<PAGE>
1940 Act File No. 811-7988
1933 Act File No.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. __
[ ] Post-Effective Amendment No. __
LORD ABBETT INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
The General Motors Building, 767 Fifth Avenue
New York, New York 10153
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: 800-426-1130
Kenneth B. Cutler
Vice President and Secretary
Lord Abbett Investment Trust
The General Motors Building
767 Fifth Avenue
New York, New York 10153
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of the registration statement.
NO FILING FEE IS REQUIRED BECAUSE AN INDEFINITE NUMBER OF SHARES ARE BEING
REGISTERED PURSUANT TO RULE 24f-2 UNDER THE INVESTMENT COMPANY ACT OF 1940.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE ON
MARCH 20, 1996 PURSUANT TO RULE 488.
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<PAGE>
LORD ABBETT INVESTMENT TRUST
CROSS-REFERENCE SHEET
ITEMS REQUIRED BY FORM N-14
<TABLE>
<CAPTION>
PART A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
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<S> <C>
1. Beginning of Registration Statement and Outside Cover Page of Registration State-
Front Cover Page of Prospectus ment; Cover Page of Proxy State-
ment and Prospectus
2. Beginning and Outside Back Cover Page of Table of Contents
Prospectus
3. Fee Table, Synopsis and Risk Factors Fee Tables; Summary of Proposals
4. Information about the Transaction Summary of Proposals; Information
About the Reorganizations
5. Information about the Registrant Summary of Proposals; Comparative
Information about the Funds; Ad-
ditional Information; Prospectus of
Acquiring Fund dated March __,
1996
6. Information about the Company Being Acquired Summary of Proposals; Comparative
Information about the Funds
7. Voting Information Meetings of Shareholders of the
Reorganized Fund and the Securities
Trust; Notice of Special Meeting of
Shareholders; Notice of Annual
Meeting of Shareholders; Summary
of Proposals
8. Interest of Certain Persons and Experts Additional Information
9. Additional Information Required for Reoffering Not Applicable
by Persons Deemed to be Underwriters
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PART B STATEMENT OF ADDITIONAL
ITEM NO. ITEM CAPTION INFORMATION CAPTION
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<S> <C>
10. Cover Page Cover Page
11. Table of Contents Not Applicable
12. Additional Information about the Registrant Cover Page of Proxy Statement and
Prospectus; Acquiring Fund State-
ment of Additional Information
dated March __, 1996 incorporated
by reference.
13. Additional Information about the Company Cover Page of Proxy Statement and
Being Acquired Prospectus; Reorganized Fund and
Securities Trust Statements of
Additional Information incorporated
by reference dated April 1, 1995
and December 27, 1994,
respectively.
14. Financial Statements Not Applicable
PART C
ITEM NO. PART C CAPTION
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15. Indemnification Indemnification
16. Exhibits Exhibits
17. Undertakings Undertakings
Signatures
</TABLE>
<PAGE>
[Letterhead of Lord Abbett U.S. Government Securities Fund, Inc.]
FROM THE CHAIRMAN OF THE BOARD
- ------------------------------
Dear Shareholder,
Your Board of Directors has determined that it will be advantageous for
your Fund, Lord Abbett U.S. Government Securities Fund, Inc., to reorganize
itself into a trust rather than to continue in its current corporate form. This
will permit your Fund to offer to investors in certain states the more favorable
tax treatment afforded by those states to shareholders of funds organized as
trusts whose assets consist primarily of U.S. government securities.
Accordingly, the Board of Directors has recommended that your Fund reorganize
itself into a new series of Lord Abbett Investment Trust, a Delaware business
trust. This new series (the "Acquiring Fund") is to be called the U.S.
Government Securities Series of Lord Abbett Investment Trust.
If approved and consummated, this proposed reorganization of your Fund
will be a tax-free reorganization for Federal income tax purposes.
As part of the reorganization, the Acquiring Fund will enter into an
investment management agreement with Lord, Abbett & Co. that will be
substantially identical to the current management agreement between Lord, Abbett
& Co. and your Fund. The Acquiring Fund will be operated in the same manner as
your Fund except for several changes primarily intended to maintain its
competitive position and to provide increased flexibility in managing its
investment portfolio. Under these changes, the Acquiring Fund will implement a
multi-class structure intended to enable investors to choose the distribution
option that best suits their individual situations. The 12b-1 Plan and
Distribution Agreement of the Acquiring Fund for your class of shares will
differ in several respects from the 12b-1 Plan of your Fund. These changes, and
their estimated effect on the expenses of the Acquiring Fund, are described in
detail in the enclosed materials. Finally, the investment objective of the
Acquiring Fund has been modified from that of your Fund to clarify that the
Acquiring Fund will seek its investment objective consistent with reasonable
risk and the fundamental investment policies and restrictions of the Acquiring
Fund have been simplified from those of your Fund.
You are also being asked to vote on the election of directors of your Fund
and to ratify the selection of Deloitte & Touche LLP as your Fund's independent
accountants. A shareholder vote is required on these latter two matters to
cover the contingency that the proposed reorganization of your Fund will not be
consummated.
Shareholders of another investment company advised by Lord, Abbett & Co.,
Lord Abbett U.S. Government Securities Trust (the "Acquired Trust"), a series of
Lord Abbett Securities Trust are being asked to vote on a proposed acquisition
by the Acquiring Fund of that trust. The Acquired Trust, which is much smaller
than your Fund, has investment objectives identical to those of your Fund and
has similar investment policies. If the shareholders of the Acquired Trust
approve that transaction, it will occur immediately after the proposed
reorganization of your Fund. The shareholders of the Acquired
<PAGE>
Trust are to receive a class of shares different from the class to be held by
the shareholders of your Fund. The Board of Directors of your Fund has
determined that this proposed acquisition of the Acquired Trust is in the best
interest of your Fund and its shareholders. Although the enclosed materials
describe the proposed reorganization of your Fund and the proposed acquisition
of the Acquired Trust, you are not being asked to vote on the acquisition of the
Acquired Trust. If the proposed reorganization of your Fund is approved, and
all other conditions to the consummation of the proposed reorganization are
satisfied, it will occur regardless of whether that other transaction is
approved or consummated.
The various matters requiring your vote will be voted upon at a meeting of
shareholders of your Fund to be held in New York on June 19, 1996 at 10:00 a.m.
YOUR VOTE ON THESE ISSUES IS CRITICAL. TO ENSURE THAT YOUR VOTE IS
COUNTED, IT IS IMPORTANT THAT YOU:
1. REVIEW THE ENCLOSED PROXY STATEMENT AND PROSPECTUS;
2. COMPLETE AND SIGN THE ENCLOSED PROXY CARD; AND
3. RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE.
Your prompt response will help save your Fund the expense of additional
solicitations.
We encourage you to review the enclosed materials. Because we believe
this proposed reorganization of your Fund is in the best interests of
shareholders, we encourage you to vote in favor of this proposal.
Sincerely,
Ronald P. Lynch
Chairman of the Board
April 17, 1996
<PAGE>
LORD ABBETT U.S. GOVERNMENT SECURITIES FUND, INC.
767 Fifth Avenue
New York, New York 10153
Telephone No. (800) 426-1130
Notice of Annual Meeting of Shareholders
to be held on June 19, 1996 April 17, 1996
Notice is given hereby of an annual meeting of the shareholders of Lord Abbett
U.S. Government Securities Fund, Inc. (the "Reorganized Fund"). The meeting
will be held in 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 10:00 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 consider and act upon an Agreement and Plan of Reorganization
between Lord Abbett U.S. Government Securities Series (the "Acquiring
Fund"), a series of Lord Abbett Investment Trust, and the Reorganized
Fund providing for (a) a reorganization of the Reorganized Fund into
the Acquiring Fund (the "Reorganization") by means of the transfer of
all of the assets of the Reorganized Fund to the Acquiring Fund in
exchange for shares of the Acquiring Fund (to be designated "Class A
Shares") and the assumption by the Acquiring Fund of all of the
liabilities of the Reorganized Fund, (b) the distribution of such Class
A Shares to the shareholders of the Reorganized Fund and (c) the
subsequent termination of the Reorganized Fund. A vote in favor of this
Item 1 will be deemed to be a vote to authorize the Reorganized Fund,
as the sole shareholder of Class A Shares of the Acquiring Fund prior
to the Reorganization, to (i) approve a proposed distribution plan
pursuant to Section 12 of the Investment Company Act of 1940, as
amended, and Rule 12b-1 thereunder applicable to that class; and (ii)
approve the proposed investment management agreement between the
Acquiring Fund and Lord, Abbett & Co.
