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. 7
[X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
[X]
OF 1940
Amendment No. 7
[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
on April 1, 1995 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
X on March 20, 1996 pursuant to paragraph (a) (3) 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, 1995.
<PAGE>
EXPLANATORY NOTE
This Post-Effective Amendment No. 7 (the "Amendment") to the Registrant's
Registration Statement relates to the U.S. Government Securities Series of the
Registrant.
The other series of shares of the Registrant are listed below and are
offered by the Prospectus in Part A of the Post-Effective Amendment to the
Registrants' Registration Statement as identified. The following is a separate
series of shares of the Registrant. This Amendment does not relate to, amend or
otherwise affect the Prospectus contained in the prior Post-Effective Amendment,
and pursuant to Rule 485(d) under the Securities Act of 1933, does not affect
the effectiveness of such Post-Effective Amendment.
Limited Duration U.S. Post-Effective
Government Securities Series Amendment No. 5
Balanced Series
LORD ABBETT INVESTMENT TRUST
FORM N-1A
Cross Reference Sheet
Post-Effective Amendment No. 7
Pursuant to Rule 481(a)
Form N-1A Location In Prospectus or
Item No. Statement of Additional Information
1 Cover Page
2 Fee Table
3 N/A
4 (a) (i) Cover Page
4 (a) (ii) Investment Objective; How We Invest
4 (b) (c) How We Invest
5 (a) (b) (c) Our Management; Back Cover Page
5 (d) N/A
5 (e) Back Cover Page
5 (f) Our Management
5 (g) N/A
5 A N/A
6 (a) Cover Page
6 (b) (c) (d) N/A
6 (e) Cover Page
6 (f) (g) Dividends, Capital Gains
Distributions and Taxes
6 (h) N/A
7 (a) Back Cover Page
7 (b) (c) (d)
(f) Purchases
7 (e) N/A
8 Redemptions and Repurchases
9 N/A
10 Cover Page
11 Cover Page - Table of Contents
<PAGE>
Form N-1A Location In Prospectus or
Item No. Statement of Additional Information
- ---------- ------------------------------------
12 N/A
13 (a) (b) (c) Investment Objective and Policies
13 (d) N/A
14 Trustees and Officers
15 (a) (c) N/A
15 (b) 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
19 (a) (b) Purchases, Redemptions
and Shareholder Services
19 (c) N/A
20 Taxes
21 (a) Purchases, Redemptions
and Shareholder Services
21 (b) (c) N/A
22 (a) N/A
22 (b) Past Performance
23 Financial Statements
<PAGE>
LORD ABBETT
TAX-FREE INCOME FUND, INC.
THE GENERAL MOTORS BUILDING
767 FIFTH AVENUE
NEW YORK, NY 10153-0203
800-426-1130
OUR FUND, LORD ABBETT TAX-FREE INCOME FUND, INC., IS AN OPEN-END MANAGEMENT
INVESTMENT COMPANY CURRENTLY CONSISTING OF TEN SEPARATE SERIES. ONLY SHARES OF
THE CALIFORNIA SERIES (A NEW SERIES EFFECTIVE IMMEDIATELY AND REFERRED TO HEREIN
AS "WE" OR THE "SERIES") ARE BEING OFFERED IN THIS PROSPECTUS. UNDER THE
INVESTMENT COMPANY ACT OF 1940 (THE "ACT"), THE SERIES IS NON-DIVERSIFIED.
HOWEVER, THE SERIES INTENDS TO MEET THE DIVERSIFICATION RULES UNDER SUBCHAPTER M
OF THE INTERNAL REVENUE CODE. THIS PROSPECTUS PERTAINS TO THE SERIES AND SHOULD
BE USED IN CONNECTION WITH THE MEETINGS OF SHAREHOLDERS OF LORD ABBETT
CALIFORNIA TAX-FREE INCOME, FUND, INC. ("LACTFIF") AND LORD ABBETT CALIFORNIA
TAX-FREE INCOME TRUST ("LACTFIT"), A SERIES OF LORD ABBETT SECURITIES TRUST, TO
BE HELD JUNE 19, 1996 TO CONSIDER APPROVAL OF PROPOSED SALES BY LACTFIF AND
LACTFIT OF ALL THEIR ASSETS TO THE SERIES IN EXCHANGE FOR, RESPECTIVELY, CLASS A
SHARES AND CLASS C SHARES OF THE SERIES AND THE ASSUMPTION BY THE SERIES OF ALL
THEIR LIABILITIES. THIS PROSPECTUS SHOULD BE USED IN CONJUNCTION WITH THE PROXY
STATEMENT AND PROSPECTUS OF THE SERIES TO BE ISSUED IN CONNECTION WITH SUCH
MEETINGS.
THE SERIES SEEKS AS HIGH A LEVEL OF INTEREST INCOME EXEMPT FROM BOTH FEDERAL
INCOME TAX AND CALIFORNIA PERSONAL INCOME TAX AS IS CONSISTENT WITH REASONABLE
RISK. THE SERIES INVESTS IN INTERMEDIATE AND LONG-TERM MUNICIPAL BONDS WHICH CAN
FLUCTUATE IN VALUE AS INTEREST RATES CHANGE. THE SERIES ALSO SEEKS AS HIGH A
LEVEL OF INTEREST INCOME EXEMPT FROM CALIFORNIA PERSONAL INCOME TAX. THERE CAN
BE NO ASSURANCE THAT THE SERIES WILL ATTAIN ITS OBJECTIVE.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE FUND AND THE
SERIES THAT A PROSPECTIVE INVESTOR (SHAREHOLDERS OF LACTFIF AND LACTFIT) SHOULD
KNOW BEFORE INVESTING. ADDITIONAL INFORMATION ABOUT THE FUND AND THE 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 TO THE FUND OR BY CALLING 800-874-3733 ASK FOR "PART B OF THE PROSPECTUS
THE STATEMENT OF ADDITIONAL INFORMATION."
THE DATE OF THIS PROSPECTUS, AND THE DATE OF
THE STATEMENT OF ADDITIONAL INFORMATION, IS
MARCH 20, 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 ALSO CAN MAKE
INQUIRIES THROUGH YOUR BROKER-DEALER.
SHARES OF THE SERIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
AN INVESTMENT IN THE SERIES INVOLVES RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
CONTENTS PAGE
1 Investment Objective 2
2 Fee Table 2
3 How We Invest 2
4 Purchases 6
5 Shareholder Services 8
6 Our Management 9
7 Dividends, Capital Gains
Distributions and Taxes 10
8 Redemptions 11
9 Performance 11
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.
The Series is only offered to residents of Arizona, California, Colorado,
District of Columbia, Hawaii, Nevada and New Jersey.
<PAGE>
1 INVESTMENT OBJECTIVE
Our investment objective is to seek as high a level of interest income exempt
from both federal income tax and California personal income tax as is consistent
with reasonable risk. The Series invests in intermediate and long-term municipal
bonds and its shares can fluctuate in value as interest rates change. Under
normal circumstances, we intend to maintain the average dollar-weighted stated
maturity of municipal bonds held by the Series at between ten and thirty-five
years.
A summary of the Series estimated expenses is set forth in the table below. The
example should not be considered a representation of past or future expenses.
Actual expenses may be greater or less than those shown.
<TABLE>
<CAPTION>
<S> <C> <C>
Shareholder Transaction Expenses Class A(6) Class C
(as a percentage of offering price) Shares Shares
Maximum Sales Load(1) on Purchases
(See Purchases) 4.75% None(2)
Deferred Sales Load(1) (See Purchases) None(3) 1.00%(4)
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee (See Our Management) 0.50%(5) 0.00%(6)
12b-1 Fees (See Purchases) 0.26%(5) 0.93%(6)
Other Expenses (See Our Management) 0.10%(5) 0.00%(6)
Total Operating Expenses 0.80%(5) 0.93%(6)
<FN>
Example: Assume an annual return of 5% and there is no change in the level of
expenses described above. For every $1,000 invested, with reinvestment of
all distributions, you would pay the following total expenses if you closed
your account after the number of years indicated.
1 year 3 years 5 Years 10 Years
Class A Shares(6) $55 $72 $90 $142
Class C Shares(6) $9 $30 $51 $114
(1) Sales "load" is referred to as sales "charge" and "deferred sales load" is
referred to as "contingent deferred reimbursement charge" throughout this
Prospectus.
(2) Although the Series will not with respect to the Class C shares charge a
front-end sales charge, investors should be aware that long-term
shareholders may pay, under the Class C 12b-1 plan, more than the economic
equivalent of the maximum front-end sales charge as as permitted be certain
rules of National Association of Securities Dealers, Inc.
(3) Class A share purchases of $1 million or more on which a distribution fee
has been paid will be subject to a contingent deferred reimbursement charge
of up to 1% if the redemption occurs more than 24 months after the month of
purchase, subject subject to certain exceptions described herein. See 12b-1
Plans under Purchases.
(4) Class C shares purchases will be subject to a 1% contingent deferred
reimbursement charge if the redemption occurs before the first anniversary
of the share purchase. See 12b-1 Plans under Purchases.
(5) The expenses of the Class A shares are estimated. The Class A 12b-1 plan
provides for annual service fee payments equal to 0.25% of the assets of
the Fund attributable to the Class A shares and, if approved by the Board
of Trustees, distribution fee payments not to exceed in any year 0.25% of
the average value of the net assets of the Fund attributable to the Class A
shares. The estimated 12b-1 fees for the Class A shares are based on the
distribution fee payments authorized by the board. See 12b-1 Plans under
Purchases.
(6) The expenses of the Class C shares are estimated.
(7) Based on total estimated operating expenses shown in the tables above.
The foregoing is provided to give investors a better understanding of the
expenses that are incurred by an investment In the Series.
3 HOW WE INVEST
We invest primarily in a diversified portfolio of intermediate-term (5-10 years)
to long-term (over 10 years) municipal bonds, the interest on which is exempt
from both federal income tax and California personal income tax in the opinion
of bond counsel to the issuer. 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. Accordingly, the value of our shares will change as the
general levels of interest rates fluctuate. When interest rates decline, values
of securities in the portfolio as well as share values generally will rise.
Conversely, when interest rates rise, values of securities in the portfolio as
well as share values decline.
"Municipal bonds" as used herein, and as more fully described in the
Statement of Additional Information, are debt obligations issued by or on behalf
of states, territories and possessions of the United States, including the
District of Columbia, Puerto Rico, the Virgin Islands and Guam, and their
political subdivisions, agencies and instrumentalities.
The Series invests primarily in investment-grade municipal bonds rated
("rated bonds") at the time of purchase within the four highest grades assigned
by Moody's Investors Service, Inc. ("Moody's" Aaa, Aa, A, Baa), Standard &
Poor's Corporation ("S&P" AAA, AA, A, BBB) or Fitch Investors Service ("Fitch"
- ---- AAA, AA, A, BBB). The Series also may invest in unrated municipal bonds,
exempt from federal income tax and California personal income tax, determined by
Lord Abbett to be of comparable quality to the rated bonds in which such Series
may invest. At least 70% of the municipal bonds in the portfolio must be rated
within, or, if unrated, equivalent to, at the time of purchase, the three
highest such grades. As much as 30% of the municipal bonds in the Series'
portfolio may be rated within, or, if unrated, equivalent to, at the time of
purchase, the fourth highest grade. This grade, while regarded as having an
adequate capacity to
pay interest and repay principal, is considered to be of medium grade and has
speculative characteristics. Changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case with higher grade bonds. After the Series
purchases a municipal bond, the issuer may cease to be rated, or its rating may
be reduced below the minimum required for purchase, which could have an adverse
effect on the market value of the issue. Neither event will require the
elimination of the issue from the Series portfolio.
