1940 Act File No. 811-7538
1933 Act File No. 333-01359
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. __
[X] Post-Effective Amendment No. 1
Lord Abbett Securities Trust
(Exact Name of Registrant as Specified in Charter)
The General Motors Building, 767 Fifth Avenue
New York, New York 10153
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: 800-426-1130
Kenneth B. Cutler
Vice President and Secretary
Lord Abbett Securities Trust
The General Motors Building
767 Fifth Avenue
New York, New York 10153
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of the registration statement.
No filing fee is required because an indefinite number of shares are being
registered pursuant to Rule 24f-2 under the Investment Company Act of 1940.
It is proposed that this filing will become effective on
the date of filing pursuant to paragraph (b) of Rule 485.
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<PAGE>
Lord Abbett Securities Trust
CROSS-REFERENCE SHEET
ITEMS REQUIRED BY FORM N-14
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Part A
Item No. Item Caption Prospectus Caption
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1. Beginning of Registration Statement and Outside Cover Page of Registration Statement;
Front Cover Page of Prospectus Cover Page of Proxy Statement and
Prospectus
2. Beginning and Outside Back Cover Page of Table of Contents
Prospectus
3. Fee Table, Synopsis and Risk Factors Fee Table; Summary of Proposal
4. Information about the Transaction Summary of Proposal; Information
About the Reorganization
5. Information about the Registrant Summary of Proposal; Comparative
Information about the Acquiring Fund
and the Acquired Fund; Additional
Information; Prospectus of Lord
Abbett Securities Trust dated
March 1, 1996
6. Information about the Company Being Acquired Summary of Proposal; Comparative
Information about the Acquiring Fund
and the Acquired Fund
7. Voting Information Special Meeting of Shareholders of
the Acquired Fund; Notice of Special
Meeting of Shareholders; Summary of
Proposal
8. Interest of Certain Persons and Experts Additional Information
9. Additional Information Required for Reoffering Not Applicable
by Persons Deemed to be Underwriters
</TABLE>
<PAGE>
<TABLE>
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Part B Statement of Additional
Item No. Item Caption Information Caption
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10. Cover Page Cover Page
11. Table of Contents Not Applicable
12. Additional Information about the Registrant Cover Page of Proxy Statement and
Prospectus;
Acquiring Fund
State ment of
Additional
Information incor
porated by
reference.
13. Additional Information about the Company Being Cover Page of Proxy Statement and
Acquired Prospectus; Acquired Fund Statement
of Additional Information incor
porated by reference.
14. Financial Statements Pro-forma Financial Statements
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Part C
Item No. Part C Caption
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15. Indemnification Indemnification
16. Exhibits Exhibits
17. Undertakings Undertakings
Signatures
</TABLE>
<PAGE>
Lord Abbett Fundamental Value Fund, Inc.
Dear Shareholder,
You are cordially invited to attend the Annual Meeting of Shareholders of
Lord Abbett Fundamental Value Fund, Inc. scheduled to be held on June 19, 1996,
at 11:00 a.m., at the General Motors Building, 767 Fifth Avenue, New York, New
York. Your Board of Directors looks forward to greeting those shareholders who
are able to attend.
At the meeting, in addition to the election of directors and the
appointment of auditors, you will be asked to approve or disapprove a proposal
to combine your Fund with another Lord Abbett fund which has an investment
objective and policies substantially similar to those of your Fund. The
investment policies of the other fund are proposed to be changed to provide
greater uniformity among the Lord Abbett-sponsored funds and greater flexibility
in the management of your Fund's portfolio.
If approved, the proposed combination will eliminate the offering of
substantially identical funds, as well as take advantage of potential economies
of scale. If combined, your Fund will have a somewhat different 12b-1 Plan and
Distribution Agreement that is intended to maintain the Fund's competitive
position.
The proposed combination will be a tax-free reorganization for federal
income tax purposes. Such proposal is fully described in the enclosed proxy
statement and prospectus. I encourage you to review the proxy statement and
prospectus for all the details regarding the meeting agenda.
Your Board of Directors believes the matters proposed in the agenda are in
the best interests of the Fund and its shareholders and unanimously recommends a
vote "for" each proposal. Regardless of the number of shares you own, it is
important that they be represented and voted. Accordingly, please sign, date and
mail the enclosed proxy card in the postage paid return envelope.
Your prompt response will help save the Fund the expense of additional
solicitation.
Sincerely,
/s/ RONALD P. LYNCH
Ronald P. Lynch
Chairman of the Board
April 24, 1996
<PAGE>
LORD ABBETT FUNDAMENTAL VALUE FUND, INC.
767 Fifth Avenue
New York, New York 10153
Notice of an Annual Meeting of Shareholders
to be held on June 19, 1996 April 24, 1996
Notice is given hereby of an annual meeting of the shareholders of Lord Abbett
Fundamental Value Fund, Inc. The meeting will be held in the offices of Lord,
Abbett & Co., on the 11th floor of The General Motors Building, 767 Fifth
Avenue, New York, New York on June 19, 1996, at 11:00 a.m. for the following
purposes and to transact such other business as may properly come before the
meeting and any adjournments thereof.
ITEM 1. To consider and act upon an Agreement and Plan of Reorganization
between Lord Abbett Fundamental Value Fund, Inc. (the "Acquired Fund"),
and the Lord Abbett Growth & Income Trust (the "Acquiring Fund"), a
series of Lord Abbett Securities Trust, providing for (a) the transfer
of all of the assets of the Acquired Fund to the Acquiring Fund in
exchange for shares of a new class of the Acquiring Fund (to be
designated "Class A Shares") and the assumption by the Acquiring Fund of
all of the liabilities of the Acquired Fund, (b) the distribution of
such Class A Shares to the shareholders of the Acquired Fund and (c) the
subsequent dissolution of the Acquired Fund. (The investment policies
and restrictions of the Acquiring Fund are expected to differ from those
of the Acquired Fund in ways that are intended to provide greater
flexibility in the management of the portfolio of the Acquiring Fund and
to provide greater uniformity in the investment policies and
restrictions among the various Lord Abbett- sponsored funds.) A vote in
favor of this Item 1 will be deemed to be a vote to authorize the
Acquired Fund, as the sole shareholder of Class A Shares prior to this
reorganization, to approve a proposed distribution plan pursuant to
Section 12 of the Investment Company Act of 1940, as amended, and Rule
12b-1 thereunder applicable to that class.
ITEM 2. To elect directors to serve as members of the Board of Directors of
the Acquired Fund.
ITEM 3. To ratify the selection of Deloitte & Touche LLP as the independent
public accountants of the Acquired Fund for the current fiscal year.
By order of the Board of Directors
Kenneth B. Cutler
Vice President and Secretary
<PAGE>
Vice President and Secretary
The Board of Directors has fixed the close of business on March 22, 1996 as the
record date for determination of shareholders of the Acquired Fund entitled to
notice of and to vote at the meeting. Shareholders are entitled to one vote for
each share held. As of March 22, there were 3,038,420 shares of the Acquired
Fund issued and outstanding.
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PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD.
SIGN, DATE AND RETURN IT IN THE ENVELOPE PROVIDED.
TO SAVE THE COST OF ADDITIONAL SOLICITATIONS, PLEASE MAIL YOUR PROXY
PROMPTLY.
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<PAGE>
Proxy Statement and Prospectus Dated April 24, 1996
Acquisition of the Assets of
Lord Abbett Fundamental Value Fund, Inc.
The General Motors Building, 767 Fifth Avenue
New York, NY 10153
by and in exchange for Class A Shares of
Lord Abbett Growth & Income Trust, a series of
Lord Abbett Securities Trust
The General Motors Building, 767 Fifth Avenue
New York, NY 10153
This Proxy Statement and Prospectus relates to Class A shares (the
"Class A shares") of the Lord Abbett Growth & Income Trust (the "Acquiring
Fund"), a series of Lord Abbett Securities Trust (the "Trust"), to be issued to,
and in exchange for all the assets of, Lord Abbett Fundamental Value Fund, Inc.
(the "Acquired Fund" and, together with the Acquiring Fund, the "Funds"). The
telephone number of the principal executive office of each of the Funds is
1-800-426-1130. In exchange for such assets, the Acquiring Fund will also assume
all of the liabilities of the Acquired Fund. Following receipt of the Acquiring
Fund Class A shares, the Acquired Fund will be dissolved and the Class A shares
will be distributed to the shareholders of the Acquired Fund. The shareholders
of the Acquired Fund are being asked to vote to approve or disapprove these
proposed transactions (the "Reorganization"), which are more fully described in
this Proxy Statement and Prospectus.
The investment objectives of the Acquiring Fund and the Acquired Fund
are substantially similar. The Acquiring Fund seeks long term growth of capital
and income without excessive fluctuations in market value. It normally invests
in common stocks of large seasoned companies in sound financial condition which
are expected to show above average price appreciation. The Acquired Fund seeks
growth of capital and growth of income consistent with reasonable risk.
Production of current income is a secondary consideration for the Acquired Fund.
Lord, Abbett & Co. ("Lord Abbett") serves as investment manager to both Funds.
The Class A shares of the Acquiring Fund will be a newly-created class
of shares that will share pro-rata with the existing class of Acquiring Fund
shares (the "Class C shares") in the portfolio, income and expenses of the
Acquiring Fund, except that each class will bear the expense of its own
distribution and shareholder servicing arrangements and certain other expenses.
See "Information About the Reorganization -- Shares of the Acquiring Fund." The
distribution and shareholder servicing arrangements for the Class A shares will
be substantially the same as the arrangements currently applicable to the
Acquired Fund shares, except as discussed herein. The directors of the Acquired
Fund
Any shareholder having a question regarding the meeting agenda or
needing assistance in voting, should contact the shareholder
servicing agent of the Acquired Fund, DST Systems, Inc.,
at 1-800-821-5129.
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>
believe that the proposed transaction will enable the shareholders of the
Acquired Fund to benefit from economies of scale while continuing to invest in a
portfolio of securities managed by Lord Abbett under an investment objective
substantially similar to that of the Acquired Fund. See "Information About the
Reorganization -- Reasons for the Reorganization." This Proxy Statement and
Prospectus sets forth concisely the information about the Acquiring Fund that a
shareholder of the Acquired Fund should know before voting on the
Reorganization. It should be read and retained for future reference. Attached as
Exhibit A to this Proxy Statement and Prospectus is a copy of the Agreement and
Plan of Reorganization (the "Plan") for the Reorganization. This Proxy Statement
and Prospectus is accompanied by the Prospectus of the Acquiring Fund dated
March 1, 1996 (the "Acquiring Fund Prospectus"), which Prospectus is
incorporated by reference herein. Also incorporated herein by reference are (a)
the Statement of Additional Information dated the date hereof relating to this
Proxy Statement and Prospectus, including the Statement of Additional
Information of the Acquired Fund dated November 1, 1995 and the Statement of
Additional Information of the Acquiring Fund dated March 1, 1996, and (b) the
Prospectus of the Acquired Fund dated November 1, 1995 (the "Acquired Fund
Prospectus"). Such Statements of Additional Information and the Acquired Fund
Prospectus are available, upon oral or written request, and at no charge, from
the Acquiring Fund, at its above-noted address or by calling 1-800-874-3733.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C>
SPECIAL MEETING OF SHAREHOLDERS OF THE ACQUIRED FUND............................................................. 2
FEE TABLE........................................................................................................ 3
ITEM 1. - APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION................................................... 5
SUMMARY OF PROPOSAL........................................................................................ 5
INFORMATION ABOUT THE REORGANIZATION....................................................................... 7
COMPARATIVE INFORMATION ABOUT THE
ACQUIRING FUND AND THE ACQUIRED FUND................................................................. 15
REQUIRED VOTE.............................................................................................. 18
ITEM 2. - ELECTION OF DIRECTORS.................................................................................. 18
ITEM 3. - RATIFICATION OR REJECTION OF INDEPENDENT
PUBLIC ACCOUNTANTS............................................................................. 23
ADDITIONAL INFORMATION........................................................................................... 24
Exhibit A - Agreement and Plan of Reorganization
Exhibit B - Comparison of Certain Investment Policies and Restrictions
</TABLE>
<PAGE>
SPECIAL MEETING OF SHAREHOLDERS OF THE ACQUIRED FUND
This Prospectus and Proxy Statement is furnished in connection with the
solicitation of proxies by and on behalf of the Board of Directors of the
Acquired Fund to be used at an Annual Meeting of Shareholders of the Acquired
Fund to be held at 11:00 a.m. on June 19, 1996, at the offices of Lord Abbett on
the 11th floor of the General Motors Building, 767 Fifth Avenue, New York, New
York 10153, and at any adjournments thereof. This Prospectus and Proxy Statement
and the enclosed proxy card are first being mailed to shareholders of the
Acquired Fund on or about April 24, 1996.
At the close of business on March 22, 1996 (the "Record Date"), there were
issued and outstanding 3,038,420 shares of the Acquired Fund. Only shareholders
of record as of the close of business on the Record Date will be entitled to
notice of, and to vote at, the meeting or any adjournment thereof. Shareholders
of the Acquired Fund are entitled to one vote for each share. Under Maryland
law, shares owned by two or more persons (whether as joint tenants,
co-fiduciaries or otherwise) will be voted as follows, unless a written
instrument or court order providing to the contrary has been filed with the
Secretary of the Acquired Fund: (1) if only one votes, that vote binds all; (2)
if more than one votes, the vote of the majority binds all; and (3) if more than
one votes and the vote is evenly divided, the vote will be cast proportionately.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the meeting, the proxies named therein will vote the shares
represented by the proxy in accordance with the instructions marked thereon. A
proxy may be revoked by the signer at any time at or before the meeting by
written notice to the Acquired Fund, by execution of a later-dated proxy or by
voting in person at the meeting. Unless revoked, all valid proxies will be voted
in accordance with the specifications thereon or, in the absence of such
specifications, FOR approval of the Plan and the Reorganization, FOR approval of
election of directors and FOR ratification of the selection of Deloitte & Touche
as the Acquired Fund's independent public accountants and on any other matters
as deemed appropriate.
Proxies will be solicited by mail. Additional solicitations may be made by
telephone, facsimile or personal contact by officers or employees of Lord Abbett
and its affiliates. The Acquired Fund may also request brokerage houses,
custodians, nominees, and fiduciaries who are shareholders of record to forward
proxy material to the beneficial owners. D.F. King & Co. has been retained to
assist in the solicitation of proxies at an estimated cost of $2,500. The cost
of the solicitation will be borne by the Acquired Fund.
In the event that sufficient votes to approve the Plan are not received by
the meeting date, the persons named as proxies may propose one or more
adjournments of the meeting to permit further solicitation of proxies. In
determining whether to adjourn the meeting, the following factors may be
considered: the percentage of votes actually cast, the percentage of negative
votes actually cast and the nature of any further solicitation and any
information to be provided to shareholders with respect to such a solicitation.
