33 Act File No. 2-10691
1940 Act File No. #811-3
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 57 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Amendment No. 17 [X]
LORD ABBETT U.S. GOVERNMENT SECURITIES FUND, INC.
------------------------------------------------
Exact Name of Registrant as Specified in Charter
767 FIFTH AVENUE, NEW YORK, N. Y. 10153-0203
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Address of Principal Executive Office
REGISTRANT'S TELEPHONE NUMBER (212) 848-1800
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Kenneth B. Cutler, Vice President & Secretary
767 FIFTH AVENUE, NEW YORK, N. Y. 10153
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(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
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X on April 1, 1995 pursuant to paragraph (b) of Rule 485
- ----
60 days after filing pursuant to paragraph (a) (1) of Rule 485
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on (date) pursuant to paragraph (a) (1) of Rule 485
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75 days after filing pursuant to paragraph (a) (2) of Rule 485
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on (date) pursuant to paragraph (a) (2) of Rule 485
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If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Rule 24f-2(a)(1) and a Rule 24f-2 Notice for
Registrant's most recent fiscal year was filed with the Commission on or about
January 23, 1995.
<PAGE>
LORD ABBETT U.S. GOVERNMENT SECURITIES FUND, INC.
FORM N-1A
Cross Reference Sheet
Post-Effective Amendment No. 57
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
16 (i) N/A
17 (a) Portfolio Transactions
17 (b) N/A
17 (c) Portfolio Transactions
<PAGE>
Form N-1A Location In Prospectus or
ITEM NO. STATEMENT OF ADDITIONAL INFORMATION
- ---------- -----------------------------------
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
<PAGE>
LORD ABBETT U.S. GOVERNMENT
SECURITIES FUND, INC.
THE GENERAL MOTORS BUILDING
767 FIFTH AVENUE
NEW YORK, NY 10153-0203
800-426-1130
LORD ABBETT U.S. GOVERNMENT SECURITIES FUND, INC. (WE OR THE FUND), IS A
DIVERSIFIED, OPEN-END MANAGEMENT INVESTMENT COMPANY ORGANIZED IN 1932 AND
INCORPORATED UNDER MARYLAND LAW ON JULY 9, 1975. WE HAVE A SINGLE CLASS OF
SHARES WITH EQUAL RIGHTS AS TO VOTING, DIVIDENDS, ASSETS AND LIQUIDATION. OUR
INVESTMENT OBJECTIVE IS HIGH CURRENT INCOME WITH RELATIVELY LOW RISK OF PRICE
DECLINE. WE SEEK OUR OBJECTIVE BY INVESTING PRIMARILY IN INTERMEDIATE- AND
LONG-TERM U.S. GOVERNMENT SECURITIES. WE WILL NOT CHANGE THIS OBJECTIVE WITHOUT
FIRST OBTAINING SHAREHOLDER APPROVAL. THERE CAN BE NO ASSURANCE THAT WE WILL
ACHIEVE OUR OBJECTIVE. THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION
ABOUT THE FUND THAT A PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING.
ADDITIONAL INFORMATION ABOUT THE FUND HAS BEEN FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. THE STATEMENT OF ADDITIONAL INFORMATION IS INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS AND MAY BE OBTAINED, 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. THE DATE OF THIS PROSPECTUS AND THE DATE OF
THE STATEMENT OF ADDITIONAL INFORMATION IS APRIL 1, 1995.
PROSPECTUS
INVESTORS SHOULD READ AND RETAIN THIS PROSPECTUS. SHAREHOLDER INQUIRIES SHOULD
BE MADE IN WRITING TO THE FUND OR BY CALLING 800-821-5129. YOU CAN ALSO 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.
CONTENTS PAGE
1 Investment Objective 2
2 Fee Table 2
3 Financial Highlights 3
4 How We Invest 3
5 Purchases 5
6 Shareholder Services 7
7 Our Management 8
8 Dividends, Capital Gains
Distributions and Taxes 8
9 Redemptions 9
10 Performance 9
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.
<PAGE>
1 INVESTMENT OBJECTIVE
--------------------
Our investment objective is high current income with relatively low risk of
price decline. Our shares can fluctuate in value more than short-duration U.S.
Government securities and consistent with intermediate-duration U.S. Government
securities like those we hold. For example, assuming a portfolio duration of
eight years, an increase in interest rates of 1%, a parallel shift in the yield
curve and no change in the spread relationships among mortgage-related
securities, the value of the portfolio would decline 8%. Using the same
assumptions, if interest rates decrease 1%, the value of the portfolio would
increase 8%. This volatility, while not eliminated, is managed by the investment
policy of Lord, Abbett & Co. (Lord Abbett) to maintain the average duration of
securities held by the Fund at between three and eight years. Duration is the
weighted average time to receipt of all cash flows due by maturity from an
obligation.
2 FEE TABLE
---------
A summary of the Funds expenses is set forth in the table below. The example is
not a representation of past or future expenses. Actual expenses may be greater
or less than those shown.
<TABLE>
<CAPTION>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
(AS A PERCENTAGE OF OFFERING PRICE)
Maximum Sales Load(1) on Purchases (See Purchases) 4.75%
Redemption Fee (See Purchases) None(2)
Deferred Sales Load(1) None(2)
- --------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee (See Our Management) .49%
12b-1 Fees (See Purchases) .29%
Other Expenses (See Our Management) .12%
- --------------------------------------------------------------
Total Operating Expenses .90%
Example: Assume an annual return of 5% and there is no change in the level of
- --------
expenses described above. For every $1,000 invested, with reinvestment of all
distributions, you would pay the following total expenses if you closed your
account after the number of years indicated.
1 year 3 years 5 years 10 years
------ ------- ------- --------
$56(3) $75(3) $95(3) $153(3)
<FN>
<F1>
(1)Sales load is referred to as sales charge and deferred sales load is referred
to as contingent deferred reimbursement charge throughout this Prospectus.
<F2>
(2)Redemptions of shares on which the Funds 1% Rule 12b-1 sales distribution fee
for purchases of $1 million or more has been paid are subject to a 1%
contingent deferred reimbursement charge, if the redemption occurs within
24 months after the month of purchase, subject to certain exceptions
described herein.
<F3>
(3)Based on total operating expenses shown in the table above.
The foregoing is provided to give investors a better understanding of the
expenses that are incurred by an investment in the Fund.
</FN>
</TABLE>
<PAGE>
3 FINANCIAL HIGHLIGHTS
--------------------
The following table has been audited by Deloitte & Touche LLP, independent
accountants, in connection with their annual audit of the Funds Financial
Statements, whose report thereon is incorporated by reference in the Statement
of Additional Information and may be obtained on request, and has been included
herein in reliance upon their authority as experts in accounting and auditing.
<TABLE>
<CAPTION>
PER SHARE OPERATING Year Ended November 30,
----------------------------------------------------------------------------------------------
PERFORMANCE: 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $3.00 $2.94 $2.94 $2.83 $2.92 $2.91 $2.96 $3.34 $3.22 $3.05
INCOME FROM INVESTMENT OPERATIONS
Net investment income .247 .239 .267 .282 .299 .309 .336 .331 .350 .345
Net realized and unrealized
gain (loss) on securities (.3685) .070 (.003) .105 (.088) .010 (.062) (.323) .192 .246
TOTAL FROM INVESTMENT OPERATIONS (.1215) .309 .264 .387 .211 .319 .274 .008 .542 .591
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment
income (.246) (.249) (.264) (.277) (.301) (.309) (.324) (.348) (.347) (.421)
Distributions from net realized
gain (.0425) -- -- -- -- -- -- (.040) (.075) --
NET ASSET VALUE, END OF YEAR $2.59 $3.00 $2.94 $2.94 $2.83 $2.92 $2.91 $2.96 $3.34 $3.22
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN* (4.24)% 10.70% 9.24% 14.35% 7.82% 11.65% 9.64% .35% 18.00% 20.91%
- ----------------------------------------------------------------------------------------- ------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $3,232,012 $3,909,868 $3,275,052 $2,293,345 $1,555,648 $1,241,218 $999,131 $749,307 $364,878 $77,223
RATIOS TO AVERAGE NET ASSETS:
Expenses .90% .89% .87% .94% .89% .88% .88% .89% .82% 1.01%
Net investment income 8.92% 7.94% 9.18% 9.63% 10.55% 10.66% 11.26% 10.48% 10.32% 11.08%
PORTFOLIO TURNOVER RATE 790.57% 586.18% 485.70% 544.19% 578.18% 440.32% 332.36% 429.12% 369.79% 363.01%
<FN>
*Total return does not consider the effects of sales or contingent deferred reimbursement charges.
See Notes to Financial Statements.
