1933 Act File No. 33-58846
1940 Act File No. 811-7538
SECURITIES & EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 11 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
AMENDMENT NO. 11 [X]
LORD ABBETT SECURITIES TRUST
Exact Name of Registrant as Specified in Charter
767 Fifth Avenue, New York, N.Y. 10153
Address of Principal Executive Office
Registrant's Telephone Number (212) 848-1800
Kenneth B. Cutler, Vice President & Secretary
767 Fifth Avenue, New York, N.Y. 10153
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately on filing pursuant to paragraph (b) of Rule 485
X on July 15, 1996 pursuant to paragraph (b) of Rule 485
- ---
60 days after filing pursuant to paragraph (a) of Rule 485
on (date) pursuant to paragraph (a) (i) of Rule 485
75 days after filing pursuant to paragraph (a) (ii) of Rule 485
on (date) pursuant to paragraph (a) (ii) of Rule 485
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Registrant's other Series have registered an indefinite amount of securities
under the Securities Act of 1933 pursuant to Rule 24f-2(a) (1) and a Rule 24f-2
Notice for these series for the most recent fiscal year was filed with the
commission on December 28, 1995.
<PAGE>
LORD ABBETT SECURITIES TRUST
N-1A
Cross Reference Sheet
Post-Effective Amendment No. 11
Form N-1A Location In Prospectus or
Item No. Statement of Additional Information
1 Cover Page
2 Fee Table
3 N/A
4 (a) (i) Cover Page
4 (a) (ii)I Investment Objectives
4 (b) (c) How We Invest
5 (a) (b) (c) Our Management; Last Page
5 (d) N/A
5 (e) Our Management
5 (f) N/A
5 (g) Purchases
6 (a) Cover Page
6 (b) (c) (d) N/A
6 (e) Cover Page; Purchases
6 (f) (g) Dividends, Capital Gains
Distributions and Taxes
7 (a) Back Cover Page
7 (b) (c) (d) Purchases
8 (a) (b) (c) (d) Redemptions
Purchases, Redemptions and Shareholder
Services
9 N/A
10 Cover Page
11 Cover Page -- Table of Contents
12 N/A
13 (a) (b) (c) (d) Investment Objectives and Policies
14 Trustees and Officers
15 (a) (b) (c) Trustees and Officers
16 (a) (i) Investment Advisory and Other
Services
16 (a) (ii) Trustees and Officers
16 (a) (iii) Investment Advisory and Other
Services
16 (b) Investment Advisory and Other Services
16 (c) (d) (e) (g) N/A
16 (f) Purchases, Redemptions and Shareholder
Services
16 (h) Investment Advisory and Other Services
16 (i) N/A
17 (a) Portfolio Transactions
17 (b) N/A
17 (c) Portfolio Transactions
17 (d) (e) N/A
18 (a) Cover Page
18 (b) N/A
<PAGE>
Form N-1A Location in Prospectus or
Item No. Statement of Additional Information
19 (a) (b) Purchases; Redemptions and Shareholder
Services; Notes to
Financial Statements
19 (c) N/A
20 Taxes
21 (a) Purchases, Redemptions and Shareholder
Services
21 (b) (c) N/A
22 N/A
22 (b) Past Performance
23 Financial Statements; Supplementary
<PAGE>
LORD ABBETT SECURITIES TRUST
THE GENERAL MOTORS BUILDING
767 FIFTH AVENUE
NEW YORK, NY 10153-0203
800-426-1130
LORD ABBETT SECURITIES TRUST (THE "FUND") IS A MUTUAL FUND CURRENTLY CONSISTING
OF A SINGLE SERIES -- THE GROWTH & INCOME SERIES (SOMETIMES REFERRED TO AS "WE"
OR THE "SERIES"). THE SERIES OFFERS TWO CLASSES OF SHARES: CLASS A AND CLASS C.
THESE CLASSES PROVIDE INVESTORS DIFFERENT INVESTMENT OPTIONS IN PURCHASING
SHARES OF THE FUND. SEE "PURCHASES" FOR A DESCRIPTION OF THESE CHOICES.
WE SEEK LONG-TERM GROWTH OF CAPITAL AND INCOME WITHOUT EXCESSIVE FLUCTUATIONS IN
MARKET VALUE.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE FUND AND THE
SERIES THAT A PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING. ADDITIONAL
INFORMATION ABOUT THE FUND AND THE SERIES HAS BEEN FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. THE STATEMENT OF ADDITIONAL INFORMATION IS INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS AND MAY BE OBTAINED, WITHOUT CHARGE, BY WRITING
TO THE FUND OR BY CALLING THE TRUST AT 800-874-3733. ASK FOR "PART B OF THE
PROSPECTUS -- THE STATEMENT OF ADDITIONAL INFORMATION".
THE DATE OF THIS PROSPECTUS, AND THE DATE OF THE STATEMENT OF ADDITIONAL
INFORMATION, IS JULY 15 , 1996.
PROSPECTUS
INVESTORS SHOULD READ AND RETAIN THIS PROSPECTUS. SHAREHOLDER INQUIRIES SHOULD
BE MADE IN WRITING TO THE FUND OR BY CALLING 800-821-5129. YOU CAN ALSO MAKE
INQUIRIES THROUGH YOUR BROKER-DEALER.
SHARES OF THE SERIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
AN INVESTMENT IN THE SERIES INVOLVES RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
1 Investment Objectives 2
2 Fee Table 2
3 Financial Highlights 3
4 How We Invest 3
5 Purchases 5
6 Shareholder Services 9
7 Our Management 10
8 Dividends, Capital Gains
Distributions and Taxes 11
9 Redemptions 11
10 Performance 12
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
1 INVESTMENT OBJECTIVE
The investment objective of the Series is 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.
2 FEE TABLE
A summary of the expenses of the Series is set forth in the table below. Actual
expenses may be greater or less than shown.
<TABLE>
<CAPTION>
Class A Class C
Shares Shares
<S> <C> <C>
Shareholder Transaction Expenses
(as a percentage of offering price)
Maximum Sales Load(1) on Purchases
(See "Purchases") 5.75%(2)(3) None(2)(3)
Redemption Fee (See "Purchases") None(2)(3) 1% if shares are
redeemed before 1st
anniversary of purchase(2)(3)
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees (See "Our Management") 0.75% 0.75%(4)
12b-1 Fees (See "Purchases") 0.23%(2)(3)(5) 0.88%(2)(3)
Other Expenses (See "Our Management") 0.37%(5) 0.37%(4)(6)
Total Operating Expenses 1.35%(5) 2.00%(4)
<FN>
Example: Assume the Series' annual return is 5% and there is no change in the
level of expenses described above. For a $1,000 investment, with reinvestment of
all distributions, you would have paid the following total expenses if you
closed your account after the number of years indicated.
1 year 3 years 5 years 10 years
Growth & Income
Class A shares $70 $97 $127 $210
Class C shares $20 $63 $108 $233
(1) Sales "load" is referred to as sales "charge" and "deferred sales load" is
referred to as "contingent deferred sales charge" (or "CDSC") and "12b-1
fees" which consist of a "service fee" and a "distribution fee" are
referred to by either or both of these terms where appropriate with respect
to Class A and Class C shares throughout this Prospectus.
(2) See "Purchases" for descriptions of the Class A front-end sales charges,
the CDSC payable on certain redemptions of Class A and Class C shares and
separate Rule 12b-1 Plans applicable to each class of shares of the Series.
(3) Although the Series does not, with respect to the Class C shares, charge a
front-end sales charge, investors should be aware that long-term
shareholders may pay, under the Rule 12b-1 Plan applicable to the Class C
shares of the Series (which pays annual .25% service and .75% distribution
fees), more than the economic equivalent of the maximum front-end sales
charge as permitted by certain rules of the National Association of
Securities Dealers, Inc. Likewise, with respect to Class A shares,
investors should be aware that, long-term, such maximum may be exceeded due
to the Rule 12b-1 plan applicable to the Class A shares which permits the
Series to pay up to 0.50% in total annual fee, half for service and the
other half for distribution.
(4) Although not obligated to, Lord Abbett may waive its management fee and/or
subsidize other expenses with respect to the Series. The management fee has
been restated to reflect current fees as a result of the discontinuation of
the fee waiver by Lord Abbett with respect to the Series as of July 12,
1996.
(5) Class A fees and expenses are estimated.
(6) The "other expenses" of the Series reflect an estimated increase in various
expenses expressed as a percentage of net assets reflecting the sale by the
Fund of its other Series.
The foregoing is provided to give investors a better understanding of the
expenses that are incurred by an investment in the Series.
</FN>
</TABLE>
<PAGE>
3 FINANCIAL HIGHLIGHTS
The following table has been audited by Deloitte & Touche llp, independent
accountants, in connection with their annual audit of the Class C share
Financial Statements, whose report thereon is incorporated by reference into the
Statement of Additional Information and may be obtained on request, and have
been included herein in reliance upon their authority as experts in auditing and
accounting.
<TABLE>
<CAPTION>
For the Period
January 3, 1994
(Commencement
Per Class C Share+ Operating Year Ended Oct. 31 of Operations) to
Performance: 1995 October 31, 1994
<S> <C> <C>
Net asset value, beginning of period $5.07 $5.00
Income from investment operations
Net investment income .12 .089++
Net realized and unrealized
gain (loss) on securities .97 .041
Total from investment operations 1.09 .13
Distributions
Dividends from net investment income (.12) (.06)
Net asset value, end of period $6.04 $5.07
Total Return* 21.83% 2.62%++
Ratios/Supplemental Data:
Net assets, end of period (000) $32,770 $9,160
Ratios to Average Net Assets:
Expenses, including waiver** 1.16% .61%++
Expenses, excluding waiver 1.91% 1.94%++
Net investment income 2.06% 2.03%++
Portfolio turnover rate 23.17% 31.95%
<FN>
* Total return does not consider the effects of sales charges.
** The Series is contingently obligated to repay its expenses voluntarily
assumed by Lord Abbett. At October 31, 1995, such expense subsidies
totalled $33,620 . Such contingent obligations are not included in
expenses. See "Our Management" for the terms of such contingent
obligations. + Prior to July 12, 1996, the Series had only one class of
shares. That class is now designated "Class C shares".
++ Not annualized.
See Notes to Financial Statements.
</FN>
</TABLE>
4 HOW WE INVEST
The Series is intended for long-term investors who purchase and redeem shares to
meet their own financial requirements rather than to take advantage of price
fluctuations.The needs of such investors will be best served by an investment
whose growth is characterized by low fluctuations in market value. For this
reason, the Series tries to keep its assets invested in securities which are
selling at reasonable prices in relation to value and, thus, is willing to forgo
some opportunities for gains when, in the judgment of Fund management
(hereinafter meaning the officers of the
Fund on a day-to-day basis subject to the overall direction of the Fund's Board
of Trustees with the advice of Lord Abbett), they carry excessive risk. Fund
management tries to anticipate major changes in the economy and select stocks
which it believes will benefit most from these changes.
The Series normally invests in common stocks (including securities convertible
into common stocks) of large, seasoned companies which are expected to show
above-average growth in value and which are in sound financial condition.
Although the prices of common stocks fluctuate and their dividends vary,
historically, common stocks have appreciated in value and their dividends have
increased when the companies they represent have prospered and grown.
The Series is constantly balancing the opportunity for profit against the risk
of loss. In the past, very few industries have continuously provided the best
investment opportunities. Trust management believes it is important to take a
flexible approach and adjust the portfolio to reflect changes in the
opportunities for sound investments relative to the risks assumed; therefore, it
sells securities that it judges to be overpriced and reinvests the proceeds in
other securities which it believes offer better values.
The Series may invest up to 10% of its net assets (at the time of investment) in
each of the following: (a) covered call options traded on a national securities
exchange for portfolio securities and (b) foreign securities. These foreign
securities will be the kind described herein for the Series' domestic
investment. It is the present intention of Fund management that these securities
be primarily traded in the United Kingdom, Western Europe, Australia, Canada,
the Far East, Latin America, and other developed countries as may be determined
from time to time. The Series also may invest in straight bonds and other debt
securities, including lower-rated, high-yield bonds, sometimes referred to as
"junk bonds" with a limit of 5% of its net assets (at the time of investment) in
such lower rated (BB/Ba or lower), high-yield bonds.
The Series does not purchase securities for trading purposes. To create reserve
purchasing power and also for temporary defensive purposes, it may invest in
short-term debt and other high-quality, fixed-income securities.
RISK FACTORS
Foreign Investments. Securities markets of foreign countries are not subject to
the same degree of regulation as the U.S. markets and may be more volatile and
less liquid than the major U.S. markets. There may be less publicly-available
information on publicly-traded companies, banks and governments in foreign
countries than is generally the case for such entities in the United States. The
lack of uniform accounting standards and practices among countries impairs the
validity of direct comparisons of valuation measures (such as price/earnings
ratios) for securities in different countries. Other considerations include
political and social instability, expropriation, higher transaction costs,
currency fluctuations, withholding taxes that cannot be passed through as a tax
credit or deduction to shareholders and different securities settlement
practices. Foreign securities may be traded on days that we do not value our
portfolio securities, and, accordingly, our net asset value may be significantly
affected on days when shareholders do not have access to a Series.