The Series internal policy restricts investments to municipal bonds
which are initially investment-grade, i.e., among the four highest grades
mentioned above or their equivalent, and it is our objective to provide
above-average tax-free income relative to comparable investment-grade, longer
term municipal bond funds. In view of this internal policy and because we manage
the maturities of our investments in accordance with our interest-rate
expectations, we anticipate (i) a higher level of tax-free income than a
short-term, tax-free municipal bond fund and (ii) a share value tending to
fluctuate more than such a short-term fund, but consistent with an
investment-grade, longer term municipal bond fund.
The two principal classifications of municipal bonds are general
obligation and limited obligation or revenue bonds. General obligation bonds are
secured by the pledge of faith, credit and taxing power of the municipality. The
taxes or special assessments that can be levied for the payment of debt service
may be limited or unlimited as to rate or amount. Revenue bonds are payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise or other specific revenue
source. Industrial development bonds are in most cases revenue bonds and do not
generally constitute the pledge of the faith, credit or taxing power of the
municipality. The credit quality of such municipal bonds usually is directly
related to the credit standing of the user of the facilities. There are
variations in the security of municipal bonds, both within a particular
classification and between classifications, depending on numerous factors.
The Series may purchase new issues of municipal bonds, which are
generally offered on a when-issued basis, with delivery and payment (settlement)
normally taking place approximately one month after the purchase date. However,
the payment obligation and the interest rate to be received by the Series are
each fixed on the purchase date. During the period between purchase and
settlement, Series assets consisting of cash and/or high-grade marketable debt
securities, marked to market daily, of a dollar amount sufficient to make
payment at settlement will be segregated at our custodian. 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. While we may sell
when-issued securities prior to settlement, we intend to actually acquire such
securities unless a sale appears desirable for investment reasons. Under normal
market conditions, the Series will attempt to invest 100% and, as a matter of
fundamental policy, will invest at least 80% of its net assets in municipal
bonds, the interest on which is exempt from federal income tax and Californias
personal income tax.
Although normally the Series intends to be fully invested in
intermediate to long-term municipal bonds, the Series may temporarily invest in
short-term tax-exempt securities meeting the above-described quality standards
and, additionally, may temporarily put up to 20% of its assets in cash, in
commercial paper of comparable investment quality or in short-term obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
(U.S. Government securities), in order to improve liquidity or to create reserve
purchasing power. Because interest earned from commercial paper or U.S.
Government securities is taxable for federal income tax purposes, we intend to
minimize temporary investments in such short-term securities.
The Series may invest up to 20% of its net assets (less any amount
invested in the temporary taxable investments described above) in private
activity bonds. Series dividends derived from interest on such bonds would be
considered a preference item for purposes of the computation of the alternative
minimum tax. Series dividends derived from such interest may increase the
alternative minimum tax liability of corporate shareholders who are subject to
that tax based on the excess of their adjusted current earnings over their
taxable income.
The Series intends to meet the diversification rules under Subchapter M
of the Internal Revenue Code. Generally, this requires, at the end of the
quarter of the taxable year, that (a) not more than 25% of the Series total
assets be invested in any one issuer and (b) with respect to 50% of the Series
total assets, no more than 5% of the Series total assets be invested in any one
issuer except U.S. Government securities. Since under these rules the Series,
may invest its assets in the securities of a limited number of issuers, the
value of the Series investments may be more affected by any single adverse
economic, political or regulatory occurrence than in the case of a diversified
investment company under the Act. For diversification purposes, the
identification of an issuer will be determined on the basis of the source of
assets and revenues committed to meeting interest and principal payments of the
securities. When the assets and revenues of Californias political subdivision
are separate from those of the state government creating the subdivision, and
the security is backed only by the assets and revenues of the subdivision, then
the subdivision would be considered the sole issuer. Similarly, if a revenue
bond is backed only by the assets and revenues of a nongovernmental user, then
such user would be considered the sole issuer.
The Series intends to invest more than 25% of its total assets in any
industry, except that the Series may, subject to the limits referred to in the
preceding three paragraphs, invest more than 25% of such assets in a combination
of U.S. Government securities and in tax-exempt securities, including tax-exempt
revenue bonds whether or not the users of any facilities financed by such bonds
are in the same industry. Where nongovernmental users are in the same industry,
there may be additional risk to the Series in the event of an economic downturn
in such industry, which may result generally in a lowered ability of such users
to make payments on their obligations. Electric utility and health care are
typical, but not all inclusive of, the industries in which this 25% may be
exceeded. The former is relatively stable but subject to rate regulation
vagaries. The latter suffers from two main problems affordability and access.
Tax-exempt securities issued by governments or political subdivisions of
governments are not considered part of any industry.
The Series may invest up to 10% of its respective net assets in illiquid
securities. Bonds determined by the Directors to be liquid pursuant to
Securities and Exchange Commission Rule 144A will not be subject to this limit,
except to the extent necessary to comply with applicable state requirements.
Investments by the Series in Rule 144A securities initially determined to be
liquid could have the effect of diminishing the level of the Series liquidity
during periods of decreased market interest in such securities. Under the Rule,
a qualifying unregistered security may be resold to a qualified institutional
buyer without registration and without regard to whether the seller originally
purchased the security for investment.
The Series may invest up to 20% of its net assets in residual interest
bonds (RIBs) to enhance and increase portfolio duration. A RIB, sometimes
referred to as an inverse floater, is a debt instrument with a floating or
variable interest rate that moves in the opposite direction of the interest rate
on another security or the value of an index. Changes in the interest rate on
the other security or index inversely affect the residual interest rate paid on
the RIB, with the result that when interest rates rise, RIBs interest payments
are lowered and their value falls faster than other similar fixed-rate bonds. In
an effort to mitigate this risk that RIB values may fall farther, management of
the Fund purchases other fixed-rate bonds which are less volatile. When interest
rates fall, not only do RIBs give higher interest payments, their values also
rise faster than other similar fixed-rate bonds. The market for RIBs is
relatively new.
The Series will not borrow money except as a temporary measure for
extraordinary or emergency purposes and then not in excess of 5% of its gross
assets (at cost or market value, whichever is lower) at the time of borrowing.
PORTFOLIO TURNOVER. It is estimated that the portfolio turnover rate for the
California Series will be less than 100%.
OPTIONS AND FINANCIAL FUTURES TRANSACTIONS. The Series may deal in options on
securities, and securities indexes, and financial futures transactions,
including options on financial futures. The Series may write (sell) covered call
options and secured put options on up to 25% of its net assets and may purchase
put and call options provided that no more than 5% of its net assets (at the
time of purchase) may be invested in premiums on such options.
The Series currently is not employing any of the options and financial
futures transactions described above.
RISK FACTORS. Securities in which we may invest are subject to the provisions of
bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors and laws which may be enacted extending the time of payment of
principal and interest, or both. There is also the possibility that, as a result
of litigation or other conditions, the power or ability of issuers to meet their
obligations for payment of principal and interest may be materially affected or
their obligations may be found to be invalid or unenforceable.
The ability of the Series to achieve its objective is based on the
expectation that the issuers of the municipal bonds in the Series portfolio will
continue to meet their obligations for the payment of principal and interest.
The following is a brief summary of certain factors affecting the Series. This
summary does not purport to be complete and are based on information derived
from publicly available documents related to each jurisdiction involved, which
information has not been independently verified by the Fund. For more detailed
discussions of the risks applicable to the Series, see the Statement of
Additional Information.
CALIFORNIA BONDS RISK FACTORS. As disclosed by the State of California in
connection with recent bond issues, various constitutional and statutory
provisions may affect the ability of issuers of California municipal bonds to
meet their financial obligations. Decreases in State and local revenues as a
consequence of such provisions may result in reductions in the ability of
California issuers to pay their obligations. In addition, starting in 1990,
California entered a sustained economic recession, the most severe in the State
since the 1930s. Although a steady recovery has been underway since 1994,
accumulated budget deficits over the past several years, together with
expenditures for school funding which have not been reflected in the budget, and
a reduction of available internal borrowable funds, have combined to
significantly deplete the States cash resources to pay its ongoing expenses. In
order to meet its cash needs, the State has had to rely for several years on a
series of external borrowings, including borrowings past the end of a fiscal
year. A full payment of $4 billion of revenue anticipation warrants will be made
on April 25, 1996. However, the State expects not to borrow over the end of the
1995-96 fiscal year, and expects to have significant available internal
borrowable cash resources and budget reserves at June 30, 1996. As a result of
the deterioration in the States budget and cash situation, the States credit
rating was reduced in July 1994 by the rating agencies.
The 1995-96 Budget Act is projected to have $44.1 billion of general fund
revenues and transfers and $43.4 billion of budgeted expenditures. In addition,
the 1995-96 Budget Act anticipates the retirement of the accumulated budget
deficit by June 30, 1996.
On December 6, 1994, Orange County, California (the County), together with its
pooled investment funds (the Pools) filed for protection under Chapter 9 of the
federal Bankruptcy Code, after reports that the Pools had suffered significant
market losses in their investments, causing a liquidity crisis for the Pools and
the County. The County has reported the Pools loss at about $1.69 billion, or
about 23 percent of their initial deposits of approximately $7.5 billion. Many
of the entities which deposited moneys in the Pools, including the County, faced
interim and /or extended cash flow difficulties because of the bankruptcy filing
and may be required to reduce programs or capital projects.
As of March 6, 1996, none of the Series net assets were invested in securities
issued by Orange County.
PUERTO RICO RISK FACTORS. The Fund may have significant investments in bonds
issued by the Commonwealth of Puerto Rico and its instrumentalities. The economy
of Puerto Rico is dominated by diversified manufacturing and service sectors. It
is closely integrated, through extensive trade, with that of the mainland United
States, and its economic health is closely tied to the price of oil and the
state of the U.S. economy. Puerto Rico has a rate of unemployment exceeding the
U.S. average. Puerto Ricos economy has experienced significant growth since
fiscal 1989. Continued growth in fiscal 1995 and 1996 will depend on several
factors, including the state of the U.S. economy, the relative stability of the
price of oil and borrowing costs.
We will not change our investment objective without shareholder approval. If we
determine that our objective can best be achieved by a change in investment
policy or strategy, we may make such change without shareholder approval by
disclosing it in our prospectus.
As soon as the Series begins to offer shares to the public (projected date: July
15, 1996), 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 Tax-Free Income Fund, Inc. (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 monthly minimum). Subsequent investments may be
made in any amount. (See Shareholder Services.)
The net asset value of our shares will be calculated every business day
as of the close of the New York Stock Exchange (NYSE) by dividing net assets by
the number of shares outstanding. Securities will be valued at their market
value as more fully described in the Statement of Additional Information.
Orders for shares received by the Fund prior to the close of the NYSE,
or received by dealers prior to such close and received by Lord Abbett 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 will be executed at the applicable
public offering price effective as of the close of the NYSE on that next
business day. The dealer will be responsible for the timely transmission of
orders to Lord Abbett. A business day is a day on which the NYSE is open for
trading.
For information regarding proper form of a purchase or redemption order,
call the Fund at 800-821-5129. This offering may be suspended, changed or
withdrawn. Lord Abbett reserves the right to reject any order.