</FN>
</TABLE>
4 HOW WE INVEST
-------------
We seek high current income with relatively low risk of price decline. To
achieve this goal, we invest in U.S. Government securities. U.S. Government
securities include: (1) obligations issued by the U.S. Treasury, differing only
in their interest rates, maturities and time of issuance, and including Treasury
bills maturing in one year or less, Treasury notes maturing in one to ten years
and Treasury bonds with maturities of over ten years 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 Government National Mortgage Association (GNMA) certificates),
(b) the right of the issuer to borrow from the U.S. Treasury or (c) the credit
of the instrumentality. Agencies and instrumentalities include the Federal Home
Loan Bank, Federal Home Loan Mortgage Corporation, Federal National Mortgage
Association, Federal Farm Credit Bank, Student Loan Marketing Association,
Tennessee Valley Authority, Financing Corporation and Resolution Funding
Corporation. Obligations issued by the U.S. Treasury and by U.S. Government
agencies and instrumentalities include those so issued in a form separated into
their component parts of principal and coupon payments, i.e., component
securities. A security backed by the U.S. Treasury or a U.S. Government agency,
although providing substantial protection against credit risk, is guaranteed
only as to the timely payment of interest and principal when held to maturity.
The market prices for such securities are not guaranteed and will fluctuate and,
accordingly, such securities will not protect investors against price changes
due to changing interest rates. Longer maturity U.S. Government securities may
exhibit greater price volatility in response to changes in interest rates than
shorter maturity securities. In addition, certain U.S. Government securities may
show even greater volatility if, for example, the interest payment component has
been removed, as with zero coupon bonds. The value of our shares will change as
the general levels of interest rates fluctuate. When interest rates decline,
share value can be expected
<PAGE>
to rise. Conversely, when interest rates rise, share value can be expected to
decline.
Investments in GNMA certificates, which are pools of home mortgages and
other mortgage-backed securities, are subject to prepayment of principal as
mortgages are prepaid. The Fund must reinvest these prepayments at prevailing
rates, which may be lower than the yield of the GNMA certificate or other
mortgage-backed securities. These prepayments will result in a further reduction
in principal if the GNMA certificate or other mortgage-backed security is
trading over par. Mortgage prepayments generally increase in a falling
interest-rate environment and, accordingly, often result in a reduction of
principal. In a rising interest rate environment, prepayments tend to decline
which increases the duration and volatility of such GNMA certificates.
The Fund may invest in liquid interest-only and principal-only
mortgage-backed securities backed by fixed-rate mortgages under guidelines
established by the Board of Directors to assure that they may be sold promptly
in the ordinary course of business at a value reasonably close to that used in
calculating our net asset value per share.
Although the longer maturity U.S. Government securities, zero coupon bonds,
GNMA certificates and other mortgage-backed securities mentioned above may be
volatile, this volatility, while not eliminated, is managed by the
above-mentioned policy of Lord Abbett to maintain the average duration of
securities held by the Fund at between three and eight years.
While growth of capital is not a Fund objective, capital appreciation may
result from efforts to secure high current income.
The Fund may purchase U.S. Government securities on a when-issued basis
and, while awaiting delivery and before paying for them (settlement), normally
may invest in short-term U.S. Government securities. The Fund does not start
earning interest on these when-issued securities until settlement and often they
are sold prior to settlement. While this investment strategy may contribute
significantly to a portfolio turnover rate in excess of 100%, it will have
little or no transaction cost or adverse tax consequences for the Fund.
Transaction costs normally do not involve brokerage because our fixed-income
portfolio transactions usually are on a principal basis and at the time of
purchase we normally anticipate that any markups charged will be more than
offset by the anticipated economic benefits of the transaction. During the
period between purchase and settlement, the value of the securities will
fluctuate and assets consisting of cash and/or marketable securities marked to
market daily in an amount sufficient to make payment at settlement will be
segregated at our custodian in order to pay for the commitment. There is a risk
that market yields available at settlement may be higher than yields obtained on
the purchase date which could result in depreciation of value.
The Fund is engaged in the lending of its portfolio securities. These loans
may not exceed 30% of the value of the Funds total assets. In such an
arrangement the Fund lends securities from its portfolio to registered
broker-dealers. Such loans are continuously collateralized by an amount at least
equal to 100% of the market value of the securities loaned. Cash collateral is
invested in obligations issued or guaranteed by the U.S. Government or its
agencies, or repurchase agreements with respect to the foregoing. As with other
extensions of credit, there are risks of delay in recovery and market loss
should the borrowers of the portfolio securities fail financially.
The Fund will not borrow money except as a temporary measure for
extraordinary or emergency purposes and then not in excess of 5% of its gross
assets (at cost or market value, whichever is lower) at the time of borrowing.
The Fund may enter into repurchase agreements with respect to a security. A
repurchase agreement is a transaction by which the Fund acquires a security and
simultaneously commits to resell that security to the seller (a bank or
securities dealer) at an agreed upon price on an agreed upon date. Such
repurchase agreement must, at all times, be collateralized by cash or U.S.
Government securities having a value equal to, or in excess of, the value of the
repurchase agreement.
FUTURE CONVERSION. In the future, upon shareholder approval, the Fund may seek
to achieve its investment objective by investing all of its assets in another
investment company (or series or class thereof) having the same investment
objective. Shareholders will be notified thirty days in advance of such
conversion. Shareholders of the Fund will be able to exchange shares for shares
of the other funds, series or classes in the Lord Abbett family having an
exchange privilege with the Fund.
<PAGE>
PORTFOLIO TURNOVER. The annual portfolio turnover rate for the year ended
November 30, 1994 was 790.57%. The high portfolio turnover rate relates to
substantial trading of U.S. and U.S. agency mortgage-backed securities to take
advantage of value changes among different agencies, coupons and maturities.
5 PURCHASES
---------
You may buy our shares through any independent securities dealer having a sales
agreement with Lord Abbett, our exclusive selling agent. Place your order with
your investment dealer or send it to Lord Abbett U.S. Government Securities
Fund, Inc. (P.O. Box 419100, Kansas City, Missouri 64141). The minimum initial
investment is $500 except for Invest-A-Matic and Div-Move ($250 initial and $50
monthly minimum) and Retirement Plans ($250 minimum). Subsequent investments may
be made in any amount. See Shareholder Services.
The net asset value of our shares is calculated every business day as of
the close of the New York Stock Exchange (NYSE) by dividing net assets by the
number of shares outstanding. Securities are valued at their market value as
more fully described in the Statement of Additional Information.
Orders for shares received by the Fund prior to the close of the NYSE or
received by dealers prior to such close and received by Lord Abbett prior to the
close of its business day, will be confirmed at the applicable public offering
price effective at such NYSE close. Orders received by dealers after the NYSE
closes and received by Lord Abbett in proper form prior to the close of its next
business day are executed at the applicable public offering price effective as
of the close of the NYSE on that next business day. The dealer is responsible
for the timely transmission of orders to Lord Abbett. A business day is a day on
which the NYSE is open for trading.
For information regarding the proper form of a purchase or redemption
order, call the Fund at 800-821-5129. This offering may be suspended, changed or
withdrawn. Lord Abbett reserves the right to reject any order.
The offering price is based on the per-share net asset value calculated
as of the times described above plus a sales charge as follows:
<TABLE>
<CAPTION>
Sales Charge as a Dealers
Percentage of: Concession
----------------- as a To Compute
Net Percentage Offering
Offering Amount of Offering Price, Divide
Size of Investment Price Invested Price* NAV by
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.00% .9525
$50,000 to $99,999 4.75% 4.99% 4.25% .9525
$100,000 to $249,999 3.75% 3.90% 3.25% .9625
$250,000 to $499,999 2.75% 2.83% 2.50% .9725
$500,000 to $999,999 2.00% 2.04% 1.75% .9800
$1,000,000 or more No Sales Charge 1.00% 1.0000
<FN>
<F1>
*Lord Abbett may, for specified periods, allow dealers to retain the full sales
charge for sales of shares during such periods, or pay an additional concession
to a dealer who, during a specified period, sells a minimum dollar amount of our
shares and/or shares of other Lord Abbett-sponsored funds. In some instances,
such additional concessions will be offered only to certain dealers expected to
sell significant amounts of shares. Lord Abbett may, from time to time,
implement promotions under which Lord Abbett will pay a fee to dealers with
respect to certain purchases not involving the imposition of a sales charge.
Additional payments may be paid from Lord Abbett's own resources and will be
made in the form of cash or, if permitted, non-cash payments. The non-cash
payments will include business seminars at resorts or other locations, including
meals and entertainment, or the receipt of merchandise. The cash payments will
include payment of various business expenses of the dealer.
</FN>
</TABLE>
In selecting dealers to execute portfolio transactions, if two or more
dealers are considered capable of providing best execution, we may prefer the
dealer who has sold our shares and/or shares of other Lord Abbett-sponsored
funds.
VOLUME DISCOUNTS. This section describes several ways to qualify for a lower
sales charge if you inform Lord Abbett or the Fund that you are eligible at the
time of purchase.
