a diversified open-end management investment company
established in 1979. Its Class A, B and C shares have equal rights as to voting,
dividends, assets and liquidation except for differences resulting from certain
class-specific expenses.
FUND PERFORMANCE
The Fund completed its fiscal year on June 30, 1997 with net assets of $144
million.
Over the past fiscal year, the Fund performed well in a climate of modest
economic growth, low inflation and relatively high short-term interest rates. We
invested entirely in agency discount notes. We also took advantage of the
increase in interest rates promulgated by the Federal Reserve Bank by seeking
longer maturities.
GLOSSARY OF TERMS
ELIGIBLE FUNDS: All Lord Abbett-sponsored funds including "AAMF" (i.e., any
authorized institution's affiliated money market fund satisfying Lord Abbett
Distributor as to certain omnibus account and other criteria) except: Lord
Abbett Equity Fund, Lord Abbett Series Fund, Lord Abbett Research Fund --
Mid-Cap Series and certain tax-free, single-state series where the exchanging
shareholder is a resident of a state in which such series is not offered for
sale.
ELIGIBLE GUARANTOR: Any member bank or broker that is a member of the medallion
stamp program.
ELIGIBLE MANDATORY DISTRIBUTIONS: If Class B shares represent a part of an
individual's total IRA or 403(b) investment, the CDSC waiver is available only
for that portion of a mandatory distribution which bears the same relation to
the entire mandatory distribution as the B share investment bears to the total
investment.
GOVERNMENT SECURITY: Any security issued or guaranteed as to principal or
interest by the Government of the United States, or by a person controlled or
supervised by and acting as an instrumentality of the Government of the United
States pursuant to authority granted by the Congress of the United States; or
any certificate of deposit for any of the foregoing.
HIGH-QUALITY, SHORT-TERM SECURITIES: Include: Bank obligations (including
certificates of deposit and banker's acceptances) of U.S. banks and savings and
loan associations which, at the date of their latest public reporting, had total
assets in excess of $1 billion and capital, surplus and undivided profits in
excess of $100 million.
Commercial Paper (short-term unsecured promissory notes of corporations,
including variable amount master demand notes) which at the date of investment
are rated A-1 by Standard & Poor's Corporation ("S&P") or P-1 by Moody's
Investors Service, Inc. ("Moody's") or, if not rated, are issued by companies
having outstanding debt rated AAA or AA by S&P or Aaa or Aa by Moody's.
Corporate debt securities (bonds and debentures) with no more than 12 months
remaining to maturity at date of settlement and rated AAA or AA by S&P or Aaa or
Aa by Moody's.
U.S. GOVERNMENT SECURITIES, AGENCIES AND INSTRUMENTALITIES: These obligations,
which must be eligible investments for a money market fund, include (1)
obligations issued by the U.S. Treasury, differing only in their interest rates,
maturities and time of issuance, and including Treasury bills, notes and bonds
and (2) obligations issued or guaranteed by U.S. Government agencies and
instrumentalities which are supported by any of the following: (a) the full
faith and credit of the United States (such as GNMA certificates), (b) the right
of the issuer to borrow from the U.S. Treasury or (c) the credit of the agency
or instrumentality. Agencies and instrumentalities include Federal Home Loan
Banks, Federal Home Loan Mortgage Association, Federal National Mortgage
Association, Federal Farm Credit Banks and Student Loan Marketing Association.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFER IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
NOT CONTAINED IN THIS PROSPECTUS OR IN SUPPLEMENTAL SALES MATERIAL AUTHORIZED BY
THE FUND AND NO PERSON IS ENTITLED TO RELY UPON ANY INFORMATION OR
REPRESENTATION NOT CONTAINED HEREIN OR THEREIN.
INVESTMENT MANAGER AND DISTRIBUTOR
Lord, Abbett & Co. and Lord Abbett Distributor LLC
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
212-848-1800
CUSTODIAN, TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
United Missouri Bank of Kansas City, N.A.
Tenth and Grand
Kansas City, Missouri 64141
SHAREHOLDER SERVICING AGENT
DST Systems, Inc.
P.O. Box 419576
Kansas City, Missouri 64141
800-821-5129
AUDITORS
Deloitte & Touche LLP
COUNSEL
Debevoise & Plimpton
Printed in the U.S.A.
LAMM-1-1197
(11/97)
NOVEMBER 1, 1997
APPLICATION INSIDE
LORD ABBETT
U.S. GOVERNMENT
SECURITIES MONEY
MARKET FUND, INC.
LORD ABBETT
STATEMENT OF ADDITIONAL INFORMATION NOVEMBER 1, 1997
LORD ABBETT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND, INC.
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from Lord Abbett Distributor LLC ("Lord Abbett Distributor") at The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. This
Statement relates to, and should be read in conjunction with, the Prospectus
dated November 1, 1997.
Lord Abbett U.S. Government Securities Money Market Fund, Inc. (sometimes
referred to as "we" or the "Fund") has 1,000,000,000 shares of authorized
capital stock consisting of three classes (A, B and C), $.001 par value. The
Board of Directors will allocate these authorized shares of capital stock among
the classes from time to time. Only Class A shares may be purchased directly and
may be acquired in exchange for shares of the same class of another Lord Abbett-
sponsored fund. Class B and Class C shares may be acquired only in exchange for
shares of the same class of another Lord Abbett-sponsored fund. See "Telephone
Exchange Privilege" for more information. All shares have equal noncumulative
voting rights and equal rights with respect to dividends, assets and
liquidation, except for certain class- specific expenses. They are fully paid
and nonassessable when issued and have no preemptive or conversion rights.
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 in the matter are substantially
identical or the matter does not affect any interest of such class. However, the
Rule exempts the selection of independent public accountants, the approval of
principal distributing contracts and the election of directors from its separate
voting requirements.
TABLE OF CONTENTS PAGE
1. Investment Policies 2
2. Yield Calculation 3
3. Directors and Officers 4
4. Investment Advisory and Other Services 7
5. Portfolio Transactions 7
6. Net Asset Value and Dividends 8
7. Telephone Exchange Privilege and Rule 12b-1 Plans 8
8. Class B Share Conversion Feature 10
9. Shareholder Programs and Retirement Plans 10
10. Commercial Paper and Bond Ratings 11
11. Taxes 13
12. Further Information About the Fund 13
13. Financial Statements 13
<PAGE>
1.
INVESTMENT POLICIES
FUNDAMENTAL INVESTMENT RESTRICTIONS
We are subject to the following investment restrictions which cannot be changed
without approval of a majority of our outstanding shares. The Fund may not: (1)
borrow money, except that (i) the Fund may borrow from banks (as defined in the
Investment Company Act of 1940, as amended (the "Act")) in amounts up to 33 1/3%
of its total assets (including the amount borrowed), (ii) the Fund may borrow up
to an additional 5% of its total assets for temporary purposes, (iii) the Fund
may obtain such short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities and (iv) the Fund may purchase
securities on margin to the extent permitted by applicable law; (2) pledge its
assets (other than to secure borrowings, or to the extent permitted by the
Fund's investment policies as permitted by applicable law); (3) engage in the
underwriting of securities, except pursuant to a merger or acquisition or to the
extent that, in connection with the disposition of its portfolio securities, it
may be deemed to be an underwriter under federal securities laws; (4) make loans
to other persons, except that the acquisition of bonds, debentures or other
corporate debt securities and investment in government obligations, commercial
paper, pass-through instruments, certificates of deposit, bankers acceptances,
repurchase agreements or any similar instruments shall not be subject to this
limitation, 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; (5) buy or sell real estate, although the Fund may buy
short-term securities secured by real estate or interests therein, or issued by
companies which invest in real estate or interests therein, nor may the Fund buy
or sell commodities or commodity contracts, interests in oil, gas or other
mineral exploration or development programs; (6) with respect to 75% of the
gross assets of the Fund, buy securities of one issuer representing more than 5%
of the Fund's gross assets, except securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities; (7) invest more than 25% of its
assets, taken at market value, in the securities of issuers in any particular
industry (excluding U.S. Government securities as described in the Fund's
prospectus); (8) issue senior securities to the extent such issuance would
violate applicable law; or (9) buy common stocks or other voting securities.
With respect to the restrictions mentioned herein, compliance therewith will not
be affected by changes in the market value of portfolio securities but will be
determined at the time of purchase or sale of such securities.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. In addition to the investment
restrictions above which cannot be changed without shareholder approval, we also
are subject to the following non-fundamental investment policies which may be
changed by the Board of Directors without shareholder approval. The Fund may
not: (1) borrow in excess of 5% of its gross assets taken at cost or market
value, whichever is lower at the time of borrowing, and then only as a temporary
measure for extraordinary or emergency purposes; (2) make short sales of
securities or maintain a short position except to the extent permitted by
applicable law; (3) 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, deemed to be liquid by the
Board of Directors; (4) invest in the securities of other investment companies
except as permitted by applicable law; (5) invest in securities of issuers
which, with their predecessors, have a record of less than three years'
continuous operations, if more than 5% of the Fund's total assets would be
invested in such securities (this restriction shall not apply to
mortgaged-backed securities, asset-backed securities or obligations issued or
guaranteed by the U. S. Government, its agencies or instrumentalities); (6) hold
securities of any issuer if more than 1/2 of 1% of the securities of such issuer
are owned beneficially by one or more officers or directors of the Fund or by
one or more partners or members of the Fund's underwriter or investment adviser
if these owners in the aggregate own beneficially more than 5% of the securities
of such issuer; (7) invest in warrants if, at the time of the acquisition, its
investment in warrants, valued at the lower of cost or market, would exceed 5%
of the Fund's total assets (included within such limitation, but not to exceed
2% of the Fund's total assets, are warrants which are not listed on the New York
or American Stock Exchange or a major foreign exchange); (8) 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; or (9) buy from or sell
to any of its officers, directors, employees, or its
2
<PAGE>
investment adviser or any of its officers, directors, partners or employees, any
securities other than shares of the Fund's common stock.
