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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:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
b(e)(2))
[X] 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):
[_] $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:
[X] 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>
LORD ABBETT INVESTMENT TRUST
INVESTMENT MANAGEMENT
THE GM BUILDING 767 FIFTH AVENUE NEW YORK NEW YORK 10153
Dear Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders
of the Lord Abbett Investment Trust scheduled to be held on June 19, 1996, at
11:00 a.m., at the General Motors Building, 767 Fifth Avenue, New York, New
York. Your Board of Trustees looks forward to greeting those shareholders who
are able to attend.
At the meeting, in addition to the election of trustees and approval of
the appointment of auditors, you will be asked to vote on a proposed revision of
your Series' fundamental investment policies and restrictions and a new 12b-1
Plan and Distribution Agreement for your Series.
Such proposals, if approved, are intended to provide for greater
flexibility in the future management of your Series' portfolio, as well as to
maintain the competitive position of the Fund.
All proposals are fully described in the enclosed proxy statement. I
encourage you to review the proxy statement for all the details regarding the
meeting agenda.
Your Board of Trustees believes these proposals are in the best interest
of the Fund and its shareholders and unanimously recommends a vote "for" all
proposals. Regardless of the number of shares you own, it is important that they
be represented and voted. Accordingly, please sign, date and mail the enclosed
proxy card in the postage paid return envelope.
Your prompt response will help save the Fund the expense of additional
solicitation.
Sincerely,
/s/ Ronald P. Lynch
Ronald P. Lynch
Chairman of the Board
<PAGE>
LORD ABBETT INVESTMENT TRUST
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
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
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 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 of the Lord Abbett Limited Duration
U.S. Government Securities Series and the Lord Abbett Balanced Series
(each, a "Series", and collectively the "Series"); and
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
<PAGE>
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 1,063,886 shares of the Limited Duration
Government Series, 680,141 shares of the Balanced Series and 1,744,027 shares of
the Fund 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.
2
<PAGE>
April 17, 1996
3
<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 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 1,063,886 shares of the Limited Duration U.S.
Government Securities Series (the "Limited Duration Government Series"), 680,141
shares of the Balanced Series (each, a "Series", and collectively the "Series")
and 1,744,027 shares of the Fund. 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, custodians, 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 less than $1,000. The cost of the solicitation will be borne
by the Fund.
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
<PAGE>
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.
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.
<TABLE>
<CAPTION>
Names and Ages of Principal Occupation and Director- Trustee of
Trustees of the Fund ships the
Fund Since
- --------------------------------------------------------------------------------------
<C> <S> <C>
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/ 2/ President and Chief Executive of 1994
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.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Names and Ages of Principal Occupation and Director- Trustee of
Trustees of the Fund ships the
Fund Since
- --------------------------------------------------------------------------------------
<C> <S> <C>
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. /2/ President and Chief Executive Officer 1993
67 of Rochester Button Company.
Thomas J. Neff /2/ President, Spencer Stuart & Asso- 1993
58 ciates, an executive search consulting
firm.
</TABLE>
- -------------------------------
1. "Interested person" of the Fund and Lord Abbett, within the meaning of the
Investment Company Act of 1940, as amended, 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 as a group. In each case, the amounts shown are less than 1% of the
Fund's outstanding shares of beneficial interest.
3
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Beneficially
Name Owned
and Phantom Shares/ 1/
- -----------------------------------------------------------------------
<S> <C>
Ronald P. Lynch 222
Robert S. Dow 33,105
E. Thayer Bigelow 11
Stewart S. Dixon 4
John C. Jansing 14
C. Alan MacDonald 4
Hansel B. Millican, Jr. 14
Thomas J. Neff 311
Trustees and Officers as a group 42,070
</TABLE>
___________________
1. Of the shares listed in the foregoing table, the following constitute
"phantom" shares credited to trustees under the Deferred Plan: Mr. Bigelow,
11 shares; Mr. Dixon, 4 shares; Mr. Jansing, 14 shares; Mr. MacDonald, 4
shares; Mr. Millican, 14 shares; Mr. Neff, 14 shares; and trustees as a
group: 61 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 Investment Company Act of 1940, as amended (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
4
<PAGE>
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.
