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. 8 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Amendment No. 8 [X]
LORD ABBETT INVESTMENT TRUST
Exact Name of Registrant as Specified in Charter
767 FIFTH AVENUE, NEW YORK, N. Y. 10153-0203
Address of Principal Executive Office
Registrant's Telephone Number (212) 848-1800
Kenneth B. Cutler, Vice President & Secretary
767 FIFTH AVENUE, NEW YORK, N. Y. 10153
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately on filing pursuant to paragraph (b) of Rule 485
X on March 1, 1996 pursuant to paragraph (b) of Rule 485
60 days after filing pursuant to paragraph (a) (1) of Rule 485
on (date) pursuant to paragraph (a) (1) of Rule 485
75 days after filing pursuant to paragraph (a) (2) of Rule 485
on (date) pursuant to paragraph (a) (2) of Rule 485
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Registrant has registered on behalf of its Limited Duration U.S. Government
Securities Series and Balanced Series an indefinite amount of securities under
the Securities Act of 1933 pursuant to Rule 24f-2(a)(1) and a Rule 24f-2 Notice
for these two series for the most recent fiscal year was filed with the
Commission on or about December 28, 1996.
<PAGE>
LORD ABBETT SECURITIES 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)I Investment Objectives
4 (b) (c) How We Invest
5 (a) (b) (c) Our Management; Last Page
5 (d) N/A
5 (e) Our Management
5 (f) N/A
5 (g) Purchases
6 (a) Cover Page
6 (b) (c) (d) N/A
6 (e) Cover Page; Purchases
6 (f) (g) Dividends, Capital Gains
Distributions and Taxes
7 (a) Back Cover Page
7 (b) (c) (d) Purchases
8 (a) (b) (c) (d) Redemptions
Purchases, Redemptions and Shareholder
Services
9 N/A
10 Cover Page
11 Cover Page -- Table of Contents
12 N/A
13 (a) (b) (c) (d) Investment Objectives and Policies
14 Trustees and Officers
15 (a) (b) (c) Trustees and Officers
16 (a) (i) Investment Advisory and Other
Services
16 (a) (ii) Trustees and Officers
16 (a) (iii) Investment Advisory and Other
Services
16 (b) Investment Advisory and Other Services
16 (c) (d) (e) (g) N/A
16 (f) Purchases, Redemptions and Shareholder
Services
16 (h) Investment Advisory and Other Services
16 (i) N/A
17 (a) Portfolio Transactions
17 (b) N/A
17 (c) Portfolio Transactions
17 (d) (e) N/A
18 (a) Cover Page
18 (b) N/A
<PAGE>
Form N-1A Location in Prospectus or
Item No. Statement of Additional Information
19 (a) (b) Purchases; Redemptions and Shareholder
Services; Notes to Financial
Statements
19 (c) N/A
20 Taxes
21 (a) Purchases, Redemptions and Shareholder
Services
21 (b) (c) N/A
22 N/A
22 (b) Past Performance
23 Financial Statements; Supplementary
<PAGE>
LORD ABBETT 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. GOVERNMENT SECURITIES SERIES ("LIMITED DURATION GOVERNMENT
SERIES") AND 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 MARCH 1, 1996.
PROSPECTUS
INVESTORS SHOULD READ AND RETAIN THIS PROSPECTUS. SHAREHOLDER INQUIRIES SHOULD
BE MADE IN WRITING TO THE FUND OR BY CALLING 800-821-5129. YOU CAN ALSO MAKE
INQUIRIES THROUGH YOUR BROKER-DEALER.
SHARES OF 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 3
5 Purchases 7
6 Shareholder Services 10
7 Our Management 10
8 Dividends, Capital Gains
Distributions and Taxes 12
9 Redemptions 12
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 INVESTMENT 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.
<TABLE>
<CAPTION>
Limited Duration Balanced
Government Series Series
<S> <C> <C>
Shareholder Transaction Expenses
(as a percentage of offering price)
Maximum Sales Load(1) on Purchases
(See "Purchases") 3.00% 4.75%
Deferred Sales Load(1)
(See "Purchases") None(2) None
Annual Series Operating Expenses
(as a percentage of average net assets)
Management Fee (See "Our Management") .18% .00%
12b-1 Fee (See "Purchases") .00%(2) .00%(2)
Other Expenses (See "Our Management") 1.22%(3) .31%(3)+
Total Operating Expenses 1.40%(3) .31%(3)+
<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
Government Series $44 $73 $104 $193
Balanced Series $51 $57 $64 $85
(1) Sales "load" and "deferred sales load" are referred to as sales "charge"
and "contingent deferred reimbursement charge," respectively, throughout
this Prospectus.
(2) This figure omits Rule 12b-1 fees because neither Series can predict when
its Rule 12b-1 Plan will become effective. The 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.
(3) Although not obligated to, Lord, Abbett & Co. ("Lord Abbett") may waive a
portion of its management fee and assume other expenses with respect to
each Series. It has waived a portion of its management fee for each Series
during the past year. The management fee would have been 0.50% for the
Limited Duration Government Series and 0.75% for the Balanced Series absent
such waiver. Lord Abbett also subsidized expenses with respect to the
Balanced Series. Without such waiver and/or subsidy these expense ratios
would have been 1.71% and 1.07% (not annualized) for the Limited Duration
Government Series and Balanced Series, respectively.
+Not annualized.
</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 Funds' 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>
BALANCED SERIES LIMITED DURATION GOVERNMENT SERIES
----------------- -------------------------------------
DECEMBER 27, 1994 NOVEMBER 4, 1993
(COMMENCEMENT YEAR ENDED (COMMENCEMENT
PER SHARE OPERATING OF OPERATIONS) TO OCTOBER 31, OF OPERATIONS) TO
PERFORMANCE: OCTOBER 31, 1995 1995 OCTOBER 31, 1994
<S> <C> <C> <C>
Net asset value, beginning of period $9.52 $4.44 $4.85
Income from investment operations
Net investment income .365 .2316 .2650
Net realized and unrealized
gain (loss) on securities 1.185 .1017 (.4123)
Total from investment operations 1.55 .3333 (.1473)
Less Distributions
Dividends from net investment income (.36) (.2433) (.2627)
Net asset value, end of period $10.71 $4.53 $4.44
Total Return* 16.32% 8.16% (3.09)%
Ratios/Supplemental Data:
Net assets, end of period (000) $5,713 $8,922 $10,256
Ratios to Average Net Assets:
Expenses, including waiver .31% 1.40% 0.89%
Expenses, excluding waiver 1.07% 1.71% 0.89%
Net investment income 3.40% 5.62% 5.61%
Portfolio turnover rate 131.80% 222.00% 895.63%
<FN>
*Total return does not consider the effects of sales loads.
+Not annualized. See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
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 (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
("GNMA") 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 ("FNMA") and Federal Home
Loan Mortgage Corporation ("FHLMC") 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
<PAGE>
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, 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 GNMA, FNMA or 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.
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.
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 in response to market conditions. 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
<PAGE>
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 stock). 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 to (a) the same duration or (b) to those permissible
for investment by federal financial institutions.
