1933 Act File No. 33-68090
1940 Act File No. 811-7988
SECURITIES & EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 5 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 [X]
AMENDMENT NO. 5 [X]
LORD ABBETT INVESTMENT 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
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X on June 15, 1995 pursuant to paragraph (b) of Rule 485
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60 days after filing pursuant to paragraph (a) (i) of Rule 485
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on (date)pursuant to paragraph (a) (i)of Rule 485
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75 days after filing pursuant to paragraph (a) (ii) of Rule 485
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on (date) pursuant to paragraph (a) (ii) of Rule 485
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If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<PAGE>
LORD ABBETT
INVESTMENT TRUST
N-1A
Cross Reference Sheet
Pursuant to Rule 481(a)
Form N-1A Location In Prospectus or
Item No. Statement of Additional Information
1 Cover Page
2 Fee Table
3 N/A
4 (a) (i) Cover Page
4 (a) (ii) Investment Objective
4 (b) (c) How We Invest
5 (a) (b) Our Management; Last Page
5 (c) Purchases
5 (d) Last Page
5 (e) Our Management
5 (f) (i) N/A
5 (f) (ii) 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) Last Page
7 (b) (c) (d) Purchases
7 (e) (f) Purchases
8 (a) (b) (c) (d) Redemptions, Purchases 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
<PAGE>
Form N-1A Location In Prospectus or
Item No. Statement of Additional Information
18 (a) Cover Page
18 (b) N/A
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 INVESTMENT TRUST
THE GENERAL MOTORS BUILDING
767 FIFTH AVENUE
NEW YORK, NY 10153-0203
800-426-1130
LORD ABBETT INVESTMENT TRUST (THE "FUND") IS A DIVERSIFIED OPEN-END MANAGEMENT
INVESTMENT COMPANY ORGANIZED AS A DELAWARE BUSINESS TRUST ON AUGUST 16, 1993.
CURRENTLY, THE FUND CONSISTS OF TWO SEPARATE SERIES -- LORD ABBETT LIMITED
DURATION U.S. GOVERNMENTSECURITIES SERIES ("LIMITED DURATION GOVERNMENT SERIES")
AND A NEW SERIES EFFECTIVE IMMEDIATELY-THE LORD ABBETT BALANCED SERIES
("BALANCED SERIES"). EACH SERIES IS SOMETIMES REFERRED TO AS "WE" OR THE
"SERIES" INDIVIDUALLY OR COLLECTIVELY. FURTHER SERIES AND CLASSES MAY BE ADDED
IN THE FUTURE.
LIMITED DURATION GOVERNMENT SERIES. THE INVESTMENT OBJECTIVE OF THE LIMITED
DURATION GOVERNMENT SERIES IS TO SEEK A HIGH INCOME FROM A PORTFOLIO CONSISTING
PRIMARILY OF LIMITED DURATION U.S. GOVERNMENT SECURITIES. THE LIMITED DURATION
GOVERNMENT SERIES IS AUTHORIZED ONLY TO INVEST IN SECURITIES AND TO ENGAGE IN
INVESTMENT PRACTICES THAT ARE PERMISSIBLE FOR NATIONAL BANKS, FEDERAL CREDIT
UNIONS AND FEDERAL SAVINGS ASSOCIATIONS ("FEDERAL FINANCIAL INSTITUTIONS").
BALANCED SERIES. THE INVESTMENT OBJECTIVE OF THE BALANCED SERIES IS TO SEEK
CURRENT INCOME AND CAPITAL GROWTH.
SEE "HOW WE INVEST" FOR MORE INFORMATION. THERE CAN BE NO ASSURANCE THAT
EITHER SERIES WILL ACHIEVE ITS OBJECTIVE.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE FUND AND
EACH SERIES THAT A PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING. ADDITIONAL
INFORMATION ABOUT THE FUND AND EACH SERIES HAS BEEN FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION AND IS AVAILABLE UPON REQUEST WITHOUT CHARGE. THE
STATEMENT OF ADDITIONAL INFORMATION IS INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS AND MAY BE OBTAINED WITHOUT CHARGE BY WRITING DIRECTLY TO THE FUND OR
BY CALLING THE FUND 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 DECEMBER 27, 1994.
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 EACH 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 EACH SERIES INVOLVES RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
CONTENTS PAGE
1 Investment Objectives 2
2 Fee Table 2
3 Financial Highlights 2
4 How We Invest 2
5 Purchases 7
6 Shareholder Services 10
7 Our Management 11
8 Dividends, Capital Gains
Distributions and Taxes 12
9 Redemptions 13
10 Performance 13
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 INVESTMETN OBJECTIVES
The investment objective of the LIMITED DURATION GOVERNMENT SERIES is to seek a
high level of income from a portfolio consisting primarily of limited duration
U.S. Government securities.
The investment objective of the BALANCED SERIES is to seek current income and
capital growth. See "How We Invest".
2 FEE TABLE
A summary of each Series' expenses is set forth in the table below. This example
should not be considered a representation of past or future expenses. Actual
expenses may be greater or less than those shown. For a better understanding of
the expenses that are incurred by an investor in each Series, summaries of those
expenses are provided in the table above and the notes below.
<TABLE>
<CAPTION>
LIMITED DURATION BALANCED
GOVERNMENT SERIES SERIES
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
(AS A PERCENTAGE OF OFFERING PRICE)
Maximum Sales Load* on Purchases
(See "Purchases") 3.00% 4.75%
Deferred Sales Load
(See "Purchases") None** None**
ANNUAL SERIES OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee (See "Our Management") .50% .75%
12b-1 Fee (See "Purchases") .00%** .00%**
Other Expenses (See "Our Management") .39%*** .25%***
Total Operating Expenses .89%*** 1.00%***
<FN>
Example: Assume each Series' annual return is 5% and there is no change in the
level of expenses described above. For every $1,000 invested with reinvestment
of all dividends and distributions you would pay the following total expenses if
you closed your account after the number of years indicated.
1 year 3 years 5 years 10 years
------ ------- ------- --------
Limited Duration 39 58 78 136
Government Series
Balanced Series 67 88
* Sales "load" and "deferred sales load" are referred to as sales "charge"
and "contingent deferred reimbursement charge," respectively, throughout
this Prospectus.
** This figure omits Rule 12b-1 fees because neither Series can predict when
its Rule 12b-1 Plan will become effective. Each Plan will go into effect on
the first day of the calendar quarter subsequent to the Series' net assets
reaching $100 million (in the case of the Limited Duration Government
Series) and $50 million (in the case of the Balanced Series). See "12b-1
Plans" under "Purchases" for a description of each Plan.
*** The Balanced Series expenses are estimated for the fiscal year. Although
not obligated to, Lord, Abbett & Co. may waive its management fee and
subsidize the operating expenses with respect to each Series. For the
period from November 4, 1993 to October 31, 1994 Lord Abbett neither waived
its management fee nor subsidized operating expenses for the Limited
Duration Government Series.
</FN>
</TABLE>
3 FINANCIAL HIGHLIGHTS
The following table has been audited by Deloitte & Touche LLP, independent
accountants, in connection with their annual audits of the Limited Duration
Government Series' Financial Statements, whose report thereon is incorporated by
reference into the Statement of Additional Information and may be obtained upon
request, and has been included herein in reliance upon their authority as
experts in auditing and accounting.
<TABLE>
<CAPTION>
LIMITED DURATION NOVEMBER 4, 1993
GOVERNMENT SERIES (COMMENCEMENT
PER SHARE OPERATING OF OPERATIONS) TO
PERFORMANCE: OCTOBER 31, 1994
-----------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $4.85
INCOME FROM INVESTMENT OPERATIONS
Net investment income .2650**
Net realized and unrealized
gain (loss) on securities (.4123)
TOTAL FROM INVESTMENT OPERATIONS (.1473)
-----------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from net investment income (.2627)
NET ASSET VALUE, END OF PERIOD $4.44
-----------------------------------------------------------------------------
TOTAL RETURN* (3.09)%**
-----------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $10,256
RATIOS TO AVERAGE NET ASSETS:
Expenses .89%**
Net investment income 5.61%**
PORTFOLIO TURNOVER RATE 860.91%
<FN>
* Total return does not consider the effects of sales loads.
** Not annualized.
See Notes to Financial Statements.
</FN>
</TABLE>
4 HOW WE INVEST
LIMITED DURATION GOVERNMENT SERIES. The Limited Duration Government Series is
authorized to invest solely in a portfolio of short-and intermediate-duration
U.S. Government securities which are permissible investments for, and the Series
is authorized to engage only in investment practices that are permissible
practices for, federal financial institutions. Such securities include direct
obligations of the United States Treasury
<PAGE>
(such as Treasury bills, notes and bonds) and obligations issued by United
States Government agencies and instrumentalities, including securities that are
supported by the full faith and credit of the United States (such as Government
National Mortgage Association certificates), securities that are supported by
the right of the issuer to borrow from the United States Treasury (such as
securities of the Federal Home Loan Banks) and securities supported solely by
the creditworthiness of the issuer (such as Federal National Mortgage
Association and Federal Home Loan Mortgage Corporation securities). Such U.S.
Government securities also include those issued or guaranteed by the U.S.
Government, its agencies or instrumentalities in a form separated into their
component parts of principal and coupon payments, i.e., "component securities,"
and mortgage-backed securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. Treasury STRIPS are direct obligations of the
U.S. Government and are examples of component securities whereby Treasury bonds
and notes are separated on the books of the Federal Reserve into their component
parts of principal and coupon payments or principal and coupon strips.
The maximum dollar-weighted effective average maturity (not stated
maturity) of the portfolio will be seven years. This effective average maturity
measures the average time principal is outstanding and (a) is different from
duration because it does not measure all cash flows and (b) includes securities
that prepay principal, thus shortening their dollar-weighted effective average
maturity. ("Duration" is generally the weighted average time to receipt of all
cash flows due by maturity from an obligation.) Stated maturity is the stated
time to final principal payment of an obligation without regard to any
prepayments of principal. Therefore, the maximum average stated maturity of the
portfolio may be substantially longer than seven years.
The Limited Duration Government Series is not a money market fund. A money
market fund is designed for stability of principal; consequently, its level of
income fluctuates. A limited duration U.S. Government securities fund,due to the
nature of its portfolio securities, generally has a steadier and higher level of
income than a money market fund. However, the Series' share value will fluctuate
more than a money market fund's over time. Historically, a portfolio with a
duration averaging between one and four years, such as the Limited Duration
Government Series' portfolio, tends to have steadier and higher income over the
course of the business cycle than a short-term money market fund portfolio. In
such a business cycle, the Limited Duration Government Series' portfolio can
"lock in" rates over a longer period, allowing its income to continue over that
period at the locked-in level which adjusts less often in response to changing
interest rates, thereby softening the impact of interest rate changes which a
money market fund portfolio is exposed to more often because it can only lock in
rates for a shorter period. Of course, past performance is no guarantee of
future results.