<TABLE>
<CAPTION>
For Year Ended De-
For the Fiscal Year Ended October 31, 1995 cember 31, 1995
- ---------------------------------------------------------------------------------------------------------
(I) (II) (III) (IV) (V)
- ---------------------------------------------------------------------------------------------------------
Name of Trustee Aggregate Pension or Retire- Estimated Annual Total Compensation
Com- ment Benefits Benefits Upon Re- Accrued by the Fund
pensation Ac- Accrued by the tirement Proposed and Fifteen Other
crued by the Fund and to be Paid by the Lord Abbett-spon-
Fund/1/ Fifteen Other Fund and Fifteen sored Funds/3/
Lord Abbett- Other Lord
sponsored Funds/2/ Abbett-sponsored
Funds/2/
- ---------------------------------------------------------------------------------------------------------
<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
retirement plans if the trustee were to retire at age 72 and the annual
retainers payable by such funds were the same as they are today. The
amounts 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).
5
<PAGE>
3. This column shows aggregate Independent Trustees' 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.
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 44, 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 votes cast. 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, but shall not be deemed to have been voted on this matter. If a broker
returns a "non-vote" proxy, indicating a lack of authority to vote on this
6
<PAGE>
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 have
been voted on 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.
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 votes cast. 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, but shall
not be deemed to have been voted on 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 have been voted on
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 POLICIES AND RESTRICTIONS OF
EACH SERIES
The Board of Trustees has approved various amendments to each Series'
investment policies and restrictions in order to provide increased flexibility
in managing the Series' investment portfolios and to provide some uniformity
7
<PAGE>
in the investment policies and restrictions among the various Lord Abbett-
sponsored funds. A Series' investment policies and restrictions designated
"fundamental" may be changed only by the vote of a "majority" (as defined in the
Act) of such Series' voting securities. 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. Each
Series' current fundamental investment policies and restrictions and its
proposed fundamental and certain non-fundamental investment policies and
restrictions are set forth in Exhibit A attached hereto.
The investment policies and restrictions of a Series govern generally the
investment activities of such 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 the
Series. The proposed fundamental investment policies and restrictions of each
Series have been made less restrictive in order to provide greater flexibility
in the future management of the Series' investment portfolio and to provide some
uniformity among the Lord Abbett-sponsored funds as noted above. The Board of
Trustees has no present intention of approving actions permitted by these less
restrictive fundamental policies and restrictions. If it were to do so, the
risks of investing in the Series could be increased. No change is proposed in
the investment objectives of the Series, which are, for the Limited Duration
Government Series, to seek a high level of income from a portfolio consisting
primarily of limited duration U.S. government securities, and for the Balanced
Series, to seek current income and capital growth.
The proposed policies and restrictions restate many of the policies and
restrictions currently in effect for the 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 a 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 a Series and its shareholders,
without incurring the costs (normally borne by such 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 a Series
to seek a shareholder vote to amend the policy or restriction to conform to
applicable law, as revised.
8
<PAGE>
The principal effect of the proposed amendments will be to permit each
Series to take certain actions not now permitted to it without obtaining
additional shareholder approval. With one exception noted below, Fund management
either will not be permitted to, or does not intend to, take any such action
with respect to a Series unless such action is approved by the Board of
Trustees. With such exception, the board does not now intend to approve any such
action or to do so in the future unless it deems such action to be an
appropriate means of seeking a Series' investment objective in the best
interests of such Series and its shareholders, in which case disclosure of the
change would be made in the Fund's then current prospectus or statement of
additional information or both. Such actions, none of which the board has a
present intention of approving, involve the following matters, among others: (i)
-
borrowings from banks in amounts up to one-third of total assets (and up to an
additional 5% of total assets for temporary purposes) and such short-term
credits as may be necessary for the clearance of purchases and sales of
portfolio securities; (ii) loans of portfolio securities to the extent permitted
--
by law; (iii) purchases and sales of securities directly or indirectly secured
---
by real estate or interests therein, commodities and commodity contracts in
accordance with applicable law so long as registration would not be required as
a commodity pool operator under the Commodity Exchange Act; and (iv) purchases
--
and sales of puts and calls. In addition, the board has approved the elimination
of the current fundamental policy prohibiting the Limited Duration Government
Series from making investments other than those a federal savings association
may invest in, sell, redeem, hold or otherwise deal in; this Series may make
such investments without further board approval consistent with its investment
objective referred to above. See Exhibit A hereto for a detailed comparison of
the current fundamental investment policies and restrictions and the proposed
fundamental and certain non-fundamental investment policies and restrictions of
the Series.