The Balanced Series may invest in shares of 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, as amended (the "Act"). 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 its 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 Limited Duration Government Series and 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 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
Standard &
<PAGE>
Poor's Rating Services ("S&P") or Moody's Investors Service, Inc. ("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.
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.
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.
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.
<PAGE>
Since the risk of default generally is higher among lower rated bonds, the
research and analysis of Lord Abbett are especially important in the selection
of such bonds which, if rated BB/Ba or lower, are often described as "high-yield
bonds" because of their generally higher yields and referred to as "junk bonds"
because of their greater risks. In selecting lower rated bonds for our
investment 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 cannot 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. The portfolio turnover rate for the Limited Duration
Government Series for the year ended October 31, 1995 was 222.00%, compared to
895.63% for the previous year, primarily due to security purchases and sales
relating to purchases and redemptions of Series shares and some portfolio
restructuring. The portfolio turnover rate for the Balanced Series for the
period December 27, 1994 through October 31, 1995 was 131.80%.
5 PURCHASES
You may buy our shares through any independent securities dealer having a sales
agreement with Lord, Abbett & Co. ("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 and Div-Move ($250
initial and $50 subsequent minimum) and Retirement Plans ($250 minimum).
Subsequent investments may be made in any amount. (See "Shareholder Services".)
The net asset value of our shares is calculated every business day as of the
close of the New York Stock Exchange ("NYSE") by dividing our net assets by the
number of shares outstanding. Securities are valued at market value as more
fully described in the Statement of Additional Information.
Orders for shares received by the Fund prior to the close of the NYSE, or
received by dealers prior to such close and received by Lord Abbett in proper
form prior to the close of its business day, will be confirmed at the applicable
public offering price effective at such NYSE close. Orders received by dealers
after the NYSE closes and received by Lord Abbett prior to the close of its next
business day are executed at the applicable public offering price effective as
of the close of the NYSE on that next business day. The dealer is responsible
for the timely transmission of orders to Lord Abbett. A business day is a day on
which the NYSE is open for trading.
For information regarding the proper form of a purchase or redemption order,
call the Fund at 800-821-5129. This offering may be suspended, changed or
withdrawn. Lord Abbett reserves the right to reject any order.
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
next computed after your order is received, plus a sales charge as follows:
<TABLE>
<CAPTION>
Sales Charge as a Dealer's
Percentage of: Concession
as a To Compute
Net Percentage Offering
Offering Amount of Offering Price, Divide
Size of Investment Price Invested Price* NAV by
<S> <C> <C> <C> <C>
Less than $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
</TABLE>
<TABLE>
Sales Charge as a Dealer's
Percentage of: Concession
as a To Compute
Net Percentage Offering
Offering Amount of Offering Price, Divide
Size of Investment Price Invested Price* NAV by
<S> <C> <C> <C> <C>
Less than $50,000 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
<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 own resources and will be
made in the form of cash or, if permitted, non-cash payments. The non-cash
payments will include business seminars at resorts or other locations, including
meals and entertainment, or the receipt of merchandise. The cash payments will
include payment of various business expenses of the dealer.
</FN>
</TABLE>
In selecting dealers to execute portfolio transactions, if two or more dealers
are considered capable of obtaining best execution, we may prefer the dealer who
has sold our shares and/or shares of other Lord Abbett-sponsored funds.
Volume Discounts. This section describes several ways to qualify for a lower
sales charge if you inform Lord Abbett or the Fund that you are eligible at the
time of purchase.
(1) Any purchaser (as described below) may aggregate a purchase in the Fund with
purchases of any other eligible Lord Abbett-sponsored fund, together with the
current value at maximum offering price of any shares in the Fund and in any
eligible Lord Abbett-sponsored funds held by the purchaser. (Holdings in the
following funds are not eligible for the above rights of accumulation: Lord
Abbett Equity Fund ("LAEF"), Lord Abbett Series Fund ("LASF"), the other series
of the Lord Abbett Research Fund if not offered to the general public ("LARF")
and Lord Abbett U.S. Government Securities Money Market Fund ("GSMMF"), except
for existing holdings in GSMMF which are attributable to shares exchanged from a
Lord Abbett-sponsored fund offered with a front-end sales charge or from a fund
in the Lord Abbett Counsel Group.) (2) A purchaser may sign a non-binding
13-month statement of intention to invest $100,000 or more in the Fund or in any
of the above eligible funds. If the intended purchases are completed during the
period, each purchase will be at the sales charge, if any, applicable to the
aggregate of such purchaser's intended purchases. If not completed, each
purchase will be at the sales charge for the aggregate of the actual purchases.
Shares issued upon reinvestment of dividends or distributions are not included
in the statement of intention. The term "purchaser" includes (i) an individual,
(ii) an individual and his or her spouse and children under the age of 21 and
(iii) a trustee or other fiduciary purchasing shares for a single trust estate
or single fiduciary account (including a pension, profit-sharing, or other
employee benefit trust qualified under Section 401 of the Internal Revenue Code
- -- more than one qualified employee benefit trust of a single employer,
including its consolidated subsidiaries, may be considered a single trust, as
may qualified plans of multiple employers registered in the name of a single
bank trustee as one account), although more than one beneficiary is involved.
Each Series' shares may be purchased at net asset value by our trustees,
employees of
<PAGE>
Lord Abbett, employees of our shareholder servicing agent and employees of any
securities dealer having a sales agreement with Lord Abbett who consents to such
purchases or by the trustee or custodian under any pension or profit-sharing
plan or Payroll Deduction IRA established for the benefit of such persons or for
the benefit of any national securities trade organization to which Lord Abbett
belongs or any company with an account(s) in excess of $10 million managed by
Lord Abbett on a private-advisory-account basis. For purposes of this paragraph,
the terms "trustees" and "employees" include a trustee's or employee's spouse
(including the surviving spouse of a deceased trustee or employee). The terms
"trustees" and "employees of Lord Abbett" also include other family members and
retired trustees and employees. Our shares also may be purchased at net asset
value (a) at $1 million or more, (b) with dividends and distributions from other
Lord Abbett-sponsored funds, except for dividends and distributions on shares of
LARF, LAEF, LASF and Lord Abbett Counsel Group, (c) under the loan feature of
the Lord Abbett-sponsored prototype 403(b) plan for share purchases representing
the repayment of principal and interest, (d) by certain authorized brokers,
dealers, registered investment advisers or other financial institutions who have
entered into an agreement with Lord Abbett in accordance with certain standards
approved by Lord Abbett, providing specifically for the use of our shares in
particular investment products made available for a fee to clients of such
brokers, dealers, registered investment advisers and other financial
institutions, (e) by employees, partners and owners of unaffiliated consultants
and advisers to Lord Abbett or Lord Abbett-sponsored funds who consent to such
purchase if such persons provide services to Lord Abbett or such funds on a
continuing basis and are familiar with such funds and (f) subject to appropriate
documentation, through a securities dealer where the amount invested represents
redemption proceeds from shares ("Redeemed Shares") of a registered open-end
management investment company not distributed or managed by Lord Abbett (other
than a money market fund), if such redemptions have occurred no more than 60
days prior to the purchase of our shares, the Redeemed Shares were held for at
least six months prior to redemption and the proceeds of redemption were
maintained in cash or a money market fund prior to purchase. Purchasers should
consider the impact, if any, of contingent deferred sales charges in determining
whether to redeem shares for subsequent investment in our shares. Lord Abbett
may suspend or terminate the purchase option referred to in (f) above at any
time.
