Draft--March 11, 1996
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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-b(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
LORD ABBETT INVESTMENT TRUST
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
--------------------
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[_] Fee paid previously with preliminary materials
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE>
[Letterhead of Lord Abbett Investment Trust]
FROM THE CHAIRMAN OF THE BOARD
- - - ------------------------------
Dear Shareholder,
The Board of Trustees of Lord Abbett Investment Trust (the "Fund") has
called a Special Meeting of Shareholders of each series of the Fund (the
"Series") to consider the matters described below. The board recommends that
you vote in favor of each proposal.
First, the board recommends that you vote to reelect the current trustees
of the Fund and to ratify the selection of Deloitte & Touche LLP as the Fund's
independent public accountants.
Second, the board recommends that shareholders of each of the Lord Abbett
Limited Duration Government Series and the Balanced Series vote in favor of a
proposed revision of the fundamental investment policies and restrictions of
such Series which is intended to provide for greater flexibility in managing
such Series' portfolio and to permit the board to change applicable policies in
the future without incurring the expense of shareholder meetings.
Third, the trustees propose that each Series enter into a new 12b-1 Plan
and Dis tribution Agreement for the existing class of shares. This new 12b-1
Plan has several changes which are designed primarily to maintain the
competitive position of the Fund and to encourage sales of Fund shares. These
changes, and the estimated effect of these changes on each Series' expenses, are
described in detail in the proxy statement.
These various matters are to be voted upon at a meeting of the
shareholders of the Fund to be held in New York on Wednesday, June 19, 1996 at
11:00 a.m.
YOUR VOTE ON THESE ISSUES IS CRITICAL. TO ENSURE THAT YOUR VOTE IS
COUNTED, IT IS IMPORTANT THAT YOU:
1. REVIEW THE ENCLOSED PROXY STATEMENT;
2. COMPLETE AND SIGN THE ENCLOSED PROXY CARD; AND
3. RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE.
Your prompt response will help save the Fund the expense of additional
solicitations.
We encourage you to review the enclosed materials. Because we believe
these proposals are in the best interests of shareholders, we encourage you to
vote in favor of the proposals.
Sincerely,
Ronald P. Lynch
Chairman of the Board
April 17, 1996
<PAGE>
PRELIMINARY COPY
LORD ABBETT INVESTMENT TRUST
767 Fifth Avenue
New York, New York 10153
Tel. No. (212) 848-1800
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD
JUNE 19, 1996
PROXY STATEMENT
You are urged to sign and mail the proxy card in the enclosed postage-paid
envelope whether you own a few or many shares. Your prompt return of the
proxy may save the Fund the necessity and expense of further solicitations to
insure a quorum at this meeting.
<PAGE>
LORD ABBETT INVESTMENT TRUST
767 Fifth Avenue
New York, New York 10153
Telephone No. (212) 848-1800
Notice of Special Meeting of Shareholders
To Be Held June 19, 1996 April 17, 1996
Notice is given hereby of a special meeting of the shareholders of each of the
Lord Abbett Limited Duration Government Series and the Lord Abbett Balanced
Series (each, a "Series", and collectively the "Series") of Lord Abbett
Investment Trust (the "Fund"). The meeting will be held at the offices of Lord,
Abbett & Co., on the 11th floor of The General Motors Building, 767 Fifth
Avenue, New York, New York, on Wednesday, June 19, 1996, at 11:00 a.m., for the
following purposes and to transact such other business as may properly come
before the meeting and any adjournments thereof.
ITEM 1. To elect trustees;
ITEM 2. To ratify or reject the selection of Deloitte & Touche LLP as
independent public accountants of the Fund for the current fiscal year;
ITEM 3. To approve or disapprove certain changes in the fundamental investment
policies and restrictions of each Series;
ITEM 4. To approve or disapprove a new Distribution Plan and Agreement for the
existing class of shares of each Series pursuant to Rule 12b-1 under
the Investment Company Act of 1940;
By order of the Board of Trustees
Kenneth B. Cutler
Vice President and Secretary
The Board of Trustees has fixed the close of business on March 22, 1996 as the
record date for determination of shareholders of the Fund entitled to notice of
and to vote at the meeting. Shareholders are entitled to one vote for each share
held. As of March 22, 1996, there were ____ shares of the Limited Duration
Government Series and ____ shares of the Balanced Series issued and outstanding.
- - - --------------------------------------------------------------------------------
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD.
SIGN, DATE AND RETURN IT IN THE ENVELOPE PROVIDED.
TO SAVE THE COST OF ADDITIONAL SOLICITATIONS, PLEASE MAIL YOUR PROXY PROMPTLY.
<PAGE>
LORD ABBETT INVESTMENT TRUST
767 Fifth Avenue
New York, New York 10153
April 17, 1996
PROXY STATEMENT
---------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Trustees of Lord Abbett Investment
Trust, a diversified, open-end management investment company organized as a
Delaware business trust (the "Fund"), for use at a special meeting of
shareholders of each of the Lord Abbett Limited Duration Government Series and
the Lord Abbett Balanced Series (each, a "Series", and collectively the
"Series") of the Fund to be held at 11:00 a.m. on Wednesday, June 19, 1996 at
the offices of Lord, Abbett & Co., the investment manager and principal
underwriter of the Fund ("Lord Abbett"), on the 11th floor of the General Motors
Building, 767 Fifth Avenue, New York, New York 10153, and at any adjournments
thereof. This proxy statement and the enclosed proxy card are first being
mailed to shareholders on or about April 17,1996.
At the close of business on March 22, 1996 (the "Record Date"), there were
issued and outstanding ____ shares of the Limited Duration Government Series and
____ shares of the Balanced Series. Only shareholders of record at the close of
business on the Record Date are entitled to notice of, and to vote at, the
special meeting or any adjournment thereof. Proxies will be solicited by mail.
Additional solicitations may be made by telephone, facsimile or personal contact
by officers or employees of Lord Abbett and its affiliates. The Fund may also
request brokerage houses, cus todians, nominees, and fiduciaries who are
shareholders of record to forward proxy materials to beneficial owners. D.F.
King & Co. has been retained to assist in the solicitation of proxies at an
estimated cost of $_______. The cost of the solicitation will be borne by
_____________.
Shareholders are entitled to one vote for each full share, and a pro
portionate vote for each fractional share, of the Fund held as of the Record
Date. Under Delaware law, shares owned by two or more persons (whether as joint
tenants, co-fiduciaries or otherwise) will be voted as follows, unless a written
instrument or court order providing to the contrary has been filed with the
Secretary of the Fund: (1) if only one votes, that vote binds all; (2) if more
- -
than one votes, the vote of the majority binds all; and (3) if more than one
-
votes and the vote is evenly divided, the vote will be cast proportionately. If
the enclosed form of proxy is properly executed and returned in time to be voted
at the meeting, the proxies named therein will vote the shares represented by
the proxy in accordance with the instructions marked thereon. Unmarked proxies
will be voted FOR each of the items described in this Proxy Statement and any
other matters as deemed appropriate. A proxy may be revoked by the signer at
any time at or before the meeting by written notice to the Fund, by execution of
a later-dated proxy or by voting in person at the meeting.
<PAGE>
1. ELECTION OF TRUSTEES
The nominees for election as trustees are Ronald P. Lynch, Robert S. Dow,
E. Thayer Bigelow, Stewart S. Dixon, John C. Jansing, C. Alan MacDonald, Hansel
B. Millican, Jr. and Thomas J. Neff, who have been nominated by the Board of
Trustees to succeed themselves. The individuals named as proxies intend to vote
the proxies, unless otherwise directed, in favor of the election of such
nominees, each of whom has agreed to continue to serve as a trustee of the Fund.
Management of the Fund has no reason to believe that any nominee will be unable
to serve as a trustee. If any nominee should be unable to serve as a trustee,
it is the intention of the individuals named as proxies to vote for the election
of such person or persons as the Board of Trustees may, in its discretion,
recommend.
Information about each person nominated for election as a trustee is set
forth in the following table. Except where indicated, each of the persons
listed in the table has held the principal occupation listed opposite his name
for the past five years.
Names and Ages of Principal Occupation and Director- Trustee of
Trustees of the Fund ships the Fund Since
- - - ---------------------- ----------------------------------- --------------
Ronald P. Lynch (1)(2) Chairman of the Board of the Fund. 1993
60 Partner of Lord Abbett.
Robert S. Dow (1)(2) President of the Fund. 1993
51 Partner of Lord Abbett.
E. Thayer Bigelow President and Chief Executive of 1994
(2) 54 Time Warner Cable Programming,
Inc. Formerly President and Chief
Operating Officer of Home Box
Office, Inc.
Stewart S. Dixon (2) Partner in the law firm of Wildman, 1993
65 Harrold, Allen & Dixon.
John C. Jansing (2) Retired. Former Chairman of Inde- 1993
70 pendent Election Corporation of
America, a proxy tabulating firm.