Approval of the proposed amendments to a Series' fundamental investment
policies and restrictions requires the affirmative vote of a "majority" (as
defined in the Act) of the voting securities of such Series. A "majority" vote
of 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. The effect of an abstention or broker non-vote is the same as a vote
against this proposal.
If the proposed amendments are not approved by the shareholders of one or
more Series, the current fundamental policies and restrictions for such Series
will continue in effect.
9
<PAGE>
The Board of Trustees recommends that shareholders vote in favor of the
proposed amendments to the Series' fundamental investment policies and
restrictions.
4. NEW DISTRIBUTION PLAN AND AGREEMENT FOR THE
CLASS A SHARES OF EACH SERIES
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
texts of the Proposed Plans for the existing Series are attached hereto as
Exhibits B-1 and B-2. 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 operative.
The Balanced Series' Current Plan was approved by such Series' shareholders
on December 15, 1994 and has not yet become operative.
Each of the Current Plans is to become operative on the first day (the
"Operative 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
March 22, 1996 the net assets of Limited Duration Government Series totaled
$4,736,757 million and the net assets of Balanced Series totaled $7,640,447
million. Upon the Current Plans becoming operative (except as to certain
accounts for which tracking data is not available), each Series is to 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
10
<PAGE>
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 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 the Current Plans becoming operative, holders of shares on which the
distribution fee has been paid are 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
after the month in which the purchase occurred. (An exception is made for
certain re demptions 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 or series 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 or series. The Fund
is to 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 annual distribution fees payable after their respective Operative
Dates (which will remain the same as under the Current Plans) up to 0.25% of the
average annual net assets attributable to the Class A Shares of each Series (the
"Distribution Fee Ceiling") (the annual distribution and service fees could
total 0.50% of such average annual net assets if approved by the board). 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.
11
<PAGE>
The one-time distribution fee, payable (after the Operative Dates) 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' Operative 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.
Lord Abbett has advised the Board of Directors that, if the share holders
approve the Proposed Plans and the Proposed Plans thereafter become operative,
Lord Abbett would currently expect to recommend that the board authorize the
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. At the current
time, such recommended payments would be 0.10% per annum of the average assets
of the Series represented by the Class A Share accounts of qualifying dealers.
Any such payments would be charged against the Distribution Fee Ceiling. Such
payment would be intended by Lord Abbett 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 also to be payable under
------------
the Proposed Plans at an annual rate of 0.25% of the average daily net asset
value of shares sold on or after the Operative Date of such Series' Proposed
Plan, 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.
12
<PAGE>
(d) CDRC. The CDRC applicable to the Class A Shares would be substantially
----
similar to that provided for 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. In addition, no CDRC would apply if the plan sponsor requested
a redemption to correct an excess contribution in order to comply with
applicable IRS rules. 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.
(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 should, once the Proposed Plans become
operative, enable the Class A Shares to compete more effectively in this growing
and important market.
(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
13
<PAGE>
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 investment 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, 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 annual operating expenses shown in the second
column are each Series' actual expenses for the fiscal year ended October 31,
1995. The expenses shown in the third column represent, on a pro-forma basis,
such actual expenses of each Series adjusted to show the effect of the maximum
distribution and service fee the board would have been authorized to approve
under the Proposed Plans had the Proposed Plans been operative during such
fiscal year. The fourth column shows such pro-forma annual operating expenses
reflecting the fact that the Proposed Plan would not have met the requirements
for being operative during such fiscal year. The example set forth below is not
a representation of past or future expenses. Actual expenses may be greater or
less than those shown.