Any such adjournment will require an affirmative vote of a majority of the
shares present in person or by proxy and entitled to vote at the meeting. The
persons named as proxies will vote upon such adjournment after consideration of
the best interests of all shareholders.
2
<PAGE>
FEE TABLE
Set forth on the following page is a summary of the expenses of the shares
of the Acquiring Fund (currently, the only class of Acquiring Fund shares, to be
designated "Class C"). Also set forth on the following page is a summary
comparison of the expenses of (a) the shares of the Acquired Fund and (b) on a
pro-forma basis after giving effect to the Reorganization, the Class A shares of
the Acquiring Fund (to be issued in the Reorganization in exchange for the
shares of the Acquired Fund). The annual operating expenses shown for the
Acquiring Fund shares and the Acquired Fund shares are the actual expenses for
the fiscal years ended October 31, 1995 and June 30, 1995, respectively, and
those shown on a pro-forma basis for the Class A shares of the Acquiring Fund
are the estimated expenses of such shares for the year ended October 31, 1995
had the Reorganization occurred on November 1, 1994, adjusted for estimated
changes in various expenses. The example set forth on the following page is not
a representation of past or future expenses. Actual expenses may be greater or
less than those shown.
3
<PAGE>
<TABLE>
<CAPTION>
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Acquiring Fund shares Acquiring Fund
Shareholder Transaction Expenses (to be designated Class A shares
(as a percentage of offering price) Class C) Acquired Fund shares (pro-forma)
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Maximum Sales Load on Purchases(1)....... None 5.75 5.75
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Deferred Sales Load (1).................. 1.00(2) None(3) None(3)
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Annual Operating Expenses
(as a percentage of average net assets)
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Management Fee........................ 0.00%(4) 0.75% 0.75%(4)
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Rule 12b-1 Fees....................... 0.88%(2) 0.21% 0.23%(5)
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Other Expenses........................ 0.28% 0.42% 0.37%(4)
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Total Operating Expenses.................... 1.16%(4) 1.38% 1.35%(4),(5)
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</TABLE>
Example: Assume each Fund's annual return is 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.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
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Acquiring Fund Class C shares (6) $12 $37 $64 $141
Acquired Fund shares (6) $71 $99 $129 $214
Acquiring Fund Class A shares $70 $97 $127 $210
(pro-forma)(6)
</TABLE>
(1) Sales "load" is referred to as sales "charge" and "deferred sales load" is
referred to as "contingent deferred reimbursement charge" throughout this
Proxy Statement and Prospectus. Investors should be aware that long-term
Class A shareholders may pay, as a front-end sales charge and under the
Rule 12b-1 Plan of the Acquired Fund and under the Rule 12b-1 Plan to be
applicable to the Class A shares of the Acquiring Fund, more than the
economic equivalent of the maximum permitted front-end sales charge as
permitted by certain rules of the National Association of Securities
Dealers, Inc.
(2) See "Purchases" in the Acquiring Fund Prospectus accompanying this Proxy
Statement and Prospectus for descriptions of the contingent deferred
reimbursement charges and the Rule 12b-1 plan applicable to the shares of
the Acquiring Fund.
(3) With respect to shares on which the Acquired Fund's Rule 12b-1 distribution
fee for purchases of $1 million or more has been paid, and Class A shares
on which the Acquiring Fund's Rule 12b-1 distribution fee will be paid,
certain redemptions are subject to a contingent deferred reimbursement
charge of up to 1% if the redemption occurs within 24 months after the
month of purchase. Holding periods for shares purchased prior to the
Reorganization will carry over for the purpose of determining the
applicability of the CDRC to Class A shares. See "12b-1 Plans" under
"Information About the Reorganization" for a description of the proposed
12b-1 Plan for the A shares.
(4) Lord Abbett has waived its management fee with respect to the Acquiring
Fund during the past year. The management fee and total operating expenses
would have been 0.75% and 1.91% absent such waiver. Lord Abbett has advised
the Acquiring Fund that it intends to discontinue such waiver following the
consummation of the Reorganization. The "other expenses" of the Acquiring
Fund Class A shares (pro-forma) reflect an estimated increase in various
expenses of the Acquiring Fund expressed as a percentage of net assets
reflecting the proposed sale by the Trust of its other series.
(5) The proposed Rule 12b-1 Plan for the A shares provides for annual fees, if
approved by the Board of Directors, of up to 0.50% of the net assets of the
Fund attributable to the Class A shares, comprising a service fee of up to
0.25% and a distribution fee of up to 0.25% of the average value of the net
assets of the Fund attributable to the Class A shares. The pro-forma Rule
12b-1 fees for the Acquiring Fund Class A shares are based on the
distribution fee payments authorized by the board. See "12b-1 Plans" under
"Information About the Reorganizations."
(6) Based on total actual operating expenses and pro-forma operating expenses
shown in the table above.
The foregoing is provided to assist shareholders of the Acquired Fund in
understanding the various expenses the holders of the shares of the Acquiring
Fund and the holders of shares of the Acquired Fund have incurred and that
holders of the shares of the Acquired Fund might incur as holders of the Class A
shares following the Reorganization.
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4
<PAGE>
ITEM 1. - APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION
SUMMARY OF PROPOSAL
The following is a summary of certain information contained elsewhere or
incorporated by reference in this Proxy Statement and Prospectus and is
qualified in its entirety by reference to such information.
Overview of Proposed Reorganization. The Plan provides for the transfer to
the Acquiring Fund of all of the assets of the Acquired Fund in exchange for
Class A shares and the assumption by the Acquiring Fund of all of the
liabilities of the Acquired Fund. The Class A shares will then be distributed to
the Acquired Fund shareholders and the Acquired Fund will be dissolved. As a
result of the Reor ganization, each shareholder of the Acquired Fund will become
the owner of that number of full and fractional Class A shares having an
aggregate net asset value equal to the aggregate net asset value of his or her
shares of the Acquired Fund, as of the close of business on the date the
Acquired Fund assets are transferred to the Acquiring Fund. Consummation of the
Reorganization is subject to the approval of the Acquired Fund's shareholders
and other conditions.
To avoid a need to call an Acquiring Fund shareholders' meeting after the
Reorganization, shareholders of the Acquired Fund are being asked to authorize
the Acquired Fund, as the sole Class A shareholder of the Acquiring Fund before
the Reorganization, to approve the proposed distribution plan for the Class A
shares. A vote in favor of the Reorganization will be deemed also to be a vote
to authorize the Acquired Fund to take such action.
The directors of the Acquired Fund believe that the proposed Reorganization
will enable the shareholders of the Acquired Fund to benefit from economies of
scale while continuing to invest in a portfolio of securities managed by Lord
Abbett under the same investment objective. See "Information About the
Reorganization -- Reasons for Reorganization" for additional information about
the reasons for the Reorganization.
Businesses of the Acquired and Acquiring Funds. The Acquired Fund is a
diversified, open-end management investment company incorporated under the laws
of Maryland on March 26, 1986. It has a single class of shares. The Acquired
Fund commenced investment operations on July 8, 1986. As of December 31, 1995,
the Acquired Fund's net assets were approximately $43 million.
The Acquiring Fund is a diversified series of the Trust, an open-end
management investment company organized under Delaware law on February 26, 1993.
To date, the Acquiring Fund offers ten series, one of which is the Acquiring
Fund, each consisting of one class of shares. As of December 31, 1995, the
Acquiring Fund's net assets were approximately $39 million.
5
<PAGE>
Investment Objectives and Policies of the Acquired Fund and the Acquiring Fund.
The Acquired Fund and Acquiring Fund have substantially similar investment
objectives. The Acquiring Fund seeks long term growth of capital and income
without excessive fluctuations in market value. It normally invests in common
stocks of large seasoned companies in sound financial condition which are
expected to show above average price appreciation. The Acquired Fund seeks
growth of capital and growth of income consistent with reasonable risk.
Production of current income is a secondary consideration for the Acquired Fund.
The two Funds also have generally similar investment policies and restrictions.
The Acquiring Fund is seeking to revise and reclassify certain of its investment
policies and restrictions in order to provide greater flexibility in managing
the investment portfolio of the Acquiring Fund and to provide greater uniformity
in the investment policies and restrictions among the various Lord Abbett-
sponsored funds. Most importantly, a number of the investment policies and
restrictions that are classified as fundamental for the Acquired Fund are to be
reclassified as non-fundamental for the Acquiring Fund. See "Comparative
Information About the Acquiring Fund and the Acquired Fund -- Investment
Objectives, Policies and Restrictions."
The portfolio of the Acquired Fund is expected to be suitable for the
Acquiring Fund, and so no significant realignment of that portfolio is expected
in connection with the Reorganization.
Purchases and Exchanges. Shares of the Acquired Fund are, and Class A shares
will be, available through certain authorized dealers at the public offering
price, which is the net asset value per share plus a one-time sales charge. See
"Information About the Reorganization -- Shares of the Acquiring Fund."
Shareholders of the Acquired Fund may now exchange their shares for shares of up
to 24 other funds and series in the Lord Abbett family of funds. It is expected
that holders of Class A shares will be able to exchange their shares for Class A
shares of up to 25 other funds and series managed by Lord Abbett. Each exchange
represents a sale of shares for which a shareholder may have to recognize a gain
or loss under Federal income tax provisions.
Rule 12b-1 Plan. The Acquired Fund has adopted a plan pursuant to Section 12(b)
of the 1940 Act and Rule 12b-1 thereunder (a "Rule 12b-1 Plan"), under which it
pays Lord Abbett (1) an annual service fee (payable quarterly) of 0.25% of the
average daily net asset value of shares sold, or attributable to shares sold, by
dealers and (2) a one-time 1% distribution fee, at the time of sale, on all
shares sold at the $1 million level by dealers, including sales qualifying at
such level under the rights of accumulation and statement of intention
privileges described in the Acquired's Fund's prospectus in effect at such time,
subject to a contingent deferred reimbursement charge for up to 24 months. Lord
Abbett is required to pay these service and distribution fees to dealers to
provide additional incentives for the dealers (a) to provide continuing
information and investment services to their shareholder accounts and otherwise
to encourage their accounts to remain invested in the Acquired Fund and (b) to
sell its shares.
As part of the Reorganization, the Acquiring Fund is adopting a new Rule
12b-1 Plan applicable to the Class A shares that will be similar to the Acquired
Fund's Rule 12b-1 Plan. The principal change is that under the proposed new Rule
12b-1 Plan for the Class A shares the Board of Directors will be able to
increase the amount of the total annual fee up to 0.50% of the Fund's average
annual net assets. For a fuller description of the current Rule 12b-1 Plan of
the Reorganized Fund and of the proposed new Rule 12b-1 Plan for the A shares of
the Acquiring Fund, see "Information About the Reorganization -- Rule 12b-1
Plan."
6
<PAGE>
Dividend Policies and Options. The Acquired Fund distributes net investment
income as dividends in July and December. It may distribute capital gains in
July and may also pay supplemental dividends and capital gains distributions in
December or January. The Acquiring Fund distributes net investment income as
dividends in March, June, September and December and may distribute capital
gains in December or January. The shareholders of each Fund may reinvest such
dividends and distributions in additional shares at net asset value or take such
amounts in cash.
Redemption Procedures. The redemption procedures of the Acquired Fund and the
Acquiring Fund are substantially the same. See the Acquiring Fund Prospectus
under "Redemptions."
Tax Considerations. The consummation of the Reorganization is subject to receipt
of an opinion of counsel, substantially to the effect that, among other things,
the Reorganization will not cause a gain or loss to be recognized by the
Acquired Fund or its shareholders for federal income tax purposes. See
"Information about the Reorganization--Federal Income Tax Considerations."
Risk Factors. Because of the similarities in the investment objectives of the
Funds, Lord Abbett believes that the relative risks involved in investing in the
Funds can be considered similar. However, the investment policies and
restrictions of the Acquiring Fund are proposed to be made less restrictive
compared to those of the Acquired Fund in order to provide greater flexibility
in the future management of the investment portfolio of the Acquiring Fund and
to provide greater uniformity in the investment policies and restrictions among
the various Lord Abbett-sponsored funds. If the Acquiring Fund were to take to
any significant extent the actions permitted by these less restrictive policies
and restrictions, a result not now anticipated, the risks of investing in the
Acquiring Fund could be greater than those involved in investing in the Acquired
Fund. See "Comparative Information About the Acquiring Fund and the Acquired
Fund -- Investment Objectives, Policies and Restrictions."
INFORMATION ABOUT THE REORGANIZATION
The Plan. On July 12, 1996, assuming the conditions referred to below are
satisfied, the Acquired Fund will transfer all its assets to the Acquiring Fund
(the date of such transfer is referred to herein as the "Closing Date") in
exchange for (i) Class A shares of the Acquiring Fund having an aggregate net
asset value equal to the aggregate value of the assets, less liabilities, of the
Acquired Fund and (ii) the assumption by the Acquiring Fund of all the
liabilities of the Acquired Fund. The Acquired Fund will distribute as of the
Closing Date such Class A shares pro-rata to its shareholders of record,
determined as of the close of business on the Closing Date, in redemption and
cancellation of their shares of the Acquired Fund. The net asset value of Class
A shares and the value of the Acquired Fund's assets and the amount of its
liabilities will be determined as of the Closing Date in accordance with the
valuation procedures set forth in the Trust's Declaration and Agreement of Trust
(see "Purchases" in the Acquiring Fund Prospectus). The valuation procedures
used by the Acquiring Fund are the same as those used by the Acquired Fund.
7
<PAGE>
The obligations of the Acquiring Fund and the Acquired Fund to consummate
the Reor ganization are subject to the satisfaction of certain conditions
precedent, including (a) approval and authorization of the Reorganization by the
vote of a majority of the shares of the Acquired Fund voted on the matter if a
quorum is present, (b) receipt of a favorable ruling from the Internal Revenue
Service to the effect that the issuance of various classes of shares by the
Acquiring Fund will not result in dividends or distributions of the Acquiring
Fund constituting "preferential dividends" under the Internal Revenue Code of
1986, as amended (the "Code"), and (c) receipt of a favorable opinion of legal
counsel as to the federal income tax consequences of the proposed transaction as
described below under "Federal Income Tax Considerations".
The foregoing summary of the Plan does not purport to be complete, and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the Plan, a copy of which is attached as Exhibit A.