(1) Any purchaser (as described below) may aggregate a purchase in the Fund
with purchases of any other eligible Lord Abbett-sponsored fund, together with
the current value at maximum offering price of any shares in the Fund and in any
eligible Lord Abbett-sponsored funds held by the purchaser (Holdings in the
following funds are not eligible for the above rights of accumulation: Lord
Abbett Equity Fund (LAEF), Lord Abbett Series Fund (LASF), Lord Abbett Research
Fund if not offered to the general public (LARF) and Lord Abbett U.S. Government
Securities Money Market Fund (GSMMF), except for existing
<PAGE>
holdings in GSMMF which are attributable to shares exchanged from a Lord
Abbett-sponsored fund offered with a front-end sales charge or from a fund in
the Lord Abbett Counsel Group.) (2) A purchaser may sign a non-binding 13 month
statement of intention to invest $100,000 or more in the Fund or in any of the
above eligible funds. If the intended purchases are completed during the period,
each purchase will be at the sales charge, if any, applicable to the aggregate
of such purchasers intended purchases. If not completed, each purchase will be
at the sales charge for the aggregate of the actual purchases. Shares issued
upon reinvestment of dividends or distributions are not included in the
statement of intention. The term purchaser includes (i) an individual, (ii) an
individual and his or her spouse and children under the age of 21 and (iii) a
trustee or other fiduciary purchasing shares for a single trust estate or single
fiduciary account (including a pension, profit-sharing, or other employee
benefit trust qualified under Section 401 of the Internal Revenue Code more than
one qualified employee benefit trust of a single employer, including its
consolidated subsidiaries, may be considered a single trust, as may qualified
plans of multiple employers registered in the name of a single bank trustee as
one account), although more than one beneficiary is involved.
Our shares may be purchased at net asset value by our directors, employees
of Lord Abbett, employees of our shareholder servicing agent and employees of
any securities dealer having a sales agreement with Lord Abbett who consents to
such purchases or by the trustee or custodian under any pension or
profit-sharing plan or Payroll Deduction IRA established for the benefit of such
persons or for the benefit of any national securities trade organization to
which Lord Abbett belongs or any company with an account(s) in excess of $10
million managed by Lord Abbett on a private-advisory-account basis. For
purposes of this paragraph, the terms directors and employees include a
directors or employees spouse (including the surviving spouse of a deceased
director or employee). The terms directors and employees of Lord Abbett also
include other family members and retired directors and employees. Our shares
also may be purchased at net asset value (a) at $1 million or more, (b) with
dividends and distributions from other Lord Abbett-sponsored funds, except for
dividends and distributions on shares of LARF, LAEF, LASF and Lord Abbett
Counsel Group, (c) under the loan feature of the Lord Abbett-sponsored prototype
403(b) plan for share purchases representing the repayment of principal and
interest, (d) by certain authorized brokers, dealers, registered investment
advisers or other financial institutions who have entered into an agreement with
Lord Abbett in accordance with certain standards approved by Lord Abbett,
providing specifically for the use of our shares in particular investment
products made available for a fee to clients of such brokers, dealers,
registered investment advisers and other financial institutions, (e) by
employees, partners and owners of unaffiliated consultants and advisers to Lord
Abbett or Lord Abbett-sponsored funds who consent to such purchase if such
persons provide services to Lord Abbett or such funds on a continuing basis and
are familiar with such funds and (f) subject to appropriate documentation,
through a securities dealer where the amount invested represents redemption
proceeds from shares (Redeemed Shares) of a registered open-end management
investment company not distributed or managed by Lord Abbett (other than a money
market fund), if such redemptions have occurred no more than 60 days prior to
the purchase of our shares, the Redeemed Shares were held for at least six
months prior to redemption and the proceeds of redemption were maintained in
cash or a money market fund prior to purchase. Purchasers should consider the
impact, if any, of contingent deferred sales charges in determining whether to
redeem shares for subsequent investment in our shares. Lord Abbett may suspend
or terminate the purchase option referred to in (f) above at any time.
Our assets may be issued at net asset value in exchange for the assets,
subject to possible tax adjustment, of a personal holding company or an
investment company.
RULE 12B-1 PLAN. We have adopted a Rule 12b-1 Plan (the Plan) which authorizes
Lord Abbett to pay distribution fees to dealers in order to provide additional
incentives for them (a) to provide continuing information and investment
services to their shareholder accounts and otherwise to encourage their accounts
to remain invested in the Fund and (b) to sell shares of the Fund. Under the
Plan (except as to certain accounts, such as those for which tracking data is
not available) the Fund pays Lord Abbett, who passes on to dealers, (1) an
annual service fee (payable quarterly)
<PAGE>
of .25% of the average daily net asset value of the Funds shares attributable to
sales by dealers on or after September 1, 1985 and .15% of the average daily net
asset value of shares sold by dealers prior to that date and (2) a one-time 1%
sales distribution fee, at the time of sale, on all shares at the $1 million
level sold by dealers including sales qualifying at such level under the rights
of accumulation and statement of intention privileges. Lord Abbett is required
to pay the sales distribution fee to dealers as compensation for selling our
shares.
Holders of shares on which the 1% sales distribution fee has been paid will
be required to pay to the Fund a contingent deferred reimbursement charge of 1%
of the original cost or the then net asset value, whichever is less, of all
shares so purchased which are redeemed out of the Lord Abbett-sponsored family
of funds on or before the end of the twenty-fourth month after the month in
which the purchase occurred. (An exception is made for redemptions by
tax-qualified plans under Section 401 of the Internal Revenue Code for benefit
payments due to plan loans, hardship withdrawals, death, retirement or
separation from service with respect to plan participants.) If the shares have
been exchanged into another Lord Abbett fund and are thereafter redeemed out of
the Lord Abbett family on or before the end of such twenty-fourth month, the
charge will be collected for the Fund by the other fund. The Fund will collect
such a charge for other Lord Abbett-sponsored funds in a similar situation.
Shares of a fund or series on which the 1% sales distribution fee has been paid
may not be exchanged into a fund or series with a Rule 12b-1 Plan for which the
payment provisions have not been in effect for at least one year.
6 SHAREHOLDER SERVICES
---------------------
We offer the following shareholder services:
TELEPHONE EXCHANGE PRIVILEGE: Shares may be exchanged, without a service
charge, for those of any other Lord Abbett-sponsored fund except for (i) LAEF,
LASF and Lord Abbett Counsel Group and (ii) 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 (together, Eligible Funds).
You or YOUR REPRESENTATIVE WITH PROPER IDENTIFICATION can instruct the Fund
to exchange uncertificated shares (held by the transfer agent) by telephone.
Shareholders have this privilege unless they refuse it in writing. The Fund will
not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine and will employ reasonable procedures to
confirm that instructions received are genuine, including requesting proper
identification, and recording all telephone exchanges. Instructions must be
received by the Fund in Kansas City (800-521-5315) prior to the close of the
NYSE to obtain each funds net asset value per share on that day. 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
terminate or limit the privilege of any shareholder who makes frequent
exchanges. The Fund can revoke the privilege for all shareholders upon 60 days
prior written notice. A prospectus for the other Lord Abbett-sponsored fund
selected by you should be obtained and read before an exchange. 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.
SYSTEMATIC WITHDRAWAL PLAN: Except for retirement plans for which there is
no such minimum, if the maximum offering price value of your uncertificated
shares is at least $10,000, you may have periodic cash withdrawals automatically
paid to you in either fixed or variable amounts.
DIV-MOVE: You can invest the dividends paid on your account ($50 minimum
monthly investment) 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: You can make fixed, periodic investments ($50 minimum
monthly investment) into the Fund and/or 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.
RETIREMENT PLANS: Lord Abbett makes available the retirement plan forms and
custodial agreements for IRAs (Individual Retirement Accounts including
<PAGE>
Simplified Employee Pensions), 403(b) plans and pension and profit-sharing
plans, including 401(k) plans.
All correspondence should be directed to Lord Abbett U.S. Government
Securities Fund, Inc. (P.O. Box 419100, Kansas City, Missouri 64141;
800-821-5129).
7 OUR MANAGEMENT
--------------
Our business is managed by our officers on a day-to-day basis under the overall
direction of our Board of Directors. We employ Lord Abbett as investment manager
pursuant to a Management Agreement. Lord Abbett has been an investment manager
for over 60 years and currently manages approximately $16 billion in a family of
mutual funds and other advisory accounts. Under the Management Agreement, Lord
Abbett provides us with investment management services and personnel, pays the
remuneration of our officers and our directors affiliated with Lord Abbett,
provides us with office space and pays for ordinary and necessary office and
clerical expenses relating to research, statistical work and supervision of our
portfolio and certain other costs. Lord Abbett provides similar services to
fifteen other funds having various investment objectives and also advises other
investment clients. Robert S. Dow, partner in charge of the fixed-income group,
serves as portfolio manager of the Fund and has acted in this capacity since
June 1982. Mr. Dow has over 23 years of investment experience and has been with
Lord Abbett since 1982. Mr. Dow is assisted by, and may delegate management
duties to, other Lord Abbett employees who may be Fund officers.
Under the Management Agreement, we are obligated to pay Lord Abbett a
monthly fee based on average daily net assets for each month. For the fiscal
year ended November 30, 1994, the effective fee paid to Lord Abbett as a
percentage of average daily net assets was at the annual rate of .49 of 1%. In
addition, we pay all expenses not expressly assumed by Lord Abbett. Our ratio of
expenses, including management fee expenses, to average net assets for the year
ended November 30, 1994 was .90%.
We will not hold annual meetings of shareholders unless required to by the
Investment Company Act of 1940, the Board of Directors or the shareholders with
one-quarter of the outstanding stock entitled to vote. See the Statement of
Additional Information for more details.
8 DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
------------------------------------------------
You begin earning dividends on the business day that payment for shares
purchased is received. Dividends from net investment income are declared daily
and paid on the 15th of each month, or if the 15th is not a business day, on the
first business day after the 15th. Dividends may be taken in cash or reinvested
in additional shares at net asset value without a sales charge.