For the Series, the offering price will be based on the per share net
asset value calculated as of the times described above, plus a sales charge as
follows:
</TABLE>
<TABLE>
<CAPTION>
Sales Charge as a Dealer's
Percentage of: Concession
as a To Compute
Net Percentage Offering
Offering Amount of Offering Price, Divide
Size of Investment Price Invested Price* NAV by
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.00% .9525
$50,000 to $99,999 4.75% 4.99% 4.25% .9525
$100,000 to $249,999 3.75% 3.90% 3.25% .9625
$250,000 to $499,999 2.75% 2.83% 2.50% .9725
$500,000 to $999,999 2.00% 2.04% 1.75% .9800
$1,000,000 or more No sales charge 1.00% 1.0000
The following $1 million category is for the California Series only until such
Series' Rule 12b-1 Plan becomes effective, at which time the sales charge table
above will apply to such Series.
$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 Abbetts own resources and will be made in the
form of cash or non-cash payments. The non-cash payments will include business
seminars at resorts or other locations, including meals and entertainment, or
the receipt of merchandise. The cash payments will include payment of various
business expenses of the dealer.
</FN>
</TABLE>
In selecting dealers to execute portfolio transactions, if two or more
dealers are considered capable of providing best execution, we may prefer the
dealer who has sold our shares and/or shares of other Lord Abbett-sponsored
funds.
Volume Discounts. There are several ways to qualify for a lower sales charge if
you inform the Fund that you are eligible at the time of purchase: (1) Increase
the initial investment to reach a higher discount level. The above schedule
applies to purchases by any purchaser of our shares, alone or in combination
with other Lord Abbett-sponsored funds (other than shares of Lord Abbett Equity
Fund (LAEF), Lord Abbett Series Fund (LASF), Lord Abbett Research Fund if not
sold to the general public (LARF), Lord Abbett Counsel Group and Lord Abbett
U.S. Government Securities Money Market Fund (GSMMF)). The term purchaser
includes (i) an individual and (ii) an individual, and his or her spouse and
children under the age of 21. (2) Add to your investment so that the current
maximum offering price value of the purchasers combined holdings in all Lord
Abbett-sponsored funds reaches a higher discount level. Shares of LAEF, LASF,
LARF, Lord Abbett Counsel Group and GSMMF are not eligible for this privilege,
unless holdings in GSMMF are attributable to shares exchanged from a Lord
Abbett-sponsored fund offered with a sales charge. (3) Sign a nonbinding
13-month statement of intention to invest $100,000 or more. If the purchases are
completed during the period, the purchase will be at the sales charge applicable
to the aggregate of your intended purchases; if not completed, the purchase will
be at the sales charge applicable to the aggregate of your actual purchases.
Dividends or distributions reinvested are not included in completion of the
statement of intention.
Our shares may be purchased at net asset value by our directors,
employees of Lord Abbett, employees of our shareholder servicing agent and
employees of any securities dealer having a sales agreement with Lord Abbett who
consents to such purchases. For purposes of this paragraph, the terms
directors and employees include a directors or employees spouse (including the
surviving spouse of a deceased director or employee). The terms directors and
employees of Lord Abbett also include other family members and retired directors
and employees.
The Series shares also may be purchased at net asset value (a) at $1
million or more after the commencement of the Series Rule 12b-1 Plan, (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) 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, (d) by
employees, partners and owners of unaffiliated consultants and advisors to Lord
Abbett or Lord Abbett-sponsored funds who consent to such purchase if such
persons provide service to Lord Abbett or such funds on a continuing basis and
are familiar with such funds, and (e) 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 redemption charges or contingent deferred sales charges in
determining whether to redeem shares for subsequent investment in our shares.
Lord Abbett may suspend, change, or terminate the purchase option referred to in
(e) 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 PLAN. The directors of the Fund have adopted a Rule 12b-1 plan (a
Plan) for each class of shares to be issued by the Series, the Class A Plan and
the Class C Plan. The Class A Plan is to become effective upon the consummation
of the acquisition by the Series of the assets of LACTFIF referred to on the
cover page of this prospectus, and the Class C Plan is to become effective upon
the consummation of the acquisition by the Series of the assets of LACTFIT, also
referred to on such cover page. Each Plan will authorize the payment of fees by
Lord Abbett Distributor LLC, a limited liability subsidiary of Lord Abbett, to
authorized institutions (except as to certain accounts for which tracking data
is not available) in order to provide additional incentives for them (a) to
provide continuing information and investment services to their shareholder
accounts and otherwise to encourage their accounts to remain invested in the
Series and (b) to sell shares of the Series.
Class A Plan: Under the Class A Plan the Series will pay Lord Abbett
Distributor, who in its discretion, utilizes and/or passes on to authorized
institutions, (1) an annual service fee (payable quarterly) of .25% of the
average daily net asset value of the shares sold by authorized institutions, (2)
a one-time sales distribution fee up to 1% (reduced as follows: 1% of the first
$5 million, 0.55% of the next $5 million, 0.50% of the next $50 million and
0.25% over $50 million) at the time of sale, on all shares (i) at the $1 million
level sold by authorized institutions including sales qualifying at such level
under the rights of accumulation and statement of intention privileges and (ii)
sold through Retirement Plans and (3) a supplemental distribution fee to dealers
who meet certain sales and redemption criteria equal to 0.10% per annum of the
average assets represented by such dealers Class A share accounts. Institutions
and persons permitted by law to receive such fees are authorized institutions.
Retirement Plans refer to those plans under Section 401(a) and (k) and 408(G) of
the Internal Revenue Code with at least 100 eligible employees. With respect to
the supplemental distribution fee, the applicable criteria include having
accounts comprising a significant percentage of the Class A share assets, having
a lower than average redemption rate and having a satisfactory program for the
promotion of Class A shares.
Distribution fees will be subject to an overall Plan ceiling of 0.25% per year,
and the Board of Directors may increase distribution fees to that level.
Lord Abbett will be permitted to use payments received under the Class A Plan to
provide continuing services to shareholder accounts not serviced by authorized
institutions and, with Board approval, to finance any activity which is
primarily intended to result in the sale of shares, subject to the overall Plan
ceiling of .25% for annual distribution fees. Holders of Class A shares on which
the sales distribution fee has been paid will be required to pay to the Series a
contingent deferred reimbursement charge of 1% of the original cost or the then
net asset value, whichever is less, of all shares so purchased which are
redeemed out of the Lord Abbett-sponsored family of funds on or before the end
of the twenty-fourth month after the month in which the purchase occurred. (An
exception is made for redemptions by retirement plans for any benefit payments
such as plan loans, hardship withdrawals, death, retirement or separation from
service with respect to plan participants or the distribution of any excess
contributions). If Class A shares have been exchanged into another Lord Abbett
fund and are thereafter redeemed out of the Lord Abbett family on or before the
end of such twenty-fourth month, the charge will be collected for the Series by
the other fund. The Series will collect such a charge for other Lord
Abbett-sponsored funds in a similar situation.
Class C Plan: The Class C Plan provided for the payments to authorized
institutions through Lord Abbett Distributor of distribution and service fees
(a) at the time shares are sold, not to exceed 0.75% and 0.25%, respectively, of
the net asset value of such shares and (b) at each quarter-end after the first
anniversary of the sale of shares, at annual rates not to exceed 0.75% and
0.25%, respectively, of the average annual net asset value of such shares
outstanding. Sales in clause (a) exclude shares issued for reinvested dividends
and distributions and shares outstanding in clause (b) include shares issued for
reinvested dividends and distributions after the first anniversary of their
issuance. Lord Abbett Distributor may retain from the quarterly distribution
fee, for the payment of distribution expenses incurred directly by it, an amount
not to exceed 0.10% of the average annual net asset value of such shares
outstanding. If Class C shares are redeemed for cash before the first
anniversary of their purchase, the redeeming shareholder will be required to pay
to the Series a contingent deferred reimbursement charge of 1% of the lower of
cost or the then net asset value of the shares redeemed. If the shares are
exchanged for Class C shares of another Lord Abbett-sponsored fund or series and
subsequently redeemed before the first anniversary of their original purchase,
the charge will be collected by the other fund or series for the Series.
5 SHAREHOLDER SERVICES
We offer the following shareholder services:
Telephone Exchange Privilege: Class A shares may be exchanged for Class A shares
and Class C shares may be exchanged for Class C shares, without a service charge
of any other Lord Abbett-sponsored fund or series that issues such shares,
except for 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.
You or your representative with proper identification can instruct the
Fund to exchange uncertificated shares by telephone. Shareholders have this
privilege unless they refuse it in writing. The Fund will not be liable for
following instructions communicated by telephone that it reasonably
believes to be genuine and will employ reasonable procedures to confirm that
instructions received are genuine, including requesting proper identification,
and recording all telephone exchanges. Instructions must be received by the Fund
in Kansas City (800-821-5129) prior to the close of the NYSE to obtain the
Series net asset value per share on that day. Expedited exchanges by telephone
may be difficult to implement in times of drastic economic or market change. The
exchange privilege should not be used to take advantage of short-term swings in
the market. The Fund reserves the right to terminate or limit the privilege of
any shareholder who makes frequent exchanges. The Fund can revoke the privilege
for all shareholders upon 60 days prior written notice. A prospectus for the
other Lord Abbett-sponsored fund or series 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: If the maximum offering price value of your
uncertificated shares is at least $10,000, you may have periodic cash
withdrawals automatically paid to you in either fixed or variable amounts.
Div-Move: You can invest the dividends paid on your account ($50 minimum monthly
investment) into an existing account in any other Lord Abbett-sponsored fund or
series that issues Class A shares or Class C shares, as the case may be. The
account must be either your account, a joint account for you and your spouse, a
single account for your spouse, or a custodial account for your minor child
under the age of 21. You should read the prospectus of the other fund before
investing.
Invest-A-Matic: You can make fixed, periodic investments ($50 minimum monthly
investment) into the Series and/or any sponsored fund or series that issues
Class A shares or Class C shares, as the case may be by means of automatic money
transfers from your bank checking account. You should read the prospectus of the
other fund before investing.
All correspondence should be directed to Lord Abbett Tax-Free Income Fund, Inc.
(P.O. Box 419100, Kansas City, Missouri 64141).
6 OUR MANAGEMENT
Our business is managed by our officers on a day-to-day basis under the overall
direction of our Board of Directors. Our board has approved a Management
Agreement with Lord Abbett under which Lord Abbett is to be employed as
investment manager of the Series. The agreement is to become effective upon the
consummation of the acquisition by the Series of the assets of LATFIF referred
to on the cover page of this prospectus. Lord Abbett has been an investment
manager for over 60 years and currently manages approximately $18 billion in a
family of mutual funds and other advisory accounts.
Under the Management Agreement, Lord Abbett will provide us with investment
management services and personnel, pays the remuneration of our officers and our
directors affiliated with Lord Abbett provides us with office space and pay for
ordinary and necessary office and clerical expenses relating to research,
statistical work and supervision of our portfolio and certain other costs. Lord
Abbett provides similar services to the other series of the Fund and to fifteen
other funds having various investment objectives and also advises other
investment clients. Zane E. Brown, Lord Abbetts Director of Fixed Income , will
be primarily responsible for the day-to-day management of the Series. Mr. Brown
has over 19 years of investment experience and has been with Lord Abbett since
1992. He will be assisted by, and may delegate management duties to, other Lord
Abbett employees who may be Fund officers.