High-Yield Bonds. The Series may invest up to 5% of its net assets (at the time
of investment), in lower-rated bonds for their higher yields. In general, the
market for lower-rated bonds is more limited than that for higher rated bonds
and, therefore, may be less liquid; market prices of such lower-rated bonds may
fluctuate more than those of higher rated bonds, particularly in times of
economic change and stress. In addition, because the market for lower-rated
corporate debt securities in past years has experienced wide fluctuations in the
values of certain of these securities, past experience may not provide an
accurate indication of the future performance of that market or of the frequency
of default, especially during periods of recession. Objective pricing data for
lower-rated bonds may be more limited and valuation of such securities may be
more difficult and require greater reliance upon judgment when compared to
higher rated bonds.
While the market for lower rated bonds may be less sensitive to interest rate
changes than that for higher rated bonds, the market prices of these lower rated
bonds structured as zero coupon or pay-in-kind securities may be affected to a
greater extent by such interest rate changes and thus may be more volatile than
prices of lower-rated securities periodically paying interest in cash. When
compared to higher rated bonds, lower-rated bonds that include redemption prior
to maturity or call provisions may be more susceptible to refunding during
periods of falling interest rates, requiring replacement by lower yielding
securities.
<PAGE>
Since the risk of default generally is higher among lower-rated bonds, the
research and analysis of Lord Abbett are especially important in the selection
of such bonds which, if rated BB/Ba or lower, are often described as "high-yield
bonds" because of their generally higher yields and referred to as "junk bonds"
because of their greater risks. In selecting lower-rated bonds for our
investment, Lord Abbett does not rely upon ratings which, in any event, evaluate
only the safety of principal and interest, not market value risk and which,
furthermore, may not accurately reflect an issuer's current financial condition.
There are no minimum rating criteria for investments in these bonds and some may
default as to principal and/or interest payments subsequent to their purchase.
Through portfolio diversification, credit analysis and attention to current
developments and trends in interest rates and economic conditions, investment
risk can be reduced, although there is no assurance that losses will not occur.
PORTFOLIO TURNOVER. The portfolio turnover rate for the Series for the fiscal
year ended October 31, 1995 was 23.17%.
DIVERSIFICATION. The Series met the diversification rules under Subchapter M of
the Internal Revenue Code for its fiscal year or period ended October 31, 1995,
and intends to continue to do so. The Series, as a "diversified" investment
company under the Act, is prohibited, with respect to 75% of the value of its
total assets, from buying securities of one issuer representing more than (i) 5%
of the Series' gross assets, except securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, or (ii) 10% of the voting
securities of such issuer. Change of Investment Objectives and Policies. The
Series will not change its investment objective without shareholder approval. If
the Series determines that its objective can best be achieved by a change in
investment policy or strategy, it may make such change without shareholder
approval by disclosing it in its prospectus.
5 PURCHASES
GENERAL
HOW MUCH MUST YOU INVEST? You may buy our shares through any independent
securities dealer having a sales agreement with Lord Abbett Distributor, LLC
("Lord Abbett Distributor"), our exclusive selling agent. Place your order with
your investment dealer or send it to Lord Abbett Securities Trust (P.O. Box
419100, Kansas City, Missouri 64141). The minimum initial investment is $1,000
except for Invest-A-Matic, Div-Move and Retirement Plans ($250 initial and $50
monthly minimum). Subsequent investments may be made in any amount. See
"Shareholder Services". For information regarding proper form of a purchase or
redemption order, call the Fund at 800-821-5129. This offering may be suspended,
changed or withdrawn. Lord Abbett Distributor reserves the right to reject any
order. The net asset value of the Series' shares is calculated every business
day as of the close of the New York Stock Exchange ("NYSE") by dividing the
Series' net assets by the number of shares of the Series outstanding. Securities
are valued at their market value, as more fully described in the Statement of
Additional Information.
BUYING SHARES THROUGH YOUR DEALER. Orders for shares received by the Fund prior
to the close of the NYSE, or received by dealers prior to such close and
received by Lord Abbett Distributor in proper form prior to the close of its
business day, will be confirmed at the applicable public offering price
effective at such NYSE close. Orders received by dealers after the NYSE closes
and received by Lord Abbett Distributor prior to the close of its next business
day are executed at the applicable public offering price effective as of the
close of the NYSE on that next business day. The dealer is responsible for the
timely transmission of orders to Lord Abbett Distributor. A business day is a
day on which the NYSE is open for trading. Lord Abbett Distributor may, for
specified periods, allow dealers to retain the full sales charge for sales of
shares during such periods, or pay an additional concession to a dealer who,
during a specified period, sells a minimum dollar amount of our shares and/or
shares of other Lord Abbett-sponsored funds. In some instances, such additional
concessions will be offered only to certain dealers expected to sell significant
amounts of shares. Lord Abbett Distributor may, from time to time, implement
promotions under which Lord Abbett Distributor will pay a fee to dealers with
respect to certain purchases not involving imposition of a sales charge.
Additional payments may be paid from Lord Abbett Distributor'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. In
selecting dealers to execute portfolio transactions for the Fund's portfolio, if
two or more dealers are considered capable of obtaining best execution, we may
prefer the dealer who has sold our shares and/or shares of other Lord
Abbett-sponsored funds.
ALTERNATIVE SALES ARRANGEMENTS
CLASSES OF SHARES. The Series offers investors two different classes of shares:
Class A and Class C shares. The different classes of shares represent
investments in the same portfolio of securities but are subject to different
expenses and will be likely to have different share prices. Investors should
read this section carefully to determine which class represents the best
investment option for their particular situation.
CLASS A SHARES. If you buy Class A shares, you pay an initial sales charge on
investments of less than $1 million (or on investments for employer-sponsored
retirement plans under the Internal Revenue Code (hereinafter referred to as
"Retirement Plans") with less than 100 eligible employees). If you purchase
Class A shares as part of an investment of at least $1 million (or for
Retirement Plans with at least 100 eligible employees) in shares of one or more
Lord Abbett-sponsored funds, you will not pay an initial sales charge, but if
you redeem any of those shares within 24 months after the month in which you buy
them, you may pay to the Series a contingent deferred sales charge ("CDSC") of
1%. Class A shares are subject to service and distribution fees that are
currently estimated to total annually approximately 0.23 of 1% of the annual net
asset value of the Class A shares. The initial sales charge rates, the CDSC and
the Rule 12b-1 Plan applicable to the Class A shares are described in "Buying
Class A Shares" below.
CLASS C SHARES. If you buy Class C shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the first anniversary of
buying them, you will normally pay the Fund a CDSC of 1%. Class C shares are
subject to service and distribution fees at an annual rate of 1% of the annual
net asset value of the Class C shares. The CDSC and the Rule 12b-1 Plan
applicable to the C shares are described in "Buying Class C Shares" below.
WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that the Series is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial adviser. The Series' class-specific expenses and the
effect of the different types of sales charges on your investment will affect
your investment results over time. The most important factors are how much you
plan to invest and how long you plan to hold your investment. If your goals and
objectives change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider another class of
shares.
In the following discussion, to help provide you and your financial adviser with
a framework in which to choose a class, we have made some assumptions using a
hypothetical investment in the Fund. We used the sales charge rates that apply
to Class A and Class C shares, and considered the effect of the higher
distribution fee on Class C expenses (which will affect your investment return).
Of course, the actual performance of your investment cannot be predicted and
will vary, based on the Fund's actual investment returns, the operating expenses
borne by each class of shares, and the class of shares you purchase. The factors
briefly discussed below are not intended to be investment advice, guidelines or
recommendations, because each investor's financial considerations are different.
The discussion below of the factors to consider in purchasing a particular class
of shares assumes that you will purchase only one class of shares and not a
combination of shares of both classes.
<PAGE>
HOW LONG DO YOU EXPECT TO HOLD YOUR INVESTMENT? While future financial needs
cannot be predicted with certainty, knowing how long you expect to hold your
investment will assist you in selecting the appropriate class of shares. For
example, over time, the reduced sales charges available for larger purchases of
Class A shares may offset the effect of paying an initial sales charge on your
investment, compared to the effect over time of higher class-specific expenses
on Class C shares for which no initial sales charge is paid. Because of the
effect of class-based expenses, your choice should also depend on how much you
plan to invest.
INVESTING FOR THE SHORT TERM. If you have a short-term investment horizon (that
is, you plan to hold your shares for not more than six years), Class C shares
might be the appropriate choice (especially for investments of less than
$100,000), because there is no initial sales charge on Class C shares, and the
CDSC does not apply to amounts you redeem after holding them one year.
However, if you plan to invest more than $100,000 for the short term, then the
more you invest and the more your investment horizon increases toward six years,
the more attractive the Class A share option may become. That is because the
annual distribution fee on Class C shares will have a greater impact on your
account over the longer term than the reduced front-end sales charge available
for larger purchases of Class A shares. For example, Class A might be more
appropriate than Class C for investments of more than $100,000 expected to be
held for 5 or 6 years (or more). For investments over $250,000 expected to be
held 4 to 6 years (or more), Class A shares may become more appropriate than
Class C. Although we believe you ought to have a long-term investment horizon,
if you are investing $500,000 or more, Class A may become more desirable as your
investment horizon approaches 3 years or more.
For most investors who invest $1 million or more or for Retirement Plans with at
least 100 eligible employees, in most cases Class A shares will be the most
advantageous choice, no matter how long you intend to hold your shares. For that
reason, Lord Abbett Distributor normally will not accept purchase orders (i) for
Class C shares of $1,000,000 or more from a single investor or (ii) for
Retirement Plans with at least 100 eligible employees.
INVESTING FOR THE LONGER TERM. If you plan to invest more than $100,000 in the
Series over the long term, Class A shares will likely be more advantageous than
Class C shares, as discussed above, because of the effect of the expected lower
expenses for Class A shares and the reduced initial sales charges available for
larger investments in Class A shares under the Fund's Rights of Accumulation.
Of course, these examples are based on approximations of the effect of current
sales charges and expenses on a hypothetical investment over time, and should
not be relied on as rigid guidelines.
Are There Differences in Account Features That Matter to You? Some account
features are available in whole or in part to Class A and Class C shareholders.
Other features (such as Systematic Withdrawal Plans) might not be advisable in
any account for Class C shareholders during the first year of share ownership
(due to the CDSC on withdrawals during that year). You should carefully review
how you plan to use your investment account before deciding which class of
shares you buy. For example, the dividends payable to Class C shareholders will
be reduced by the expenses borne solely by that class, such as the higher
distribution fee to which Class C shares are subject, as described below.
HOW DOES IT AFFECT PAYMENTS TO MY BROKER? A salesperson, such as a broker, or
any other person who is entitled to receive compensation for selling Fund shares
may receive different compensation for selling one class than for selling
another class. As discussed in more detail below, such compensation is primarily
paid at the time of sale in the case of Class A shares and is paid over time, so
long as shares remain outstanding, in the case of Class C shares. It is
important that investors understand that the primary purpose of the CDSC and
distribution fee for Class C shares is the same as the purpose of the front-end
sales charge on sales of Class A shares: to compensate brokers and other persons
selling such shares. The CDSC, if payable, reduces the Class C distribution fee
expenses for the Fund and Class C shareholders.
BUYING CLASS A SHARES. The offering price of Class A shares is based on the
per-share net asset value next computed after your order is accepted plus a
sales charge as follows:
<TABLE>
<CAPTION>
Sales Charge as a Dealer's
Percentage of: Concession
as a To Compute
Net Percentage Offering
Offering Amount of Offering Price, Divide
Size of Investment Price Invested Price NAV by
<S> <C> <C> <C> <C>
Less than $50,000 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% 2.25% .9725
$500,000 to $999,999 2.00% 2.04% 1.75% .9800
$1,000,000 or more No Sales Charge 1.00%* 1.0000
<FN>
*Authorized institutions receive concessions on purchases made by a retirement
plan or other qualified purchaser within a 12-month period (beginning with the
first net asset value purchase) as follows: 1.00% on purchases of $5 million,
0.55% of the next $5 million, 0.50% of the next $40 million and 0.25% on
purchases over $50 million. See Class A Rule 12b-1 Plan below.
</FN>
</TABLE>
CLASS A SHARE VOLUME DISCOUNTS. This section describes several ways to qualify
for a lower sales charge when purchasing Class A shares if you inform Lord
Abbett Distributor or the Fund that you are eligible at the time of purchase.
(1) Any purchaser (as described below) may aggregate a Class A share purchase in
the Fund with any share purchases of any other eligible Lord Abbett-sponsored
fund, together with the current value at maximum offering price of any shares in
the Fund and in any eligible Lord Abbett-sponsored funds held by the purchaser.
(Holdings in the following funds are not eligible for the above rights of
accumulation: Lord Abbett Equity Fund ("LAEF"), Lord Abbett Series Fund
("LASF"), any series of the Lord Abbett Research Fund not offered to the general
public ("LARF") and Lord Abbett U.S. Government Securities Money Market Fund
("GSMMF"), except for holdings in GSMMF which are attributable to any shares
exchanged from a Lord Abbett-sponsored fund.) (2) A purchaser may sign a
non-binding 13-month statement of intention to invest $100,000 or more in any
shares of the Fund or in any of the above eligible funds. If the intended
purchases are completed during the period, the total amount of your intended
purchases of any shares will determine the reduced sales charge rate for the
Class A shares purchased during the period. If not completed, each Class A share
purchase will be at the sales charge for the aggregate of the actual share
purchases. Shares issued upon reinvestment of dividends or distributions are not
included in the statement of intention. The term "purchaser" includes (i) an
individual, (ii) an individual and his or her spouse and children under the age
of 21 and (iii) a trustee or other fiduciary purchasing shares for a single
trust estate or single fiduciary account (including a pension, profit-sharing,
or other employee benefit trust qualified under Section 401 of the Internal
Revenue Code -- more than one qualified employee benefit trust of a single
employer, including its consolidated subsidiaries, may be considered a single
trust, as may qualified plans of multiple employers registered in the name of a
single bank trustee as one account), although more than one beneficiary is
involved.