Direct U.S. Government obligations are issued by the U.S. Treasury and include
bills, certificates of indebtedness, notes and bonds. U.S. agency obligations
are issued by agencies established under the authority of an act of Congress
including, but not limited to, the Bank for Cooperatives, Federal Home Loan
Banks and Federal Intermediate Credit Banks.
Certificates of deposit are certificates issued in consideration for funds
deposited in a bank or savings and loan association. They are for a definite
period of time, earn a specified rate of return and are negotiable. Banker's
acceptances are short-term credit instruments primarily used to finance the
import, export, transfer or storage of goods.
They are termed "accepted" when a bank guarantees their payment at maturity.
Variable amount master demand notes are demand obligations that permit the
investment of fluctuating amounts at varying market rates of interest pursuant
to arrangements between the issuer and a commercial bank acting as agent for the
payees of such notes; each party has the right to vary the amount of the
outstanding indebtedness of the notes.
REPURCHASE AGREEMENTS. A repurchase agreement is an instrument under which the
purchaser (i.e., the Fund) acquires the obligation (debt security) and the
seller agrees, at the time of the sale, to repurchase the obligation at a
mutually agreed upon time and repurchase price, thereby determining the yield
during the purchaser's holding period. This results in a fixed rate of return
insulated from market fluctuation during such period. The underlying securities
will consist only of securities in which the Fund may otherwise invest and their
value will be marked to market daily to ensure that such value is at least equal
to the repurchase price (including accrued interest). Repurchase agreements
usually are for short periods. In the event of bankruptcy or other default by
the seller, the Fund would be subject to possible risks such as delays and
expenses in liquidating the underlying securities, decline in value of the
underlying securities and loss of interest. To minimize any such risk, the
creditworthiness of entities with whom we enter into repurchase agreements is
carefully evaluated by our investment manager, Lord Abbett.
2.
YIELD CALCULATION
Each Class calculates its "yield" and "effective yield" based on the number of
days in the period for which the calculation is made ("base period"). Each
Class' "yield" is computed by determining the net change for the base period
(exclusive of capital changes) in the value of a hypothetical preexisting
account having a balance of one share at the start of the base period and
subtracting this value from the value of the account at the end of the base
period and dividing the result by the account's beginning value to come up with
a "base period return" which is then multiplied by 365 over the number of days
in the base period. "Effective yield" is determined by compounding the "base
period return" by adding one, raising the sum to a power equal to 365 divided by
the number of days in the base period and subtracting one from the result. An
example follows for the seven-day period ended June 30, 1997 of the calculation
of both "yield" and "effective yield" for one Class A share:
Value of hypothetical account with
exactly one share at beginning of
base period $ 1.000000000
Value of same account at end of base
period $ 1.000894658
Net change in account value $ .000894658
3
<PAGE>
Base period return (net change in
account value divided by the
beginning account value) .0894658%
"Yield" [base period return
times (365 divided by 7)] 4.67%
"Effective yield" [(base period
return + 1) 365/7] - 1 4.78%
On June 30, 1997, our portfolio had a dollar-weighted life to maturity of 33
days.
Publishing of the annualized yield for a given period provides investors with a
basis for comparing our yield with that of other investment vehicles. However,
yields of other investment vehicles may not always be comparable because of
different methods of calculating yield. In addition, the safety and yield of the
Fund and other money market funds are a function of portfolio quality, portfolio
maturity and operating expenses, while the yields on competing bank accounts are
established by the bank and their principal is generally insured.
Each Class' yield is not fixed. It fluctuates and the annualization of a yield
rate is not a representation by the Class as to what an investment in the Class
will actually yield for any given period. Actual yields will depend not only on
changes in interest rates on money market instruments during the course of the
period in which the investment in the Class is held, but also on such matters as
any realized and unrealized gains and losses, changes in the expenses of the
Class during the period and on the relative amount of new money coming into the
Class which has to be invested at a different yield than that represented by
existing assets.
3.
DIRECTORS AND OFFICERS
The following directors are partners of Lord, Abbett & Co., The General Motors
Building, 767 Fifth Avenue, New York, New York 10153-0203. They have been
associated with Lord Abbett for over five years and are also officers, directors
or trustees of the twelve other Lord Abbett-sponsored funds. They are
"interested persons" as defined in the Act, and as such, may be considered to
have indirect financial interests in the Rule 12b-1 Plan described in the
Prospectus.
Robert S. Dow, age 52, Chairman and President
E. Wayne Nordberg, age 59
The following outside directors of the Funds are also directors or trustees of
the^TWELVE other Lord Abbett-sponsored funds referred to above.
E. Thayer Bigelow
Courtroom Television Network
600 Third Avenue
New York, New York
Chief Executive Officer of Courtroom Television Network. Formerly President and
Chief Operating Officer of Time Warner Cable Programming, Inc. Prior to that,
formerly President and Chief Operating Officer of Home Box Office, Inc. Age 56.
4
<PAGE>
Stewart S. Dixon
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon. Age 66.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 71.
C. Alan MacDonald
Directorship Inc.
8 Sound Shore Drive
Greenwich, Connecticut
Managing Director of Directorship Inc., a consultancy in board management and
corporate governance. Formerly General Partner of The Marketing Partnership,
Inc., a full service marketing consulting firm (1994-1997). Formerly Chairman
and Chief Executive Officer of Lincoln Snacks, Inc., manufacturer of branded
snack foods (1992-1994). Currently serves as Director of Den West Restaurant
Co., J. B. Williams, and Fountainhead Water Company. Age 64.
Hansel B. Millican, Jr.
The Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of The Rochester Button Company. Age 69.
Thomas J. Neff
Spencer Stuart U.S.
277 Park Avenue
New York, New York
Chairman of Spencer Stuart U.S., an executive search consulting firm. Age 60.
5
<PAGE>
The second column of the following table sets forth the compensation accrued for
the Fund's outside directors. The third column sets forth information with
respect to the equity-based benefits accrued for outside directors by the Lord
Abbett-sponsored funds. The fourth column sets forth the total compensation
payable by such funds to the outside directors. No director of the Fund
associated with Lord Abbett and no officer of the Fund received any compensation
from the Fund for acting as a director or officer.
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED JUNE 30, 1997
(1) (2) (3) (4)
For Year Ended
Equity-Based December 31, 1996
Benefits Accrued Total Compensation
Aggregate by the Fund and Accrued by the Fund and
Compensation Twelve Other Lord Twelve Other Lord
Accrued by Abbett-sponsored Abbett-sponsored
NAME OF DIRECTOR THE FUND1 FUNDS2 FUNDS3
<S> <C> <C> <C>
E. Thayer Bigelow $608 $11,563 $48,200
Stewart S. Dixon $591 $22,283 $46,700
John C. Jansing $591 $28,242 $46,700
C. Alan MacDonald $615 $29,942 $48,200
Hansel B. Millican, Jr. $610 $24,499 $49,600
Thomas J. Neff $602 $15,990 $46,900
<FN>
1. Outside directors' 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 is being deferred under a
plan that deems the deferred amounts to be invested in shares of the
Fund for later distribution to the directors so that each director's
compensation depends in part on the performance of the Fund. The
amounts of the aggregate compensation payable by the Fund as of June
30, 1997 deemed invested in Fund shares, including dividends
reinvested and changes in net asset value applicable to such deemed
investments, were: Mr. Bigelow, $1,646; Mr. Dixon, $22,105; Mr.
Jansing, $23,557; Mr. MacDonald, $9,543; Mr. Millican, $23,924 and Mr.
Neff, $24,136. If the amounts deemed invested in Fund shares were
added to each director's actual holdings of Fund shares as of June 30,
1997, each would own, the following: Mr. Bigelow, 1,646 shares; Mr.
Dixon, 22,839 shares; Mr. Jansing, 23,557 shares; Mr. McDonald, 10,640
shares; Mr. Millican, 23,924 shares; and Mr. Neff, 26,334 shares.
2. The amounts in column 3 were accrued by the Lord Abbett-sponsored
funds for the twelve months ended October 31, 1996 with respect to the
equity- based plans described in footnote one and on the fees payable
to outside directors of the Fund for the twelve months ended October
31, 1996. In addition to the equity-based plans, each Lord
Abbett-sponsored fund has had a retirement plan for its outside
directors. The retirement plans and the equity-based plans, however,
were amended recently to, among other things, enable outside directors
to elect to convert their accrued prospective benefits under the
retirement plans to amounts deemed invested in Fund shares under the
equity-based plans. Five of the six outside directors made such an
election and thus will not receive retainers under the retirement
plan. The recent amendments also increased the annual retainer to
$50,000 and increased the annual retirement benefits from 80% to 100%
of a director's final annual retainer. Thus, if Mr. Jansing (the
director who did not elect to convert his accrued prospective
benefits) were to retire at or after age 72 and the annual retainer
payable by the funds were the same as it is today, he would receive
annual retirement benefits for life of $50,000. Each retirement plan
also provides for a pre-retirement death benefit and actuarially
reduced joint-and-survivor spousal benefits.
3. This column shows aggregate compensation, including directors 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, 1996.