Unlike a money market fund, the Limited Duration Government Series does not
seek to maintain a stable net asset value and may not be able to return
dollar-for-dollar the money invested. The level of income will vary depending on
interest rates and the portfolio. In general, because the Limited Duration
Government Series invests in longer-term securities than a money market fund,
the value of its shares will fluctuate more than a money market fund, but less
than, for example, a long-term U.S. Government securities fund. When interest
rates rise, the value of securities in the portfolio, as well as the share
value, generally will fall. Conversely, when rates fall, the value of securities
in the portfolio and the share value generally will rise. Component securities
in which the Series may invest may show greater price volatility in response to
interest rate changes than will other debt securities in which the Series may
invest. The value of principal-only component securities will be reduced in a
rising interest rate environment or as the expected amount of principal
prepayments declines. The value of interest-only component securities will be
reduced in a falling interest-rate environment or in expectation that the amount
of principal prepayments will increase. Although the U. S. Government securities
in which the Limited Duration Government Series may invest are guaranteed as to
timely payment of interest and principal,
<PAGE>
the market prices for such securities are not guaranteed and, as with other bond
investments, will rise and fall in value as interest rates change.
The Limited Duration Government Series seeks to reduce the effects of
interest-rate volatility on principal by limiting the average duration to a
range of one to four years. If 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) rates
are low, it will tend to shorten the average duration to one year or less.
Conversely, if in its judgment rates are high, it will tend to extend the
average duration to four years or less.
The Limited Duration Government Series limits its investments in mortgage
backed securities to those issued or guaranteed by the U. S. Government or one
of its agencies or instrumentalities, primarily the Government National Mortgage
Association ("GNMA"), the Federal National Mortgage Association ("FNMA") or the
Federal Home Loan Mortgage Corporation ("FHLMC"). Mortgage-backed securities
guaranteed by GNMA consist of pass-through interests in pools of mortgage loans
guaranteed or issued by agencies or instrumentalities of the United States.
Mortgage-backed securities issued by FNMA and FHLMC most often represent
pass-through interests in pools of conventional mortgage loans or participations
in the pools. Such "pass-through" mortgage-backed securities represent undivided
interests in the underlying mortgage pool, and a proportionate share of both
regular interest and principal payments (net of certain fees), as well as
unscheduled early prepayment on the underlying mortgage pool, are passed through
monthly to the holder of the mortgage-backed securities.
The Limited Duration Government Series must reinvest such prepayments at
prevailing interest rates, which may be lower than those of the mortgage-backed
securities prepaid. Prepayment will result in a reduction of principal if the
pre-paid mortgage-backed security is trading over par. Principal prepayments
generally increase in a falling interest-rate environment, as indicated above,
and accordingly often result in a reduction of principal. Among the types of
mortgage-backed securities in which the Limited Duration Government Series may
invest are collateralized mortgage obligations ("CMOs"), which are debt
obligations collateralized by mortgage loans or mortgage pass-through securities
guaranteed or issued by GNMA, FNMA, or FHLMC. The Limited Duration Government
Series will not invest in privately issued CMOs. The issuer of a series of CMOs
may elect to be treated as a Real Estate Mortgage Investment Conduit (a
"REMIC"). In a CMO, a series of bonds or certificates are issued in multiple
classes. Each class, often referred to as a "tranche," is issued at a specific
fixed or floating coupon rate and has a stated maturity or final distribution
date.
When investing in CMOs, including REMICs, the Limited Duration Government
Series intends to comply with requirements imposed upon federal financial
institutions requiring that such securities either pass a high-risk test or be
held solely to reduce interest rate risk.
The Fund has received an opinion from its counsel, Debevoise & Plimpton,
that, subject to qualifications and assumptions contained in such opinion and an
attached memorandum, Debevoise & Plimpton is aware of no applicable statute,
regulation or interpretive advice issued by a federal regulatory body that would
prohibit a federal financial institution from investing in shares of the Limited
Duration Government Series. Copies of such opinion and memorandum, may be
obtained by writing directly to the Fund or by calling the Fund at 800-874-3733.
BALANCED SERIES. Fund management believes that of all the various kinds of
investments, equity securities generally afford the best opportunity for
investors' capital to grow and for their income to increase. The prices of
equity securities fluctuate and the dividends earned on equity securities vary.
But if the companies they represent prosper and grow, equity securities should
appreciate in value and the income distributed in the form of dividends should
increase.
However, the market risk is generally greater in equity securities than in
fixed-income securities. Therefore the Balanced Series at all times maintains at
least 25% of its net assets in fixed-income senior securities, such as
high-grade bonds or notes and U. S. Government securities. It also may invest in
lower-grade preferred stocks or lower-grade bonds, but for capital appreciation
and income and not for capital stability.
<PAGE>
The Balanced Series changes the proportions of its assets invested in fixed
income securities and in equity securities and the individual securities within
those classifications. The Balanced Series is guided by an investment philosophy
that identifies undervalued areas of the equity and fixed-income markets in an
effort to generate above-average returns. The equity investment process
integrates the results of quantitative and qualitative valuation analysis with a
macro-economic outlook. Fundamental economic and business factors taken into
consideration include government, fiscal and monetary policies, employment
levels, demographics, retail sales and market share when determining future
earnings and market valuation for stocks. In order to have maximum flexibility
in effectuating this equity investment process, we will invest in small,
middle-sized and/or large companies based on their market capitalization (i.e.
the market value of a company's outstanding stocks). For the fixed-income
component, a duration target between 3.5 and 7.5 years is established within the
context of broad economic and interest rate trends identified by Fund
management. The fixed-income management strategies are driven by the shape of
the yield curve, yield spread analysis and effects on value of time.
The Balanced Series may invest up to 10% of its net assets (at the time of
investment) in each of the following: (a) writing covered call options traded on
a national securities exchange for portfolio securities, (b) foreign securities
and (c) lower rated, high-yield bonds, sometimes referred to as "junk bonds."
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.
To create reserve purchasing power and also for temporary defensive
purposes, the Balanced Series may invest in high quality, short-term debt
securities, such as those of banks, corporations and the U. S. Government.
The U. S. Government securities in which the Balanced Series may invest
include the same described above for the Limited Duration Government Series
except that they will not be restricted (a) to the same duration or (b) to those
permissible for investment by federal financial institutions.
The Balanced Series may invest in closed-end investment companies if bought
in the primary or secondary market with a fee or commission no greater than the
customary broker's commission in compliance with the Investment Company Act of
1940. Shares of such investment companies sometimes trade at a discount or
premium in relation to their net asset value and there may be duplication of
fees, for example, to the extent that the Balanced Series and the closed-end
investment company both charge a management fee.
POLICIES FOR BOTH SERIES. Each Series may purchase U.S. Government securities on
a when-issued basis and, while awaiting delivery and before paying for them
("settlement"), normally may invest in short-term U.S. Government securities
without amortizing any premiums. Each Series does not start earning interest on
these when-issued securities until settlement and the Balanced Series often will
sell them prior to settlement, whereas the Limited Duration Government Series
will sell them according to guidelines applicable to federal financial
institutions. While this investment strategy is expected to contribute
significantly to a portfolio turnover rate substantially in excess of 100% for
the fixed-income portion of the Balanced Series, it will have little or no
transaction cost or adverse tax consequences for either Series. Transaction
costs normally will exclude brokerage because our fixed income portfolio
transactions are usually on a principal basis when using this strategy and any
mark-ups charged normally will be more than offset by the beneficial economic
consequences anticipated at the time of purchase. During the period between
purchase and settlement, the value of the securities will fluctuate and assets
consisting of cash and/or marketable securities marked to market daily in an
amount
<PAGE>
sufficient to make payment at settlement will be segregated at our custodian in
order to pay for the commitment. There is a risk that market yields available at
settlement may be higher than yields obtained on the purchase date which could
result in depreciation of value.
Each Series may engage in the lending of its portfolio securities. These
loans may not exceed 30% of the value of each Series' total assets. In such an
arrangement the Series loans securities from its portfolio to registered
broker-dealers. Such loans are continuously collateralized by an amount at least
equal to 100% of the market value of the securities loaned. Cash collateral is
invested in short-term obligations issued or guaranteed by the U.S. Government
or its agencies, commercial paper or bond obligations rated AA or A-1/P-1 by S&P
or Moody's, respectively, or repurchase agreements with respect to the
foregoing. As with other extensions of credit, there are risks of delay in
recovery and market loss should the borrowers of the portfolio securities fail
financially.
Each Series may enter into repurchase agreements with respect to a security.
A repurchase agreement is a transaction by which the Series acquires a security
and simultaneously commits to resell that security to the seller (a bank or
securities dealer) at an agreed upon price on an agreed upon date. Such
repurchase agreement must, at all times, be collateralized by cash or U.S.
Government securities having a value equal to, or in excess of, the value of the
repurchase agreement.
Each Series may invest up to 15% of its net assets in illiquid securities.
Securities determined by the Trustees to be liquid pursuant to Securities and
Exchange Commission Rule 144A ("Rule 144A") are not subject to this limit,
except to the extent necessary to comply with applicable state requirements.
Investments by a Series in Rule 144A securities initially determined to be
liquid could have the effect of diminishing the level of a Series' liquidity
during periods of decreased market interest in such securities. Under Rule 144A
a qualifying security may be resold to a qualified institutional buyer without
registration and without regard to whether the seller originally purchased the
security for investment.
Neither Series will borrow money except as a temporary measure for
extraordinary or emergency purposes and then not in excess of 5% of its gross
assets (at cost or market value, whichever is lower) at the time of borrowing.
Each Series will not change its investment objective or its investment
restrictions listed in its Statement of Additional Information without its
shareholders' approval. If Fund management determines that each Series'
objective can best be achieved by a substantive change in investment policy,
which may be changed without shareholder approval, it will make such a change by
disclosing it in its prospectus.
FUTURE CONVERSION. In the future, upon shareholder approval, each Series may
seek to achieve its investment objective by investing all of its assets in
another investment company (or series or class thereof) having the same
investment objective. Shareholders will be notified thirty days in advance of
such conversion. Shareholders of each Series will be able to exchange Series
shares for shares of the other funds, series or classes in the Lord Abbett
family having an exchange privilege with the Fund.
RISK FACTORS-BALANCED SERIES
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
the Balanced Series.
<PAGE>
HIGH-YIELD BONDS. The Balanced Series may invest 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 has in past years
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 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.
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 portfolio 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 is 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.
Small Capitalized Companies. These generally consist of companies in either
the formative or developing growth phase of business growth. The formative phase
has high risk. The perils of infancy take a high toll during these years. Skill
of management and growth of revenues and earnings permit some of these formative
companies to survive and advance into the growth stage. The developing growth
phase is a period of swift development, when growth occurs at a rate rarely
equalled by established companies in their mature years. Of course, the actual
growth of a company can not be foreseen, and it can be difficult to determine in
which phase a company is presently situated. Small capitalized companies are
usually young and their shares are generally traded over the counter.