2
<PAGE>
Names and Ages of Principal Occupation and Director- Trustee of
Trustees of the Fund ships the Fund Since
- - - ---------------------- ----------------------------------- --------------
C. Alan MacDonald (2) General Partner, The Marketing 1993
62 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 and Chief
Executive Officer of Nestle Foods
Corp., and prior to that, President
and Chief Executive Officer 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.
Hansel B. Millican, Jr. President and Chief Executive Officer 1993
(2) 67 of Rochester Button Company.
Thomas J. Neff (2) President, Spencer Stuart & Asso- 1993
58 ciates, an executive search consulting
firm.
- - - ---------------
(1) "Interested person" of the Fund and Lord Abbett, within the meaning of the
Act, because of his association with Lord Abbett.
(2) Also a director or trustee of the other Lord Abbett-sponsored funds except
for Lord Abbett Research Fund, Inc., of which only Messrs. Lynch, Dow,
Millican and Neff are directors.
Listed below is the number of shares of the Fund owned beneficially by
each trustee as of March 22, 1996, together with the number of "phantom" shares
credited to the account of each trustee under a plan (the "Deferred Plan")
permitting independent trustees to defer their trustees' fees and to have the
deferred amounts deemed invested in shares of the Fund for later payment. Also
shown is the number of shares owned beneficially by the trustees and officers as
a group, together with such "phantom" shares credited to the accounts of
trustees and officers as a group. In each case, the amounts shown are less than
1% of the Fund's outstanding shares of beneficial interest.
Number of Shares Beneficially Owned
Name and Phantom Shares/(1)/
--------------- -----------------------------------
Ronald P. Lynch 0
Robert S. Dow 23,494
E. Thayer Bigelow 9
Stewart S. Dixon 12
John C. Jansing 12
3
<PAGE>
Number of Shares Beneficially Owned
Name and Phantom Shares/(1)/
--------------- -----------------------------------
C. Alan MacDonald 12
Hansel B. Millican, Jr. 12
Thomas J. Neff 12
Trustees and Officers
as a group 24,951
___________________
(1) Of the shares listed in the foregoing table, the following constitute
"phantom" shares credited to trustees under the Deferred Plan: Mr.
Bigelow, 9 shares; Mr. Dixon, 12 shares; Mr. Jansing, 12 shares; Mr.
MacDonald, 12 shares; Mr. Millican, 12 shares; Mr. Neff, 12 shares; and
trustees and officers as a group: 69 shares.
The Board of Trustees has only one standing committee, an Audit Committee,
consisting of Messrs. Bigelow, MacDonald and Millican. The functions performed
by the Audit Committee include recommendation of the selection of independent
public accountants for the Fund to the Board of Trustees for approval, review of
the scope and results of audit and non-audit services, the adequacy of internal
controls and material changes in accounting principles and practices and other
matters when requested from time to time by the trustees (the "Independent
Trustees") who are not "interested persons" of the Fund within the meaning of
the Act. The Audit Committee held four meetings during the fiscal year ended
October 31, 1995.
The Board of Trustees of the Fund met twelve times during the fiscal year
ended October 31, 1995, and each trustee attended at least 75% of the total
number of meetings of the Board and, if he was a member of the Audit Committee,
of such committee.
The second column of the following table sets forth the compensation accrued
by the Fund for the Independent Trustees. The third and fourth columns set
forth information with respect to the retirement plan for Independent Trustees
maintained by the Fund and the other Lord Abbett-sponsored funds. The fifth
column sets forth the total compensation accrued by the Fund and such other
funds for the Independent Trustees. The second, third and fourth columns give
information for the Fund's most recent fiscal year; the fifth column gives
information for the calendar 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.
4
<PAGE>
<TABLE>
<CAPTION>
For Year Ended De-
For the Fiscal Year Ended October 31, 1995 cember 31, 1995
--------------------------------------------------------- -------------------
(I) (II) (III) (IV) (V)
- - - ------------------------ -------------- -------------------- ------------------- -------------------
Estimated Annual
Pension or Retire- Benefits Upon Re-
ment Benefits tirement Proposed
Accrued by the to be Paid by the Total Compensation
Aggregate Com- Fund and Fund and Fifteen Accrued by the Fund
pensation Ac- Fifteen Other Other Lord and Fifteen Other
crued by the Lord Abbett- Abbett-sponsored Lord Abbett-spon-
Name of Trustee Fund/1/ sponsored Funds/2/ Funds/2/ sored Funds/3/
- - - ------------------------ -------------- -------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
E. Thayer Bigelow $36 $ 9,772 $33,600 $41,700
Stewart S. Dixon $37 $22,472 $33,600 $42,000
John C. Jansing $38 $28,480 $33,600 $42,960
C. Alan MacDonald $38 $27,435 $33,600 $42,750
Hansel B. Millican, Jr. $38 $24,707 $33,600 $43,000
Thomas J. Neff $37 $16,126 $33,600 $42,000
- - - ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Independent Trustees' fees, including attendance fees for board and
committee meetings, are generally 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 Independent Trustees is being deferred under a plan that
deems the deferred amounts to be invested in shares of the Fund for later
distribution to the trustees. The total amount accrued under the plan for
each Independent Trustee since the beginning of his tenure with the Fund,
including dividends reinvested and changes in net asset value applicable to
such deemed investments, as of October 31, 1995, were as follows: Mr.
Bigelow, $38; Mr. Dixon, $35; Mr. Jansing, $51; Mr. MacDonald, $33; Mr.
Millican, $51; and Mr. Neff, $49.
(2) Each Lord Abbett-sponsored fund has a retirement plan providing that
Independent Trustees will receive annual retirement benefits for life equal
to 80% of their final annual retainers following retirement at or after age
72 with at least 10 years of service. Each plan also provides for a reduced
benefit upon early retirement under certain circumstances, a pre-retirement
death benefit and actuarially reduced joint-and-survivor spousal benefits.
The amounts stated in column (IV) would be payable annually under such re
tirement plans if the trustee were to retire at age 72 and the annual
retainers payable by such funds were the same as they are today. The
amounts set forth in column (III) were accrued by the Lord Abbett-sponsored
funds during the fiscal year ended October 31, 1995 with respect to the
retirement benefits set forth in column (IV).
(3) This column shows aggregate Independent Trustee's fees, including
attendance fees for board and committee meetings, of a nature referred to
in the first sentence of footnote (1), accrued by the Lord Abbett-sponsored
funds during the year ended December 31, 1995.
5
<PAGE>
Listed below are the executive officers of the Fund, other than Messrs.
Lynch and Dow who are listed above in the table of nominees. Each executive
officer has been associated with Lord Abbett for over five years, except as
indicated. Messrs. Allen, Carper, Cutler, Henderson, Morris, Nordberg and Walsh
are partners of Lord Abbett; the others listed below are employees.
Stephen I. Allen, age 42, Vice President since 1994.
Daniel E. Carper, age 43, Vice President since 1993.
Kenneth B. Cutler, age 63, Vice President and Secretary since 1993.
John J. Gargana, Jr., age 64, Vice President since 1993.
Thomas S. Henderson, age 64, Vice President since 1993.
Paul A. Hilstad, age 53, Vice President since 1995 (with Lord Abbett since 1995
- - - -formerly Senior Vice President and General Counsel of American Capital Manage
ment & Research, Inc.).
Thomas F. Konop, age 54, Vice President since 1993.
Robert G. Morris, age 51, Vice President since 1995.
E. Wayne Nordberg, age 59, Vice President since 1993.
Keith F. O'Connor, age 40, Treasurer since 1993.
Victor W. Pizzolato, age 63, Vice President since 1993.
John J. Walsh, age 60, Vice President since 1993.
Pursuant to the Fund's Declaration of Trust, the election of each trustee
of the Fund requires the affirmative vote of a plurality of the shares of the
Fund voted at the meeting. If a shareholder abstains from voting on this matter,
then the shares held by such shareholder shall be deemed present at the meeting
for purposes of determining a quorum and for purposes of calculating the vote
with respect to this matter, but shall not be deemed to have been voted in favor
of this matter. If a broker returns a "non-vote" proxy, indicating a lack of
authority to vote on this matter, then the shares covered by such non-vote shall
be deemed present at the meeting for purposes of determining a quorum but shall
not be deemed to be represented at the meeting for purposes of calculating the
vote with respect to this matter.
The Board of Trustees recommends that the shareholders vote FOR the
election of each of the nominees as a trustee of the Fund.
6
<PAGE>
2. RATIFICATION OR REJECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Trustees has selected Deloitte & Touche LLP as the in
dependent public accountants of the Fund for the fiscal year ending October 31,
1996. The Act requires that such selection be submitted for ratification or
rejection at the next annual meeting of shareholders if such meeting be held.
Deloitte & Touche LLP (or a predecessor firm) acted as the Fund's independent
public accountants for the year ended October 31, 1995, and for a number of
years prior thereto. Based on in formation in the possession of the Fund, and
information furnished by Deloitte & Touche LLP, the firm has no direct financial
interest and no material indirect financial interest in the Fund. A
representative of Deloitte & Touche LLP is expected to attend the meeting and
will be provided with an opportunity to make a statement and answer appropriate
questions.