Reasons for the Reorganization. The Board of Directors of the Acquired Fund and
the Board of Trustees of the Trust, including in each case a majority who are
not "interested persons" (as defined in the 1940 Act) of either Fund or of Lord
Abbett, approved the Plan and the Reorganization on March 14, 1996, and in this
connection determined that participation in the proposed Reorganization is in
the best interests of the shareholders of each of the Funds and that the
interests of existing shareholders of the Funds will not be diluted as a result
of the Reorganization. In doing so, the boards of the two Funds considered the
estimated expenses to be incurred by the Funds in connection with the
Reorganizations and several other factors, including (a) that the shareholders
of the Acquired Fund are expected to benefit from economies of scale as
shareholders of the Acquiring Fund, which has been growing faster and is now
larger than the Acquired Fund, while continuing to invest in a portfolio of
securities managed by Lord Abbett under a substantially similar investment
objective, and (b) that the implementation of a multi- class fund structure for
the Acquiring Fund is expected to (i) enable investors in the Acquiring Fund to
choose the distribution option that best suits their individual situations, (ii)
facilitate distribution of the Acquiring Fund's shares, and (iii) maintain the
competitive position of the Acquiring Fund in relation to other funds that have
implemented or are seeking to implement similar distribution arrangements.
The trustees of the Trust and the directors of the Acquired Fund are the
same individuals.
Shares of the Acquiring Fund. On or before the Closing Date, the Acquiring Fund
will have two classes of shares, Class C shares (the existing class of the
Acquiring Fund) and Class A shares (to be received by the shareholders of the
Acquired Fund in the Reorganization). Each share of the Acquiring Fund,
regardless of class, will share pro-rata (based on net asset value) in the
portfolio and income of the Acquiring Fund and in the Acquiring Fund's expenses,
except for differences in expenses resulting from different Rule 12b-1 Plans for
the various classes and certain other class specific expenses. See "Rule 12b-1
Plans" below.
8
<PAGE>
After the Reorganization, Class A shares will be offered to the public at
net asset value subject to an initial sales charge identical to the sales charge
currently imposed on sales of the Acquired Fund shares, as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Sales Charge as a Dealer's Con-
Percentage of: cession as a To Compute
---------------------------------------- Percentage of Offering
Net Amount Offering Price, Divide
Size of Investment Offering Price Invested Price* NAV by
- -----------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00% .9425
- -----------------------------------------------------------------------------------------------------------------------
$50,000 to $99,999 4.75% 4.99% 4.00% .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
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* 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 the Acquiring Fund's 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.
** As disclosed in the Acquiring Fund Prospectus, other sales in certain
categories are made at net asset value without a sales charge.
Subject to some exceptions, Class A shares sold without any sales charge
will be subject to a contingent deferred reimbursement charge (a "CDRC") of up
to 1% of the lower of their cost or their net asset value if they are redeemed
from the Lord Abbett-sponsored family of funds within 24 months after the month
of purchase. See "Rule 12b-1 Plans" below. Holding periods for shares purchased
prior to the Reorganization will carry over for the purpose of determining the
applicability of the CDRC to Class A shares.
After the Reorganization, Class C shares will be offered at net asset value
without an initial sales charge, but if redeemed for cash before the first
anniversary of their purchase, will be subject to a CDRC equal to 1% of the
lower of their cost or then net asset value. Holding periods for shares
purchased prior to the Reorganization will carry over for the purpose of
determining the applicability of the CDRC to Class C shares.
9
<PAGE>
After the Closing Date, the Acquiring Fund may create and issue one or more
classes of shares in addition to the Class A and C shares.
Shares of all classes of the Acquiring Fund will vote together on all
matters affecting the Acquiring Fund, except for matters, such as approval of a
Rule 12b-1 plan, affecting only a particular class or classes. Shares of the
Acquiring Fund will vote together with shares of other series of the Trust on
all matters affecting the Trust, except for matters, such as approval of an
investment management agreement, affecting only one or more particular series.
All shares voting on a matter will have identical voting rights. All issued
shares of the Acquiring Fund will be fully paid and non-assessable, and
shareholders will have no preemptive or other right to subscribe to any
additional shares. Shares of all classes of the Acquiring Fund will have the
same rights and be subject to the same limitations with respect to dividends,
redemptions and liquidation except for differences resulting from class-specific
Rule 12b-1 plans and related service plans and certain other class-specific
expenses.
Rule 12b-1 Plans. As part of the Reorganization, the Acquiring Fund is adopting
a Rule 12b-1 plan applicable to the Class A shares (the "Class A 12b-1 Plan")
that will be similar to the plan currently in effect for the Acquired Fund, but
with certain changes as described below. Under the Acquired Fund's current plan
(except as to certain accounts for which tracking data is not available), the
Fund pays dealers through Lord Abbett (1) an annual service fee (payable
quarterly) of 0.25% of the average daily net asset value of shares sold, or
attributable to shares sold, by dealers and (2) a one-time 1% distribution fee,
at the time of sale, on all shares sold at the $1 million level by dealers,
including sales qualifying at such level under the rights of accumulation and
statement of intention privileges described in the Acquired Fund's prospectus in
effect at such time. These service and distribution fees provide additional
incentives for dealers (a) to provide continuing information and investment
services to their shareholder accounts and otherwise to encourage their accounts
to remain invested in the Acquired Fund and (b) to sell shares of the Acquired
Fund.
Under the current plan of the Acquired Fund, holders of shares on which the
1% distribution fee has been paid are required to pay to the Acquired Fund a
CDRC, or contingent deferred reimbursement charge, of 1% of the original cost or
the then net asset value, whichever is less, of such shares if they 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 certain redemptions by tax-qualified plans under Section
401 of the Internal Revenue Code due to plan loans, hardship withdrawals, death,
retirement or separation from service with respect to plan participants.) If the
shares are 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 is collected for the Acquired Fund by the other fund. The Acquired
Fund collects such a charge for other Lord Abbett-sponsored funds in a similar
situation.
Set forth below is a description of the principal changes to be effected
under the proposed Class A 12b-1 Plan:
(a) Distribution Fees. The Board of Trustees of the Trust will be
authorized under the Class A 12b-1 Plan, without further shareholder vote, to
increase the amount of distribution fees up to 0.25% of the average annual net
assets attributable to the Class A shares (the annual distribution and service
fees
10
<PAGE>
could total 0.50% of such average annual net assets if approved by the Board of
Trustees). This increased spending limit is intended primarily to permit the
trustees to increase the amount to be spent for distribution to meet changing
sales competition. The trustees believe it is desirable to be able to make these
changes without further shareholder approval because additional shareholder
meetings would be costly to the Acquiring Fund and its shareholders and the time
required for such meetings could delay the implementation of advantageous
changes. The Board of Trustees will approve additional changes under this
increased authority only if a majority of the trustees who are not "interested
persons" of the Acquiring Fund within the meaning of the 1940 Act and who will
have no direct or indirect financial interest in the operations of the Class A
12b-1 Plan or in any agreements related thereto conclude in their business
judgment that there is a reasonable likelihood that the increase will benefit
the Acquiring Fund and its shareholders.
The one-time 1% distribution fee, payable at the time of certain sales as
described above, is to be charged against the 0.25% permitted annual
distribution fee. During the Acquired Fund's last fiscal year, payments of the
one-time 1% distribution fee under that Fund's Rule 12b-1 plan totaled 0.01% of
the Acquired Fund's average net assets. Subject to approval of the
Reorganization by the shareholders of the Acquired Fund, the Board of Trustees
of the Acquiring Fund has authorized the Acquiring Fund to pay this one-time
distribution fee with respect to sales of Class A shares, subject to three
changes: First, the payments will be made in connection with sales to retirement
plans with 100 or more eligible employees, in addition to sales at the $1
million level as under the Acquired Fund's 12b-1 plan; Second, the payments will
be reduced as follows: 1.0% of the first $5 million, 0.55% of the next $5
million, 0.50% of the next $40 million and 0.25% over $50 million of shares sold
to a retirement plan or other qualifying purchaser within a 12-month period
(beginning when the first purchase is made at net asset value); and Third, the
payments will be made to institutions and persons permitted by applicable law
and/or rules to receive such payments ("Authorized Institutions"), rather than
just to dealers as is the case under the Acquired Fund's Rule 12b-1 plan.
Subject to such approval of the Reorganization, the Acquiring Fund's Board
of Trustees has authorized the Acquiring Fund to pay, as an additional
distribution fee, a modest supplemental payment to dealers who have accounts
comprising a significant percentage of the Acquiring Fund's Class A share
assets, having a lower than average redemption rate and who have a satisfactory
program for the promotion of Class A shares. Any such payments will be 0.10% per
annum of the average assets of the Acquiring Fund represented by the Class A
share accounts of qualifying dealers. This supplemental payment is intended by
the Board of Trustees to enhance the Acquiring Fund's relationships with those
dealers most likely to have a significant impact on the growth of the Class A
shares.
(b) Service Fees. Service fee payments, which are to be continued under the
proposed Class A 12b-1 Plan at an annual rate of 0.25% of the average daily net
asset value of the Class A shares could be made to all Authorized Institutions
(institutions and persons permitted by applicable law and/or rules to receive
such payments), rather than just to dealers as is the case under the Acquired
Fund's plan.
(c) Use of Payments by Lord Abbett. Lord Abbett will be permitted to use
payments received under the Class A 12b-1 Plan to provide continuing services to
shareholder accounts not serviced by Authorized Institutions and, with board
approval, to finance any activity which is primarily intended to result in the
sale of Class A shares. Any such payments to finance activities primarily
intended to
11
<PAGE>
result in the sale of Class A shares would be subject to the overall ceiling of
0.25% for annual distribution fees.
(d) CDRC. The Board of Trustees of the Trust has approved a CDRC applicable
to the Class A 12b-1 shares substantially similar to the CDRC payable under the
Rule 12b-1 Plan of the Acquired Fund, except that no CDRC would be payable in
connection with redemptions by retirement plans (not just those qualified under
Section 401 of the Internal Revenue Code) attributable to any benefit payment.
In addition, no CDRC would apply if the plan sponsor requested a redemption to
correct an excess contribution in order to comply with applicable IRS rules.
Because CDRC payments will be made directly to the Acquiring Fund, they will
have the effect of reducing the amount of the distribution fees paid by the
Acquiring Fund for the purpose of complying with the overall ceiling of 0.25%
for annual distribution fees. As in the case of the specific distribution fees
authorized by the Board of Trustees of the Trust, the CDRC authorized from time
to time by the board for the Class A shares will be described in the then
current prospectus of the Acquiring Fund.
If the supplemental payment to dealers, the revised one-time distribution
fee and the other changes described above had been in effect for the Acquired
Fund's last fiscal year, it is estimated that, in the aggregate, they would have
increased the expense ratio of the Acquired Fund by 2 basis points from 1.38% to
approximately 1.40%, a difference of 0.02%.
(e) Lord Abbett Distributor. The other party to the Class A 12b-1 Plan is
to be Lord Abbett Distributor LLC, a New York limited liability company, to be
formed as a subsidiary of Lord Abbett ("Lord Abbett Distributor"), rather than
Lord Abbett. Lord Abbett Distributor is to take on all the underwriting
functions currently performed directly by Lord Abbett.
The Class A 12b-1 Plan was approved on March 14, 1996 by the trustees of
the Trust, including a majority of the trustees who are not "interested persons"
of the Trust within the meaning of the 1940 Act and who will have no direct or
indirect financial interest in the operations of the Class A 12b-1 Plan or in
any agreements related thereto. In considering whether to approve the Class A
12b-1 Plan, the trustees considered, among other things, the factors set forth
below:
(i) Flexibility in Adapting Distribution Fees to Meet Industry-Wide
Changes. During the last several years, there has been significantly
increased competition and pricing experimentation in the mutual fund
industry. As the pace of change increases, the Board of Trustees believes
it will be useful to be able to respond more quickly to marketplace
pressures, and to change in appropriate cases the amount of the Class A
12b-1 distribution fees to be paid, without unnecessarily burdening the
shareholders with the costs of additional proxy solicitations. The trustees
believe that the increased distribution fees described above are good
examples of the desirability of this flexibility. Based on advice received
from Lord Abbett, the decision by the board to approve the payment of
distribution fees in connection with sales to retirement plans with 100 or
more eligible employees will enable the Class A shares to compete more
effectively in this growing and important market. The 0.10% per annum
supplemental payments to dealers who meet certain criteria will permit the
Acquiring Fund to enhance relationships with those dealers most likely to
have a significant impact on the growth of the Class A shares.
12
<PAGE>
(ii) Expanding Categories of Persons Eligible to Receive Payments. The
current Rule 12b-1 Plan of the Acquired Fund limits payments thereunder to
dealers selling shares of the Acquired Fund. Since that plan was adopted,
different methods of distribution, using different entities, have developed
in the industry. The Board of Trustees sees no reason to limit arbitrarily
the categories of persons eligible to receive payments under the proposed
plan, and believes that the availability of payments under the plan will
induce such other entities to invest in Class A shares.
(iii) Flexibility in Distributor's Use of Payments. Lord Abbett has
advised the Board of Trustees that allowing Lord Abbett Distributor to
retain fees received from the Acquired Fund to (i) provide continuing
information and investment services to shareholder accounts and (ii)
finance, with board approval, any activity which is primarily intended to
result in the sale of Class A shares will provide useful flexibility and
will be in line with common practice in the industry.
Prior to the Reorganization, the Acquired Fund will purchase one Class A
share, and as sole shareholder of the Acquiring Fund, will approve the Class A
12b-1 Plan prior to the class being issued to the Acquired Fund in the
Reorganization. A vote in favor of the Reorganization will be deemed also to be
a vote to authorize the Acquired Fund to take such action.
Federal Income Tax Considerations. The consummation of each Reorganization is
conditioned upon the receipt of an opinion of Debevoise & Plimpton, legal
counsel to the Funds, regarding the Federal income tax consequences of that
Reorganization substantially to the effect that, for Federal income tax
purposes:
(a) no gain or loss will be recognized by the Acquired Fund upon the
transfer of the Acquired Fund's assets to the Acquiring Fund in exchange
for Class A shares and the assumption by the Acquiring Fund of the
liabilities of the Acquired Fund or upon the distribution of the Class A
shares to the Acquired Fund's shareholders;
(b) no gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund in exchange for Class A shares
and the assumption by the Acquiring Fund of the liabilities of the Acquired
Fund;
(c) no gain or loss will be recognized by shareholders of the Acquired
Fund upon the exchange of their Acquired Fund shares for Class A shares;
(d) the aggregate tax basis of the Class A shares received by any
Acquired Fund shareholder pursuant to the Reorganization will be the same
as the aggregate tax basis of the Acquired Fund shares held by such
shareholder immediately prior to the Reorganization, and the holding period
for the Class A shares to be received by any Acquired Fund shareholder will
include the period during which the Acquired Fund shares exchanged therefor
were held by such shareholder (provided that the Acquired Fund shares were
held as capital assets on the date of the Reorganization); and
13
<PAGE>
(e) the tax basis of the Acquired Fund's assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the
Acquired Fund immediately prior to the Reorganization, and the holding
period of the assets of the Acquired Fund in the hands of the Acquiring
Fund will include the period during which those assets were held by the
Acquired Fund.