Under the Management Agreement, we will be obligated to pay Lord Abbett
a monthly fee at the annual rate of .50 of 1% of the average daily net assets of
the Series for the month. In addition, we will pay all expenses not expressly
assumed by Lord Abbett.
We will not hold annual meetings of shareholders unless required to do
so by the Act, the Board of Directors or the shareholders with one-quarter of
the outstanding stock entitled to vote. See the Statement of Additional
Information for more details.
The Fund was incorporated under Maryland law on December 27, 1983. Each
outstanding share of the Series has one vote on all matters voted upon by the
Series and an equal right to dividends and distributions of the Series. All
shares have noncumulative voting rights for the election of directors.
7 DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
Dividends from net investment income are declared daily and paid monthly. They
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. You begin earning dividends on
the business day on which payment for the purchase of your shares is received.
A long-term capital gains distribution is made 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. It is
anticipated that capital gains distributions, if any, will be declared and paid
in December. You may take them in cash or additional shares at net asset value
without a sales charge.
Supplemental dividends from taxable net investment income may be paid in
December or January. Dividends and distributions declared in October, November
or December of any year to shareholders of record as of a date in such a month
will be treated for federal income tax purposes as having been received by
shareholders in that year if they are paid before February 1 of the following
year.
We intend to meet the requirements of Subchapter M of the Internal
Revenue Code. We intend to take all other action required to insure that we will
pay no federal income tax and that the of the Series may pay exempt-interest
dividends. Dividends derived from interest income on obligations exempt from
federal income tax, when designated by the Fund as exempt-interest dividends,
will be exempt from federal income tax when received by shareholders.
Exempt-interest dividends derived from interest income on municipal bonds issued
by the State of California and its political subdivisions, agencies and
instrumentalities and on obligations of the federal government or certain other
government authorities (for example, Puerto Rico) paid to individual
shareholders will be exempt from California personal income tax. Such dividends
may be subject to California franchise taxes and corporate income taxes if
received by a corporation subject to such taxes and to state and local taxes in
states other than California. Dividends derived from income on our other
investments, or from any net realized short-term capital gains, will be taxable
to shareholders as ordinary income, whether received in cash or shares.
Dividends 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
shareholder 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%.
You may be subject to a $50.00 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.
Shareholders receiving Social Security benefits and certain railroad
retirement benefits may be subject to federal income tax on up to 85% of such
benefits as a result of receiving investment income, including tax-exempt income
(such as exempt-interest dividends) and other distributions paid by the Fund.
The tax will be imposed on up to one-half of such benefits only when the sum of
the recipients adjusted gross income (plus miscellaneous adjustments),
tax-exempt income and one-half of Social Security income exceeds $25,000
($32,000 for individuals filing a joint return). The tax will be imposed on up
to 85% only when such sum exceeds $34,000 for individuals ($44,000 for
individuals filing a joint return). Shareholders receiving such benefits should
consult their tax advisers. Annual Information Information concerning the tax
treatment of dividends and other distributions will be mailed annually to
shareholders. The Series will also provide annually to its shareholders
information regarding the source of dividends and distributions of capital gains
paid by the Series. You should consult your tax adviser regarding the treatment
of those distributions and state and local taxes generally and any proposed
changes thereto as well as the tax consequences of gains or losses from the
redemption, or exchange of our shares.
8 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 Tax-Free Income Fund,
Inc. (P.O. Box 419100, Kansas City, Missouri 64141) with signature(s) and any
legal capacity of the signer(s) guaranteed by an eligible guarantor, accompanied
by any certificates for shares to be redeemed and other required documentation.
Within seven days after acceptance, we will make payment of the net asset value
of the shares on the date the redemption order was received in proper form.
However, if you have purchased Fund shares by check and subsequently submit a
redemption request, redemption proceeds will be paid upon clearance of your
purchase check, which may take up to 15 days. To avoid delays you may arrange
for the bank upon which a check was drawn to communicate to the Fund that the
check has cleared.
Shares also may be redeemed by the Fund at net asset value through your
securities dealer who, as an unaffiliated dealer, may charge you a fee. If your
dealer receives your order prior to the close of the NYSE and communicates it to
Lord Abbett, as our agent, prior to the close of Lord Abbetts business day, you
will receive the net asset value 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 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
Board of Directors may authorize redemption of all of the shares in any account
in which there are fewer than 25 shares.
9 PERFORMANCE
Yield, tax-equivalent yield and total return data may from time to time
be included in advertisements about the Series. Yield is calculated by dividing
the Series annualized net investment income per share during a recent 30-day
period by the maximum offering price per share on the last day of that period.
Tax-equivalent yield is calculated by dividing that portion of the Series yield
(as determined above) which is tax-exempt by one minus a stated income tax rate
and adding the product to that portion, if any, of the Series yield that is not
tax exempt. The Series yield and tax equivalent yield reflect the deduction of
the maximum initial sales charge and reinvestment of all income dividends and
capital gains distributions. Total return for the one-, five- and ten-year
periods represents the average annual compounded rate of return on an investment
of $1,000 in the 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. See Past Performance in the Statement of Additional Information for a
more detailed discussion.
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 OR INCORPORATED BY REFERENCE 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>
Underwriter and Investment Manager
Lord, Abbett & Co.
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
212-848-1800
Custodian
Bank of New York
40 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 Printed in the U.S.A.
TAX-FREE
INCOME
FUND, INC.
CALIFORNIA SERIES
A mutual fund seeking high level of interest exempt from both federal and
California income tax consistent with reasonable risk.
<PAGE>
LORD ABBETT
Statement of Additional Information March 20, 1996
Lord Abbett
Investment Trust
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from your securities dealer or from Lord, Abbett & Co. at The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. This
Statement relates to, and should be read in conjunction with, the Prospectus
dated March 20, 1996. The Prospectus and this Statement pertain to the Series
referred to below and should be used in connection with the meetings of
shareholders of Lord Abbett U.S. Government Securities Fund, Inc. ("LAUSGSF")
and Lord Abbett Securities Trust -- Lord Abbett U.S. Government Trust
("LAUSGST") called to consider approval of proposed sales by those funds of all
their assets to the Series in exchange for, respectively, Class A shares and
Class C shares of the Series and the assumption by the Series of all their
liabilities. The Prospectus and this Statement should be used in conjunction
with the Proxy Statement and Prospectus of the Series to be issued in connection
with such meetings.
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 three series consisting of
three classes of shares - Lord Abbett Limited Duration U.S. Government
Securities Series, Lord Abbett Balanced Series and Lord Abbett U.S. Government
Securities Series (a new series). 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 of assets specifically allocated to
such class or series. Only shares of Lord Abbett U.S. Government Securities
Series (sometimes referred to as "we" or the "Series") are described in this
Statement of Additional Information.
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.
Rule 18f-3 under the Act requires that, if an investment company such as the
Fund issues more than one class of voting stock, each class shall have exclusive
voting rights on any matter submitted to shareholders that relates solely to its
different arrangement for shareholder services or the distribution of securities
and shall have separate voting rights on any matter submitted to shareholders in
which the interests of one class differ from the interests of any other class.
Shareholder inquiries should be made by writing directly to the Fund or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
TABLE OF CONTENTS Page
1. Investment Objective and Policies 2
2. Trustees and Officers 3
3. Investment Advisory and Other Services 6
4. Portfolio Transactions 6
5. Purchases, Redemptions
and Shareholder Services 7
6. Past Performance 12
7. Taxes 12
8. Information About The Fund 12
<PAGE>
1.
Investment Objective and Policies
Fundamental Investment Restrictions. The Series' investment objective and
policies are described in the Prospectus under "How We Invest". In addition to
those policies described in the Prospectus, we are subject to the following
fundamental investment restrictions which cannot be changed for the Series
without the approval of the holders of a majority of the Series' respective
shares. The Series may not: (1) borrow money (except that (i) the Series may
borrow from banks (as defined in the Act) in amounts up to 33 1/3% of its total
assets (including the amount borrowed), (ii) the Series may borrow up to an
additional 5% of its total assets for temporary purposes, (iii) the Series may
obtain such short-term credit as may be necessary for the clearance of purchases
and sales of portfolio securities and (iv) the Series may purchase securities on
margin to the extent permitted by applicable law); (2) pledge its assets (other
than to secure such borrowings or, to the extent permitted by the Series'
investment policies as set forth in its prospectus and statement of additional
information, as they may be amended from time to time, in connection with
hedging transactions, short sales, when-issued and forward commitment
transactions and similar investment strategies); (3) engage in the underwriting
of securities except pursuant to a merger or acquisition or to the extent that
in connection with the disposition of its portfolio securities it may be deemed
to be an underwriter under federal securities laws; (4) make loans to other
persons, except that the acquisition of bonds, debentures or other corporate
debt securities and investment in government obligations, commercial paper,
pass-through instruments, certificates of deposit, bankers acceptances,
repurchase agreements or any similar instruments shall not be subject to this
restriction, and except further that the Series may lend its portfolio
securities, provided that the lending of portfolio securities may be made only
in accordance with applicable law and the guidelines set forth in the Series'
prospectus and statement of additional information, as they may be amended from
time to time; (5) buy or sell real estate (except that the Series may invest in
securities directly or indirectly secured by real estate or interests therein or
issued by companies which invest in real estate or interests therein),
commodities or commodity contracts (except to the extent the Series may do so in
accordance with applicable law and without registering as a commodity pool
operator under the Commodity Exchange Act as, for example, with futures
contracts); (6) with respect to 75% of the gross assets of the Series, 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; (7) invest more than 25% of its assets, taken
at market value, in the securities of issuers in any particular industry
(excluding securities of the U.S. Government, its agencies and
instrumentalities);or (8) issue senior securities to the extent such issuance
would violate applicable law.
With respect to the restrictions mentioned herein, compliance therewith will not
be affected by change in the market value of portfolio securities but will be
determined at the time of purchase or sale of such securities.
Of course, as a matter of fundamental policy, we may not invest in securities
other than U.S. Government securities as described in the Prospectus.
If we enter into repurchase agreements as provided in clause (4) above, we will
do so only with those primary reporting dealers that report to the Federal
Reserve Bank of New York and with the 100 largest United States commercial banks
and the underlying securities purchased under the repurchase agreements will
consist only of U.S. Government securities in which we may otherwise invest.
Non-Fundamental Investment Restrictions. In addition to those policies described
in the Prospectus and the investment restrictions above which cannot be changed
without shareholder approval, we also are subject to the following
non-fundamental investment policies which may be changed by the Board of
Directors without shareholder approval. The Series may not: (1) make short sales
of securities or maintain a short position except to the extent permitted by
applicable law; (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 of the Securities Act of 1933 ("Rule 144A") that are determined
by the Directors, or by Lord Abbett pursuant to delegated authority, to be
liquid are considered liquid securities); (3) invest in securities issued by
other investment companies as defined in the Act, except as permitted by the
Act; (4) purchase securities of any issuer unless it or its predecessor has a
record of three years' continuous operation, except that the Series 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; (5) 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 directors 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; (6) 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; or (7) invest in real estate limited
partnership interests or interest in oil, gas or other mineral leases, or
exploration or development programs, except that the Series may invest in
securities issued by companies that engage in oil, gas or other mineral
exploration or development activities.
As stated in the Prospectus, we may purchase Government securities on a
when-issued basis. Under no circumstance will delivery and payment
("settlement") for such securities take place more than 120 days after the
purchase date.