Ratification of the selection of Deloitte & Touche LLP requires the
affirmative vote of a majority of the shares of the Fund voted at the meeting.
If a shareholder abstains from voting on this matter, then the shares held by
such shareholder shall be deemed present at the meeting for purposes of
determining a quorum and for purposes of calculating the vote with respect to
this matter, but shall not be deemed to have been voted in favor of this matter.
If a broker returns a "non-vote" proxy, indicating a lack of authority to vote
on this matter, then the shares covered by such non-vote shall be deemed present
at the meeting for purposes of determining a quorum but shall not be deemed to
be represented at the meeting for purposes of calculating the vote with respect
to this matter.
The Board of Trustees recommends that shareholders vote to ratify the
selection of Deloitte & Touche LLP as the Fund's independent public accountants
for the fiscal year ending October 31, 1996.
3. PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT RESTRICTIONS AND POLICIES OF
THE LIMITED DURATION GOVERNMENT SERIES AND THE BALANCED SERIES
The Board of Trustees has approved various amendments to the investment
policies and restrictions of the Limited Duration Government Series and the
Balanced Series in order to provide increased flexibility in managing such
Series' investment portfolio. Those investment policies and restrictions of a
Series that are designated "fundamental" may only be changed by the vote of a
"majority" (as defined in the Act) of the voting securities of such Series.
Those investment policies and restrictions designated "non-fundamental" may be
changed by the vote of the Board of Trustees alone. Therefore, the proposed
amendments to the fundamental policies and restrictions described below require
shareholder approval. The current and proposed investment policies and
restrictions for both Series (both fundamental and non-fundamental) with respect
to various investment techniques and securities are set forth in Exhibit A
attached hereto.
Investment policies and restrictions govern generally the investment
activities of the Series and limit its ability to invest in certain types of
securities or engage in certain types of transactions. The proposed changes are
not expected to affect materially the current operations of either Series.
Although the proposed fundamental investment policies and restrictions are less
restrictive than the current
7
<PAGE>
fundamental investment policies and restrictions of each Series, non-fundamental
restrictions have been adopted, to become effective with the proposed amendments
to the fundamental policies and restrictions, which will limit the effect of
such changes on the operations of the Series. The proposed fundamental policies
and restrictions are intended principally to provide greater flexibility in the
future management of the Series' respective investment portfolios. The Board of
Trustees has no present intention of approving actions permitted by these less
restrictive fundamental policies. If it were to do so, the risks of investing in
the Series could be increased. No change is proposed with respect to either
Series' investment objective.
The proposed policies and restrictions restate many of the policies and
restrictions currently in effect for each Series. In some instances, certain
fundamental policies and restrictions have been modified or eliminated in
accordance with developments in Federal or state blue sky regulations or in the
securities markets since the inception of the Series. In other instances, as
illustrated in Exhibit A, certain policies and restrictions previously deemed
fundamental have been redesignated non-fundamental. By making certain policies
and restrictions non-fundamental, the Board may amend a policy or restriction as
it deems appropriate and in the best interest of the Series and its
shareholders, without incurring the costs (normally borne by the Series and its
shareholders) of seeking a shareholder vote. Also, certain of the proposed
fundamental investment policies and restrictions are stated in terms of "to the
extent permitted by applicable law". Applicable law can change over time and
may become more or less restrictive as a result. The policies and restrictions
have been drafted in this manner so that a change in law would not require the
Fund to seek a shareholder vote to amend the policy or restriction to conform to
applicable law, as revised.
Approval of the proposed amendments to either Series' fundamental
investment restrictions and policies requires the affirmative vote of a
"majority" (as defined in the Act) of the voting securities of such Series. A
"majority" vote for a Series is defined in the Act as the vote of the holders of
the lesser of: (i) 67% or more of the voting securities of such Series present
-
or represented by proxy at the shareholders meeting, if the holders of more than
50% of the outstanding voting securities of such Series are present or
represented by proxy, or (ii) more than 50% of the outstanding voting securities
--
of such Series. If a shareholder abstains from voting on this matter, then the
shares held by such shareholder shall be deemed present at the meeting for
purposes of determining a quorum and for purposes of calculating the vote with
respect to this matter, but shall not be deemed to have been voted in favor of
this matter. If a broker returns a "non-vote" proxy, indicating a lack of
authority to vote on this matter, then the shares covered by such non-vote shall
be deemed present at the meeting for purposes of determining a quorum but shall
not be deemed to be represented at the meeting for purposes of calculating the
vote with respect to this matter.
If the proposed amendments are not approved by the shareholders of a
Series, the current fundamental policies and restrictions will continue in
effect for such Series.
The Board of Trustees recommends that shareholders of each Series vote in
favor of the proposed amendments to the fundamental investment restrictions and
policies of such Series.
8
<PAGE>
4. NEW DISTRIBUTION PLAN AND AGREEMENT FOR THE CLASS A SHARES
At a meeting of the Board of Trustees of the Fund held on March 14, 1996,
the trustees of the Fund unanimously approved, subject to shareholder approval,
and determined to submit to the shareholders of each Series for approval, a new
Distribution Plan and Agreement pursuant to Rule 12b-1 under the Act (each a
"Proposed Plan") for the existing class of shares of each Series. The existing
class of shares, for each Series, is to be designated the Class A Shares. The
Board of Trustees has authorized the creation of a new class of shares for each
Series, to be designated the "Class C Shares", and the creation of a new Series
of the Fund which will offer both Class A and Class C Shares. The text of the
Proposed Plan for each Series is attached hereto as Exhibit B. The trustees who
approved the Proposed Plans include all of the Independent Trustees, none of
whom is an "interested person" of the Fund within the meaning of the Act or will
have a direct or indirect financial interest in the operations of the Proposed
Plans or in any agreements related thereto.
If approved by shareholders, the Proposed Plan for each of the Limited
Duration Government Series and the Balanced Series will replace the distribution
plan and agreement for such Series (each a "Current Plan") described below:
The Limited Duration Government Series' Current Plan was approved by such
Series' shareholders on October 20, 1993 and has not yet become effective.
The Balanced Series' Current Plan was approved by such Series' shareholders
on December 15, 1994 and has not yet become effective.
The changes included in the Proposed Plans, which are described below, are
designed primarily to maintain the competitive position of the Class A Shares of
each Series.
Each of the Current Plans will go into effect on the first day (the "Effective
Date") of the quarter subsequent to the date that such respective Series' net
assets reach $100 million (in the case of the Limited Duration Government
Series) and $50 million (in the case of the Balanced Series). As of __________,
1996 the net assets of Limited Duration Government Series totaled $____ million
and the net assets of Balanced Series totaled $____ million. Upon effectiveness
of the Current Plans (except as to certain accounts for which tracking data is
not available), each Series will pay dealers through Lord Abbett (1) an annual
service fee (payable quarterly) of 0.25% of the average - daily net asset value
of shares sold by dealers and (2) a one-time distribution fee, at the time
of sale, on all shares sold at the $1 million level by dealers, including sales
qualifying at such level under the rights of accumulation and statement of
intention privileges described in the Fund's prospectus in effect at such time ,
(a) in the case of the Balanced Series, at the rate of 1% of the net asset value
of such shares and (b) in the case of the Limited Duration Government Series, at
the rate of 1% of the first $3 million, plus 0.50% of the next $7 million, plus
0.25% of the remainder, of the net asset value of such shares sold to a
shareholder. These service and distribution fees are intended to provide
additional incentives for dealers (a) to provide continuing - information and
investment services to their shareholder accounts and otherwise to encourage
their accounts to remain invested in the Fund and (b) to sell - shares of the
Fund.
Upon effectiveness of the Current Plans, holders of shares on which the
distribution fee has been paid will be required to pay to the Fund a contingent
deferred reimbursement charge ("CDRC") of 1% of the original cost or the then
net asset value, whichever is less, of such shares if they are redeemed out of
the Lord Abbett-sponsored family of funds on or before the end of the twenty-
fourth month
9
<PAGE>
after the month in which the purchase occurred. (An exception is made for
certain redemptions by tax-qualified plans under Section 401 of the Internal
Revenue Code due to plan loans, hardship withdrawals, death, retirement or
separation from service with respect to plan participants.) If the shares are
exchanged into another Lord Abbett fund and are thereafter redeemed out of the
Lord Abbett family on or before the end of such twenty-fourth month, the charge
will be collected for the Fund by the other fund. The Fund will collect such a
charge for other Lord Abbett-sponsored funds in a similar situation.