The Funds have not sought a tax ruling from the Internal Revenue Service
with respect to the tax consequences of the Reorganization, but will act in
reliance upon the opinion of counsel. Such opinion is not binding on the
Internal Revenue Service. Since the foregoing discussion relates only to the
general Federal income tax consequences of the Reorganization, shareholders
should also consult their tax advisors as to any state or local tax consequences
of the Reorganization to them and any special circumstances that may apply in
their individual circumstances.
Expenses of the Reorganization. Expenses of the Reorganization, including legal
and accounting expense, the costs of proxy solicitation and the preparation of
this Prospectus and Proxy Statement, will be borne in part by the Acquiring Fund
and in part by the Acquired Fund. If the Reorganization is consummated, the
expenses of the Acquired Fund, to the extent not paid prior to the Closing Date,
will be assumed by the Acquiring Fund and taken into account in determining the
net assets of the Acquired Fund for the purpose of calculating the number of
Class C shares to be issued to the Acquired Fund.
Capitalization. The following table sets forth the capitalization of the
Acquiring Fund and the Acquired Fund as of December 31, 1995, and the pro-forma
capitalization of the Acquiring Fund as if the Reorganization had occurred on
that date:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Class A Class C
Acquiring Acquiring
Fund Fund
Acquiring Fund Acquired Fund (pro-forma - (pro-forma -
(unaudited) (unaudited) unaudited) unaudited)
- ------------------------------------------------------------------------------------------------------
(In thousands, except per share values)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets................ $39,198 $42,740 $39,198 $42,740
- ------------------------------------------------------------------------------------------------------
Net Asset Value per Share. $6.41 $14.11 $6.41 $6.41
- ------------------------------------------------------------------------------------------------------
Shares Outstanding: 6,116 3,028 6,116 6,665
- ------------------------------------------------------------------------------------------------------
</TABLE>
The foregoing table reflects a pro-forma exchange ratio of approximately
2.2 Class A shares for each Acquired Fund share. If the Reorganization is
consummated, the actual exchange ratio may vary from this ratio due to changes
in the market value of the portfolio securities of both the Acquiring Fund and
the Acquired Fund between December 31, 1995 and the Closing Date, and changes in
the amounts of undistributed net investment income and accrued liabilities of
the Acquiring Fund and the Acquired Fund during that period.
14
<PAGE>
COMPARATIVE INFORMATION ABOUT THE
ACQUIRING FUND AND THE ACQUIRED FUND
Fees and Expenses. Both the Acquiring Fund and the Acquired Fund employ Lord
Abbett as their investment manager. Under the management agreement between the
Trust and Lord Abbett, the Trust, on behalf of the Acquiring Fund, is obligated
to pay a monthly fee, based on average daily net assets for each month, at the
annual rate of 0.75 of 1%. For the fiscal year ended October 31, 1995, Lord
Abbett waived all of the management fee payable by the Acquiring Fund. Lord
Abbett has advised the Acquiring Fund that it intends to discontinue such waiver
following the consummation of the Reorganization.
Under the management agreement between the Acquired Fund and Lord Abbett,
the Acquired Fund is obligated to pay a monthly fee at the annual rate of 0.75
of 1% of the Acquired Fund's first $200 million of average daily net assets,
0.65 of 1% of the next $300 million of such assets and 0.50% of such assets in
excess of $500 million. For the fiscal year ended October 31, 1995, the Acquired
Fund paid Lord Abbett a management fee at an annual rate of 0.75 of 1% of
average daily net assets. Lord Abbett has advised the boards of the Acquiring
and the Acquired Funds that, if the Reorganization is consummated, Lord Abbett
will amend the management agreement with the Acquiring Fund to add the same
breakpoints as those contained in the management agreement between the Acquired
Fund and Lord Abbett.
The management agreement of the Acquiring Fund provides for the Acquiring
Fund to repay Lord Abbett without interest for any expenses of the Acquiring
Fund paid or reimbursed by Lord Abbett, as follows: if the Acquiring Fund's
annual expense ratio (determined before taking into account any fee waiver or
expense payment or reimbursement by Lord Abbett) is less than 1.95% after the
first day of the calendar quarter after the net assets of the Acquiring Fund
first reach $50 million (the "commencement date"), the Acquiring Fund will repay
Lord Abbett an amount sufficient to increase the expense ratio to 1.95%. The
Acquiring Fund is not obligated to repay any such expenses after the earlier of
the termination of the management agreement or the end of five full fiscal years
after the commencement date. The contingent obligation to repay such expenses,
which totaled $58,560 as of December 31, 1995, will continue after the
consummation of the Reorganization. Management of the Trust has determined that
this contingent obligation is probable of repayment whether or not the
Reorganization takes place, and so it has been accrued in full as an expense of
the Acquiring Fund. Accordingly, it will be reflected in full in the net asset
value of the Acquiring Fund in connection with the Reorganization. The Acquired
Fund has no such contingent obligation.
As shown above under "Fee Table," the adjusted pro-forma expense ratio for
the Class A shares was 1.35%, compared to the actual expense ratio of 1.38% for
the Acquired Fund.
Investment Objectives, Policies and Restrictions. The Acquired Fund and
Acquiring Fund have substantially similar investment objectives. The Acquiring
Fund seeks long term growth of capital and income without excessive fluctuations
in market value. It normally invests in common stocks of large seasoned
companies in sound financial condition which are expected to show above average
price appreciation. The Acquired Fund seeks growth of capital and growth of
income consistent with reasonable risk. Production of current income is a
secondary consideration for the Acquired Fund.
15
<PAGE>
The Acquired Fund and the Acquiring Fund have substantially the same
investment policies and restrictions. However, the Acquiring Fund is seeking
approval of its shareholders to simplify and make less restrictive its
investment policies and restrictions in order to provide greater flexibility in
managing its investment portfolio and to provide greater uniformity in the
investment policies and restrictions among the Lord Abbett-sponsored funds. A
number of the investment policies and restrictions that are classified as
fundamental for the Acquired Fund are to be re-classified as non-fundamental or
are to be modified or eliminated for the Acquiring Fund. Fundamental investment
restrictions may not be changed without approval of the shareholders of a fund
and the costs of shareholder meetings for these purposes generally are borne by
the fund and its shareholders. The board may amend a non-fundamental restriction
as it deems appropriate and in the best interest of the fund and its
shareholders, without incurring the costs of seeking a shareholder vote.
The principal effect for the shareholders of the Acquired Fund of the
proposed changes in the fundamental policies of the Acquiring Fund will be to
permit the Acquiring Fund to take certain actions not now permitted to the
Acquired Fund without obtaining approval of the shareholders. The Acquiring Fund
either will not be permitted to, or does not intend to, take any such action
unless such action is approved by its Board of Trustees. The board does not now
intend to approve any such action or to do so in the future unless it deems such
action to be an appropriate means of seeking the Acquiring Fund's investment
objective in the best interests of the Acquiring Fund and its shareholders, in
which case disclosure of the change would be made in the Acquiring Fund's then
current prospectus or statement of additional information or both. Such actions
involve the following matters, among others: (i) short sales of securities; (ii)
borrowings from banks in amounts up to one-third of total assets (and up to an
additional 5% of total assets for temporary purposes) and short-term credits for
the clearance of purchases and sales of securities; (iii) loans of portfolio
securities to the extent permitted by law; (iv) purchases and sales of
securities directly or indirectly secured by real estate or interests therein
and of commodities and commodity contracts in accordance with applicable law so
long as registration would not be required as a commodity pool operator under
the Commodity Exchange Act; (v) with respect to 25% of gross assets, investments
of more than 5% of gross assets in the securities of any one issuer and
ownership of more than 10% of the voting securities of an issuer; (vi)
investments in illiquid securities; (vii) pledges to secure borrowings as
permitted by applicable law; (viii) investments in the securities of investment
companies to the extent permitted by applicable law; (ix) investments in
securities of issuers with less than three years of continuous operations; and
(x) purchases and sales of puts or calls.
A summary comparison of the fundamental and certain non-fundamental
investment policies and restrictions of the Acquired Fund and of the Acquiring
Fund, as currently in effect and as proposed to be amended, is set forth in
Exhibit B to this Proxy Statement and Prospectus.
For a full discussion and statement of the Acquiring Fund's investment
objectives, policies and restrictions, see "Investment Objective" and "How We
Invest" in the Acquiring Fund Prospectus and "Investment Objective and Policies"
in the Acquiring Fund Statement of Additional Information. For a full discussion
and statement of the Acquired Fund investment objectives, policies and
restrictions, see "Investment Objective" and "How We Invest" in the Acquired
Fund Prospectus and "Investment Objective and Policies" in the Acquired Fund
Statement of Additional Information. The summary comparison set forth in Exhibit
B does not purport to be complete, and is subject in all respects to, and is
qualified in its entirety by reference to such statements of such policies and
restrictions.
16
<PAGE>
Shareholders' Rights. After the Reorganization, the rights of the former
shareholders of the Acquired Fund will be governed by the Trust's Declaration of
Trust, By-Laws and applicable Delaware law. Prior to the Reorganization the
rights of the shareholders of the Acquired Fund are governed by the Articles of
Incorporation and By-Laws of the Acquired Fund and applicable Maryland law. The
corporate law of Maryland, to which the Acquired Fund is subject, requires
shareholder approval of a greater number of corporate actions than is the case
under the law of Delaware applicable to business trusts and the Declaration of
Trust of the Investment Trust. Thus, the Board of Trustees of the Trust may have
somewhat greater authority, acting alone, to take corporate actions than has
been the case with the Board of Directors of the Acquired Fund. However, the
Acquiring Fund believes that the responsibilities and fiduciary duties of the
trustees of the Acquiring Fund are substantially the same as those of the
directors of the Acquired Fund and the operations of the Acquiring Fund will
continue to be subject to the provisions of the 1940 Act and the rules and
regulations of the Commission thereunder.
The Acquired Fund's By-Laws provide for indemnification of the directors
for actual liabilities arising out of the directors' service in their capacity
as directors of the Acquired Fund, subject only to the conditions and
limitations of applicable law. The Trust's Declaration of Trust provides for
indem nification of the trustees against certain liabilities and expenses,
except with respect to (i) any matter as to which any trustee has been
adjudicated not to have acted in good faith in the reasonable belief that his or
her action was in the best interest of the Trust, (ii) any liability by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of
duties or (iii) any matter disposed of by settlement, compromise or consent
decree, unless it is determined that such compromise is in the best interests of
the Trust and that the trustee appears to have acted in good faith in the
reasonable belief that such act was in the best interests of the Trust. Acquired
Fund shareholders may remove, with or without cause, any director by the
affirmative vote of a majority of the votes cast. The Trust shareholders may
remove a trustee by the vote of shareholders of record of not less than
two-thirds.
Derivative actions on behalf of the Trust or the Acquiring Fund may be
brought only by shareholders owning not less than 50% of the then-outstanding
shares of the Trust or the Acquiring Fund, as the case may be. No such
restrictions apply to derivative actions on behalf of the Acquired Fund.
Neither the Acquired Fund nor the Acquiring Fund regularly holds
shareholder meetings. The By-laws of each of the Funds provides that a meeting
of shareholders will be held upon the written request of holders of at least 25%
of the shares entitled to vote at the meeting.
The foregoing is only a summary of certain rights of the shareholders of
the Acquired Fund and of the rights these shareholders will have following the
Reorganization as holders of Class A shares of the Acquiring Fund. It is not a
complete description of the Declaration of Trust of the Acquiring Fund or the
Articles of Incorporation of the Acquired Fund, the By-Laws of either of the
Funds or the applicable Delaware or Maryland law. Shareholders desiring
additional information about those
17
<PAGE>
documents and provisions of law should refer to such Declarations of Trust,
Articles of Incorporation, By-Laws and provisions.
REQUIRED VOTE
Approval of the Plan and the Reorganization will require the affirmative
vote of a majority of the outstanding shares of the Acquired Fund. In the case
of the Plan and the Reorganization, the effect of an abstention or broker
non-vote by an Acquired Fund shareholder is the same as a vote against. If the
Plan is not approved by the shareholders of the Acquired Fund or if the
Reorganization is not consummated for any other reason, the Acquired Fund will
continue to engage in business as Lord Abbett Fundamental Value Fund, Inc.
The Board of Directors of the Acquired Fund recommends that shareholders
vote FOR the approval of the proposed Agreement and Plan of Reorganization and
the Reorganization.
ITEM 2. - ELECTION OF DIRECTORS
The Board of Directors of the Acquired Fund believes that it is important
to ensure continuity of operation of the Acquired Fund in the event that the
Reorganization is not consummated. Accordingly, the Board has determined that
the persons who currently constitute the Board of Directors of the Acquired Fund
should stand for re-election, for a term of office to extend until their
successors are elected and qualified.
The nominees for election as directors are Ronald P. Lynch, Robert S. Dow,
E. Thayer Bigelow, Stewart S. Dixon, John C. Jansing, C. Alan MacDonald, Hansel
B. Millican, Jr. and Thomas J. Neff. The individuals named as proxies intend to
vote the proxies, unless otherwise directed, in favor of the election of such
nominees, each of whom has agreed to continue to serve as a director of the
Acquired Fund. Management of the Acquired Fund has no reason to believe that any
nominee will be unable to serve as a director. If any nominee should be unable
to serve as a director, it is the intention of the individuals named as proxies
to vote for the election of such person or persons as the Board of Directors
may, in its discretion, recommend.
Information about each person nominated for election as a director is set
forth in the following table. Except where indicated, each of the persons listed
in the table has held the principal occupation listed opposite his name for the
past five years.
<TABLE>
<CAPTION>
Names and Ages of Director of the
Directors of the Fund Principal Occupation and Directorships Fund Since
--------------------- -------------------------------------- ----------
<S> <C> <C>
Ronald P. Lynch (1)(2) Chairman of the Board of the Reorganized 1986
60 Fund.
Partner of Lord Abbett.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Names and Ages of Director of the
Directors of the Fund Principal Occupation and Directorships Fund Since
--------------------- -------------------------------------- ----------
<S> <C> <C>
Robert S. Dow (1)(2) President of the Reorganized Fund. 1995
50 Partner of Lord Abbett.
E. Thayer Bigelow President and Chief Executive Officer of 1994
(2) 54 Time Warner Cable Programming, Inc.,
formerly President and Chief Operating
Officer of Home Box Office, Inc.