Checks representing dividends paid in cash will be mailed to shareholders
as soon as practicable after the payment date.
A long-term capital gains distribution is made when we have net profits
during the year from sales of securities which we have held more than one year.
If we realize net short-term capital gains, they also will be distributed. Any
capital gains distribution will be made in January. You may take the
distribution in cash or reinvest it in additional shares at net asset value
without a sales charge.
Supplemental dividends and distributions also may be paid in December or
January. Dividends and distributions declared in October, November or December
of any year to shareholders of record as of a date in such a month 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.
We intend to continue to meet the requirements of Subchapter M of the
Internal Revenue Code. We will try to distribute to shareholders all our net
investment income and net realized capital gains, so as to avoid the necessity
of the Fund paying federal income tax. Shareholders, however, must report
dividends and capital gains distributions as taxable income. Distributions
derived from net long-term capital gains which are designated by the Fund as
capital gains dividends will be taxable to shareholders as long-term capital
gains, whether received in cash or shares, regardless of how long a taxpayer has
held the shares. Under current law, net long-term capital gains are taxed at the
rates applicable to ordinary income, except that the maximum rate for long-term
capital gains for individuals is 28%. See Performance for a discussion of the
purchase of high-coupon securities at a premium and the distribution to
shareholders as ordinary income of all interest income on those securities. This
practice increases current income of the Fund, but may result in higher taxable
income to Fund shareholders than other portfolio management practices.
<PAGE>
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 (shareholder) failed to provide a correct taxpayer
identification number or to make certain required certifications.
We will inform shareholders of the federal tax status of each dividend and
distribution after the end of each calendar year. Shareholders should consult
their tax advisers concerning applicable state and local taxes as well as the
tax consequences of gains or losses from the redemption or exchange of our
shares.
9 REDEMPTIONS
-----------
To obtain the proceeds of an expedited redemption of $50,000 or less, you or
YOUR REPRESENTATIVE WITH PROPER IDENTIFICATION can telephone the Fund. The Fund
will not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine and will employ reasonable procedures to
confirm that instructions received are genuine, including requesting proper
identification, recording all telephone redemptions and mailing the proceeds
only to the named shareholder at the address appearing on the account
registration.
If you do not qualify for the expedited procedures described above, to
redeem shares directly, send your request to Lord Abbett U.S. Government
Securities Fund, Inc. (P.O. Box 419100, Kansas City, Missouri 64141) with
signature(s) and any legal capacity of the signer(s) guaranteed by an eligible
guarantor, accompanied by any certificates for shares to be redeemed and other
required documentation. We will make payment of the net asset value of the
shares on the date the redemption order was received in proper form. Payment
will be made within seven days (such period to be reduced to three business days
on and after June 7, 1995). The Fund may suspend the right to redeem shares for
not more than seven days or longer under unusual circumstances as permitted by
Federal law. If you have purchased Fund shares by check and subsequently submit
a redemption request, redemption proceeds will be paid upon clearance of your
purchase check, which may take up to 15 days. To avoid delays you may arrange
for the bank upon which a check was drawn to communicate to the Fund that the
check has cleared. Shares also may be redeemed by the Fund at net asset value
through your securities dealer who, as an unaffiliated dealer, may charge you a
fee. If your dealer receives your order prior to the close of the NYSE and
communicates it to Lord Abbett, as our agent, prior to the close of Lord Abbetts
business day, you will receive the net asset value of the shares being redeemed
as of the close of the NYSE on that day. If the dealer does not communicate such
an order to Lord Abbett until the next business day, you will receive the net
asset value as of the close of the NYSE on that next business day.
Shareholders who have redeemed their shares have a one-time right to
reinvest into another account having the identical registration, in any of the
Eligible Funds, at the then applicable net asset value of the shares being
purchased without the payment of a sales charge. Such reinvestment must be made
within 60 days of the redemption and is limited to no more than the dollar
amount of the redemption proceeds.
Under certain circumstances and subject to prior written notice, our Board
of Directors may authorize redemption of all of the shares in any account in
which there are fewer than 50 shares.
TAX-QUALIFIED PLANS: For redemptions of $50,000 or less, follow normal
redemption procedures. Redemptions over $50,000 must be in writing from the
employer, broker or plan administrator stating the reason for the redemption.
The reason for the redemption must be received by the Fund prior to, or
concurrent with, the redemption request.
10 PERFORMANCE
-----------
Lord Abbett U.S. Government Securities Fund ended fiscal 1994 on November 30,
with net assets of $3.2 billion, versus $3.9 billion one year earlier. The Funds
total return (the percentage change in net asset value, assuming the
reinvestment of all distributions) was -4.2% for the fiscal year. This return
and the Funds longer term performance surpassed the average return of General
U.S. Government Bond mutual funds for the one-, five- and ten-year periods
ending November 30, 1994, according to Lipper Analytical Services.
<PAGE>
In an attempt to temper economic strength (and the accompanying
inflationary pressures), the Federal Reserve raised short-term interest rates
six times in 1994 with the objective of slowing the economy. Although inflation
(as measured by the Consumer Price Index) did not show any meaningful increase,
the Federal Reserve acted to control potential inflation in the hopes of
avoiding the need for an even more restrictive policy later on.
Your Funds performance was affected by this interest-rate environment;
however, its core holdings of mortgage-related securities helped to alleviate
some of the negative impact of the markets volatility.
At the close of the fiscal year, a core of long-term mortgage-related U.S.
Government agency and instrumentality issues comprised 76% of the portfolio. The
balance of the Funds portfolio was invested in U.S. Treasury and agency notes
and bonds. The average maturity of the portfolio was 8 years and 8 months.
YIELD AND TOTAL RETURN. Yield and total return data may, from time to time, be
included in advertisements about the Fund. Yield is calculated by dividing the
Funds annualized net investment income per share during a recent 30-day period
by the maximum public offering price per share on the last day of that period.
The Funds yield reflects the deduction of the maximum initial sales charge and
reinvestment of all income dividends and capital gains distributions. Total
return for the one-, five- and ten-year periods represents the average annual
compounded rate of return on an investment of $1,000 in the Fund at the maximum
public offering price. Total return also may be presented for other periods or
based on investment at reduced sales charge levels or net asset value. Any
quotation of total return not reflecting the maximum initial sales charge would
be reduced if such sales charge were used. Quotations of yield or total return
for any period when an expense limitation is in effect will be greater than if
the limitation had not been in effect.
The Funds dividend distribution rate differs from its SEC yield primarily
because the Fund may purchase short- and intermediate-term high-coupon
securities at a premium and, consistent with applicable tax regulations,
distribute to shareholders all of the interest income on these securities
without amortizing the premiums. This practice also is used by the Fund for
financial statement purposes and is in accordance with generally accepted
accounting principles. In other words, the Fund may pay more than face value for
a security that pays a greater-than-market rate of interest and then distribute
all such interest as dividends. The principal payable on the security at
maturity will equal the security's face value, and so the market value of the
security will gradually decrease to face value, assuming no changes in the
market rate of interest or in the credit quality of the issuer. Shareholders
should recognize that such dividends will therefore tend to decrease the net
asset value of the Fund. Dividends paid from this interest income are taxable to
shareholders at ordinary income tax rates.
The Fund may make distributions in excess of net investment income from
time to time to provide more stable dividends. Such distributions could cause
slight decreases in net asset values over time, but historically have not
resulted in a return of capital for tax purposes.
See Past Performance in the Statement of Additional Information for a more
detailed discussion concerning the computation of the Funds total return and
yield.
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.
<PAGE>
Comparison of change in value of a $10,000 investment in Lord Abbett U.S.
Government Securities Fund, assuming reinvestment of all dividends and
distributions, Lipper's Average of General U.S. Government bond funds and the
Lehman Government Bond Index.
<TABLE>
<CAPTION>
The Fund Lipper' Average Lehman
Fiscal The Fund at Maximum of General U.S. Government
Year end at NAV Offering Price(1) Gov't Bond Funds(2) Bond Index(3)
<C> <C> <C> <C> <C>
11-30-85 $12,091 $11,525 $11,772 $11,860
11-30-86 14,268 13,599 13,537 14,065
11-30-87 14,318 13,647 13,518 14,230
11-30-88 15,699 14,963 14,607 15,354
11-30-89 17,528 16,706 16,363 17,575
11-30-90 18,897 18,012 17,497 18,848
11-30-91 21,610 20,598 19,716 21,344
11-30-92 23,607 22,502 21,322 23,274
11-30-93 26,132 24,907 23,585 26,087
11-30-94 25,023 23,850 22,422 25,151
Past performance is no guarantee of future results.
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (1)(4)
-----------------------------------------------------
1 Year 5 Year 10 Year 10/15/85-11/30/94
- ------ ------ ------- -----------------
- -8.80% +6.33% +9.08% 8.05%
<FN>
<F1>
(1) Total return is the percent change in value, after deduction of the maximum
sales charge of 4.75%, with all dividends and distributions reinvested for
the periods shown ending November 30, 1994 using the SEC-required uniform
method to compute such return.
<F2>
(2) Source: Lipper Analytical Services.
<F3>
(3) Performance numbers for the Lehman Government Bond Index, which is
unmanaged, do not reflect transaction costs or management fees. An investor
cannot invest directly in the Index.