</FN>
</TABLE>
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Allen, Brown, Carper, Ms. Foster, Messrs. Hilstad, Morris, Noelke, Nordberg and
Walsh are partners of Lord Abbett; the others are employees: Robert Gerber, age
43, Executive Vice President (with Lord Abbett since July 1997; formerly Senior
Portfolio Manager of Sanford C. Bernstein & Co., Inc.); Stephen I. Allen, age
44; Zane E. Brown, age 45; Daniel E. Carper, age 45; Daria L. Foster, age 43;
Paul A. Hilstad, age 54, Vice
6
<PAGE>
President and Secretary (with Lord Abbett since 1995; formerly Senior Vice
President and General Counsel of American Capital Management & Research, Inc.);
Robert G. Morris, age 52; Robert Noelke, age 40; E. Wayne Nordberg, age 59;
Thomas F. Konop, age 55; A. Edward Oberhaus, III, age 37, John J. Walsh, age 61,
Vice Presidents; and Keith O'Connor, age 42, Vice President and Treasurer.
The Fund's By-Laws provide that the Fund shall not hold an annual meeting of its
stockholders in any year unless one or more matters are required to be acted on
by stockholders under the Act, as amended (the "Act"), or unless called by a
majority of the Board of Directors or by stockholders holding at least one
quarter of the stock of the Fund outstanding and entitled to vote at the
meeting. When any such annual meeting is held, the stockholders will elect
directors and vote on the approval of the independent auditors of the Fund.
As of September 30, 1997, our directors and officers, as a group, owned less
than 1% of our outstanding shares.
4.
INVESTMENT ADVISORY AND OTHER SERVICES
As described under "Our Management" in the Prospectus, Lord Abbett is the Fund's
investment manager. Ten of the twelve general partners of Lord Abbett are
officers and/or directors of the Fund and are identified as follows: Stephen I.
Allen, Zane E. Brown, Daniel E. Carper, Robert S. Dow, Daria L. Foster, Paul A.
Hilstad, Robert G. Morris, Robert Noelke, E. Wayne Nordberg and John J. Walsh.
The address of each partner is The General Motors Building, 767 Fifth Avenue,
New York, New York 10153-0203.
The services performed by Lord Abbett are described under "Our Management" in
the Prospectus. Under the Management Agreement we pay Lord Abbett a monthly fee,
based on average daily net assets for each month, at the annual rate of .5 of 1%
of the portion of our net assets not in excess of $250,000,000, .45 of 1% of
such assets in excess of $250,000,000 but not in excess of $500,000,000 and .4
of 1% of such assets over $500,000,000. This fee is allocated among Classes A, B
and C based on each class' proportionate share of such average daily net assets.
For the fiscal years ended June 30, 1997, 1996 and 1995, the management fees
paid to Lord Abbett amounted to $773,869, $748,926 and $775,871, respectively.
We pay all expenses not expressly assumed by Lord Abbett, including, without
limitation, 12b-1 expenses, outside directors' fees and expenses, association
membership dues, legal and auditing fees, taxes, transfer and dividend
disbursing agent fees, shareholder servicing costs, fees and 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
security transactions expenses.
We have agreed with the State of California to limit operating expenses
(including management fees but excluding taxes, interest, extraordinary expenses
and brokerage commissions) to 2 1/2% of average annual net assets up to
$30,000,000, 2% of the next $70,000,000 of such assets and 1 1/2% of such assets
in excess of $100,000,000. The expense limitation is a condition on the
registration of investment company shares for sale in California and applies so
long as our shares are registered for sale in that State.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281, are
the independent auditors of the Fund and must be approved at least annually by
our Board of Directors to continue in such capacity. They perform audit services
for the Fund including the examination of financial statements included in our
annual report to shareholders.
United Missouri Bank of Kansas City, N.A., Tenth and Grand, Kansas City,
Missouri, is the Fund's custodian. The custodian pays for and collects proceeds
of securities bought and sold by the Fund and attends to the collection of
principal and income.
7
<PAGE>
5.
PORTFOLIO TRANSACTIONS
We expect that purchases and sales of portfolio securities usually will be
principal transactions. Portfolio securities normally will be purchased directly
from the issuer or from an underwriter or market maker for the securities. We
usually will pay no brokerage commissions for such purchases and no brokerage
commissions have been paid over the last three fiscal years. Purchases from
underwriters of portfolio securities will include a commission or concession
paid by the issuer to the underwriter and purchases from dealers serving as
market makers will include a dealer's markup. Decisions as to the purchase and
sale of portfolio securities are made by Lord Abbett. Our traders, who may be
officers of the Fund and are also employees of Lord Abbett, implement these
decisions. They do the trading as well for other accounts--investment companies
(of which they are also officers) and other clients-managed by Lord Abbett. They
are responsible for the negotiation of prices and commissions.
Our policy is 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, consistent with
obtaining best execution. This policy governs the selection of dealers. We make
no commitments regarding the allocation of brokerage business to or among
broker-dealers.
6.
NET ASSET VALUE AND DIVIDENDS
NET ASSET VALUE. The determination of our net asset value is described under
"Net Asset Value" in the Prospectus.
As disclosed in the Prospectus, we calculate our net asset value, declare
dividends and otherwise are open for business on each day that the New York
Stock Exchange (the "NYSE") is open for trading. The NYSE is closed on Saturdays
and Sundays and the following holidays: New Year's Day, Martin Luther King, Jr.
Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
We attempt to maintain a net asset value of $1.00 per share for all classes for
purposes of sales and redemptions but there is no assurance that we shall be
able to do so. Although we have received an exemptive order from the Securities
and Exchange Commission which permits us to round our net asset value per share
to the nearest cent for such purpose, our Board of Directors has determined that
it is in the best interests of the Fund and its shareholders to value our
portfolio securities under the amortized cost method of securities valuation
pursuant to Rule 2a-7 under the Act so long as that method fairly reflects the
Fund's market-based net asset value. Rule 2a-7, as amended, contains certain
maturity, diversification and quality requirements that apply to any fund
employing the amortized cost method in reliance on the Rule and to any
registered investment company which, like the Fund, holds itself out as a money
market fund. (See Prospectus - "How We Invest - Rule 2a-7.")
DIVIDENDS. As described in the Prospectus under "Dividends, Yield and Taxes,"
our net income will be declared as a dividend daily. Net income consists of (1)
all interest income and discount earned (including original issue discount and
market discount) less (2) a provision for all expenses, including class-specific
expenses, plus or minus (3) all short-term realized gains and losses on
portfolio assets.
7.
TELEPHONE EXCHANGE PRIVILEGE AND
RULE 12B-1 PLANS
TELEPHONE EXCHANGE PRIVILEGE. Shares of the Fund may be exchanged for those in
the same class of (a) any other Lord Abbett-sponsored fund except for (i) Lord
Abbett Equity Fund ("LAEF"), Lord Abbett Series Fund ("LASF") and any series of
Lord Abbett Research Fund not offered to the general public ("LARF") and (ii)
certain single-state tax-free series and funds where the exchanging shareholder
is a resident of a state in which such series or fund is not offered for sale,
and (b) any authorized institution's affiliated money market fund satisfying
Lord Abbett Distributor as to certain
8
<PAGE>
omnibus account and other criteria, hereinafter referred to as an "authorized
money market fund" or "AMMF." Class B and Class C shares of the Fund may be
acquired only by exchange for shares in the same class of any eligible Lord
Abbett-sponsored fund or AMMF. Class A shares of the Fund may be acquired either
by such an exchange or by direct purchase.
You or your representative with proper identification can instruct the Fund to
exchange by telephone. All shareholders have this privilege unless they refuse
it in writing. Exchanges for shares in the same class of any eligible Lord
Abbett- sponsored fund or AMMF will be based on the relative net asset values of
the shares exchanged, without a sales charge in most cases. Class A shares
purchased directly from the Fund may be exchanged for Class A, B or C shares of
an eligible Lord Abbett-sponsored fund. Therefore, a sales charge will be
payable on exchanges for shares of any eligible fund in the Lord Abbett Family
of Funds in accordance with the prospectus of that fund if the Class A shares
being exchanged were purchased directly from the Fund (not including shares
described under "Div-Move" below). Instructions for the exchange must be
received by the Fund in Kansas City prior to the close of the NYSE to obtain the
other fund's net asset value per share calculated on that day. Securities
dealers may charge for their services in expediting exchange transactions.
Before making an exchange you should read the prospectus of the other fund which
is available from your securities dealer or Lord Abbett Distributor. An
"exchange" is effected through the redemption of Fund shares and the purchase of
shares of such other Lord Abbett-sponsored fund or AMMF. Exercise of the
exchange privilege will be treated as a sale for federal income tax purposes,
and, depending on the circumstances, a capital gain or loss may be recognized.
This privilege may be modified or terminated at any time.
You should not view the exchange privilege as a means for taking advantage of
short-term swings in the market and the Fund reserves the right to terminate or
limit the privilege of any shareholder who makes frequent exchanges.
RULE 12B-1 PLANS. The Fund is not making payments of Rule 12b-1 fees for its
Class A share Rule 12b-1 Plan ("A Plan") and its Class C share Rule 12b-1 Plan
("C Plan"). The Fund is making annual distribution fee payments (0.75 of 1% of
the average daily net asset value of the Class B shares that are outstanding for
less than 8 years) pursuant to its Class B share Rule 12b-1 Plan ("B Plan"). As
described in the Fund's current Prospectus, the Fund has adopted a Distribution
Plan and Agreement pursuant to Rule 12b-1 under the Act for each Class. In
adopting each Plan and in approving its continuance, the Board of Directors has
concluded that based on information requested by the Board and provided by Lord
Abbett, there is a reasonable likelihood that each Plan will benefit the Class
and its shareholders. The expected benefits include (in the case of the Class B
Plan) greater sales and lower redemptions of Class B shares and (in the case of
the Class A and C Plan) a higher quality of service to shareholders by dealers
than otherwise would be the case. Lord Abbett is to use all amounts received
under each Plan for payments to dealers for (i) providing continuous services to
each Class' shareholders (in the case of the A and C Plans), such as answering
shareholder inquiries, maintaining records, and assisting shareholders in making
redemptions, transfers, additional purchases and exchanges and (ii) their
assistance in distributing Class B shares (in the case of the B Plan).