CLASS A SHARE NET ASSET VALUE PURCHASES. Our Class A shares may be purchased at
net asset value by our trustees, employees of Lord Abbett, employees of our
shareholder servicing agent and employees of any securities dealer having a
sales agreement with Lord Abbett Distributor who consents to such purchases or
by the trustee or custodian under any pension or profit-sharing plan or Payroll
Deduction IRA established for the benefit of such persons or for the benefit of
any national securities trade organization to which Lord Abbett or Lord Abbett
Distributor belongs or any company with an account(s) in excess of $10 million
managed by Lord Abbett on a private-advisory-account basis. For purposes of this
paragraph, the terms "trustees" and "employees" include a trustee's or
employee's spouse (including the surviving spouse of a deceased trustee or
employee). The terms "trustees" and "employees of Lord Abbett" also include
other family members and retired trustees and employees. Our Class A shares also
may be purchased at net asset value (a) at $1 million or more, (b) with
dividends and distributions on Class A shares of other Lord Abbett-sponsored
funds, except for dividends and distributions on shares of LARF, LAEF and LASF,
(c) under the loan feature of the Lord Abbett-sponsored prototype 403(b) plan
for Class A share purchases representing the repayment of principal and
interest, (d) by certain authorized brokers, dealers, registered investment
advisers or other financial institutions who have entered into an agreement with
Lord Abbett Distributor in accordance with certain standards approved by Lord
Abbett Distributor, providing specifically for the use of our Class A shares in
particular investment products made available for a fee to clients of such
brokers, dealers, registered investment advisers and other financial
institutions ("mutual fund wrap fee programs"), (e) by employees, partners and
owners of unaffiliated consultants and advisers to Lord Abbett, Lord Abbett
Distributor or Lord Abbett-sponsored funds who consent to such purchase if such
persons provide services to Lord Abbett, Lord Abbett Distributor or such funds
on a continuing basis and are familiar with such funds, (f) through Retirement
Plans with at least 100 eligible employees and (g) subject to appropriate
documentation, through a securities dealer where the amount invested represents
redemption proceeds from shares ("Redeemed Shares") of a registered open-end
management investment company not distributed or managed by Lord Abbett
Distributor or Lord Abbett (other than a money market fund), if such redemptions
have occurred no more than 60 days prior to the purchase of our Class A shares,
the Redeemed Shares were held for at least six months prior to redemption and
the proceeds of redemption were maintained in cash or a money market fund prior
to purchase. Purchasers should consider the impact, if any, of contingent
deferred sales charges in determining whether to redeem shares for subsequent
investment in our Class A shares. Lord Abbett Distributor may suspend or
terminate the purchase option referred to in (g) above at any time.
Our Class A shares may be issued at net asset value in exchange for the assets,
subject to possible tax adjustment, of a personal holding company or an
investment company.
<PAGE>
CLASS A RULE 12B-1 PLAN. We have adopted a Class A share Rule 12b-1 Plan (the "A
Plan") which authorizes the payment of fees to authorized institutions (except
as to certain accounts for which tracking data is not available) in order to
provide additional incentives for them (a) to provide continuing information and
investment services to their Class A shareholder accounts and otherwise to
encourage those accounts to remain invested in the Series and (b) to sell Class
A shares of the Series. Under the A Plan, in order to save on the expense of
shareholders meetings and to provide flexibility to the Board of Trustees, the
Board, including a majority of the outside trustees who are not "interested
persons" of the Fund as defined in the Investment Company Act of 1940, is
authorized to approve annual fee payments from our Class A assets of up to 0.50
of 1% of the average net asset value of such assets consisting of distribution
and service fees, each at a maximum annual rate not exceeding 0.25 of 1% (the
"Fee Ceiling").
Under the A Plan, the Board has approved payments by the Series to Lord Abbett
Distributor which uses or passes on to authorized institutions (1) an annual
service fee (payable quarterly) of .25% of the average daily net asset value of
the Class A shares serviced by authorized institutions; and (2) a one-time
distribution fee of up to 1% (reduced according to the following schedule: 1% of
the first $5 million, .55% of the next $5 million, .50% of the next $40 million
and .25% over $50 million), payable at the time of sale on all Class A shares
sold during any 12-month period starting from the day of the first net asset
value sale (i) at the $1 million level by authorized institutions, including
sales qualifying at such level under the rights of accumulation and statement of
intention privileges; (ii) through Retirement Plans with at least 100 eligible
employees.
In addition, the Board has approved for those authorized institutions which
qualify, a supplemental annual distribution fee equal to 0.10% of the average
daily net asset value of the Class A shares serviced by authorized institutions
which have a satisfactory program for the promotion of such shares comprising a
significant percentage of the Class A assets, with a lower than average
redemption rate. Institutions and persons permitted by law to receive such fees
are "authorized institutions".
Under the A Plan, Lord Abbett Distributor is permitted to use payments received
to provide continuing services to Class A 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
are subject to the Fee Ceiling. Any payments under the A Plan not used by Lord
Abbett Distributor in this manner are passed on to authorized institutions.
Holders of Class A shares on which the 1% sales distribution fee has been paid
may be required to pay to the Series on behalf of its Class A shares a CDSC of
1% of the original cost or the then net asset value, whichever is less, of all
Class A shares so purchased which are redeemed out of the Lord Abbett-sponsored
family of funds on or before the end of the twenty-fourth month after the month
in which the purchase occurred. (An exception is made for redemptions by
Retirement Plans due to any benefit payment such as Plan loans, hardship
withdrawals, death, retirement or separation from service with respect to plan
participants or the distribution of any excess contributions.) If the Class A
shares have been exchanged into another Lord Abbett-sponsored fund and are
thereafter redeemed out of the Lord Abbett family of funds on or before the end
of such twenty-fourth month, the charge will be collected for the Series' Class
A shares by the other fund. The Series will collect such a charge for other Lord
Abbett-sponsored funds in a similar situation.
BUYING CLASS C SHARES. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed for
cash before the first anniversary of their purchase, a CDSC of 1% may be
deducted from the redemption proceeds. That reimbursement charge will not apply
to shares purchased by the reinvestment of dividends or capital gains
distributions. The charge will be assessed on the lesser of the net asset value
of the shares at the time of redemption or the original purchase price. The CDSC
is not imposed on the amount of your account value represented by the increase
in net asset value over the initial purchase price (including increases due to
the reinvestment of dividends and capital gains distributions). The Class C CDSC
is paid to the Series to reimburse it, in whole or in part, for the service and
distribution fee payment made by the Series at the time such shares were sold,
as described below.
To determine whether the CDSC applies to a redemption, the Series redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held for one year or more, and (3)
shares held the longest before the first anniversary of their purchase. If Class
C shares are exchanged into the same class of another Lord Abbett-sponsored fund
and subsequently redeemed before the first anniversary of their original
purchase, the charge will be collected by the other fund on behalf of this
Series' Class C shares. The Series will collect such a charge for other Lord
Abbett-sponsored funds in a similar situation.
<PAGE>
CLASS C RULE 12B-1 PLAN. The Fund has adopted a Class C share Rule 12b-1 Plan
(the "C Plan") under which (except as to certain accounts for which tracking
data is not available) the Series pays authorized institutions through Lord
Abbett Distributor (1) a service fee and a distribution fee, at the time shares
are sold, not to exceed 0.25 and 0.75 of 1%, respectively, of the net asset
value of such shares and (2) at each quarter-end after the first anniversary of
the sale of shares, fees for services and distribution at annual rates not to
exceed 0.25 and 0.75 of 1% respectively, of the average annual net asset value
of such shares outstanding (payments with respect to shares not outstanding
during the full quarter to be prorated). These service and distribution fees are
for purposes similar to those mentioned above with respect to the A Plan. Sales
in clause (1) exclude shares issued for reinvested dividends and distributions
and shares outstanding in clause (2) include shares issued for reinvested
dividends and distributions after the first anniversary of their issuance.
6 SHAREHOLDER SERVICES
We offer the following shareholder services:
Telephone Exchange Privilege: Shares of any class may be exchanged without a
service charge: (a) for shares of the same class of any other Lord
Abbett-sponsored fund except for (i) LAEF, LASF and LARF and (ii) certain
tax-free, single-state series where the exchanging shareholder is a resident of
a state in which such series is not offered for sale and (b) for shares of any
authorized institution's affiliated money market fund satisfying Lord Abbett
Distributor as to certain omnibus account and other criteria (together,
"Eligible Funds").
You or your representative with proper identification can instruct the Fund to
exchange uncertificated shares of a class (held by the transfer agent) by
telephone. Shareholders have this privilege unless they refuse it in writing.
The Fund will not be liable for following instructions communicated by telephone
that it reasonably believes to be genuine and will employ reasonable procedures
to confirm that instructions received are genuine, including requesting proper
identification and recording all telephone exchanges. Instructions must be
received by the Fund in Kansas City (800-821-5129) prior to the close of the
NYSE to obtain each fund's net asset value per class share on that day.
Expedited exchanges by telephone may be difficult to implement in times of
drastic economic or market change. The exchange privilege should not be used to
take advantage of short-term swings in the market. The Fund reserves the right
to terminate or limit the privilege of any shareholder who makes frequent
exchanges. The Fund can revoke the privilege for all shareholders upon 60 days'
prior written notice. A prospectus for the other Lord Abbett-sponsored fund
selected by you should be obtained and read before an exchange. Exercise of the
Exchange Privilege will be treated as a sale for federal income tax purposes
and, depending on the circumstances, a capital gain or loss may be recognized.
SYSTEMATIC WITHDRAWAL PLAN ("SWP"): Except for Retirement Plans for which there
is no such minimum, if the maximum offering price value of your uncertificated
shares is at least $10,000, you may have periodic cash withdrawals automatically
paid to you in either fixed or variable amounts. For C shares, redemption
proceeds due to an SWP will be derived from the following sources in the order
listed: (1) shares acquired by reinvestment of dividends and capital gains, (2)
shares held for one year or more, and (3) shares held the longest before the
first anniversary of their purchase.
DIV-MOVE: You can invest the dividends paid on your account ($50 minimum
investment) into an existing account within the same class in any Eligible Fund.
The account must be either your account, a joint account for you and your
spouse, a single account for your spouse or a custodial account for your minor
child under the age of 21. Such dividends will not be subject to a CDSC. You
should read the prospectus of the other fund before investing.
INVEST-A-MATIC: You can make fixed, periodic investments ($50 minimum
investment) into the Fund and/or any Eligible Fund by means of automatic money
transfers from your bank checking account. You should read the prospectus of the
other fund before investing.
RETIREMENT PLANS: Lord Abbett makes available the retirement plan forms and
custodial agreements for IRAs (Individual Retirement Accounts including
Simplified Employee Pensions), 403(b) plans and pension and profit-sharing
plans, including 401(k) plans.
HOUSEHOLDING: A single copy of an annual or semi-annual report will be sent to
an address to which more than one registered shareholder of the Fund with the
same last name has indicated mail is to be delivered, unless additional reports
are specifically requested in writing or by telephone.
All correspondence should be directed to Lord Abbett Securities Trust (P.O. Box
419100, Kansas City, Missouri 64141; 800-821-5129).
<PAGE>
7 OUR MANAGEMENT
Our business is managed by our officers on a day-to-day basis under the overall
direction of our Board of Trustees with the advice of Lord Abbett. We employ
Lord Abbett as investment manager pursuant to a Management Agreement. Lord
Abbett has been an investment manager for over 65 years and currently manages
approximately $19 billion in a family of mutual funds and other advisory
accounts. Under the Management Agreement, Lord Abbett provides us with
investment management services and personnel, pays the remuneration of our
officers and of our Trustees affiliated with Lord Abbett, provides us with
office space and pays for ordinary and necessary office and clerical expenses
relating to research, statistical work and supervision of our portfolios and
certain other costs. Lord Abbett provides similar services to twelve other Lord
Abbett-sponsored funds having various investment objectives and also advises
other investment clients. Robert G. Morris, Executive Vice President, serves as
portfolio manager for the Series. Mr. Morris has been with Lord Abbett five
years and has over twenty-five years of investment experience.
Under the Management Agreement, we are obligated to pay Lord Abbett a monthly
fee at the annual rate of .75 of 1% for the Series. This rate is higher than
that paid by most investment companies. For the year ended October 31, 1995,
Lord Abbett had waived $143,551 in management fees for the Series. For the same
period the Class C ratio of expenses, including management fees, to average net
assets was 1.16%. For the same period, had Lord Abbett not waived its management
fee and assumed certain expenses, the expense ratio would have been 1.91%. As of
July 12, 1996, Lord Abbett has discontinued its waiver of the Series' management
fee.
The Management Agreement provides for the Series to repay Lord Abbett without
interest any expenses assumed by Lord Abbett on and after the first day of the
calendar quarter after the net assets of the Series first reach $50 million
("commencement date"), to the extent that the expense ratio (determined before
taking into account any fee waiver or expense assumption) is less than 1.95% for
the Series. The Series shall not be 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 Series will not record as
obligations in its financial statements any expenses which may possibly be
repaid to Lord Abbett under this repayment formula unless such repayment is
probable at the time. If such repayment is not probable, the Series will
disclose in notes to its financials that such repayments are possible. As of
October 31, 1995, such contingent obligations of the Series totaled $33,620.
We will not hold annual meetings and expect to hold meetings of shareholders
only when necessary under applicable law or the terms of the Fund's Declaration
of Trust. Under the Declaration of Trust, a shareholder's meeting may be called
at the request of the holders of one-quarter of the outstanding shares entitled
to vote. See the Statement of Additional Information for more details.