PORTFOLIO TURNOVER. For the period from November 4, 1993 to October 31, 1994 the
portfolio turnover rate was 860.91% for the Limited Duration Government Series.
This high portfolio turnover rate relates to substantial trading of U.S. and
U.S. agency mortgage-backed securities to take advantage of value changes among
different agencies, coupons and maturities. See "Policies For Both Series" for
more information. The equity portfolio turnover rate for the Balanced Series is
not expected to exceed 100%.
5 PURCHASES
You may buy our shares through any independent securities dealer having a sales
agreement with Lord Abbett, our exclusive selling agent. Place your order with
your investment dealer or send it to Lord Abbett Investment 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 minimum and $50
monthly minimum). Subsequent investments may be made in any amount.
<PAGE>
The net asset value of a Series' shares is calculated every business day as
of the close of the New York Stock Exchange ("NYSE") by dividing a Series' net
assets by the number of shares of a Series outstanding. Securities are valued at
their market value as more fully described in the Statement of Additional
Information.
Orders for shares received by the Trust prior to the close of the NYSE or
received by dealers prior to such close and received by Lord Abbett prior to the
close of its business day, will be confirmed at the applicable public offering
price effective at such NYSE close. Orders received by dealers after the NYSE
closes and received by Lord Abbett prior to the close of its next business day
are executed at the applicable public offering price effective as of the close
of the NYSE on that next business day. The dealer is responsible for the timely
transmission of orders to Lord Abbett. A business day is a day on which the NYSE
is open for trading.
For information regarding proper form of a purchase or redemption order,
call the Fund at 800-821-5129. This offering may be suspended, changed or
withdrawn at any time. Lord Abbett reserves the right to reject any order.
For investments of $1 million or more, there are sales charges as shown below
until each Series' Rule 12b-1 Plan goes into effect, at which time the sales
charges will be eliminated and a dealer's concession in the form of a one-time
fee for distribution will be paid, at the time of sale, to dealers as follows:
1% of the first $3 million, plus .50% of the next $7 million, plus .25% of the
remainder of the net asset value of shares sold (in the case of the Limited
Duration Government Series) and 1% of the net asset value of shares sold (in the
case of the Balanced Series).
For each Series the offering price is based on the per-share net asset value
calculated as of the times described above, plus a sales charge as follows:
<TABLE>
<CAPTION>
BALANCED SALES CHARGE AS A DEALER'S
SERIES PERCENTAGE OF: CONCESSION
AS A TO COMPUTE
NET PERCENTAGE OFFERING
OFFERING AMOUNT OF OFFERING PRICE, DIVIDE
SIZE OF INVESTMENT PRICE INVESTED PRICE* NAV BY
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.00% .9525
$50,000 to $99,999 4.75% 4.99% 4.25% .9525
$100,000 to $249,999 3.75% 3.90% 3.25% .9625
$250,000 to $499,999 2.75% 2.83% 2.50% .9725
$500,000 to $999,999 2.00% 2.04% 1.75% .9800
$1,000,000 or more 1.00% 1.01% 1.00% .9900
</TABLE>
<TABLE>
<CAPTION>
LIMITED DURATION SALES CHARGE AS A DEALER'S
GOVERNMENT PERCENTAGE OF: CONCESSION
SERIES 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 $100,000 3.00% 3.09% 2.50% .9700
$100,000 to $249,999 2.50% 2.56% 2.25% .9750
$250,000 to $499,999 2.00% 2.04% 1.75% .9800
$500,000 to $999,999 1.50% 1.52% 1.25% .9850
$1,000,000 to $2,999,999 1.00% 1.01% 1.00% .9900
$3,000,000 to $9,999,999 .50% .50% .50% .9950
$10,000,000 or more .25% .25% .25% .9975
<FN>
* Lord Abbett may, for specified periods, allow dealers to retain the full
sales charge for sales of shares during such period, or pay an additional
concession to a dealer who, during a specified period, sells a minimum
dollar amount of our shares and/or shares of other Lord Abbett-sponsored
funds. In some instances, such additional concessions will be offered only
to certain dealers expected to sell significant amounts of shares. Lord
Abbett may from time to time implement promotions under which Lord Abbett
will pay a fee to dealers with respect to certain purchases not involving
imposition of a sales charge. Additional payments may be paid from Lord
Abbett's resources and will be made in the form of cash or non-cash
payments. The non-cash payments will include business seminars at resorts
or other locations, including meals and entertainment, or the receipt of
merchandise. The cash payments will include payment of various business
expenses of the dealer.
</FN>
</TABLE>
In selecting dealers to execute portfolio transactions, if two or more
dealers are considered capable of obtaining best execution, we may prefer the
dealer who has sold our shares and/or shares of other Lord Abbett-sponsored
funds.
VOLUME DISCOUNTS. There are several ways to qualify for a lower sales charge if
you inform the Fund that you are eligible at the time of purchase:(1) Increase
the initial investment to reach a higher discount level. The above schedule
applies to purchases by any "purchaser" of our shares, alone or in combination
with other Lord Abbett-sponsored funds [other than shares of Lord Abbett Equity
Fund ("LAEF"), Lord Abbett Series Fund ("LASF"), Lord Abbett Research Fund
("LARF"), Lord Abbett Counsel Group and Lord Abbett U.S. Government Securities
Money Market Fund ("GSMMF")]. The term "purchaser" includes (i) an individual,
(ii) an individual and his or her spouse and children under the age of 21 or
(iii) a trustee or other fiduciary purchasing shares for a single trust estate
or single fiduciary account (including a pension, profit-sharing, or other
<PAGE>
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.
(2) Add to your investment so that the current maximum offering price value of
the "purchaser's" combined holdings in all Lord Abbett-sponsored funds reaches a
higher discount level. Shares of LAEF, LASF, LARF, Lord Abbett Counsel Group and
GSMMF are not eligible for this privilege unless holdings in GSMMF are
attributable to shares exchanged from a Lord Abbett-sponsored fund offered with
a sales charge. (3) Sign a nonbinding 13-month statement of intention to invest
$100,000 or more. If the purchases are completed during the period, each
purchase will be at the sales charge applicable to the aggregate of your
intended purchases; if not completed, each purchase will be at the sales charge
applicable to the aggregate of your actual purchases. Dividends or distributions
reinvested are not included in completion of the statement of intention.
Our shares may be purchased at net asset value by our trustees, employees of
Lord Abbett, employees of our shareholder servicing agent, 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 the employees of
such persons or for the benefit of any national securities trade organization to
which Lord Abbett belongs or any company with an account(s) in excess of $10
million managed by Lord Abbett on a private-advisory-account basis. For purposes
of this paragraph, the terms "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.
Each Series' shares also may be purchased at net asset value (a) at $1
million or more after the commencement of each Series' Rule 12b-1 Plan, (b) with
dividends and distributions from other Lord Abbett-sponsored funds, except for
dividends and distributions on shares of LAEF, LASF, LARF and Lord Abbett
Counsel Group, (c) under the loan feature of the Lord Abbett-sponsored prototype
403 (b) plan for share purchases representing the repayment of principal and
interest, (d) by certain authorized brokers, dealers, registered investment
advisers or other financial institutions who have entered into an agreement with
Lord Abbett in accordance with certain standards approved by Lord Abbett,
providing specifically for the use of our shares in particular investment
products made available for a fee to clients of such brokers, dealers,
registered investment advisers and other financial institutions, (e) by
employees, partners and owners of unaffiliated consultants and advisors to Lord
Abbett or Lord Abbett-sponsored funds who consent to such purchase if such
persons provide service to Lord Abbett or such funds on a continuing basis and
are familiar with such funds, and (f) subject to appropriate documentation,
through a securities dealer where the amount invested represents redemption
proceeds from shares ("Redeemed Shares") of a registered open-end management
investment company not distributed or managed by Lord Abbett (other than a money
market fund), if such redemption has occurred no more than 60 days prior to the
purchase of our shares, the Redeemed Shares were held for at least six months
prior to redemption and the proceeds of redemption were maintained in cash or a
money market fund prior to purchase. Purchasers should consider the impact, if
any, of redemption charges or contingent deferred sales charges in determining
whether to redeem shares for subsequent investment in our shares. Lord Abbett
may suspend, change, or terminate the purchase option referred to in (f) above
at any time.
Our shares may be issued at net asset value in exchange for the assets, of a
personal holding company or an investment company.
RULE 12B-1 PLANS. Each Series has adopted a Rule 12b-1 Plan (the "Plan") which
authorizes the payment of fees to dealers in order to provide additional
incentives for them (a) to maintain Series
<PAGE>
shareholder accounts and/or to provide Series shareholders with personal
services, including shareholder liaison services, such as responding to customer
inquiries and providing information on their investments and (b) to sell shares
of each Series. The Plans commence on the first day of the calendar quarter
after Series' net assets reach $100 million, in the case of the Limited Duration
Government Series, and $50 million, in the case of the Balanced Series. Under
each Plan (except as to certain accounts, such as those for which tracking data
is not available), each Series pays Lord Abbett, who passes on to dealers, (i)
an annual service fee (payable quarterly) of .25% of the average daily net asset
value of the Series' shares serviced by dealers from the commencement of the
Series' public offering and (ii) with respect to sales at the breakpoint of $1
million or more, a one-time distribution fee, at the time of sale, of (a) 1% of
the net asset value of shares sold on or after the effective date (in the case
of the Balanced Series' Plan) and (b) 1% of the first $3 million, plus .50% of
the next $7 million, plus .25% of the remainder of the net asset value of such
shares sold (in the case of Limited Duration Government Series' Plan). Sales
qualifying at such levels in clause (ii) under rights of accumulation and
statement of intention privileges are included.
Holders of shares on which a distribution fee has been paid will be
required to pay to each Series a contingent deferred reimbursement charge
("CDRC") of 1% of the original cost or the then net asset value, whichever is
less, of all shares so purchased which are redeemed out of any fund in the Lord
Abbett family having an exchange privilege with each Series on or before the end
of the twenty-fourth month after the month in which the purchase occurred. (An
exception is made for redemptions by tax-qualified plans under Section 401 of
the Internal Revenue Code for benefit payments due to plan loans, hardship
withdrawals, death, retirement or separation from service with respect to plan
participants.) If the shares have been exchanged into another fund or series in
the Lord Abbett family and are thereafter redeemed out of the Lord Abbett family
on or before the end of such twenty-fourth month, the charge will be collected
for the Series by the other fund or series. Each Series will collect such a
charge for other Lord Abbett-sponsored funds or series in a similar situation.