Each Plan requires the Board of Directors 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
Board of Directors and of the Fund's directors 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 directors"), cast
in person at a meeting called for the purpose of voting on such Plan. Each Plan
may not be amended to increase materially the amount spent for distribution
expenses without approval by a majority of the Fund's directors, including a
majority of the outside directors. Each Plan may be terminated at any time by
vote of a majority of the Fund's outside directors or by vote of the holders of
a majority of the appropriate Class' outstanding voting securities.
As stated in the Prospectus, a contingent deferred sales charge ("CDSC") is
imposed with respect to those shares of the Fund bought in exchange for shares
of another Lord Abbett-sponsored fund or series on which the other fund has paid
a 12b-1 fee if such shares are redeemed out of the Fund (a) within a period of
24 months from the end of the month in which the original sale occurred in the
case of Class A shares acquired in exchange for shares in the same class of a
fund in the Lord Abbett Family of Funds or (b) within 6 years of their original
purchase in the case of Class B shares, or (c)
9
<PAGE>
within a period of 12 months from the end of the month in which the original
sale occurred in the case of Class C shares.
As described in the Prospectus, in no event will the amount of the CDSC exceed
1% in the case of Class A and C shares or 5% scaled down to 1%, in the case of
Class B shares, of the lesser of (i) the net asset value of the shares redeemed
or (ii) the original cost of the shares for which such shares were exchanged
("Exchanged Shares"). No CDSC will be imposed when the investor redeems (i)
amounts derived from increases in the value of the account above the total cost
of shares being redeemed due to increases in net asset value, regardless of
whether this increase is reflected in reinvested dividends or distributions, in
the case of Class A shares, and due to such an increase because of reinvested
dividends and capital gains, in the case of Class B and C shares, (ii) shares
with respect to which no Lord Abbett fund paid a 12b-1 fee or (iii) shares
which, together with Exchanged Shares, have been held continuously (a) for 24
months from the end of the month in which the original sale occurred in the case
of Class A shares, (b) until the 6th anniversary of their original purchase in
the case of Class B shares and (c) until the 1st anniversary of their original
purchase 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 shares subject to a CDSC, those held the longest
will be the first to be redeemed.
8.
CLASS B SHARE CONVERSION FEATURE
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 advisor, 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 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.
9.
SHAREHOLDER PROGRAMS AND RETIREMENT PLANS
We have several programs available. These include automatic subsequent
investments of $50 or more from your checking account, a systematic withdrawal
plan, cash payments of monthly dividends to a designated third party and
expedited exchanges among the Lord Abbett-sponsored funds. Forms are available
from the Fund or Lord Abbett.
DIV-MOVE. Under the Div-Move service described in the Prospectus, you can invest
the dividends paid on your account into an existing account 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 PLAN. The Systematic Withdrawal Plan (the "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. The SWP involves
the planned redemption of shares on a periodic basis by receiving either fixed
or variable amounts at periodic intervals. 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 your SWP is established. Since the value
of shares redeemed may be more or less than their cost, gain or
10
<PAGE>
loss may be recognized for income tax purposes on each periodic payment. 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 and custodial agreements for IRAs (Individual
Retirement Accounts including Simplified Employee Pensions and Simple IRA's),
403(b) plans and qualified pension and profit-sharing plans, including 401(k)
plans. The forms contain specific information about the 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.
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 Directors may authorize redemption of all of the shares in any
account in which there are fewer than 500 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 60 days' 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.
10.
COMMERCIAL PAPER AND BOND RATINGS
COMMERCIAL PAPER RATINGS
The rating A-1+ is the highest commercial paper rating assigned by Standard &
Poor's Corporation ("S&P"). Paper rated A-1 has the following characteristics:
Liquidity ratio is adequate to meet cash requirements; long-term senior debt is
rated A or better; the issuer has access to diverse channels of borrowing; core
earnings and cash flow have an upward trend with allowance made for unusual
circumstances; typically, the issuer's industry is well established and the
issuer has a strong position within the industry; the reliability and quality of
management are sound. Those issues determined to possess overwhelming safety
characteristics will be denoted with a plus (+) sign designation.
The rating P-1 is the highest commercial paper rating assigned by Moody's
Investors Service, Inc. ("Moody's"). Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of parent company
and the relationships which exist with the issuer; and (8) recognition by the
management of obligations which may be present or may arise as a result of
public interest questions and preparations to meet such obligations.
11
<PAGE>
BOND RATINGS
Moody's Investors Service, Inc.'s Corporate Bond Ratings
Aaa - Bonds which are rated Aaa are judged to be of the best quality and carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa - Bonds which are rated Aa are judged to be of high-quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium- grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance and
other terms of the contract over any long period of time may be small.
Caa - Bonds that are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds that are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C - Bonds that are rated C are the lowest-rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Standard & Poor's Corporation's Corporate Bond Ratings
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong and in the majority of instances they
differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
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<PAGE>
BB-B-CCC-CC-C - Debt rated BB, B, CCC, CC and C is regarded as having
predominately speculative characteristics with respect to capacity to pay
interest and repay principal. 'BB' indicates the least degree of
speculation and 'CCC' the highest. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
D - Debt rated 'D' is in payment default. The 'D' rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes such payments will
be made during such grace period. The 'D' rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
11.
TAXES
The Fund will be subject to a 4% nondeductible excise tax on certain amounts not
distributed (and not treated as having been distributed) on a timely basis in
accordance with a calendar year distribution requirement. 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 not qualify for the dividends-received deduction
for corporations.
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 Sates 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 a 30% (or lower treaty rate) United States withholding tax
on dividends representing ordinary income and net short-term capital gains, and
the applicability of United States gift and estate taxes to non-United States
persons who own Fund shares.
12.
FURTHER INFORMATION ABOUT THE FUND
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment accounts. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Fund's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security 7 days
before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account
considers a trade or trades in such security, from profiting on trades of the
same security within 60 days and from trading on material and non-public
information. The Code imposes certain similar requirements and restrictions on
the independent directors and trustees of each Lord Abbett-sponsored mutual fund
to the extent contemplated by the recommendations of the Advisory Group.
13.
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended June 30, 1997 and the report
of Deloitte & Touche LLP, independent auditors, on such financial statements
contained in the 1997 Annual Report to Shareholders of Lord Abbett U.S.
Government Securities Money Market Fund, Inc. are incorporated herein by
reference to such financial statements and report in reliance upon the authority
of Deloitte & Touche LLP as experts in auditing and accounting.
13
<PAGE>
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Part A - Financial Highlights for the ten years ended June 30, 1997
Part B - Statement of Net Assets at June 30, 1997
Statement of Operations for the year ended June 30, 1997
Statements of Changes in Net Assets for the years ended
June 30, 1997 and 1996
Financial Highlights for the five years ended June 30, 1997
(b) Exhibits
99.B5 Management Agreement*
99.B11 Consent of Deloitte & Touche*
99.B15 Form of 12b-1 Plan Pension Class (P Shares) for
Family of Funds*
99.B16 Computation of Performance & Yield*
99.B18 Form of Amended Plan entered into pursuant to Rule
18f-3(d) under the Investment Company Act of 1940*
Ex 27 Financial Data Schedule*
Exhibits not listed are not a applicable.
* Filed herewith.
Item 25. Persons Controlled by or Under Common Control with Registrant
None.
Item 26. Number of Record Holders of Securities
At October 24, 1997 - Class A - 10,968
Class B - 28
Class C - 77
Item 27. Indemnification
Registrant is incorporated under the laws of the State of Maryland and is
subject to Section 2-418 of the Corporations and Associations Article of
the Annotated Code of the State of Maryland controlling the indemnification
of directors and officers. Since Registrant has its executive offices in
the State of New York, and is qualified as a foreign corporation doing
business in such State, the persons covered by the foregoing statute may
also be entitled to and subject to the limitations of the indemnification
provisions of Section 721-726 of the New York Business Corporation Law.
The general effect of these statutes is to protect officers, directors and
employees of Registrant against legal liability and expenses incurred by
reason of their positions with the Registrant. The statutes provide for
indemnification for liability for proceedings not brought on behalf of the
<PAGE>
corporation and for those brought on behalf of the corporation, and in each
case place conditions under which indemnification will be permitted,
including requirements that the officer, director or employee acted in good
faith. Under certain conditions, payment of expenses in advance of final
disposition may be permitted. The By-Laws of Registrant, without limiting
the authority of Registrant to indemnify any of its officers, employees or
agents to the extent consistent with applicable law, makes the
indemnification of its directors mandatory subject only to the conditions
and limitations imposed by the above-mentioned Section 2-418 of Maryland
Law and by the provisions of Section 17(h) of the Investment Company Act of
1940 as interpreted and required to be implemented by SEC Release No.
IC-11330 of September 4, 1980.