The Fund. The Fund was organized as a Delaware business trust on February 26,
1993. Its Class A and Class C shares have equal rights as to voting, dividends
and distributions except for differences resulting from certain class-specific
expense.
8 DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
Dividends from net investment income are paid to shareholders of the Series in
March, June, September and December. Supplemental dividends by the Series may be
paid in December or January. Dividends from net investment income may be taken
in cash or reinvested in additional shares at net asset value without a sales
charge. If you elect a cash payment (i) a check will be mailed to you as soon as
possible after the monthly reinvestment date or (ii) if you arrange for direct
deposit, your payment will be wired directly to your bank account within one day
after the date on which the dividend is paid. You begin earning dividends on the
business day on which payment for the purchase of your shares is received.
A long-term capital gains distribution is made by the Series when it has net
profits during the year from sales of securities which it has held more than one
year. If the Series realizes net short-term capital gains, they also will be
distributed. It is anticipated that capital gains will be distributed in
December or January. You may take them in cash or additional shares without a
sales charge.
Dividends declared in October, November or December of any year to shareholders
of record as of a date in such a month will be treated for federal income tax
purposes as having been received by shareholders in that year if they are paid
before February 1 of the following year.
<PAGE>
We intend to continue to meet the requirements of Subchapter M of the Internal
Revenue Code and to take any action necessary to insure that we will pay no
federal income tax. However, shareholders must report dividends and capital
gains distributions as taxable income. Distributions derived from net long-term
capital gains which are designated by the Series as "capital gains
distributions" will be taxable to shareholders as long-term capital gains,
whether received in cash or shares, regardless of how long a taxpayer has held
the shares. Under current law, net long-term capital gains are taxed at the
rates applicable to ordinary income, except that the maximum rate for long-term
capital gains for individuals is 28%. Legislation pending as of the date of this
Prospectus would have the effect of reducing the federal income tax rate on
capital gains. See "Performance" for a description of the purchase by the Series
of high coupon securities at a premium and the distribution to shareholders as
ordinary income of all income on those securities. This practice increases
current income of the Fund, but may result in higher taxable income to Fund
shareholders than other portfolio management practices.
The Series may be subject to foreign withholding taxes which would reduce the
yield on their investments. Tax treaties between certain countries and the
United States may reduce or eliminate such taxes. See the Statement of
Additional Information for additional details.
Shareholders may be subject to a $50 penalty under the Internal Revenue Code and
we may be required to withhold and remit to the U.S. Treasury a portion (31%) of
any redemption or repurchase proceeds (including the value of shares exchanged
into another Lord Abbett-sponsored fund) and of any taxable dividend or
distribution on any account where the payee failed to provide a correct taxpayer
identification number or to make certain required certifications.
We will inform shareholders of the federal tax status of each dividend and
distribution after the end of each calendar year. Shareholders should consult
their tax advisers concerning applicable state and local taxes as well as on the
tax consequences of gains or losses from the redemption or exchange of our
shares.
9 REDEMPTIONS
To obtain the proceeds of an expedited redemption of $50,000 or less, you or
your representative with proper identification can telephone the Fund. The Fund
will not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine and will employ reasonable procedures to
confirm that instructions received are genuine, including requesting proper
identification, recording all telephone redemptions and mailing the proceeds
only to the named shareholder at the address appearing on the account
registration.
If you do not qualify for the procedure above, send your written redemption
request to Lord Abbett Securities Trust (P.O. Box 419100, Kansas City, Missouri
64141) with signature(s) and any legal capacity of the signer(s) guaranteed by
an eligible guarantor accompanied by any certificates for shares to be redeemed
and other required documentation. Payment will be made within three business
days. The Fund may suspend the right to redeem shares for not more than three
days (or longer under unusual circumstances as permitted by Federal law). If you
have purchased Series shares by check and subsequently submit a redemption
request, redemption proceeds will be paid upon clearance of your purchase check,
which may take up to 15 days. To avoid delays you may arrange for the bank upon
which a check was drawn to communicate to the Fund that the check has cleared.
Shares also may be redeemed by the Fund at net asset value through your
securities dealer who, as an unaffiliated dealer, may charge you a fee. If your
dealer receives your order prior to the close of the NYSE and communicates it to
Lord Abbett, as our agent, prior to the close of Lord Abbett's business day, you
will receive the net asset value of the shares being redeemed as of the close of
the NYSE on that day. If the dealer does not communicate such an order to Lord
Abbett until the next business day, you will receive the net asset value as of
the close of the NYSE on that next business day. Shareholders who have redeemed
their shares have a one-time right to reinvest, in another account having the
identical class and registration, in any of the Eligible Funds at the then
applicable net asset value without the payment of a front-end sales charge. Such
reinvestment must be made within 60 days of the redemption and is limited to no
more than the amount of the redemption proceeds.
Under certain circumstances and subject to prior written notice, our Board of
Trustees may authorize redemption of all of the shares in any account in which
there are fewer than 50 shares.
TAX-QUALIFIED PLANS: For redemptions of $50,000 or less, follow normal
redemption procedures. Redemptions over $50,000 must be in writing from the
employer, broker or plan administrator stating the reason for the redemption.
The reason for the redemption must be received by the Fund prior to, or
concurrent with, the redemption request.
10 PERFORMANCE
Lord Abbett Securities Trust - Growth & Income Series closed fiscal 1995 on
October 31 with combined assets of $32,769,924. During the year, the Series
portfolio and the financial markets in general performed well. Following are
some of the factors that were relevant to the Series' performance over the past
year, including market conditions and investment strategies pursued by the
Fund's management.
The past twelve months have been marked by a return of investor confidence in
the U.S. equity and fixed-income markets, as the success of the Federal
Reserve's preemptive strike against an overheating economy and rising inflation
became increasingly visible. The first signs of the economic slowdown came in
the form of weaker auto sales, a significant slowdown in the housing market and
rising inventories in the manufacturing sector. The yield on 3-year and 5-year
U.S. Treasury notes fell approximately 2% during the first three quarters of the
year.
YIELD AND TOTAL RETURN. Yield and total return data may, from time to time, be
included in advertisements about the Series. Each class of shares calculates its
"yield" by dividing the annualized net investment income per share on the
portfolio during a 30-day period by the maximum offering price on the last day
of the period. The yield of each class will differ because of the different
expenses (including actual 12b-1 fees) of each class of shares. The yield data
represents a hypothetical investment return on the portfolio, and does not
measure an investment return based on dividends actually paid to shareholders.
To show that return, a dividend distribution rate may be calculated. Dividend
distribution rate is calculated by dividing the dividends of a class derived
from net investment income during a stated period by the maximum offering price
on the last day of the period. Yields and dividend distribution rate for Class A
shares reflect the deduction of the maximum initial sales charge, but may also
be shown based on the Fund's net asset value per share. Yields for Class C
shares do not reflect the deduction of the CDSC. "TOTAL RETURN" for the one-,
five- and ten-year periods represents the average annual compounded rate of
return on an investment of $1,000 in the Series at the maximum public offering
price. When total return is quoted for Class A shares, it includes the payment
of the maximum initial sales charge. When total return is shown for Class C
shares, it reflects the effect of the applicable CDSC. Total return also may be
presented for other periods or based on investments at reduced sales charge
levels or net asset value. Any quotation of total return not reflecting the
maximum sales charge (front-end, level, or back-end) would be reduced if such
sales charge were used. Quotations of yield or total return for any period when
an expense limitation is in effect will be greater than if the limitation had
not been in effect. See "Past Performance" in the Statement of Additional
Information for a more detailed description.
See "Performance" in the Statement of Additional Information for a more detailed
discussion concerning the computation of the Fund's total return and yield.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFER IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
NO PERSON IS AUTHORIZED TO GIVE INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS OR IN SUPPLEMENTAL LITERATURE AUTHORIZED BY THE
SERIES, AND NO PERSON IS ENTITLED TO RELY UPON ANY INFORMATION OR REPRESENTATION
NOT CONTAINED HEREIN OR THEREIN.
<PAGE>
Comparison of change in value of a $10,000 investment in Class C shares of Lord
Abbett Securities Trust -- Growth & Income Series, assuming reinvestment of all
dividends and distributions, and the Standard & Poor's 500
<TABLE>
<CAPTION>
The Series
at Net S&P
Date Asset Value 500
<S> <C> <C>
1/3/94 $10000 $10000
10/31/94 10262 10382
10/31/95 12502 13125
</TABLE>
(1)Performance numbers for Standard & Poor's 500, which is unmanaged, do not
reflect transaction costs or management fees. An investor cannot invest directly
in this index.
(2)Total return is the percent change in value with all dividends and
distributions reinvested for the periods shown ending October 31, 1995 using the
SEC-required uniform method to compute such return.
<PAGE>
Investment Manager and Underwriter
Lord, Abbett & Co. and Lord Abbett Distributor LLC
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
212-848-1800
Custodian
The Bank of New York
48 Wall Street
New York, New York 10286
Transfer Agent and Dividend
Disbursing Agent
United Missouri Bank of Kansas City, N.A.
Tenth and Grand
Kansas City, Missouri 64141
Shareholder Servicing Agent
DST Systems, Inc.
P.O. Box 419100
Kansas City, Missouri 64141
800-821-5129
Auditors
Deloitte & Touche LLP
Counsel
Debevoise & Plimpton
<PAGE>
LORD ABBETT
Statement of Additional Information July 15, 1996
Lord Abbett Securities Trust
- -----------------------------------------------------------------------------
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from your securities dealer or from Lord, Abbett & Co. at The
General Motors Building, 767 Fifth Avenue, New York, New York 10153- 0203. This
Statement relates to, and should be read in conjunction with, the Prospectus
dated July 15, 1996.
Lord Abbett Securities Trust (referred to as the "Fund") was organized as a
Delaware business trust on February 26, 1993. As of July 12, 1996, the Fund has
one series -- Lord Abbett Growth and Income Fund (the "Series") -- which
consists of two classes (A and C). All shares have equal noncumulative voting
rights and equal rights with respect to dividends, assets and liquidation,
except for certain class-specific expenses. Prior to July 12, 1996, we had only
one class of shares, which class is now designated Class C. All shares have
equal noncumulative voting rights and equal rights with respect to dividends,
assets and liquidation, except for certain class-specific expenses. They are
fully paid and nonassessable when issued and have no preemptive or conversion
rights.
Rule 18f-2 under the Act provides that any matter required to be submitted, by
the provisions of the Act or applicable state law or otherwise, to the holders
of the outstanding voting securities of an investment company such as the Fund
shall not be deemed to have been effectively acted upon unless approved by the
holders of a majority of the outstanding shares of each class or series affected
by such matter. Rule 18f-2 further provides that a class or series shall be
deemed to be affected by a matter unless the interests of each class or series
in the matter are substantially identical or the matter does not affect any
interest of such class or series. However, the Rule exempts the selection of
independent public accountants, the approval of principal distributing contracts
and the election of trustees from its separate voting requirements.
Shareholder inquiries should be made by writing directly to the Fund or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
TABLE OF CONTENTS Page
1. Investment Objective and Policies 2
2. Trustees and Officers 4
3. Investment Advisory and Other Services 7
4. Portfolio Transactions 7
5. Purchases, Redemptions and Shareholder Services 9
6. Past Performance 14
7. Taxes 14
8. Information About the Fund 15
9. Financial Statements 16
<PAGE>
1.
Investment Objective and Policies
Fundamental Investment Restrictions
The Series may not: (1) borrow money, except that (i) the Series may borrow from
banks (as defined in the Investment Company Act of 1940, as amended (the "Act"))
in amounts up to 33 1/3% of its total assets (including the amount borrowed),
(ii) the Series may borrow up to an additional 5% of its total assets for
temporary purposes, (iii) the Series may obtain such short-term credit as may be
necessary for the clearance of purchases and sales of portfolio securities and
(iv) the Series may purchase securities on margin to the extent permitted by
applicable law; (2) pledge its assets (other than to secure borrowings, or to
the extent permitted by the Series' investment policies as permitted by
applicable law); (3) engage in the underwriting of securities, except pursuant
to a merger or acquisition or to the extent that, in connection with the
disposition of its portfolio securities, it may be deemed to be an underwriter
under federal securities laws; (4) make loans to other persons, except that the
acquisition of bonds, debentures or other corporate debt securities and
investment in government obligations, commercial paper, pass-through
instruments, certificates of deposit, bankers acceptances, repurchase agreements
or any similar instruments shall not be subject to this limitation, and except
further that the Series may lend its portfolio securities, provided that the
lending of portfolio securities may be made only in accordance with applicable
law; (5) buy or sell real estate (except that the Series may invest in
securities directly or indirectly secured by real estate or interests therein or
issued by companies which invest in real estate or interests therein), or
commodities or commodity contracts (except to the extent the Series may do so in
accordance with applicable law and without registering as a commodity pool
operator under the Commodity Exchange Act as, for example, with futures
contracts); (6) with respect to 75% of its gross assets, buy securities of one
issuer representing more than (i) 5% of its gross assets, except securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
or (ii) 10% of the voting securities of such issuer; (7) invest more than 25% of
its assets, taken at market value, in the securities of issuers in any
particular industry (excluding securities of the U.S. Government, its agencies
and instrumentalities); or (8) issue senior securities to the extent such
issuance would violate applicable law.
With respect to the restrictions mentioned herein, compliance therewith will not
be affected by changes in the market value of portfolio securities but will be
determined at the time of purchase or sale of such securities.