ITEM 2. In the event the Reorganization is not consummated for any reason:
(A) To elect directors to serve as members of the Board of Directors of
the Reorganized Fund; and
(B) To ratify the selection of Deloitte & Touche LLP as the independent
public accountants of the Reorganized Fund for the current fiscal
year.
By order of the Board of Directors
Kenneth B. Cutler
Vice President and Secretary
<PAGE>
The Board of Directors has fixed the close of business on March 22, 1996 as the
record date for determination of shareholders of the Reorganized 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, there were ____ shares of the Reorganized
Fund issued and outstanding.
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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.
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<PAGE>
[Letterhead of Lord Abbett Securities Trust-Lord Abbett U.S. Government
Securities Trust]
FROM THE CHAIRMAN OF THE BOARD
- ------------------------------
Dear Shareholder,
Lord, Abbett & Co. serves as investment manager to two U.S. Government
securities funds with identical investment objectives and similar policies: your
Fund, Lord Abbett U.S. Government Securities Trust, a series of Lord Abbett
Securities Trust and Lord Abbett U.S. Government Securities Fund, Inc. (the
"Reorganized Fund"). The Board of Directors of the Reorganized Fund has
recommended that the Reorganized Fund be reorganized into a new series of Lord
Abbett Investment Trust, called Lord Abbett U.S. Government Securities Series
(the "Acquiring Fund") having a substantially similar objective and similar
policies. To eliminate the offering of substantially similar funds and to take
advantage of potential economies of scale, the Board of Trustees of your Fund
has recommended that your Fund combine with the Acquiring Fund immediately
following the reorganization of the Reorganized Fund into the Acquiring Fund.
If approved and consummated, this proposed combination of your Fund and
the Acquiring Fund will be a tax-free reorganization for Federal income tax
purposes.
You are also being asked to ratify the selection of Deloitte & Touche LLP
as your Fund's independent accountants. A shareholder vote is required on this
matter to cover the contingency that the proposed combination of your Fund and
the Acquiring Fund will not be consummated.
The proposal is subject to the approval of shareholders of your Fund at a
meeting to be held in New York on June 19, 1996 at 10:00 a.m.
YOUR VOTE ON THESE ISSUES IS CRITICAL. TO ENSURE THAT YOUR VOTE IS
COUNTED, IT IS IMPORTANT THAT YOU:
1. REVIEW THE ENCLOSED PROXY STATEMENT AND PROSPECTUS;
2. COMPLETE AND SIGN THE ENCLOSED PROXY CARD; AND
3. RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE.
Your prompt response will help save your Fund the expense of additional
solicitations.
<PAGE>
We encourage you to review the enclosed materials. Because we believe
this combination of funds is in the best interests of shareholders, we encourage
you to vote in favor of this proposal.
Sincerely,
Ronald P. Lynch
Chairman of the Board
April 17, 1996
<PAGE>
LORD ABBETT SECURITIES TRUST--LORD ABBETT U.S. GOVERNMENT SECURITIES TRUST
767 Fifth Avenue
New York, New York 10153
Telephone No. (800) 426-1130
Notice of a Special Meeting of Shareholders
to be held on June 19, 1996 April 17, 1996
Notice is given hereby of a special meeting of the shareholders of Lord Abbett
Securities Trust. The meeting will be held in the offices of Lord, Abbett &
Co., on the 11th floor of The General Motors Building, 767 Fifth Avenue, New
York, NY on June 19, 1996, at 10:00 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 consider and act upon an Agreement and Plan of Reorganization
between Lord Abbett U.S. Government Securities Trust (the "Acquired
Trust"), a series of Lord Abbett Securities Trust, and Lord Abbett U.S.
Government Securities Series (the "Acquiring Fund"), a series of Lord
Abbett Investment Trust, providing for (a) the transfer of all of the
assets of the Acquired Trust to the Acquiring Fund in exchange for
shares of a new class of the Acquiring Fund (to be designated "Class C
Shares") and the assumption by the Acquiring Fund of all of the
liabilities of the Acquired Trust, (b) the distribution of such Class C
Shares to the shareholders of the Acquired Trust and (c) the subsequent
termination of the Acquired Trust. A vote in favor of this Item 1 will
be deemed to be a vote to authorize the Acquired Trust, as the sole
shareholder of Class C Shares prior to this reorganization, to approve
a proposed distribution plan pursuant to Section 12 of the Investment
Company Act of 1940, as amended, and Rule 12b-1 thereunder applicable
to that class.
ITEM 2. To ratify the selection of Deloitte & Touche LLP as the independent
auditors of Lord Abbett Securities Trust for the current fiscal year.
By order of the Board of Directors
Kenneth B. Cutler
Vice President and Secretary
The Board of Trustees has fixed the close of business on March 22, 1996 as the
record date for determination of shareholders of the Acquired Trust entitled to
notice of and to vote at the meeting. Shareholders are entitled to one vote for
each share held. As of March 22, there were ____ shares of the Acquired Trust
issued and outstanding.
<PAGE>
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PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD.
SIGN, DATE AND RETURN IT IN THE ENVELOPE PROVIDED.
TO SAVE THE COST OF ADDITIONAL SOLICITATIONS, PLEASE MAIL YOUR PROXY PROMPTLY.
- --------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT AND PROSPECTUS DATED MARCH 20, 1996
---------------------------------------------------
ACQUISITION OF THE ASSETS OF
Lord Abbett U.S. Government Securities Fund, Inc. and
Lord Abbett U.S. Government Securities Trust, a series of
Lord Abbett Securities Trust
The General Motors Building, 767 Fifth Avenue
New York, NY 10153
(800) 426-1130
BY AND IN EXCHANGE FOR CLASS A AND CLASS C SHARES, RESPECTIVELY, OF
Lord Abbett U.S. Government Securities Series, a series of
Lord Abbett Investment Trust
The General Motors Building, 767 Fifth Avenue
New York, NY 10153
(800) 426-1130
This Proxy Statement and Prospectus relates to Class A shares (the "Class
A shares") and Class C shares (the "Class C shares") of Lord Abbett U.S.
Government Securities Series (the "Acquiring Fund"), a series of Lord Abbett
Investment Trust (the "Investment Trust"), to be issued to, and in exchange for
all the assets of, respectively, Lord Abbett U.S. Government Securities Fund,
Inc. (the "Reorganized Fund") and Lord Abbett U.S. Government Securities Trust
(the "Acquired Trust" and, together with the Reorganized Fund and the Acquiring
Fund, the "Funds"), a series of Lord Abbett Securities Trust (the "Securities
Trust"). In exchange for such assets, the Acquiring Fund will also assume all
of the liabilities of the Reorganized Fund and the Acquired Trust. Following
receipt of the Class A shares and the Class C shares, the Reorganized Fund and
the Acquired Trust will be terminated and the Class A shares and Class C shares
will be distributed to the respective shareholders of those Funds. The
shareholders of the Reorganized Fund and the Acquired Trust are being asked to
vote to approve or disapprove these proposed transactions (with respect to the
Reorganized Fund, the "Fund Reorganization," and with respect to the Acquired
Trust, the "Trust Reorganization," and collectively, the "Reorganizations"),
which are more fully described in this Proxy Statement and Prospectus.
The Reorganized Fund and the Acquired Trust are open-end diversified
investment management companies that seek high current income with relatively
low risk of price decline. They seek this objective by investing primarily in
intermediate- and long-term U.S. Government securities. The Investment Trust is
a Delaware business trust that is also an open-end diversified investment
management company. It currently consists of two series in addition to the
Acquiring Fund. The Acquiring Fund is a new series of Investment Trust that
will seek high current income consistent with reasonable risk. It will hold no
assets and conduct no investment operations prior to the consummation of the
Fund Reorganization. Lord Abbett serves as investment manager to the
Reorganized Fund and the Acquired Trust and will serve as the investment manager
of the Acquiring Fund under an investment management agreement substantially the
same as the current investment management agreement of the Reorganized Fund (see
"Comparative Information about the Funds -- Management Agreements").