In referring in its By-Laws to, and making indemnification of directors
subject to the conditions and limitations of, both Section 2-418 of the
Maryland Law and Section 17(h) of the Investment Company Act of 1940,
Registrant intends that conditions and limitations on the extent of the
indemnification of directors imposed by the provisions of either Section
2-418 or Section 17(h) shall apply and that any inconsistency between the
two will be resolved by applying the provisions of said Section 17(h) if
the condition or limitation imposed by Section 17(h) is the more stringent.
In referring in its By-Laws to SEC Release No. IC-11330 as the source for
interpretation and implementation of said Section 17(h), Registrant
understands that it would be required under its By-Laws to use reasonable
and fair means in determining whether indemnification of a director should
be made and undertakes to use either (1) a final decision on the merits by
a court or other body before whom the proceeding was brought that the
person to be indemnified ("indemnitee") was not liable to Registrant or to
its security holders by reason of willful malfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
his office ("disabling conduct") or (2) in the absence of such a decision,
a reasonable determination, based upon a review of the facts, that the
indemnitee was not liable by reason of such disabling conduct, by (a) the
vote of a majority of a quorum of directors who are neither "interested
persons" (as defined in the 1940 Act) of Registrant nor parties to the
proceeding, or (b) an independent legal counsel in a written opinion. Also,
Registrant will make advances of attorneys' fees or other expenses incurred
by a director in his defense only if (in addition to his undertaking to
repay the advance if he is not ultimately entitled to indemnification) (1)
the indemnitee provides a security for his undertaking, (2) Registrant
shall be insured against losses arising by reason of any lawful advances,
or (3) a majority of a quorum of the non-interested, non-party directors of
Registrant, or an independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts, that there is
reason to believe that the indemnitee ultimately will be found entitled to
indemnification.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, 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 director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, 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. In addition, Registrant maintains a directors'
and officers' errors and omissions liability insurance policy protecting
directors and officers against liability for breach of duty, negligent act,
error or omission committed in their capacity as directors or officers. The
policy contains certain exclusions, among which is exclusion from coverage
for active or deliberate dishonest or fraudulent acts and exclusion for
fines or penalties imposed by law or other matters deemed uninsurable.
2
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
Lord,Abbett & Co. acts as investment advisor for twelve other open-end
investment companies (of which it is principal underwriter for thirteen),
and as investment adviser to approximately 5,757 private accounts as of
July 31, 1997. Other than acting as 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 own account or in the capacity of director, officer, employee, partner
or trustee of any entity except as follows:
John J. Walsh
Trustee
The Brooklyn Hospital Center
100 Parkside Avenue
Brooklyn, N.Y.
Item 29. Principal Underwriter
(a) Lord Abbett Affiliated Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett Series Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Tax-Free Income Trust
Lord Abbett Securities Trust
Lord Abbett Investment Trust
Lord Abbett Research Fund, Inc.
Investment Adviser
American Skandia Trust
(Lord Abbett Growth and Income Portfolio)
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
Business Address (1) with Registrant
Robert S. Dow Chairman and President
Paul A. Hilstad Vice President & Secretary
Stephen I. Allen Vice President
Zane E. Brown Vice President
Daniel E. Carper Vice President
Daria Foster Vice President
Robert G. Morris Vice President
Robert Noelke Vice President
3
<PAGE>
E. Wayne Nordberg Vice President
John J. Walsh Vice President
Michael McLaughlin Partner
W. Thomas Hudson Partner
(1) Each of the above has a principal business address
767 Fifth Avenue, New York, NY 10153
(c) Not applicable
Item 30. 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 canceled 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 31. Management Services
None
Item 32. 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).
4
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all the requirements
for effectiveness of this Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Registration Statement
and/or any amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on the
31st day of October, 1997
LORD ABBETT U. S. GOVERNMENT SECURITIES MONEY MARKET FUND, INC.
By /s/ Robert S. Dow
Robert S. Dow,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
/s/ Robert S. Dow October 31, 1997
_________________________ Chairman, President _________________________
AND DIRECTOR
Robert S. Dow (Title) (Date)
/s/ Keith F. O'Connor Vice President and October 31, 1997
_________________________ TREASURER _________________________
Keith F. O'Connor (Title) (Date)
/s/ E. ayne Nordberg October 31, 1997
_________________________ DIRECTOR _________________________
E. Wayne Nordberg (Title) (Date)
/s/ Stewart S. Dixon October 31, 1997
_______________________ DIRECTOR _________________________
Stewart S. Dixon (Title) (Date)
/s/ John C. Jansing October 31, 1997
_________________________ DIRECTOR _________________________
John C. Jansing (Title) (Date)
/s/ C. Alan MacDonald October 31, 1997
_________________________ DIRECTOR _________________________
C. Alan MacDonald (Title) (Date)
/s/ Hansel B. Millican, Jr. October 31, 1997
_________________________ DIRECTOR _________________________
Hansel B. Millican, Jr. (Title) (Date)
/s/ Thomas J. Neff October 31, 1997
_________________________ DIRECTOR _________________________
Thomas J. Neff (Title) (Date)
/s/ E. Thayer Bigelow October 31, 1997
_________________________ DIRECTOR _________________________
E. Thayer Bigelow (Title) (Date)
LORD ABBETT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND, INC.
(formerly LORD ABBETT CASH RESERVE FUND, INC.)
MANAGEMENT AGREEMENT
AGREEMENT made as of this 14th day of October, 1981 by and
between LORD ABBETT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND, INC., a
Maryland Corporation (hereinafter called the "Corporation"), and LORD, ABBETT &
CO., a New York partnership (hereinafter called the "Investment Manager").
WHEREAS, the Corporation, desires to obtain the investment
management services of the Investment Manager and the Investment Manager is
willing to provide services of the nature desired upon the terms and conditions
hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and
of other good and valuable consideration, receipt of which is hereby
acknowledged, it is agreed as follows:
1. The Corporation hereby employs the Investment Manager under
the terms and conditions of this Agreement, and the Investment Manager hereby
accepts such employment and agrees to perform supervisory functions of the
Corporation with respect to the investment and reinvestment of its property and
assets (whether or not held in trust or in the custody of a bank or trust
company subject to the Corporation's direction or control) including, without
limitation, the supervision of its investment portfolio and the recommendation
of investment policies and procedures within the
<PAGE>
limitations set forth in the Corporation's Registration Statement on file with
the Securities and Exchange Commission under the Securities Act of 1933 and the
Investment Company Act of 1940, as amended (the "Act").
The Investment Manager agrees to maintain an adequate
organization of competent persons to perform the supervisory functions mentioned
herein.
All recommendations with respect to the investment portfolios
will be made to the Corporation's trading department which, with the approval of
authorized officers of the Corporation, will execute all trades in accordance
with the Corporation's investment procedures.
The Investment Manager reserves the right, in its discretion,
to purchase or otherwise obtain statistical information and services from other
sources, including affiliated persons of the Investment Manager.
Notwithstanding the provisions of this paragraph 1, the
investment policies and procedures and all other actions of the Corporation are,
and shall at all times be, subject to the control and direction of its Board of
Directors.
2. The Corporation agrees to pay the Investment Manager for
its services under this Agreement and for the expenses assumed, a management fee
computed and payable monthly at the annual rate of three quarters .50 of 1% of
the value of the Corporation's average daily net assets not in excess of
$250,000,000, .45 of 1%
<PAGE>
of such assets not in excess of $500,000,000 and .40 of 1% of such assets in
excess of $500,000,000. The value of the net assets of the Corporation shall
include all assets held in trust or in custody of any bank, savings bank or
trust company for the Corporation, subject to its control or direction, and
shall be determined as provided in the Articles of Incorporation of the
Corporation. The fee shall be paid on the first day of each month for the
preceding month.
It is understood that any supplemental advisory or statistical services
which may be provided to the Corporation or to the Investment Manager from time
to time by independent broker-dealers or persons other than the Investment
Manager, for whatever reason, shall not reduce the amount of the fees payable to
the Investment Manager hereunder. It is recognized that such supplementary
advisory or statistical services may be useful to the Investment Manager and the
Corporation, but their value is indeterminable and is not to be considered a
substitute for the services provided by the Investment Manager hereunder.
3. It is understood that the services of the Investment
Manager are not deemed to be exclusive, and nothing in this Agreement shall
prevent the Investment Manager, or any officer, director, partner or employee
thereof, from providing similar services to other investment companies and other
clients (whether or not their investment objectives and policies are similar to
3
<PAGE>
those of the Corporation) or to engage in other activities. When other clients
of the Investment Manager desire to purchase or sell the same portfolio security
at the same time as the Corporation, it is understood that such purchases and
sales will be made as nearly as practicable on a pro rata basis in proportion to
the amounts desired to be purchased or sold by each client.
4. The Corporation will, at its own expense, furnish to the
Investment Manager periodic (but not less than semi-annually) statements of its
books of account, including balance sheets and earnings statements, and all
other information which may reasonably be required, from time to time, by the
Investment Manager, and will, at its own expense, at all times keep the
Investment Manager fully advised as to the cash, securities and other property
then comprising its assets, and furnish daily detailed price makeup sheets with
respect to its investment portfolio and shares of its capital stock.