14
<PAGE>
<TABLE>
<CAPTION>
I II III IV
- -----------------------------------------------------------------------------------------------
LIMITED DURATION Current Pro-Forma (reflecting Pro-Forma
GOVERNMENT SERIES (reflecting the maximum amounts
Current Plan) payable under the
Proposed Plan)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
(AS A PERCENTAGE OF OFFERING PRICE)
- -----------------------------------------------------------------------------------------------
Maximum Sales Load/1/ on Purchases 3.00% 3.00% 3.00%
Deferred Sales Load /1 / None/2/ None/2/ None/2/
- -----------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- -----------------------------------------------------------------------------------------------
Management Fee 0.18%/3/ 0.18%/3/ 0.18%/3/
12b-1 Fees 0.00%/4/ 0.50% 0.00%/4/
Other Expenses 1.22% 1.22% 1.22%
- -----------------------------------------------------------------------------------------------
Total Operating Expenses 1.40%/3/ 1.90%/3,5/ 1.40%/3/
- -----------------------------------------------------------------------------------------------
</TABLE>
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 3 YEARS 5 YEARS 10 YEARS
-------- -------- --------- ---------
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
CURRENT $ 44/6/ $ 73/6/ $ 104/6/ $ 193/6/
- -----------------------------------------------------------------
PRO-FORMA (MAXIMUM) $49/5,6/ $88/5,6/ $130/5,6/ $246/5,6/
- -----------------------------------------------------------------
PRO-FORMA (ESTIMATED) $ 44/6/ $ 73/6/ $ 104/6/ $ 193/6/
- -----------------------------------------------------------------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
I II III IV
- ----------------------------------------------------------------------------------------
BALANCED SERIES Current Pro-Forma (reflecting Pro-Forma
maximum amounts
payable under the
Proposed Plan)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
(AS A PERCENTAGE OF OFFERING PRICE)
- ----------------------------------------------------------------------------------------
Maximum Sales Load/1/ on Purchases 4.75% 4.75% 4.75%
Deferred Sales Load /1 / None/2/ None/2/ None/2/
- ----------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ----------------------------------------------------------------------------------------
Management Fee 0.00%/3/ 0.00%/3/ 0.00%/3/
12b-1 Fees 0.00%/4/ 0.50% 0.00%/4/
Other Expenses 0.37%/3+/ 0.37%/3+/ 0.37%/3+/
- ----------------------------------------------------------------------------------------
Total Operating Expenses 0.37%/3+/ 0.87%/3,5+/ 0.37%/3+/
- ----------------------------------------------------------------------------------------
</TABLE>
+ 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 3 YEARS 5 YEARS 10 YEARS
--------- -------- -------- ---------
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
CURRENT $51/6/ $59/6/ $67/6/ $92/6/
- -----------------------------------------------------------------
PRO-FORMA (MAXIMUM) $56/5,6/ $74/5,6/ $93/5,6/ $150/5,6/
- -----------------------------------------------------------------
PRO-FORMA (ESTIMATED) $51/6/ $59/6/ $67/6/ $92/6/
- -----------------------------------------------------------------
</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. Investors should be aware that long-term
shareholders may pay, as a front-end sales charge and under both the
Proposed Plans once such Plans become operative, more than the economic
equivalent of the maximum front-end sales charge permitted by certain rules
of the National Association of Securities Dealers, Inc.
2. Under both the Current Plans and the Proposed Plans, redemptions of shares
on which a 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
16
<PAGE>
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 operating expenses with respect to any Series. For the fiscal
year ended October 31, 1995, Lord Abbett waived a portion of its management
fee for the Limited Duration Government Series and waived all of its
management fee 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 of the Current Plans was,
and neither of the Proposed Plans would have been, operative. 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).
5. Reflects the maximum annual 12b-1 fees of 0.50% that could be paid under the
Proposed Plans in any year, consisting of a distribution fee of 0.25% and a
service fee of 0.25%. This maximum amount would not be applicable for either
Series until such Series' Proposed Plan became operative.
6. 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.
Notwithstanding the foregoing, the Proposed Plans will not become operative
until their respective Operative Dates (as defined above). 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.
17
<PAGE>
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. The effect of an abstention or broker non-vote is the same as a vote
against this proposal.
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. Transactions Involving each Series of the Fund.
----------------------------------------------
It is expected that (i) the Limited Duration Government Series will
-
acquire the assets of Lord Abbett Limited Duration U.S. Government Trust (the
"Acquired Limited Duration Government Series"), a series of Lord Abbett
Securities Trust (the "Trust") and (ii) the Balanced Series will acquire the
--
assets of the Lord Abbett Balanced Trust (the "Acquired Balanced Series"), a
series of the Trust. These transactions, which are subject to certain
conditions, have been approved by the Board of Trustees of the Fund, including a
majority of the Independent Trustees, as being in the best interests of the
shareholders of such respective Series. Shareholders of the Series are not
required to approve these transactions. As of March 22, 1996, (i) the net
-
assets of the Acquired Limited Duration Government Series and the Limited
Duration Government Series were approximately $10,216,909 and $4,736,757,
respectively and (ii) the net assets of the Acquired Balanced Series and the
--
Balanced Series were $2,969,206 and $7,640,447, respectively.