Set forth below is a description of the principal changes to be effected
under the Proposed Plans:
(a) Distribution Fees. The Fund's Board of Trustees will be authorized
-----------------
under the Proposed Plans, without further shareholder vote, to increase the
amount of distribution fees up to 0.25% of the average annual net assets
attributable to the Class A Shares of each Series (the "Distribution Fee
Ceiling"). This increased spending limit is intended primarily to permit the
trustees to increase the amount to be spent for distribution to meet changing
sales competition. The trustees believe it is desirable to be able to make
these changes without further shareholder approval because additional
shareholder meetings would be time-consuming and costly to the Series and their
shareholders. The Board of Trustees will approve additional charges under this
increased authority only if a majority of the Independent Trustees conclude in
their business judgment that there is a reasonable likelihood that the increase
will benefit the affected Series and its shareholders.
The one-time 1% distribution fee, payable (after the Effective Date) at the
time of certain sales as described above, is to be charged against the
Distribution Fee Ceiling. Subject to shareholder approval of the Proposed
Plans, the Board of Trustees has authorized each Series to begin paying, after
such Series' Effective Date, this one-time distribution fee with respect to
sales of Class A Shares, subject to three changes: First, the payments will be
-----
made in connection with sales to retirement plans with 100 or more eligible
employees, in addition to sales at the $1 million level as under the Current
Plan; Second, the payments will be scaled down at the following breakpoints:
------
1% of the first $5 million, 0.55% of the next $5 million, 0.50% of the
next $40 million and 0.25% over $50 million of shares sold to a retirement plan
or other qualifying purchaser within a 12-month period (beginning when the first
purchase is made at net asset value); and Third, the payments will be made to
-----
institutions and persons permitted by applicable law and/or rules to receive
such payments ("Authorized Institutions"), rather than just to dealers as is the
case under the Current Plan.
If shareholders approve the Proposed Plans, the Board of Trustees has
authorized each Series to pay, as an additional distribution fee, a supplemental
payment to dealers who have accounts comprising a significant percentage of such
Series' Class A Share assets and having a lower than average redemption rate and
who have a satisfactory program for the promotion of Class A Shares. Any such
payments will be 0.10% per annum of the average assets of the Series represented
by the Class A Share accounts of qualifying dealers. This supplemental payment
is intended by the Board of Trustees to enhance the Fund's relationships with
those dealers most likely to have a significant impact on the growth of the
Class A Shares.
(b) Service Fees. Service fee payments, which are to be continued under
------------
the Proposed Plans at an annual rate of 0.25% of the average daily net asset
10
<PAGE>
value of shares sold on or after the Effective Date of such Series' Proposed
Plan (which Effective Dates would remain the same as under the Current Plans),
could be made to all Authorized Institutions (institutions and persons permitted
by applicable law and/or rules to receive such payments), rather than just to
dealers as is the case under the Current Plans.
(c) Use of Payments by Lord Abbett. Lord Abbett would be permitted to use
------------------------------
payments received under the Proposed Plans to provide continuing services to
shareholder accounts not serviced by Authorized Institutions and, with Board
approval, to finance any activity which is primarily intended to result in the
sale of Class A Shares. Any such payments to finance activities primarily
intended to result in the sale of Class A Shares would be subject to the
Distribution Fee Ceiling.
(d) CDRC. The CDRC applicable to the Class A Shares would be substantially
----
similar to that payable under the Current Plans, except that no CDRC would be
payable in connection with redemptions by retirement plans (not just those
qualified under Section 401 of the Internal Revenue Code) attributable to any
benefit payment or distribution of any excess contribution thereunder (not just
those described above in connection with such exception under the Current
Plans). Because CDRC payments will be made directly to the Series, they will
have the effect of reducing the amount of the distribution fees paid by the
Series for the purpose of complying with the Distribution Fee Ceiling. As in
the case of the specific distribution fees authorized by the Board of Trustees
of the Fund, the CDRC authorized from time to time by the board for the Class A
Shares of each Series will be described in the then current prospectus of the
Fund.
Because of the effectiveness provisions of both the Current and Proposed
Plans, there would have been no change in either Series' expenses if the
supplemental payment to dealers, the revised one-time distribution fee and the
other changes described above had been in effect for the Fund's last fiscal
year. Once the Proposed Plans become effective, the board will determine the
level of payments that may be made thereunder.
(e) Lord Abbett Distributor. The other party to the Proposed Plans is to
-----------------------
be Lord Abbett Distributor LLC, a New York limited liability company, to be
formed as a subsidiary of Lord Abbett ("Lord Abbett Distributor"), rather than
Lord Abbett. Lord Abbett Distributor is to take on all the underwriting
functions currently performed directly by Lord Abbett.
In considering whether to recommend the Proposed Plans for approval, the
Board considered, among other things, the factors set forth below:
(i) Flexibility in Adapting Distribution Fees to Meet Industry-Wide
---------------------------------------------------------------
Changes. During the last several years, there has been significantly increased
competition and pricing experimentation in the mutual fund industry. As the
pace of change increases, the Board of Trustees believes it will be useful to be
able to respond more quickly to marketplace pressures, and change in appropriate
cases the amount of the Class A 12b-1 distribution fees to be paid, without
unnecessarily burdening the shareholders with the costs of additional proxy
solicitations. The trustees believe that the increased distribution fees
described above are good examples of the desirability of this flexibility.
Based on advice received from Lord Abbett, the decision by the Board to approve
the payment of distribution fees in connection with sales to retirement plans
with 100 or more eligible employees will
11
<PAGE>
enable the Class A Shares to compete more effectively in this growing and
important market. The 0.10% per annum supplemental payments to dealers who meet
certain criteria will permit the Fund enhance relationships with those dealers
most likely to have a significant impact on the growth of the Class A Shares.
(ii) Expanding Categories of Persons Eligible to Receive Payments. The
------------------------------------------------------------
Current Plans limit payments thereunder to dealers selling Fund shares. Since
the Current Plans were adopted, different methods of distribution, using
different entities, have developed in the industry. The Board of Trustees sees
no reason to limit arbitrarily the categories of persons eligible to receive
payments under the Proposed Plans, and believes that the availability of
payments under the plans will induce such other entities to invest in Class A
Shares.
(iii) Flexibility in Distributor's Use of Payments. Lord Abbett has
--------------------------------------------
advised the Board of Trustees of the Fund that allowing Lord Abbett Distributor
to retain fees received from the Series to (i) provide continuing information
and in vestment services to shareholder accounts and (ii) finance, with Board
approval, any activity which is primarily intended to result in the sale of
Class A Shares, will provide useful flexibility and will be in line with common
practice in the industry.
In light of the anticipated benefits to each of the Limited Duration
Government Series and the Balanced Series and each of their respective
shareholders as a result of adopting the Proposed Plans, and having reviewed a
comparison of the costs to each Series of the Current Plans and the Proposed
Plans, the trustees of the Fund have concluded, in the exercise of reasonable
business judgment and in light of their fiduciary duties, that there is a
reasonable likelihood that the Proposed Plans will benefit each such Series and
its shareholders. There can, however, be no assurance that the anticipated
benefits will be realized.
Set forth in the tables below is a summary comparison of the expenses of
each of the Limited Duration Government Series and the Balanced Series, on a
current and pro-forma basis. The example set forth below is not a
representation of past or future expenses. Actual expenses may be greater or
less than those shown.
12
<PAGE>
- - - --------------------------------------------------------------------
I II III
- - - --------------------------------------------------------------------
LIMITED DURATION Current Pro Forma
GOVERNMENT SERIES ------- ---------
- - - --------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
(AS A PERCENTAGE OF OFFERING PRICE)
- - - --------------------------------------------------------------------
Maximum Sales Load/1/ on Purchases 3.00% 3.00%
Deferred Sales Load /1/ None/2/ None/2/
- - - --------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET
ASSETS)
- - - --------------------------------------------------------------------
Management Fee 0.18%/3/ 0.18%/3/
12b-1 Fees 0.00%/4/ 0.00%/4/
Other Expenses 1.22% 1.22%
- - - --------------------------------------------------------------------
Total Operating Expenses 1.40%/3/ 1.40%
- - - --------------------------------------------------------------------
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.
<TABLE>
<CAPTION>
- - - ------------------------------------------------------------------------------------
1 year/5/ 3 years/5/ 5 years/5/ 10 years/5/
- - - ------------------------------------------------------------------------------------
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
- - - --------- --------- ------- ---------- ------- --------- ------- ---------
- - - ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$44/7/ $44/6,7/ $73/7/ $73/6,7/ $104/7/ $104/6,7/ $193/7/ $193/6,7/
- - - ------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
- - - -------------------------------------------------------------------
I II III
- - - -------------------------------------------------------------------
BALANCED SERIES Current Pro Forma
------- ---------
- - - -------------------------------------------------------------------
SHAREHOLDER TRANSACTION
EXPENSES
(AS A PERCENTAGE OF OFFERING
PRICE)
- - - -------------------------------------------------------------------
Maximum Sales Load/1/ on 4.75% 4.75%
Purchases None/2/ None/2/
Deferred Sales Load /1 /
- - - -------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(AS A PERCENTAGE OF AVERAGE NET
ASSETS)
- - - -------------------------------------------------------------------
Management Fee 0.00%/3/ 0.00%
12b-1 Fees 0.00%/4/ 0.00%/4/
Other Expenses 0.37%/3+/ 0.37%/3+/
- - - -------------------------------------------------------------------
Total Operating Expenses 0.37%/3+/ 0.37%/3+/
- - - -------------------------------------------------------------------
+ Annualized.