Non-Fundamental Investment Restrictions. In addition to the investment
restrictions above which cannot be changed without shareholder approval, we also
are subject to the following non-fundamental investment policies which may be
changed by the Board of Trustees without shareholder approval. The Series may
not: (1) borrow in excess of 5% of its gross assets taken at cost or market
value, whichever is lower at the time of borrowing, and then only as a temporary
measure for extraordinary or emergency purposes; (2) make short sales of
securities or maintain a short position except to the extent permitted by
applicable law; (3) invest knowingly more than 15% of its net assets (at the
time of investment) in illiquid securities, except for securities qualifying for
resale under Rule 144A of the Securities Act of 1933, deemed to be liquid by the
Board of Trustees; (4) invest in the securities of other investment companies
except as permitted by applicable law; (5) invest in securities of issuers
which, with their predecessors, have a record of less than three years'
continuous operations, if more than 5% of the Fund's total assets would be
invested in such securities (this restriction shall not apply to
mortgaged-backed securities, asset- backed securities or obligations issued or
guaranteed by the U. S. government, its agencies or instrumentalities); (6) hold
securities of any issuer if more than 1/2 of 1% of the securities of such issuer
are owned beneficially by one or more officers or trustees of the Fund or by one
or more partners or members of the Fund's underwriter or investment adviser if
these owners in the aggregate own beneficially more than 5% of the securities of
such issuer; (7) invest in warrants if, at the time of the acquisition, its
investment in warrants, valued at the lower of cost or market, would exceed 5%
of the Series' total assets (included within such limitation, but not to exceed
2% of the Series' total assets, are warrants which are not listed on the New
York or American Stock Exchange or a major foreign exchange); (8) invest in real
estate limited partnership interests or interests in oil, gas or other mineral
leases, or exploration or other development programs, except that the Series may
invest in securities issued by companies that engage in oil, gas or other
mineral exploration or other development activities; (9) write, purchase or sell
puts, calls, straddles, spreads or combinations thereof, except to the extent
permitted in the Fund's prospectus and statement of additional information, as
they may be amended from time to time; or (10) buy from or sell to any of its
officers, trustees, employees, or its investment adviser or any of its officers,
trustees, partners or employees, any securities other than shares of beneficial
interest in the Series.
Although it has no current intention to do so, the Series may invest in
financial futures and options on financial futures.
Lending Portfolio Securities
The Fund may lend portfolio securities to registered broker-dealers. These
loans, if and when made, may not exceed 30% of the Series total assets. The
Fund's loan of securities will be collateralized by cash or marketable
securities issued or guaranteed by the U.S. Government or its agencies ("U.S.
Government securities") or other permissible means at least equal to the market
value of the loaned securities. From time to time, the Fund may pay a part of
the interest received with respect to the investment of collateral to a borrower
and/or a third party that is not affiliated with the Fund and is acting as a
"placing broker". No fee will be paid to affiliated persons of the Fund.
By lending portfolio securities, the Fund can increase its income by continuing
to receive interest on the loaned securities as well as by either investing the
cash collateral in permissible investments, such as U.S. Government securities
or obtaining yield in the form of interest paid by the borrower when U.S.
Government securities or other forms of non-cash collateral are received. The
Fund will comply with the following conditions whenever they loan securities:
(i) the Fund must receive at least 100% collateral from the borrower; (ii) the
borrower must increase the collateral whenever the market value of the
securities loaned rises above the level of the collateral; (iii) the Fund must
be able to terminate the loan at any time; (iv) the Fund must receive reasonable
compensation for the loan, as well as any dividends, interest or other
distributions on the loaned securities; (v) the Fund may pay only reasonable
fees in connection with the loan and (vi) voting rights on the loaned securities
may pass to the borrower except that, if a material event adversely affecting
the investment in the loaned securities occurs, the Trustees must terminate the
loan and regain the right to vote the securities.
<PAGE>
Repurchase Agreements
The Fund may enter into repurchase agreements with respect to a security. A
repurchase agreement is a transaction by which the Fund acquires a security and
simultaneously commits to resell that security to the seller (a bank or
securities dealer) at an agreed upon price on an agreed upon date. The resale
price reflects the purchase price plus an agreed upon market rate of interest
which is unrelated to the coupon rate or date of maturity of the purchased
security. In this type of transaction, the securities purchased by the Fund have
a total value in excess of the value of the repurchase agreement. The Fund
requires at all times that the repurchase agreement be collateralized by cash or
U.S. Government securities having a value equal to, or in excess of, the value
of the repurchase agreement. Such agreements permit the Fund to keep all of its
assets at work while retaining flexibility in pursuit of investments of a longer
term nature.
The use of repurchase agreements involves certain risks. For example, if the
seller of the agreement defaults on its obligation to repurchase the underlying
securities at a time when the value of these securities has declined, the Fund
may incur a loss upon disposition of them. If the seller of the agreement
becomes insolvent and subject to liquidation or reorganization under the
Bankruptcy Code or other laws, a bankruptcy court may determine that the
underlying securities are collateral not within the control of the Fund and are
therefore subject to sale by the trustee in bankruptcy. Even though the
repurchase agreements may have maturities of seven days or less, they may lack
liquidity, especially if the issuer encounters financial difficulties. While
Fund management acknowledges these risks, it is expected that they can be
controlled through stringent selection criteria and careful monitoring
procedures. Fund management intends to limit repurchase agreements to
transactions with dealers and financial institutions believed by Fund management
to present minimal credit risks. Fund management will monitor creditworthiness
of the repurchase agreement sellers on an ongoing basis.
The Fund will enter into repurchase agreements only with those primary reporting
dealers that report to the Federal Reserve Bank of New York and with the 100
largest United States commercial banks and the underlying securities purchased
under the agreements will consist only of those securities in which the Fund
otherwise may invest.
Other Investment Restrictions (which can be changed without shareholder
approval)
Pursuant to Texas regulations, we will not invest more than 5% of our assets in
warrants and not more than 2% of such value in warrants not listed on the New
York or American Stock Exchanges, except when they form a unit with other
securities. As a matter of operating policy, we will not invest more than 5% of
our net assets in rights.
Portfolio Turnover
For the fiscal year ended October 31, 1995 the portfolio turnover was 23.17%.
Covered Call Options
As stated in the Prospectus, the Fund may write covered call options which are
traded on a national securities exchange with respect to securities in its
portfolio in an attempt to increase its income and to provide greater
<PAGE>
flexibility in the disposition of its portfolio securities. A "call option" is a
contract sold for a price (the "premium") giving its holder the right to buy a
specific number of shares of stock at a specific price prior to a specified
date. A "covered call option" is a call option issued on securities already
owned by the writer of the call option for delivery to the holder upon the
exercise of the option. During the period of the option, the Fund forgoes the
opportunity to profit from any increase in the market price of the underlying
security above the exercise price of the option (to the extent that the increase
exceeds its net premium). The Fund may enter into "closing purchase
transactions" in order to terminate its obligation to deliver the underlying
security (this may result in a short-term gain or loss). A closing purchase
transaction is the purchase of a call option (at a cost which may be more or
less than the premium received for writing the original call option) on the same
security, with the same exercise price and call period as the option previously
written. If the Fund is unable to enter into a closing purchase transaction, it
may be required to hold a security that it might otherwise have sold to protect
against depreciation. The Fund does not intend to write covered call options
with respect to securities with an aggregate market value of more than 5% of its
gross assets at the time an option is written. This percentage limitation will
not be increased without prior disclosure in the current Prospectus.
The Fund's custodian will segregate cash or liquid high-grade debt securities in
an amount not less than that required by Securities Exchange Commission ("SEC")
Release 10666 with respect to its assets committed to written covered call
options. If the value of the segregated securities declines, additional cash or
debt securities will be added on a daily basis (i.e., marked-to-market) so that
the segregated amount will not be less than the amount of the Fund's commitments
with respect to such written options.
2.
Trustees and Officers
The following trustees are partners of Lord Abbett, The General Motors Building,
767 Fifth Avenue, New York, New York 10153-0203. They have been associated with
Lord Abbett for over five years and are also officers and/or directors or
trustees of the twelve other Lord Abbett-sponsored funds. They are "interested
persons" as defined in the Act, and as such, may be considered to have an
indirect financial interest in the Rule 12b-1 Plan described in the Prospectus.
Robert S. Dow, age 51, Chairman and President
The following outside trustees are also directors or trustees of the twelve
other Lord Abbett-sponsored funds referred to above.
E. Thayer Bigelow
Time Warner Cable
300 First Stamford Place
Stamford, Connecticut
<PAGE>
President and Chief Executive Officer of Time Warner Cable Programming, Inc.
Formerly President and Chief Operating Officer of Home Box Office, Inc. Age 54.
Stewart S. Dixon
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon. Age 65.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 70.
C. Alan MacDonald
The Marketing Partnership, Inc.
27 Signal Road
Stamford, Connecticut
General Partner, The Marketing Partnership, Inc., a full service marketing
consulting 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 Company. Age 62.
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 67.
Thomas J. Neff
Spencer Stuart & Associates
277 Park Avenue
New York, New York
President of Spencer Stuart & Associates, an executive search consulting firm.
Age 58.
<PAGE>
The second column of the following table sets forth the compensation accrued for
the Fund's outside trustees. The third and fourth columns set forth information
with respect to the retirement plan for outside trustees maintained by the Lord
Abbett-sponsored funds. The fifth column sets forth the total compensation
payable by such funds to the outside trustees. No trustee of the Fund associated
with Lord Abbett and no officer of the Fund received any compensation from the
Fund for acting as a trustee or officer.
<TABLE>
<CAPTION>
For the Fiscal Year Ended October 31, 1995
(1) (2) (3) (4) (5)
Pension or Estimated Annual For Year Ended
Retirement Benefits Benefits Upon December 31, 1995
Accrued by the Retirement Proposed Total Compensation
Aggregate Fund and to be Paid by the Accrued by the Fund and
Compensation Twelve Other Lord Fund and Twelve Twelve Other Lord
Accrued by Abbett-sponsored Other Lord Abbett- Abbett-sponsored
Name of Trustee the Fund1 Funds sponsored Funds2 Funds3
<S> <C> <C> <C> <C>
E. Thayer Bigelow $1,486 $9,772 $33,600 $41,000
Stewart S. Dixon $1,521 $22,472 $33,600 $42,000
John C. Jansing $1,531 $28,480 $33,600 $42,966
C. Alan MacDonald $1,545 $27,435 $33,600 $42,750
Hansel B. Millican, Jr. $1,420 $24,707 $33,600 $43,000
Thomas J. Neff $1,496 $16,126 $33,600 $42,000
<FN>
1. Outside trustees' fees, 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 the fees payable by the Fund to its outside
trustees are being deferred under a plan that deems the deferred amounts to
be invested in shares of the Fund for later distribution to the trustees. The
total amount accrued under the plan for each outside trustee since the
beginning of his tenure with the Fund, including dividends reinvested and
changes in net asset value applicable to such deemed investments as of
October 31, 1995 were as follows: Mr. Bigelow, $1,570; Mr. Dixon, $1,436; Mr.
Jansing, $2,698; Mr. MacDonald, $1,364; Mr. Millican, $2,682 and Mr. Neff,
$2,629.
2. Each Lord Abbett-sponsored fund has a retirement plan providing that outside
directors or trustees 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 would be payable annually under such retirement plans if
the trustee were to retire at age 72 and the annual retainers payable by such
funds were the same as they are today. The amounts accrued in column 3 were
accrued by the Lord Abbett-sponsored funds during the fiscal year ended
October 31, 1995 with respect to the retirement benefits in column 4.
3. This column shows aggregate compensation, including trustee's fees and
attendance fees for board and committee meetings, of a nature referred to in
the first sentence of footnote one, accrued by the Lord Abbett-sponsored
funds during the year ended December 31, 1995.
</FN>
</TABLE>
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Allen, Carper, Cutler, Henderson, Morris, Nordberg and Walsh are partners of
Lord Abbett; the others are employees: David Seto, age 35, Executive Vice
President; Kenneth B. Cutler, age 63, Vice President and Secretary; Stephen I.
Allen, age 42; Daniel E. Carper, age 44; Thomas S. Henderson, age
<PAGE>
64; Robert G. Morris, age 51, E. Wayne Nordberg, age 59; John J. Gargana, Jr.,
age 64; Paul A. Hilstad, age 53 (with Lord Abbett since 1995 - formerly Senior
Vice President and General Counsel of American Capital Management & Research,
Inc.); Thomas F. Konop, age 53; Victor W. Pizzolato, age 63; John J. Walsh, age
58, Vice Presidents; and Keith F. O'Connor, age 40, Treasurer.
The Fund does not hold annual meetings of shareholders unless one or more
matters are required to be acted on by shareholders under the Act. Under the
Fund's Declaration of Trust, shareholder meetings may be called at any time by
certain officers of the Fund or by a majority of the trustees (i) for the
purpose of taking action upon any matter requiring the vote or authority of the
Fund's shareholders or upon other matters deemed to be necessary or desirable or
(ii) upon the written request of the holders of at least one-quarter of the
shares of the Fund outstanding and entitled to vote at the meeting.
As of October 31, 1995, our trustees and officers, as a group, owned less than
1% of our outstanding shares.]
3.
Investment Advisory and Other Services
As described under "Our Management" in the Prospectus, Lord Abbett is the
investment manager for the Fund. The eight general partners of Lord Abbett, all
of whom are officers and/or trustees of the Fund, are: Stephen I. Allen, Daniel
E. Carper, Kenneth B. Cutler, Robert S. Dow, Thomas S. Henderson, Robert G.
Morris, E. Wayne Nordberg and John J. Walsh. The address of each partner is The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203.