<F4>
(4) Since 10/15/85, the Fund has invested in U.S. Government securities
exclusively. Data reflects total return from that date at the maximum sales
charge. Prior to 10/15/85, the Fund invested in both corporate and U.S.
Government securities.
</FN>
</TABLE>
<PAGE>
UNDERWRITER AND INVESTMENT MANAGER
Lord, Abbett & Co.
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
212-848-1800
CUSTODIAN
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10005
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 419100
Kansas City, Missouri 64141
800-821-5129
AUDITORS
Deloitte & Touche llp
COUNSEL
Debevoise & Plimpton
Printed in the U.S.A.
LAUSGS-1-495
<PAGE>
Lord
Abbett
PROSPECTUS
APRIL 1 95
Application
Inside
LORD ABBETT U.S.
GOVERNMENT SECURITIES
FUND
A MUTUAL FUND SEEKING
HIGH CURRENT INCOME WITH
RELATIVELY LOW RISK OF PRICE DECLINE.
LORD ABBETT
U.S. GOVERNMENT SECURITIES FUND, INC.
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
<PAGE>
LORD ABBETT
STATEMENT OF ADDITIONAL INFORMATION APRIL 1, 1995
LORD ABBETT
U.S. GOVERNMENT
SECURITIES
FUND, INC.
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from your securities dealer or from Lord, Abbett & Co. 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 April 1, 1995.
Lord Abbett U.S. Government Securities Fund, Inc. (sometimes referred to as "we"
or the "Fund") was organized in 1932 and was incorporated under Maryland law on
July 9, 1975. Our authorized capital stock consists of a single class of
1,700,000,000 shares, $1.00 par value. All shares have equal noncumulative
voting rights and equal rights with respect to dividends, assets and
liquidation.
Shareholder inquiries should be made by writing directly to the Fund or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
TABLE OF CONTENTS PAGE
1. Investment Objective and Policies 2
2. Directors and Officers 3
3. Investment Advisory and Other Services 6
4. Portfolio Transactions 6
5. Purchases, Redemptions
and Shareholder Services 7
6. Past Performance 11
7. Taxes 12
8. Information About The Fund 12
9. Financial Statements 13
<PAGE>
1.
Investment Objective and Policies
The Fund's investment objective and policies are described in the Prospectus on
the cover page and under "How We Invest". In addition to those policies
described in the Prospectus, we are subject to the following investment
restrictions which cannot be changed without shareholder approval. We may not:
(1) sell short or buy on margin; (2) borrow securities; (3) borrow money except
as a temporary measure for extraordinary or emergency purposes and then not in
excess of 5% of our gross assets (at cost or market value, whichever is lower)
at the time of borrowing; (4) engage in the underwriting of securities; (5) lend
money or securities to any person, except through entering into short-term
repurchase agreements with sellers of securities we have purchased and by
lending our portfolio securities to registered broker-dealers where the loan is
100% secured by cash or its equivalent as long as we comply with regulatory
requirements and management deems such loans not to expose us to significant
risk or adversely affect our qualification for pass-through tax treatment under
the Internal Revenue Code; (6) pledge, mortgage, or hypothecate our assets; (7)
deal in real estate, commodities, or commodity contracts; (8) invest in
securities issued by other investment companies as defined in the Investment
Company Act of 1940; (9) buy securities of any issuer unless it or its
predecessor has a record of three years' continuous operation, except that we
may buy securities of such issuers through subscription offers or other rights
we receive as a security holder of companies offering such subscriptions or
rights, and such purchases will then be limited in the aggregate to 5% of our
net assets at the time of investment; (10) buy securities if the purchase would
then cause us to have more than 5% of our gross assets, at market value at the
time of investment, invested in the securities of any one issuer, except
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, or to own more than 10% of the voting securities of any
issuer; (11) hold securities of any issuer when more than 1/2 of 1% of its
securities are owned beneficially by one or more of our officers or directors or
by one or more partners of our underwriter or investment manager if these owners
in the aggregate own beneficially more than 5% of such securities; (12) engage
in security transactions with our underwriter or investment manager, our
officers or directors, or firms (acting as principals) with which any of the
foregoing are associated; however, this provision does not apply to our shares,
or to securities we may become entitled to by reason of our ownership of
securities already held, or to transactions on a securities exchange when only
the regular exchange commissions and charges are imposed (we have not had, nor
do we intend to have, any such transactions on an exchange) or to transactions
in accordance with Investment Company Act of 1940 Rule 17a-7 or (13) concentrate
our investments in any one industry.
Of course, as a matter of fundamental policy, we may not invest in securities
other than U.S. Government securities, even though several of the above
restrictions (which were adopted prior to our adopting a policy of investing
only in U.S. Government securities) may imply otherwise.
If we enter into repurchase agreements as provided in clause (5) above, we will
do so only with those primary reporting dealers that report to the Federal
Reserve Bank of New York and with the 100 largest United States commercial banks
and the underlying securities purchased under the repurchase agreements will
consist only of U.S. Government securities in which we may otherwise invest.
As stated in the Prospectus, we may purchase Government securities on a
when-issued basis. Under no circumstance will delivery and payment
("settlement") for such securities take place more than 120 days after the
purchase date.
For the year ended November 30, 1994, the portfolio turnover rate was 790.57%
versus 586.18% for the prior year. The higher portfolio turnover rate relates to
substantial trading of U.S. and U.S. Agency mortgage-backed securities to take
advantage of value changes among different agencies, coupons and maturities.
LENDING PORTFOLIO SECURITIES
The Fund is engaged in the lending of its portfolio securities to registered
broker-dealers. These loans may not exceed 30% of the Fund's total assets. The
Fund's lending of securities will be collateralized by cash or marketable
securities issued or guaranteed by the U.S. Government or its agencies ("U.S.
Government Securities") or other permissible means. The cash or instruments
collateralizing the Fund's lending of securities will be maintained at all times
in an amount at least equal to the current market value of the loaned
securities. From time to time, the Fund may allow a part of the interest
received with respect to the investment of collateral to be paid to the borrower
and/or a third party that is not affiliated with the Fund and is acting as a
"placing broker". No fee will be paid to affiliated persons of the Fund.
By lending portfolio securities, the Fund can increase its income by continuing
to receive interest on the loaned securities as well as by either investing the
cash collateral in permissible investments, such as U.S. Government Securities
or obtaining yield in the form of interest paid by a borrower when such U.S.
Government Securities are used as collateral. The Fund will comply with the
following conditions whenever it's lending securities: (i) the Fund must receive
at least 100% collateral from the borrower; (ii) the borrower must increase the
collateral whenever the market value of the securities loaned rises above the
level of the collateral; (iii) the Fund must be able to terminate the loan at
any time; (iv) the Fund must receive reasonable compensation with respect to the
loan, as well as any dividends, interest or other distributions on the loaned
securities; (v) the Fund may pay only reasonable fees in connection with the
loan and (vi) voting rights on the loaned securities may pass to the borrower,
except that if a material event adversely affecting the investment in the loaned
securities occurs, the Fund's Board of Directors must terminate the loan and
regain the right to vote the securities.
WHEN-ISSUED TRANSACTIONS
As stated in the Prospectus, the Fund may purchase portfolio securities on a
when-issued basis. When-issued transactions involve a commitment by the Fund to
purchase securities, with payment and delivery ("settlement") to take place in
the future, in order to secure what is considered to be an advantageous price or
yield at the time of entering into the transaction. When the Fund enters into a
when-issued purchase, it becomes obligated to purchase securities and it assumes
all the rights and risks attendant to ownership of a security, although
settlement occurs at a later date. The value of securities to be delivered in
the future will fluctuate as interest rates vary. At the time the Fund makes the
commitment to purchase a security on a when-issued basis, it will record the
transaction and reflect the liability for the purchase and the value of the
security in determining its net asset value. The Fund, generally, has the
ability to close out a purchase obligation on or before the settlement date,
rather than take delivery of the security. Under no circumstance will settlement
for such securities take place more than 120 days after the purchase date.
2.
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 and/or
directors or trustees of the fifteen other Lord Abbett-sponsored funds. They are
"interested persons" as defined in the Investment Company Act of 1940, as
amended, and as such, may be considered to have an indirect financial interest
in the Rule 12b-1 Plan described in the Prospectus.
Ronald P. Lynch, age 59, President and Chairman
Robert S. Dow, age 50, Executive Vice President
The following outside directors are also directors or trustees of the fifteen
other Lord Abbett-sponsored funds referred to above except for Lord Abbett
Research Fund, Inc., of which only Messrs. Millican and Neff are directors.
E. Thayer Bigelow
Time Warner Cable
300 First Stamford Place
Stamford, Connecticut
President and Chief Executive Officer of Time Warner Cable Programming, Inc.
Formerly President and Chief Operating Officer of Home Box Office, Inc. Age 53.
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 64.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 69.
C. Alan MacDonald
The Marketing Partnership, Inc.
27 Signal Road
Stamford, Connecticut
General Partner, The Marketing Partnership, Inc., a full service marketing
consulting firm that specializes in strategic planning and customer specific
marketing. Formerly Acquisition Consultant, The Noel Group, a private consulting
firm (1994). Formerly Chairman and Chief Executive Officer of Lincoln Snacks,
Inc., manufacturer of branded snack foods (1992-1994). Formerly President and
Chief Executive Officer of Nestle Foods Corporation, a subsidiary of Nestle S.A.