If these transactions are consummated, Class C Shares of the Limited
Duration Government Series will be issued to the shareholders of the Acquired
18
<PAGE>
Limited Duration Government Series and Class C Shares of the Balanced Series
will be issued to the shareholders of the Acquired Balanced Series. The Class C
Shares and the existing shares of each Series, which are to be designated the
Class A Shares, will be classes within such Series. Each such share, regardless
of class, will share pro rata (based on net asset value) in the portfolio and
income of the Series and in the Series' expenses, except for differences in
expenses resulting from different Rule 12b-1 Plans for the classes and possibly
other class-specific expenses. The Class C Shares of the Series are to be
subject to a Rule 12b-1 plan that involves annual distribution and service fees
for the account of such class that are expected initially to equal approximately
1.0% of the average net asset value of the Class C Shares.
Commencing July 15, 1996, following the closings of these various
transactions, both classes of each Series are to be offered to the public. It
is expected that implementation of the Series' multi-class structure will (i)
-
enable investors in the Series to choose the distribution option that best suits
their individual situations, (ii) facilitate distribution of the Series' shares,
--
and (iii) maintain the competitive position of the Series in relation to other
---
funds that have implemented or are seeking to implement similar distribution
arrangements.
b. 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.
c. 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.
d. 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
report(s) by writing to the Fund or by calling 800-874-3733.
e. Portfolio Transactions.
----------------------
19
<PAGE>
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, a brokerage
commission will usually not be paid 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.
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
20
<PAGE>
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 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.
21
<PAGE>
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 commission cost of each day. Other clients who direct that their
brokerage business be placed with specific brokers or who invest through wrap
accounts introduced to Lord Abbett by certain brokers may not participate with
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 year 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
Kenneth B. Cutler
Vice President and Secretary
22
<PAGE>
EXHIBIT A
COMPARISON OF CURRENT FUNDAMENTAL AND CERTAIN CURRENT NON-FUNDAMENTAL INVESTMENT
POLICIES AND RESTRICTIONS AND PROPOSED FUNDAMENTAL AND CERTAIN
NON-FUNDAMENTAL 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 or Each Series may purchase securities on
buy securities on margin although it may margin to the extent permitted by applicable
obtain short-term credit necessary for the law.
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 except Each Series may not borrow money, except
(i) as a temporary measure for extraordinary that (i) Each Series may borrow from banks
or emergency purposes and then not in (as defined in the Act) in amounts up to
excess of 5% of gross assets (at cost or 33% of its total assets (including the
market value, whichever is lower) at the time amount borrowed), (ii) each Series may bor-
of borrowing, (ii) unless such borrowing row up to an additional 5% of its total assets
does not exceed the asset coverage for temporary purposes, and (iii) each Series
requirements of Section 18(f) of the Act and may obtain such short-term credit as may be
(iii) unless such borrowing on behalf of a necessary for the clearance of purchases and
class or series shall be a liability only of such sales of portfolio securities.
class or series, as the case may be.
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 to writing of securities, except pursuant to a
a merger or acquisition or to the extent that merger or acquisition or to the extent that, in
in connection with the disposition of its connection with the disposition of its
portfolio securities it may be deemed to be portfolio securities, it may be deemed to be
an underwriter under federal securities laws. an underwriter under federal securities 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 securities Each Series may not make loans to other
to any person, except through entering into persons, except that the acquisition of bonds,
short-term repurchase agreements with sellers debentures or other corporate debt securities
of securities it has purchased and by lending and investment in government obligations,
its portfolio securities to registered broker- commercial paper, pass-through instruments,
dealers where the loan is 100% secured by certificates of deposit, bankers acceptances,
cash or its equivalent as long as it complies repurchase agreements or any similar
with regulatory requirements and except for instruments shall not be subject to this
time or demand deposits with banks and limitation, and except further that each Series
purchases of commercial paper or publicly may lend its portfolio securities, provided
offered debt securities at original issue or that the lending of portfolio securities may be
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 estate Each Series may not buy or sell real estate
(including limited partnerships therein but (except that each Series may invest in securi-
excluding securities of companies, such as ties directly or indirectly secured by real
real estate investment trusts, which deal in estate or interests therein or issued by
real estate or interests therein), oil, gas or companies which invest in real estate or
other mineral leases or in commodities or interests therein) or commodities or com-
commodity contracts in the ordinary course modity contracts (except to the extent each
of its business, except such interests and Series may do so in accordance with appli-
other property acquired as a result of owning cable law and without registering as a
other securities, though securities will not be commodity pool operator under the Com-
purchased in order to acquire any of these modity Exchange Act as, for example, with
interests. futures contracts).