Stewart S. Dixon (2) Partner in the law firm of Wildman, 1986
65 Harrold, Allen & Dixon.
John C. Jansing (2) Retired. Former Chairman of Independent 1986
70 Election Corporation of America, a proxy
tabulating firm.
C. Alan MacDonald (2) General Partner, The Marketing Partner 1988
62 ship, Inc., a full service marketing con
sulting firm. Formerly Chairman and Chief
Executive Officer of Lincoln Snacks, Inc.,
manufacturer of branded snack foods
(1992-1994). Formerly President & CEO of Nestle
Foods Corp., and prior to that, President & CEO
of Stouffer Foods Corp., both subsidiaries of
Nestle SA, Switzerland. Currently serves as
Director of Den West Restaurant Co., J. B.
Williams, and Fountainhead Water Com pany.
Hansel B. Millican, Jr. (2) President and Chief Executive Officer of 1986
66 Rochester Button Company.
Thomas J. Neff (2) President, Spencer Stuart & Associates, an 1986
58 executive search consulting firm.
</TABLE>
- ------------------------------------
(1) "Interested person" of the Acquired Fund and Lord Abbett, within the
meaning of the Investment Company Act of 1940, as amended, because of his
association with Lord Abbett.
(2) Also a director or trustee of the other Lord Abbett-sponsored funds except
for Lord Abbett Research Fund, Inc., of which only Messrs. Lynch, Dow,
Millican and Neff are directors.
Listed below is the number of shares of the Acquired Fund's outstanding
capital stock owned beneficially by each director as of March 22, 1996, together
with the number of "phantom" shares credited to the account of each director
under a plan (the "Deferred Plan") permitting independent directors to defer
their directors' fees and to have the deferred amounts deemed invested in shares
of the capital stock of the Acquired Fund for later payment. Also shown is the
number of shares owned
19
<PAGE>
beneficially by the directors as a group, together with such "phantom" shares
credited to the accounts of directors as a group. In each case, the amounts
shown are less than 1% of the Acquired Fund's outstanding capital stock.
<TABLE>
<CAPTION>
Number of Shares Beneficially
Name Owned and Phantom Shares(1)
---- ---------------------------
<S> <C>
Ronald P. Lynch 137,719
Robert S. Dow 7,142
E. Thayer Bigelow 11
Stewart S. Dixon 1,263
John C. Jansing 2,893
C. Alan MacDonald 478
Hansel B. Millican, Jr. 1,051
Thomas J. Neff 1,276
Thomas S. Henderson 8,483
Directors and Officers as a 181,028
group
</TABLE>
- -------------------
(1) Of the shares listed in the foregoing table, the following constitute
"phantom" shares credited to directors under the Deferred Plan: Mr.
Bigelow, 11 shares; Mr. Dixon, 1,083 shares; Mr. Jansing, 1,088 shares; Mr.
MacDonald, 478 shares; Mr. Millican, 1,051 shares; Mr. Neff, 1,100 shares;
and directors as a group: 4,811.
The board of the Acquired Fund has only one standing committee, an Audit
Committee, consisting of Messrs. Bigelow, MacDonald and Millican. The functions
performed by the Audit Committee include recommendation of the selection of
independent public accountants for the Acquired Fund to the board for approval,
review of the scope and results of audit and non-audit services, the adequacy of
internal controls and material changes in accounting principles and practices
and other matters when requested from time to time by the directors who are not
"interested persons" of the Acquired Fund within the meaning of the 1940 Act.
The Audit Committee held four meetings during the fiscal year of the Acquired
Fund ended June 30, 1995.
The Board of Directors of the Acquired Fund met ten times during the fiscal
year ended June 30, 1995, and each director attended at least 75% of the total
number of meetings of the Board and, if he was a member of the Audit Committee,
of such committee.
20
<PAGE>
The second column of the following table sets forth the compensation
accrued by the Acquired Fund for the directors not associated with Lord Abbett.
The third and fourth columns set forth information with respect to the
retirement plan for the directors not associated with Lord Abbett maintained by
the Acquired Fund and the other Lord Abbett-sponsored funds. The fifth column
sets forth the total compensation accrued by the Acquired Fund and such other
funds for such directors. The second, third and fourth columns give information
for the Acquired Fund's most recent fiscal year; the fifth column gives
information for the calendar year ended December 31, 1995. No director
associated with Lord Abbett and no officer of the Acquired Fund received any
compensation from the Acquired Fund for acting as a director or officer.
<TABLE>
<CAPTION>
For Year Ended
For the Fiscal Year Ended June 30, 1995 December 31, 1995
--------------------------------------------------------------- -----------------------
(I) (II) (III) (IV) (V)
- --------------------------- ------------------- -------------------- -------------------- -----------------------
Pension or Estimated Annual
Retirement Bene- Benefits Upon Re-
fits Accrued by tirement Proposed Total Compensation
the Acquired to be Paid by the Accrued by the Ac-
Aggregate Com- Fund and Fifteen Acquired Fund quired Fund and
pensation Ac- Other Lord and Fifteen Other Fifteen Other Lord
crued by the Ac- Abbett-sponsored Lord Abbett-spon- Abbett-sponsored
Name of Director quired Fund(1) Funds(2) sored Funds(2) Funds(3)
- --------------------------- ------------------- -------------------- -------------------- -----------------------
<S> <C> <C> <C> <C>
E. Thayer Bigelow(4) $ 74 $ 7,656 $ 33,600 $ 41,700
Thomas F. Creamer(5) $ 16 $ 27,578 $ 33,600 $ 0
Stewart S. Dixon $ 109 $ 22,595 $ 33,600 $ 42,000
John C. Jansing $ 111 $ 28,636 $ 33,600 $ 42,960
C. Alan MacDonald $ 112 $ 27,508 $ 33,600 $ 42,750
Hansel B. Millican, Jr. $ 111 $ 24,892 $ 33,600 $ 43,000
Thomas J. Neff $ 108 $ 16,214 $ 33,600 $ 42,000
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fees for directors not associated with Lord Abbett, including attendance
fees for board and committee meetings, are allocated among all Lord
Abbett-sponsored funds based on net assets of each fund. A portion of fees
payable by the Acquired Fund to such directors are being deferred under a
plan that deems the deferred amounts to be invested in shares of the
Acquired Fund for later payment to the directors. The total amount accrued
under the plan for each such director since the beginning of his tenure
with the Acquired Fund, including dividends reinvested and changes in net
asset value applicable to such deemed investments, were as follows as of
June 30, 1995: Mr. Bigelow, $82; Mr. Dixon, $13,754; Mr. Jansing, $13,746;
Mr. MacDonald, $6,071; Mr. Millican, $13,279; and Mr. Neff, $13,897.
21
<PAGE>
(2) Each Lord Abbett-sponsored fund has a retirement plan providing that
Directors not associated with Lord Abbett 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 in column (IV)
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 set forth in column (III) were accrued
by the Lord Abbett-sponsored funds during the fiscal year ended June 30,
1995 with respect to the retirement benefits set forth in column (IV).
(3) This column shows aggregate fees of directors who are not associated with
Lord Abbett, including attendance fees for board and committee meetings, of
a nature referred to in the first sentence of footnote (1), accrued by the
Lord Abbett-sponsored funds during the year ended December 31, 1995.
(4) Mr. Bigelow was elected a director of the Fund on October 12, 1994.
(5) Mr. Creamer retired as a director of the Fund effective September 21, 1994.
The stated amount of his retirement income (column iv) is the annual amount
payable to him by the Lord Abbett-sponsored funds before reduction for a
joint-and-survivor spousal benefit.
Listed below are the executive officers of the Acquired Fund, other than
Messrs. Lynch and Dow who are listed above in the table of nominees. Each
executive officer has been associated with Lord Abbett for over five years,
except as indicated. Messrs. Allen, Carper, Cutler, Henderson, Morris, Nordberg
and Walsh are partners of Lord Abbett; the others listed below are em ployees.
Stephen I. Allen, age 42, Vice President since 1994.
Daniel E. Carper, age 44, Vice President since 1986.
Kenneth B. Cutler, age 63, Vice President and Secretary since 1986.
John J. Gargana, Jr., age 64, Vice President since 1986.
Thomas S. Henderson, age 64, Vice President since 1986.
Paul A. Hilstad, age 53, Vice President since 1995 (with Lord Abbett since 1995
- - formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.).
William T. Hudson, age 53, Executive Vice President since 1995.
Thomas F. Konop, age 54, Vice President since 1987.
22
<PAGE>
EXHIBIT A
---------
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the
"Agreement") is made as of this day of , 1996, by and between Lord Abbett
Securities Trust (the "Trust"), a Delaware business trust, on behalf of its
series the Lord Abbett Growth & Income Trust (the "Acquiring Fund") and Lord
Abbett Fundamental Value Fund, Inc. (the "Acquired Fund"), a Maryland
corporation.
WHEREAS, this Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(C) of the
United States Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the reorganization (the "Reorganization") will consist of
the transfer of all of the assets of the Acquired Fund in exchange for Class A
shares of capital stock of the Acquiring Fund (the "Acquiring Fund Class A
Shares" and each an "Acquiring Fund Class A Share") and the assumption by the
Acquiring Fund of all of the liabilities of the Acquired Fund and the
distribution, after the Closing Date herein referred to, of Acquiring Fund Class
A Shares to the shareholders of the Acquired Fund in termination of the Acquired
Fund, all upon the terms and conditions hereinafter set forth in this Agreement;
WHEREAS, the Acquired Fund and the Trust are open-end, registered
investment companies of the management type;
WHEREAS, the Acquiring Fund is a series of the Trust;
WHEREAS, the Acquired Fund owns securities that generally are of the
character in which the Acquiring Fund is permitted to invest;
WHEREAS, the Acquiring Fund is authorized to issue and currently has
outstanding a single class of shares (the "Acquiring Fund Class C Shares"), and
prior to the consummation of the Reorganization, will seek to amend its
Declaration and Agreement of Trust to provide for the authorization and issuance
of shares of additional classes of capital stock, including Acquiring Fund Class
A Shares, which will share pro rata with each other class in the portfolio,
income and expenses of the Acquiring Fund, except that each class will bear the
expense of its own distribution and shareholder servicing arrangements and
certain other expenses;
WHEREAS, after the multiple class share structure is authorized by
the Acquiring Fund but before the Acquiring Fund Class A Shares are issued to
the Acquired Fund pursuant to the Reorganization, the Acquired Fund is to
purchase one Acquiring Fund Class A share and as sole shareholder approve a plan
pursuant to
<PAGE>
Section 12(b) of the Investment Company Act of 1940 (the "1940 Act") and Rule
12b-1 thereunder (a "Rule 12b-1 Plan") applicable to the Acquiring Fund Class A
Shares;
WHEREAS, the Board of Directors, including a majority of the
directors who are not "interested persons" (as defined under the 1940 Act ), of
the Acquired Fund has determined that the Reorganization is in the best
interests of the Acquired Fund's shareholders and that the interests of the
existing shareholders of the Acquired Fund will not be diluted as a result of
this transaction; and
WHEREAS, the Board of Trustees, including a majority of the trustees
who are not "interested persons" (as defined under the 1940 Act) of the Trust,
has determined that the Reorganization is in the best interests of the Acquiring
Fund's shareholders and that the interests of the existing shareholders of the
Acquiring Fund will not be diluted as a result of this transaction;
NOW THEREFORE, in consideration of the premises and of the agreements
hereinafter set forth, the parties hereto agree as follows:
1. REORGANIZATION.
1.1. Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the Acquired Fund
will transfer its assets as set forth in paragraph 1.2 to the Acquiring Fund,
and the Acquiring Fund will in exchange therefor, (i) deliver to the Acquired
Fund the number of Acquiring Fund Class A Shares, including fractional Acquiring
Fund Class A Shares, determined by dividing the net value of the Acquired Fund's
assets so transferred computed in the manner and as of the time and date set
forth in paragraph 2.1, by the net asset value of one Acquiring Fund Class C
Share, computed in the manner and as of the time and date set forth in paragraph
2.2; and (ii) assume all of the liabilities of the Acquired Fund. Such
transactions shall take place at the closing provided for in paragraph 3.1 (the
"Closing").
1.2. (a) The assets of the Acquired Fund to be acquired by the
Acquiring Fund shall consist of all of its property, including, without
limitation, all cash, securities and dividends or interest receivables and any
deferred or prepaid expenses shown as an asset on the books of the Acquired Fund
on the closing date provided in paragraph 3.1 (the "Closing Date").
2
<PAGE>
(b) The Acquiring Fund has a list of all of the Acquired Fund's
assets as of the date of execution of this Agreement. The Acquired Fund has a
statement of the Acquiring Fund's investment objectives, policies and
restrictions. The Acquired Fund reserves the right to sell any of its securities
but will not, without the prior approval of the Acquiring Fund, acquire any
additional securities other than securities of the type in which the Acquiring
Fund is permitted to invest. The Acquiring Fund will, within a reasonable time
prior to the Closing Date, furnish the Acquired Fund with a list of the
securities, if any, on the Acquired Fund's list referred to in the first
sentence of this paragraph which do not conform to the Acquiring Fund's
investment objectives, policies and restrictions. In the event that the Acquired
Fund holds any investments which the Acquiring Fund may not hold, the Acquired
Fund will dispose of such securities prior to the Closing Date. In addition, if
it is determined that the portfolios of the Acquired Fund and the Acquiring
Fund, when aggregated, would contain investments exceeding certain percentage
limitations imposed upon the Acquiring Fund with respect to such investments,
the Acquired Fund, if requested by the Acquiring Fund, will dispose of and/or
reinvest a sufficient amount of such investments as may be necessary to avoid
violating such limitations as of the Closing Date.
1.3. As provided in paragraph 3.4, as soon after the Closing Date as
is conveniently practicable, the Acquired Fund will distribute pro rata to the
Acquired Fund's shareholders of record determined as of the close of business on
the Closing Date, the Acquiring Fund Class A Shares it receives pursuant to
paragraph 1.1. Such distribution will be accomplished by establishing Acquiring
Fund shareholder accounts in the names of each Acquired Fund shareholder,
representing the respective pro rata number of full and fractional Acquiring
Fund Class A Shares due each shareholder. All issued and outstanding shares of
the Acquired Fund will simultaneously be canceled on the books of the Acquired
Fund. The Acquiring Fund shall not issue certificates representing the Acquiring
Fund Shares in connection with such exchange.
1.4. Any transfer taxes payable upon issuance of Acquiring Fund Class
A Shares in a name other than the registered holder of the shares of the
Acquired Fund on the books of the Acquired Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Class A Shares are to be issued and transferred.
1.5. The Acquired Fund shall, following the Closing Date and the
making of all distributions pursuant to paragraph 1.3, be dissolved pursuant to
the law of Maryland. Any reporting responsibility of the Acquired Fund is and
shall remain
3
<PAGE>
the responsibility of the Acquired Fund up to and including the Closing Date and
following the dissolution of the Acquired Fund.