Shares of a fund or series on which a distribution fee has been paid may not be
exchanged into a fund or series with a Rule 12b-1 Plan for which the payment
provisions have not been in effect for at least one year.
6 SHAREHOLDER SERVICES
We offer the following shareholder services.
TELEPHONE EXCHANGE PRIVILEGE: Shares of either Series may be exchanged,
without a service charge, for those of any other Lord Abbett-sponsored fund
except for (i) LAEF, LASF, LARF and Lord Abbett Counsel Group and (ii) certain
tax-free, single-state series where the exchanging shareholder is a resident of
a state in which such series are not offered for sale (together, "Eligible
Funds").
You or YOUR REPRESENTATIVE WITH PROPER IDENTIFICATION can instruct the Fund
to exchange uncertificated shares 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 Series' net asset value per share on
that day. Expedited exchanges by telephone may be difficult to implement in
times of drastic economic or market change. The exchange privilege should not be
used to take advantage of short-term swings in the market. The Fund reserves the
right to terminate or limit the privilege of any shareholder who makes frequent
exchanges. The Fund can revoke the privilege for all shareholders upon 60 days'
prior written notice. A prospectus for the other Lord Abbett sponsored fund
selected by you should be obtained and read before an exchange. Exercise of the
exchange privilege will be treated as a sale for federal income tax purposes
and, depending on the circumstances, a capital gain or loss may be recognized.
See the back of the Fund's application for more details.
<PAGE>
SYSTEMATIC WITHDRAWAL PLAN: If the maximum offering price value of your
uncertificated shares is at least $10,000, except for Lord Abbett prototype
retirement plans for which there is no such minimum, you may have periodic cash
withdrawals automatically paid to you in either fixed or variable amounts.
DIV-MOVE: You can invest the dividends paid on your account ($50 minimum
monthly investment) into an existing account in any other Eligible Fund. The
account must be either your account, a joint account for you and your spouse, a
single account for your spouse, or a custodial account for your minor child
under the age of 21. You should read the prospectus of the other funds before
investing.
INVEST-A-MATIC: You can make fixed, periodic investments ($50 minimum monthly
investment) into either Series and/or any other Eligible Fund by means of
automatic money transfers from your bank checking account.
RETIREMENT PLANS: Shares may be purchased by all types of tax-deferred
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, pension and profit-sharing plans,
including 401(k) plans.
All correspondence should be directed to Lord Abbett Investment Trust (P.O.
Box 419100, Kansas City, Missouri 64141; 800-821-5129).
7 OUR MANAGEMENT
Our business is managed by our officers on a day-to-day basis under the overall
direction of our Board of Trustees. We employ Lord Abbett as investment manager
pursuant to a Management Agreement. Lord Abbett has been an investment manager
for over 60 years and currently manages approximately $16 billion in mutual
funds and 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
fifteen other Lord Abbett-sponsored funds having various investment objectives
and also advises other investment clients. Robert S. Dow,Lord Abbett Partner in
charge of Fixed Income for over five years, is primarily responsible for the
day-to-day management of the Limited Duration Government Series and has been
since its inception. Mr. Dow also is responsible for the day-to-day management
of the fixed-income portion of the Balanced Series since inception. Mr. Dow is
assisted by, and may delegate management duties to, other Lord Abbett employees
who may be Fund officers. E. Wayne Nordberg, Lord Abbett Partner for over five
years, is primarily responsible for the day-to-day management of the equity
security portion of the Balanced Series since its inception. Mr. Nordberg is
assisted by, and may delegate duties to, other Lord Abbett employees who may be
Fund officers.
Under each Management Agreement, we are obligated to pay Lord Abbett a
monthly fee based on average daily net assets for each month. For the fiscal
year ended October 31, 1994, the fee paid to Lord Abbett as a percentage of
average daily net assets was at the annual rate of .50 of 1% (in the case of the
Limited Duration Government Series). Such fee is .75 of 1% (in the case of the
Balanced Series). This latter fee is higher than that paid by most investment
companies. Our ratio of expenses, including management fee expenses, to average
net assets for the year ended October 31, 1994 for the Limited Duration
Government Series was .89%.
Each Agreement provides for each Series to repay Lord Abbett without interest
for any expenses assumed by Lord Abbett on and after the first day of the
calendar quarter after the net assets of each such Series first reach $50
million ("commencement date"), to the extent that the expense ratio of such
Series (determined before taking into account any fee waiver or expense
assumption) is less than 1.15% (in the case of the Balanced Series)
<PAGE>
and less than .75% (in the case of the Limited Duration Government Series).
Thereafter, such repayment of Lord Abbett by the Limited Duration Government
Series will continue on and after the first day of the calendar quarter after
the net assets of that Series first reach $100 million to the extent that the
Series' expense ratio so determined is less than .95%. Each Series shall not be
obligated to repay any such expenses after the earlier of the termination of its
Agreement or the end of five full fiscal years after the commencement date. The
Series will not record as obligations in their financial statements any expenses
which may possibly be repaid to Lord Abbett under this repayment formula, but
each will disclose in a note to its financials that such expenses are possible.
However, if such expenses become probable, they will be recorded as obligations
of the Series at that time. 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, a shareholders'
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 was organized as a Delaware business trust on August
16, 1993. Each outstanding share has one vote and an equal right to dividends
and distributions of its series. All shares have noncumulative voting rights for
the election of Trustees. At November 30, 1994, Lord Abbett owned 47% of the
Fund's shares.
8 DIVIDENDS, CAPITAL GAINS DISTRIBUTIOHNS AND TAXES
With respect to the Limited Duration Government and Balanced Series, dividends
from net investment income are declared daily and paid on the 15th of each
month, or if the 15th is not a business day, on the first business day after the
15th. Dividends for both Series may be taken in cash or additional shares at net
asset value without a sales charge. Checks representing dividends paid in cash
will be mailed to shareholders as soon as practicable after the payment date.
A long-term capital gains distribution is made when we have net profits
during the year from sales of securities which we have held more than one year.
If we realize net short-term capital gains, they also will be distributed. Any
capital gains distribution will be made in December and you may take it in cash
or additional shares without a sales charge.
Supplemental dividends also may be paid in December or January. Dividends and
distributions declared in October, November or December of any year to
shareholders of record as of a date in such a month will be treated for federal
income tax purposes as having been received by shareholders in that year if they
are paid before February 1 of the following year.
We intend to meet the requirements of Subchapter M of the Internal Revenue
Code for the Balanced Series and to continue to meet such requirements for the
Limited Duration Government Series. We try to distribute to shareholders all our
net investment income and net realized capital gains, so as to avoid the
necessity of paying federal income tax. Shareholders, however, must report
dividends and capital gains distributions as taxable income. Distributions
derived from net long-term capital gains which are designated by a Series as
"capital gains dividends" will be taxable to shareholders as long-term capital
gains, whether received in cash or shares, regardless of how long a taxpayer has
held the shares. Under current law, net long-term capital gains are taxed at the
rates applicable to ordinary income, except that the maximum rate for long-term
capital gains for individuals is 28%. See "Performance" for a discussion of the
purchase of high coupon securities at a premium and the distribution to
shareholders as ordinary income of all interest income on those securities.
Shareholders may be subject to a $50 penalty under the Internal Revenue Code
and we may be required to withhold and remit to the U.S. Treasury a portion
(31%) of any redemption proceeds (including the value of shares exchanged into
another Lord Abbett-sponsored fund), and of any dividend or distribution on any
account where the payee failed to provide a correct taxpayer identification
number or to make certain required certifications.
<PAGE>
We will inform shareholders of the federal tax status of each dividend and
distribution shortly after year-end. 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, repurchase 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 described above, send your written
redemption request to Lord Abbett Investment 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. Within seven days after
acceptance, we will make payment of the net asset value, less any applicable
CDRC, of the shares on the date the order was received in proper form. However,
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 the check was drawn to communicate to the Trust that the
check has cleared.
Shares also may be redeemed 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 for 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 calculated as of the close of the NYSE on that next business day.
Under certain circumstances and subject to prior written notice, our Trustees
may authorize redemption of all of the shares in any account in which there are
fewer than 50 shares.
Our shareholders, and shareholders of other Lord Abbett-sponsored funds which
are offered with a sales charge, who have redeemed their shares, have a one-time
right to reinvest in any Eligible Funds at the then applicable net asset value
without the payment of a sales charge. Such reinvestment must be made within 60
days of the redemption and is limited to no more than the amount of the
redemption proceeds.
TAX-QUALIFIED PLANS: If you are an investor through a tax-qualified plan, you
may avoid imposition of the CDRC described in "Rule 12b-1 Plan" under
"Purchases," for redemptions of $50,000 or less by following 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 concurrently with,
the redemption request.
10 PERFORMANCE
Following are some of the factors that were relevant to the Limited Duration
Government Series performance over the past year, including market conditions
and investment strategies pursued by the Series' management.
During 1994, the U.S. economy marked the completion of its third year of
growth and the Federal Reserve's previously accommodative monetary policy gave
way to a more neutral one. By raising short-term interest rates five times in
the first ten months of this year, the Federal Reserve has made clear its
resolve to control inflationary pressures before they become problematic (and
require an even more stringent course of action). Renewed inflation concerns,
<PAGE>
forced sales by "hedge" funds, as well as losses attributable to derivative
securities, also led to a rise in long-term interest rates. Pressures on
commodity prices also added to investor uncertainty and helped to push bond
yields higher.
Increases in both short- and intermediate-term rates adversely affected the
net asset value and total return of the Limited Duration Government Series, as
the market value of debt securities in the portfolio decreased. We continue our
commitment to value investing. The Federal Reserve Bank's actions should
moderate the unsustainable growth of the last few quarters, setting the stage
for a more positive bond market environment.
We may make distributions in excess of net investment income from time to
time to provide more stable dividends. Such distributions could cause slight
decreases in net asset values over time, but historically have not resulted in a
return of capital for tax purposes.
Yield and total return data may, from time to time, be included in
advertisements about each Series. "Yield" is calculated by dividing a Series'
annualized net investment income per share during a recent 30-day period by the
maximum public offering price per share on the last day of that period. Each
Series' yield reflects the deduction of the maximum initial sales charge and
reinvestment of all income dividends and capital gains distributions. "Total
return" for the one-, five- and ten-year periods represents the average annual
compounded rate of return on an investment of $1,000 in a Series at the maximum
public offering price. Total return also may be presented for other periods or
based on investment at reduced sales charge levels or net asset value. Any
quotation of total return not reflecting the maximum initial sales charge would
be reduced if such sales charge were used. Quotations of yield or total return
for any period when an expense limitation is in effect will be greater than if
the limitation had not been in effect.