5. The Investment Manager shall be under no obligation to pay
any fees, costs, expenses or other charges of the Corporation, except for the
compensation of its officers and directors who are affiliated with the
Investment Manager, sales and promotional costs, including the costs of printing
prospectuses used for offering shares other than to existing shareholders, rent
for its office space; and except for the ordinary and necessary office and
clerical expenses relating to research, statistical work
4
<PAGE>
and supervision of the Corporation's investment portfolio, to be performed by
the Investment Manager under paragraph 1 of this Agreement. The Corporation will
pay all other fees, cost, expenses or charges relating to its assets and
operations, including without limitation, office and clerical expenses not
relating to research, statistical work and supervision of the Corporation's
investment portfolio; fees and expenses of directors not affiliated with the
investment Manager, governmental fees; interest charges, taxes, association
membership dues; fees and charges for legal and auditing services (including
preparation of tax returns); fees and expenses of any custodians or trustees
with respect to custody of its assets; fees, charges and expenses of dividend
disbursing agents, registrars and transfer agents (including the cost of keeping
all necessary shareholder records and accounts, and handling any problems
relating thereto, and the expense of furnishing to all shareholders statements
of their accounts after every transaction, including the expense of mailing);
cost and expense of preparing, printing and mailing stock certificates,
prospectuses and reports, notices and proxy statements to shareholders and cost
of preparing reports to governmental agencies; brokerage fees and commissions of
every kind and expenses in connection with the execution of portfolio security
transactions (including the cost of any service or agency designed to facilitate
the purchase and sale of portfolio securities); insurance premiums;
5
<PAGE>
the cost of qualification and registration, of the Corporation and its shares
under federal, state and other securities laws; and any other fee, cost, expense
or charge of any kind not expressly assumed by the Investment Manager under this
Agreement.
Notwithstanding the above, the Investment Manager will pay
expenses of the Corporation in excess of 1/2 of 1% of average daily net assets
for the first 120 days following the effective date of the initial Registration
Statement of the Corporation filed with the Securities and Exchange Commission
under the Securities Act of 1933; thereafter, the Investment Manager may, but is
not required to, pay all or any portion of expenses of the Corporation not
expressly assumed by the Investment Manager under the Agreement. Any such
expenses paid by the Investment Manager which are not reimbursable by the
Investment Manager pursuant to state expense limitations described below shall
be paid back to the Investment Manager by the Corporation. Such repayment shall
be made as follows: for any month that the Corporation's ratio of operating
expenses to average net asses on an annualized basis is less than 8/10 of 1%,
the Corporation shall pay the Investment Manger an amount equal in dollars to
the difference in dollars between the expenses at the actual expense ratio and
those at a ratio of 8/10 of 1%; any such payments shall be made monthly and
shall continue until the amount of reimbursement is paid in full or until
September 30, 1988, whichever first occurs.
6
<PAGE>
Notwithstanding any other provision of this Agreement, if
expenses (including the management fee hereunder but excluding interest, taxes,
brokerage fees, and where permitted, extraordinary expenses) borne by the
Corporation in any fiscal year exceed expense limitations applicable to the
Corporation imposed by state securities administrators, as such limitations may
be lowered or raised from time to time, the Investment Manger will reimburse the
Corporation for any such excess.
If the Investment Manager pays for other expenses of the Corporation or
furnishes without charge to the Corporation services the cost of which is to be
borne by the Corporation under this Agreement, the Investment Manager shall not
be deemed to have waived its rights under this Agreement to have the Corporation
pay for such expenses or provide or pay for such services in the future.
6. The Investment Manager agrees that it shall observe and be
bound by all of the provisions of the Articles of Incorporation (including any
amendments thereto) of the Corporation which shall in any way limit or restrict
or prohibit or otherwise regulate any action by the Investment Manager.
7. The Investment Manager assumes no responsibility under this
Agreement and, having so acted, the Investment Manager shall not be held liable
or accountable for any mistakes of law or fact, or for any error or omission of
its officers, directors,
7
<PAGE>
partners or employees, or for any loss or damage arising or resulting therefrom
suffered by the Corporation or any of its stockholders, creditors, directors or
officers; provided however, that nothing herein shall be deemed to protect the
Investment Manager against any liability to the Corporation or to its
stockholders by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties hereunder, or by reason of the reckless disregard
of its obligations and duties hereunder. The Investment Manager shall not be
responsible for any action of the Board of Directors of the Corporation in
following or declining to follow any advice or recommendation of the Investment
Manager.
8. Neither this Agreement nor any other transaction between
the parties hereto pursuant to this Agreement shall be invalidated or in any way
affected by the fact that any or all of the directors, officers, stockholders,
or other representatives of the Corporation are or may be interested in the
Investment Manager, or any successor or assignee thereof, or that any or all of
the directors, officers, partners, or other representatives of the Investment
Manager are or may be interested in the Corporation, except as otherwise may be
provided in the Investment Company Act of 1940. The Investment Manager in acting
hereunder shall be an independent contractor and not any agent of the
Corporation.
9. This Agreement shall become effective upon the effective
date of the Registration Statement of the Corporation
8
<PAGE>
filed with the Securities and Exchange Commission under the Securities Act of
1933 on May 21, 1979, and continue in force until February 4, 1981, and is
renewable annually thereafter by specific approval of the Board of Directors of
the Corporation or by vote of a majority of the outstanding voting securities of
the Corporation; any such renewal shall be approved by the vote of a majority of
the directors who are not parties to this Agreement or interested persons of the
Investment Manager or of the Corporation, cast in person or at a meeting called
for the purpose of voting on such approval.
This Agreement may be terminated without penalty at any time
by the Corporation upon 60 days' written notice. This Agreement shall
automatically terminate in the event of its assignment. The terms "interested
persons", "assignment" and "vote of a majority of the outstanding voting
securities" shall have the same meaning as those terms are defined in the
Investment Company Act of 1940.
10. The Investment Manager reserves the right to grant the use
of the name "LORD ABBETT" or "LORD, ABBETT & CO.", or any derivative thereof, to
any other investment company or business enterprise. The Investment Manager
reserves the right to withdraw from the Corporation the use of the name "LORD
ABBETT" and the use of its registered service mark; at such time of withdrawal
of the right to use the name "LORD ABBETT", the Investment Manager agrees
9
<PAGE>
that the question of continuing this Agreement may be submitted to a vote of the
Corporation's shareholders. In the event of such withdrawal or the termination
of this Agreement, for any reason, the Corporation will, on the written request
of the Investment Manager, take such action as may be necessary to change its
name and eliminate all reference to the words "LORD ABBETT" in any form, and
will no longer use such registered service mark.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officers and its corporate seal to be affixed
hereto, and the Investment Manager has caused this Agreement to be executed by
one of its partners all on the day and year first above written.
LORD ABBETT CASH RESERVE FUND, INC.
By:/S/ ROBERT S. DRISCOLL
Chairman of the Board
/S/ GARY J. STRUM
Assistant Secretary
LORD, ABBETT & CO.
By: /S/ KENNETH B. CUTLER
A Partner
10
CONSENT OF INDEPENDENT AUDITORS
Lord Abbett U.S. Government Securities Money Market Fund, Inc.:
We consent to the incorporation by reference in Post-Effective Amendment No. 23
to Registration Statement No. 2-64536 of our report dated August 1,1997
appearing in the annual report to shareholders and to the reference to us under
the caption "Financial Highlights" in the Prospectus and to the references to us
under the captions "Investment Advisory and Other Services" and "Financial
Statements" in the Statement of Additional Information, both of which are part
of such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
October 29, 1997
Rule 12b-1 Distribution Plan and Agreement
Lord Abbett Developing Growth Fund, Inc. -- Pension Class
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of October __, 1997 by
and between LORD ABBETT DEVELOPING GROWTH FUND, INC., a Maryland Corporation,
(the "Fund"), on behalf of its Pension Class (the "Class"), and LORD ABBETT
DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"); and
the Distributor is the exclusive selling agent of the Fund's shares of
beneficial interest, including the Class, pursuant to the Distribution Agreement
between the Fund and the Distributor, dated July 12, 1996, and
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement
(the "Plan") for the Class with the Distributor, as permitted by Rule 12b-1
under the Act, pursuant to which the Class may make certain payments to the
Distributor for payment to institutions and persons permitted by applicable law
and/or rules to receive such payments ("Authorized Institutions") in connection
with sales of Shares and for use by the Distributor as provided in paragraph 3
of this Plan, and
WHEREAS, the Fund's Board of Directors has determined that there is a
reasonable likelihood that the Plan will benefit the Class and the holders of
the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other
good and valuable consideration, receipt of which is hereby acknowledged, it is
agreed as follows:
1. The Fund hereby authorizes the Distributor to enter into agreements
with Authorized Institutions (the "Agreements") which may provide for the
payment to such Authorized Institutions of distribution and service fees which
the Distributor receives from the Class in order to provide incentives to such
Authorized Institutions (i) to sell Shares and (ii) to provide continuing
information and investment services to their accounts holding Shares and
otherwise to encourage their accounts to remain invested in the Shares. The
Distributor may, from time to time, waive or defer payment of some fees payable
at the time of the sale of Shares provided for under paragraph 2 hereof.
2. Subject to possible reduction as provided below in this paragraph 2,
the Class shall pay to the Distributor fees at each quarter-end (a) for
services, at an annual rate not to exceed .25 of 1% of the average annual net
asset value of Shares outstanding for the quarter or more and (b) for
distribution, at an annual rate not to exceed .50 of 1% of the average annual
net asset value of Shares outstanding for the quarter or more. For purposes of
the quarter-end fee payments above, (A) Shares issued pursuant to an exchange
for shares of another series of the Fund or another Lord Abbett-sponsored fund
(or for shares of a fund acquired by the Fund) will be credited with the time
held from the initial purchase of such other shares when determining how long
Shares mentioned in clauses (a) and (b) have been outstanding and (B) payments
will be based on Shares outstanding during any such quarter. Shares outstanding
in clause (a) and (b) above include Shares issued for
<PAGE>
reinvested dividends and distributions which have been outstanding for the
quarter or more.