(Switzerland). Age 61.
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 65.
Thomas J. Neff
277 Park Avenue
New York, New York
President of Spencer Stuart & Associates, an executive search consulting firm.
Age 57.
The second column of the following table sets forth the compensation accrued for
the Fund's outside directors. The third and fourth columns set forth information
with respect to the retirement plan for outside directors maintained by the Lord
Abbett-sponsored funds. The fifth column sets forth the total compensation
payable by such funds to the outside directors. The first four columns give
information for the Fund's fiscal year ended November 30, 1994; the fifth column
gives information for the year ended December 31, 1994. 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 NOVEMBER 30, 1994
- ----------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
Pension or Estimated Annual For Year Ended
Retirement Benefits Benefits Upon December 31, 1994
Accrued as Expenses Retirement Proposed Total Compensation
by the Fund and to be Paid by the Accrued by the Fund and
Aggregate Fifteen Other Lord Fund and Fifteen Fifteen Other Lord
Compensation Abbett-sponsored Other Lord Abbett- Abbett-sponsored
Name of Director from the Fund1 Funds2 sponsored Funds2 Funds3
- ---------------- -------------- ------------------ ----------------- ------------------
<S> <C> <C> <C> <C>
E. Thayer Bigelow4 $1,201 none $33,600 $8,400
Thomas F. Creamer5 $10,268 $27,578 $33,600 $29,650
Stewart S. Dixon $13,075 $22,595 $33,600 $43,600
John C. Jansing $12,747 $28,636 $33,600 $42,500
C. Alan MacDonald $12,443 $27,508 $33,600 $41,500
Hansel B. Millican, Jr. $12,443 $24,842 $33,600 $41,750
Thomas J. Neff $12,432 $16,214 $33,600 $41,200
<FN>
<F1>
1. Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on net
assets of each fund. Fees payable by the Fund to its outside directors are
being deferred under a plan that deems the deferred amounts to be invested in
shares of the Fund for later distribution to the directors. The amounts
accrued by the Fund for the year ended November 30, 1994, are as set forth
after each outside Director's name above. The total amount accrued for each
outside Director since the beginning of his tenure with the Fund, together
with dividends reinvested and changes in net asset value applicable to such
deemed investments, were as follows as of November 30, 1994: Mr. Bigelow,
$1,201; Mr. Creamer, $74,137; Mr. Dixon, $81,774; Mr. Jansing, $81,311; Mr.
MacDonald, $64,141; Mr. Millican, $82,065; and Mr. Neff, $82,050.
<F2>
2. Each Lord Abbett-sponsored fund has a retirement plan providing that outside
directors will receive annual retirement benefits for life equal to 80% of
their final annual retainers following retirement at or after age 72 with at
least 10 years of service. Each plan also provides for a reduced benefit upon
early retirement under certain circumstances, a pre-retirement death benefit
and actuarially reduced joint-and-survivor spousal benefits. The amounts
stated, except in the case of Mr. Creamer, would be payable annually under
such retirement plans if the director were to retire at age 72 and the annual
retainers payable by such funds were the same as they are today. The amounts
accrued in column 3 were accrued by the Lord Abbett-sponsored funds during
the fiscal year ended November 30, 1994 with respect to the retirement
benefits in column 4.
<F3>
3. This column shows aggregate compensation, including director's 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, 1994.
<F4>
4. Mr. Bigelow was elected a director of the Fund on October 19, 1994.
<F5>
5. Mr. Creamer retired as a director of the Fund effective September 21, 1994.
The stated amount of his retirement income (column 4) is the annual amount
payable to him by the Lord Abbett-sponsored funds before reduction for a
joint-and-survivor spousal benefit.
</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, Carper, Cutler, Nordberg and Walsh are partners of Lord Abbett; the
others are employees: Kenneth B. Cutler, age 62, Vice President and Secretary;
Stephen I. Allen, age 41, Daniel E. Carper age, 43, E. Wayne Nordberg, age 58,
John J. Walsh, age 58, Jeffery H. Boyd, age 38 (with Lord Abbett since 1994 -
formerly partner in the law firm of Robinson & Cole), John J. Gargana, Jr., age
63, Thomas F. Konop, age 52, Victor W. Pizzolato, age 62, Vice Presidents; and
Keith F. O'Connor, age 39, 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 Investment Company Act of 1940, 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 March 1, 1995, our officers and directors, as a group, owned less than 1%
of our outstanding shares.
3.
Investment Advisory and Other Services
As described under "Our Management" in the Prospectus, Lord Abbett is the
Fund's investment manager. The eight general partners of Lord Abbett, all of
whom are officers and/or directors of the Fund, are: Stephen I. Allen, Daniel E.
Carper, Kenneth B. Cutler, Robert S. Dow, Thomas S. Henderson, Ronald P. Lynch,
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 in the Prospectus under "Our
Management". 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 .50 of
1% of the portion of our net assets not in excess of $3,000,000,000 plus .45% of
1% of such assets over $3,000,000,000. For the fiscal years ended November 30,
1994, 1993, and 1992, the management fees paid to Lord Abbett amounted to
$17,590,00, $18,250,000 and $14,040,000 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, expenses relating to
shareholder meetings, expenses of preparing, printing and mailing stock
certificates and shareholder reports, expenses of registering our shares under
federal and state securities laws, expenses of preparing, printing and mailing
prospectuses to existing shareholders, insurance premiums, brokerage and other
expenses connected with executing portfolio transactions.
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.
Morgan Guaranty Trust Company of New York ("Morgan"), 60 Wall Street, New York,
New York, is the Fund's custodian.
4.
Portfolio Transactions
Purchases and sales of portfolio securities usually will be principal
transactions and normally such securities will be purchased directly from the
issuer or from an underwriter or market maker for the securities. Therefore, the
Fund usually will pay no brokerage commissions for such purchases. 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. Principal transactions,
including riskless principal transactions, are not afforded the protection of
the safe harbor in Section 28 (e) of the Securities Exchange Act of 1934.
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, except to the extent that we may pay a higher
commission as described below. This policy governs the selection of brokers or
dealers and the market in which the transaction is executed. To the extent
permitted by law, we may, if considered advantageous, make a purchase from or
sale to another Lord Abbett-sponsored fund without the intervention of any
broker-dealer.
We select broker-dealers on the basis of their professional capability and the
value and quality of their brokerage and research services. Normally, the
selection is made by our traders who are officers of the Fund and also are
employees of Lord Abbett. Our traders do the trading as well for other accounts
- -- investment companies (of which they are also officers) and other investment
clients -- managed by Lord Abbett. They are responsible for the negotiation of
prices and commissions.
A broker may receive a commission for portfolio transactions exceeding the
amount another broker would have charged for the same transaction if our traders
determine that such amount is reasonable in relation to the value of the
brokerage and research services performed by the executing broker viewed in
terms of either the particular transaction or the broker's overall
responsibilities with respect to us and other accounts managed by Lord Abbett.
Brokerage services may include such factors as showing us trading opportunities
including blocks, willingness and ability to take positions in securities,
knowledge of a particular security or market, proven ability to handle a
particular type of trade, confidential treatment, promptness, reliability and
quotation and pricing services. Research may include the furnishing of analyses
and reports concerning issuers, industries, securities, economic factors and
trends, portfolio strategy and the performance of accounts. Such research may be
used by Lord Abbett in servicing all their accounts, and not all of such
research will necessarily be used by Lord Abbett in connection with their
services to us; conversely, research furnished in connection with brokerage on
other accounts managed by Lord Abbett may be used in connection with their
services to us, and not all of such research will necessarily be used by Lord
Abbett in connection with their services to such other accounts. We have been
advised by Lord Abbett that, although such research is often useful, no dollar
value can be ascribed to it nor can it be accurately ascribed or allocated to
any account and it is not a substitute for services provided by them to us; nor
does it materially reduce or otherwise affect the expenses incurred by Lord
Abbett in the performance of such services. We make no commitments regarding the
allocation of brokerage business to or among dealers.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold our shares and/or
shares of other Lord Abbett-sponsored funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as we do, transactions will, to the extent practicable, be allocated among all
participating accounts in proportion to the amount of each order and will be
executed daily until filled so that each account shares the average price and
commission cost of each day.
We will not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from
broker-dealers as consideration for the direction to them of portfolio business.
5.
Purchases, Redemptions
and Shareholder Services
The Fund values its portfolio securities at market value as of the close of the
New York Stock Exchange. Market value will be determined as follows: securities
listed or admitted to trading privileges on the New York or American Stock
Exchange or on the NASDAQ National Market System are valued at the last sales
price, or, if there is no sale on that day, at the mean between the last bid and
asked prices, or, in the case of bonds, in the over-the-counter market if, in
the judgment of the Fund's officers, that market more accurately reflects the
market value of the bonds. Over-the-counter securities not traded on the NASDAQ
National Market System are valued at the mean between the last bid and asked
prices. Securities for which market quotations are not available are valued at
fair market value under procedures approved by the Board of Directors.