Our Series' distribution rates differ from our yield primarily because the
Series may purchase short- and intermediate-term high coupon securities at a
premium and, consistent with applicable tax regulations, distribute to
shareholders all of the interest income on these securities without amortizing
the premiums. This practice also is used by these Series for financial statement
purposes and is in accordance with generally accepted accounting principles. In
other words, these Series may pay more than face value for a security that pays
a greater-than-market rate of interest and then distribute all such interest as
dividends. The principal payable on the security at maturity will equal face
value, and so the market value of the security will gradually decrease to face
value, assuming no changes in the market rate of interest or in the credit
quality of the issuer. Shareholders should recognize that such dividends will
therefore tend to decrease the net asset value of these Series. Dividends paid
from this interest income are taxable to shareholders at ordinary income rates.
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
FUND, AND NO PERSON IS ENTITLED TO RELY UPON ANY INFORMATION OR REPRESENTATION
NOT CONTAINED HEREIN OR THEREIN.
<PAGE>
Comparison of change in value of a $10,000 investment in Lord Abbett Investment
Trust --- Limited Duration Government Series, Lipper's Average Short and
Intermediate U.S. Government Funds and the Lehman Intermediate Government Index.
<TABLE>
<CAPTION>
Fund at Fund at Lipper's Average Lipper's Average Shearson Lehman
Net Asset Maximum of Intermediate U.S. of Short U.S. Intermediate Government
Date Value Offering Price Government Bonds Index (2) Government Bonds Index (2) Bond Index (3)
- ---- --------- ------------------ ------------------------- ---------------------- -----------------------
<S> <C> <C> <C> <C>
10/31/93 $10,000 $9,700 $10,000 $10,000 $10,000
10/31/94 9,691 9,400 9,575 9,873 9,829
Average Annual Total Return (1)
Life of Fund
------------
-6.00%
<FN>
(1) Total return is the percent change in value, after deduction of the maximum
sales charge of 3%, with all dividends and distributions reinvested for the
periods shown ending October 31, 1994 using the SEC-required uniform method
to compute such return.
(2) Source: Lipper Analytical Services
(3) Performance numbers for the unmanaged Lehman Intermediate Government Index
do not reflect transaction costs or management fees. An investor cannot
invest directly in the Index.
</FN>
</TABLE>
<PAGE>
UNDERWRITER AND INVESTMENT MANAGER
Lord, Abbett & Co.
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
212-848-1800
CUSTODIAN
Morgan Guaranty Trust Company of New York
60 Wall Street, New York, New York 10005
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
United Missouri Bank of Kansas City, N.A.
Tenth and Grand
Kansas City, Missouri 64141
SHAREHOLDER SERVICING AGENT
DST Systems, Inc.
P.O. Box 419100
Kansas City, Missouri 64141
800-821-5129
AUDITORS
Deloitte & Touche LLP
COUNSEL
Debevoise & Plimpton
LORD ABBETT
INVESTMENT TRUST
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
LORD ABBETT PROSPECTUS
DECEMBER 27 '94
INTENDED FOR USE UNTIL MARCH 1, 1996.
INVESTMENT TRUST
LIMITED DURATION
U.S. GOVERNMENT
SECURITIES SERIES
Seeking a high level of
income primarily from
limited duration U.S.
Government securities
BALANCED SERIES
Seeking current income
and capital growth
<PAGE>
LORD ABBETT
STATEMENT OF ADDITIONAL INFORMATION DECEMBER 27, 1994
INTENDED FOR USE
UNTIL MARCH 1, 1996
LORD ABBETT INVESTMENT TRUST
LIMITED DURATION U. S. GOVERNMENT SECURITIES SERIES
BALANCED SERIES
- -------------------------------------------------------------------------------
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 December 27, 1994.
Lord Abbett Investment Trust (referred to as the "Fund") was organized as a
Delaware business trust on August 16, 1993. The Fund's Trustees have authority
to create separate classes and series of shares of beneficial interest, without
further action by shareholders. To date, the Fund has two series consisting of
two classes of shares - Lord Abbett Limited Duration U. S. Government Securities
Series and Lord Abbett Balanced Series (sometimes referred to as "Limited
Duration Government Series" and "Balanced Series", respectively, or "we" or the
"Series", individually or collectively). Further classes or series may be added
in the future. The Investment Company Act of 1940, as amended (the "Act")
requires that where more than one class or series exists, each class or series
must be preferred over all other classes or series in respect of assets
specifically allocated to such class or series.
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 Objectives and Policies 2
2. Trustees and Officers 5
3. Investment Advisory and Other Services 7
4. Portfolio Transactions 8
5. Purchases, Redemptions and Shareholder Services 9
6. Performance 13
7. Taxes 14
8. Information About the Fund 14
9. Financial Statements 15
<PAGE>
1.
Investment Objective and Policies
Each Series' investment objective and policies are described in the Prospectus
on the cover page and under "How We Invest". In addition to those policies
described in the Prospectus, each Series is subject to the following investment
restrictions which cannot be changed for a Series without the approval of the
holders of a majority of that Series' shares. Each Series may not: (1) borrow
money except (i) as a temporary measure for extraordinary or emergency purposes,
and then not in excess of 5% of gross assets (at cost or market value, which
ever is lower) at the time of borrowing, (ii) unless such borrowing does not
exceed the asset coverage requirements of Section 18(f) of the Act and (iii)
unless such borrowing on behalf of a class or series shall be a liability only
of such class or series, as the case may be; (2) 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, or as indicated below; (3) lend
money or securities to any person except through entering into short-term
repurchase agreements with sellers of securities it has purchased and by lending
its portfolio securities to registered broker-dealers where the loan is 100%
secured by cash or its equivalent as long as it complies with regulatory
requirements (investment in repurchase agreements exceeding seven days and in
other illiquid investments are subject to the maximum of 15% of each Series' net
assets described below) and except for time or demand deposits with banks and
purchases of commercial paper or publicly offered debt securities at original
issue or otherwise; (4) buy or sell real estate (including limited partnerships
therein but excluding securities of companies, such as real estate investment
trusts, which deal in real estate or interests therein), oil, gas or other
mineral leases or in commodities or commodity contracts in the ordinary course
of its business, except such interests and other property acquired as a result
of owning other securities, though securities will not be purchased in order to
acquire any of these interests; (5) with respect to 75% of its total assets, and
except as indicated below, buy securities if the purchase would then cause it to
(i) have more than 5% of its gross assets, at market value at the time of
investment, invested in the securities of any one issuer except securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
or (ii) own more than 10% of the voting securities of any issuer; (6)
concentrate its investments in any particular industry (i) except as indicated
below and (ii) excluding U.S. Government securities; (7) issue senior securities
except to the extent permitted by the Act; or (8) with respect to the Limited
Duration Government Series, make investments other than those a federal savings
association by law or regulation may, without limitation as to percentage of
assets, invest in, sell, redeem, hold, or otherwise deal in.
Notwithstanding restrictions 2, 5 and 6 above and investment policy 4 below, in
the future, upon shareholder approval, each of the Series may seek to achieve
its investment objective by investing all of its assets in another investment
company (or series or class thereof) having the same investment objective.
Shareholders will be notified thirty days in advance of such conversion. In the
event the Fund creates other series or Series classes, shareholders of each
Series will be able to exchange Series shares for shares of the other Fund
series and/or Series classes.
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.
In addition to the investment restrictions above which cannot be changed without
shareholder approval, we also are subject to the policies described in the
Prospectus and the following investment policies which may be changed by the
Board of Trustees without shareholder approval. Each Series may not: (1) sell
short securities or buy securities on margin although it may obtain short-term
credit necessary for the clearance of purchases of securities; (2) invest
knowingly more than 15% of its net assets (at the time of investment) in
illiquid securities (securities qualifying for resale under Rule 144A that are
determined by the Trustees, or by Lord Abbett pursuant to delegated authority
from the Trustees, to be liquid are considered liquid securities, except as
otherwise required by state law); (3) pledge, mortgage or hypothecate its
assets, however, this provision does not apply to permitted borrowings mentioned
above or to the grant of escrow receipts or the entry into other similar escrow
arrangements arising out of the writing of covered call options; (4) invest in
securities issued by other investment companies as defined in the Act except as
permitted by the Act and except as indicated above; (5) except for the Balanced
Series, buy or sell put or call options; or (6) purchase securities of any
issuer unless it or its predecessor has a record of three years' continuous
operation, except that it may purchase securities of such issuers through
subscription offers or other rights it receives as a security holder of
companies offering such subscriptions or
<PAGE>
rights and such purchases will then be limited in the aggregate to 5% of the
Series' net assets at the time of investment; (7) hold securities of any issuer
when more than 1/2 of 1% of the issuer's securities are owned beneficially by
one or more of the Fund's officers or trustees or by one or more partners of the
Fund's underwriter or investment adviser if these owners in the aggregate own
beneficially more than 5% of such securities; (8 ) with respect to the Balanced
Series, engage in short-term trading under normal circumstances; or (9) with
respect to the Balanced Series, invest in warrants, valued at the lower of cost
or market, to exceed 5% of the Series' net assets, including warrants not listed
on the New York or American Stock Exchange which may not exceed 2% of such net
assets.
LENDING PORTFOLIO SECURITIES
The Fund may lend portfolio securities to registered brokers-dealers. These
loans, if and when made, may not exceed 30% of the Fund's total assets. The
Fund's loans 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 in an amount 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 the borrower and/or a third party that is not affiliated with the Fund and is
acting as a "placing broker." No fee will be paid to affiliated persons of the
Fund.
By lending portfolio securities, the Fund can increase its income by continuing
to receive income 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 such U.S.
Government securities or other forms of non-cash collateral are used as
security. The Fund will comply with the following conditions whenever it loans
securities: (i) the Fund must receive at least 100% collateral from the
borrower; (ii) the borrower must increase the collateral whenever the market
value of the securities loaned rises above the level of the collateral; (iii)
the Fund must be able to terminate the loan at any time; (iv) the Fund must
receive reasonable compensation with respect to the loan, as well as any
dividends, interest or other distributions on the loaned securities; (v) the
Fund may pay only reasonable fees in connection with the loan; and (vi) voting
rights on the loaned securities may pass to the borrower except that, if the
Fund has knowledge of a material event adversely affecting the investment in the
loaned securities, the Fund must terminate the loan and regain the right to vote
the securities.
REPURCHASE AGREEMENTS
Each Series may enter into repurchase agreements with respect to a security. A
repurchase agreement is a transaction by which the Series acquires a security
and simultaneously commits to resell that security to the seller (a bank or
securities dealer), and the seller commits to repurchase that security, 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 Series have a total value in excess
of the value of the repurchase agreement.) Each Series 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 Series 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 provide additional
collateral or to repurchase the underlying securities at a time when the value
of these securities has declined, the Series 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 Series 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 for each Series 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.
<PAGE>
Each Series 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 Series otherwise may invest.