The services performed by Lord Abbett are described under "Our Management" in
the Prospectus. Under the Management Agreement, we are obligated to pay Lord
Abbett a monthly fee, based on average daily net assets for each month, at the
annual rate of .75 of 1%. This fee is allocated among Class A and C based on the
classes' proportionate shares of such daily net assets. For the year ended
October 31, 1995 such fees amounted to $982, and were attributable to Class C
shares only.
Although not obligated to do so, Lord Abbett has waived or may waive, all or
part of its management fees and has assumed or may assume, other expenses of the
Fund. For the period January 3, 1994 (commencement of operations) to October 31,
1994 Lord Abbett waived $27,498, in management fees and assumed $33,620 of other
expense, which were attributable to Class C shares only.
As discussed in the Prospectus under "Our Management," the Fund is contingently
obligated to repay to Lord Abbett the amounts of such assumed other expenses.
We pay all expenses not expressly assumed by Lord Abbett, including, without
limitation, 12b-1 expenses, outside trustees' fees and expenses, association
membership dues, legal and auditing fees, taxes, transfer and dividend
disbursing agent fees, shareholder servicing costs, expenses relating to
shareholder meetings, expenses of preparing, printing and mailing stock
certificates and shareholder reports, expenses of registering our shares under
federal and
<PAGE>
state securities laws, expenses of preparing, printing and mailing prospectuses
to existing shareholders, insurance premiums, brokerage and other expenses
connected with executing portfolio transactions.
The Fund has agreed with the State of California to limit operating expenses
(including management fees but excluding taxes, interest, extraordinary expenses
and brokerage commissions) to 2 1/2% of average annual net assets up to
$30,000,000, 2% of the next $70,000,000 of such assets and 1 1/2% of such assets
in excess of $100,000,000. However, as described in the Prospectuses, the Fund
has adopted a Plan pursuant to Rule 12b-1 of the Act for each class of shares.
Annual Plan distribution expenses up to 1% of the Fund's average net assets
during its fiscal year may be excluded from this expense limitation. The expense
limitation is a condition on the registration of investment company shares for
sale in the State and applies so long as our shares are registered for sale in
that State.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10128, are
the independent public accountants of the Fund and must be approved at least
annually by our trustees to continue in such capacity. Deloitte & Touche LLP
perform audit services for the Fund including the examination of financial
statements included in our annual report to shareholders.
The Bank of New York ("BNY"), 48 Wall Street, New York, New York 10286, is the
Fund's custodian.
4.
Portfolio Transactions
Our policy is to obtain best execution on all our portfolio transactions, which
means that we seek to have purchases and sales of portfolio securities executed
at the most favorable prices, considering all costs of the transaction including
brokerage commissions and dealer markups and markdowns and taking into account
the full range and quality of the brokers' services. Consistent with obtaining
best execution, the Fund may pay, as described below, a higher commission than
some brokers might charge on the same transaction. This policy governs the
selection of brokers or dealers and the market in which the transaction is
executed. To the extent permitted by law, we may, if considered advantageous,
make a purchase from or sale to another Lord Abbett-sponsored fund without the
intervention of any broker-dealer.
Broker-dealers are selected on the basis of their professional capability and
the value and quality of their brokerage and research services. Normally, the
selection is made by traders who are officers of the Fund and also are employees
of Lord Abbett. These traders do the trading as well for other accounts --
investment companies (of which they are also officers) and other investment
clients -- managed by Lord Abbett. They are responsible for obtaining best
execution.
We pay a commission rate that we believe is appropriate to give maximum
assurance that our brokers will provide us, on a continuing basis, the highest
level of brokerage services available. While we do not always seek the lowest
possible commissions on particular trades, we believe that our commission rates
are in line with the rates that many other institutions pay. Our traders are
authorized to pay brokerage commissions in excess of those that
<PAGE>
other brokers might accept on the same transactions in recognition of the value
of the services performed by the executing brokers, viewed in terms of either
the particular transaction or the overall responsibilities of Lord Abbett with
respect to us and the other accounts they manage. Such services include showing
us trading opportunities including blocks, a willingness and ability to take
positions in securities, knowledge of a particular security or market, proven
ability to handle a particular type of trade, confidential treatment, promptness
and reliability.
Some of our brokers also provide research services at least some of which are
useful to Lord Abbett in their overall responsibilities with respect to us and
the other accounts they manage. Research includes the furnishing of analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts and trading equipment and
computer software packages, acquired from third-party suppliers, that enable
Lord Abbett to access various information bases. Such services may be used by
Lord Abbett in servicing all their accounts, and not all of such services will
necessarily be used by Lord Abbett in connection with their management of the
Fund; conversely, such services furnished in connection with brokerage on other
accounts managed by Lord Abbett may be used in connection with their management
of the Fund; and not all of such services will necessarily be used by Lord
Abbett in connection with their advisory services to such other accounts. We
have been advised by Lord Abbett that research services received from brokers
cannot be allocated to any particular account, are not a substitute for Lord
Abbett's services but are supplemental to their own research effort and, when
utilized, are subject to internal analysis before being incorporated by Lord
Abbett into their investment process. As a practical matter, it would not be
possible for Lord Abbett to generate all of the information presently provided
by brokers. While receipt of research services from brokerage firms has not
reduced Lord Abbett's normal research activities, the expenses of Lord Abbett
could be materially increased if it attempted to generate such additional
information through its own staff and purchased such equipment and software
packages directly from the suppliers.
No commitments are made regarding the allocation of brokerage business to or
among brokers, and trades are executed only when they are dictated by investment
decisions of the Fund to purchase or sell portfolio securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold our shares and/or
shares of other Lord Abbett-sponsored funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as we do, transactions will, to the extent practicable, be allocated among all
participating accounts in proportion to the amount of each order and will be
executed daily until filled so that each account shares the average price and
commission cost of each day. Other clients who direct that their brokerage
business be placed with specific brokers or who invest through wrap accounts
introduced to Lord Abbett by certain brokers may not participate with us in the
buying and selling of the same securities as described above. If these clients
wish to buy or sell the same security as we do, they may have their transactions
executed at times different from our transactions and thus may not receive the
same price or incur the same commission cost as we do.
We will not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from dealers as
consideration for the direction to them of portfolio business.
<PAGE>
For the period January 3, 1994 to October 31, 1994 and for the fiscal year ended
October 31, 1995 we paid total commissions to independent broker-dealers of
$11,162 and $41,192, respectively with respect to Class C shares only.
5.
Purchases, Redemptions
and Shareholder Services
Securities in the Fund's portfolios are valued at their market values as of the
close of the NYSE. Market value will be determined as follows: securities listed
or admitted to trading privileges on any national or foreign securities exchange
are valued at the last sales price on the principal securities exchange on which
such securities are traded, or, if there is no sale, at the mean between the
last bid and asked prices on such exchange, or, in the case of bonds, in the
over-the-counter market if, in the judgment of the Fund's officers, that market
more accurately reflects the market value of the bonds. Securities traded only
in the over-the-counter market are valued at the mean between the bid and asked
prices, except that securities admitted to trading on the NASDAQ National Market
System are valued at the last sales price. Securities for which market
quotations are not available are valued at fair value under procedures approved
by the Board of Trustees.
All assets and liabilities expressed in foreign currencies will be converted
into United States dollars at the mean between the buying and selling rates of
such currencies against United States dollars last quoted by any major bank. If
such quotations are not available, the rate of exchange will be determined in
accordance with policies established by the Fund's Board of Trustees. The Board
of Trustees will monitor, on an ongoing basis, the Fund's method of valuation.
Information concerning how we value our Shares for the purchase and redemption
of our Shares is described in the Prospectus under "Purchases" and
"Redemptions", respectively.
As disclosed in the Prospectus, we calculate our net asset values and are
otherwise open for business on each day that the NYSE is open for trading. The
NYSE is closed on Saturdays and Sundays and the following holidays -- New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
The net asset value per share for the Class A shares will be determined in the
same manner as for the Class C shares (net assets divided by shares
outstanding). Our Class A shares will be sold with a front-end sales charge of
5.75%.
The offering price of Class C shares on October 31, 1995 was computed as
follows:
Net asset value per share (net assets divided by
shares outstanding).......................................$6.04
<PAGE>
The net asset value per share for the Class A shares will be determined in the
same manner as for the Class C shares (net assets divided by shares
outstanding).
The Fund has entered into a distribution agreement with Lord Abbett Distributor
LLC, a New York limited liability company ("Lord Abbett Distributor") under
which Lord Abbett Distributor is obligated to use its best efforts to find
purchasers for the shares of the Fund, and to make reasonable efforts to sell
Fund shares so long as, in Lord Abbett Distributor's judgment, a substantial
distribution can be obtained by reasonable efforts.
Class A and C Rule 12b-1 Plans. As described in the Prospectus, the Fund has
adopted a Distribution Plan and Agreement pursuant to Rule 12b-1 of the Act for
each of the two of the Series classes: the "A Plan" and the "C Plan",
respectively. In adopting each Plan and in approving its continuance, the Board
of Trustees has concluded that there is a reasonable likelihood that each Plan
will benefit its respective class and such class' shareholders. The expected
benefits include greater sales and lower redemptions of shares, which should
allow each Class to maintain a consistent cash flow, and a higher quality of
service to shareholders by authorized institutions than would otherwise be the
case. During the last fiscal year, the Fund accrued or paid through Lord Abbett
to authorized institutions $169,003 under the C Plan. The A Plan was adopted by
the Fund subsequent to its last fiscal year. Lord Abbett used all amounts
received under the C Plan for payments to dealers for (i) providing continuous
services to the Class C shareholders, such as answering shareholder inquiries,
maintaining records, and assisting shareholders in making redemptions,
transfers, additional purchases and exchanges and (ii) their assistance in
distributing Class C shares of the Fund.
Each Plan requires the trustees to review, on a quarterly basis, written reports
of all amounts expended pursuant to the Plan and the purposes for which such
expenditures were made. Each Plan shall continue in effect only if its
continuance is specifically approved at least annually by vote of the trustees,
including a majority of the trustees who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related to the Plan ("outside trustees"), cast in
person at a meeting called for the purpose of voting on the Plan. No Plan may be
amended to increase materially the above limits set forth therein the amount
spent for distribution expenses thereunder without approval by a majority of the
outstanding voting securities of the applicable class and the approval of a
majority of the trustees, including a majority of the outside trustees. Each
Plan may be terminated at any time by vote of a majority of the outside trustees
or by vote of a majority of the outstanding voting securities of the applicable
class.
Contingent Deferred Sales Charges. A Contingent Deferred Sales Charge ("CDSC"),
applies upon early redemption of shares regardless of class and (i) will be
assessed on the lesser of the net asset value of the shares at the time of
redemption or the original purchase price and (ii) is not imposed on the amount
of your account value represented by the increase in net asset value over the
initial purchase price (including increases due to the reinvestment of dividends
and capital gains distributions).
Class A Shares. As stated in the Prospectus, a CDSC of 1% is imposed with
respect to those Class A shares (or Class A shares of another Lord
Abbett-sponsored fund or series acquired through exchange of such shares) on
which
<PAGE>
the Fund has paid the one-time distribution fee of 1% if such shares are
redeemed out of the Lord Abbett-sponsored family of funds within a period of 24
months from the end of the month in which the original sale occurred.
Class C Shares. As stated in the Prospectus, if Class C shares are redeemed for
cash before the first anniversary of their purchase, the redeeming shareholder
will be required to pay to the Series on behalf of Class C shares a CDSC of 1%
of the lower of cost or the then net asset value of Class C shares redeemed. If
such shares are exchanged into the same class of another Lord Abbett-sponsored
fund and subsequently redeemed before the first anniversary of their original
purchase, the charge will be collected by the other fund on behalf of this
Series' Class C shares.
General.
With respect to Class A shares, no CDSC is payable on redemptions by
participants or beneficiaries from employer-sponsored retirement plans under the
Internal Revenue Code for benefit payments due to plan loans, hardship
withdrawals, death, retirement or separation from service and for returns of
excess contributions to retirement plan sponsors. In the case of both classes of
shares, the CDSC is received by the Series and is intended to reimburse all or a
portion of the amount paid by the Series if the shares are redeemed before the
Series has had an opportunity to realize the anticipated benefits of having a
long-term shareholder account in the Series.
The other funds and series which participate in the Telephone Exchange Privilege
(except (a) Lord Abbett U.S. Government Securities Money Market Fund, Inc.
("GSMMF"), (b) certain series of Lord Abbett Tax-Free Income Fund and Lord
Abbett Tax-Free Income Fund for which a Rule 12b-1 Plan is not yet in effect,
and (c) any authorized institution's affiliated money market fund satisfying
Lord Abbett Distributor as to certain omnibus account and other criteria-
hereinafter referred to as an "authorized money market fund" or "AMMF"
(collectively, the "Non-12b-1 funds")) have instituted a CDSC for each class on
the same terms and conditions. No CDSC will be charged on an exchange of shares
of the same class between Lord Abbett funds or between such funds and AMMF. Upon
redemption of shares out of the Lord Abbett family of funds or out of AMMF, the
CDSC will be charged on behalf of and paid to the Fund in which the original
purchase (subject to a CDSC) occurred, in the case of the Class A and Class C
shares. Thus, if shares of a Lord Abbett fund are exchanged for shares of the
same class of another such fund and the shares of the same class tendered
("Exchanged Shares") are subject to a CDSC, the CDSC will carry over to the
shares of the same class being acquired, including GSMMF and AMMF ("Acquired
Shares"). Any CDSC that is carried over to Acquired Shares is calculated as if
the holder of the Acquired Shares had held those shares from the date on which
he or she became the holder of the Exchanged Shares. Although the Non-12b-1
funds will not pay a distribution fee on their own shares, and will, therefore,
not impose their own CDSC, the Non-12b-1 funds will collect the CDSC on behalf
of other Lord Abbett funds, in the case of the Class A and Class C shares.