Our shares may be issued at net asset value in exchange for the assets, subject
to possible tax adjustment, of a personal holding company or an investment
company.
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 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
<PAGE>
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 SHAREHOLDERS SERVICES
We offer the following shareholder services:
Telephone Exchange Privilege: Shares may be exchanged, without a service charge,
for those of any other Lord Abbett-sponsored fund except for (i) LAEF, LARF,
LASF and Lord Abbett Counsel Group and (ii) certain tax-free single-state series
where the exchanging shareholder is a resident of a state in which such series
is not offered for sale (together, "Eligible Funds").
You or your representative with proper identification can instruct the Fund to
exchange uncertificated shares (held by the transfer agent) by telephone.
Shareholders have this privilege unless they refuse it in writing. The Fund will
not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine and will employ reasonable procedures to
confirm that instructions received are genuine, including requesting proper
identification and recording all telephone exchanges. Instructions must be
received by the Fund in Kansas City (800-521-5315) prior to the close of the
NYSE to obtain each fund's net asset value per share on that day. Expedited
exchanges by telephone may be difficult to implement in times of drastic
economic or market change. The exchange privilege should not be used to take
advantage of short-term swings in the market. The Fund reserves the right to
terminate or limit the privilege of any shareholder who makes frequent
exchanges. The Fund can revoke the privilege for all shareholders upon 60 days'
prior written notice. A prospectus for the other Lord Abbett-sponsored fund
selected by you should be obtained and read before an exchange. Exercise of the
Exchange Privilege will be treated as a sale for federal income tax purposes
and, depending on the circumstances, a capital gain or loss may be recognized.
Systematic Withdrawal Plan: Except for retirement plans for which there is no
such minimum, if the maximum offering price value of your uncertificated shares
is at least $10,000, you may have periodic cash withdrawals automatically paid
to you in either fixed or variable amounts.
Div-Move: You can invest the dividends paid on your account ($50 monthly minimum
investment) into an existing account in any other Eligible Fund. The account
must be either your account, a joint account for you and your spouse, a single
account for your spouse, or a custodial account for your minor child under the
age of 21. You should read the prospectus of the other fund before investing.
Invest-A-Matic: You can make fixed, periodic investments ($50 minimum
investment) into the Fund and/or any Eligible Fund by means of automatic money
transfers from your bank checking account. You should read the prospectus of the
other fund before investing.
Retirement Plans: Lord Abbett makes available the retirement plan forms and
custodial agreements for IRAs (Individual Retirement Accounts including
Simplified Employee Pensions), 403(b) plans and pension and profit-sharing
plans, including 401(k) plans.
Householding: A new procedure has been inaugurated whereby a single copy of an
annual or semi-annual report is sent to an address to which more than one
registered shareholder of the Fund with the same last name has indicated mail is
to be delivered, unless additional reports are specifically requested in writing
or by telephone.
All correspondence should be directed to Lord Abbett 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. Each Series employs Lord Abbett as
investment manager pursuant to a Management Agreement. Lord Abbett has been an
investment manager for over 65 years and currently manages
<PAGE>
approximately $19 billion in mutual funds and advisory accounts. Under the
Management Agreements, 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.
Zane E. Brown, Lord Abbett's Director of Fixed Income, is primarily responsible
for the day-to-day management of the Limited Duration Government Series and the
fixed-income portion of the Balanced Series. Prior to joining Lord Abbett in
1992, Mr. Brown was Executive Vice President in charge of fixed income at
Equitable Capital Management Co. Robert S. Dow, president and director (trustee)
of the Lord Abbett family of funds and a Lord Abbett partner for over five
years, was primarily responsible for the day-to-day management of the
fixed-income portion of the Balanced Series since its inception, before Mr.
Brown. Mr. Brown is assisted by (as was Mr. Dow), 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 at the annual rate of .50
of 1% (in the case of the Limited Duration Government Series) and .75 of 1% (in
the case of the Balanced Series). This latter fee is higher than that paid by
most investment companies. For the fiscal year ended October 31, 1995 Lord
Abbett waived $26,725 in management fees for the Limited Duration Government
Series. The ratio of expenses, including management fee expenses, to average net
assets for the year ended October 31, 1995 for the Limited Duration Government
Series was 1.40%. This expense ratio would have been 1.71% had Lord Abbett not
waived all or a portion of its management fee. For the period December 27, 1994
to October 31, 1995 Lord Abbett waived $23,330 in management fees for the
Balanced Series. The ratio of expenses to average net assets for the same period
was .31% (not annualized) for the Balanced Series. Lord Abbett waived management
fees and subsidized expenses with respect to the Balanced Series. Without such
waiver and subsidy the expense ratio would have been 1.07% (not annualized).
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) 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.
<PAGE>
8 DIVIDEND, CAPITAL GAINS DISTRIBUTIONS AND TAXES
With respect to each 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 reinvested in additional shares at net asset value without a sales
charge. If you elect a cash payment (i) a check will be mailed to you as soon as
possible after the monthly reinvestment date or (ii) if you arrange for direct
deposit, your payment will be wired directly to your bank account within one day
after the payable 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 continue to meet the requirements of Subchapter M of the Internal
Revenue Code. We will try to distribute to shareholders all our net investment
income and net realized capital gains, so as to avoid the necessity of the Fund
paying federal income tax. Distributions derived from net long-term capital
gains which are designated by the Fund as "capital gains dividends" will be
taxable to shareholders as long-term capital gains, whether received in cash or
shares, regardless of how long a taxpayer has held the shares. Under current
law, net long-term capital gains are taxed at the rates applicable to ordinary
income, except that the maximum rate for long-term capital gains for individuals
is 28%. Legislation is pending in Congress as of the date of this Prospectus
which would have the effect of reducing the federal income tax rate on capital
gains.
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.
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 expedited procedures described above to redeem
shares directly, send your 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. We will
make payment of the net asset value of the shares on the date the redemption
order was received in proper form. Payment will be made within three business
days. The Fund may suspend the right to redeem shares for not more than three
days (or longer under unusual circumstances as permitted by Federal law). If you
have purchased Fund shares by check and subsequently submit a redemption
request, redemption proceeds will be paid upon clearance of your purchase check,
which may take
<PAGE>
up to 15 days. To avoid delays you may arrange for the bank upon which a check
was drawn to communicate to the Fund that the check has cleared. Shares also may
be redeemed by the Fund at net asset value through your securities dealer who,
as an unaffiliated dealer, may charge you a fee. If your dealer receives your
order prior to the close of the NYSE and communicates it to Lord Abbett, as our
agent, prior to the close of Lord Abbett's business day, you will receive the
net asset value of the shares being redeemed as of the close of the NYSE on that
day. If the dealer does not communicate such an order to Lord Abbett until the
next business day, you will receive the net asset value as of the close of the
NYSE on that next business day.