Lending Portfolio Securities
The Series may lend its portfolio securities to registered broker-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. The cash or instruments
collateralizing the Fund's lending of securities will be maintained at all times
in an amount at least equal to the current market value of the loaned
securities. From time to time, the Series may allow a part of the interest
received with respect to the investment of collateral to be paid to the borrower
and/or a third party that is not affiliated with the Fund and is acting as a
"placing broker". No fee will be paid to affiliated persons of the Fund.
By lending portfolio securities, the Series can increase its income by
continuing to receive interest on the loaned securities as well as by either
investing the cash collateral in permissible investments, such as U.S.
Government Securities, or obtaining yield in the form of interest paid by a
borrower when such U.S. Government Securities are used as collateral. The 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 a material event
adversely affecting the investment in the loaned securities occurs, the Fund's
Board of Trustees must terminate the loan and regain the right to vote the
securities.
When-Issued Transactions
As stated in the Prospectus, the 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. When the Series enters
into a when-issued purchase, it becomes obligated to purchase securities and it
assumes all the rights and risks attendant to ownership of a security, although
settlement occurs at a later date. The value of securities to be delivered in
the future will fluctuate as interest rates vary. At the time the 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 Series, generally, has the
ability to close out a purchase obligation on or before the settlement date,
rather than take delivery of the security. Under no circumstance will settlement
for such securities take place more than 120 days after the purchase date.
2.
Trustees and Officers
The following trustees of the Fund are partners of Lord, Abbett & Co., The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. They
have been associated with Lord Abbett for over five years and are also officers
and/or directors or trustees of the fifteen other Lord Abbett-sponsored funds.
They are "interested persons" as defined in the Investment Company Act of 1940,
as amended, and as such, may be considered to have an indirect financial
interest in the Rule 12b-1 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
Snacks, Inc., manufacturer of branded snack foods (1992-1994. Formerly President
& CEO of Nestle Foods Corp, and prior to that, President & CEO of Stouffer Foods
Corp., both subsidiaries of Nestle SA, Switzerland. Currently serves as Director
of Den West Restaurant Co., J. B. Williams, and Fountainhead Water Company. Age
62.
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 67.
Thomas J. Neff
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. The first four columns give
information for the Fund's fiscal year ended October 31, 1995; the fifth column
gives information for the year ended December 31, 1995. No trustee of the Fund
associated with Lord Abbett and no officer of the Fund received any compensation
from the Fund for acting as a trustee or officer.
<TABLE>
<CAPTION>
For the Fiscal Year Ended October 31, 1995
(1) (2) (3) (4) (5)
Pension or Estimated Annual For Year Ended
Retirement Benefits Benefits Upon December 31, 1995
Accrued by the Retirement Proposed Total Compensation
Aggregate Fund and to be Paid by the Accrued by the Fund and
Compensation 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 $4,970 $9,772 $33,600 $ 41,700
Stewart S. Dixon $5,696 $22,472 $33,600 $ 42,000
John C. Jansing $5,721 $28,480 $33,600 $42,960
C. Alan MacDonald $5,692 $27,435 $33,600 $42,750
Hansel B. Millican, Jr. $5,691 $24,707 $33,600 $43,000
Thomas J. Neff $5,594 $16,126 $33,600 $42,000
<FN>
1. Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on net
assets of each fund. A portion of the fees payable by the Fund to its outside
directors are being deferred under a plan that deems the deferred amounts to
be invested in shares of the Fund for later distribution to the directors.
The total amount accrued under the plan for each outside director since the
beginning of his tenure with the Fund, including dividends reinvested and
changes in net asset value applicable to such deemed investments, were as
follows as of October 31, 1995: Mr. Bigelow, $5,261; Mr. Dixon, $48,641; Mr.
Jansing, $52,388; Mr. MacDonald, $31,222; Mr. Millican, $52,823 and Mr. Neff,
$53,041.
2. Each Lord Abbett-sponsored fund has a retirement plan providing that outside
directors will receive annual retirement benefits for life equal to 80% of
their final annual retainers following retirement at or after age 72 with at
least 10 years of service. Each plan also provides for a reduced benefit upon
early retirement under certain circumstances, a pre-retirement death benefit
and actuarially reduced joint-and-survivor spousal benefits. The amounts
stated would be payable annually under such retirement plans if the director
were to retire at age 72 and the annual retainers payable by such funds were
the same as they are today. The amounts accrued in column 3 were accrued by
the Lord Abbett-sponsored funds during the fiscal year ended October 31, 1995
with respect to the retirement benefits in column 4.
3. This column shows aggregate compensation, including director's fees and
attendance fees for board and committee meetings, of a nature referred to in
footnote one, accrued by the Lord Abbett-sponsored funds during the year
ended December 31, 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, 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 41, Daniel E. Carper, age 43, E. Wayne Nordberg, age 59,
John J. Walsh, age 58, Paul A. Hilstad, age 53 (with Lord Abbett since 1995 -
formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.), John J. Gargana, Jr., age 64, Thomas F. Konop, age
53, Victor W. Pizzolato, age 63, 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 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 March 20, 1996, our officers and trustees, as a group, owned less than 1%
of our outstanding shares.
3.
Investment Advisory and Other Services
As described under "Our Management" in the Prospectus, Lord Abbett is to be the
investment manager for the 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 to be performed by Lord Abbett are described in the Prospectus
under "Our Management". Under the Management Agreement, we will pay Lord Abbett
a monthly fee, based on average daily net assets for each month, at the annual
rate of .50 of 1% of the portion of our net assets not in excess of
$3,000,000,000 plus .45% of 1% of such assets over $3,000,000,000.
We will pay all expenses not expressly assumed by Lord Abbett, including without
limitation 12b-1 expenses, outside trustees' fees and expenses, association
membership dues, legal and auditing fees, taxes, transfer and dividend
disbursing agent fees, shareholder servicing costs, expenses relating to
shareholder meetings, expenses of preparing, printing and mailing 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.
The Series expects to agree with the State of California to limit operating
expenses (including management fees but excluding taxes, interest, extraordinary
and brokerage commissions) to 2 1/2% of the 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. Annual distribution expenses under Rule 12b-1
plans up to one percent of the Series' average net assets during its fiscal year
are to 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 is expected to apply so long as our shares are registered for sale in the
State.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281 are
the independent auditors of the Fund and must be approved at least annually by
our trustees to continue in such capacity. They perform audit services for the
Fund including the examination of financial statements included in our annual
report to shareholders.
The Bank of New York ("BNY"), 40 Wall Street, New York, New York, is the Fund's
custodian.
4.
Portfolio Transactions
Purchases and sales of portfolio securities usually will be principal
transactions and normally such securities will be purchased directly from the
issuer or from an underwriter or purchased from or sold to a market maker for
the securities. Therefore, the Series usually will pay no brokerage commissions
on such transactions. Purchases from underwriters of portfolio securities will
include a commission or concession paid by the issuer to the underwriter and
purchases from or sales to dealers serving as market makers will include a
dealer's markup or markdown. Principal transactions, including riskless
principal transactions, are not afforded the protection of the safe harbor in
Section 28(e) of the Securities Exchange Act of 1934.
Our policy is to obtain best execution on all our portfolio transactions, which
means that we seek to have purchases and sales of portfolio securities executed
at the most favorable prices, considering all costs of the transaction including
dealer markups and markdowns and any brokerage commissions. This policy governs
the selection of dealers and brokers and the market in which the transaction is
executed. To the extent permitted by law, we may, if considered advantageous,
make a purchase from or sale to another Lord Abbett-sponsored fund without the
intervention of any broker-dealer.
We select broker-dealers on the basis of their professional capability and the
value and quality of their brokerage and research services. Normally, the
selection is made by our traders who are officers of the Fund and also are
employees of Lord Abbett. 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 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
Series; 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 Series, and not all of such services will necessarily be used
by Lord Abbett in connection with their advisory services to such other
accounts. We have been advised by Lord Abbett that research services received
from brokers cannot be allocated to any particular account, are not a substitute
for Lord Abbett's services but are supplemental to their own research effort
and, when utilized, are subject to internal analysis before being incorporated
by Lord Abbett into their investment process. As a practical matter, it would
not be possible for Lord Abbett to generate all of the information presently
provided by brokers. While receipt of research services from brokerage firms has
not reduced Lord Abbett's normal research activities, the expenses of Lord
Abbett could be materially increased if it purchased such equipment and software
packages directly from the suppliers and attempted to generate such additional
information through its own staff. 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.
We will not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from
broker-dealers as consideration for the direction to them of portfolio business.
5.
Purchases, Redemptions
and Shareholder Services
The Series will value its portfolio securities at market value as of the close
of the New York Stock Exchange. Market value will be determined as follows:
securities listed or admitted to trading privileges on the New York or American
Stock Exchange or on the NASDAQ National Market System are valued at the last
sales price, or, if there is no sale on that day, at the mean between the last
bid and asked prices, or, in the case of bonds, in the over-the-counter market
if, in the judgment of the Fund's officers, that market more accurately reflects
the market value of the bonds. Over-the-counter securities not traded on the
NASDAQ National Market System are valued at the mean between the last bid and
asked prices. Securities for which market quotations are not available are
valued at fair market value under procedures approved by the Board of Trustees.
The Series is expected to commence operations on July 15, 1996. When the Series
commences operations, the net asset value per share is to be the same as the net
asset value per share of LAUSGSF at the time of the sale by that fund of its
assets to the Series as referred to on the cover page of this Statement. The
maximum offering price of our Class A shares will be computed in the same manner
as the maximum offering price of LAUSGSF shares. On July 15, 1996, the maximum
offering price of LAUSGSF shares will be computed as follows:
Net asset value per share (net assets divided by
shares outstanding)...................................................$
Maximum offering price per share (net asset value
divided by .9525).....................................................$
Our Class C shares will be sold at net asset value (net assets divided by shares
outstanding).
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 Series and to make reasonable efforts to sell Series shares, so
long as, in Lord Abbett's judgment, a substantial distribution can be obtained
by reasonable efforts.
As described in the prospectus, the Board of Trustees has adopted a Rule 12b-1
Plan (a "Plan") for each class of shares to be issued by the Series, the Class A
Plan and the Class C Plan. The Class A Plan is to become effective upon the
consummation of the acquisition by the Series of the assets of LAUSGSF referred
to on the cover page of this statement, and the Class C Plan is to become
effective upon the consummation of the acquisition by the Series of the assets
of LAUSGST, also referred to on such cover page.
The Plans will require the Board of Trustees to review, on a quarterly basis,
written reports of all amounts expended pursuant to the Plans and the purposes
for which such expenditures were made. The Plans shall continue in effect only
if their 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 Plans or in any agreements related to the Plans ("outside
trustees"), cast in person at a meeting called for the purpose of voting on such
Plans and agreements. The Plans may not be amended to increase materially the
amount permitted to be spent for distribution expenses without approval by a
majority of the outstanding of the Class A shares in the case of the Class A
Plan or the Class C shares in the case of the Class C Plan and the approval of a
majority of the trustees, including a majority of the Series' outside trustees.
The 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.
CDRC for Class A Shares: As stated in the Prospectus, a 1% contingent deferred
reimbursement charge ("CDRC") will be imposed with respect to those the Class A
shares (or shares of another Lord Abbett-sponsored fund or series acquired
through exchange of such shares) on which the 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 of Class A shares by tax qualified plans under
section 401 of the Internal Revenue Code for benefit payments due to plan loans,
hardship withdrawals, death, retirement or separation from service with respect
to plan participants. The CDRC is received by the Series and is intended to
reimburse all or a portion of the amount paid by the Series if the Class A
shares are redeemed before the Series has had an opportunity to realize the
anticipated benefits of having a large, long-term Class A shareholder account in
the Series. Class A shares on which such 1% sales distribution fee has been paid
may not be exchanged into a fund or series with a Rule 12b-1 plan for which the
payment provisions have not been in effect for at least one year.