<PAGE>
The Class A shares and the Class C shares will share pro-rata in the
portfolio, income and expenses of the Acquiring Fund, except that each class
will bear the expense of its own distribution and shareholder servicing
arrangements and certain other expenses. See "Information About the
Reorganizations -- Shares of the Acquiring Fund." The directors of the
Reorganized Fund believe that the proposed Fund Reorganization will enable
shareholders of the Reorganized Fund to obtain the benefits of certain tax
advantages that flow from the trust form. The trustees of the Acquired Trust
believe that the proposed Trust Reorganization will enable the shareholders of
the Acquired Trust to benefit from economies of scale while continuing to invest
in a portfolio of securities managed by Lord Abbett under an investment
objective that is substantially similar to that of the Acquired Trust. See
"Information About the Reorganizations -- Reasons for the Reorganizations."
This Proxy Statement and Prospectus sets forth concisely the information
about the Acquiring Fund that shareholders of the Reorganized Fund and Acquired
Trust should know before voting on the Reorganizations. It should be read and
retained for future reference. Attached as Exhibits A(1) and (2) to this Proxy
Statement and Prospectus are copies of the Agreements and Plans of
Reorganization (the "Fund Plan" with respect to the Reorganized Fund and the
"Trust Plan" with respect to the Acquired Trust, and collectively, the "Plans")
for the respective Reorganizations of the Reorganized Fund and the Acquired
Trust. This Proxy Statement and Prospectus is accompanied by the Prospectus of
the Acquiring Fund dated March , 1996 (the "Acquiring Fund Prospectus"),
which Prospectus is incorporated by reference herein. Also incorporated herein
by reference are (a) the Statement of Additional Information dated the date
hereof relating to this Proxy Statement and Prospectus, including the Statement
of Additional Information of the Reorganized Fund dated April 1, 1995, the
Statement of Additional Information of the Lord Abbett Securities Trust dated
December 27, 1994 and the Statement of Additional Information of the Acquiring
Fund dated March , 1996, and (b) the Prospectus of the Reorganized Fund
dated April 1, 1995 (the "Reorganized Fund Prospectus") and the Prospectus of
the Lord Abbett Securities Trust dated December 27, 1994 (the "Acquired Trust
Prospectus") [a pre-effective amendment is to be filed to incorporate by
reference the final Prospectus and Statement of Additional Information of the
Investment Trust and the Prospectus and Statement of Additional Information of
Lord Abbett Securities Trust to be dated March 1, 1996]. Such Statements of
Additional Information and such Prospectuses are available, upon oral or written
request, and at no charge, from the Acquiring Fund, at its above-noted telephone
number and address.
<PAGE>
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TABLE OF CONTENTS
<TABLE>
<S> <C>
MEETINGS OF SHAREHOLDERS OF THE REORGANIZED FUND AND
SECURITIES TRUST.................................................................... 2
FEE TABLES............................................................................. 4
ITEM 1. APPROVAL OF THE AGREEMENTS
AND PLANS OF REORGANIZATION
SUMMARY OF PROPOSALS........................................................... 7
INFORMATION ABOUT THE REORGANIZATIONS.......................................... 9
COMPARATIVE INFORMATION ABOUT THE FUNDS........................................ 19
ITEM 2. FOR REORGANIZED FUND SHAREHOLDERS ONLY --
(A) Election of Directors and (B) Ratification or Rejection
of Independent Accountants..................................................... 22
ITEM 3. FOR ACQUIRED TRUST SHAREHOLDERS ONLY --
Ratification or Rejection of Independent Public Accountants.................... 29
ADDITIONAL INFORMATION................................................................. 30
Exhibit A(1) - Agreement and Plan of Reorganization with respect to the
Reorganized Fund
(2) - Agreement and Plan of Reorganization with respect to the
Acquired Trust
Exhibit B - Proposed Class A 12b-1 Plan
Exhibit C - Comparison of Investment Policies and Restrictions
</TABLE>
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
MEETINGS OF SHAREHOLDERS OF THE REORGANIZED FUND
AND SECURITIES TRUST
This Prospectus and Proxy Statement is furnished in connection with the
solicitation of proxies by and on behalf of the Board of Directors of the
Reorganized Fund and the Board of Trustees of Securities Trust to be used at an
Annual Meeting of Shareholders of the Reorganized Fund and a Special Meeting of
Shareholders of Securities Trust and any adjournments thereof. Such meetings
are to be held at 10:00 a.m. on June 19, 1996, at the offices of Lord Abbett on
the 11th floor of the General Motors Building, 767 Fifth Avenue, New York, NY
10153. This Prospectus and Proxy Statement and the enclosed proxy card are
first being mailed to shareholders of the Reorganized Fund and the Acquired
Trust on or about April 17, 1996.
Approval of the Fund Plan and the Fund Reorganization will require the
affirmative vote of a majority of the outstanding shares of the Reorganized
Fund, and approval of the Trust Plan and the Trust Reorganization will acquire
the affirmative vote of a majority of the outstanding shares of the Acquired
Trust. To avoid a need to call an Acquiring Fund shareholders' meeting after
the Reorganizations, the shareholders of the Reorganized Fund are being asked,
as part of their vote on the Fund Plan, to authorize the Reorganized Fund, as
the sole shareholder of the Acquiring Fund before the Fund Reorganization, to
(a) approve a proposed distribution plan pursuant to Section 12 of the
Investment Company Act of 1940, as amended (the "1940 Act"), and Rule 12b-1
thereunder applicable to the Class A shares, and (b) approve a proposed
investment management agreement between the Acquiring Fund and Lord, Abbett &
Co. ("Lord Abbett") that will be substantially identical to the current
investment management agreement of the Reorganized Fund. For the same reason,
the shareholders of the Acquired Trust are being asked, as part of their vote on
the Trust Plan, to authorize the Acquired Trust, as the sole Class C shareholder
of the Acquiring Fund before the Trust Reorganization, to approve a proposed
distribution plan that is substantially the same as the current distribution
plan of the Acquired Trust. A vote in favor of a Reorganization will be deemed
also to be a vote to authorize the Reorganized Fund or the Acquired Trust, as
the case may be, to take such action.
At the close of business on March 22, 1996 (the "Record Date"), there were
issued and outstanding ____ shares of the Reorganized Fund and ____ shares of
the Acquired Trust. Only shareholders of record as of the close of business on
the Record Date will be entitled to notice of, and to vote at, the meetings or
any adjournment thereof. Shareholders of the Reorganized Fund and the Acquired
Trust are entitled to one vote for each share. The Reorganized Fund is a
Maryland corporation and the Acquired Trust is a series of a Delaware business
trust. Under Maryland and 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 Reorganized Fund or the Acquired Trust,
as the case may be: (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.
The effect of an abstention or broker non-vote is the same as a vote
against the Fund Plan or the Trust Plan, as the case may be. If the enclosed
form of proxy is properly executed and returned in time to be voted at the
applicable meeting, the proxies named therein will vote the shares represented
by the proxy in accordance with the instructions marked thereon. A proxy may be
revoked by the signer at any time at or before the applicable meeting by written
notice to the Reorganized Fund or the Acquired
2
<PAGE>
Trust, as the case may be, by execution of a later-dated proxy or by voting in
person at the meeting. Unless revoked, all valid proxies will be voted in
accordance with the specifications thereon or, in the absence of such
specifications, FOR approval of the applicable Plan, FOR the other matter or
matters specified in the notice of such meeting and on any other matters as
deemed appropriate.
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 Reorganized Fund and the Acquired Trust may also
request brokerage houses, custodians, nominees, and fiduciaries who are
stockholders of record to forward proxy materials to the beneficial owners.
____________________ has been retained to assist in the solicitation of proxies
at an estimated cost of $_______. The cost of the solicitations will be borne
by ______________.
In the event that sufficient votes to approve a Plan are not received by
the meeting date, the persons named as proxies may propose one or more
adjournments of the applicable meeting to permit further solicitation of
proxies. In determining whether to adjourn a meeting, the following factors may
be considered: the percentage of votes actually cast, the percentage of
negative votes actually cast and the nature of any further solicitation and any
information to be provided to shareholders with respect to such a solicitation.
Any such adjournment will require an affirmative vote by the holders of a
majority of the shares present in person or by proxy and entitled to vote at the
meeting. The persons named as proxies will vote upon such adjournment after
consideration of the best interests of all shareholders.
If the Fund Plan is not approved by the shareholders of the
Reorganized Fund, or if the Fund Reorganization is not consummated for any other
reason, the Reorganized Fund will continue to engage in business as Lord Abbett
U.S. Government Securities Fund, Inc. If the Trust Plan is not approved by the
shareholders of the Acquired Trust, or if the Trust Reorganization is not
consummated for any other reason, the Acquired Trust will continue to engage in
business as Lord Abbett U.S. Government Securities Trust, a series of Lord
Abbett Securities Trust. If the Fund Plan is approved by the shareholders of
the Reorganized Fund, and all other conditions to consummation of the Fund
Reorganization are satisfied, the Fund Reorganization will occur regardless of
whether the Trust Plan is approved or the Trust Reorganization is consummated.