Shareholders who have redeemed their shares have a one-time right to reinvest
into another account having the identical registration in any of the Eligible
Funds, at the then applicable net asset value of the shares being purchased,
without the payment of a sales charge. Such reinvestment must be made within 60
days of the redemption and is limited to no more than the amount of the
redemption proceeds.
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.
Tax-qualified Plans: For redemptions of $50,000 or less, follow normal
redemption procedures. Redemptions over $50,000 must be received by the Fund
prior to, or concurrent with, the redemption request.
10 PERFORMANCE
Lord Abbett Investment Trust completed fiscal 1995 on October 31. The Limited
Duration Government Series closed the fiscal year with net assets of $8.9
million. The Series' distribution rate was 5.83% based on the net asset value of
$4.53 and the per-share monthly dividend of $.022, annualized. Total return for
the year was 8.16%.
The Balanced Series ended its abbreviated fiscal year on October 31, 1995 (the
Series commenced operations on December 27, 1994) with net assets of $5.7
million. The Series' distribution rate was 4.71% based on the October 31 net
asset value of $10.71 (this rate is based on the monthly dividend rate of $.042,
annualized). The Series posted a total return of 16.32% since inception.
The past twelve months have been marked by a return of investor confidence in
the U.S. equity and fixed-income markets, as the success of the Federal
Reserve's preemptive strike against an overheating economy and rising inflation
became increasingly visible. The first signs of the economic slowdown came in
the form of weaker auto sales, a significant slowdown in the housing market and
rising inventories in the manufacturing sector. The yield on 3-year and 5-year
U.S. Treasury notes fell approximately 2% during the first three quarters of the
year.
The Limited Duration Government Series was positioned "duration neutral" for
most of fiscal year 1995. The fixed-income portion of the Balanced Series was
adjusted several times during the fiscal year anticipating the direction of
interest rates. The equity portion of the Balanced Series was adjusted during
the fiscal year, by increasing our holdings in less cyclical, consumer
non-durable goods.
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 yields 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, Lippers Average Short and
Intermediate U.S. Government Funds and the Lehman Intermediate Government Index.
<PAGE>
<TABLE>
<CAPTION>
The Series The Series Lippers Average Lippers Average Lehman
at Net at Maximum Intermediate U.S. Short U.S. Intermediate
Date Asset Value Offering Price Government Funds Government Funds Gov't Index
<S> <C> <C> <C> <C> <C>
11/4/93 $10000 $9700 $10000 $10000 $10000
10/31/94 9691 9400 9575 9873 9799
10/31/95 10482 10168 10733 10659 11165
</TABLE>
Comparison of change in value of a $10,000 investment in Lord Abbett Investment
Trust --- Balanced Series and the Merrill Lynch Wilshire Capital Market Index.
<TABLE>
<CAPTION>
The Series The Series Merrill Lynch
at Net at Maximum Wilshire Capital
Date Asset Value Offering Price Markets Index
<S> <C> <C> <C>
12/27/94 $10000 $9525 $10000
10/31/95 11632 11080 12248
<FN>
(1) Source: Lipper Analytical Services.
(2) Performance numbers for the unmanaged Lehman Intermediate Government Index
and Merrill Lynch Wilshire Capital Market Index do not reflect transaction
costs or management fees. An investor cannot invest directly in these
Indices.
(3) Total return is the percent change in value, after deduction of the maximum
sales charge of 3.00% with respect to the Limited Duration Government
Series and 4.75% with respect to the Balanced Series, with all dividends
and distributions reinvested for the periods shown ending October 31, 1995
using the SEC-required uniform method to compute such return.
</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
The Bank of New York
48 Wall Street
New York, New York 10286
Transfer Agent and Dividend
Disbursing Agent
United Missouri Bank of Kansas City, N.A.
Tenth and Grand
Kansas City, Missouri 64141
Shareholder Servicing Agent
DST Systems, Inc.
P.O. Box 419100
Kansas City, Missouri 64141
800-821-5129
Auditors
Deloitte & Touche llp
Counsel Debevoise & Plimpton
<PAGE>
Lord Abbett
Investment
Trust
Seeking a high level of income primarily from limited duration U.S. Government
Securities
<PAGE>
LORD ABBETT
Statement of Additional Information 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 March 1, 1996.
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 each consisting
of one 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 7
5. Purchases, Redemptions and Shareholder Services 8
6. Performance 13
7. Taxes 13
8. Information About the Fund 14
9. Financial Statements 14
<PAGE>
<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,
2
<PAGE>
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 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
Each Series may lend portfolio securities to registered brokers-dealers. These
loans, if and when made, may not exceed 30% of the Series' total assets. The
Series' 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 each series
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, each Series 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. Each series will comply with the following
conditions whenever it loans securities: (i) the Series 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 Series must be able to terminate the loan at
any time; (iv) the Series must receive reasonable compensation with respect to
the loan, as well as any dividends, interest or other distributions on the
loaned securities; (v) the Series 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
3
<PAGE>
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.
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 ("settlement") to take place
in the future, in order to secure what is considered to be an advantageous price
or yield at the time of entering into the transaction. 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 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 fiscal year ended October 31, 1995, the portfolio turnover rate was
222.00% for the Limited Duration Government Series compared to 895.63% for the
previous year. For the period December 27, 1994 through October 31, 1995 the
portfolio turnover rate was 131.80% for 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
4
<PAGE>
(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.
2.
Trustees and Officers
The following trustees are partners of Lord Abbett, The General Motors Building,
767 Fifth Avenue, New York, New York 10153-0203. They have been associated with
Lord Abbett for over five years and are also officers and/or directors or
trustees of the fifteen other Lord Abbett-sponsored funds. They are "interested
persons" as defined in the Act, and as such, may be considered to have an
indirect financial interest in the Rule 12b-1 Plans described in the Prospectus.
Ronald P.Lynch, age 60, Chairman
Robert S. Dow, age 50, 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, Connecticut
President and Chief Executive Officer of Time Warner Cable Programming, Inc.
Formerly President and Chief Operating Officer of Home Box Office, Inc. Age 54.
Stewart S. Dixon
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon. Age 65.
John C. Jansing 162 S. Beach Road Hobe Sound, Florida Retired. Former Chairman
of Independent Election Corporation of America, a proxy tabulating firm. Age 70.
C. Alan MacDonald
The Marketing Partnership, Inc.
27 Signal Road
Stamford, Connecticut
General Partner, The Marketing Partnership, Inc., a full service marketing
consulting firm. Formerly Chairman and Chief Executive Officer of Lincoln Foods,
Inc., manufacturer of branded snack foods (1992-1994). Formerly President & CEO
of Nestl Foods Corp, and prior to that, President & CEO of Stouffer Foods
Corp., both subsidiaries of Nestl SA, Switzerland. Currently serves as Director
of Den West Restaurant Co., J. B. Williams, and Fountainhead Water Company. Age
62.
5
<PAGE>
<PAGE>
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 67.