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.
<TABLE>
<CAPTION>
- - - ------------------------------------------------------------------------------------
1 year/5/ 3 years/5/ 5 years/5/ 10 years/5/
- - - ------------------------------------------------------------------------------------
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
- - - --------- --------- ------- ---------- ------- --------- ------- ---------
- - - ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$51 $51 $59 $59 $67 $67 $92 $92
- - - ------------------------------------------------------------------------------------
</TABLE>
1. Sales "load" is referred to as sales "charge" and "deferred sales load" is
referred to as "contingent deferred reimbursement charge" or "CDRC"
throughout this Proxy Statement.
2. Under both the Current Plans and the Proposed Plans, redemptions of shares
on which each Series' Rule 12b-1 sales distribution fee has been paid are
subject to a CDRC of 1% of the original cost or the then net asset value,
whichever is less, of all shares so purchased which are redeemed out of 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, subject to
certain exceptions described herein.
3. Although not obligated to, Lord, Abbett & Co. may waive its management fee
and subsidize the operating expenses with respect to each Series. For the
14
<PAGE>
fiscal year ended October 31, 1995, Lord Abbett waived portions of its
management fee for both Series and subsidized certain operating expenses
for the Balanced Series. With respect to the Limited Duration Government
Series and the Balanced Series, the management fee would have been 0.50 and
0.75, respectively, and the total operating expenses would have been 1.72%
and 1.26%, respectively.
4. This figure omits Rule 12b-1 fees because neither Current Plan has become
operative. The Current Plans become operative, and the Proposed Plans are
to become operative, on the first day of the calendar quarter subsequent to
the Series' net assets reaching $100 million (in the case of the Limited
Duration Government Series) and $50 million (in the case of the Balanced
Series). If the Proposed Plans go into effect, each of the Limited Duration
Government Series and the Balanced Series could pay a maximum annual 12b-1
fees of 0.50% that could be paid under the proposed plan in any year,
consisting of a distribution fee of 0.25% of net assets and a service fee
of 0.25% of net assets thereunder.
5. Based on total current and pro-forma operating expenses shown in the table
above.
If the shareholders approve the Proposed Plans, the Proposed Plans shall,
unless terminated as described below, become effective July 12, 1996 and
continue in effect until July 12, 1997 and from year to year thereafter only so
long as such continuance is specifically approved, at least annually, by the
Fund's Board of Trustees and its Independent Trustees by a vote cast in person
at a meeting called for the purpose of voting on such continuance. Each
Proposed Plan may be terminated at any time by a vote of a majority of the
Independent Trustees or by a shareholder vote in compliance with Rule 12b-1
under the Act. The Plan may not be amended to increase materially the amount to
be spent for distribution above the maximum amounts set forth in the Proposed
Plans without a shareholder vote in compliance with Rule 12b-1 under the Act.
All material amendments must be approved by a majority of the Independent
Trustees.
Each Proposed Plan provides that while it is in effect, the selection and
nomination of Independent Trustees is committed to the discretion of the
Independent Trustees then sitting on the Board. This does not prevent the
involvement of others in such selection and nomination if the final decision on
any such selection or nomination is approved by a majority of the Independent
Trustees.
Pursuant to Rule 12b-1 under the Act, approval of the Proposed Plan with
respect to a Series requires the affirmative vote of a "majority" (as defined in
the Act) of the voting securities of such Series. A "majority" vote for a
Series is defined in the Act as the vote of the holders of the lesser of: (i)
-
67% or more of the voting securities of such Series present or represented by
proxy at the shareholders meeting, if the holders of more than 50% of the
outstanding voting securities of such Series are present or represented by
proxy, or (ii) more than 50% of the outstanding voting securities of such
--
Series. If a shareholder abstains from voting on this matter, then the shares
held by such shareholder shall be deemed present at the meeting for purposes of
determining a quorum and for purposes of calculating the vote with respect to
this matter, but shall not be deemed to have been voted in favor of this matter.
If a broker returns a "non-vote" proxy, indicating a lack of authority to vote
on this matter, then the shares covered by such non-vote shall be deemed present
at the meeting for purposes of determining a quorum but shall not be deemed to
be
15
<PAGE>
represented at the meeting for purposes of calculating the vote with respect to
this matter.
If the Proposed Plan is not approved for one or both Series, the Current
Plan for each such Series will continue in effect according to its terms.
The Board of Trustees recommends that shareholders of each of the Limited
Duration Government Series and the Balanced Series vote in favor of adoption of
the Proposed Plan for such series.
5. OTHER INFORMATION
Management is not aware of any matters to come before the meeting other
than those set forth in the notice. If any such other matters do come before
the meeting, the individuals named as proxies will vote, act, and consent with
respect thereto in accordance with their best judgment.
a. Timeliness of Shareholder Proposals.
-----------------------------------
Any shareholder proposals to be presented for action at the Fund's next
shareholder meeting pursuant to the provisions of Rule 14a-8 under the
Securities Exchange Act of 1934, as amended, must be received at the Fund's
principal execu tive offices within a reasonable time in advance of the date
solicitation is made for such meeting. The Fund does not intend to hold another
annual or special meeting of shareholders unless required to do so by the Act.
b. Investment Adviser and Underwriter.
----------------------------------
Lord, Abbett & Co., 767 Fifth Avenue, New York, New York, 10153, acts as
investment adviser and principal underwriter with respect to the Fund.
c. Annual Report Available Upon Request.
------------------------------------
The Fund will furnish, without charge, a copy of the Fund's most recent
annual report and the most recent semi-annual report succeeding the annual
report, if any, to a shareholder upon request. A shareholder may obtain such
reports(s) by writing to the Fund or by calling 800-___-____.
d. Portfolio Transactions.
----------------------
With respect to the Limited Duration Government Series and the fixed-income
portion of the Balanced Series, 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.
16
<PAGE>
With respect to the equity portion of the Balanced Series, purchases and
sales of portfolio securities usually will involve the payment of brokerage
commissions. Consistent with obtaining best execution, the Balanced Series may
pay, as described below, a higher commission than some brokers might charge on
the same transactions.
The Fund's policy is to obtain best execution on all portfolio trans
actions, which means that the Fund seeks to have purchases and sales of
portfolio securities executed at the most favorable prices, considering all
costs of the trans action 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, the Fund may, if considered advantageous, make a purchase from or sale to
another Lord Abbett-sponsored fund without the intervention of any broker-
dealer.
The Fund selects 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 traders who are officers of the Fund and also
are employees of Lord Abbett. These traders do the trading as well for other
accounts --investment companies (of which they are also officers) and other
investment clients --managed by Lord Abbett. They are responsible for obtaining
best execution.
With respect to the Limited Duration Government Series and the fixed-income
portion of the Balanced Series, the Fund 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 the Fund's net cost of the purchase or the net proceeds to the Fund of
the sale are at least as favorable as the Fund could obtain on a direct purchase
or sale.
With respect to the equity portion of its portfolio, the Balanced Series
will pay a commission rate that Fund management believes is appropriate to give
maximum assurance that the Fund's brokers will provide, on a continuing basis,
the highest level of brokerage services available. While the Fund does not
always seek the lowest possible commissions on particular trades, Fund
management believes that the commission rates the Fund pays on behalf of the
Balanced Series are in line with the rates that many other institutions pay.
Fund traders are authorized to pay brokerage commissions in excess of those that
other brokers might accept on the same transactions in recognition of the value
of the services performed by the executing brokers, viewed in terms of either
the particular transaction or the overall responsibilities of Lord Abbett with
respect to the equity portion of the Balanced Series' portfolio and the other
accounts they manage. Such services include showing the Fund trading
opportunities including blocks, a willingness and ability to take positions in
securities, knowledge of a particular security or market, proven ability to
handle a particular type of trade, confidential treatment, promptness and
reliability.
Some brokers used by the Fund also provide research services at least some
of which are useful to Lord Abbett in their overall responsibilities with
respect to the Fund 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
17
<PAGE>
of the Fund; conversely, such services furnished in connection with brokerage on
other accounts managed by Lord Abbett may be used in connection with their
management of the Fund, and not all of such services will necessarily be used by
Lord Abbett in connection with their advisory services to such other accounts.
The Fund has 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 the
Fund's 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 the Fund, 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 com mission cost of each day. Other clients who direct that their
brokerage business be placed with specific brokers or who invest through wrap
accounts introduced to Lord Abbett by certain brokers may not participate with
the Fund in the buying and selling of the same securities as described above.
If these clients wish to buy or sell the same security as the Fund does, they
may have their transactions executed at times different from the Fund's
transactions and thus may not receive the same price or incur the same
commission cost as the Fund does.