3
<PAGE>
FEE TABLES
FEE TABLE WITH RESPECT TO FUND REORGANIZATION. Set forth below is a summary
comparison of the expenses of (a) the shares of the Reorganized Fund and (b) on
a pro-forma basis after giving effect to the Fund Reorganization, the Class A
Shares of the Acquiring Fund (to be issued in the Fund Reorganization in
exchange for the shares of the Reorganized Fund). The annual operating expenses
shown in the summary comparison for the shares of the Reorganized Fund are the
actual expenses for the fiscal year ending November 30, 1995, and those shown on
a pro-forma basis for the Class A shares of the Acquiring Fund are such actual
expenses of the Reorganized Fund adjusted for estimated changes in Rule 12b-1
plan expenses. The example set forth below is not a representation of past or
future expenses. Actual expenses may be greater or less than those shown.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ACQUIRING FUND
SHAREHOLDER TRANSACTION EXPENSES REORGANIZED FUND CLASS A SHARES
(AS A PERCENTAGE OF OFFERING PRICE) SHARES (PRO-FORMA)
- ----------------------------------- ---------------- --------------
<S> <C> <C>
Maximum Sales Load on Purchases/(1)/.................. 4.75% 4.75%
Deferred Sales Load /(1)/............................. None/(2)/ None/(2)/
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee........................................ 0.50% 0.49%/(3)/
Rule 12b-1 Fees....................................... 0.25% 0.27%/(3)/
Other Expenses........................................ 0.15% 0.15/%(3)/
TOTAL OPERATING EXPENSES................................. 0.90% 0.91%/(3)/
</TABLE>
- ----------
Example: Assume annual return is 5% and there is no change in the level of
- -------
expenses described above. For every $1,000 invested, with reinvestment of all
distributions, you would pay the following total expenses if you closed your
account after the number of years indicated.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ -------- ------- --------
REORGANIZED FUND SHARES/(4)/ $56 $75 $96 $155
ACQUIRING FUND CLASS A SHARES $56 $75 $96 $155
(PRO-FORMA)/(4)/
- --------------------------------------------------------------------------------
/(1)/ Sales "load" is referred to as sales "charge" and "deferred sales load"
is referred to as "contingent deferred reimbursement charge" throughout
this Proxy Statement and Prospectus.
/(2)/ With respect to shares on which the Reorganized Fund's Rule 12b-1
distribution fee for purchases of $1 million or more has been paid, and
Class A shares on which the Acquiring Fund's Rule 12b-1 distribution fee
for such purchases will be paid, certain redemptions are subject to a
contingent deferred reimbursement charge of up to 1% if the redemption
occurs within 24 months after the month of purchase. Holding periods for
shares purchased prior to the Fund Reorganization will carry over for the
purpose of determining the applicability of the CDRC to Class A shares.
See "12b-1 Plans" under "Information About the Reorganizations" for a
description of the proposed 12b-1 Plan for the A shares.
/(3)/ The expenses of the Acquiring Fund Class A shares are estimated. The
proposed Rule 12b-1 Plan for the A shares provides for annual service fee
payments equal to 0.25%, and, if approved by the Board of Trustees,
distribution fee payments not to exceed in any year 0.25%, of the average
value of the net assets of the Fund attributable to the Class A shares.
The board has not authorized the Acquiring Fund to make distribution fee
payments at this level. The estimated Rule 12b-1 fees for the Acquiring
Fund Class A shares are based on the distribution fee payments authorized
by the board. See "12b-1 Plans" under "Information About the
Reorganizations".
/(4)/ Based on total operating expenses or estimated operating expenses shown
in the table above.
The foregoing is provided to assist shareholders of the Reorganized Fund in
understanding the various expenses the holders of shares of the Reorganized Fund
have incurred and that such holders might incur as holders of the Class A shares
following the Fund Reorganization.
- --------------------------------------------------------------------------------
4
<PAGE>
FEE TABLE WITH RESPECT TO TRUST REORGANIZATION. Set forth below is a summary
comparison of the expenses of (a) the shares of the Acquired Trust and (b) on a
pro-forma basis after giving effect to the Trust Reorganization, the Class C
shares of the Acquiring Fund (to be issued in the Trust Reorganization in
exchange for the shares of the Acquired Trust). The annual operating expenses
shown in the summary comparison for the shares of the Acquired Trust are the
actual expenses for the fiscal year ending October 31, 1995, and those shown on
a pro-forma basis for the Class C shares of the Acquiring Fund are the estimated
expenses of such shares had the Trust Reorganization occurred on November 1,
1994. The example set forth below is not a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ACQUIRING FUND
SHAREHOLDER TRANSACTION EXPENSES REORGANIZED FUND CLASS A SHARES
(AS A PERCENTAGE OF OFFERING PRICE) SHARES (PRO-FORMA)
- ----------------------------------- ---------------- --------------
<S> <C> <C>
Maximum Sales Load on Purchases/(1)/................. None/(2)/ None/(2)/
Deferred Sales Load /(1)/............................ 1.00%/(3)/ 1.00%/(3)/
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee....................................... 0.50% 0.49%/(4)/
Rule 12b-1 Fees...................................... 0.92%/(2)/ 0.92%/(2)(4)/
Other Expenses....................................... 0.16% 0.15%/(4)/
TOTAL OPERATING EXPENSES............................... 1.58% 1.57%/(4)/
</TABLE>
- ----------
Example: Assume each Fund's annual return is 5% and there is no change in the
- -------
level of expenses described above. For every $1,000 with reinvestment of all
distributions, you would pay the following total expenses if you closed your
account after the number of years indicated.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
ACQUIRED TRUST SHARES/(5)/ $16 $50 $86 $188
ACQUIRING FUND CLASS C SHARES $16 $50 $86 $187
(PRO-FORMA)/(5)/
/(1)/ Sales "load" is referred to as sales "charge" and "deferred sales load"
is referred to as "contingent deferred reimbursement charge" throughout
this Proxy Statement and Prospectus.
/(2)/ Although the Acquired Trust does not, and the Acquiring Fund will not
with respect to the Class C shares, charge a front-end sales charge,
investors should be aware that long-term shareholders may pay, under the
Rule 12b-1 Plan of the Acquired Trust and under the Rule 12b-1 Plan to be
applicable to the Class C shares of the Acquiring Fund (which pays and
will pay annual 0.25% service and 0.75% distribution fees), more than the
economic equivalent of the maximum front-end sales charge as permitted by
certain rules of National Association of Securities Dealers, Inc.
/(3)/ Redemptions of the Acquired Trust shares are, and redemptions of the
Class C shares will be, subject to a 1% contingent deferred reimbursement
charge if the redemption occurs before the first anniversary of the share
purchase. Holding periods for shares purchased prior to the Trust
Reorganization will carry over for the purpose of determining the
applicability of the CDRC to Class C shares. See "12b-1 Plans" under
"Information About Reorganizations".
/(4)/ The expenses of the Acquiring Fund Class C shares are estimated.
/(5)/ Based on total operating expenses or estimated operating expenses shown
in the table above.
The foregoing is provided to assist shareholders of the Acquired Trust in
understanding the various expenses the holders of shares of the Acquired Trust
have incurred and that such holders might incur as holders of the Class C shares
following the Trust Reorganization.
- --------------------------------------------------------------------------------
5
<PAGE>
ITEM 1. - APPROVAL OF THE AGREEMENTS AND
PLANS OF REORGANIZATION
SUMMARY OF PROPOSALS
The following is a summary of certain information contained elsewhere or
incorporated by reference in this Proxy Statement and Prospectus and is
qualified in its entirety by reference to such information.
OVERVIEW OF PROPOSED REORGANIZATIONS. The Plans provide for the transfer to the
Acquiring Fund of all of the assets of the Reorganized Fund and the Acquired
Trust in exchange for Class A shares and Class C shares, respectively, and the
assumption by the Acquiring Fund of all of the liabilities of those respective
Funds. The Class A shares and Class C shares will then be distributed to the
respective shareholders of the Reorganized Fund and the Acquired Trust in
liquidation of those Funds. As a result of the Reorganizations, each
shareholder of the Reorganized Fund and each shareholder of the Acquired Trust
will become an owner of that number of full and fractional Class A shares or
Class C shares, as the case may be, having an aggregate net asset value equal to
the aggregate net asset value of their shares of the Reorganized Fund or the
Acquired Trust, as of the close of business on the date of the Reorganizations.