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 75% of With respect to 75% of its gross assets, each
its total assets, and except as indicated Series may not buy securities of one issuer
below, buy securities if the purchase would representing more than (i) 5% of each Series'
then cause it to (i) have more than 5% of its gross assets, except securities issued or guar-
gross assets, at market value at the time of anteed by the U.S. Government, its agencies
investment, invested in the securities of any or instrumentalities, or (ii) 10% of the voting
one issuer except securities issued or 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 25%
excluding U.S. Government securities. of its assets, taken at market value, in the
Notwithstanding the foregoing, in the future, securities of issuers in any particular industry
upon shareholder approval, each Series may (excluding securities of the U.S.
seek to achieve its investment objective by Government, its agencies and instrumen-
investing all of its assets in another talities).
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
Each Series may not invest knowingly more NON-FUNDAMENTAL
than 15% of its net assets (at the time of Each Series may not invest knowingly more
investment) in illiquid securities (securities than 15% of its net assets (at the time of
qualifying for resale under Rule 144A that investment) in illiquid securities, except for
are determined by the trustees, or by Lord securities qualifying for resale under Rule
Abbett pursuant to delegated authority from 144A of the Securities Act of 1933, deemed
the trustees, to be liquid are considered to be liquid by the Board of Trustees.
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 (other
hypothecate its assets, however, this than to secure borrowings, or to the extent
provision does not apply to permitted permitted by each Series' investment
borrowings mentioned above or to the grant policies, as permitted by applicable law).
of escrow receipts or the entry into other
similar escrow arrangements arising out of
the writing of covered call options.
- -------------------------------------------------------------------------------------------------------
</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 its Each Series may not invest in the securities
assets in another investment company (or of other investment companies, except as
series or class thereof) having the same permitted by applicable law.
investment objective. Shareholders will be
notified thirty days in advance of such
conversion.
- -------------------------------------------------------------------------------------------------------
OPTIONS.
NON-FUNDAMENTAL NON-FUNDAMENTAL
The Limited Duration Government Series Each Series may not write, purchase or sell
may not buy or sell put or call options. 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 of
any issuer unless it or its predecessor has a NON-FUNDAMENTAL
record of three years' continuous operation, Each Series may not invest in securities of
except that it may purchase securities of such issuers which, with their predecessors, have
issuers through subscription offers or other a record of less than three years continuous
rights it receives as a security holder of operations, if more than 5% of such Series'
companies offering such subscriptions or total assets would be invested in such
rights and such purchases will then be securities (this restriction shall not apply to
limited in the aggregate to 5% of the Series' mortgage-backed securities, asset-backed
net assets at the time of investment. securities or obligations issued or guaranteed
by the U.S. Government, its agencies or
instrumentalities).
- -------------------------------------------------------------------------------------------------------
OWNERSHIP OF PORTFOLIO SE-
CURITIES BY OFFICERS AND
TRUSTEES.
NON-FUNDAMENTAL NON-FUNDAMENTAL
Each Series may not hold securities of any Each Series may not hold securities of any
issuer when more than 1/2 of 1% of the issuer if more than 1/2 of 1% of the securities
issuer's securities are owned beneficially by of such issuer are owned beneficially by one
one or more of the Fund's officers or or more officers or trustees of the Fund or
trustees or by one or more partners of the by one or more partners or members of the
Fund's underwriter or investment adviser if underwriter or investment advisor if these
these owners in the aggregate own owners in the aggregate own beneficially
beneficially more than 5% of such more than 5% of the securities of such
certificates. issuer.