The Fund will not seek "reciprocal" dealer business (for the purpose of
applying commissions in whole or in part for the Fund's benefit or otherwise)
from broker-dealers as consideration for the direction to them of portfolio
business.
For the fiscal years ended October 31, 1995 and the period from November 4,
1993 (commencement of operations) to October 31, 1994, the Limited Duration
Government Series paid no commissions to independent broker-dealers; for the
period from December 27, 1994 (commencement of operations) to October 31, 1995,
the Balanced Series paid $3,743 in commissions to independent broker-dealers.
LORD ABBETT INVESTMENT TRUST
By:______________________________
Kenneth B. Cutler
Vice President and Secretary
18
<PAGE>
EXHIBIT A
COMPARISON OF CURRENT AND PROPOSED
INVESTMENT POLICIES AND RESTRICTIONS
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------------
CURRENT PROPOSED
------- --------
POLICY/RESTRICTION POLICY/RESTRICTION
------------------ ------------------
- - - -------------------------------------------------------------------------------------------------
<S> <C>
SHORT SALES/MARGIN.
NON-FUNDAMENTAL FUNDAMENTAL
Each Series may not sell short securities Each Series may purchase securities on
or buy securities on margin although it margin to the extent permitted by appli-
may obtain short-term credit necessary cable law.
for the clearance of purchases of
securities. NON-FUNDAMENTAL
Each Series may not make short sales of
securities or maintain a short position
except to the extent permitted by
applicable law.
- - - ---------------------------------------------------------------------------------------------
BORROWING.
FUNDAMENTAL FUNDAMENTAL
Each Series may not borrow money Each Series may not borrow money,
except (i) as a temporary measure for except that (i) Each Series may borrow
extraordinary or emergency purposes and from banks (as defined in the Act) in
then not in excess of 5% of gross assets amounts up to 33-1/3% of its total assets
(at cost or market value, whichever is (including the amount borrowed),
lower) at the time of borrowing, (ii) (ii) each Series may borrow up to an
unless such borrowing does not exceed additional 5% of its total assets for
the asset coverage requirements of temporary purposes, and (iii) each Series
Section 18(f) of the Act and (iii) unless may obtain such short-term credit as may
such borrowing on behalf of a class or be necessary for the clearance of
series shall be a liability only of such purchases and sales of portfolio
class or series, as the case may be. securities.
NON-FUNDAMENTAL
Each Series may not borrow in excess of
5% of its gross assets taken at cost or
market value, whichever is lower at the
time of borrowing, and then only as a
temporary measure for extraordinary or
emergency purposes.
- - - ---------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------------
CURRENT PROPOSED
------- --------
POLICY/RESTRICTION POLICY/RESTRICTION
------------------ ------------------
- - - -------------------------------------------------------------------------------------------------
<S> <C>
UNDERWRITING.
FUNDAMENTAL FUNDAMENTAL
Each Series may not engage in the Each Series may not engage in the under-
underwriting of securities except pursuant writing of securities, except pursuant to a
to a merger or acquisition or to the merger or acquisition or to the extent
extent that in connection with the that, in connection with the disposition of
disposition of its portfolio securities it its portfolio securities, it may be deemed
may be deemed to be an underwriter to be an underwriter under federal securi-
under federal securities laws. ties laws.
Notwithstanding the foregoing, in the
future, upon shareholder approval, each
Series may seek to achieve its investment
objective by investing all of its assets in
another investment company (or series or
class thereof) having the same investment
objective. Shareholders will be notified
thirty days in advance of such
conversion.
- - - ---------------------------------------------------------------------------------------------
LENDING.
FUNDAMENTAL FUNDAMENTAL
Each Series may not lend money or Each Series may not make loans to other
securities to any person, except through persons, except that the acquisition of
entering into short-term repurchase bonds, debentures or other corporate debt
agreements with sellers of securities it securities and investment in government
has purchased and by lending its obligations, commercial paper, pass-
portfolio securities to registered broker- through instruments, certificates of
dealers where the loan is 100% secured deposit, bankers acceptances, repurchase
by cash or its equivalent as long as it agreements or any similar instruments
complies with regulatory requirements shall not be subject to this limitation, and
and except for time or demand deposits except further that each Series may lend
with banks and purchases of commercial its portfolio securities, provided that the
paper or publicly offered debt securities lending of portfolio securities may be
at original issue or otherwise. made only in accordance with applicable
law.
- - - ---------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------------
CURRENT PROPOSED
------- --------
POLICY/RESTRICTION POLICY/RESTRICTION
------------------ ------------------
- - - -------------------------------------------------------------------------------------------------
<S> <C>
REAL ESTATE/COMMODITIES.
FUNDAMENTAL FUNDAMENTAL
Each Series may not buy or sell real Each Series may not buy or sell real
estate (including limited partnerships estate (except that each Series may invest
therein but excluding securities of in securities directly or indirectly secured
companies, such as real estate investment by real estate or interests therein or
trusts, which deal in real estate or issued by companies which invest in real
interests therein), oil, gas or other estate or interests therein), commodity or
mineral leases or in commodities or commodity contracts (except to the extent
commodity contracts in the ordinary each Series may do so in accordance with
course of its business, except such applicable law and without registering as
interests and other property acquired as a a commodity pool operator under the
result of owning other securities, though Commodity Exchange Act as, for
securities will not be purchased in order example, with futures contracts).
to acquire any of these interests.
NON-FUNDAMENTAL
Each Series may not invest in real estate
limited partnership interests or interests
in oil, gas or other mineral leases, or
exploration or other development
programs, except that each Series may
invest in securities issued by companies
that engage in oil, gas or other mineral
exploration or development activities.
- - - ---------------------------------------------------------------------------------------------
DIVERSIFICATION.
FUNDAMENTAL FUNDAMENTAL
Each Series may not, with respect to With respect to 75% of its gross assets,
75% of its total assets, and except as each Series may not buy securities of one
indicated below, buy securities if the issuer representing more than (i) 5% of
purchase would then cause it to (i) have each Series' gross assets, except
more than 5% of its gross assets, at securities issued or guaranteed by the
market value at the time of investment, U.S. Government, its agencies or
invested in the securities of any one instrumentalities, or (ii) 10% of the
issuer except securities issued or voting securities of such issuer.
guaranteed by the U.S. Government, its
agencies or instrumentalities or (ii) own
more than 10% of the voting securities of
any issuer.
- - - ---------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------------
CURRENT PROPOSED
------- --------
POLICY/RESTRICTION POLICY/RESTRICTION
------------------ ------------------
- - - -------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT IN A SINGLE
INDUSTRY.
FUNDAMENTAL
Each Series may not concentrate its FUNDAMENTAL
investments in any particular industry, Each Series may not invest more than
excluding U.S. Government securities. 25% of its assets, taken at market value,
Notwithstanding the foregoing, in the in the securities of issuers in any
future, upon shareholder approval, each particular industry (excluding securities
Series may seek to achieve its investment of the U.S. Government, its agencies and
objective by investing all of its assets in instrumentalities).
another investment company (or series or
class thereof) having the same investment
objective. Shareholders will be notified
thirty days in advance of such
conversion.
- - - ---------------------------------------------------------------------------------------------
RESTRICTED/ILLIQUID
SECURITIES.
NON-FUNDAMENTAL NON-FUNDAMENTAL
Each Series may not invest knowingly Each Series may not invest knowingly
more than 15% of its net assets (at the more than 15% of its net assets (at the
time of investment) in illiquid securities time of investment) in illiquid securities,
(securities qualifying for resale under except for securities qualifying for resale
Rule 144A that are determined by the under Rule 144A of the Securities Act of
Trustees, or by Lord Abbett pursuant to 1933, deemed to be liquid by the Board
delegated authority from the Trustees, to of Trustees.
be liquid are considered liquid securities,
except as otherwise required by state
law).
- - - ---------------------------------------------------------------------------------------------
MORTGAGING AND PLEDGING OF
ASSETS.
NON-FUNDAMENTAL FUNDAMENTAL
Each Series may not pledge, mortgage or Each Series may not pledge its assets
hypothecate its assets, however, this (other than to secure borrowings, or to
provision does not apply to permitted the extent permitted by each Series's
borrowings mentioned above or to the investment policies, in connection with
grant of escrow receipts or the entry into hedging transactions, short sales, when-
other similar escrow arrangements arising issued and forward commitment
out of the writing of covered call transactions and similar investment
options. strategies).
- - - ---------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------------
CURRENT PROPOSED
------- --------
POLICY/RESTRICTION POLICY/RESTRICTION
------------------ ------------------
- - - -------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENTS IN SECURITIES OF
OTHER INVESTMENT
COMPANIES.
FUNDAMENTAL
In the future, upon shareholder approval,
each Series may seek to achieve its NON-FUNDAMENTAL
investment objective by investing all of Each Series may not invest in the
its assets in another investment company securities of other investment companies,
(or series or class thereof) having the except as permitted by applicable law.
same investment objective. Shareholders
will be notified thirty days in advance of
such conversion.