The other Lord Abbett-sponsored funds and series which participate in the
Telephone Exchange Privilege (except Lord Abbett U.S. Government Securities
Money Market Fund, Inc. ("GSMMF") and certain series of Lord Abbett Tax-Free
Income Fund, Inc. and Lord Abbett Tax-Free Income Trust for which a Rule 12b-1
Plan is not yet in effect (collectively, the "Non-Plan Series")) are to
institute a CDRC with respect to their Class A shares on the same terms and
conditions. No CDRC will be charged on an exchange of shares between Lord Abbett
funds. Upon redemption of Class A 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
Class A Shares") are subject to a CDRC, the CDRC will carry over to the shares
being acquired, including GSMMF ("Acquired Class A Shares"). Any CDRC that is
carried over to Acquired Class A Shares is calculated as if the holder of the
Acquired Class A Shares had held those shares from the date on which he or she
became the holder of the Exchanged Class A Shares. Although GSMMF and the
Non-Plan 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 Class A 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 Class A Share 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 Class A Shares for which such shares were acquired).
No Class A share 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
Class A Shares, have been held continuously for 24 months from the end of the
month in which the original sale occurred. In determining whether a Class A
share 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.
CDRC for Class C Shares: As stated in the Prospectus, a 1% CDRC will also be
imposed with respect to those Class C shares (or Class C shares acquired through
exchange with any other Lord Abbett-sponsored fund or series) on which the
Series has paid, at the time of purchase, a service fee of 0.25% and a
distribution fee of 0.75%, if such shares are redeemed out of the Lord
Abbett-sponsored family of funds before the first anniversary of their original
purchase. The CDRC is received by the Series and is intended to reimburse all or
a portion of the amount paid by the Series if the Class C shares are redeemed
before the Series has had an opportunity to realize the anticipated benefits of
having a large, long-term Class C shareholder account in the Series.
No Class C share CDRC will be charged on an exchange of shares, although it will
be charged on behalf of and paid to the fund or series in which the original
purchase occurred, if shares subject to the Class C share CDRC are redeemed out
of the Lord Abbett-sponsored family of funds before the first anniversary of
their original purchase. Thus, if Class C shares of a participating fund or
series are acquired as a result of an exchange of its shares for those of
another such fund or series and the shares tendered ("Exchanged Class C Shares")
will be subject to a CDRC, the CDRC will carry over to the shares being acquired
("Acquired Class C Shares"). Any CDRC that is carried over to Acquired Class C
Shares is calculated as if the holder of the Acquired Class C Shares had held
those shares from the date on which he or she became the holder of Exchanged
Class C Shares.
In no event will the amount of the Class C share CDRC exceed 1% of the lesser of
(i) the net asset value of the Class C shares redeemed or(ii) the original cost
of such shares (or of Exchanged Class C Shares for which such shares were
acquired). No Class C share CDRC will be imposed when the investor redeems
(i)shares with respect to which no fund or series paid the 0.75% distribution
and 0.25% service fees (including shares acquired through reinvestment of
dividend income and capital gains distributions) or (ii) Class C shares which,
together with Exchanged Class C Shares, have been held continuously until the
first anniversary of their original purchase. In determining whether a Class C
share CDRC is payable (a) shares not subject to a CDRC will be redeemed before
shares subject to a CDRC and (b) shares subject to a CDRC and held the longest
will be the first to be redeemed.
Under 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 Class A on
Class C shares exchanged from a Lord Abbett-sponsored fund) currently owned by
you are credited as purchases (at their current offering prices on the date the
Statement is signed) toward achieving the stated investment. Shares valued at 5%
of the amount of intended purchases are escrowed and may be redeemed to cover
the additional sales charge payable if the Statement is not completed. The
Statement of Intention is neither a binding obligation on you to buy, nor on the
Series to sell, the full amount indicated.
As stated in the Prospectus, purchasers (as defined in the Prospectus) may
accumulate their Class A share investment in Lord Abbett-sponsored funds (other
than LAEF, LARF, LASF, and GSMMF, unless holdings in GSMMF are attributable to
Class A or Class C shares 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 Class A shares may be purchased at net asset
value by our trustees, employees of Lord Abbett, employees of our shareholder
servicing agent and employees of any securities dealer having a sales agreement
with Lord Abbett who consents to such purchases or by the trustee or custodian
under any pension or profit-sharing plan or Payroll Deduction IRA established
for the benefit of such persons or for the benefit of employees of any national
securities trade organization to which Lord Abbett belongs or any company with
an account(s) in excess of $10 million managed by Lord Abbett on a
private-advisory-account basis. For purposes of this paragraph, the terms
"trustees" and "employees" include a trustee's or employee's spouse (including
the surviving spouse of a deceased trustee or employee). The terms "our
trustees" and "employees of Lord Abbett" also include other family members and
retired trustees and employees.
Our Class A shares also may be purchased at net asset value (a) at $1 million or
more, (b) with dividends and distributions from other Lord Abbett-sponsored
funds, except for LARF, LAEF and LASF and except for dividends and distributions
paid on any Class C shares, (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. Class A Shares are offered at net asset value
to these investors for the purpose of promoting goodwill with employees and
others with whom Lord Abbett and/or the Fund have business relationships.
Our Class A shares also may be purchased at net asset value, subject to
appropriate documentation, through a securities dealer where the amount invested
represents redemption proceeds from shares ("Redeemed Shares") of a registered
open-end management investment company not distributed or managed by Lord Abbett
(other than a money market fund), if such redemption has occurred no more than
60 days prior to the purchase of our shares, the Redeemed Shares were held for
at least six months prior to redemption and the proceeds of redemption were
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 Class A shares may be issued at net asset value in exchange for the assets,
subject to possible tax adjustment, of a personal holding company or an
investment company. There are economies of selling efforts and sales-related
expenses with respect to offers to these investors and those referred to above.
The Prospectus briefly describes the Telephone Exchange Privilege. You may
exchange some or all of your Class A shares for Class A shares, and you may
exchange some or all of your Class C shares for Class C shares, of Lord
Abbett-sponsored funds offered at this time to the public, 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 being
exchanged must have a value equal to at least the minimum initial investment
required for the fund into which the exchange is made.
Shareholders in such other funds have the same right to exchange their shares
for the Series' shares. Exchanges are based on relative net asset values on the
day instructions are received by the Fund in Kansas City if the instructions are
received prior to the close of the NYSE in proper form. No sales charges are
imposed except in the case of exchanges of Class A shares 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, if any, 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.
A redemption order is in proper form when it contains all of the information and
documentation required by the order form or supplementally by Lord Abbett or the
Fund to carry out the order. The signature(s) and any legal capacity of the
signer(s) must be guaranteed by an eligible guarantor. See the Prospectus for
expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Trustees may authorize redemption of all of the shares in any
account in which there are fewer than 50 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least 60 days' prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
Under the Div-Move service described in the Prospectus, you can invest the
dividends paid on your account into an existing account in any other Lord
Abbett-sponsored fund or series that issues Class A shares or Class B shares, as
the case may be. 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 is described in the Prospectus. To avail
yourself of this method you complete the application form, selecting the time
and amount of your bank checking account withdrawals and the funds for
investment, include a voided, unsigned check and complete the bank
authorization.
The Systematic Withdrawal Plan (the "SWP") also is described in the Prospectus.
You may establish a SWP if you own or purchase uncertificated shares having a
current offering price value of at least $10,000. Lord Abbett prototype
retirement plans have no such minimum. The SWP involves the planned redemption
of shares on a periodic basis by receiving either fixed or variable amounts at
periodic intervals. Since the value of shares redeemed may be more or less than
their cost, gain or loss may be recognized for income tax purposes on each
periodic payment. Normally, you may not make regular investments at the same
time you are receiving systematic withdrawal payments because it is not in your
interest to pay a sales charge on new investments when in effect a portion of
that new investment is soon withdrawn. The minimum investment accepted while a
withdrawal plan is in effect is $1,000. The SWP may be terminated by you or by
us at any time by written notice.
The Prospectus indicates the types of retirement plans for which Lord Abbett
provides forms and explanations. Lord Abbett makes available the retirement plan
forms and custodial agreements for IRAs (Individual Retirement Accounts
including Simplified Employee Pensions), 403(b) plans and qualified pension and
profit-sharing plans, including 401(k) plans. The forms name Investors Fiduciary
Trust Company as custodian and contain specific information about the plans.
Explanations of the eligibility requirements, annual custodial fees and
allowable tax advantages and penalties are set forth in the relevant plan
documents. Adoption of any of these plans should be on the advice of your legal
counsel or qualified tax adviser.
6.
Past Performance
The Series will compute 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 one thousand dollars,
which represents a hypothetical initial investment. The calculation assumes
deduction of the maximum sales charge from the initial amount invested and
reinvestment of all income dividends and capital gains distributions on the
reinvestment dates at prices calculated as stated in the Prospectus. The ending
redeemable value is determined by assuming a complete redemption at the end of
the period(s) covered by the average annual total return computation.
Our yield quotation will be 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' maximum offering price per share on the last day of the period. To
this quotient add one. This sum is multiplied by itself five times. Then one is
subtracted from the product of this multiplication and the remainder is
multiplied by two.
These figures represent past performance, and an investor should be aware that
the investment return and principal value of a 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 such 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 will generally 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 tax
purposes as a long-term capital loss to the extent of any capital gains
distributions which you received with respect to such shares. Losses on the sale
of stock or securities are not deductible if, within a period beginning 30 days
before the date of the sale and ending 30 days after the date of the sale, the
taxpayer acquires stock or securities that are substantially identical.
The Series will be subject to a 4% non-deductible excise tax on certain amounts
not distributed (and not treated as having been distributed) on a timely basis
in accordance with a calendar-year distribution requirement. The Series intends
to distribute to shareholders each year an amount adequate to avoid the
imposition of such excise tax.
8.
Information About the Fund
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment accounts. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Fund's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security 7 days
before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account
considers a trade or trades in such security, from profiting on trades of the
same security within 60 days and from trading on material and non-public
information. The Code imposes certain similar requirements and restrictions on
the independent directors and trustees of each Lord Abbett-sponsored mutual fund
to the extent contemplated by the recommendations of the Advisory Group.
<PAGE>
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
None.
(b) Exhibits -
99.B4 Form of Specimen Certificate****
99.B5 Form of Addendum to Management Agreement****
99.B6 Distribution agreement between Registrant and Lord
Abbett & Co.****
99.B7 Retirement Plan for Non-interested Person Trustees
and Trustees of Lord Abbett Funds.**
Lord Abbett Prototype Retirements Plans***
(1) 401(k)
(2) IRA
(3) 403(b)
(4) Profit-Sharing, and
(5) Money Purchases
99.B15 Form of Rule 12b-1 Distribution
Plan and Agreement.*
* Filed herewith.
** Incorporated by reference to Post-Effective Amendment No. 7 to the
Registration Statement (on Form N1-A) of Lord Abbett Equity Fund (File
No. 811-6033).
*** Incorporated by reference to Post-Effective Amendment No. 6 to
the Registration Statement (on Form N1-A) of Lord Abbett Securities
Trust (File No. 811-7538).