The Board of Directors of the Fund shall from time to time determine
the amounts and the time of payments (such as, at the time of sale, quarterly or
otherwise), within the foregoing maximum amounts, that the Class may pay the
Distributor hereunder. Such determinations by the Board of Directors shall be
made by votes of the kind referred to in paragraph 10 of this Plan. The service
fees mentioned in this paragraph are for the purposes mentioned in clause (ii)
of paragraph 1 of this Plan and the distribution fees mentioned in this
paragraph are for the purposes mentioned in clause (i) of paragraph 1 and the
second sentence of paragraph 3 of this Plan. The Distributor will monitor the
payments hereunder and shall reduce such payments or take such other steps as
may be necessary to assure that (x) the payments pursuant to this Plan shall be
consistent with Rule 2830, subparagraphs (d)(2) and (5) of the Conducts Rules of
the National Association of Securities Dealers, Inc. with respect to investment
companies with asset-based sales charges and service fees as the same may be in
effect from time to time and (y) the Class shall not pay with respect to any
Authorized Institution service fees equal to more than .25 of 1% of the average
annual net asset value of Shares sold by (or attributable to shares sold by)
such Authorized Institution and held in an account covered by an Agreement.
3. Within the foregoing maximum amounts, the Distributor may use
amounts received as distribution fees hereunder from the Class to finance any
activity which is primarily intended to result in the sale of Shares including,
but not limited to, commissions or other payments relating to selling or
servicing efforts. Without limiting the generality of the foregoing, the
Distributor may apply amounts authorized by the Fund's Board of Directors
designated as the distribution fee referred to in clause (b) of paragraph 2 to
expenses incurred by the Distributor if such expenses are primarily intended to
result in the sale of Shares. The Fund's Board of Directors (in the manner
contemplated in paragraph 10 of this Plan) shall approve the timing, categories
and calculation of any payments under this paragraph 3 other than those referred
to in the foregoing sentence.
4. The net asset value of the Shares shall be determined as provided in
the Articles of Incorporation of the Fund. If the Distributor waives all or a
portion of fees which are to be paid by the Class hereunder, the Distributor
shall not be deemed to have waived its rights under this Agreement to have the
Class pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial
Officer, is hereby authorized to direct the disposition of monies paid or
payable by the Class hereunder and shall provide to the Fund's Board of
Directors, and the Board of Directors shall review, at least quarterly, a
written report of the amounts so expended pursuant to this Plan and the purposes
for which such expenditures were made.
6. Neither this Plan nor any other transaction between the parties
hereto pursuant to this Plan shall be invalidated or in any way affected by the
fact that any or all of the directors, officers, shareholders, or other
representatives of the Fund are or may be "interested persons" of the
Distributor, or any successor or assignee thereof, or that any or all of the
directors, officers, partners, members or other representatives of the
Distributor are or may be "interested persons" of the Fund, except as otherwise
may be provided in the Act.
<PAGE>
7. The Distributor shall give the Fund the benefit of the Distributor's
best judgment and good faith efforts in rendering services under this Plan.
Other than to abide by the provisions hereof and render the services called for
hereunder in good faith, the Distributor assumes no responsibility under this
Plan and, having so acted, the Distributor shall not be held liable or held
accountable for any mistake of law or fact, or for any loss or damage arising or
resulting therefrom suffered by the Fund, the Class or any of the shareholders,
creditors, directors or officers of the Fund; provided however, that nothing
herein shall be deemed to protect the Distributor against any liability to the
Fund or the Class' shareholders by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties hereunder, or by reason of the
reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective on the date hereof, and shall
continue in effect for a period of more than one year from such date only so
long as such continuance is specifically approved at least annually by a vote of
the Board of Directors of the Fund, including the vote of a majority of the
directors who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of this Plan or in any agreement
related to this Plan, cast in person at a meeting called for the purpose of
voting on such renewal.
9. This Plan may not be amended to increase materially the amount to be
spent by the Class hereunder without the vote of a majority of its outstanding
voting securities and each material amendment must be approved by a vote of the
Board of Directors of the Fund, including the vote of a majority of the
directors who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of this Plan or in any agreement
related to this Plan, cast in person at a meeting called for the purpose of
voting on such amendment.
10. Amendments to this Plan other than material amendments of the kind
referred to in the foregoing paragraph 9 of this Plan may be adopted by a vote
of the Board of Directors of the Fund, including the vote of a majority of the
directors who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of this Plan or in any agreement
related to this Plan. The Board of Directors of the Fund may, by such a vote,
interpret this Plan and make all determinations necessary or advisable for its
administration.
11. This Plan may be terminated at any time without the payment of any
penalty by (a) the vote of a majority of the directors of the Fund who are not
"interested persons" of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreement related to this Plan,
or (b) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under
the Act as in effect at such time.
12. So long as this Plan shall remain in effect, the selection and
nomination of those directors of the Fund who are not "interested persons" of
the Fund are committed to the discretion of such disinterested directors. The
terms "interested persons," "assignment" and "vote of a majority of the
outstanding voting securities" shall have the same meaning as those terms are
defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and on its behalf by its duly authorized representative
as of the date first above written.
<PAGE>
LORD ABBETT DEVELOPING GROWTH FUND, INC.
By:
Paul A. Hilstad
Vice President
ATTEST:
Thomas F. Konop
Assistant Secretary
LORD ABBETT DISTRIBUTOR LLC
By: LORD, ABBETT & CO.
By:
A Partner
Exhibit 16
Yield Calculation
We calculate our "yield" and "effective yield" based on the number of days in
the period for which the calculation is made ("base period"). Our "yield" is
computed by determining the net change for the base period (exclusive of capital
charges) in the value of a hypothetical preexisting account having a balance of
one share at the start of the base period by subtracting this value from the
value of the account at the end of the base period and dividing the result by
the account's beginning value to come up with a "base period return" which is
then multiplied by 365 over the number of days in the base period. "Effective
yield" is determined by compounding the "base period return" by adding one,
raising the sum to a power equal to 365 divided by the number of days in the
base period and subtracting one from the result. An example follows for the
seven-day period ended June 30, 1997 of the calculation of both "yield" and
"effective yield":
Value of hypothetical account with
exactly one share at beginning of
base period $1.000000000
________________________________________________________________________________
Value of same account at end of base
period $1.000894658
Net change in account value $ .000894658
Base period return (net change in
account value divided by the
beginning account value) .0894658%
________________________________________________________________________________
"Yield" [base period return
times (365 divided by 7)] 4.67%
________________________________________________________________________________
"Effective yield" [(base period
return + 1) 365/7] - 1 4.78%
On June 30, 1997, our portfolio had a dollar-weighted life to maturity of 33
days.
Amended and Restated Plans as of August 1,1997
Pursuant to Rule 18f-3(d)
under the Investment Company Act of 1940
(As adopted August 15, 1996)
Rule 18f-3 (the "Rule") under the Investment Company Act of 1940, as
amended (the "1940 Act"), requires that the Board of Directors or Trustees of an
investment company desiring to offer multiple classes pursuant to the Rule adopt
a plan setting forth the separate arrangement and expense allocation of each
class, and any related conversion features or exchange privileges. This document
constitutes an amended and restated plan (individually, a "Plan" and
collectively, the "Plans") of each of the investment companies, or series
thereof, listed on Schedule A attached hereto (each, a "Fund"). The Plan of any
Fund is subject to amendment by action of the Board of Directors or Trustees
(the "Board") of such Fund and without the approval of shareholders of any
class, to the extent permitted by law and by the governing documents of such
Fund.
The Board, including a majority of the non-interested Board members,
has determined that the following separate arrangement and expense allocation,
and the related conversion features, if any, and exchange privileges, of each
class of each Fund are in the best interest of each class of each Fund
individually and each Fund as a whole.
1. CLASS DESIGNATION. Shares of all Funds except Lord Abbett Series Fund, Inc.
shall be divided into Class A shares, Class B shares, Class C, Class Y and
Pension Class shares as indicated for each Fund on Schedule A attached hereto.
In the case of the Lord Abbett Series Fund - Growth & Income Portfolio, shares
shall be divided into Variable Contract Class shares and Pension Class shares as
indicated on Schedule A.
2. SALES CHARGES AND DISTRIBUTION AND SERVICE FEES.
(a) INITIAL SALES CHARGE. Class A shares will be traditional front-end
sales charge shares, offered at their net asset value ("NAV") plus a sales
charge in the case of each Fund as described in such Fund's prospectus as from
time to time in effect.
Class B shares, Class C shares, Class Y shares, Variable Contract Class
shares and Pension Class shares will be offered at their NAV without an initial
sales charge.
(b) SERVICE AND DISTRIBUTION FEES. In respect of the Class A shares,
Class B shares, Class C shares, Variable Contract Class shares and Pension Class
shares, each Fund will pay service and/or distribution fees under plans from
time to time in effect adopted for such classes pursuant to Rule 12b-1 under the
1940 Act (each, a "12b-1 Plan").
Pursuant to a 12b-1 Plan with respect to the Class A shares, if
effective, each Fund will generally pay (i) at the time such shares are sold, a
one-time distribution fee of up to 1% of the NAV of the shares sold in the
amount of $1 million or more, including sales qualifying at such level under the
rights of accumulation and statement of intention privileges, or to retirement
plans with 100 or more eligible employees, as described in the Fund's prospectus
as from time to time in effect, (ii) a
<PAGE>
continuing distribution fee at an annual rate of 0.10% of the average daily NAV
of the Class A share accounts of dealers who meet certain sales and redemption
criteria, and (iii) a continuing service fee at an annual rate not to exceed
0.25% of the average daily NAV of the Class A shares. The Board will have the
authority to increase the distribution fees payable under such 12b-1 Plan by a
vote of the Board, including a majority of the independent directors thereof, up
to an annual rate of 0.25% of the average daily NAV of the Class A shares. The
effective dates of various of the 12b-1 Plans for the Class A shares are based
on achievement by the Funds of specified total net assets for the Class A shares
of such Funds.