Acquired Shares held in GSMMF and AMMF which are subject to a CDSC will be
credited with the time such shares are held in GSMMF but will not be credited
with the time such shares are held in AMMF. Therefore, if your Acquired Shares
held in AMMF qualified for no CDSC at the time of exchange into AMMF, that is
the CDSC treatment you will receive upon redeeming for cash from AMMF,
regardless of the time you have held Acquired Shares in AMMF.
<PAGE>
In no event will the amount of the CDSC exceed 1% of the lesser of (i) the net
asset value of the shares redeemed or (ii) the original cost of such shares (or
of the Exchanged Shares for which such shares were acquired). No CDSC will be
imposed when the investor redeems (i) amounts derived from increases in the
value of the account above the total cost of shares being redeemed due to
increases in net asset value, (ii) shares with respect to which no Lord Abbett
fund or series paid a 12b-1 fee or (iii) shares which, together with Exchanged
Shares, have been held continuously for 24 months from the end of the month in
which the original sale occurred (in the case of Class A shares); or for one
year or more (in the case of Class C shares). In determining whether a CDSC is
payable, (a) shares not subject to the CDSC will be redeemed before shares
subject to the CDSC and (b) of the shares subject to a CDSC, those held the
longest will be the first to be redeemed.
Exchanges. The Prospectus briefly describes the Telephone Exchange Privilege.
You may exchange some or all of your shares of any class for those in the same
class of: (i) Lord Abbett-sponsored funds currently offered to the public with a
sales charge (front-end, back-end or level ), (ii) GSMMF or (iii) AMMF, to the
extent offers and sales may be made in your state. You should read the
prospectus of the other fund before exchanging. In establishing a new account by
exchange, shares of the Fund being exchanged must have a value equal to at least
the minimum initial investment required for the other fund into which the
exchange is made.
Shareholders in other Lord Abbett-sponsored funds and AMMF have the same right
to exchange their shares for the corresponding class of the Fund's shares.
Exchanges are based on relative net asset values on the day instructions are
received by the Fund in Kansas City if the instructions are received prior to
the close of the NYSE in proper form. No sales charges are imposed except in the
case of exchanges out of GSMMF or AMMF (unless a sales charge (front-end,
back-end or level) was paid on the initial investment in a Lord Abbett-sponsored
fund). Exercise of the exchange privilege will be treated as a sale for federal
income tax purposes, and, depending on the circumstances, a gain or loss may be
recognized. In the case of an exchange of shares that have been held for 90 days
or less where no sales charge is payable on the exchange, the original sales
charge incurred with respect to the exchanged shares will be taken into account
in determining gain or loss on the exchange only to the extent such charge
exceeds the sales charge that would have been payable on the acquired shares had
they been acquired for cash rather than by exchange. The portion of the original
sales charge not so taken into account will increase the basis of the acquired
shares.
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as a means for taking advantage of
short-term swings in the market, and we reserve the right to terminate or limit
the privilege of any shareholder who makes frequent exchanges. We can revoke or
modify the privilege for all shareholders upon 60 days' prior notice. "Eligible
Funds" are AMMF and other Lord Abbett-sponsored funds which are eligible for the
exchange privilege, except Lord Abbett Series Fund ("LASF") which offers its
shares only in connection with certain variable annuity contracts, Lord Abbett
Equity Fund ("LAEF"), which is not issuing shares, and certain series of Lord
Abbett Research Fund if not offered to the general public ("LARF").
Statement of Intention. Under the terms of the Statement of Intention to invest
$100,000 or more over a 13-month period as described in the Prospectus, in
shares of a Lord Abbett-sponsored fund (other than shares of LAEF, LASF, LARF
and GSMMF, unless holdings in GSMMF are attributable to shares exchanged from a
Lord Abbett- sponsored fund offered with a front-end, back-end or level sales
charge) currently owned by you are credited as purchases (at their current
offering prices on the date the Statement is signed) toward achieving the stated
investment and reduced initial sales charge for Class A shares. Class A shares
valued at 5% of the amount of intended purchases are escrowed and may be
redeemed to cover the additional sales charge payable if the Statement is not
completed. The Statement of Intention is neither a binding obligation on you to
buy, nor on the Fund to sell, the full amount indicated.
Rights of Accumulation. As stated in the Prospectus, purchasers (as defined in
the Prospectus) may accumulate their investment in Lord Abbett-sponsored funds
(other than LAEF, LARF, LASF, GSMMF, and AMMF unless holdings in GSMMF or AMMF
are attributable to shares exchanged from a Lord Abbett-sponsored fund offered
with a front-end, back-end or level sales charge) so that a current investment,
plus the purchaser's holdings valued at the current maximum offering price,
reach a level eligible for a discounted sales charge for Class A shares.
Net Asset Value Purchases of Class A Shares. As stated in the Prospectus, our
Class A shares may be purchased at net asset value by our trustees, employees of
Lord Abbett, employees of our shareholder servicing agent and employees of any
securities dealer having a sales agreement with Lord Abbett who consents to such
purchases or by the trustee or custodian under any pension or profit-sharing
plan or Payroll Deduction IRA established for the benefit of such persons or for
the benefit of employees of any national securities trade organization to which
Lord Abbett belongs or any company with an account(s) in excess of $10 million
managed by Lord Abbett on a private- advisory-account basis. For purposes of
this paragraph, the terms "trustees" and "employees" include a trustee's or
employee's spouse (including the surviving spouse of a deceased trustee or
employee). The terms "our trustees" and "employees of Lord Abbett" also include
other family members and retired trustees and employees.
Our Class A shares also may be purchased at net asset value (a) at $1 million or
more, (b) with dividends and distributions from Class A shares of other Lord
Abbett-sponsored funds, except for LARF, LAEF and LASF, (c) under the loan
feature of the Lord Abbett-sponsored prototype 403(b) plan for share purchases
representing the repayment of principal and interest, (d) by certain authorized
brokers, dealers, registered investment advisers or other financial institutions
who have entered into an agreement with Lord Abbett Distributor in accordance
with certain standards approved by Lord Abbett Distributor, providing
specifically for the use of our shares in particular investment products made
available for a fee to clients of such brokers, dealers, registered investment
advisers and other financial institutions, and (e) by employees, partners and
owners of unaffiliated consultants and advisors to Lord Abbett, Lord Abbett
Distributor or Lord Abbett-sponsored funds who consent to such purchase if such
persons provide service to Lord Abbett, Lord Abbett Distributor or such funds on
a continuing basis and are familiar with such funds. Shares are offered at net
asset value to these investors for the purpose of promoting goodwill with
employees and others with whom Lord Abbett Distributor and/or the Fund has
business relationships.
Our Class A shares also may be purchased at net asset value, subject to
appropriate documentation, through a securities dealer where the amount invested
represents redemption proceeds from shares ("Redeemed Shares") of a registered
open-end management investment company not distributed or managed by Lord Abbett
(other than a money market fund), if such redemption has occurred no more than
60 days prior to the purchase of our shares, the Redeemed Shares were held for
at least six months prior to redemption and the proceeds of redemption were
<PAGE>
maintained in cash or a money market fund prior to purchase. Purchasers should
consider the impact, if any, of contingent deferred sales charges in determining
whether to redeem shares for subsequent investment in our Class A shares. Lord
Abbett may suspend, change or terminate this purchase option at any time.
Our Class A shares may be issued at net asset value in exchange for the assets,
subject to possible tax adjustment, of a personal holding company or an
investment company. There are economies of selling efforts and sales-related
expenses with respect to offers to these investors and those referred to above.
Redemptions. A redemption order is in proper form when it contains all of the
information and documentation required by the order form or supplementally by
Lord Abbett Distributor or the Fund to carry out the order. The signature(s) and
any legal capacity of the signer(s) must be guaranteed by an eligible guarantor.
See the Prospectus for expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Trustees may authorize redemption of all of the shares in any
account in which there are fewer than 60 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least 6 month's prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
Div-Move. Under the Div-Move service described in the Prospectus, you can invest
the dividends paid on your account of any class into an existing account of the
same class in any other Eligible Fund. The account must be either your account,
a joint account for you and your spouse, a single account for your spouse, or a
custodial account for your minor child under the age of 21. You should read the
prospectus of the other fund before investing.
Invest-A-Matic. The Invest-A-Matic method of investing in the Fund and/or any
other Eligible Fund is described in the Prospectus. To avail yourself of this
method you must complete the application form, selecting the time and amount of
your bank checking account withdrawals and the Funds for investment, include a
voided, unsigned check and complete the bank authorization.
Systematic Withdrawal Plans. The Systematic Withdrawal Plan ("SWP") also is
described in the Prospectus. You may establish a SWP if you own or purchase
uncertificated shares having a current offering price value of at least $10,000.
Lord Abbett prototype retirement plans have no such minimum. With respect to
Class C shares, the CDSC will be waived on and after the first anniversary of
their purchase. The SWP involves the planned redemption of shares on a periodic
basis by receiving either fixed or variable amounts at periodic intervals. Since
the value of shares redeemed may be more or less than their cost, gain or loss
may be recognized for income tax purposes on each periodic payment. Normally,
you may not make regular investments at the same time you are
<PAGE>
receiving systematic withdrawal payments because it is not in your interest to
pay a sales charge on new investments when in effect a portion of that new
investment is soon withdrawn. The minimum investment accepted while a withdrawal
plan is in effect is $1,000. The SWP may be terminated by you or by us at any
time by written notice.
Retirement Plans. The Prospectus indicates the types of retirement plans for
which Lord Abbett provides forms and explanations. Lord Abbett makes available
the retirement plan forms and custodial agreements for IRAs (Individual
Retirement Accounts, including Simplified Employee Pensions), 403(b) plans and
qualified pension and profit-sharing plans, including 401(k) plans. The forms
name Investors Fiduciary Trust Company as custodian and contain specific
information about the plans. Explanations of the eligibility requirements,
annual custodial fees and allowable tax advantages and penalties are set forth
in the relevant plan documents. Adoption of any of these plans should be on the
advice of your legal counsel or qualified tax adviser.
6.
Past Performance
The Fund computes the average annual compounded rate of total return for each
class during specified periods that would equate the initial amount invested to
the ending redeemable value of such investment by adding one to the computed
average annual total return, raising the sum to a power equal to the number of
years covered by the computation and multiplying the result by one thousand
dollars which represents a hypothetical initial investment. The calculation
assumes deduction of the maximum sales charge (as described in the next
paragraph) from the amount invested and reinvestment of all income dividends and
capital gains distributions on the reinvestment dates at prices calculated as
stated in the Prospectus. The ending redeemable value is determined by assuming
a complete redemption at the end of the period covered by the average annual
total return computation.
In calculating total returns for Class A shares, the current maximum sales
charge of 5.75% (as a percentage of the offering price) is deducted from the
initial investment (unless the return is shown at net asset value). For Class C
shares, the 1.0% CDSC is applied to the Series' investment result for the time
period shown prior to the first anniversary of purchase (unless the total return
is shown at net asset value). Total returns also assume that all dividends and
capital gains distributions during the period are reinvested at net asset value
per share, and that the investment is redeemed at the end of the period.
Although prior to July 12, 1996, the Series had only one class of shares, which
class is now designated Class C, for purposes of computing average annual
compounded rates of total return for the Fund's Class A shares prior to that
date, the Series' investment result is used, applying the Applicable Percentage,
unless total return is shown at net asset value.
Using the method described above to compute average annual compounded rates of
total return for the fiscal-year ending on October 31, 1995 was 12.98% for the
Series' Class C shares.
Our yield quotation for both Classes is based on a 30-day period ended on a
specified date, computed by dividing our net investment income per share earned
during the period by our maximum offering price per share on the last day of the
period. This is determined by finding the following quotient: take the Series'
dividends and interest earned during the period minus its expenses accrued for
the period and divide by the product of (i) the average daily
<PAGE>
number of Series' shares outstanding during the period that were entitled to
receive dividends and (ii) the Series' maximum offering price per share on the
last day of the period. To this quotient add one. This sum is multiplied by
itself five times. Then one is subtracted from the product of this
multiplication and the remainder is multiplied by two. Yield for the Class A
shares reflect the deduction of the maximum initial sales charge, but may also
be shown based on the Series' net asset value per share. Yields for C shares do
not reflect the deduction of the CDSC. For the 30-day period ended October 31,
1995, the yield for the Class C shares of Fund was 1.86%.
These figures represent past performance, and an investor should be aware that
the investment return and principal value of a Fund investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Therefore, there is no assurance that this performance will be
repeated in the future.
7.
Taxes
The value of any shares redeemed by the Fund or repurchased or otherwise sold
may be more or less than your tax basis in the shares at the time the
redemption, repurchase or sale is made. Any gain or loss will generally be
taxable for federal income tax purposes. Any loss realized on the sale,
redemption or repurchase of Fund shares which you have held for six months or
less will be treated for tax purposes as a long-term capital loss to the extent
of any capital gains distributions which you received with respect to such
shares. Losses on the sale of stock or securities are not deductible if, within
a period beginning 30 days before the date of the sale and ending 30 days after
the date of the sale, the taxpayer acquires stock or securities that are
substantially identical.