- - - ---------------------------------------------------------------------------------------------
ELIGIBLE INVESTMENTS.
FUNDAMENTAL No Fundamental Policy/Restriction.
The Limited Duration Government Series
may not make investments other than
those a federal savings association by law
or regulation may, without limitation as
to percentage of assets, invest in, sell,
redeem, hold, or otherwise deal in.
- - - ---------------------------------------------------------------------------------------------
OPTIONS.
NON-FUNDAMENTAL NON-FUNDAMENTAL
The Limited Duration Government Series Each Series may not write, purchase or
may not buy or sell put or call options. sell puts, calls, straddles, spreads or
combinations thereof, except to the extent
permitted in the Fund's prospectus and
statement of additional information, as
they may be amended from time to time.
Although it has no current intention to do
so, each Series may invest in financial
futures and options on financial futures.
- - - ---------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------------
CURRENT PROPOSED
------- --------
POLICY/RESTRICTION POLICY/RESTRICTION
------------------ ------------------
- - - -------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENTS IN SECURITIES OF
ISSUERS IN OPERATION FOR LESS
THAN THREE YEARS.
NON-FUNDAMENTAL
Each Series may not purchase securities NON-FUNDAMENTAL
of any issuer unless it or its predecessor Each Series may not invest in securities
has a record of three years' continuous of issuers which, with their predecessors,
operation, except that it may purchase have a record of less than three years
securities of such issuers through continuous operations, if more than 5%
subscription offers or other rights it of such Series' total assets would be
receives as a security holder of invested in such securities (this
companies offering such subscriptions or restriction shall not apply to mortgage-
rights and such purchases will then be backed securities, asset-backed securities
limited in the aggregate to 5% of the or obligations issued or guaranteed by the
Series' net assets at the time of U.S. Government, its agencies or
investment. instrumentalities).
- - - ---------------------------------------------------------------------------------------------
OWNERSHIP OF PORTFOLIO SE-
CURITIES BY OFFICERS AND
TRUSTEES
NON-FUNDAMENTAL
Each Series may not hold securities of
NON-FUNDAMENTAL any issuer if more than 1/2 of 1% of the
Each Series may not hold securities of securities of such issuer are owned
any issuer when more than 1/2 of 1% of beneficially by one or more officers or
the issuer's securities are owned trustees of the Fund or by one or more
beneficially by one or more of the Fund's partners or members of the underwriter
officers or trustees or by one or more or investment advisor if these owners in
partners of the Fund's underwriter or the aggregate own beneficially more than
investment adviser if these owners in the 5% of the securities of such issuer.
aggregate own beneficially more than 5%
of such certificates.
- - - ---------------------------------------------------------------------------------------------
TRANSACTIONS WITH CERTAIN
PERSONS.
NON-FUNDAMENTAL
No Policy/Restriction stated. Each Series may not buy from or sell to
any of its officers, trustees, employees,
or its investment adviser or any of its
officers, directors, partners or
employees, any securities other than
shares of such Series' common stock.
- - - ---------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------------
CURRENT PROPOSED
------- --------
POLICY/RESTRICTION POLICY/RESTRICTION
------------------ ------------------
- - - -------------------------------------------------------------------------------------------------
<S> <C>
SENIOR SECURITIES
FUNDAMENTAL
FUNDAMENTAL Each Series may not issue senior se-
Each Series may not issue senior se- curities to the extent such issuance would
curities except to the extent permitted by violate applicable law.
the Act.
- - - ---------------------------------------------------------------------------------------------
PURCHASE OF WARRANTS
NON-FUNDAMENTAL
The Balanced Series may not invest in Each Series may not invest in warrants
warrants, valued at the lower of cost or if, at the time of the acquisition, its
market, to exceed 5% of the Series' net investment in warrants, valued at the
assets, including warrants not listed on lower of cost or market, would exceed
the New York or American Stock 5% of such Series' total assets (included
Exchange which may not exceed 2% of within such limitation, but not to exceed
such net assets. 2% of such Series' total assets, are
warrants which are not listed on the New
York or American Stock Exchange or a
major foreign exchange).
- - - ---------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
EXHIBIT B-1
LIMITED DURATION GOVERNMENT SERIES
Rule 12b-1 Distribution Plan and Agreement -- Lord Abbett Investment Trust
Limited Duration Government Series -- Class A Shares
--------------------------------------------------------------------------
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by and
between LORD ABBETT INVESTMENT TRUST, a Delaware business trust (the "Fund"), on
behalf of the LORD ABBETT LIMITED DURATION GOVERNMENT SERIES (the "Series"), and
LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the
"Distributor").
WHEREAS, the Fund 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 Fund's shares of beneficial
interest, including the Series' Class A shares (the "Shares") pursuant to the
Distribution Agreement between the Fund and the Distributor, dated as of the
date hereof (the "Distribution Agreement").
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement (the
"Plan") for the Series with the Distributor, as permitted by Rule 12b-1 under
the Act, pursuant to which the Series 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 Fund's Board of Trustees has determined that there is a
reasonable likelihood that the Plan will benefit the Series 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, and subject
to the effective date provisions of paragraph 8 of this Plan, it is agreed as
follows.
1. The Fund hereby authorizes the Distributor to enter into agree ments
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 Series 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.
2. The Fund also hereby authorizes the Distributor to use payments
received hereunder from the Series in order to (a) finance any activity which is
-
primarily intended to result in the sale of Shares and (b) provide continuing in
-
<PAGE>
formation 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 (i) any payments referred to in the foregoing clause (a) shall not
- - - -------- -
exceed the distribution fee permitted to be paid at the time under paragraph 3
of this Plan and shall be authorized by the Board of Trustees of the Fund 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 permitted to be paid
at the time under paragraph 3 of this Plan.
3. The Series 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.
The Board of Trustees of the Fund shall from time to time determine the amounts,
within the foregoing maximum amounts, that the Series 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 Fund. 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
Series of contingent deferred reimbursement charges relating to distribution
fees paid by the Series 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 Series
--
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.
4. The net asset value of the Shares shall be determined as provided in
the Declaration of Trust of the Fund. If the Distributor waives all or a
portion of the fees which are to be paid by the Series hereunder, the
Distributor shall not be deemed to have waived its rights under this Agreement
to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial
Officer, is hereby authorized to direct the disposition of monies paid or
payable by the Series hereunder and shall provide to the Fund'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.
2
<PAGE>
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 Fund are or may be "interested persons" of the
Distributor, or any successor or assignee thereof, or that any or all of the
directors, officers, partners, members or other representatives of the
Distributor are or may be "interested persons" of the Fund, except as may
otherwise be provided in the Act.
7. The Distributor shall give the Fund 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 Fund, the Series or any of the shareholders,
creditors, trustees, or officers of the Fund; provided however, that nothing
herein shall be deemed to protect the Distributor against any liability to the
Fund or the Series' 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 on the first day of the calendar
quarter subsequent to the Series' net assets reaching $100 million.
Notwithstanding the foregoing, the Plan shall become effective on such date and
shall continue in effect thereafter only so long as such continuance is
specifically approved at least annually from the date hereof by a vote of the
Board of Trustees of the Fund, including the vote of a majority of the trustees
who are not "interested persons" of the Fund and who have no direct or indirect
financial interest in the operation of 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 Series 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 Fund, including the vote
of a majority of the trustees who are not "interested persons" of the Fund and
who have no direct or indirect financial interest in the operation of 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 Series 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 Fund, including the vote of a majority of the trustees who are
not
3
<PAGE>
"interested persons" of the Fund 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 Fund may, by such a vote, interpret this Plan and
make all determina tions 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 Fund who are not
-
"interested persons" of the Fund 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 Fund who are not "interested persons" of the
Fund 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.
13. The obligations of the Fund and the Series, including those imposed
hereby, are not personally binding upon, nor shall resort be had to the private
property of, any of the Trustees, shareholders, officers, employees or agents of
the Fund or Series individually, but are binding only upon the assets and
property of the Series. Any and all personal liability, either at common law or
in equity, or by statute or constitution, of every such Trustee, shareholder,
officer, employee or agent for any breach of the Fund or Series of any
agreement, representation or warranty hereunder is hereby expressly waived as a
condition of and in consideration for the execution of this Agreement by the
Fund.
IN WITNESS WHEREOF, each of the parties has caused this in strument to be
executed in its name and on its behalf by its duly authorized repre sentative as
of the date first above written.
LORD ABBETT INVESTMENT TRUST
By:_____________________________
President
ATTEST:
_____________________
Assistant Secretary
LORD ABBETT DISTRIBUTOR LLC
By:_____________________________
4
<PAGE>
Rule 12b-1 Distribution Plan and Agreement -- Lord Abbett Investment Trust
Balanced Series -- Class A Shares
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July
12, 1996 by and between LORD ABBETT INVESTMENT TRUST, a Delaware business trust
(the "Fund"), on behalf of the LORD ABBETT BALANCED SERIES (the "Series"), and
LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the
"Distributor").