WHEN-ISSUED TRANSACTIONS
As stated in the Prospectus, each Series may purchase portfolio securities on a
when-issued basis. When-issued transactions involve a commitment by the Series
to purchase securities, with payment and delivery to take place in the future,
in order to secure what is considered to be an advantageous price or yield at
the time of entering into the transaction. The value of fixed-income securities
to be delivered in the future will fluctuate as interest rates vary. During the
period between purchase and settlement, the value of the securities will
fluctuate and assets consisting of cash and/or marketable securities (normally
short-term U.S. Government securities) marked to market daily in an amount
sufficient to make payment at settlement will be segregated at our custodian in
order to pay for the commitment. There is a risk that market yields available at
settlement may be higher than yields obtained on the purchase date which could
result in depreciation of value of fixed-income when-issued securities. At the
time each Series makes the commitment to purchase a security on a when-issued
basis, it will record the transaction and reflect the liability for the purchase
and the value of the security in determining its net asset value. The Balanced
Series, generally, has the ability to close out a purchase obligation on or
before the settlement date rather than take delivery of the security, whereas
the Limited Duration Government Series may sell them only according to
guidelines applicable to national banks, federal credit unions and federal
savings associations ("federal financial institutions"). Under no circumstance
will delivery and payment ("settlement") for such securities take place more
than 120 days after the purchase date.
AVERAGE DURATION
The Limited Duration Government Series limits its average dollar weighted
portfolio duration to a range of one to four years. However, many of the
securities in which the Series invests will have remaining durations in excess
of four years.
Some of the securities in the Limited Duration Government Series' portfolio may
have periodic interest rate adjustments based upon an index such as the 91-day
Treasury Bill rate. This periodic interest rate adjustment tends to lessen the
volatility of the security's price. With respect to securities with an interest
rate adjustment period of one year or less, the Limited Duration Government
Series will, when determining average-weighted duration, treat such a security's
maturity as the amount of time remaining until the next interest rate
adjustment.
Instruments such as GNMA, FNMA, FHLMC securities and similar securities backed
by amortizing loans generally have shorter effective maturities than their
stated maturities. This is due to changes in amortization caused by demographic
and economic forces such as interest rate movements. These effective maturities
are calculated based upon historical payment patterns and therefore have shorter
duration than would be implied by their stated final maturity. For purposes of
determining the Limited Duration Government Series' average maturity, the
maturities of such securities will be calculated based upon the issuing agency's
payment factors using industry-accepted valuation models.
PORTFOLIO TURNOVER
For the period from November 4, 1993 to October 31, 1994, the portfolio turnover
rate was 860.91% for the Limited Duration Government Series. Although neither
Series can accurately predict its annual portfolio turnover rate, a rate
substantially in excess of 100% but not exceeding 600% is expected for the
fixed-income portion of the Balanced Series and a rate not in excess of 100% is
expected for the equity portion of the Balanced Series. As discussed above, each
Series may purchase U.S. Government securities on a when-issued basis with
settlement taking place after the purchase date, (without amortizing any
premiums). This investment technique is expected to contribute significantly to
portfolio turnover rates. However, it will have little or no transaction cost or
adverse tax consequences. Transaction costs normally will exclude brokerage
because each Series' fixed-income portfolio transactions are usually on a
principal basis and any markups charged normally will be more than offset by the
beneficial economic consequences anticipated at the time of purchase or no
purchase will be made. Generally, short-term losses on short-term U.S.
Government securities purchased under this investment technique tend to offset
any short-term gains due to such high portfolio turnover.
<PAGE>
SUITABILITY FOR FEDERAL FINANCIAL INSTITUTIONS - LIMITED DURATION GOVERNMENT
SERIES
The Limited Duration Government Series is authorized only to invest in
securities and to engage in investment practices that are permissible for
federal financial institutions. In conformity with restrictions and policies
imposed on such institutions, the Limited Duration Government Series will, among
other things, (1) invest solely in securities issued or guaranteed by the U.S.
Government, its agencies and its instrumentalities that are permissible
investments for federal financial institutions; (2) invest in high-risk
collateralized mortgage obligations and real estate mortgage investment conduits
(as such risk is determined according to tests applicable to federal financial
institutions) solely for the purpose of reducing interest rate risk; (3) not
purchase or sell a standby commitment; (4) not buy or sell a futures contract;
(5) not engage in adjusted trading; and (6) not purchase a zero coupon security
with a maturity date that is more than 10 years from the settlement date for the
purchase of the security. In addition, the Limited Duration Government Series
will comply with prudential guidelines applicable to federal financial
institutions with respect to, among other things, (i) repurchase agreements,
(ii) lending of portfolio securities and (iii) delayed-delivery and when-issued
transactions.
2.
Trustees and Officers
The following Trustees are partners of Lord, Abbett & Co., The General Motors
Building, 767 Fifth Avenue, New York, New York 10153-0203 ("Lord Abbett"). They
have been associated with Lord Abbett for over five years and are also officers
and/or directors or Trustees of the fifteen other Lord Abbett-sponsored funds
described under "Purchases, Redemptions, and Shareholder Services" (except for
Mr. Dow who is an officer but not a director of Lord Abbett Research Fund,
Inc.). They are "interested persons" of the Fund as defined in the Act.
Ronald P. Lynch, Chairman and President
Robert S. Dow, Executive Vice President
The following outside Trustees are also directors or Trustees of the fifteen
other Lord Abbett-sponsored funds referred to above (except for Lord Abbett
Research Fund, Inc., of which only Messrs. Millican and Neff are directors).
E. Thayer Bigelow
Time Warner Cable
300 First Stamford Place
Stamford, CT 06902
President and Chief Executive Officer of Time Warner Cable. Formerly President
and Chief Operating Officer of Home Box Office, Inc.
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.
John C. Jansing
162 South Beach Road
Hobe Sound, Florida
Retired. Formerly Chairman of Independent Election Corporation of America, a
proxy tabulating firm.
<PAGE>
C. Alan MacDonald
The Noel Group
Two Greenwich Plaza, Suite 1001
Greenwich, Connecticut
Acquisition Consultant, The Noel Group, a private consulting firm. Formerly
Chairman and Chief Executive Officer of Lincoln Snacks, Inc., manufacturer of
branded snack foods (1992-1994). Formerly President and Chief Executive Officer
of Nestle Foods Corporation, a subsidiary of Nestle S.A. (Switzerland).
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Formerly
Senior Vice President of Springs Industries, Inc., a textile company
(1986-1989).
Thomas J. Neff
55 East 52nd Street
New York, New York
President of Spencer Stuart & Associates, an executive search consulting firm.
For the period November 4, 1993 to October 31, 1994, the Limited Duration
Government Series accrued, for all outside trustees as a group, Trustees' fees
totaling $65 (exclusive of expenses).
The Board of Trustees has adopted a retirement plan under which the outside
Trustees will receive an annual retirement benefit equal to 80% of their final
annual retainer following retirement at or after age 72 with at least 10 years
of service. This plan also provides for a reduced benefit upon early retirement
under certain circumstances and a preretirement death benefit. For the period
November 4, 1993 to October 31, 1994, the Limited Duration Government Series
accrued nothing for the payment of benefits under this plan.
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, Nordberg and Walsh are partners of Lord Abbett and the others are
employees: Kenneth B. Cutler, Vice President and Secretary; Daniel E. Carper, E.
Wayne Nordberg, John J. Walsh, Jeffery H. Boyd, John J. Gargana, Jr., Thomas F.
Konop, Victor W. Pizzolato, Vice Presidents and Keith F. O'Connor, 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 Series outstanding and entitled to vote at the meeting.
As of December 27, 1994, all of the Balanced Series' outstanding shares are
owned by Lord Abbett. Lord Abbett owned, as of November 30, 1994, 47% of the
Limited Duration Government Series, thus giving the firm control of both Series.
Our officers and trustees, as a group (excluding the firm's shares), owned less
than 2% of the Limited Duration Government Series shares on that date.
<PAGE>
3.
Investment Advisory and Other Services
As described under "Our Management" in the Prospectus, Lord Abbett is the
investment manager for the each Series. 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,
Ronald P. Lynch, E. Wayne Nordberg and John J. Walsh. The address of each
partner is The General Motors Building, 767 Fifth Avenue, New York, New York
10153- 0203.
The services performed by Lord Abbett are described under "Our Management" in
the Prospectus. Under each 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 .5 of 1% (in the case of the Limited Duration Government Series)
and .75 of 1% (in the case of the Balanced Series).
Each Series pays all of its expenses not expressly assumed by Lord Abbett,
including, without limitation, 12b-1 expenses, outside Trustees' fees and
expenses, association membership dues, legal and audit fees, taxes, transfer and
dividend disbursing agent fees, shareholder servicing costs, expenses relating
to shareholder meetings, expenses of preparing, printing and mailing share
certificates and shareholder reports, expenses of registering our shares under
federal and state securities laws, expenses of preparing, printing and mailing
prospectuses to existing shareholders, insurance premiums and brokerage and
other expenses connected with executing portfolio transactions. For the period
November 4, 1993 (commencement of operations) to October 31, 1994, the
management fees paid to Lord Abbett by the Limited Duration Government Series
amounted to $46,153.
Each Series 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 each Series' 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 Prospectus, the
Fund has adopted a Plan for each Series pursuant to Rule 12b-1 of the Act.
Annual Plan distribution expenses up to one percent of the Series' 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 the State.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281, are
the independent auditors of the Fund and must be approved at least annually by
our 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.
Morgan Guaranty Trust Company of New York , 60 Wall Street, New York, New York,
is the Fund's custodian.
4.
Portfolio Transactions
It is expected that purchases and sales of each Series' fixed-income portfolio
securities usually will be principal transactions and normally such securities
will be purchased directly from the issuer or from an underwriter or market
maker for the securities. Therefore, each Series usually will pay no brokerage
commissions for such purchases. Purchases from underwriters of portfolio
securities will include a commission or concession paid by the issuer to the
underwriter and purchases from dealers serving as market makers will include a
dealer's markup. Principal transactions, including riskless principal
transactions, are not afforded the protection of the safe harbor in Section 28
(e) of the Securities Exchange Act of 1934.
Each Series' policy is to have purchases and sales of portfolio securities
executed at most favorable prices, considering all costs of the transaction
including brokerage commissions and dealer markups and markdowns, consistent
<PAGE>
with obtaining best execution, except to the extent that we may pay a higher
commission as described below. This policy governs the selection of brokers or
dealers and the market in which the transaction is executed. To the extent
permitted by law, we may, if considered advantageous, make a purchase from or
sale to another Lord Abbett-sponsored fund without the intervention of any
dealer.
We select brokers on the basis of their professional capability and the value
and quality of their brokerage and research services. Normally, the selection is
made by our traders who are officers of the Fund and also are employees of Lord
Abbett. Our traders do the trading as well for other accounts -- investment
companies (of which they are also officers) and other investment clients --
managed by Lord Abbett. They are responsible for the negotiation of prices and
commissions.