2. VALUATION
2.1. The net value of the Acquired Fund's assets to be acquired by
the Acquiring Fund hereunder shall be the value of such assets, less the
Acquired Fund's liabilities assumed by the Acquiring Fund, computed as of the
close of regular trading on New York Stock Exchange, Inc. (the "NYSE") on the
Closing Date (such time and date being hereinafter called the "Valuation Date"),
using the valuation procedures set forth in the Trust's Declaration and
Agreement of Trust.
2.2. The net asset value of one Acquiring Fund Class C Share shall be
the net asset value per share computed as of the close of regular trading on the
NYSE on the Valuation Date, using the valuation procedures set forth in the
Trust's Declaration and Agreement of Trust.
2.3. All computations of value shall be made by the Acquiring Fund
and the Acquired Fund in accordance with the regular practice of the Acquiring
Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be July 12, 1996, or such other date as
the parties may agree to in writing. All acts taking place at the Closing shall
be deemed to take place simultaneously as of the close of business on the
Closing Date unless otherwise provided. The Closing shall be held as of 5:00
p.m. at the offices of [specify location in New Jersey], or at such other time
and/or place as the parties may agree.
3.2. In the event that on the Valuation Date (a) the NYSE or another
primary trading market for portfolio securities of the Acquiring Fund or the
Acquired Fund shall be closed to trading or trading thereon shall be restricted
or (b) trading or the reporting of trading on the NYSE or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of the
Acquiring Fund or the Acquired Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.
3.3. At the Closing, the Acquired Fund shall direct its custodian to
deliver to the custodian of the Acquiring Fund, for the Acquiring Fund's
account, all of its portfolio securities and other assets held by such custodian
for the Acquired
4
<PAGE>
Fund's account, duly endorsed in proper form for transfer as appropriate, in
such condition as to constitute good delivery thereof in accordance with the
custom of the Acquiring Fund's custodian, and shall be accompanied by all
necessary federal and state stock transfer stamps or a check for the appropriate
purchase price thereof.
3.4. The Acquired Fund shall direct its transfer agent to deliver to
the transfer agent of the Acquiring Fund on the Closing Date a list of the names
and addresses of the Acquired Fund's shareholders and the number of outstanding
shares owned by each such shareholder immediately prior to the Closing. The
Acquiring Fund shall direct its transfer agent to issue and deliver a
confirmation evidencing the Acquiring Fund Class A Shares to be credited to the
Acquired Fund's account on the Closing Date to the transfer agent of the
Acquired Fund, or provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Class A Shares have been credited to the Acquired Fund's account
on the books of the Acquiring Fund. At the Closing, each party shall deliver to
the other such bills of sale, checks, assignments, share certificates, if any,
receipts, assumption agreements or other documents as such other party or its
counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1. The Acquired Fund represents and warrants to the Trust as
follows:
(a) The Acquired Fund is a registered investment company classified
as a management company of the open-end type, and its registration with
the Securities and Exchange Commission (the "Commission") as an investment
company under the 1940 Act is in full force and effect.
(b) The Acquired Fund is duly organized, validly existing and in good
standing under the laws of the State of Maryland and has the power to own
all of its properties and assets and to carry out this Agreement.
(c) The current prospectus and statement of additional information of
the Acquired Fund conform (and any prospectus or statement of additional
information of the Acquired Fund issued prior to the Closing Date will
conform) in all material respects to the applicable requirements of the
Securities Act of 1933 Act, as amended (the "1933 Act"), and the 1940 Act
and the rules and regulations of the Commission thereunder and do not (and
will not) include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements
5
<PAGE>
therein, in light of the circumstances under which they were (and will be)
made, not materially misleading.
(d) The Acquired Fund is not, and the execution, delivery and
performance of this Agreement will not result in, a material violation of
its Articles of Incorporation or By-laws or of any agreement, instrument,
contract or other undertaking to which the Acquired Fund is a party or by
which it is bound.
(e) The Acquired Fund has no material contracts or other commitments
which will be terminated with liability to the Acquired Fund on, prior to
or after the Closing Date.
(f) Except as otherwise disclosed in writing to and accepted by the
Acquiring Fund, no litigation or administrative proceeding or
investigation before any court or governmental body is presently pending
or to its knowledge threatened against the Acquired Fund or any of the
Acquired Fund's properties or assets, which if adversely determined would
materially and adversely affect the financial condition of the Acquired
Fund or the conduct of the Acquired Fund's business. The Acquired Fund
knows of no facts which might form the basis of the institution of such a
proceeding and is not party to or subject to the provisions of any order,
decree or judgment of any court or governmental body which materially and
adversely affects the business of the Acquired Fund or the ability of the
Acquired Fund to consummate the transactions contemplated herein.
(g) True and correct copies of the Acquired Fund's (i) Statement of
Net Assets as at June 30, 1995 and (ii) Statements of Operations and
Changes in Net Assets for the 12-month period then ended, including the
accompanying notes, have been furnished to the Acquiring Fund. Such
Statement of Net Assets and such Statements of Operations and Changes in
Net Assets (and the accompanying notes) have been audited by Deloitte &
Touche LLP, independent certified public accountants. Such statements have
been prepared in accordance with generally accepted accounting principles
consistently applied, and such statements fairly reflect the financial
condition and the operations and changes in net assets of the Acquired
Fund as of such date and for such period, respectively. There are no known
contingent liabilities of the Acquired Fund as of such date required to be
reflected or disclosed in such Statement of Net Assets or notes in
accordance with generally accepted accounting principles that are not so
reflected or disclosed.
6
<PAGE>
(h) Since June 30, 1995, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business,
or any incurrence by the Acquired Fund of indebtedness maturing more than
one year from the date such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Acquiring Fund.
(i) The Acquired Fund will file the final federal and other tax
returns of the Acquired Fund for the period ending on the Closing Date in
accordance with the Code. At the Closing Date, all federal and other tax
returns and reports of the Acquired Fund required by law to have been
filed prior to the Closing Date shall have been filed, and all federal and
other taxes shown as due on such returns shall have been paid, or
provision shall have been made for the payment thereof, and to the best of
the Acquired Fund's knowledge, no such return is currently under audit and
no assessment has been asserted with respect to such returns.
(j) For the most recent fiscal year of its operation, the Acquired
Fund has met the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company.
(k) All issued and outstanding shares of the Acquired Fund are, and
at the Closing Date will be, duly and validly issued and outstanding,
fully paid and non-assessable. All of the issued and outstanding shares of
the Acquired Fund will, at the time of Closing, be held of record by the
persons and in the amounts set forth in the records of the transfer agent
as provided in paragraph 3.4. The Acquired Fund does not have outstanding
any options, warrants or other rights to subscribe for or purchase any
shares of the Acquired Fund, nor is there outstanding any security
convertible into any shares of the Acquired Fund.
(l) At the Closing Date, the Acquired Fund will have good and
marketable title to its assets to be transferred to the Acquiring Fund
pursuant to paragraph 1.1 and full right, power and authority to sell,
assign, transfer and deliver such assets hereunder and, upon delivery and
payment for such assets, the Acquiring Fund will acquire good and
marketable title thereto, subject to no restrictions on the full transfer
thereof, including such restrictions as might arise under the 1933 Act,
other than as disclosed to the Acquiring Fund prior to the date hereof.
7
<PAGE>
(m) The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action on the part of Acquired
Fund's directors, and subject to the due approval of the Acquired Fund's
shareholders, this Agreement, assuming due authorization, execution and
delivery by the Acquiring Fund, constitutes a valid and binding obligation
of the Acquired Fund, enforceable in accordance with its terms, subject as
to enforcement to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights and to general
equity principles. The Acquired Fund's Board of Directors has called a
meeting of the Acquired Fund's shareholders at which the shareholders of
the Acquired Fund are to consider and act upon this Agreement.
(n) The information furnished and to be furnished by the Acquired
Fund for use in registration statements, proxy materials and other
documents which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete in all material
respects and shall comply in all material respects with federal securities
and other laws and regulations thereunder applicable thereto.
(o) The combined prospectus and proxy statement (the "N-14 prospectus
and proxy statement") and the related statement of additional information
included in the Registration Statement on Form N-14 of the Acquiring Fund
(the "N-14 Registration Statement") did not on the effective date of the
N-14 Registration Statement contain any untrue statement of a material
fact relating to the Acquired Fund or the meeting of the Acquired Fund
shareholders referred to therein or omit to state a material fact required
to be stated therein or necessary to make the statements therein relating
to the Acquired Fund or such special meeting, in light of the
circumstances under which such statements were made, not materially
misleading.
(p) The Acquiring Fund Class A Shares to be issued to the Acquired
Fund hereunder are not being acquired for the purpose of making any
distribution thereof other than in accordance with the terms of this
Agreement.
4.2. With respect to the Acquiring Fund, the Trust represents and
warrants to the Acquired Fund as follows:
(a) The Investment Trust is a registered investment company
classified as a management company of the open-end type, and its
registration with the Commission as an investment company under the 1940
Act is in full force and effect.
8
<PAGE>
(b) The Acquiring Fund is a series of the Trust. The Trust is a
business trust duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the power to own all of its
properties and assets and to carry out this Agreement.
(c) The current prospectus and statement of additional information of
the Trust conform (and any prospectus or statement of additional
information of the Trust issued prior to the Closing Date will conform) in
all material respects to the applicable requirements of the 1933 Act and
the 1940 Act and the rules and regulations of the Commission thereunder
and do not (and will not) include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were (or will be) made, not materially misleading.
(d) The Trust is not, and the execution, delivery and performance of
this Agreement will not result in, a material violation of its Declaration
and Agreement of Trust or By-laws or of any agreement, instrument,
contract or other undertaking to which the Trust is a party or by which it
is bound.
(e) The Trust has no material contracts or other commitments which
will be terminated with liability to the Trust on, prior to or after the
Closing Date.
(f) Except as otherwise disclosed in writing to and accepted by the
Acquired Fund, no litigation or administrative proceeding or investigation
before any court or governmental body is presently pending or to its
knowledge threatened against the Trust or any of the Acquiring Fund's
properties or assets, which, if adversely determined, would materially and
adversely affect its financial condition or the conduct of its business.
The Trust knows of no facts which might form the basis of the institution
of such a proceeding and is not party to or subject to the provisions of
any order, decree or judgment of any court or governmental body which
materially and adversely affects its business or its ability to consummate
the transactions contemplated herein.
(g) True and correct copies of the Acquiring Fund's (i) Statement of
Net Assets as at October 31, 1995, and (ii) Statements of Operation and
Changes in Net Assets for the 12-month period then ended, including the
accompanying notes, have been furnished to the Acquired Fund. Such
Statement of Net Assets and such Statements of Operations and Changes in
9
<PAGE>
Net Assets (and the accompanying notes) have been audited by Deloitte &
Touche LLP, independent certified public accountants. Such statements have
been prepared in accordance with generally accepted accounting principles
consistently applied, and such statements fairly reflect the financial
condition and the operations and changes in net assets of the Acquiring
Fund as of such date and for such period, respectively. There are no known
contingent liabilities of the Acquiring Fund as of such date required to
be reflected or disclosed in such Statements of Net Assets or notes in
accordance with generally accepted accounting principles that are not so
reflected or disclosed.
(h) Since October 31, 1995, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business,
or any incurrence by the Acquiring Fund of indebtedness maturing more than
one year from the date such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Acquired Fund.
(i) At the Closing Date, all federal and other tax returns and
reports of the Trust required by law to have been filed prior to the
Closing Date shall have been filed, and all federal and other taxes shown
as due on such returns and reports shall have been paid, or provision
shall have been made for the payment thereof, and to the best of the
Acquiring Fund's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns.
(j) For the most recent fiscal year of its operation, the Acquiring
Fund has met the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company and the
Acquiring Fund intends to do so in the future.
(k) All issued and outstanding shares of the Acquiring Fund are, and
at the Closing Date will be, duly and validly issued and outstanding,
fully paid and non-assessable, with no personal liability attaching to the
ownership thereof. The Acquiring Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any shares
of the Acquiring Fund, nor is there outstanding any security convertible
into shares of the Acquiring Fund.
(l) At the Closing Date, the Acquiring Fund will have good and
marketable title to the Acquiring Fund's assets.
10
<PAGE>
(m) The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action on the part of the Trust's
Board of Trustees, and assuming due authorization, execution and delivery
by the Acquired Fund, this Agreement constitutes a valid and binding
obligation of the Trust on behalf of the Acquiring Fund, enforceable in
accordance with its terms, subject as to enforcement to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles.
(n) The N-14 Registration Statement (except insofar as it relates to
the Acquired Fund or the special meeting of its shareholders referred to
therein) did not on the effective date of the N-14 Registration Statement
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such
statements were made, not materially misleading.
(o) The Acquiring Fund Class A Shares to be issued and delivered to
the Acquired Fund pursuant to the terms of this Agreement have been duly
authorized by the Board of Trustees of the Trust, and, when issued and
delivered at the Closing in accordance with this Agreement, will be duly
and validly issued Acquiring Fund Class A Shares and will be fully paid
and non-assessable with no personal liability attaching to the ownership
thereof.
(p) A majority of the Board of Trustees of the Trust has duly
executed an instrument which shall have the status of an amendment to the
Declaration and Agreement of Trust of the Trust (a copy of which has been
furnished to the Acquired Fund) setting forth the establishment of
Acquiring Fund Class A Shares.
5. COVENANTS
5.1. The Acquiring Fund and the Acquired Fund each will operate its
business in the ordinary course between the date hereof and the Closing Date. It
is understood that such ordinary course of business will include the declaration
and payment of customary dividends and distributions and any other dividends and
distributions deemed advisable.
5.2. At or after the Closing, the Acquired Fund will deliver or
otherwise make available to the Trust a statement of the Acquired Fund's assets
and liabilities, together with a list of the Acquired Fund's portfolio
securities showing the
11
<PAGE>
tax costs of such securities to it and holding periods of such securities, as of
the Closing Date.
5.3. The Acquired Fund will assist the Acquiring Fund in obtaining
such information as the Acquiring Fund reasonably requests concerning the
beneficial ownership of the Acquired Fund's shares.