The maximum offering price of our shares on November 30, 1994 was computed as
follows:
Net asset value per share (net assets divided by
shares outstanding)......................................................$2.59
Maximum offering price per share (net asset value
divided by .9525)........................................................$2.72
The Fund has entered into a distribution agreement with Lord Abbett under which
Lord Abbett is obligated to use its best efforts to find purchasers for the
shares of the Fund and to make reasonable efforts to sell Fund shares, so long
as, in Lord Abbett's judgment, a substantial distribution can be obtained by
reasonable efforts.
For the last three fiscal years, Lord Abbett, as our principal underwriter,
received net commissions after allowance of a portion of the sales charge to
independent dealers as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
-----------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Gross sales charge $14,334,294 $35,255,728 $48,282,846
Amount allowed
to dealers 12,360,904 30,440,962 41,298,238
----------- ---------- ----------
Net commissions
received by
Lord Abbett $ 1,973,390 $ 4,814,766 $ 6,987,608
=========== =========== ===========
</TABLE>
As described in the Prospectus, the Fund has adopted a Distribution Plan and
Agreement (the "Plan") pursuant to Rule 12b-1 of the Investment Company Act of
1940, as amended. In adopting the Plan and in approving its continuance, the
Board of Directors has concluded that there is a reasonable likelihood that the
Plan will benefit the Fund and its shareholders. The expected benefits include
greater sales and lower redemptions of Fund shares, which should allow the Fund
to maintain a consistent cash flow, and a higher quality of service to
shareholders by dealers than would otherwise be the case. During the last fiscal
year, the Fund accrued or paid through Lord Abbett to dealers $10,342,591 under
the Plan. Lord Abbett uses all amounts received under the Plan for payments to
dealers for (i) providing continuous services to the Fund's shareholders, such
as answering shareholder inquiries, maintaining records, and assisting
shareholders in making redemptions, transfers, additional purchases and
exchanges and (ii) their assistance in distributing shares of the Fund.
The Plan requires the Board of Directors to review, on a quarterly basis,
written reports of all amounts expended pursuant to the Plan and the purpose for
which such expenditures were made. The Plan shall continue in effect only if its
continuance is specifically approved at least annually by vote of the Fund's
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 and
agreements. The Plan may not be amended to increase materially the amount spent
for distribution expenses without approval by a majority of the Fund's
outstanding voting securities and the approval of a majority of the directors,
including a majority of the Fund's outside directors. The Plan may be terminated
at any time by vote of a majority of the Fund's outside directors or by vote of
a majority of the Fund's outstanding voting securities.
As stated in the Prospectus, a 1% contingent deferred reimbursement charge
("CDRC") is imposed with respect to those shares (or shares of another Lord
Abbett-sponsored fund or series acquired through exchange of such shares) on
which the Fund has paid the one-time 1% 12b-1 sales distribution fee if such
shares are redeemed out of the Lord Abbett-sponsored family of funds within a
period of 24 months from the end of the month in which the original sale
occurred.
No CDRC is payable on redemptions by tax qualified plans under section 401 of
the Internal Revenue Code for benefit payments due to plan loans, hardship
withdrawals, death, retirement or separation from service with respect to plan
participants. The CDRC is received by the Fund and is intended to reimburse all
or a portion of the amount paid by the Fund if the shares are redeemed before
the Fund has had an opportunity to realize the anticipated benefits of having a
large, long-term shareholder account in the Fund. Shares of a fund or series on
which such 1% sales distribution fee has been paid may not be exchanged into a
fund or series with a Rule 12b-1 plan for which the payment provisions have not
been in effect for at least one year.
The other Lord Abbett-sponsored funds and series which participate in the
Telephone Exchange Privilege (except Lord Abbett U.S. Government Securities
Money Market Fund, Inc. ("GSMMF") and certain series of Lord Abbett Tax-Free
Income Fund, Inc. and Lord Abbett Tax-Free Income Trust for which a Rule 12b-1
Plan is not yet in effect (collectively, the "Series")) have instituted a CDRC
on the same terms and conditions. No CDRC will be charged on an exchange of
shares between Lord Abbett funds. Upon redemption out of the Lord Abbett family
of funds the CDRC will be charged on behalf of and paid to the fund in which the
original purchase (subject to a CDRC) occurred. Thus, if shares of a Lord Abbett
fund are exchanged for shares of another such fund and the shares tendered
("Exchanged Shares") are subject to a CDRC, the CDRC will carry over to the
shares being acquired, including GSMMF ("Acquired Shares"). Any CDRC that is
carried over to Acquired Shares is calculated as if the holder of the Acquired
Shares had held those shares from the date on which he or she became the holder
of the Exchanged Shares. Although GSMMF and the Series will not pay a 1% sales
distribution fee on $1 million purchases of their own shares, and will therefore
not impose their own CDRC, GSMMF will collect the CDRC on behalf of other Lord
Abbett funds. Acquired shares held in GSMMF which are subject to a CDRC will be
credited with the time such shares are held in that fund.
In no event will the amount of the CDRC exceed 1% of the lesser of (i) the net
asset value of the shares redeemed or (ii) the original cost of such shares (or
of the Exchanged Shares for which such shares were acquired). No CDRC 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, (ii) shares with respect to which no Lord Abbett
fund paid a 1% sales distribution fee on issuance (including shares acquired
through reinvestment of dividend income and capital gains distributions) or
(iii) shares which, together with Exchanged Shares, have been held continuously
for 24 months from the end of the month in which the original sale occurred. In
determining whether a CDRC is payable, (a) shares not subject to the CDRC will
be redeemed before shares subject to the CDRC and (b) of shares subject to a
CDRC, those held the longest will be the first to be redeemed.
Under the terms of the Statement of Intention to invest $100,000 or more over a
13-month period as described in the Prospectus, shares of Lord Abbett-sponsored
funds (other than shares of Lord Abbett Equity Fund ("LAEF"), Lord Abbett Series
Fund ("LASF"), Lord Abbett Research Fund if not offered to the general public
("LARF"), and GSMMF, unless holdings in GSMMF are attributable to shares
exchanged from a Lord Abbett-sponsored fund offered with a sales charge)
currently owned by you are credited as purchases (at their current offering
prices on the date the Statement is signed) toward achieving the stated
investment. Shares valued at 5% of the amount of intended purchases are escrowed
and may be redeemed to cover the additional sales charge payable if the
Statement is not completed. The Statement of Intention is neither a binding
obligation on you to buy, nor on the Fund to sell, the full amount indicated.
As stated in the Prospectus, purchasers (as defined in the Prospectus) may
accumulate their investment in Lord Abbett-sponsored funds (other than LAEF,
LARF, LASF, and GSMMF, unless holdings in GSMMF are attributable to shares
exchanged from a Lord Abbett-sponsored fund offered with a front-end sales
charge or from Lord Abbett Counsel Group) so that a current investment, plus the
purchaser's holdings valued at the current maximum offering price, reach a level
eligible for a discounted sales charge.
As stated in the Prospectus, our shares may be purchased at net asset value by
our directors, employees of Lord Abbett, employees of our shareholder servicing
agent and employees of any securities dealer having a sales agreement with Lord
Abbett who consents to such purchases or by the trustee or custodian under any
pension or profit-sharing plan or Payroll Deduction IRA established for the
benefit of such persons or for the benefit of employees of any national
securities trade organization to which Lord Abbett belongs or any company with
an account(s) in excess of $10 million managed by Lord Abbett on a
private-advisory-account basis. For purposes of this paragraph, the terms
"directors" and "employees" include a director's or employee's spouse (including
the surviving spouse of a deceased director or employee). The terms "our
directors" and "employees of Lord Abbett" also include other family members and
retired directors and employees.
Our shares also may be purchased at net asset value (a) at $1 million or more,
(b) with dividends and distributions from other Lord Abbett-sponsored funds,
except for LARF, LAEF, LASF and Lord Abbett Counsel Group, (c) under the loan
feature of the Lord Abbett-sponsored prototype 403(b) plan for share purchases
representing the repayment of principal and interest, (d) by certain authorized
brokers, dealers, registered investment advisers or other financial institutions
who have entered into an agreement with Lord Abbett in accordance with certain
standards approved by Lord Abbett, providing specifically for the use of our
shares in particular investment products made available for a fee to clients of
such brokers, dealers, registered investment advisers and other financial
institutions, and (e) by employees, partners and owners of unaffiliated
consultants and advisors to Lord Abbett or Lord Abbett-sponsored funds who
consent to such purchase if such persons provide service to Lord Abbett or such
funds on a continuing basis and are familiar with such funds. Shares are offered
at net asset value to these investors for the purpose of promoting goodwill with
employees and others with whom Lord Abbett and/or the Fund have business
relationships.
Our shares also may be purchased at net asset value, subject to appropriate
documentation, through a securities dealer where the amount invested represents
redemption proceeds from shares ("Redeemed Shares") of a registered open-end
management investment company not distributed or managed by Lord Abbett (other
than a money market fund), if such redemption has occurred no more than 60 days
prior to the purchase of our shares, the Redeemed Shares were held for at least
six months prior to redemption and the proceeds of redemption were maintained in
cash or a money market fund prior to purchase. Purchasers should consider the
impact, if any, of contingent deferred sales charges in determining whether to
redeem shares for subsequent investment in our shares. Lord Abbett may suspend,
change or terminate this purchase option at any time.