Thomas J. Neff
Spencer Stuart & Associates
277 Park Avenue
New York, New York
President of Spencer Stuart & Associates, an executive search consulting firm.
Age 58.
The second column of the following table sets forth the compensation accrued for
the Fund's outside trustees. The third and fourth columns set forth information
with respect to the retirement plan for outside trustees maintained by the Lord
Abbett-sponsored funds. The fifth column sets forth the total compensation
payable by such funds to the outside trustees. No director of the Fund
associated with Lord Abbett and no officer of the Fund received any compensation
from the Fund for acting as a trustee or officer.
<TABLE>
<CAPTION>
For the Fiscal Year Ended October 31, 1995
(1) (2) (3) (4) (5)
Pension or Estimated Annual For Year Ended
Retirement Benefits Benefits Upon December 31, 1995
Accrued by the Retirement Proposed Total Compensation
Aggregate Fund and to be Paid by the Accrued by the Fund and
Compensation Fifteen Other Lord Fund and Fifteen Fifteen Other Lord
Accrued by Abbett-sponsored Other Lord Abbett- Abbett-sponsored
Name of Director the Fund1 Funds sponsored Funds2 Funds3
<S> <C> <C> <C> <C>
E. Thayer Bigelow $36 $ 9,772 $33,600 $41,700
Stewart S. Dixon $37 $22,472 $33,600 $42,000
John C. Jansing $38 $28,480 $33,600 $42,960
C. Alan MacDonald $38 $27,435 $33,600 $42,750
Hansel B. Millican, Jr. $38 $24,707 $33,600 $43,000
Thomas J. Neff $37 $16,126 $33,600 $42,000
<FN>
1. Outside trustees' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on net
assets of each fund. A portion of the fees payable by the Fund to its outside
trustees are being deferred under a plan that deems the deferred amounts to be
invested in shares of the Fund for later distribution to the trustees. The total
amount accrued under the plan for each outside trustee since the beginning of
his tenure with the Trust, including dividends reinvested and changes in net
asset value applicable to such deemed investments as of October 31, 1995, were
as follows: Mr. Bigelow, $38; Mr. Dixon, $35; Mr. Jansing, $51; Mr. MacDonald,
$33; Mr. Millican, $51 and Mr. Neff, $49.
2. Each Lord Abbett-sponsored fund has a retirement plan providing that outside
trustees will receive annual retirement benefits for life equal to 80% of their
final annual retainers following retirement at or after age 72 with at least 10
years of service. Each plan also provides for a reduced benefit upon early
6
<PAGE>
retirement under certain circumstances, a pre-retirement death benefit and
actuarial ly reduced joint-and-survivor spousal benefits. The amounts stated
would be payable annually under such retirement plans if the trustee were to
retire at age 72 and the annual retainers payable by such funds were the same as
they are today. The amounts accrued in column 3 were accrued by the Lord
Abbett-sponsored funds during the fiscal year ended October 31, 1995 with
respect to the retirement benefits in column 4.
3. This column shows aggregate compensation, including trustee's fees and
attendance fees for board and committee meetings, of a nature referred to in
footnote one, accrued by the Lord Abbett-sponsored funds during the year ended
December 31, 1995.
</FN>
</TABLE>
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Allen, Carper, Cutler, Dow, Henderson, Morris, Nordberg and Walsh are partners
of Lord Abbett; the others are employees: Kenneth B. Cutler, age 63, Vice
President and Secretary; Stephen I. Allen, age 42; Daniel E. Carper, age 44;
Robert S. Dow, age 50; Thomas S. Henderson, age 64; Robert G. Morris, age 51, E.
Wayne Nordberg, age 59; John J. Gargana, Jr., age 64; Paul A. Hilstad, age 53
(with Lord Abbett since 1995 - formerly Senior Vice President and General
Counsel of American Capital Management & Research, Inc.); Thomas F. Konop, age
53; Victor W. Pizzolato, age 63; John J. Walsh, age 58, Vice Presidents; and
Keith F. O'Connor, age 40, Treasurer.
The Fund does not hold annual meetings of shareholders unless one or more
matters are required to be acted on by shareholders under the Act. Under the
Fund's Declaration of Trust, shareholder meetings may be called at any time by
certain officers of the Fund or by a majority of the trustees (i) for the
purpose of taking action upon any matter requiring the vote or authority of the
Fund's shareholders or upon other matters deemed to be necessary or desirable or
(ii) upon the written request of the holders of at least one-quarter of the
shares of the Series outstanding and entitled to vote at the meeting.
As of February 1, 1996, our officers and trustees as a group owned less than 1%
of the outstanding shares of the Limited Duration Government Series and 1% of
the outstanding shares of the Balanced Series.
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 nine 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, Robert G. Morris, E. Wayne Nordberg and John J. Walsh. The
address of each partner is The General Motors Building, 767 Fifth Avenue, New
York, New York 10153-0203.
The services performed by Lord Abbett are described under "Our Management" in
the Prospectus. Under 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 and the fiscal
year ended October 31, 1995, the management fees paid to Lord Abbett by the
Limited Duration Government Series amounted to $46,153 and $15,561,
respectively. For the fiscal year ended October 31, 1995, Lord Abbett waived
$26,752 in management fees for the Limited Duration Government Series. With
respect to the Balanced Series, for the period December 27, 1994 (commencement
of operations) to October 31, 1995 Lord Abbett waived $23,330 in management
fees.
7
<PAGE>
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 public accountants of the Fund and must be approved at least
annually by our trustees to continue in such capacity. Deloitte & Touche LLP
perform audit services for the Fund including the examination of financial
statements included in our annual report to shareholders.
Bank of New York , 40 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
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.
Broker-dealers are selected on the basis of their professional capability and
the value and quality of their brokerage and research services.Normally, the
selection is made by traders who are officers of the Fund and also are employees
of Lord Abbett.These traders do the trading as well for other accounts --
investment companies (of which they are also officers) and other investment
clients -- managed by Lord Abbett.They are responsible for the negotiation of
prices and any commissions.
We may pay a brokerage commission on the purchase or sale of a security that
could be purchased from or sold to a market maker if our net cost of the
purchase or the net proceeds to us of the sale are at least as favorable as we
could obtain on a direct purchase or sale. Brokers who receive such commissions
may also provide research services at least some of which are useful to Lord
Abbett in their overall responsibilities with respect to us and the other
accounts they manage. Research includes trading equipment and computer software
packages, acquired from third-party suppliers, that enable Lord Abbett to access
various information bases and may include the furnishing of analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts. Such services may be used by
Lord Abbett in servicing all their accounts, and not all of such services will
necessarily be used by Lord Abbett in connection with their management of the
Fund; conversely, such services furnished in connection with brokerage on other
accounts managed by Lord Abbett may be used in connection with their management
of the Fund, and not all of such services will necessarily be used by Lord
Abbett in connection with their advisory services to such other accounts. We
have been advised by Lord Abbett that research
8
<PAGE>
services received from brokers cannot be allocated to any particular account,
are not a substitute for Lord Abbett's services but are supplemental to their
own research effort and, when utilized, are subject to internal analysis before
being incorporated by Lord Abbett into their investment process. As a practical
matter, it would not be possible for Lord Abbett to generate all of the
information presently provided by brokers. While receipt of research services
from brokerage firms has not reduced Lord Abbett's normal research activities,
the expenses of Lord Abbett could be materially increased if it attempted to
generate such additional information through its own staff and purchased such
equipment and software packages directly from the suppliers.