- -------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
CURRENT PROPOSED
- ---------------------------------------------------------------------------------------------------------
POLICY/RESTRICTION POLICY/RESTRICTION
- ---------------------------------------------------------------------------------------------------------
<S> <C>
TRANSACTIONS WITH CERTAIN
PERSONS.
No policy/restriction stated. NON-FUNDAMENTAL
Each Series may not buy from or sell to any
of its officers, trustees, employees, or its in-
vestment adviser or any of its officers, direc-
tors, partners or employees, any securities
other than shares of such Series' common
stock.
- -------------------------------------------------------------------------------------------------------
SENIOR SECURITIES.
FUNDAMENTAL FUNDAMENTAL
Each Series may not issue senior securities Each Series may not issue senior securities to
except to the extent permitted by the Act. the extent such issuance would violate
applicable law.
- -------------------------------------------------------------------------------------------------------
PURCHASE OF WARRANTS.
NON-FUNDAMENTAL NON-FUNDAMENTAL
The Balanced Series may not invest in Each Series may not invest in warrants if, at
warrants, valued at the lower of cost or the time of the acquisition, its investment in
market, to exceed 5% of the Series' net warrants, valued at the lower of cost or
assets, including warrants not listed on the market, would exceed 5% of such Series'
New York or American Stock Exchange total assets (included within such limitation,
which may not exceed 2% of such net assets. but not to exceed 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).
- -------------------------------------------------------------------------------------------------------
ELIGIBLE INVESTMENTS.
FUNDAMENTAL
The Limited Duration Government Series No policy/restriction stated.
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.
- -------------------------------------------------------------------------------------------------------
</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 Plan will succeed a Rule 12b-1 Distribution Plan and
Agreement between the Fund and Lord, Abbett & Co. ("Lord Abbett"), an affiliate
of the Distributor.
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 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 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.
<PAGE>
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 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
2
<PAGE>
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.
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 upon the date hereof and shall
continue in effect for a period of more than one year from that date only so
long as such continuance is specifically approved at least annually by a vote of
the Board of Trustees of the 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. Notwithstanding the foregoing, no payments may be made
by the Series hereunder prior to or with respect to any period prior to the
first day of the calendar quarter subsequent to the Series' net assets reaching
$100 million.
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
3
<PAGE>
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 foregoing 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 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.
4
<PAGE>
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:_____________________________
5
<PAGE>
EXHIBIT B-2
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 Plan will succeed a Rule 12b-1 Distribution Plan and
Agreement between the Fund and Lord, Abbett & Co. ("Lord Abbett"), an affiliate
of the Distributor.
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 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 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.
<PAGE>
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 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
2
<PAGE>
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.
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 upon the date hereof and shall
continue in effect for a period of more than one year from that date only so
long as such continuance is specifically approved at least annually by a vote of
the Board of Trustees of the 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. Notwithstanding the foregoing, no payments may be made
by the Series hereunder prior to or with respect to any period prior to the
first day of the calendar quarter subsequent to the Series' net assets reaching
$50 million.
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
3
<PAGE>
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 foregoing 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 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.
4
<PAGE>
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:_____________________________
5
<PAGE>
LORD ABBETT INVESTMENT TRUST
LORD ABBETT LIMITED DURATION
U.S. GOVERNMENT SECURITIES SERIES
SPECIAL MEETING OF SHAREHOLDERS
JUNE 19, 1996
767 Fifth Avenue
New York, New York 10153
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
<PAGE>
Series' existing class of shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as described in the proxy statement.
2
<PAGE>
ACCOUNT NUMBER SHARES PROXY NUMBER
LORD ABBETT INVESTMENT TRUST
LORD ABBETT LIMITED DURATION U.S. GOVERNMENT
SECURITIES 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)
3
<PAGE>
LORD ABBETT INVESTMENT TRUST
LORD ABBETT BALANCED SERIES
SPECIAL MEETING OF SHAREHOLDERS
JUNE 19, 1996
767 Fifth Avenue
New York, New York 10153
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
1
<PAGE>
Series' existing class of shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as described in the proxy statement.
2
<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 authorized officers should
sign for corporations.
Date:.......................................
Signature(s) of Shareholder(s) as shown at left
..............................................
..............................................
(Please read other side)
3
4