**** Previously filed.
Item 25. Persons Controlled by or Under Common Control with Registrant
None.
Item 26. Number of Record Holders of Securities
NONE
Item 27. Indemnification
Registrant is incorporated under the laws of the State of Maryland and is
subject to Section 2-418 of the Corporations and Associations Article of
the Annotated Code of the State of Maryland controlling the indemnification
of Trustees and officers. Since Registrant has its executive offices in
the State of New York, and is qualified as a foreign corporation doing
business in such State, the persons covered by the foregoing statute may
also be entitled to and subject to the limitations of the indemnification
provisions of Section 721-726 of the New York Business Corporation Law.
The general effect of these statutes is to protect officers, Trustees and
employees of Registrant against legal liability and expenses incurred by
reason of their positions with the Registrant. The statutes provide for
indemnification for liability for proceedings not brought on behalf of the
corporation and for those brought on behalf of the corporation, and in each
case place conditions under which indemnification will be permitted,
including requirements that the officer, Trustee or employee acted in good
faith. Under certain conditions, payment of expenses in advance of final
disposition may be permitted. The By-Laws of Registrant, without limiting
the authority of Registrant to indemnify any of its officers, employees or
agents to the extent consistent with applicable law, makes the
indemnification of its Trustees mandatory subject only to the conditions
and limitations imposed by the above-mentioned Section 2-418 of Maryland
Law and by the provisions of Section 17(h) of the Investment Company Act of
1940 as interpreted and required to be implemented by SEC Release No.
IC-11330 of September 4, 1980.
In referring in its By-Laws to, and making indemnification of Trustees
subject to the conditions and limitations of, both Section 2-418 of the
Maryland Law and Section 17(h) of the Investment Company Act of 1940,
Registrant intends that conditions and limitations on the extent of the
indemnification of Trustees imposed by the provisions of either Section
2-418 or Section 17(h) shall apply and that any inconsistency between the
two will be resolved by applying the provisions of said Section 17(h) if
the condition or limitation imposed by Section 17(h) is the more stringent.
In referring in its By-Laws to SEC Release No. IC-11330 as the source for
interpretation and implementation of said Section 17(h), Registrant
understands that it would be required under its By-Laws to use reasonable
and fair means in determining whether indemnification of a Trustee should
be made and undertakes to use either (1) a final decision on the merits by
a court or other body before whom the proceeding was brought that the
person to be indemnified ("indemnitee") was not liable to Registrant or to
its security holders by reason of willful malfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
his office ("disabling conduct") or (2) in the absence of such a decision,
a reasonable determination, based upon a review of the facts, that the
indemnitee was not liable by reason of such disabling conduct, by (a) the
vote of a majority of a quorum of Trustees who are neither "interested
persons" (as defined in the 1940 Act) of Registrant nor parties to the
proceeding, or (b) an independent legal counsel in a written opinion. Also,
Registrant will make advances of attorneys' fees or other expenses incurred
by a Trustee in his defense only if (in addition to his undertaking to
repay the advance if he is not ultimately entitled to indemnification) (1)
the indemnitee provides a security for his undertaking,
<PAGE>
(2) Registrant shall be insured against losses arising by reason of any
lawful advances, or (3) a majority of a quorum of the non-interested,
non-party Trustees of Registrant, or an independent legal counsel in a
written opinion, shall determine, based on a review of readily available
facts, that there is reason to believe that the indemnitee ultimately will
be found entitled to indemnification.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to 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. In addition, Registrant maintains a Trustees'
and officers' errors and omissions liability insurance policy protecting
Trustees and officers against liability for breach of duty, negligent act,
error or omission committed in their capacity as Trustees or officers. The
policy contains certain exclusions, among which is exclusion from coverage
for active or deliberate dishonest or fraudulent acts and exclusion for
fines or penalties imposed by law or other matters deemed uninsurable.
Item 28. Business and Other Connections of Investment Adviser
Lord, Abbett & Co. acts as investment advisor for seventeen other open-end
investment companies (of which it is principal underwriter for fifteen),
and as investment adviser to approximately 5,100 private accounts. Other
than acting as Trustees 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 Trustee, officer, employee, partner or trustee of any
entity except as follows:
John J. Walsh
Trustee
The Brooklyn Hospital Center
100 Parkside Avenue
Brooklyn, N.Y.
Item 29. Principal Underwriter
(a) Affiliated Fund, Inc.
Lord Abbett U. S. Government Securities Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Value Appreciation Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett California Tax-Free Income Fund, Inc.
Lord Abbett Fundamental Value Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett U. S. Government Securities Money Market Fund, Inc.
Lord Abbett Series Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Tax-Free Income Trust
Lord Abbett Securities Trust
Lord Abbett Investment Trust
Lord Abbett Research Fund, Inc.
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
Robert S. Dow President
Kenneth B. Cutler Vice President & Secretary
Stephen I. Allen Vice President
Daniel E. Carper Vice President
Thomas S. Henderson Vice President
Robert G. Morris Vice President
E. Wayne Nordberg Vice President
John J. Walsh Vice President
(1) Each of the above has a principal business address
767 Fifth Avenue, New York, NY 10153
(c) Not applicable
Item 30. Location of Accounts and Records
Registrant maintains the records, required by Rules 31a - 1(a)
and (b), and 31a - 2(a) at its main office.
Lord, Abbett & Co. maintains the records required by Rules 31a -
1(f) and 31a - 2(e) at its main office.
Certain records such as canceled stock certificates and correspondence may be
physically maintained at the main office of the Registrant's Transfer Agent,
Custodian, or Shareholder Servicing Agent within the requirements of Rule 31a-3.
Item 31. Management Services
None
Item 32. Undertakings
(c) The Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
The registrant undertakes, if requested to do so by the holders of at
least 10% of the registrant's outstanding shares, to call a meeting of
shareholders for the purpose of voting upon the question of removal of
a director or directors and to assist in communications with other
shareholders as required by Section 16(c).
<PAGE>
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
9th 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 9, 1996
/s/ John J. Gargana, Jr. Vice President & February 9, 1996
Chief Financial Officer
/s/ E. Thayer Bigelow Trustee February 9, 1996
/s/ Stewart S. Dixon Trustee February 9, 1996
/s/ Robert S. Dow Trustee & President February 9, 1996
/s/ John C. Jansing Trustee February 9, 1996
/s/ C. Alan MacDonald Trustee February 9, 1996
/s/ Hansel B. Millican, Jr. Trustee February 9, 1996
/s/ Thomas J. Neff Trustee February 9, 1996
<PAGE>
Rule 12b-1 Distribution Plan and Agreement
Lord Abbett Investment Trust. -- Class C Shares
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of June 8,
1996 by and between LORD ABBETT INVESTMENT TRUST., a Delaware business trust
(the "Trust"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability
company (the "Distributor").
WHEREAS, the Trust is an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"Act"); and the Distributor is the exclusive selling agent of the Trust's Class
C shares of capital stock (the "Shares") pursuant to the Distribution Agreement
between the Trust and the Distributor, dated as of the date hereof, and
WHEREAS, the Trust desires to adopt a Distribution Plan and
Agreement (the "Plan") with the Distributor, as permitted by Rule 12b-1 under
the Act, pursuant to which the Trust may make certain payments to the
Distributor for payment to institutions and persons permitted by applicable law
and/or rules to receive such payments ("Authorized Institutions") in connection
with sales of Shares and for use by the Distributor as provided in paragraph 3
hereof, and
WHEREAS, the Trust's Board of Trustees has determined that
there is a reasonable likelihood that the Plan will benefit the Trust and the
holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and
of other good and valuable consideration, receipt of which is hereby
acknowledged, it is agreed as follows:
1. The Trust hereby authorizes the Distributor to enter into
agreements with Authorized Institutions (the "Agreements") which may provide for
the payment to such Authorized Institutions of distribution and service fees
which the Distributor receives from the Trust in order to provide incentives to
such Authorized Institutions (i) to sell Shares and (ii) to provide continuing
information and investment services to their accounts holding Shares and
otherwise to encourage their accounts to remain invested in the Shares. No
payments shall be made hereunder to any Authorized Institution with respect to
any accounts for which tracking data is not available. The Distributor may, from
time to time, waive or defer payment of some fees payable at the time of the
sale of Shares provided for under paragraph 2 hereof.
<PAGE>
2. Subject to possible reduction as provided below in this
paragraph 2, the Trust shall pay to the Distributor fees (i) at the time of sale
of Shares (a) for services, not to exceed .25 of 1% of the net asset value of
the Shares sold and (b) for distribution, not to exceed .75 of 1% of the net
asset value of the Shares sold; and (ii) at each quarter-end after the first
anniversary of the sale of Shares (a) for services, at an annual rate not to
exceed .25 of 1% of the average annual net asset value of Shares outstanding for
one year or more and (b) for distribution, at an annual rate not to exceed .75
of 1% of the average annual net asset value of Shares outstanding for one year
or more. For purposes of clause (ii) above, (A) Shares issued pursuant to an
exchange for Class C shares of another Lord Abbett-sponsored Trust (or for
shares of a Trust acquired by the Trust) will be credited with the time held
from the initial purchase of such other shares when determining how long Shares
mentioned in clause (ii) have been outstanding and (B) payments will be based on
Shares outstanding during any such quarter. Sales in clause (i) above exclude
Shares issued for reinvested dividends and distributions, and Shares outstanding
in clause (ii) above include Shares issued for reinvested dividends and
distributions which have been outstanding for one year or more. The service fees
mentioned in this paragraph are for the purposes mentioned in clause (ii) of
paragraph 1 of this Plan and the distribution fees mentioned in this paragraph
are for the purposes mentioned in clause (i) of paragraph 1 and the second
sentence of paragraph 3 of this Plan. The Distributor will monitor the payments
hereunder and shall reduce such payments or take such other steps as may be
necessary to assure that (x) the payments pursuant to this Plan shall be
consistent with Article III, Section 26, subparagraphs (d)(2) and (5) of the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
with respect to investment companies with asset-based sales charges and service
fees (the "NASD") as the same may be in effect from time to time and (y) the
Trust shall not pay with respect to any Authorized Institution service fees
equal to more than .25 of 1% of the average annual net asset value of Shares
sold by (or attributable to shares sold by) such Authorized Institution and held
in an account covered by an Agreement.
3. The Distributor may use amounts received as distribution
fees hereunder from the Trust to finance any activity which is primarily
intended to result in the sale of Shares including, but not limited to,
commissions or other payments relating to selling or servicing efforts. Without
limiting the generality of the foregoing, the Distributor may apply up to 10 of
the 75 basis points designated as the distribution fee referred to in clause
(ii)(b) of paragraph 2 to expenses incurred by the Distributor if such expenses
are primarily intended to result in the sale of Shares. The Trust's Board of
Trustees (in the manner contemplated in paragraph 10 of this Plan) shall approve
the timing, categories and calculation of any payments under this paragraph 3
other than those referred to in the foregoing sentence.
4. The net asset value of the Shares shall be determined as
provided in the Articles of Incorporation of the Trust. If the Distributor
waives all or a portion of fees which are to be paid by the Trust hereunder, the
Distributor shall not be deemed to have waived its rights under this Agreement
to have the Trust pay such fees in the future.
5. The Secretary of the Trust, or in his absence the Chief
Financial Officer, is hereby authorized to direct the disposition of monies paid
or payable by the Trust hereunder and shall provide to the Trust's Board of
Trustees, and the Board of Trustees shall review, at least quarterly, a written
report of the amounts so expended pursuant to this Plan and the purposes for
which such expenditures were made.