No commitments are made regarding the allocation of brokerage business to or
among brokers, and trades are executed only when they are dictated by investment
decisions of the Fund to purchase or sell portfolio securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold our shares and/or
shares of other Lord Abbett-sponsored funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as we do, transactions will, to the extent practicable, be allocated among all
participating accounts in proportion to the amount of each order and will be
executed daily until filled so that each account shares the average price and
commission cost of each day. Other clients who direct that their brokerage
business be placed with specific brokers or who invest through wrap accounts
introduced to Lord Abbett by certain brokers may not participate with us in the
buying and selling of the same securities as described above. If these clients
wish to buy or sell the same security as we do, they may have their transactions
executed at times different from our transactions and thus may not receive the
same price or incur the same commission cost as we do.
We will not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from dealers as
consideration for the direction to them of portfolio business.
During the period from November 4, 1993 to October 31, 1994 and for the fiscal
year ended October 31,1995 the Limited Duration Government Series paid no
commissions to independent brokers. For the period December 27, 1994 to October
31, 1995 the Balanced Series paid total commissions to independent brokers of
$4,566.
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 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.
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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 Government Series; and Balanced Series
shares on October 31, 1995 was computed as follows:
Limited Duration
Government Balanced
Series Series
Net asset value per share (net assets divided
by shares outstanding)..............................$4.53 $10.71
Maximum offering price per share - net asset
value divided by (.9700 for Limited Duration
Government Series) and (.9525 for Balanced Series)..$4.67 $11.24
The Fund has entered into a distribution agreement with Lord Abbett under which
Lord Abbett is obligated to use its best efforts to find purchasers for the
shares of the Fund, and to make reasonable efforts to sell Fund shares so long
as, in Lord Abbett's judgment, a substantial distribution can be obtained by
reasonable efforts.
Since commencement of operations, Lord Abbett as our principal underwriter
received net commissions after allowance of a portion of the sales charge to
independent dealers as follows:
November 4, 1993
to Year Ended
October 31, 1994 October 31, 1995
Gross sales charge $102,403 $205,002
Amount allowed
to dealers $ 87,791 $192,792
Net Commissions received
by Lord Abbett $ 14,612 $ 12,210
As described in the Prospectus, each Series has adopted a Distribution Plan and
Agreement ("Plan") pursuant to Rule 12b-1 of the Act. 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.
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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 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, a 1% contingent deferred reimbursement charge ("CDRC") is
imposed with respect to those shares (or shares of another Lord Abbett-sponsored
fund or series acquired through exchange of such shares) on which a Series has
paid the one-time 1% 12b-1 sales distribution fee if such shares are redeemed
out of the Lord Abbett-sponsored family of funds within a period of 24 months
from the end of the month in which the original sale occurred.
No CDRC is payable on redemptions by tax qualified plans under section 401 of
the Internal Revenue Code for benefit payments due to plan loans, hardship
withdrawals, death, retirement or separation from service with respect to plan
participants. The CDRC is received by a Series and is intended to reimburse all
or a portion of the amount paid by a Series if the shares are redeemed before a
Series has had an opportunity to realize the anticipated benefits of having a
large, long-term shareholder account in a 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.
The other Lord Abbett-sponsored funds and series which participate in the
Telephone Exchange Privilege (except Lord Abbett U.S. Government Securities
Money Market Fund, Inc. ("GSMMF") and certain series of the Fund and Lord Abbett
Tax-Free Income Trust for which a Rule12b-1 Plan is not yet in effect
(collectively, the "Series")) have instituted a CDRC on the same terms and
conditions. No CDRC will be charged on an exchange of shares between Lord Abbett
funds. Upon redemption of shares out of the Lord Abbett family of funds, the
CDRC will be charged on behalf of and paid to the fund in which the original
purchase (subject to a CDRC) occurred. Thus, if shares of a Lord Abbett fund are
exchanged for shares of another such fund and the shares tendered ("Exchanged
Shares") are subject to a CDRC, the CDRC will carry over to the shares being
acquired, including GSMMF ("Acquired Shares"). Any CDRC that is carried over to
Acquired Shares is calculated as if the holder of the Acquired Shares had held
those shares from the date on which he or she became the holder of the Exchanged
Shares. Although GSMMF and the Series will not pay a 1% sales distribution fee
on $1 million purchases of their own shares, and will therefore not impose their
own CDRC, GSMMF will collect the CDRC on behalf of other Lord Abbett funds.
Acquired shares held in GSMMF which are subject to a CDRC will be credited with
the time such shares are held in that fund.
In no event will the amount of the CDRC exceed 1% of the lesser of (i) the net
asset value of the shares redeemed or (ii) the original cost of such shares (or
of the Exchanged Shares for which such shares were acquired). No CDRC will be
imposed when the investor redeems (i) amounts derived from increases in the
value of the account above the total cost of shares being redeemed due to
increases in net asset value, (ii) shares with respect to which no Lord Abbett
fund paid a 1% sales distribution fee on issuance (including shares acquired
through reinvestment of dividend income and capital gains distributions) or
(iii) shares which, together with Exchanged Shares, have been held continuously
for 24 months from the end of the month in which the original sale occurred. In
determining whether a CDRC is payable, (a) shares not subject to the CDRC will
be redeemed before shares subject to the CDRC and (b) of shares subject to a
CDRC, those held the longest will be the first to be redeemed.
Under the terms of the Statement of Intention to invest $100,000 or more over a
13-month period as described in the Prospectus, shares of Lord Abbett-sponsored
funds (other than shares of Lord Abbett Equity Fund ("LAEF"), Lord Abbett Series
Fund ("LASF"), Lord Abbett Research Fund if not offered to the general public
("LARF"), and GSMMF, unless holdings in GSMMF are attributable to shares
exchanged from a Lord Abbett-sponsored fund offered
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with a sales charge or from a fund in the Lord Abbett Counsel Group) currently
owned by you are credited as purchases (at their current offering prices on the
date the Statement is signed) toward achieving the stated investment.Shares
valued at 5% of the amount of intended purchases are escrowed and may be
redeemed to cover the additional sales charge payable if the Statement is not
completed.The Statement of Intention is neither a binding obligation on you to
buy, nor on the Fund to sell, the full amount indicated.
As stated in the Prospectus, purchasers (as defined in the Prospectus) may
accumulate their investment in Lord Abbett-sponsored funds (other than LAEF,
LARF, LASF, and GSMMF, unless holdings in GSMMF are attributable to shares
exchanged from a Lord Abbett-sponsored fund offered with a front-end sales
charge or from Lord Abbett Counsel Group) so that a current investment, plus the
purchaser's holdings valued at the current maximum offering price, reach a level
eligible for a discounted sales charge.