In transactions on stock exchanges, commissions are negotiated; in the case of
securities traded in over-the-counter markets, there generally is no stated
commission, but the price usually includes an undisclosed commission or markup.
Purchases from underwriters of newly-issued securities for inclusion in each
Series' portfolio usually will include a concession paid to the underwriter by
the issuer and purchases from dealers serving as market makers will include the
spread between the bid and asked prices. A broker may receive a commission for
portfolio transactions exceeding the amount another broker would have charged
for the same transaction if Lord Abbett determines that such amount of
commission is reasonable in relation to the value of the brokerage and research
services performed by the executing broker viewed either in terms of the
particular transaction or the broker's overall responsibilities with respect to
us and other accounts managed by Lord Abbett. Brokerage services may include
such factors as showing us trading opportunities including blocks, willingness
and ability to take positions in securities, knowledge of a particular security
or market, proven ability to handle a particular type of trade, confidential
treatment, promptness, reliability and quotation and pricing services. Research
may include the furnishing of analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy and the
performance of accounts. Such research may be used by Lord Abbett in servicing
all their accounts and not all of such research necessarily will be used by Lord
Abbett in connection with their services to us; conversely, research furnished
in connection with brokerage of other accounts managed by Lord Abbett may be
used in connection with their services to us and not all of such research
necessarily will be used by Lord Abbett in connection with their services to
such other accounts. We have been advised by Lord Abbett that, although such
research is often useful, no dollar value can be ascribed to it, nor can it be
accurately ascribed or allocated to any account and it is not a substitute for
services provided by them to us, nor does it materially reduce or otherwise
affect the expenses incurred by Lord Abbett in the performance of such services.
We make no commitments regarding the allocation of brokerage business to or
among brokers.
If two or more brokers are considered capable of offering the equivalent
likelihood of best execution, the broker who has sold our shares and/or shares
of other Lord Abbett-sponsored funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as we do, transactions will, to the extent practicable, be allocated among all
participating accounts in proportion to the amount of each order and will be
executed daily until filled so that each account shares the average price and
commission cost of each day.
We will not seek "reciprocal" broker business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from
broker-dealers as consideration for the direction to them of portfolio business.
During the period from November 4, 1993 to October 31, 1994, Limited Duration
Government Series paid total commissions to independent brokers of $87,791.
5.
Purchases, Redemptions
and Shareholder Services
Securities in each Series' portfolio 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 securities exchange are valued
<PAGE>
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 Board of Trustees of the Fund. The
Board of Trustees will monitor, on an ongoing basis, the Fund's method of
valuation.
As disclosed in the Prospectus, we calculate our net asset value and are
otherwise open for business on each day that the New York Stock Exchange
("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 offering price of Limited Duration Series' shares on October 31, 1994 was
computed as follows:
<TABLE>
<CAPTION>
Limited Duration
Government Balanced
SERIES SERIES *
----------------- ---------
<S> <C> <C>
Net asset value per share (net assets divided
by shares outstanding) $4.44 $9.53
Maximum offering price per share - net asset
value divided by (.9700 for Limited Duration
Government Series) and (.9525 for Balanced Series) $4.58 $10.00
<FN>
* The Balanced Series is expected to commence operations on December 27, 1994.
Net asset value and maximum offering price per share shown for this Series are
estimated as of such date.
</FN>
</TABLE>
The Fund has entered into a distribution agreement with Lord Abbett under which
Lord Abbett is obligated to use its best efforts to find purchasers for the
shares of the Fund and to make reasonable efforts to sell each Series' shares so
long as, in Lord Abbett's judgment, a substantial distribution can be obtained
by reasonable efforts.
As described in the Prospectus, each Series has adopted a Distribution Plan and
Agreement ("Plan") pursuant to Rule 12b- 1 of the Investment Company Act of
1940, as amended. In adopting each Plan and in approving its continuance, the
Board of Trustees has concluded that, based on information provided by Lord
Abbett, there is a reasonable likelihood that each Plan will benefit its Series
and its shareholders. The expected benefits include greater sales and lower
redemptions of shares and a higher quality of service provided to shareholders
by dealers than otherwise would be the case. Lord Abbett uses all amounts
received under each Plan for payments to dealers for (i) selling shares of the
Series and (ii) maintaining Series shareholder accounts and/or providing Series
shareholders with service, including shareholder liaison services such as
responding to customer inquiries and providing information on their investments.
Each Plan requires the Board of Trustees to review, on a quarterly basis,
written reports of all amounts expended pursuant to the Plan and the purpose 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 Fund's
Board of Trustees and of the Fund's 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 such Plan and
agreements. Each Plan may not be amended to increase materially the amount spent
for distribution expenses without approval by a majority of the Series'
outstanding voting securities and the approval of a majority of the
<PAGE>
Trustees including a majority of the Series' outside Trustees. Each Plan may be
terminated at any time by vote of a majority of the Fund's outside Trustees or
by vote of a majority of the Series' outstanding voting securities.
As stated in the Prospectus, under each Plan a 1%, contingent deferred
reimbursement charge ("CDRC") is imposed with respect to those shares (or shares
in another Lord Abbett fund or series acquired through exchange of such shares)
on which the Series has paid the one-time distribution fee if such shares are
redeemed out of a fund in the Lord Abbett family having an exchange privilege
with the Series within a period 24 months from the end of the month in which the
original purchase occurred. (An exception is made for redemptions by
tax-qualified plans under Section 401 of the Internal Revenue Code for benefit
payments due to plan loans, hardship withdrawals, death, retirement or
separation from service with respect to plan participants). The CDRC 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 large, long-term
account in the Series. Shares of a Fund or Series on which such 1% sales
distribution fee has been paid may not be exchanged into a fund or series with a
Rule 12b-1 plan for which the payment provisions have not been in effect for at
least one year.
Other Lord Abbett funds and series with front-end sales charges which
participate in the Telephone Exchange Privilege (except Lord Abbett U.S.
Government Securities Money Market Fund ("GSMMF"), and certain funds or series
for which a Rule 12b-1 plan is not yet in effect) have instituted a CDRC on
similar terms and conditions. No CDRC will be charged on an exchange of shares
between Lord Abbett funds and series with front-end sales charges, although it
will be charged on behalf of and paid to the fund or series in which the
original purchase occurred. Thus, if shares of a participating Lord Abbett fund
or series are exchanged for those of another such fund or series and the shares
tendered ("Exchanged Shares") are subject to a CDRC, the CDRC will carry over to
the shares being acquired ("Acquired Shares") including shares of any series for
which a Rule 12b-1 plan in not yet in effect. Any CDRC that is carried over to
Acquired Shares is calculated as if the holder of Acquired Shares had held those
shares from the date on which he or she became the holder of Exchanged Shares.
Acquired Shares held in GSMMF and such series which are subject to a CDRC will
be credited with the time such shares are held in that fund or series.
In no event will the amount of a CDRC exceed 1% of the lesser of (i) the net
asset value of the shares redeemed or (ii) the original cost of such shares (or
of Exchanged Shares for which such shares were acquired). No CDRC will be
imposed when the investor redeems (i) amounts derived from increases in the
value of the account above the total cost of shares being redeemed due to
increases in net asset value, (ii) shares with respect to which no Lord Abbett
fund or series paid a distribution fee on issuance (including shares acquired
through reinvestment of dividend income and capital gains distributions) or
(iii) shares which, together with Exchanged Shares, have been held continuously
for 24 months from the end of the month in which the original sale occurred. In
determining whether a CDRC is payable, (a) shares not subject to a CDRC will be
redeemed before shares subject to a CDRC and (b) shares subject to a CDRC and
held the longest will be the first to be redeemed.
Under terms of the Statement of Intention to invest $100,000 or more over a
13-month period as described in the Prospectus, shares of all Lord
Abbett-sponsored funds (other than shares of Lord Abbett Equity Fund "LAEF",
Lord Abbett Research Fund ("LARF"), Lord Abbett Counsel Group or GSMMF, unless
holdings in GSMMF are attributable to shares exchanged from a Lord
Abbett-sponsored fund or series offered with a front-end sales charge) currently
owned by you are credited as purchases (at their current offering prices on the
date the Statement is signed) toward achieving the stated investment. Shares
valued at 5% of the amount of intended purchases are escrowed and may be
redeemed to cover the additional sales charge payable if the Statement is not
completed. The Statement of Intention is neither a binding obligation on you to
buy, nor on the Series to sell, the full amount indicated.
As stated in the Prospectus, shares of each Series may be purchased at net asset
value by our Trustees, by employees of Lord Abbett, by employees of our
shareholder servicing agent and by employees of any securities dealer that has a
sales agreement with Lord Abbett and 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
<PAGE>
Trustee or employee). The terms "Trustees" and "employees of Lord Abbett" also
include other family members and retired Trustees or employees.
As discussed in the Prospectus, shares of each Series also may be purchased at
net asset value (a) at $1 million or more (subsequent to the effective date of
the Rule 12b-1 Plan for any such Series), (b) with dividends and distributions
from other Lord Abbett-sponsored funds, except for LARF, LAEF, LASF and Lord
Abbett Counsel Group, (c) under the loan feature of the Lord Abbett-sponsored
prototype 403(b) plan for share purchases representing the repayment of
principal and interest, (d) by certain authorized brokers, dealers, registered
investment advisers or other financial institutions who have entered into an
agreement with Lord Abbett in accordance with certain standards approved by Lord
Abbett, providing specifically for the use of our shares in particular
investment products made available for a fee to clients of such brokers,
dealers, registered investment advisers and other financial institutions, and
(e) by employees, partners and owners of unaffiliated consultants and advisors
to Lord Abbett or Lord Abbett-sponsored funds who consent to such purchase if
such persons provide service to Lord Abbett or such funds on a continuing basis
and are familiar with such funds. Shares are offered at net asset value to these
investors for the purpose of promoting goodwill with employees and others with
whom Lord Abbett and/or the Fund have business relationships.
Our shares 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, if such
redemption has occurred no more than 60 days prior to the purchase of our shares
and the purchaser either (i) paid a sales charge at the time of purchase of the
Redeemed Shares, or (ii) paid or was at some time subject to a contingent
deferred sales charge with respect to the Redeemed Shares.
Shares of each Series may be issued at net asset value in exchange for the
assets 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.
Our shares also may be issued at net asset value plus the applicable sales
charge in exchange for securities for which market quotations are readily
available and which are desired for our portfolios and which have a market value
not less than the net asset value of our shares issued in exchange.
The Prospectus briefly describes the Telephone Exchange Privilege. You may
exchange some or all of your shares for those of any of the Lord Abbett
sponsored funds currently offered to the public with a front-end sales charge
and GSMMF, to the extent offers and sales may be made in your state. You should
read the prospectus of the other fund before exchanging. In establishing a new
account by exchange, shares of the Series being exchanged must have a value
equal to at least the minimum initial investment required for the fund into
which the exchange is made.