Consummation of the Fund Reorganization is subject to the approval of the
Reorganized Fund's shareholders and other conditions. It is not subject to the
consummation of the Trust Reorganization. Consummation of the Trust
Reorganization is subject to the approval of the Acquired Trust's shareholders,
the prior consummation of the Fund Reorganization and other conditions.
To avoid a need to call an Acquiring Fund shareholders' meeting after the
Reorganizations, shareholders of the Reorganized Fund are being asked to
authorize the Reorganized Fund, as the sole Class A shareholder of the Acquiring
Fund before the Fund Reorganization, to (a) approve the proposed distribution
plan for the Class A shares, and (b) approve the proposed investment advisory
agreement for the Acquiring Fund, and shareholders of the Acquired Trust are
being asked to authorize the Acquired Trust, as the sole Class C shareholder of
the Acquired Trust prior to the Trust Reorganization, to approve the proposed
distribution plan for the Class C shares. A vote in favor of a Reorganization
will be deemed also to be a vote to authorize the Reorganized Fund or the
Acquired Trust, as the case may be, to take such action.
The directors of the Reorganized Fund believe it will be advantageous for
the Reorganized Fund to reorganize itself into a trust rather than to continue
in its current corporate form. This will permit the Reorganized Fund to offer
to investors in certain states the more favorable tax treatment afforded by
those states to shareholders of funds organized as trusts whose assets consist
primarily of U.S. government securities. The trustees of the Acquired Trust
believe that the proposed Trust Reorganization will enable the shareholders of
the Acquired Trust to benefit from economies of scale while continuing to invest
in a portfolio of
6
<PAGE>
securities managed by Lord Abbett under a substantially similar investment
objective as that of the Acquired Trust. See "Information About the
Reorganizations -- Reasons for Reorganizations" for additional information about
the reasons for the Reorganizations.
BUSINESSES OF THE FUNDS. The Reorganized Fund is a diversified, open-end
management investment company organized in 1932 and reincorporated under the
laws of Maryland on July 9, 1975. It has a single class of shares with equal
rights as to voting, dividends, assets and liquidation. As of December 31,
1995, the Reorganized Fund's net assets were approximately $3,313 million.
The Acquired Trust is a diversified series of the Securities Trust, an
open-end management investment company organized as a Delaware business trust
under an Agreement and Declaration of Trust dated February 26, 1993. The
Securities Trust offers ten series, one of which is the Acquired Trust, each
consisting of one class of shares. The Acquired Trust commenced investment
operations on June 1, 1993. As of December 31, 1995, the Acquired Trust's net
assets were approximately $328 million.
The Acquiring Fund is a diversified series of the Investment Trust, an
open-end management investment company organized as a Delaware business trust
under an Agreement and Declaration of Trust dated August 16, 1993. Currently,
the Investment Trust consists of three separate series -- the Lord Abbett
Limited Duration U.S. Government Securities Series, the Lord Abbett Balanced
Series, and the Acquiring Fund. The Acquiring Fund will hold no assets and will
conduct no investment operations prior to the consummation of the Fund
Reorganization.
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS. The Reorganized Fund and the
Acquired Trust have identical investment objectives: to seek high current
income with relatively low risk of price decline. The investment objective of
the Acquiring Fund is substantially similar: to seek high current income
consistent with reasonable risk. The Reorganized Fund and the Acquired Trust
seek their objectives by investing primarily in intermediate- and long-term U.S.
Government securities. The Acquiring Fund will seek its objective by investing
exclusively in U.S. Government securities, which will be primarily intermediate-
and long-term. See the Acquiring Fund Prospectus under "How We Invest" for a
description of U.S. Government securities.
The Reorganized Fund and the Acquired Trust also have substantially
similar investment policies and restrictions. The investment policies and
restrictions of the Acquiring Fund have been simplified compared to those of the
Reorganized Fund and the Acquired Trust in order to provide greater flexibility
in managing the investment portfolio of the Acquiring Fund. Most importantly, a
number of the investment policies and restrictions that are classified as
fundamental for the Reorganized Fund and the Acquired Trust are classified as
non-fundamental for the Acquiring Fund. See "Comparative Information About the
Funds -- Investment Objectives, Policies and Restrictions."
7
<PAGE>
The portfolios of the Reorganized Fund and the Acquired Trust are expected
to be suitable for the Acquiring Fund, and so no significant realignment of
those portfolios is expected in connection with the Reorganizations.
PURCHASES AND EXCHANGES. Shares of the Reorganized Fund and the Acquired Trust
are, and Class A and C Shares will be, available through certain authorized
dealers at the public offering price, which is the net asset value per share
plus, in the case of Class A shares, a one-time sales charge. Class C shares
will be subject to a contingent deferred reimbursement charge equal to 1% of the
lower of their cost or the net asset value if redeemed for cash before the first
anniversary of their purchase. See "Information About the Reorganizations --
Shares of the Acquiring Fund." Shareholders of the Reorganized Fund may now
exchange their shares for shares of up to 24 other funds and series in the Lord
Abbett family of funds, and shareholders of the Acquired Trust may now exchange
their shares for shares of the nine other series of Lord Abbett Securities Trust
and for shares of Lord Abbett U.S. Government Securities Money Market Fund, Inc.
It is expected that holders of Class A shares will be able to exchange their
shares for Class A shares of up to 25 other funds and series managed by Lord
Abbett and that holders of Class C shares will be able to exchange their shares
for Class C shares of up to 13 of such funds and series. Each exchange
represents a sale of shares for which a shareholder may have to recognize a gain
or loss under Federal income tax provisions.
RULE 12b-1 PLANS. The Reorganized Fund has adopted a plan pursuant to Section
12(b) of the 1940 Act and Rule 12b-1 thereunder (a "Rule 12b-1 Plan"), under
which it pays Lord Abbett (1) an annual service fee (payable quarterly) of 0.25%
of the average daily net asset value of shares sold, or attributable to shares
sold, by dealers on or after September 1, 1985 (0.15% of the average daily net
asset value of shares sold, or attributable to shares sold, by dealers prior to
that date) and (2) a one-time 1% distribution fee, at the time of sale, on all
shares sold at the $1 million level by dealers, including sales qualifying at
such level under the rights of accumulation and statement of intention
privileges described in the Fund's prospectus in effect at such time, subject to
a contingent deferred reimbursement charge for up to 24 months. Lord Abbett is
required to pay these service and distribution fees to dealers to provide
additional incentives for the dealers (a) to provide continuing information and
investment services to their shareholder accounts and otherwise to encourage
their accounts to remain invested in the Reorganized Fund and (b) to sell its
shares.
As part of the Fund Reorganization, the Acquiring Fund is adopting a new
Rule 12b-1 Plan applicable to the Class A shares that will be similar to the
Reorganized Fund's Rule 12b-1 Plan. The principal change is that the proposed
new Rule 12b-1 Plan for the Class A shares will authorize the Board of Directors
to be able to increase the amount of the total distribution fee up to 0.25% of
the Fund's average annual net assets. For a fuller description of the current
Rule 12b-1 Plan of the Reorganized Fund and of the proposed new Rule 12b-1 Plan
for the A shares of the Acquiring Fund, see "Information About the
Reorganizations -- Rule 12b-1 Plans".
8
<PAGE>
The Acquired Trust has adopted a Rule 12b-1 Plan under which it pays
service and distribution fees at the time shares are sold not to exceed 1% of
the net asset value of such shares and at each quarter-end after the first
anniversary of the sale of shares at an annual rate not to exceed 1% of the net
asset value of such shares then outstanding. As part of the Trust
Reorganization, the Acquiring Fund will adopt a Rule 12b-1 Plan applicable to
the Class C shares that will be substantially the same as the Acquired Trust's
Rule 12b-1 Plan. See "Information About the Reorganizations -- Rule 12b-1
Plans".
DIVIDEND POLICIES AND OPTIONS. The Reorganized Fund and the Acquired Trust
distribute net investment income monthly as dividends. They also may pay
supplemental dividends and capital gains distributions in December or January.
The shareholders of each such Fund may reinvest such dividends and distributions
in additional shares at net asset value or take such amounts in cash. The
Acquiring Fund intends to continue these same practices.