As stated in the Prospectus, our shares may be purchased at net asset value by
our trustees, employees of Lord Abbett, employees of our shareholder servicing
agent and employees of any securities dealer having a sales agreement with Lord
Abbett who consents to such purchases or by the trustee or custodian under any
pension or profit-sharing plan or Payroll Deduction IRA established for the
benefit of such persons or for the benefit of employees of any national
securities trade organization to which Lord Abbett belongs or any company with
an account(s) in excess of $10 million managed by Lord Abbett on a
private-advisory-account basis. For purposes of this paragraph, the terms
"trustees" and "employees" include a trustee's or employee's spouse (including
the surviving spouse of a deceased director or employee). The terms " directors"
and "employees of Lord Abbett" also include other family members and retired
trustees and employees.
Our shares also may be purchased at net asset value (a) at $1 million or more,
(b) with dividends and distributions from other Lord Abbett-sponsored funds,
except for LARF, LAEF, LASF and Lord Abbett Counsel Group, (c) under the loan
feature of the Lord Abbett-sponsored prototype 403(b) plan for share purchases
representing the repayment of principal and interest, (d) by certain authorized
brokers, dealers, registered investment advisers or other financial institutions
who have entered into an agreement with Lord Abbett in accordance with certain
standards approved by Lord Abbett, providing specifically for the use of our
shares in particular investment products made available for a fee to clients of
such brokers, dealers, registered investment advisers and other financial
institutions, and (e) by employees, partners and owners of unaffiliated
consultants and advisors to Lord Abbett or Lord Abbett-sponsored funds who
consent to such purchase if such persons provide service to Lord Abbett or such
funds on a continuing basis and are familiar with such funds. Shares are offered
at net asset value to these investors for the purpose of promoting goodwill with
employees and others with whom Lord Abbett and/or the Fund has business
relationships.
Our shares also may be purchased at net asset value, subject to appropriate
documentation, through a securities dealer where the amount invested represents
redemption proceeds from shares ("Redeemed Shares") of a registered open-end
management investment company not distributed or managed by Lord Abbett (other
than a money market fund), if such redemption has occurred no more than 60 days
prior to the purchase of our shares, the Redeemed Shares were held for at least
six months prior to redemption and the proceeds of redemption were maintained in
cash or a money market fund prior to purchase. Purchasers should consider the
impact, if any, of contingent deferred sales charges in determining whether to
redeem shares for subsequent investment in our shares. Lord Abbett may suspend,
change or terminate this purchase option at any time.
Our shares may be issued at net asset value in exchange for the assets, subject
to possible tax adjustment, of a personal holding company or an investment
company. There are economies of selling efforts and sales-related expenses with
respect to offers to these investors and those referred to above.
The Prospectus briefly describes the Telephone Exchange Privilege.You may
exchange some or all of your shares for those of Lord Abbett-sponsored funds
currently offered to the public with a sales charge and GSMMF, to the extent
offers and sales may be made in your state. You should read the prospectus of
the other fund before exchanging.In establishing a new account by exchange,
shares of the Fund being exchanged must have a value equal to at least the
minimum initial investment required for the fund into which the exchange is
made.
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Shareholders in other Lord Abbett-sponsored funds have the same right to
exchange their shares for the Fund's shares. Exchanges are based on relative net
asset values on the day instructions are received by the Fund in Kansas City if
the instructions are received prior to the close of the NYSE in proper form. No
sales charges are imposed except in the case of exchanges out of GSMMF (unless a
sales charge was paid on the initial investment). Exercise of the exchange
privilege will be treated as a sale for federal income tax purposes, and,
depending on the circumstances, a gain or loss may be recognized. In the case of
an exchange of shares that have been held for 90 days or less where no sales
charge is payable on the exchange, the original sales charge incurred with
respect to the exchanged shares will be taken into account in determining gain
or loss on the exchange only to the extent such charge exceeds the sales charge
that would have been payable on the acquired shares had they been acquired for
cash rather than by exchange. The portion of the original sales charge not so
taken into account will increase the basis of the acquired shares.
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as a means for taking advantage of
short-term swings in the market, and we reserve the right to terminate or limit
the privilege of any shareholder who makes frequent exchanges. We can revoke or
modify the privilege for all shareholders upon 60 days' prior notice. "Eligible
Funds" are other Lord Abbett-sponsored funds which are eligible for the exchange
privilege, except LASF which offers its shares only in connection with certain
variable annuity contracts, LAEF which is not issuing shares, LARF and Lord
Abbett Counsel Group.
A redemption order is in proper form when it contains all of the information and
documentation required by the order form or supplementally by Lord Abbett or the
Fund to carry out the order. The signature(s) and any legal capacity of the
signer(s) must be guaranteed by an eligible guarantor. See the Prospectus for
expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Trustees may authorize redemption of all of the shares in any
account in which there are fewer than 25 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 30 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 must
complete the application form, selecting the time and amount of your bank
checking account withdrawals and the funds for investment, include a voided,
unsigned check and complete the bank authorization.
The Systematic Withdrawal Plan (the "SWP") also is described in the Prospectus.
You may establish a SWP if you own or purchase uncertificated shares having a
current offering price value of at least $10,000.Lord Abbett prototype
retirement plans have no such minimum. The SWP involves the planned redemption
of shares on a periodic basis by receiving either fixed or variable amounts at
periodic intervals.Since the value of shares redeemed may be more or less than
their cost, gain or loss may be recognized for income tax purposes on each
periodic payment.Normally, you may not make regular investments at the same
time you are receiving systematic withdrawal payments because it is not in your
interest to pay a sales charge on new investments when in effect a portion of
that new investment is soon withdrawn. The minimum investment accepted while a
withdrawal plan is in effect is $1,000.The SWP may be terminated by you or by
us at any time by written notice.
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The Prospectus indicates the types of retirement plans for which Lord Abbett
provides forms and explanations.Lord Abbett makes available the retirement plan
forms and custodial agreements for IRAs (Individual Retirement Accounts
including Simplified Employee Pensions), 403(b) plans and qualified pension and
profit-sharing plans, including 401(k) plans.The forms name Investors Fiduciary
Trust Company as custodian and contain specific information about the plans.
Explanations of the eligibility requirements, annual custodial fees and
allowable tax advantages and penalties are set forth in the relevant plan
documents. Adoption of any of these plans should be on the advice of your legal
counsel or qualified tax adviser.
6.
Performance
Using the method to compute average annual compounded total return described
below, the total annual return for the Limited Duration Government Series for
the period from November 4, 1993 (commencement of operations) to October 31,
1994 and the year ended October 31, 1995 were .85% and 4.90% respectively. For
the period December 27, 1994 (commencement of operations) to October 31, 1995
the total annual return for the Balanced Series was 10.80%. The redeemable value
of shares of the Limited Duration Government Series and the Balanced Series at
October 31, 1995 were $1,017 and $1,108, respectively.
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, 1995, the Limited
Duration Government Series and Balanced Series yields were 2.26% and 2.79%,
respectively.