6. Neither this Plan nor any other transaction between the
parties hereto pursuant to this Plan shall be invalidated or in any way affected
by the fact that any or all of the Trustees, officers, shareholders, or other
representatives of the Trust are or may be "interested persons" of the
Distributor, or any successor or assignee thereof, or that any or all of the
Trustees, Trustees, officers, partners, or other representatives of the
Distributor are or may be "interested persons" of the Trust, except as otherwise
may be provided in the Act.
7. The Distributor shall give the Trust the benefit of the
Distributor's best judgment and good faith efforts in rendering services under
this Plan. Other than to abide by the provisions hereof and render the services
called for hereunder in good faith, the Distributor assumes no responsibility
under this Plan and, having so acted, the Distributor shall not be held liable
or held accountable for any mistake of law or fact, or for any loss or damage
arising or resulting therefrom suffered by the Trust or its stockholders, or by
creditors, Trustees or officers of the Trust; provided however, that nothing
herein shall be deemed to protect the Distributor against any liability to the
Trust or its stockholders by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder, or by reason of the
reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective on the date hereof, and
shall continue in effect for a period of more than one year from such date only
so long as such continuance is specifically approved at least annually by a vote
of the Board of Trustees of the Trust, including the vote of a majority of the
Trustees who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of this Plan or in any agreement
related to this Plan, cast in person at a meeting called for the purpose of
voting on such renewal.
9. This Plan may not be amended to increase materially the
amount to be spent by the Trust hereunder without the vote of a majority of its
outstanding voting securities and each material amendment must be approved by a
vote of the Board of Trustees of the Trust, including the vote of a majority of
the Trustees who are not "interested persons" of the Trust and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement related to this Plan, cast in person at a meeting called for the
purpose of voting on such amendment.
10. Amendments to this Plan other than material amendments of
the kind referred to in the foregoing paragraph 9 of this Plan may be adopted by
a vote of the Board of Trustees of the Trust, including the vote of a majority
of the Trustees who are not "interested persons" of the Trust and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement related to this Plan. The Board of Trustees of the Trust may, by such
a vote, interpret this Plan and make all determinations necessary or advisable
for its administration.
11. This Plan may be terminated at any time without the
payment of any penalty by (a) the vote of a majority of the Trustees of the
Trust who are not "interested persons" of the Trust and have no direct or
indirect financial interest in the operation of this Plan or in any agreement
related to this Plan, or (b) by a shareholder vote in compliance with Rule 12b-1
and Rule 18f-3 under the Act as in effect at such time. This Plan shall
automatically terminate in the event of its assignment.
12. So long as this Plan shall remain in effect, the selection
and nomination of those Trustees of the Trust who are not "interested persons"
of the Trust are committed to the discretion of such disinterested Trustees. The
terms "interested persons," "assignment" and "vote of a majority of the
outstanding voting securities" shall have the same meaning as those terms are
defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and on its behalf by its duly authorized
representative as of the date first above written.
LORD ABBETT INVESTMENT TRUST
By:
Chairman
ATTEST:
Assistant Secretary
LORD ABBETT DISTRIBUTOR LLC
By:
Form of Rule 12b-1 Distribution Plan and Agreement
Lord Abbett Investment Trust -- Class A Shares
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of October
20, 1993 by and between LORD ABBETT INVESTMENT TRUST, a Delaware business Trust
corporation (the "Trust"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited
liability company (the "Distributor").
WHEREAS, the Trust is an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"Act"); and the Distributor is the exclusive selling agent of the Trust's Class
A shares of capital stock (the "Shares") pursuant to the Distribution Agreement
between the Trust and the Distributor, dated as of the date hereof (the
"Distribution Agreement").
WHEREAS, the Trust desires to adopt a Distribution Plan and
Agreement (the "Plan") with the Distributor, as permitted by Rule 12b-1 under
the Act, pursuant to which the Trust may make certain payments to the
Distributor to be used by the Distributor or paid to institutions and persons
permitted by applicable law and/or rules to receive such payments ("Authorized
Institutions") in connection with sales of Shares and/or servicing of accounts
of shareholders holding Shares.
WHEREAS, the Plan will succeed a Rule 12b-1 Distribution Plan
and Agreement between the Trust and Lord, Abbett & Co. ("Lord Abbett"), an
affiliate of the Distributor.
WHEREAS, the Trust's Board of Trustees has determined that
there is a reasonable likelihood that the Plan will benefit the Trust and the
holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and
of other good and valuable consideration, receipt of which is hereby
acknowledged, it is agreed as follows.
1. The Trust hereby authorizes the Distributor to enter into
agreements with Authorized Institutions (the "Agreements") which may provide for
the payment to such Authorized Institutions of distribution and service fees
which the Distributor receives from the Trust in order to provide additional
incentives to such Authorized Institutions (i) to sell Shares and (ii) to
provide continuing information and investment services to their accounts holding
Shares and otherwise to encourage their accounts to remain invested in the
Shares. No payments shall be made hereunder to any Authorized Institution with
respect to any accounts for which tracking data is not available.
<PAGE>
2. The Trust also hereby authorizes the Distributor to use
payments received hereunder from the Trust in order to (a) finance any activity
which is primarily intended to result in the sale of Shares and (b) provide
continuing information and investment services to shareholder accounts not
serviced by Authorized Institutions receiving a service fee from the Distributor
hereunder and otherwise to encourage such accounts to remain invested in the
Shares; provided that any payments referred to in the foregoing clause (a) shall
be authorized by the Board of Trustees of the Trust by a vote of the kind
referred to in paragraph 10 of this Plan and (ii) any payments referred to in
clause (b) shall not exceed the service fee rate applicable at the time under
paragraph 3 of this Plan.
3. The Trust is authorized to pay the Distributor hereunder
for remittance to Authorized Institutions and/or use by the Distributor pursuant
to this Plan (a) service fees and (b) distribution fees, each at an annual rate
not to exceed .25 of 1% of the average annual net asset value of Shares
outstanding, except that service fees payable with respect to Shares that were
initially issued, or are attributable to shares that were initially issued by
the Trust or a predecessor Trust prior to June 1, 1990 shall not exceed .15 of
1% of the average net asset value of such Shares. The Board of Trustees of the
Trust shall from time to time determine the amounts, within the foregoing
maximum amounts, that the Trust may pay the Distributor hereunder. Any such fees
(which may be waived by the Authorized Institutions in whole or in part) may be
calculated and paid quarterly or more frequently if approved by the Board of
Trustees of the Trust. Such determinations and approvals by the Board of
Trustees shall be made and given by votes of the kind referred to in paragraph
10 of this Plan. Payments by holders of Shares to the Trust of contingent
deferred reimbursement charges relating to distribution fees paid by the Trust
hereunder shall reduce the amount of distribution fees for purposes of the
annual 0.25% distribution fee limit. The Distributor will monitor the payments
hereunder and shall reduce such payments or take such other steps as may be
necessary to assure that (i) the payments pursuant to this Plan shall be
consistent with Article III, Section 26, subparagraphs (d)(2) and (5) of the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
with respect to investment companies with asset-based sales charges and service
fees, as the same may be in effect from time to time and (ii) the Trust shall
not pay with respect to any Authorized Institution service fees equal to more
than .25 of 1% of the average annual net asset value of Shares sold by (or
attributable to Shares or shares sold by) such Authorized Institution and held
in an account covered by an Agreement.
4. The net asset value of the Shares shall be determined as
provided in the Articles of Incorporation of the Trust. If the Distributor
waives all or a portion of the fees which are to be paid by the Trust hereunder,
the Distributor shall not be deemed to have waived its rights under this
Agreement to have the Trust pay such fees in the future.
5. The Secretary of the Trust, or in his absence the Chief
Financial Officer, is hereby authorized to direct the disposition of monies paid
or payable by the Trust hereunder and shall provide to the Trust's Board of
Trustees, and the Trustees shall review at least quarterly, a written report of
the amounts so expended pursuant to this Plan and the purposes for which such
expenditures were made.
6. Neither this Plan nor any other transaction between the
parties hereto pursuant to this Plan shall be invalidated or in any way affected
by the fact that any or all of the Trustees, officers, shareholders, or other
representatives of the Trust are or may be "interested persons" of the
Distributor, or any successor or assignee thereof, or that any or all of the
Trustees, officers, partners, or other representatives of the Distributor are or
may be "interested persons" of the Trust, except as may otherwise be provided in
the Act.
7. The Distributor shall give the Trust the benefit of the
Distributor's best judgment and good faith efforts in rendering services under
this Plan. Other than to abide by the provisions hereof and render the services
called for hereunder in good faith, the Distributor assumes no responsibility
under this Plan and, having so acted, the Distributor shall not be held liable
or held accountable for any mistake of law or fact, or for any loss or damage
arising or resulting therefrom suffered by the Trust or any of the shareholders,
creditors, Trustees, or officers of the Trust; provided however, that nothing
herein shall be deemed to protect the Distributor against any liability to the
Trust or its shareholders by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder, or by reason of the
reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective upon the date hereof, and
shall continue in effect for a period of more than one year from that date only
so long as such continuance is specifically approved at least annually by a vote
of the Board of Trustees of the Trust, including the vote of a majority of the
Trustees who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of this Plan or in any agreement
related to this Plan, cast in person at a meeting called for the purpose of
voting on such renewal.
9. This Plan may not be amended to increase materially the
amount to be spent by the Trust hereunder above the maximum amounts referred to
in paragraph 3 of this Plan without a shareholder vote in compliance with Rule
12b-1 and Rule 18f-3 under the Act as in effect at such time, and each material
amendment must be approved by a vote of the Board of Trustees of the Trust,
including the vote of a majority of the Trustees who are not "interested
persons" of the Trust and who have no direct or indirect financial interest in
the operation of this Plan or in any agreement related to this Plan, cast in
person at a meeting called for the purpose of voting on such amendment.
Amendments to this Plan which do not increase materially the amount to be spent
by the Trust hereunder above the maximum amounts referred to in paragraph 3 of
this Plan may be made pursuant to paragraph 10 of this Plan.
10. Amendments to this Plan other than material amendments of
the kind referred to in the forgoing paragraph 9 may be adopted by a vote of the
Board of Trustees of the Trust, including the vote of a majority of the Trustees
who are not "interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of this Plan or in any agreement related to
this Plan. The Board of Trustees of the Trust may, by such a vote, interpret
this Plan and make all determinations necessary or advisable for its
administration.
11. This Plan may be terminated at any time without the
payment of any penalty (a) by the vote of a majority of the Trustees of the
Trust who are not "interested persons" of the Trust and have no direct or
indirect financial interest in the operation of this Plan or in any agreement
related to the Plan, or (b) by a shareholder vote in compliance with Rule 12b-1
and Rule 18f-3 under the Act as in effect at such time. This Plan shall
automatically terminate in the event of its assignment.
12. So long as this Plan shall remain in effect, the selection
and nomination of those Trustees of the Trust who are not "interested persons"
of the Trust are committed to the discretion of such disinterested Trustees. The
terms "interested persons," "assignment" and "vote of a majority of the
outstanding voting securities" shall have the same meanings as those terms are
defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and on its behalf by its duly authorized
representative as of the date first above written.
LORD ABBETT INVESTMENT TRUST
By:_____________________________
President
ATTEST:
- -------------------
Assistant Secretary
LORD ABBETT DISTRIBUTOR LLC
By:_____________________________