WHEREAS, the Fund 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 Fund's shares of
beneficial interest, including the Series' Class A shares (the "Shares")
pursuant to the Distribution Agreement between the Fund and the Distributor,
dated as of the date hereof (the "Distribution Agreement").
WHEREAS, the Fund desires to adopt a Distribution Plan and
Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule
12b-1 under the Act, pursuant to which the Series 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 Fund's Board of Trustees has determined that
there is a reasonable likelihood that the Plan will benefit the Series 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, and subject to the effective date provisions of paragraph 8 of
this Plan, it is agreed as follows.
1. The Fund hereby authorizes the Distributor to enter into agreements with
Authorized Institutions (the "Agreements") which may provide for the payment to
such Autho-
rized Institutions of distribution and service fees which the Distributor
receives from the Series 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.
2. The Fund also hereby authorizes the Distributor to use
payments received hereunder from the Series 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 (i) any payments referred to in the foregoing clause (a)
shall not exceed the distribution fee permitted to be paid at the time under
paragraph 3 of this Plan and shall
<PAGE>
be authorized by the Board of Trustees of the Fund 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 permitted to be paid at the time
under paragraph 3 of this Plan.
3. The Series 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. The Board of Trustees of the Fund shall from time to time determine
the amounts, within the foregoing maximum amounts, that the Series 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 Fund. 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 Series of contingent deferred reimbursement charges relating to distribution
fees paid by the Series 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 Series
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 Declaration of Trust of the Fund. If the Distributor waives all
or a portion of the fees which are to be paid by the Series hereunder, the
Distributor shall not be deemed to have waived its rights under this Agreement
to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief
Financial Officer, is hereby authorized to direct the disposition of monies paid
or payable by the Series hereunder and shall provide to the Fund'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 Fund are or may be "interested persons" of the
Distributor, or any successor or assignee thereof, or that any or all of the
directors, officers, partners, members or other representatives of the
Distributor are or may be "interested persons" of the Fund, except as may
otherwise be provided in the Act.
<PAGE>
7. The Distributor shall give the Fund 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 Fund, the Series or any of the
shareholders, creditors, trustees, or officers of the Fund; provided however,
that nothing herein shall be deemed to protect the Distributor against any
liability to the Fund or the Series' 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 on the first day of the
calendar quarter subsequent to the Series' net assets reaching $50 million.
Notwithstanding the foregoing, the Plan shall become effective on such date and
shall continue in effect thereafter only so long as such continuance is
specifically approved at least annually from the date hereof by a vote of the
Board of Trustees of the Fund, including the vote of a majority of the trustees
who are not "interested persons" of the Fund and who have no direct or indirect
financial interest in the operation of 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 Series 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 Fund,
including the vote of a majority of the trustees who are not "interested
persons" of the Fund and who have no direct or indirect financial interest in
the operation of 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 Series hereunder above the maximum amounts referred to in para-
graph 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 Fund, including the vote of a majority of the trustees
who are not "interested persons" of the Fund and who have no direct or indirect
financial interest in the operation of this Plan or in any agreement related to
this Plan. The Board of Trustees of the Fund 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 Fund
who are not "interested persons" of the Fund and have no direct or indirect
financial interest in the operation of this Plan or in
<PAGE>
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 Fund who are not "interested persons" of
the Fund 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.
13. The obligations of the Fund and the Series, including
those imposed hereby, are not personally binding upon, nor shall resort be had
to the private property of, any of the Trustees, shareholders, officers,
employees or agents of the Fund or Series individually, but are binding only
upon the assets and property of the Series. Any and all personal liability,
either at common law or in equity, or by statute or constitution, of every such
Trustee, shareholder, officer, employee or agent for any breach of the Fund or
Series of any agreement, representation or warranty
<PAGE>
hereunder is hereby expressly waived as a condition of and in consideration for
the execution of this Agreement by the Fund.
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:_____________________________
<PAGE>
<PAGE>
LORD ABBETT INVESTMENT TRUST
LORD ABBETT LIMITED DURATION
GOVERNMENT SERIES
SPECIAL MEETING OF SHAREHOLDERS
JUNE 19, 1996
767 Fifth Avenue
New York, New York 10153
Tel. No. (212) 848-1800
The undersigned hereby appoints KENNETH B. CUTLER, ROBERT S. DOW and RONALD
P. LYNCH and each of them proxies, with full power of substitution, to vote
(according to the number of votes which the undersigned would be entitled to
cast if then personally present) at the special meeting of shareholders of LORD
ABBETT INVESTMENT TRUST (the "Fund") on June 19, 1996, including all
adjournments, as specified below, and in their discretion upon such other
business as may properly be brought before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES WHICH RECOMMENDS THAT
YOU VOTE FOR PROPOSALS 1-4.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE VOTE OF THE UNDERSIGNED
IS TO BE CAST FOR ALL PROPOSALS LISTED BELOW.
1. Election of Trustees:
For [_] Without Authority [_] For All Except [_]
(NOTE: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, CHECK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME
BELOW.)
Ronald P. Lynch, Robert S. Dow, E. Thayer Bigelow, Stewart S. Dixon,
John C. Jansing, C. Alan MacDonald, Hansel B. Millican, Jr. and Thomas
J. Neff.
2. For [_] Against [_] Abstain [_] To ratify the selection of Deloitte &
Touche LLP as independent public accountants of the Fund for the
fiscal year ending October 31, 1996.
3. For [_] Against [_] Abstain [_] To approve or disapprove the proposed
changes in the Series' fundamental investment policies and
restrictions, as described in the proxy statement.
4. For [_] Against [_] Abstain [_] To approve or disapprove the proposed
new Distribution Plan and Agreement for the
Series' existing class of shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as described in the proxy statement.
<PAGE>
ACCOUNT NUMBER SHARES PROXY NUMBER
LORD ABBETT INVESTMENT TRUST
LORD ABBETT LIMITED DURATION GOVERNMENT SERIES
PLEASE SIGN, DATE AND MAIL THIS PROXY IN THE POSTAGE PAID RETURN ENVELOPE
PROVIDED.
For information as to the voting of stock registered in more than one name, see
page 1 of the proxy statement. When signing the proxy as attorney, executor,
administrator, trustee or guardian, please indicate the capacity in which you
are acting. Only autho rized officers should sign for corporations.
Date:......................................................
Signature(s) of Shareholder(s) as shown at left
.............................................................
.............................................................
(Please read other side)
<PAGE>
LORD ABBETT INVESTMENT TRUST
LORD ABBETT BALANCED SERIES
SPECIAL MEETING OF SHAREHOLDERS
JUNE 19, 1996
767 Fifth Avenue
New York, New York 10153
Tel. No. (212) 848-1800
The undersigned hereby appoints KENNETH B. CUTLER, ROBERT S. DOW and
RONALD P. LYNCH and each of them proxies, with full power of substitution, to
vote (according to the number of votes which the under signed would be entitled
to cast if then personally present) at the special meeting of shareholders of
LORD ABBETT INVESTMENT TRUST (the "Fund") on June 19, 1996, including all
adjournments, as specified below, and in their discretion upon such other
business as may properly be brought before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES WHICH RECOMMENDS THAT
YOU VOTE FOR PROPOSALS 1-4.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE VOTE OF THE UNDERSIGNED
IS TO BE CAST FOR ALL PROPOSALS LISTED BELOW.
1. Election of Trustees:
For [_] Without Authority [_] For All Except [_]
(NOTE: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, CHECK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME
BELOW.)
Ronald P. Lynch, Robert S. Dow, E. Thayer Bigelow, Stewart S. Dixon,
John C. Jansing, C. Alan MacDonald, Hansel B. Millican, Jr. and Thomas
J. Neff.
2. For [_] Against [_] Abstain [_] To ratify the selection of Deloitte &
Touche LLP as independent public accountants of the Fund for the fiscal
year ending October 31, 1996.
3. For [_] Against [_] Abstain [_] To approve or disapprove the proposed
changes in the Series' fundamental investment policies and restrictions,
as described in the proxy statement.
4. For [_] Against [_] Abstain [_] To approve or disapprove the proposed
new Distribution Plan and Agreement for the Series' existing class of
shares pursuant to Rule 12b-1 under the Investment Company Act of 1940,
as described in the proxy statement.
<PAGE>
ACCOUNT NUMBER SHARES PROXY NUMBER
LORD ABBETT INVESTMENT TRUST
LORD ABBETT BALANCED SERIES
PLEASE SIGN, DATE AND MAIL THIS PROXY IN THE POSTAGE PAID RETURN ENVELOPE
PROVIDED.
For information as to the voting of stock registered in more than one name, see
page 1 of the proxy statement. When signing the proxy as attorney, executor,
administrator, trustee or guardian, please indicate the capacity in which you
are acting. Only autho rized officers should sign for corporations.
Date:......................................................
Signature(s) of Shareholder(s) as shown at left
.............................................................
.............................................................
(Please read other side)