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
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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 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
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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, 1995 and the report of Deloitte & Touche LLP, independent public
accountants, on such annual financial statements contained in the 1995 Annual
Report to Shareholders of 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 Part A - Financial Highlights for
the period November 24, 1993 (commencement of
operations - Limited Duration Government Series) to
October 31, 1994 and the year ended October 31, 1995;
the period December 27, 1994 (commencement of
operations - Balanced Series) to October 31, 1995.
Part B - Statement of Net Assets at October 31, 1995.
Statement of Operations for the year ended October 31, 1995.
(b)Exhibits -
(11) Consent of Deloitte & Touche.*
(16) Total Return and Yield Computation.*
* Filed herewith.
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
(as of February 16, 1996)
Aggregate - 595
Limited Duration Government - 229
Balanced - 366
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
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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
2
<PAGE>
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 5,100 private accounts.
Other than acting as Trustees (directors) and/or officers of
open-end investment companies managed by Lord, Abbett & Co., none
of Lord, Abbett & Co.'s partners has, in the past two fiscal
years, engaged in any other business, profession, vocation or
employment of a substantial nature for his own account or in the
capacity of director, officer, employee, partner or trustee of
any entity except as follows:
John J. Walsh
Trustee
Brooklyn Hospital
Parkside Avenue
Brooklyn, N.Y.
Item 29. Principal Underwriter
(a) Lord Abbett Affiliated Fund, Inc.
Lord Abbett U. S. Government Securities Fund, Inc.
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.
3
<PAGE>
Lord Abbett California Tax-Free Income Fund, Inc.
Lord Abbett Fundamental Value Fund, Inc.
Lord Abbett Government Securities Money Market Fund, Inc.
Lord Abbett Tax-Free Income Trust
Lord Abbett Global Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Series Fund, Inc.
Lord Abbett Research Fund, Inc.
Lord Abbett Investment Trust
Investment Adviser
American Skandia Trust (Lord Abbett Growth and Income
Portfolio)
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
Business Address (1) with Registrant
Ronald P. Lynch Chairman and Trustee
Kenneth B. Cutler Vice President & Secretary
Stephen I. Allen Vice President
Daniel E. Carper Vice President
Robert S. Dow 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
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.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant 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
28th day of February 1996.
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 Trustee February 28, 1996
/s/ John J. Gargana, Jr. Vice President & February 28, 1996
Chief Financial Officer
/S/ E. Thayer Bigelow Trustee February 28, 1996
/s/ Stewart S. Dixon Trustee February 28, 1996
/s/ Robert S. Dow Trustee & President February 28, 1996
/s/ John C. Jansing Trustee February 28, 1996
/s/ C. Alan MacDonald Trustee February 28, 1996
/s/ Hansel B. Millican, Jr. Trustee February 28, 1996
/S/ Thomas J. Neff Trustee February 28, 1996
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
EX-99.B11 CONSENT OF DELOITTE & TOUCH
EX-99.B16 COMPUTATION OF PERFORMANCE & YIELD
EX-27 FINANCIAL DATA SCHEDULE
CONSENT OF INDEPENDENT AUDITORS
Lord Abbett Investment Trust:
We consent to the incorporation by reference in Post-Effective Amendment No. 8
to Registration Statement No. 33-68090 of our report dated December 8,1995
appearing in the annual report to shareholders and to the reference to us under
the captions "Financial Highlights" in the Prospectus and "Investment Advisory
and Other Services" and "Financial Statements" in the Statement of Additional
Information, both of which are part of such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
February 29, 1996
Exhibit 16
Lord Abbett Investment Trust Limited Duration
Post Effective Amendment No. 8 on form N-1A
Results of a $1,000 investment reflecting the maximum sales charge and the
reinvestment of all distributions.
Period ending October 31, 1995
P = (1 + T)N = ERV,
1 Year Life of Fund*
$1,049 $1,017
P = 1,000 P = 1,000
N = 1 N = 1.992
ERV = 1,049 ERV = 1,017
T = Average annual total return
1,000 (1 + T)1 - 1,049 1,000 (1 + T)1.992 = 1,017
(1 + T)1 = 1,049 (1 + T)1.992 = 1,017
1 + T = (1,049)1 (1 + T) = 1,017.502
--------- ----------
(1,000) (1,000)
T = (1,049)1 -1 T = 1,017 .502 -1
-------- -------
(1,000) (1,000)
T = 4.90% T = .85%
* The Trust's Limited Duration Series commenced operations on 10/29/93.
<PAGE>
EXHIBIT 16
Calculation of yield appearing in the Statement of Additional Information for
Lord Abbett Investment Trust Limited Duration U. S. Government, Post Effective
Amendment No. 8
YIELD FORMULA
For the 30 Days
Ended October 31, 1995
YIELD = 2[(a-b + 1)6 -1] = 2.26%
cd
Where:
a = Fund dividends and interest earned during the period in the amount of
$33,856.
b = Fund expenses accrued for the period (net of reimbursements) in the
amount of $17,188.
c = the average daily number of Fund shares outstanding during the period
that were entitled to receive dividends were 1,906,215.
d = the maximum offering price per Fund share on the last day of the period
was $4.67.
1 - .36 (Tax rate used) - .64
5.99% divided by .64 = 9.36% Tax Equivalent Yield
<PAGE>
EXHIBIT 16
Calculation of yield appearing in the Statement of additional Information for
Lord Abbett Investment Trust (Balanced Fund), Post Effect Amendment No. 8 of
Form N-1A.
YIELD FORMULA
For the 30 Days
Ended October 31, 1995
YIELD = 2[(a-b + 1)6 -1] = 2.79%
cd
Where:
a = Fund dividends and interest earned during the period in the amount of
$15,770.
b = Fund expenses accrued for the period (net of reimbursements) in the
amount of $2,518.
c = the average daily number of Fund shares outstanding during the period
that were entitled to receive dividends were 509,218.
d = the maximum offering price per Fund share on the last day of the period
was $11.24.
1 - .36 (Tax rate used) - .64
5.99% divided by .64 = 9.36% Tax Equivalent Yield
<PAGE>
EXHIBIT 16
Lord Abbett Investment Trust Balanced
Post Effective Amendment No. 8 on form N-IA
Results of a $1,000 investment reflecting the maximum sales charge and the
reinvestment of all distributions:
Period Ending October 31, 1995
P = (1 + T}N = ERV
Life of Fund *
1,108
P = 1,000
N = Less than one year
ERV = 1,108
T - Average annual total return
1,000 (1 + T) = 1,108
(1 + T) = 1,108
1 + T = 1,108
(1,000)
T = 1,108 -1
(1,000)
T = 10.80%
* The Trust's Balanced Series commenced operations on 12/27/94.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 144943
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<PER-SHARE-NAV-BEGIN> 4.44
<PER-SHARE-NII> .231
<PER-SHARE-GAIN-APPREC> .102
<PER-SHARE-DIVIDEND> .243
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<INVESTMENTS-AT-VALUE> 5361884
<RECEIVABLES> 159278
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<NUMBER-OF-SHARES-SOLD> 539264
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<SHARES-REINVESTED> 10681
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