Pursuant to a 12b-1 Plan with respect to the Class B shares, if
effective, each Fund will generally pay a continuing annual fee of up to 1% of
the average annual NAV of such shares then outstanding (each fee comprising .25%
in service fee and .75% in distribution fee).
Pursuant to a 12b-1 Plan with respect to the Class C shares, if
effective, each Fund will generally pay a one-time service and distribution fee
at the time such shares are sold of up to 1% of their NAV and a continuing
annual fee, commencing 12 months after the first anniversary of such sale, of up
to 1% of the average annual NAV of such shares then outstanding (each fee
comprising .25% in service fees and .75% in distribution fees).
Pursuant to a 12b-1 plan with respect to the Variable Contract Class,
if operational, the Growth & Income Portfolio will generally pay a continuing
annual fee of up to .15% of the average annual NAV of such shares then
outstanding to reimburse an insurance company for its expenditure related to the
distribution of such shares which expenditures are not also reimbursable
pursuant to fees paid under the variable contract issued by such insurance
company.
Pursuant to a 12b-1 Plan with respect to the Pension Class, if
operational, the Growth & Income Portfolio will generally pay a continuing
annual fee of .45% of the average annual NAV of such shares then outstanding.
The Board will have the authority to increase the distribution fees payable
under such 12b-1 Plan by a vote of the Board, including a majority of the
independent directors thereof, up to an annual rate of 0.75% of the average
daily NAV of such shares (consisting of distribution and service fees, at
maximum annual rates not exceeding 0.50 and 0.25 of 1%, respectively).
The Class Y shares do not have a Rule 12b-1 Plan.
(c) CONTINGENT DEFERRED SALES CHARGES ("CDSC"). Subject to some
exceptions, Class A shares subject to the one-time sales distribution fee of up
to 1% under the Rule 12b-1 Plan for the Class A shares will be subject to a CDSC
equal to 1% of the lower of the cost or the NAV of such shares if the shares are
redeemed for cash on or before the end of the twenty-fourth month after the
month in which the shares were purchased.
Class B shares will be subject to a CDSC ranging from 5% to 1% of the
lower of the cost or the NAV of the shares, if the shares are redeemed for cash
before the sixth anniversary of their purchase. The CDSC for the Class B shares
may be waived for certain transactions. Class C shares will be subject to a CDSC
equal to 1% of the lower of the cost or the NAV of the shares if the shares are
redeemed for cash before the first anniversary of their purchase.
<PAGE>
Neither the Class Y, Variable Contract Class nor the Pension Class
shares will be subject to a CDSC.
3. CLASS-SPECIFIC EXPENSES. The following expenses shall be allocated, to the
extent such expenses can reasonably be identified as relating to a particular
class and consistent with Revenue Procedure 96-47, on a class-specific basis:
(a) fees under a 12b-1 Plan applicable to a specific class (net of any CDSC paid
with respect to shares of such class and retained by the Fund) and any other
costs relating to implementing or amending such Plan, including obtaining
shareholder approval of such Plan or any amendment thereto; (b) transfer and
shareholder servicing agent fees and shareholder servicing costs identifiable as
being attributable to the particular provisions of a specific class; (c)
stationery, printing, postage and delivery expenses related to preparing and
distributing materials such as shareholder reports, prospectuses and proxy
statements to current share holders of a specific class; (d) Securities and
Exchange Commission registration fees incurred by a specific class; (e) Board
fees or expenses identifiable as being attributable to a specific class; (f)
fees for outside accountants and related expenses relating solely to a specific
class; (g) litigation expenses and legal fees and expense relating solely to a
specific class; (h) expenses incurred in connection with shareholders meetings
as a result of issues relating solely to a specific class and (i) other expenses
relating solely to a specific class, provided, that advisory fees and other
expenses related to the management of a Fund's assets (including custodial fees
and tax-return preparation fees) shall be allocated to all shares of such Fund
on the basis of NAV, regardless of whether they can be specifically attributed
to a particular class. All common expenses shall be allocated to shares of each
class at the same time they are allocated to the shares of all other classes.
All such expenses incurred by a class of shares will be charged directly to the
net assets of the particular class and thus will be borne on a pro rata basis by
the outstanding shares of such class. For all Funds, with the exception of
Series Fund - Growth & Income Portfolio, Blue Sky expenses will be treated as
common expenses. In the case of Series Fund - Growth & Income Portfolio, Blue
Sky expenses will be allocated entirely to the Pension Class, as the Variable
Contract Class of Series Fund Growth & Income Portfolio has no Blue Sky
expenses.
4. INCOME AND EXPENSE ALLOCATIONS. Income, realized and unrealized capital gains
and losses and expenses not allocated to a class as provided above shall be
allocated to each class on the basis of the net assets of that class in relation
to the net assets of the Fund, except that, in the case of each daily dividend
Fund, income and expenses shall be allocated on the basis of relative net assets
(settled shares).
5. DIVIDENDS AND DISTRIBUTIONS. Dividends and Distributions paid by a Fund on
each class of its shares, to the extent paid, will be calculated in the same
manner, will be paid at the same time, and will be in the same amount, except
that the amount of the dividends declared and paid by a particular class may be
different from that paid by another class because of expenses borne exclusively
by that class.
6. NET ASSET VALUES. The NAV of each share of a class of a Fund shall be
determined in accordance with the Articles of Incorporation or Declaration of
Trust of such Fund with appropriate adjustments to reflect the allocations of
expenses, income and realized and unrealized capital gains and losses of such
Fund between or among its classes as provided above.
<PAGE>
7. CONVERSION FEATURES. The Class B shares will automatically convert to Class A
shares 8 years after the date of purchase. Such conversion will occur at the
relative NAV per share of each Class without the imposition of any sales charge,
fee or other charge. When Class B shares convert, any other Class B shares that
were acquired by the shareholder by the reinvestment of dividends and
distributions will also convert to Class A shares on a pro rata basis. The
conversion of Class B shares to Class A shares after 8 years is subject to the
continuing availability of a private letter ruling from the Internal Revenue
Service or an opinion of counsel to the effect that the conversion does not
constitute a taxable event for the Class B shareholder 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.
Subject to amendment by the Board, Class A shares and Class C shares
shall not be subject to any automatic conversion feature.
8. EXCHANGE PRIVILEGES. Except as set forth in a Fund's prospectus as from time
to time in effect, shares of any class of such Fund may be exchanged, at the
holder's option, for shares of the same class of another Fund, or other Lord
Abbett-sponsored fund or series thereof, without the imposition of any sales
charge, fee or other charge.
Each Plan is qualified by and subject to the terms of the then current
prospectus for the applicable Fund; provided, however, that none of the terms
set forth in any such prospectus shall be inconsistent with the terms contained
herein. The prospectus for each Fund contains additional information about that
Fund's classes and its multiple-class structure.
Each Plan is being adopted for a Fund with the approval of, and all
material amendments thereto must be approved by, a majority of the Board of such
Fund, including a majority of the Board who are not interested persons of the
Fund.
<PAGE>
The Lord Abbett - Sponsored Funds
ESTABLISHING MULTI-CLASS STRUCTURES
CLASSES
Lord Abbett Affiliated Fund, Inc. A, B, C, P, Y
Lord Abbett Bond-Debenture Fund, Inc. A, B, C, P*, Y
Lord Abbett Developing Growth Fund, Inc. A, B, C, P*
Lord Abbett Mid-Cap Value Fund, Inc. A, B, C, P*
Lord Abbett Global Fund, Inc.
Equity Series A, B, C, P*
Income Series A, B, C, P*
Lord Abbett Investment Trust
Balanced Series A, C
Limited Duration U.S. Government
Securities Series A, C
U.S. Government Securities Series A, B, C, P*
Lord Abbett Securities Trust
Growth & Income Trust A, B, C, P*
International Series A, B, C, P*, Y
Lord Abbett Tax-Free Income Fund, Inc.
California Series A, C
National Series A, B, C
New York Series A, C
Lord Abbett Tax-Free Income Trust
Florida Series A, C
Lord Abbett U.S. Government Securities
Money Market Fund, Inc. A, B, C
Lord Abbett Research Fund, Inc.
Large-Cap Series A, B, C, P*
Small-Cap Series A, B, C, P*, Y
Lord Abbett Series Fund
Growth & Income Portfolio Variable Contract Class
Growth & Income Portfolio Pension Class
* Pursuant to authority granted by the Board of Directors to the appropriate
officers of the funds, these classes and their related plans (12b-1 and 18f-3)
will commence operations upon Blue Sky and SEC clearance in the discretion of
such officers.
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<PERIOD-START> JUL-01-1996
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<SHARES-COMMON-STOCK> 243676
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<INTEREST-INCOME> 7300
<OTHER-INCOME> 0
<EXPENSES-NET> 1673
<NET-INVESTMENT-INCOME> 5627
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<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 5627
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<DISTRIBUTIONS-OF-INCOME> 5627
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 866542
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<SHARES-REINVESTED> 3906
<NET-CHANGE-IN-ASSETS> 243676
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 751
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<GROSS-EXPENSE> 1673
<AVERAGE-NET-ASSETS> 164160
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<PER-SHARE-NII> .024
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<NET-INVESTMENT-INCOME> 40045
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