REDEMPTION PROCEDURES. The redemption procedures of the Reorganized Fund and
the Acquired Trust are substantially the same. The Acquiring Fund will follow
the redemption procedures of the Reorganized Fund, which are described in the
Acquiring Fund Prospectus under "Redemptions".
TAX CONSIDERATIONS. The consummation of each Reorganization is subject to
receipt of an opinion of counsel substantially to the effect that, among other
things, such Reorganization will not cause a gain or loss to be recognized by
the Reorganized Fund or the Acquired Trust, as the case may be, or its
shareholders for federal income tax purposes. See "Information about the
Reorganizations--Federal Income Tax Considerations".
RISK FACTORS. Because of the similarities in the investment objectives and
policies of the Funds, the relative risks involved in investing in the Funds can
be considered similar. See "Comparative Information About the Funds --
Investment Objectives, Policies and Restrictions" below.
INFORMATION ABOUT THE REORGANIZATIONS
THE PLANS. On July 12, 1996, assuming the conditions referred to below are
satisfied, the Reorganized Fund will transfer all of its assets to the Acquiring
Fund (the date of such transfer is referred to herein as the "Closing Date") in
exchange for (i) Class A shares of the Acquiring Fund having an aggregate net
asset value equal to the aggregate value of the assets, less liabilities, of the
Reorganized Fund and (ii) the assumption by the Acquiring Fund of all the
liabilities of the Reorganized Fund. The Reorganized Fund will distribute as of
the Closing Date such Class A shares pro-rata to its shareholders of record,
determined as of the close of business on the Closing Date, in exchange for
their shares of the Reorganized Fund. Approval and consummation of the Trust
Reorganization are not conditions to the consummation of the Fund
9
<PAGE>
Reorganization. Assuming the other conditions referred to below are satisfied,
the Fund Reorganization will occur regardless of whether the Trust
Reorganization is expected to occur.
Upon the consummation of the Fund Reorganization and on the Closing Date,
assuming the other conditions referred to below are satisfied, the Acquired
Trust will transfer all of its assets to the Acquiring Fund in exchange for (i)
Class C shares of the Acquiring Fund having an aggregate net asset value equal
to the aggregate value of the assets, less liabilities, of the Acquired Trust
and (ii) the assumption by the Acquiring Fund of all the liabilities of the
Acquired Trust. The Acquired Trust will distribute as of the Closing Date such
Class C shares pro-rata to its shareholders of record, determined as of the
close of business on the Closing Date, in exchange for their shares of the
Acquired Trust.
The net asset values of the Class A shares and Class C shares and the
values of the assets and the amounts of the liabilities of the Reorganized Fund
and the Acquired Trust will be determined as of the Closing Date in accordance
with the valuation procedures set forth in the Acquiring Fund's Declaration of
Trust (see "Purchases" in the Acquiring Fund Prospectus). The valuation
procedures used by the Acquiring Fund are the same as those used by the
Reorganized Fund and the Acquired Trust.
The obligations of each of the Reorganized Fund and the Acquired Trust to
consummate the Reorganization to which it is to be a party are subject to the
satisfaction of certain conditions precedent, including (a) approval and
authorization of such Reorganization by the vote of not less than a majority of
the shares of the Reorganized Fund or the Acquired Trust, as the case may be,
outstanding and entitled to vote, (b) receipt of a favorable ruling from the
Internal Revenue Service to the effect that the issuance of various classes of
shares by the Acquiring Fund will not result in dividends or distributions of
the Acquiring Fund constituting "preferential dividends" under the Internal
Revenue Code of 1986, as amended (the "Code") and (c) a favorable opinion of
legal counsel as to the federal income tax consequences of the proposed
transaction as described below under "Federal Income Tax Considerations".
The foregoing summary of the Plans does not purport to be complete, and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the Plans, copies of which are attached as Exhibits A(1) and
(2).
REASONS FOR THE REORGANIZATIONS. The Board of Directors of the Reorganized Fund
and the Board of Trustees of the Securities Trust, as well as the Board of
Trustees of the Investment Trust, including in each case a majority who are not
"interested persons" (as defined in the 1940 Act) of any of the Funds or of Lord
Abbett, approved the respective Plans and Reorganizations on March 14, 1996. In
this connection, the boards determined that participation in the proposed
Reorganizations is in the best interests of the shareholders of the respective
Funds and that the interests of existing shareholders of the Funds will not be
diluted as a result of their effecting the respective Reorganizations. In doing
so, the board of the Reorganized Fund considered that in some states
shareholders owning shares of funds whose assets consist primarily of U.S.
10
<PAGE>
government securities receive more favorable treatment under their states' tax
laws if the funds are organized as trusts rather than corporations. The
proposed Fund Reorganization is intended to assure that shareholders receive
such benefits. In addition, the boards of the Funds considered several factors,
including that (a) the shareholders of the Acquired Trust are expected to
benefit from economies of scale as shareholders of the larger Acquiring Fund
following the Fund Reorganization, while continuing to invest in a portfolio of
securities managed by Lord Abbett under a substantially similar investment
objective, and (b) implementation of a multi-class fund structure for the
Acquiring Fund is expected to (i) enable investors in the Acquiring Fund to
choose the distribution option that best suits their individual situations, (ii)
facilitate distribution of the Acquiring Fund's shares, and (iii) maintain the
competitive position of the Acquiring Fund in relation to other funds that have
implemented or are seeking to implement similar distribution arrangements.
The trustees of the Investment Trust and Securities Trust and the
directors of the Reorganized Fund are the same individuals.
SHARES OF THE ACQUIRING FUND. On or before the Closing Date, the Acquiring Fund
will have two classes of shares, Class A shares (to be received by the
shareholders of the Reorganized Fund in the Fund Reorganization) and Class C
shares (to be received by the shareholders of the Acquired Trust in the Trust
Reorganization). Each share of the Acquiring Fund, regardless of class, will
share pro-rata (based on net asset value) in the portfolio and income of the
Acquiring Fund and in the Acquiring Fund's expenses, except for differences in
expenses resulting from different Rule 12b-1 Plans for the various classes and
certain other class specific expenses. See "Rule 12b-1 Plans" below.
After the Fund Reorganization, Class A shares will be offered to the
public at net asset value subject to an initial sales charge identical to the
sales charge currently imposed on sales of the Reorganized Fund shares, as
follows:
11
<PAGE>
<TABLE>
<CAPTION>
SALES CHARGE AS A DEALER'S CON-
PERCENTAGE OF: CESSION AS A TO COMPUTE
---------------------------- PERCENTAGE OF OFFERING
SIZE OF INVESTMENT OFFERING PRICE NET AMOUNT OFFERING PRICE, DIVIDE
INVESTED PRICE* NAV BY
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.00% .9525
- --------------------------------------------------------------------------------------
$50,000 to $99,999 4.75% 4.99% 4.25% .9525
- --------------------------------------------------------------------------------------
$100,000 to $249,999 3.75% 3.90% 3.25% .9625
- --------------------------------------------------------------------------------------
$250,000 to $499,999 2.75% 2.83% 2.50% .9725
- --------------------------------------------------------------------------------------
$500,000 to $999,999 2.00% 2.04% 1.75% .9800
- --------------------------------------------------------------------------------------
$1,000,000 or more No Sales Charge** 1.00% 1.0000
- --------------------------------------------------------------------------------------
</TABLE>
* Lord Abbett may, for specified periods, allow dealers to retain the full
sales charge for sales of shares during such periods, or pay an
additional concession to a dealer who, during a specified period, sells a
minimum dollar amount of our shares and/or shares of other Lord Abbett-
sponsored funds. In some instances, such additional concessions will be
offered only to certain dealers expected to sell significant amounts of
shares. Lord Abbett may, from time to time, implement promotions under
which Lord Abbett will pay a fee to dealers with respect to certain
purchases not involving the imposition of a sales charge. Additional
payments may be paid from Lord Abbett's own resources and will be made in
the form of cash or, if permitted, non-cash payments. The non-cash
payments will include business seminars at resorts or other locations,
including meals and entertainment, or the receipt of merchandise. The
cash payments will include payment of various business expenses of the
dealer.
** As disclosed in the Acquiring Fund Prospectus, other sales in certain
categories are made at net asset value without a sales charge.
Subject to some exceptions, Class A shares sold without any sales charge
will be subject to a contingent deferred reimbursement charge (a "CDRC") of up
to 1% of the lower of their cost or their net asset value if they are redeemed
from the Lord Abbett-sponsored family of funds within 24 months after the month
of purchase. See "12b-1 Plans" below. Holding periods for shares purchased
prior to the Fund Reorganization will carry over for the purpose of determining
the applicability of the CDRC to Class A shares.