Shareholders in such other funds have the same right to exchange their shares
for each Series' shares. Exchanges are based on relative net asset values on the
day instructions are received by the Fund in Kansas City if the instructions are
received prior to the close of the NYSE in proper form. No sales charges are
imposed except in the case of exchanges out of GSMMF (unless a sales charge was
paid on the initial investment). Exercise of the exchange privilege will be
treated as a sale for federal income tax purposes, and, depending on the
circumstances, a gain or loss may be recognized. In the case of an exchange of
shares that have been held for 90 days or less where no sales charge is payable
on the exchange, the original sales charge incurred with respect to the
exchanged shares will be taken into account in determining gain or loss on the
exchange only to the extent such charge exceeds the sales charge that would have
been payable on the acquired shares had they been acquired for cash rather than
by exchange. The portion of the original sales charge not so taken into account
will increase the basis of the acquired shares.
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as a means for taking advantage of
short-term swings in the market, and we reserve the right to terminate or limit
the privilege of any shareholder who makes frequent exchanges. We can revoke or
modify the privilege for all shareholders upon 60 days' prior notice. "Eligible
Funds" are other Lord Abbett-sponsored funds which are eligible for the exchange
<PAGE>
privilege, not including LASF which offers its shares only in connection with
certain variable annuity contracts, LAEF which is not issuing shares, LARF and
Lord Abbett Counsel Group.
A redemption order is in proper form when it contains all of the information and
documentation required by the order form or supplementally by Lord Abbett or the
Fund to carry out the order. The signature(s) and any legal capacity of the
signer(s) must be guaranteed by an eligible guarantor. See the Prospectus for
expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Trustees may authorize redemption of all of the shares in any
account in which there are fewer than 50 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least 60 days' prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
Under the Div-Move service described in the Prospectus, you can invest the
dividends paid on your account into an existing account in any other Eligible
Fund. The account must be either your account, a joint account for you and your
spouse, a single account for your spouse, or a custodial account for your minor
child under the age of 21. You should read the prospectus of the other fund
before investing.
The Invest-A-Matic method of investing in the Fund and/or any other Eligible
Fund is described in the Prospectus. To avail yourself of this method you
complete the application form, selecting the time and amount of your bank
checking account withdrawals, and the funds for investment, include a voided,
unsigned check and complete the bank authorization.
The Systematic Withdrawal Plan also is described in the Prospectus. You may
establish a Plan if you own or purchase uncertificated shares having a current
offering price value of at least $10,000. Lord Abbett prototype retirement plans
have no such minimum. The Plan involves the planned redemption of shares on a
periodic basis by receiving either fixed or variable amounts at periodic
intervals. Since the value of shares redeemed may be more or less than their
cost, gain or loss may be recognized for income tax purposes on each periodic
payment. Normally, you may not make regular investments at the same time you are
receiving systematic withdrawal payments because it is not in your interest to
pay a sales charge on new investments when in effect a portion of that new
investment is soon withdrawn. The minimum investment accepted while a withdrawal
plan is in effect is $1,000. The Systematic Withdrawal Plan may be terminated by
you or by us at any time by written notice.
The Prospectus indicates the types of retirement plans for which Lord Abbett
provides forms and explanations. Lord Abbett makes available the retirement plan
forms and custodial agreements for IRAs (Individual Retirement Accounts
including Simplified Employee Pensions), 403(b) plans and qualified pension and
profit-sharing plans, including 401(k) plans. The forms name Investors Fiduciary
Trust Company as custodian and contain specific information about the plans.
Explanations of the eligibility requirements, annual custodial fees and
allowable tax advantages and penalties are set forth in the relevant plan
documents. Adoption of any of these plans should be on the advice of your legal
counsel or qualified tax adviser.
<PAGE>
6.
Performance
Using the method to compute average annual compounded total return described
below, the life-of-Series total annual return for the Limited Duration
Government Series for the period from November 4, 1993 to October 31, 1994 is
(6.00)%. The redeemable value at October 31, 1994 was $940.
Each Series computes its average annual compounded rate of total return during
specified periods that would equate the initial amount invested to the ending
redeemable value of such investment by adding one to the computed average annual
total return, raising the sum to a power equal to the number of years covered by
the computation and multiplying the result by $1,000, which represents a
hypothetical initial investment. The calculation assumes deduction of the
maximum sales charge from initial amount invested and reinvestment of all income
dividends and capital gains distributions on the reinvestment dates at net asset
value. The ending redeemable value is determined by assuming a complete
redemption at the end of the period(s) covered by the average annual total
return computation and deducting any applicable CDRC.
Each Series' yield quotation is based on a 30-day period ended on a specified
date, computed by dividing our net investment income per share earned during the
period by our maximum offering price per share on the last day of the period.
This is determined by finding the following quotient: take the 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 number of Series shares
outstanding during the period that were entitled to receive dividends and (ii)
the Series' at 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 the multiplication and the remainder is
multiplied by two. For the 30-day period ended October 31, 1994, the Limited
Duration Government Series' yield was 5.63%.
It is important to remember that any figures developed using the formulas above
represent past performance and an investor should be aware that the investment
return and principal value of the Series 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, 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 generally will be taxable for federal income tax
purposes. Any loss realized on the sale, redemption or repurchase of Series
shares which you have held for six months or less will be treated for federal
income 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 Series shares are not deductible if, within a period beginning 30
days before the date of the sale and ending 30 days after the date of the sale,
the taxpayer acquires stock or securities that are substantially identical.
Each Series will be subject to a 4% nondeductible excise tax on certain amounts
not distributed (and not treated as having been distributed) on a timely basis
in accordance with a calendar year distribution requirement. Each Series intends
to distribute to shareholders each year an amount adequate to avoid the
imposition of such excise tax. Dividends paid by the Series will qualify for the
dividends-received deduction for corporations to the extent that 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
each Series, including a 30% (or lower treaty rate) United States withholding
tax on dividends representing
<PAGE>
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 Series shares.
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 shareholders
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 or any series 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.
General. The assets of the Fund received for the issue or sale of the shares of
each series and all income, earnings, profits, and proceeds thereof, subject
only to the rights of creditors, are especially allocated to each series, and
constitute the underlying assets of such series. The underlying assets of each
series are recorded on the books of account of the Fund, and are to be charged
with the liabilities with respect to such series and with a share of the general
expenses of the Fund. Expenses with respect to the Fund are to be allocated in a
manner and on a basis (generally in proportion to relative assets) deemed fair
and equitable by the Trustees. In the event of the dissolution or liquidation of
the Fund, the holders of the shares of each series are entitled to receive as a
class the underlying assets of such series available for distribution.
Under the Fund's Declaration of Trust, the Trustees may, upon shareholder vote,
cause the Fund to merge or consolidate into, or sell and convey all or
substantially all of, the assets of the Fund or any series 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 or any series may be brought only by
shareholders owning not less than 50% of the then outstanding shares of the Fund
or any series, as applicable.
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 Fund's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security 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 Fund 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, 1994 and the report of Deloitte & Touche LLP, independent auditors, on such
annual financial statements contained in the 1994 Annual Report to Shareholders
of the Lord Abbett Investment 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.
<PAGE>
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(b) Exhibits -
(1) Form of Registrant's Declaration & Agreement
of Trust.***
(2) Form of By-Laws of Registrant.***
(4) Form of Specimen Share Certificate.***
(5) Form of Management Agreement between Registrant and
Lord, Abbett & Co.***
(7)(a) Retirement Plan for Non-interested Person Directors and
trustees of Lord Abbett Funds.****
(7)(b) Lord Abbett Prototype Retirements Plans*****
(1) 401(k)
(2) IRA
(3) 403(b)
(4) Profit-Sharing, and
(5) Money Purchases
(8) Form of Global Custody Agreement***
(10) Opinion of Debevoise & Plimpton.**
(11)(a) Consent of Deloitte & Touche.***
(11)(b) Opinion and of Debevoise & Plimpton with respect to
the permissibility of the Registrant's Limited
Duration Government Series as an investment for
national banks, federal credit unions, and federal
savings associations. ***
(11)(c) Consent of Debevoise & Plimpton***
(15) Form of Distribution Plan and Agreement pursuant to
Rule 12b-1 under the 1940 Act.***
(16) Total Return and Yield Computation***
** To be filed with Rule 24f-2 Notice.
*** Previously filed.
**** Incorporated by reference to Post-Effective Amendment No. 7 to
the Registration Statement (on Form N1-A) of Lord Abbett Equity
Fund (File No. 6033)
***** Incorporated by reference to Post-Effective Amendment No. 6 to
the Registration Statement (on Form N1-A) of Lord Abbett
Securities Trust (File No. 811-7538).
Exhibit items not listed are not applicable.
Item 25. Persons Controlled by or Under Common Control with Registrant
None.
Item 26. Number of Record Holders of Securities
None.
<PAGE>
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 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 sixteen other Lord Abbett open-end investment
companies (of which it is principal underwriter for fifteen), and as
investment adviser to approximately 7,000 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 - Caledonian Hospital
Parkside Avenue and St. Pauls Place
Brooklyn, N.Y.
Item 29. Principal Underwriter
(a) Affiliated Fund, Inc.
Lord Abbett U. S. Government Securities Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Value Appreciation Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett California Tax-Free Income Fund, Inc.
Lord Abbett Fundamental Value Fund, Inc.
Lord Abbett U.S. 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 Securities Trust
Investment Adviser
American Skandia Trust (Lord Abbett Growth and Income Portfolio)
USAffinity Tax-Free Municipal Fund
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
Business Address (1) with Registrant
Ronald P. Lynch Chairman, President and Trustee
Kenneth B. Cutler Vice President & Secretary
Stephen I. Allen Vice President
Daniel E. Carper Vice President
Robert S. Dow Vice President
Thomas S. Henderson Vice President
E. Wayne Nordberg Vice President
John J. Walsh Vice President
(1) Each of the above has a principal business address at 767 Fifth Avenue, New
York, NY 10153
(c) Not applicable.
<PAGE>
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.
<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
15th day of June 1995.
LORD ABBETT INVESTMENT TRUST
By /S/ RONALD P. LYNCH
Ronald P. Lynch, Chairman
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
NAME TITLE DATE
- ----- ----- ----
Chairman,
/s/ Ronald P. Lynch President & Trustee June 15, 1995
/s/ John J. Gargana, Jr. Vice President & June 15, 1995
Chief Financial Officer
E. Thayer Bigelow Trustee June 15, 1995
/s/ Stewart S. Dixon Trustee June 15, 1995
/s/ Robert S. Dow Trustee June 15, 1995
/s/ John C. Jansing Trustee June 15, 1995
/s/ C. Alan MacDonald Trustee June 15, 1995
/s/ Hansel B. Millican, Jr. Trustee June 15, 1995
/s/ Thomas J. Neff Trustee June 15, 1995