5.4. Subject to the provisions of this Agreement, the Acquired Fund
and the Acquiring Fund each will take, or cause to be taken, all action, and do
or cause to be done all things, reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.5. Prior to the Closing Date, the Board of Directors of the
Acquired Fund will declare such dividends and distributions, payable no later
than [90] days after the Closing Date, to shareholders of record of the Acquired
Fund as of the Closing Date, which, together with all such previous dividends
and distributions, shall have the effect of distributing to the shareholders of
the Acquired Fund all of the investment company taxable income and
exempt-interest income of the Acquired Fund for all taxable years ending on or
prior to the Closing Date. The dividends and distributions declared by the
Acquired Fund shall also include all of the Acquired Fund's net capital gain
realized in all taxable years ending on or prior to the Closing Date (after
reduction for any capital loss carry forward). Such dividends and distributions
declared prior to the Closing Date shall be paid by the Acquiring Fund no later
than [90] days after the Closing Date.
5.6. As promptly as practicable, but in any case within sixty days
after the Closing Date, the Acquired Fund shall furnish the Acquiring Fund, in
such form as is reasonably satisfactory to the Acquiring Fund, a statement of
the earnings and profits of the Acquired Fund for federal income tax purposes
which will be carried over to the Acquiring Fund as a result of Section 381 of
the Code.
5.7. The Acquired Fund will provide the Acquiring Fund with any
additional information reasonably necessary for any revision of the N-14
Prospectus and Proxy Statement referred to in paragraph 4.1(o), all to be
included in any amendment to the N-14 Registration Statement, in compliance with
the 1933 Act, the Securities Exchange Act of 1934 (the "1934 Act") and the 1940
Act in connection with the meeting of the Acquired Fund's shareholders to
consider approval of this Agreement and the Reorganization.
12
<PAGE>
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED
FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Trust in all material respects of all of the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto, the following
further conditions:
6.1. All representations and warranties of the Trust contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date.
6.2. The Acquiring Fund shall have delivered to the Acquired Fund a
certificate executed in its name by its Chairman, President or a Vice President
and its Treasurer or an Assistant Treasurer, in form reasonably satisfactory to
the Acquired Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the Trust made in this Agreement are true and
correct at and as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST
The obligations of the Trust, on behalf of the Acquiring Fund, to
consummate the transactions provided for herein shall be subject, at its
election, to the performance by the Acquired Fund in all material respects of
all the obligations to be performed by it hereunder on or before the Closing
Date and, in addition thereto, the following further conditions:
7.1. All representations and warranties of the Acquired Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
7.2. The Acquired Fund shall have delivered to the Acquiring Fund on
the Closing Date a certificate executed in its name by its Chairman, President
or a Vice President and its Treasurer or an Assistant Treasurer, in form and
substance satisfactory to the Acquiring Fund and dated as of the Closing Date,
to the effect that the representations and warranties of the Acquired Fund made
in this Agreement are
13
<PAGE>
true and correct at and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
TRUST AND THE ACQUIRED FUND
If any of the conditions set forth below do not exist on the Closing
Date with respect to the Acquiring Fund or the Acquired Fund, either party to
this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1. This Agreement and the transactions contemplated herein shall
have been approved by the requisite vote of the holders of the outstanding
shares of the Acquired Fund in accordance with the provisions of the Acquired
Fund's Articles of Incorporation of Trust and By-laws. Notwithstanding anything
herein to the contrary, neither the Acquiring Fund nor the Acquired Fund may
waive the conditions set forth in this paragraph 8.1.
8.2. On the Closing Date, no action, suit or other proceeding shall
be pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
8.3. All consents of other parties and all other consents, orders,
rulings and permits of federal, state and local regulatory authorities
(including those of the Commission, the Internal Revenue Service and state Blue
Sky and securities authorities) deemed necessary by the Acquiring Fund or the
Acquired Fund to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where failure
to obtain any such consent, order, ruling or permit would not involve a risk of
a material adverse effect on the assets or properties of the Acquiring Fund or
the Acquired Fund.
8.4. The N-14 Registration Statement shall have become effective
under the 1933 Act and no stop orders suspending the effectiveness thereof shall
have been issued and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the 1933 Act.
8.5. The parties shall have received a favorable opinion of Debevoise
& Plimpton, addressed to the Trust and the Acquired Fund and satisfactory to the
14
<PAGE>
Secretary of each such party, substantially to the effect that for federal
income tax purposes:
(a) the acquisition by the Acquiring Fund of all of the assets of the
Acquired Fund solely in exchange for the issuance of Acquiring Fund Class
A Shares to the Acquired Fund and the assumption of all of the Acquired
Fund liabilities by the Acquiring Fund, followed by the distribution by
the Acquired Fund, in complete liquidation, of the Acquiring Fund Class A
Shares to the Acquired Fund shareholders in exchange for their Acquired
Fund shares, will be treated as a "reorganization" within the meaning of
Section 368(a) of the Code, and the Acquiring Fund and the Acquired Fund
will each be a "party to a reorganization" within the meaning of Section
368(b) of the Code;
(b) no gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund in exchange for the Acquiring
Fund Shares and the assumption by the Acquiring Fund of liabilities of the
Acquired Fund;
(c) no gain or loss will be recognized by the Acquired Fund upon the
transfer of the Acquired Fund's assets to the Acquiring Fund in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of
liabilities of the Acquired Fund or upon the distribution of the Acquiring
Fund Shares to the Acquired Fund's shareholders;
(d) no gain or loss will be recognized by shareholders of the
Acquired Fund upon the exchange of their Acquired Fund shares for the
Acquiring Fund Shares;
(e) the aggregate tax basis for the Acquiring Fund Shares received by
each of the Acquired Fund's shareholders pursuant to the Reorganization
will be the same as the aggregate tax basis of the Acquired Fund shares
held by such shareholder immediately prior to the Reorganization, and the
holding period of the Acquiring Fund Shares to be received by each
Acquired Fund shareholder will include the period during which the
Acquired Fund shares exchanged therefor were held by such shareholder
(provided that the Acquired Fund shares were held as capital assets on the
date of the Reorganization); and
(f) the tax basis of the Acquired Fund's assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the
Acquired Fund immediately prior to the Reorganization, and the holding
period of the assets of the Acquired Fund in the hands of the Acquiring
Fund
15
<PAGE>
will include the period during which those assets were held by the
Acquired Fund.
Notwithstanding anything herein to the contrary, neither the Trust
nor the Acquired Fund may waive the conditions set forth in this paragraph 8.5.
8.6. The Acquiring Fund shall have duly adopted a Rule 12b-1 Plan for
the Acquiring Fund Class A Shares acceptable to the Acquired Fund.
9. BROKERAGE FEES AND EXPENSES
9.1. The Investment Trust represents and warrants to the Acquired
Fund, and the Acquired Fund represents and warrants to the Acquiring Fund, that
there are no brokers or finders entitled to receive any payments in connection
with the transactions provided for herein.
9.2. Except as may be otherwise provided herein, the Acquiring Fund
and the Acquired Fund each shall pay, or provide for the payment of, the
expenses incurred by it in connection with entering into and carrying out the
provisions of this Agreement.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. The parties hereto agree that no party has made any
representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties.
10.2. None of the representations and warranties included or provided
for herein shall survive the consummation of the transactions contemplated
hereby.
11. TERMINATION
11.1. This Agreement may be terminated at any time prior to the
Closing Date: (1) by the mutual agreement of the Acquired Fund and the Trust;
(2) by the Acquired Fund in the event that the Trust shall, or by the Trust in
the event that the Acquired Fund shall, materially breach any representation or
warranty contained herein or any agreement contained herein and to be performed
at or prior to the Closing Date; or (3) by either party if a condition herein
expressed to be precedent to the obligations of the terminating party has not
been met and it reasonably appears that it will not or cannot be met.
16
<PAGE>
11.2. In the event of any such termination, there shall be no
liability for damages on the part of either the Acquired Fund, the Trust or the
Acquiring Fund or their respective directors, trustees or officers to the other
party, but the Acquiring Fund and the Acquired Fund shall each bear, or provide
for the payment of, the expenses incurred by it incidental to the preparation
and carrying out of this Agreement as provided in paragraph 9.2.
12. AMENDMENTS; WAIVERS
12.1. This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers of
the Acquired Fund and the Trust; provided, however, that following the approval
of the Acquired Fund shareholders referred to in paragraph 8.1, no such
amendment may have the effect of changing the provisions for determining the
number of the Acquiring Fund Class A Shares to be issued to the Acquired Fund's
shareholders under this Agreement to the detriment of such shareholders without
their further approval.
12.2. At or at any time prior to the Closing either party hereto may
by written instrument signed by it (i) waive any inaccuracies in the
representations and warranties made to it contained herein and (ii) waive
compliance with any of the covenants or conditions made for its benefit
contained herein.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by personal
delivery addressed to Lord Abbett Fundamental Value Fund, Inc., 767 Fifth
Avenue, New York, New York, 10153, Attention: Office of the Secretary; or to
Lord Abbett Investment Trust on behalf of its series Lord Abbett Growth & Income
Trust, 767 Fifth Avenue, New York, New York, 10153, Attention: Office of the
Secretary.
17
<PAGE>
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
14.1. The article and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
14.3. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
14.4. (a) This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm, corporation or other entity, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
18
<PAGE>
(b) The Acquired Fund is hereby expressly put on notice of the
limitation of liability as set forth in Article IV of the Declaration and
Agreement of Trust of the Trust and agrees that the obligations assumed by the
Trust pursuant to this Agreement shall be limited in any case to the Acquiring
Fund and its assets and the Acquired Fund shall not seek satisfaction of any
such obligation from the shareholders of the Trust, the trustees, officers,
employees or agents of the Trust or any of them or from any other assets of the
Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its Chairman of the Board, President or Vice
President and attested by its Secretary or Assistant Secretary.
Attest: LORD ABBETT FUNDAMENTAL
VALUE FUND, INC.
By: _______________________________
Name: __________________ Name:
Title: Secretary Title:
Attest: LORD ABBETT SECURITIES TRUST
on behalf of the Lord Abbett Growth &
Income Trust
By: _______________________________
Name: _________________ Name:
Title: Secretary Title:
19
<PAGE>
EXHIBIT B
---------
Comparison of Certain Investment Policies and Restrictions
Comparison of the fundamental and certain non-fundamental
investment policies and restrictions of Lord Abbett Fundamental Value Fund, Inc.
(the "Acquired Fund") and Lord Abbett Growth & Income Trust, a series of Lord
Abbett Securities Trust (the "Acquiring Fund") and of the Acquiring Fund as
proposed to be revised.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Policy/Restriction of the Policy/Restriction of the Proposed Policy/Restriction of
Acquired Fund Acquiring Fund the Acquiring Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SHORT SALES/MARGIN.
Fundamental Non-fundamental Non-fundamental
Subject to certain exceptions, the Subject to certain exceptions, the The Fund may not make short
Fund may not sell short or buy on Fund may not sell short or buy on sales of securities or maintain a
margin margin. short position except to the ex-
tent permitted by applicable law.
Fundamental
The Fund may purchase securi-
ties on margin to the extent per-
mitted by applicable law
- -----------------------------------------------------------------------------------------------------------------------------------
BORROWING.
Fundamental Fundamental Fundamental
Subject to certain exceptions, the Subject to certain exceptions, the The Fund may not borrow
Fund may not borrow money. Fund may not borrow money money, except that (i) the Fund
may borrow from banks (as defined
in the 1940 Act) in amounts up to
33 1/3% of its total assets
(including the amount borrowed),
(ii) the Fund may borrow up to an
additional 5% of its total assets
for temporary pur poses, and (iii)
the Fund may ob tain such
short-term credit as may be
necessary for the clearance of
purchases and sales of portfolio
securities.
Non-fundamental
The Fund may not borrow in excess
of 5% of its gross assets taken at
cost or market value, whichever is
lower at the time of borrowing, and
then only as a temporary measure
for extraordinary or emergency
purposes.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Policy/Restriction of the Policy/Restriction of the Proposed Policy/Restriction of
Acquired Fund Acquiring Fund the Acquiring Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
UNDERWRITING.
Fundamental Fundamental Fundamental
The Fund may not engage in the The Fund may not engage in the The Fund may not engage in the
underwriting of securities, unless underwriting of securities, except underwriting of securities, except,
deemed to be an underwriter in pursuant to a merger or pursuant to a merger or acquisition
selling a portfolio security requiring acquisition, or unless deemed to be or to the extent that, in
registration under the 1933 Act. an underwriter in selling a connection with the disposition of
portfolio security requiring its portfolio securities, it may be
registration under the 1933 Act. deemed to be an underwriter under
federal securities laws.
- -----------------------------------------------------------------------------------------------------------------------------------
LENDING.
Fundamental Fundamental Fundamental
The Fund may not lend money or The Fund may not lend money or The Fund may not make loans to
securities to any person, except securities to any person, except other persons, except that the ac-
through lending its portfolio through certain repurchase quisition of bonds, debentures or
securities to registered dealers agreements and by lending its other corporate debt securities and
100% secured by cash or its portfolio securities to registered investment in government
equivalent as long as we comply with broker-dealers where the loan is obligations, commercial paper,
regulatory requirements. 100% secured by cash or its pass-through instruments,
equivalent and except for time or certificates of deposit, bankers
demand deposits with banks and acceptances, repurchase agreements
purchases of commercial paper or or any similar instruments shall
publicly-offered debt securities at not be subject to this limitation,
original issue or otherwise. and except further that the Fund
may lend its portfolio securities,
provided that the lending of
portfolio securities may be made
only in accordance with applicable
law.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Policy/Restriction of the Policy/Restriction of the Proposed Policy/Restriction of
Acquired Fund Acquiring Fund the Acquiring Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE/COMMODITIES.
Fundamental Fundamental Fundamental
The Fund may not buy or sell real The Fund may not buy or sell real The Fund may not buy or sell
estate (except securities of companies estate (excluding securities of real estate (except that the Fund
that deal in real estate or interests companies which deal in real estate or may invest in securities directly
therein), or oil, gas or other mineral interests therein), oil, gas or other or indirectly secured by real
leases, commodities or commodity mineral leases or in commodities or estate or interests therein or
contracts in the ordinary course of its commodity contracts in the ordinary issued by companies which invest
business, except such interests and course of its business, except such in real estate or interests therein)
other property acquired as a result of interests and other property acquired or commodities or commodity
owning other securities, though as a result of owning other securities, contracts (except to the extent the
securities will not be purchased in though securities will not be Fund may do so in accordance
order to acquire any of these purchased in order to acquire any of with applicable law and without
interests. these interests. registering as a commodity pool
operator under the Commodity
Exchange Act as, for example,
with futures contracts).
Non-fundamental
The Fund may not invest in real
estate limited partnership
interests or interests in oil, gas
or other mineral leases, or ex-
ploration or other development
programs, except that the Fund may
invest in securities issued by
companies that engage in oil, gas
or other mineral exploration or
development activities.
- -----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFICATION.