After the Trust Reorganization, Class C shares will be offered at net
asset value without an initial sales charge, but if redeemed for cash before the
first anniversary of their purchase, will be subject to a CDRC equal to 1% of
the lower of their cost or then net asset value. Holding periods for shares
purchased prior to the Trust Reorganization will carry over for the purpose of
determining the applicability of the CDRC to Class C shares.
After the Closing Date, the Acquiring Fund may create and issue one or
more classes of shares in addition to the Class A and C shares. Lord Abbett has
advised the Board of Trustees of the Acquiring Fund that it intends to propose
to the board in the near future that the board authorize the Acquiring Fund to
issue a third class of shares, to be designated the "Class
12
<PAGE>
B shares". If authorized, the Class B shares are expected to be sold without an
initial sales charge and otherwise to be similar to the Class C shares except
that (i) they will be subject to a contingent deferred sales charge ("CDSC")
that is payable to the distributor of such shares, rather than subject to a
contingent deferred reimbursement charge payable to the Acquiring Fund as is the
case with the Class C shares, (ii) the B share CDSC will be substantially larger
than the 1% CDRC charged on early redemptions of Class C shares, (iii) the B
share CDSC will apply over a period of time substantially longer than the 12
months applicable to the C share CDRC, and will scale down to zero over that
longer period, and (iv) the Class B shares will convert automatically into A
shares at net asset value after a period of time.
Shares of all classes of the Acquiring Fund will vote together on all
matters affecting the Acquiring Fund, except for matters, such as approval of a
Rule 12b-1 plan, affecting only a particular class or classes. Shares of the
Acquiring Fund will vote together with shares of other series of Investment
Trust on all matters affecting the Investment Trust, except for matters, such as
approval of an investment management agreement, affecting only one or more
particular series. All shares voting on a matter will have identical voting
rights. All issued shares of the Acquiring Fund will be fully paid and non-
assessable, and shareholders will have no preemptive or other right to subscribe
to any additional shares. Shares of all classes of the Acquiring Fund will have
the same rights and be subject to the same limitations with respect to
dividends, redemptions and liquidation except for differences resulting from
class-specific Rule 12b-1 plans and related service plans and certain other
class-specific expenses.
RULE 12b-1 PLANS. Class A Rule 12b-1 Plan. As part of the Fund Reorganization,
the Acquiring Fund is adopting a Rule 12b-1 plan applicable to the Class A
shares (the "Class A 12b-1 Plan") that will be similar to the plan currently in
effect for the Reorganized Fund. A copy of the Class A 12b-1 Plan is attached
as Exhibit B to this Proxy Statement and Prospectus. Under the Reorganized
Fund's plan (except as to certain accounts for which tracking data is not
available), the Fund pays Lord Abbett (1) an annual service fee (payable
quarterly) of 0.25% of the average daily net asset value of shares sold by
dealers on or after September 1, 1985 (0.15% of the average daily net asset
value of shares sold, or attributable to shares sold, by dealers prior to that
date) and (2) a one-time 1% distribution fee, at the time of sale, on all shares
sold at the $1 million level by dealers, including sales qualifying at such
level under the rights of accumulation and statement of intention privileges
described in the Reorganized Fund's prospectus in effect at such time. Lord
Abbett is required to pay these service and distribution fees to dealers to
provide additional incentives for the dealers (a) to provide continuing
information and investment services to their shareholder accounts and otherwise
to encourage their accounts to remain invested in the Reorganized Fund and (b)
to sell shares of the Reorganized Fund.
Under the current plan of the Reorganized Fund, holders of shares on which
the 1% distribution fee has been paid are required to pay to the Reorganized
Fund a CDRC, or contingent deferred reimbursement charge, 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
13
<PAGE>
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 redemptions by
tax-qualified plans under Section 401 of the Internal Revenue Code due to plan
loans, hardship withdrawals, death, retirement or separation from service with
respect to plan participants.) If the shares are exchanged into another Lord
Abbett fund and are thereafter redeemed out of the Lord Abbett family on or
before the end of such twenty-fourth month, the charge is collected for the
Reorganized Fund by the other fund. The Reorganized Fund collects 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 Class A 12b-1 Plan:
(a) Distribution Fees. The Acquiring Fund's Board of Trustees will be
-----------------
authorized under the Class A 12b-1 Plan, without further shareholder vote, to
increase the amount of distribution fees up to 0.25% of the average annual net
assets attributable to the Class A shares. 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 costly to the Acquiring Fund
and its shareholders and the time required for such meetings could delay the
implementation of advantageous changes. The Board of Trustees will approve
additional charges under this increased authority only if a majority of the
trustees who are not "interested persons" of the Acquiring Fund within the
meaning of the 1940 Act and who will have no direct or indirect financial
interest in the operations of the Class A 12b-1 Plan or in any agreements
related thereto conclude in their business judgment that there is a reasonable
likelihood that the increase will benefit the Acquiring Fund and its
shareholders.
The one-time 1% distribution fee, payable at the time of certain sales as
described above, is to be charged against the 0.25% permitted annual
distribution fee. During the Reorganized Fund's last fiscal year, payments of
the one-time 1% distribution fee under that Fund's Rule 12b-1 plan totaled 0.__%
of the Reorganized Fund's average net assets. Subject to approval of the Fund
Reorganization by the shareholders of the Reorganized Fund, the Board of
Trustees of the Acquiring Fund has authorized the Acquiring Fund to pay 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 Reorganized Fund's 12b-1 plan; Second, the
------
payments will be reduced as follows: 1.0% 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 Reorganized
Fund's Rule 12b-1 plan.
14
<PAGE>
Subject to such approval of the Fund Reorganization, the Acquiring Fund's
Board of Trustees has authorized the Acquiring Fund to pay, as an additional
distribution fee, a modest supplemental payment to dealers who meet certain
sales and redemption criteria. Any such payments will be 0.10% per annum
of the average assets of the Acquiring Fund represented by the Class A share
accounts of qualifying dealers. The applicable criteria include having accounts
comprising a significant percentage of the Acquiring Fund's Class A share
assets, having a lower than average redemption rate and having a satisfactory
program for the promotion of Class A shares. This supplemental payment is
intended by the Board of Trustees to focus on the Acquiring Fund's relationships
with those dealers most likely to have a significant impact on the growth of the
Class A shares.
If this supplemental payment to dealers, the revised one-time distribution
fee described above and the other changes described below had been in effect for
the Reorganized Fund's last fiscal year, it is estimated that in the aggregate
they would have increased the expense ratio of the Reorganized Fund from 0.___%
to approximately 0.__%, a difference of 0.__%.
(b) Service Fees. Service fee payments, which are to be continued under
------------
the proposed Class A 12b-1 Plan at an annual rate of 0.25% of the average daily
net asset value of shares sold on or after September 1, 1985 (0.15% of the
average daily net asset value of shares sold, or attributable to shares sold,
prior to such date), 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 Reorganized Fund's plan.
(c) Use of Payments by Lord Abbett. Lord Abbett will be permitted to use
------------------------------
payments received under the Class A 12b-1 Plan to provide continuing services to
shareholder accounts not serviced by Authorized Institutions and, with board
approval, to finance any activity which is primarily intended to result in the
sale of 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 overall
ceiling of 0.25% for annual distribution fees.
(d) CDRC. The Board of Trustees of the Acquiring Fund has approved a CDRC
----
applicable to the Class A 12b-1 shares substantially similar to the CDRC payable
under the Rule 12b-1 Plan of the Reorganized Fund, except that no CDRC would be
payable in connection with redemptions by retirement plans (not just those
qualified under Section 401 of the Internal Revenue Code) attributable to any
benefit payment or distribution of any excess contribution thereunder (not just
those described above in connection with such exception under the Reorganized
Fund's plan). Because CDRC payments will be made directly to the Acquiring
Fund, they will have the effect of reducing the amount of the distribution fees
paid by the Acquiring Fund for the purpose of complying with the overall ceiling
of 0.25% for annual distribution fees. As in the case of the specific
distribution fees authorized by the Board of Trustees of the Acquiring Fund, the
CDRC authorized from time to time by the board for the Class A shares will be
described in the then current prospectus of the Acquiring Fund.
15
<PAGE>
(e) Lord Abbett Distributor. The other party to the Class A 12b-1 Plan 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.