Our shares may be issued at net asset value in exchange for the assets, subject
to possible tax adjustment, of a personal holding company or an investment
company. There are economies of selling efforts and sales-related expenses with
respect to offers to these investors and those referred to above.
The Prospectus briefly describes the Telephone Exchange Privilege. You may
exchange some or all of your shares for those of Lord Abbett-sponsored funds
currently offered to the public with a sales charge and GSMMF, to the extent
offers and sales may be made in your state. You should read the prospectus of
the other fund before exchanging. In establishing a new account by exchange,
shares of the Fund being exchanged must have a value equal to at least the
minimum initial investment required for the fund into which the exchange is
made.
Shareholders in such other funds have the same right to exchange their shares
for the Fund's shares. Exchanges are based on relative net asset values on the
day instructions are received by the Fund in Kansas City if the instructions are
received prior to the close of the NYSE in proper form. No sales charges are
imposed except in the case of exchanges out of GSMMF (unless a sales charge was
paid on the initial investment). Exercise of the exchange privilege will be
treated as a sale for federal income tax purposes, and, depending on the
circumstances, a gain or loss may be recognized. In the case of an exchange of
shares that have been held for 90 days or less where no sales charge is payable
on the exchange, the original sales charge incurred with respect to the
exchanged shares will be taken into account in determining gain or loss on the
exchange only to the extent such charge exceeds the sales charge that would have
been payable on the acquired shares had they been acquired for cash rather than
by exchange. The portion of the original sales charge not so taken into account
will increase the basis of the acquired shares.
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as a means for taking advantage of
short-term swings in the market, and we reserve the right to terminate or limit
the privilege of any shareholder who makes frequent exchanges. We can revoke or
modify the privilege for all shareholders upon 60 days' prior notice. "Eligible
Funds" are other Lord Abbett-sponsored funds which are eligible for the exchange
privilege, except LASF which offers its shares only in connection with certain
variable annuity contracts, LAEF which is not issuing shares, LARF and Lord
Abbett Counsel Group.
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 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 50 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.
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.
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
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.
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. Since the value of shares redeemed may be more or less than
their cost, gain or loss may be recognized for income tax purposes on each
periodic payment. Normally, you may not make regular investments at the same
time you are receiving systematic withdrawal payments because it is not in your
interest to pay a sales charge on new investments when in effect a portion of
that new investment is soon withdrawn. The minimum investment accepted while a
withdrawal plan is in effect is $1,000. The SWP may be terminated by you or by
us at any time by written notice.
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), 403(b) plans and qualified pension and
profit-sharing plans, including 401(k) plans. The forms name Investors Fiduciary
Trust Company as custodian and 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.
6.
Past Performance
The Fund computes the average annual compounded rate of total return during
specified periods that would equate the initial amount invested to the ending
redeemable value of such investment by adding one to the computed average annual
total return, raising the sum to a power equal to the number of years covered by
the computation and multiplying the result by one thousand dollars, which
represents a hypothetical initial investment. The calculation assumes deduction
of the maximum sales charge from the initial amount invested and reinvestment of
all income dividends and capital gains distributions on the reinvestment dates
at prices calculated as stated in the Prospectus. The ending redeemable value is
determined by assuming a complete redemption at the end of the period(s) covered
by the average annual total return computation.
Using the method described above to compute average annual total return for the
one year ended November 30, 1994 and the period from October 15, 1985 (when the
Fund changed its policy to investing exclusively in U.S. Government Securities
as described in the Prospectus) to November 30, 1994 amounted to -8.80% and
8.05%, respectively. For the five and ten year periods ending November 30, 1994,
such average annual total returns were 6.33% and 9.08%, respectively. The ending
redeemable values for such one, five, ten year and October 15, 1985 periods were
$912, $1,359, $2,384 and $2,028, respectively.
Our yield quotation is based on a 30-day period ended on a specified date,
computed by dividing our net investment income per share earned during the
period by our maximum offering price per share on the last day of the period.
This is determined by finding the following quotient: take the Fund's dividends
and interest earned during the period minus its expenses accrued for the period
and divide by the product of (i) the average daily number of Fund shares
outstanding during the period that were entitled to receive dividends and (ii)
the Fund's maximum offering price per share on the last day of the period. To
this quotient add one. This sum is multiplied by itself five times. Then one is
subtracted from the product of this multiplication and the remainder is
multiplied by two. For the 30-day period ended November 30, 1994, the yield for
the Fund was 5.51%.
These figures represent past performance, and an investor should be aware that
the investment return and principal value of a Fund investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Therefore, there is no assurance that this performance will be
repeated in the future.
7.
Taxes
The value of any shares redeemed by the Fund or repurchased or otherwise sold
may be more or less than your tax basis in the shares at the time the
redemption, repurchase or sale is made. Any gain or loss will generally be
taxable for federal income tax purposes. Any loss realized on the sale,
redemption or repurchase of Fund shares which you have held for six months or
less will be treated for tax purposes as a long-term capital loss to the extent
of any capital gains distributions which you received with respect to such
shares. Losses on the sale of stock or securities are not deductible if, within
a period beginning 30 days before the date of the sale and ending 30 days after
the date of the sale, the taxpayer acquires stock or securities that are
substantially identical.
The Fund will be subject to a 4% non-deductible 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 qualify for the
dividends-received deduction for corporations to the extent they are derived
from dividends paid by domestic corporations.
8.
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.
9.
Financial Statements
The financial statements for the fiscal year ended November 30, 1994 and the
report of Deloitte & Touche LLP, independent auditors, on such financial
statements contained in the 1994 Annual Report to Shareholders of Lord Abbett
U.S. Government Securities 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.
<PAGE>
PART C OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(a) Financial Statements
Part A - Financial Highlights for the ten years ended November 30, 1994
Part B - Statement of Net Assets at November 30, 1994 Statement of
Operations for the year ended November 30, 1994 Statements
of Changes in Net Assets for the years ended November 30,
1994 and 1993 Financial Highlights for the five years ended
November 30, 1994
(b) Exhibits -
99.B5 Management Agreement between Registrant and Lord, Abbett &
Co.*
99.B6 Distribution agreement between Registrant and Lord, Abbett
& Co.*
99.B7 Retirement Plan for Non-interested Person Directors and
Trustees of Lord Abbett Funds.**
Lord Abbett Prototype Retirements Plans***
(1) 401(k)
(2) IRA
(3) 403(b)
(4) Profit-Sharing, and
(5) Money Purchases
99.B11 Consent of Deloitte & Touche LLP*
99.B15 Rule 12b-1 Distribution Plan and Agreement.*
99.B16 Total Return and Yield Computations.*
* Filed herewith.
** Incorporated by reference to Post-Effective Amendment No. 7 to the
Registration Statement (on Form N1-A) of Lord Abbett Equity Fund (File No.
811-6033).
*** Incorporated by reference to Post-Effective Amendment No. 6 to the
Registration Statement (on Form N1-A) of Lord Abbett Securities Trust (File
No. 811-7538).
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
-------------------------------------------------------------
None.
Item 26. NUMBER OF RECORD HOLDERS OF SECURITIES
--------------------------------------
At March 10, 1995 - 132,546
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 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.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
----------------------------------------------------
Lord, Abbett & Co. acts as investment advisor for seventeen other
open-end investment companies (of which it is principal underwriter for
fifteen), and as investment adviser to approximately 5,100 private
accounts. 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) Affiliated Fund, Inc.
Lord Abbett U. S. Government Securities Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Value Appreciation Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett California Tax-Free Income Fund, Inc.
Lord Abbett Fundamental Value Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett U. S. Government Securities Money Market 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
INVESTMENT ADVISER
------------------
American Skandia Trust (Lord Abbett Growth and Income
Portfolio)
America's Utility Fund, Inc.
Lord Abbett Research Fund, Inc.
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
Business Address (1) with Registrant
-------------------- ---------------------
Ronald P. Lynch President, Chairman
and Director
Robert S. Dow Executive Vice President
Kenneth B. Cutler Vice President & Secretary
Stephen I. Allen Vice President
Daniel E. Carper Vice President
Thomas S. Henderson Vice President
E. Wayne Nordberg Vice President
John J. Walsh Vice President
(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.
<PAGE>
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.
<PAGE>
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
29th day of March 1995.
LORD ABBETT U.S. GOVERNMENT SECURITIES FUND, INC.
By /S/ RONALD P. LYNCH
-------------------------------
Ronald P. Lynch, Chairman
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.
NAME TITLE DATE
- ----- ------ -----
Chairman,
/s/ Ronald P. Lynch President & Director March 29, 1995
- ---------------------------
Vice President & March 29, 1995
/s/ Robert S. Dow Director
- ---------------------------
/s/ John J. Gargana, Jr. Vice President & March 29, 1995
- --------------------------- Chief Financial Officer
/s/ E. Thayer Bigelow Director March 29, 1995
- ---------------------------
/s/ Stewart S. Dixon Director March 29, 1995
- ---------------------------
/s/ John C. Jansing Director March 29, 1995
- ---------------------------
/s/ C. Alan MacDonald Director March 29, 1995
- ---------------------------
/s/ Hansel B. Millican, Jr. Director March 29, 1995
- ---------------------------
/s/ Thomas J. Neff Director March 29, 1995
- ---------------------------