The writing of call options and other investment techniques and practices which
the Fund may utilize, as described above under "Investment Objectives and
Policies," may create "straddles" for United States federal income tax purposes
and may affect the character and timing of the recognition of gains and losses
by the Fund. Such transactions may increase the amount of short-term capital
gain realized by the Fund, which is taxed as ordinary income when distributed to
shareholders. Limitations imposed by the Internal Revenue Code on regulated
investment companies may restrict the Fund's ability to engage in transactions
in options.
The Fund will be subject to a 4% non-deductible excise tax on certain amounts
not distributed (and not treated as having been distributed) on a timely basis
in accordance with a calendar-year distribution requirement. The Fund intends to
distribute to shareholders each year an amount adequate to avoid the imposition
of such excise tax. Dividends paid by the Fund will qualify for the
dividends-received deduction for corporations to the extent they are derived
from dividends paid by domestic corporations.
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to United States persons (United States citizens or residents and
United States domestic corporations, partnerships, trusts and estates.) Each
shareholder who is not a United States person should consult his tax adviser
regarding the U.S. and foreign tax consequences of the ownership of shares of
the Fund, including a 30% (or lower treaty rate) United States withholding tax
on dividends representing ordinary income and net short-term capital gains, and
the applicability of United States gift and estate taxes to non-United States
persons who own Fund shares.
<PAGE>
8.
Information About the Fund
Shareholder Liability. Delaware law provides that Fund shareholders shall be
entitled to the same limitations of personal liability extended to stockholders
of private corporations for profit. The courts of some states, however, may
decline to apply Delaware law on this point. The Fund's Declaration of Trust
contains an express disclaimer of shareholder liability for the acts,
obligations, or affairs of the Fund and requires that a disclaimer be given in
each contract entered into or executed by the Fund. The Declaration provides for
indemnification out of the Fund's property of any shareholder or former
shareholder held personally liable for the obligations of the Fund. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which Delaware law does not apply, no
contractual limitation of liability was in effect and the portfolio is unable to
meet its obligations. Lord Abbett believes that, in view of the above, the risk
of personal liability to shareholders is extremely remote.
Under The Fund's Declaration of Trust, the trustees may, without shareholder
vote, cause the Fund to merge or consolidate into, or sell and convey all or
substantially all of, the assets of the Fund to one or more trusts, partnerships
or corporations, so long as the surviving entity is an open-end management
investment company that will succeed to or assume the Fund's registration
statement. In addition, the trustees may, without shareholder vote, cause the
Fund to be incorporated under Delaware law.
Derivative actions on behalf of the Fund may be brought only by shareholders
owning not less than 50% of the then outstanding shares of the Fund.
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment account. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Trust's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security seven days
before or after any Lord Abbett-sponsored fund trades in such security,
profiting from trades of the same security within 60 days and trading on
material non-public information. The Code imposes similar requirements and
restrictions on the independent trustees of the Trust to the extent contemplated
by the recommendations of such Advisory Group.
9.
Financial Statements
The financial statements for the fiscal half year and fiscal year ended October
31, 1995 and the report of Deloitte & Touche LLP, independent public
accountants, on such annual financial statements contained in the 1995 Annual
Report to Shareholders of Lord Abbett Securities Trust are incorporated herein
by reference to such financial statements and report in reliance upon the
authority of Deloitte & Touche LLP as experts in auditing and accounting. Prior
to July 15, 1996, the Fund had only one class of shares, which class is now
designated Class C.
<PAGE>
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Part A - Financial Highlights for the period December
31, 1993 (commencement of operations - Growth & Income
Series) to October 31, 1994 and the fiscal year ended
October 31, 1995.
Part B - Statement of Net Assets at October 31, 1995.
Statement of Operations for the year ended October 31,
1995.
(b) Exhibits -
99.B1 Amendment to Declaration of Trust*
99.B6 Form of Distribution Agreement**
99.B11 Consent of Deloitte & Touche*
99.B15a Forms of Rule 12b-1 Plans for Class A and Class C
shares**
99.B15b Form of Rule 12b-1 Plan for Class B shares**
99.B18 Form of Plan entered into by Registrant pursuant to
Rule 18f-3.***
* Filed herewith.
** The form of this document is incorporated by Reference to Post-Effective
Amendment No. 41 to the Registration Statement on Form N-1A of Lord Abbett
Bond-Debenture Fund, Inc. (File No. 811-2145). The Lord Abbett Bond-
Debenture Fund document is substantially identical to that form used for
the Registrant except for the name of the Registrant and/or its Series and
perhaps minor differences.
*** Incorporated by Reference to Post-Effective Amendment No. 40 to the
Registration Statement on Form N-1A of Lord Abbett Bond-Debenture Fund,
Inc. (File No. 811- 2145)
Item 25. Persons Controlled by or Under Common Control with Registrant
None.
1
<PAGE>
Item 26. Number of Record Holders of Securities
(as of June 28, 1996)
Growth & Income - 3,843
Item 27. Indemnification
The Registrant is a Delaware Business Trust established under
Chapter 38 of Title 12 of the Delaware Code. The Registrant's
Declaration and Instrument of Trust at Section 4.3 relating to
indemnification of Trustees, officers, etc. states the
following.
The Trust shall indemnify each of its Trustees, officers,
employees and agents (including any individual who serves at
its request as director, officer, partner, trustee or the like
of another organization in which it has any interest as a
shareholder, creditor or otherwise) against all liabilities
and expenses, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees reasonably incurred by him or her
in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before
any court or administrative or legislative body in which he or
she may be or may have been involved as a party or otherwise
or with which he or she may be or may have been threatened,
while acting as Trustee or as an officer, employee or agent of
the Trust or the Trustees, as the case may be, or thereafter,
by reason of his or her being or having been such a Trustee,
officer, employee or agent, except with respect to any matter
as to which he or she shall have been adjudicated not to have
acted in good faith in the reasonable belief that his or her
action was in the best interests of the Trust or any Series
thereof. Notwithstanding anything herein to the contrary, if
any matter which is the subject of indemnification hereunder
relates only to one Series (or to more than one but not all of
the Series of the Trust), then the indemnity shall be paid
only out of the assets of the affected Series. No individual
shall be indemnified hereunder against any liability to the
Trust or any Series thereof or the Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her
office. In addition, no such indemnity shall be provided with
respect to any matter disposed of by settlement or a
compromise payment by such Trustee, officer, employee or
agent, pursuant to a consent decree or otherwise, either for
said payment or for any other expenses unless there has been a
determination that such compromise is in the best interests of
the Trust or, if appropriate, of any affected Series thereof
and that such Person appears to have acted in good faith in
the reasonable belief that his or her action was in the best
interests of the Trust or, if appropriate, of any affected
Series thereof, and did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. All
determinations that the applicable standards of conduct have
been met for indemnification hereunder shall be made by (a) a
majority vote of a quorum consisting of disinterested Trustees
who are not parties to the proceeding relating to
indemnification, or (b) if such a quorum is not obtainable or,
even if obtainable, if a majority vote of such quorum so
directs, by independent legal counsel in a written opinion, or
(c) a vote of Shareholders (excluding Shares owned of record
or beneficially by such individual). In addition, unless a
matter is disposed of with a court determination (i) on the
merits that such Trustee, officer, employee or agent was not
liable or (ii) that such Person was not guilty of willful
misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office, no
indemnification shall be provided hereunder unless there has
been a determination by independent legal counsel in a written
opinion that such Person did not engage in willful
2
<PAGE>
misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office.
The Trustees may make advance payments out of the assets of
the Trust or, if appropriate, of the affected Series in
connection with the expense of defending any action with
respect to which indemnification might be sought under this
Section 4.3. The indemnified Trustee, officer, employee or
agent shall give a written undertaking to reimburse the Trust
or the Series in the event it is subsequently determined that
he or she is not entitled to such indemnification and (a) the
indemnified Trustee, officer, employee or agent shall provide
security for his or her undertaking, (b) the Trust shall be
insured against losses arising by reason of lawful advances,
or (c) a majority of a quorum of disinterested Trustees or an
independent legal counsel in a written opinion shall
determine, based on a review of readily available facts (as
opposed to a full trial-type inquiry), that there is reason to
believe that the indemnitee ultimately will be found entitled
to indemnification. The rights accruing to any Trustee,
officer, employee or agent under these provisions shall not
exclude any other right to which he or she may be lawfully
entitled and shall inure to the benefit of his or her heirs,
executors, administrators or other legal representatives.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to Trustees, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of
expense incurred or paid by a Trustee, officer or controlling
person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such Trustee,
officer or controlling person in connection with the
securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
Lord, Abbett & Co. acts as investment manager and/or principal
underwriter for twelve other Lord Abbett open-end investment
companies (of which it is principal underwriter for thirteen),
and as investment adviser to approximately 5,100 private
accounts. Other than acting as Trustees (directors) and/or
officers of open-end investment companies managed by Lord,
Abbett & Co., none of Lord, Abbett & Co.'s partners has, in
the past two fiscal years, engaged in any other business,
profession, vocation or employment of a substantial nature for
his own account or in the capacity of director, officer,
employee, partner or trustee of any entity except as follows:
John J. Walsh
Trustee
Brooklyn Hospital
Parkside Avenue
Brooklyn, N.Y.
Item 29. Principal Underwriter
(a) Lord Abbett Affiliated Fund, Inc.
Lord Abbett U. S. Government Securities Fund, Inc.
3
<PAGE>
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Government Securities Money
Market Fund, Inc.
Lord Abbett Tax-Free Income Trust
Lord Abbett Global Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Series Fund, Inc.
Lord Abbett Research Fund, Inc.
Lord Abbett Investment Trust
Investment Adviser
American Skandia Trust (Lord Abbett Growth and Income
Portfolio)
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
Business Address (1) with Registrant
Robert S. Dow Chairman and President
Kenneth B. Cutler Vice President & Secretary
Stephen I. Allen Vice President
Daniel E. Carper Vice President
Thomas S. Henderson Vice President
Robert G. Morris Vice President
E. Wayne Nordberg Vice President
John J. Walsh Vice President
(1) Each of the above has a principal business address at 767 Fifth
Avenue, New York, NY 10153
(c) Not applicable
Item 30. Location of Accounts and Records
Registrant maintains the records, required by Rules 31a - 1(a)
and (b), and 31a - 2(a) at its main office.
Lord, Abbett & Co. maintains the records required by Rules 31a
- 1(f) and 31a - 2(e) at its main office.
Certain records such as correspondence may be physically
maintained at the main office of the Registrant's Transfer
Agent, Custodian, or Shareholder Servicing Agent within the
requirements of Rule 31a-3.
Item 31. Management Services
None.
Item 32. Undertakings
(c) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without
charge.
The Registrant undertakes, if requested to do so by the
holders of at least 10% of the Registrant's outstanding
shares, to call a meeting of shareholders for the purpose of
voting upon the question of removal of a director or directors
and to assist in communications with other shareholders as
required by Section 16(c).
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all the requirements
for effectiveness of this Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Registration Statement
and/or any amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on the
10th day of June 1996.
LORD ABBETT INVESTMENT TRUST
By /S/ ROBERT S. DOW
Robert S. Dow, Chairman
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
NAME TITLE DATE
- ----- ----- ----
Chairman, President
/s/ Robert S. Dow Trustee June 10, 1996
/s/ John J. Gargana, Jr. Vice President & June 10, 1996
Chief Financial Officer
E. Thayer Bigelow Trustee
/s/ Stewart S. Dixon Trustee June 10, 1996
/s/ John C. Jansing Trustee June 10, 1996
/s/ C. Alan MacDonald Trustee June 10, 1996
/s/ Hansel B. Millican, Jr. Trustee June 10, 1996
Thomas J. Neff Trustee
LORD ABBETT SECURITIES TRUST
AMENDMENT TO DECLARATION OF TRUST
the undersigned, being at least a majority of the Trustees of Lord Abbett
Securities Trust, a Delawares business trust (the "Trust"), organized pursuant
to a Declaration of Trust deated February 26, 1993 (the "Declaration"), do
hereby establish, pursuant to Section 5.3 of the Declaration, a new class of
shares for the Series of the Trust previously designated the Lord Abbett Growth
& Income Trust, to be designated the Class A shares of such Series. The initial
class of shares of such Series shall be designated Class C shares of such
Series. Any variations between such classes, as to purchase price, determination
of net asset value, the priice terms and manner of redemption, special and
relative rights as to dividends and on liquidation, and conditions under which
such classes shall have searate voting rights, shall be as set forthe in the
Declaration or as elsewhere determeined by the Board of Trustees of the Trust.
This instrument shall constitute an amendment to the Declaration.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument this 19th day
0f June, 1996.
/s/ Robert S. Dow Trustee June 19, 1996
E. Thayer Bigelow Trustee
/s/ Stewart S. Dixon Trustee June 19, 1996
/s/ John C. Jansing Trustee June 19, 1996
/s/ C. Alan MacDonald Trustee June 19, 1996
/s/ Hansel B. Millican, Jr. Trustee June 19, 1996
Thomas J. Neff Trustee
CONSENT OF INDEPENDENT AUDITORS
Lord Abbett Securities Trust:
We consent to the incorporation by reference in Post-Effective Amendment No. 11
to Registration Statement No. 33-58846 of our report dated December 8,1995
appearing in the annual report to shareholders and to the reference to us under
the captions "Financial Highlights" in the Prospectus and "Investment Advisory
and Other Services" and "Financial Statements" in the Statement of Additional
Information, both of which are part of such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
July 11, 1996
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<NAME> LORD ABBETT SECURITIES TRUST
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