Fundamental Fundamental Fundamental
The Fund may not buy securities if The Fund may not, with respect to With respect to 75% of its gross
the purchase would then cause it to 75% of its gross assets, buy securities assets, the Fund may not buy
have more than 5% of its gross as- if the purchase would then cause it to securities of one issuer
sets, at market value at the time of have more than 5% of its gross as- representing more than (i) 5% of
investment, invested in the securities sets, at market value at the time of the Fund's gross assets, except
of any one issuer, except securities investment, invested in the securities securities issued or guaranteed by
issued or guaranteed by the U.S. of any one issuer, except securities the U.S. Government, its
Government, its agencies or in- issued or guaranteed by the U.S. agencies or instrumentalities, or
strumentalities, or to own more than Government, its agencies or (ii) 10% of the voting securities
10% of the voting securities of any instrumentalities, or to own more than of such issuer.
issuer. 10% of the voting securities of any
issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Policy/Restriction of the Policy/Restriction of the Proposed Policy/Restriction of
Acquired Fund Acquiring Fund the Acquiring Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT IN A SINGLE
INDUSTRY.
Fundamental Fundamental Fundamental
The Fund may not concentrate its The Fund may not concentrate its in The Fund may not invest more
investments in any particular industry, vestments in any particular industry than 25% of its assets, taken at
but if deemed appropriate for attain excluding U.S. Government securi- market value, in the securities of
ment of its investment objective, up ties. issuers in any particular industry
to 25% of its gross assets may be in (excluding securities of the U.S.
vested in any one industry classi- Government, its agencies and
fication used for investment purposes. instrumentalities).
- -----------------------------------------------------------------------------------------------------------------------------------
RESTRICTED/ILLIQUID
SECURITIES.
Fundamental Non-fundamental Non-fundamental
The Fund may not invest knowingly The Fund may not invest knowingly The Fund may not invest,
in securities or other assets not more than 15% of its net assets in knowingly, more than 15% of its
readily marketable at the time of illiquid securities (subject to net assets (at the time of
purchase or subject to legal or applicable state law, securities investment) in illiquid securities,
contractual restrictions on resale. qualifying for resale under Rule 144A except for securities qualifying
of the Securities Act of 1933 that are for resale under Rule 144A of
determined by the trustees, or by the Securities Act of 1933,
Lord Abbett, to be liquid are deemed to be liquid by the Board
considered liquid securities). of Trustees.
- -----------------------------------------------------------------------------------------------------------------------------------
MORTGAGING AND PLEDGING
OF ASSETS.
Fundamental Non-fundamental Fundamental
The Fund may not pledge, mortgage The Fund may not pledge, mortgage, The Fund may not pledge its as-
or hypothecate its assets, except for or hypothecate its assets, except for sets (other than to secure bor-
the grant of escrow receipts or the permitted borrowing or the grant of rowings, or to the extent per-
entry into other similar escrow escrow receipts or the entry into simi- mitted by the Fund's investment
arrangements arising out of the lar escrow arrangements arising out of policies, as permitted by ap
writing of covered call options. the writing of covered call options. plicable law).
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
OF OTHER INVESTMENT COMPANIES.
Fundamental Non-fundamental Non-fundamental
The Fund may not buy securities The Fund may not invest in the The Fund may not invest in the
issued by any other open-end in- securities of other investment securities of other investment
vestment company except pursuant to companies except as permitted by the companies, except as permitted
a merger, acquisition or con- 1940 Act. by applicable law.
solidation, except up to 5% of its
gross assets is such securities are
bought in the open market with a fee
or commission no greater than the
customary broker's commission.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Policy/Restriction of the Policy/Restriction of the Proposed Policy/Restriction of
Acquired Fund Acquiring Fund the Acquiring Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPTIONS.
Fundamental Non-fundamental Non-fundamental
The Fund may not buy or sell put or The Fund may not buy or sell put or The Fund may not write,
call options, although it may buy, call options although it may write purchase or sell puts, calls,
hold or sell rights or warrants and covered call options and enter into straddles, spreads or
write covered call options and enter closing purchase transactions. combinations thereof, except to
into closing purchase transactions. the extent permitted in the
Fund's prospectus and statement of
additional information, as they may
be amended from time to time.
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
OF ISSUERS IN OPERATION
FOR LESS THAN THREE YEARS.
Fundamental Non-fundamental Non-fundamental
The Fund may not invest more than The Fund may not purchase securities The Fund may not invest in
5% of its gross assets, taken at of any issuer unless it or its securities of issuers which, with
market value at the time of predecessor has a record of three their predecessors, have a record
investment, in companies (including years' continuous operation, except of less than three years con-
their predecessors) with less than through subscription offers or other tinuous operations, except if
three years' continuous operation. rights limited in the aggregate to 5% more than 5% of the Fund's total
of its net assets at the time of in assets would be invested in such
vestment. securities (this restriction shall
not apply to mortgage-backed
securities, asset-backed securities
or obligations issued or
guaranteed by the U.S.
Government, its agencies or
instrumentalities).
- -----------------------------------------------------------------------------------------------------------------------------------
OWNERSHIP OF PORTFOLIO
SECURITIES BY OFFICERS AND
DIRECTORS.
Fundamental Non-fundamental Non-fundamental
The Fund may not own securities in a The Fund may not hold securities of The Fund may not hold securities
company when any of its officers, any issuer when more than1/2of 1% of any issuer if more than1/2of
directors or security holders is an of of the issuer's securities are owned 1% of the securities of such
ficer or director of the Fund or an beneficially by one or more of the issuer are owned beneficially by
officer, director or partner of our in Trust's officers or trustees or by one one or more officers or Trustees
vestment manager, if after the pur or more partners of the Trust's under or by one or more members or
chase any of such persons owns bene writer or investment adviser if these partners of the underwriter or
ficially more than1/2of 1% of such owners in the aggregate own bene investment advisor if together
securities and such persons together ficially more than 5% of such they own more than 5% of the
own more than 5% of such securities. securities. securities of such issuer.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Policy/Restriction of the Policy/Restriction of the Proposed Policy/Restriction of
Acquired Fund Acquiring Fund the Acquiring Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TRANSACTIONS WITH
CERTAIN PERSONS.
Fundamental None Non-fundamental
The Fund may not buy securities from The Fund may not buy from or
or sell them to its officers, directors, sell to any of its officers, direc-
or employees, or to our investment tors, employees, or its in
manager or to its partners and em vestment adviser or any or its
ployees, other than capital stock of officers, directors, partners or
the Fund. employees, any securities other
than shares of beneficial interest
in the Fund.
- -----------------------------------------------------------------------------------------------------------------------------------
SENIOR SECURITIES.
Fundamental Fundamental
None The Fund may not issue senior The Fund may not issue senior
securities. securities to the extent such
issuance would violate applicable
law.
- -----------------------------------------------------------------------------------------------------------------------------------
PURCHASE OF WARRANTS.
Non-fundamental None Non-fundamental
Pursuant to state regulations, the Fund The Fund may not invest in
will not invest more than 5% of its warrants if, at the time of the
net assets in warrants and not more acquisition, its investment in
than 2% in warrants not listed on the warrants, valued at the lower of
New York or American Stock cost or market, would exceed 5%
Exchanges, except when they form a of the Fund's total assets
unit with other securities. (included within such limitation,
but not to exceed 2% of the Fund's
total assets, are warrants which
are not listed on the New York or
American Stock Exchange or a major
foreign exchange.)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 24, 1996
Acquisition of the Assets of
Lord Abbett Fundamental Value Fund, Inc.
The General Motors Building, 767 Fifth Avenue
New York, NY 10153
by and in exchange for Class A Shares of
Lord Abbett Growth & Income Trust, a series of
Lord Abbett Securities Trust
The General Motors Building, 767 Fifth Avenue
New York, NY 10153
This Statement of Additional Information, relating specifically to
the proposed trans fer of the assets of Lord Abbett Fundamental Value Fund, Inc.
(the "Acquired Fund"), to the Lord Abbett Growth & Income Trust (the "Acquiring
Fund"), a series of Lord Abbett Securities Trust (the "Trust") in exchange for
Class A shares of the Acquiring Fund and the assumption by the Acquiring Fund of
the liabilities of the Acquired Fund, consists of (i) this page, (ii) the
pro-forma financial statements of the Acquiring Fund as at October 31, 1995 and
for the 12-month period then ended prepared as though the reorganization
referred to above had occurred on November 1, 1994, attached hereto as Exhibit
A, and (iii) the following described documents, each of which accompanies this
Statement of Additional Information and is incorporated herein by reference:
1. Statement of Additional Information of the Acquiring Fund dated
March 1, 1996.
2. Statement of Additional Information of the Acquired Fund dated
November 1, 1995.
3. The financial statements of the Acquiring Fund for the fiscal year
ended October 31, 1995, and the report thereon of Deloitte & Touche LLP,
independent auditors, contained in the 1995 Annual Report of the Acquiring Fund.
4. The financial statements of the Acquired Fund for the fiscal year
ended June 30, 1995, and the report thereon of Deloitte & Touche LLP,
independent public accountants, contained in the 1995 Annual Report of the
Acquired Fund.
The financial statements referred to above are incorporated herein in
reliance upon the authority of Deloitte & Touche LLP as experts in auditing and
accounting. This Statement of Additional Information is not a prospectus. A
Proxy Statement and Prospectus dated the date hereof relating to the
above-referenced matter may be obtained without charge by writing the Acquiring
Fund at the address set forth above or by calling 1-800-874-3733. This Statement
of Additional Information should be read in conjunction with such Proxy
Statement and Prospectus.
B-1
<PAGE>
PART C
<TABLE>
<CAPTION>
Item 16. Exhibits
<C> <S>
11. Opinion of Debevoise & Plimpton as to the legality of securities
being issued and Consent; filed herewith.
17(b). Prospectus and Statement of Additional Information of the
Registrant dated March 1, 1996. Incorporated herein by reference to
Post-Effective Amendment No.10 to Registrant's Registration
Statement on Form N-1A (File Nos. 33-58846 and 811-7538) filed on or
about February 29, 1996.
</TABLE>
C-1
<PAGE>
SIGNATURES
*Post-effective amendment No. 1 to this Registration Statement has been
signed on behalf of the Registrant in the City of New York and State of New York
on the 24 day of April 1996, who certifies that this Post-Effective Amendment
No. 1 meets all the requirements for effectiveness under paragraph (b) of Rule
485 under the Securities Act of 1933, as amended.
LORD ABBETT SECURITIES TRUST
By:/s/ Ronald P. Lynch
---------------
Ronald P. Lynch
Chairman of the Board
*Post-Effective Amendment No. 1 to this Registration Statement has
been signed by the following persons in the capacities indicated and on the
dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Ronald P. Lynch Chairman of the Board
- ------------------------------- and Trustee 4/24/96
Ronald P. Lynch
/s/ Robert S. Dow President and Trustee
- ------------------------------- 4/24/96
Robert S. Dow
/s/ John J. Gargana, Jr. Vice President and
- ------------------------------- Chief Financial Officer 4/24/96
John J. Gargana, Jr.
/s/ E. Thayer Bigelow Trustee
- ------------------------------- 4/24/96
E. Thayer Bigelow
/s/ Trustee
- ------------------------------- ----------
Stewart S. Dixon
/s/ Trustee
- ------------------------------- ----------
John C. Jansing
/s/ C. Alan MacDonald Trustee
- ------------------------------- 4/24/96
C. Alan MacDonald
/s/ Trustee
- ------------------------------- ----------
Hansel B. Millican, Jr.
/s/ Thomas J. Neff Trustee
- ------------------------------- 4/24/96
Thomas J. Neff
C-2
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as a part of this Registration
Statement pursuant to General Instruction G of Form N-14.
Exhibit Page
Number Description Number
------ ----------- ------
(11) Opinion of Debevoise & Plimpton as to legality of securities
being issued and Consent.
C-3
Exhibit 11
[Debevoise & Plimpton Letterhead]
April 24, 1996
Lord Abbett Securities Trust
The General Motors Building
767 Fifth Avenue
New York, New York 10153
Lord Abbett Securities Trust
Registration Statement on Form N-14
-------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Lord Abbett Securities Trust (the
"Registrant"), a Delaware business trust, in con nection with the preparation
and filing with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, of a Registration Statement on Form N-14 (File No. 811-
7538) and Post-Effective Amendment No. 1 thereto (as so amended, the
"Registration Statement"), relating to the issuance of shares of beneficial
interest of the Lord Abbett Growth & Income Trust (the "Acquiring Fund"), a
series of the Registrant.
Such shares have been established and designated as the Class A shares
(the "Class A shares"). The Class A shares are to be issued to Lord Abbett
Fundamental Value Fund, Inc., a Maryland corporation (the "Acquired Fund"),
<PAGE>
Lord Abbett Securities Trust
Page 2
pursuant to an Agreement and Plan of Reorganization (the "Acquired Fund Plan")
between the Registrant, on behalf of the Acquiring Fund, and the Acquired Fund
substantially in the form of Exhibit A included in Part A of the Registration
Statement. Such issuance of the Class A shares is to be made in connection with
the acquisition by the Acquiring Fund of the assets of, and the assumption by
the Acquiring Fund of the liabilities of, the Acquired Fund.
In so acting, we have examined and relied upon the originals, or
copies certified or otherwise identified to our satisfaction, of such documents,
records, certificates and other instruments and have made such other investiga
tions as in our judgment are necessary or appropriate to en able us to render
the opinion expressed below. We have not, however, undertaken any independent
investigation of any factual matter set forth in any of the foregoing.
Based on the foregoing, we are of the following opinion:
Assuming that the Acquired Fund and the Acquiring Fund duly execute and
deliver the Acquired Fund Plan, that the Acquired Fund Plan and the
reorganization provided for thereby are duly approved by the shareholders of the
Acquired Fund, that the transac tions contemplated by the Acquired Fund Plan are
duly consummated and that the amendment to the Declaration of Trust of the
Registrant substantially in the form of Exhibit 1(b) to the Registration
Statement is duly approved and executed, the Class A shares issued pur suant to
the Acquired Fund Plan will be legally issued, fully paid and non-assessable.
This opinion is limited solely to the federal law of the United States
and the Delaware Business Trust Act as in effect on the date hereof and the
relevant facts that exist as of the date hereof. Without limiting the generali
ty of the foregoing, we express no opinion concerning other laws of the State of
Delaware, including the securities laws of such state, or the laws of any other
jurisdiction other than the United States. No assurance can be given that the
law or facts will not change, and we have not undertaken to advise you or any
other person with respect to any event subsequent to the date hereof.
We are delivering this opinion to you and, without our prior written
consent, no other persons are entitled to
<PAGE>
Lord Abbett Securities Trust
Page 3
rely on this opinion. We consent to the filing of this opinion as an Exhibit to
the Registration Statement. In giving such consent, we do not thereby concede
that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933 or the Rules and Regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Debevoise & Plimpton