The Class A 12b-1 Plan was approved on March 14, 1996 by the trustees of
the Acquiring Fund, including a majority of the trustees who are not "interested
persons" of the Acquiring Fund within the meaning of the 1940 Act and who will
have no direct or indirect financial interest in the operations of the Class A
12b-1 Plan or in any agreements related thereto. In considering whether to
approve the Class A 12b-1 Plan, the trustees 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 to change in
appropriate cases the amount of the Class A 12b-1 distribution fees to be paid,
without unnecessarily burdening the shareholders with the costs of additional
proxy solicitations. The trustees believe that the increased distribution fees
described above are good examples of the desirability of this flexibility.
Based on advice received from Lord Abbett, the decision by the Board to approve
the payment of distribution fees in connection with sales to retirement plans
with 100 or more eligible employees will enable the Class A shares to compete
more effectively in this growing and important market and the 0.10% per annum
supplemental payments to dealers who meet certain criteria will permit the
Acquiring Fund to focus on relationships with those dealers most likely to have
a significant impact on the growth of the Class A shares.
(ii) Expanding Categories of Persons Eligible to Receive Payments. The
------------------------------------------------------------
current Rule 12b-1 Plan of the Reorganized Fund limits payments thereunder to
dealers selling fund shares. Since that plan was adopted, different methods of
distribution, using different entities, have developed in the industry. The
Board of Trustees sees no reason to limit arbitrarily the categories of persons
eligible to receive payments under the proposed plan, and believes that the
availability of payments under the plan 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 Acquiring Fund that allowing Lord Abbett
Distributor to retain fees received from the Fund 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.
16
<PAGE>
Prior to the Fund Reorganization, the Reorganized Fund will purchase one
Class A share, and as sole shareholder of the Acquiring Fund, will approve the
Class A 12b-1 Plan prior to the class being issued to the Reorganized Fund in
the Fund Reorganization. A vote in favor of the Fund Reorganization will be
deemed also to be a vote to authorize the Reorganized Fund to take such action.
Class C Rule 12b-1 Plan. The Acquiring Fund is adopting a Rule 12b-1 Plan
for the Class C shares (the "Class C 12b-1 Plan") substantially the same as the
plan currently in effect for the Acquired Trust. The Acquired Trust's plan
provides for payments to dealers through Lord Abbett of distribution and service
fees (a) at the time shares are sold, not to exceed 0.75% and 0.25%,
respectively, of the net asset value of the shares sold and (b) at the end of
the quarter following the first anniversary of the sale of shares, and quarterly
thereafter, at an annual rate not to exceed 0.75% and 0.25%, respectively, of
the net asset value of such shares, including any shares issued for reinvested
dividends and distributions after such first anniversary, so long as such shares
remain outstanding. Lord Abbett Distributor may retain from the quarterly
distribution fee, for the payment of distribution expenses incurred directly by
it, an amount not to exceed 0.10% of the average annual net asset value of such
shares outstanding. See the Acquired Trust Prospectus under "Purchases" for
additional information concerning the Rule 12b-1 Plan of the Acquired Trust.
There are two substantive changes in the Class C 12b-1 Plan: First,
-----
payment under the plan may 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 Acquired Trust's Rule 12b-1
plan; and Second, the other party to the Class C 12b-1 Plan is to be Lord Abbett
------
Distributor (a New York limited liability company to be formed as a subsidiary
of Lord Abbett), rather than Lord Abbett itself. Lord Abbett Distributor is to
take on all the underwriting functions currently performed directly by Lord
Abbett.
The Class C 12b-1 Plan was approved on March 14, 1996 by the trustees of
the Acquiring Fund, including a majority of the trustees who are not "interested
persons" of the Acquiring Fund within the meaning of the 1940 Act and who will
have no direct or indirect financial interest in the operations of such plan or
in any agreements related thereto. Prior to the Trust Reorganization, the
Acquired Trust will purchase one Class C share, and as sole shareholder, will
approve the Class C 12b-1 Plan prior to that class being issued to the Acquired
Trust in the Trust Reorganization. A vote in favor of the Trust Reorganization
will be deemed also to be a vote to authorize the Acquiring Trust to take such
action.
FEDERAL INCOME TAX CONSIDERATIONS. The consummation of each Reorganization is
conditioned upon the receipt of an opinion of Debevoise & Plimpton, legal
counsel to the Funds, regarding the Federal income tax consequences of that
Reorganization substantially to the effect that, for Federal income tax
purposes:
(a) no gain or loss will be recognized by the Reorganized Fund or the
Acquired
17
<PAGE>
Trust, as the case may be, upon the transfer of its assets to the Acquiring Fund
in exchange for Class A shares or Class C shares, as the case may be, and the
assumption by the Acquiring Fund of its liabilities or upon the distribution of
the Class A shares or the Class C shares, as the case may be, to its
shareholders;
(b) no gain or loss will be recognized by the Acquiring Fund upon the receipt
of the assets of the Reorganized Fund or the Acquired Trust, as the case may be,
in exchange for Class A shares or Class C shares, as the case may be, and the
assumption by the Acquiring Fund of the liabilities of the Reorganized Fund or
the Acquired Trust, as the case may be;
(c) no gain or loss will be recognized by shareholders of the Reorganized
Fund or the Acquired Trust, as the case may be, upon the exchange of their
shares for Class A shares or Class C shares;
(d) the aggregate tax basis of the Class A shares received by any Reorganized
Fund shareholder or of the Class C shares received by any Acquired Trust
shareholder pursuant to the Reorganizations will be the same as the aggregate
tax basis of the Reorganized Fund or Acquired Trust shares held by such
shareholder immediately prior to the Re organizations, and the holding period
for the Class A shares or Class C shares to be received by any such shareholder
will include the period during which the shares exchanged therefor were held by
such shareholder (provided that such shares are held as capital assets on the
date of the Reorganizations); and
(e) the tax basis of the assets of the Reorganized Fund or the Acquired Trust
acquired by the Acquiring Fund will be the same as the tax basis of such assets
to the Reorganized Fund or the Acquired Trust, as the case may be, immediately
prior to the Reorganizations, and the holding period of such assets in the hands
of the Acquiring Fund will include the period during which those assets were
held by the Reorganized Fund or the Acquired Trust, as the case may be.
The Funds have not sought a tax ruling from the Internal Revenue Service
with respect to the tax consequences of the Reorganizations, but will act in
reliance upon the opinion of counsel. Such opinion is not binding on the
Internal Revenue Service. Since the foregoing discussion relates only to the
general Federal income tax consequences of the Reorganizations, shareholders
should also consult their tax advisors as to any state or local tax consequences
of the Reorganizations to them and any special considerations that may apply in
their individual circumstances.
EXPENSES OF THE REORGANIZATIONS. Expenses of the Reorganizations, including
legal and accounting expense, the costs of proxy solicitation and the
preparation of this Prospectus and Proxy Statement, will be borne by __________.
If the Reorganizations are consummated, the respective expenses of the
Reorganized Fund and the Acquired Trust, to the extent not paid prior to the
Closing Date, will be assumed by the Acquiring Fund and taken into account in
18
<PAGE>
determining the net assets of those Funds for the purpose of calculating the
numbers of Class A and Class C shares to be issued in the Reorganizations.
CAPITALIZATION. The following table sets forth the capitalization of the
Reorganized Fund and the Acquired Trust as of December 31, 1995, and the pro-
forma capitalization of the Acquiring Fund as if the Reorganizations had
occurred on that date:
<TABLE>
<CAPTION>
CLASS A
ACQUIRING CLASS C
REORGANIZED FUND ACQUIRING FUND
FUND ACQUIRED TRUST (PRO-FORMA - (PRO-FORMA -
(UNAUDITED) (UNAUDITED) UNAUDITED) UNAUDITED)
---------- -------------- ------------- ---------------
- ------------------------------------------------------------------------------------------
(In thousands, except per share values)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets $3,313,305 $327,717 $3,313,305 $327,717
- -----------------------------------------------------------------------------------------
Net Asset Value per Share $ 2.75 $ 4.65 $ 2.75 $ 2.75
- -----------------------------------------------------------------------------------------
Shares Outstanding 1,206,596 70,264 1,206,596 119,343
- -----------------------------------------------------------------------------------------
</TABLE>
The exchange ratio of Class A shares for Reorganized Fund shares is to be
one for one. The foregoing table reflects a pro-forma exchange ratio of
approximately 1.7 Class C shares for each Acquired Trust share. If the Trust
Reorganization is consummated, the actual exchange ratio of Class C and Acquired
Trust shares may vary from this pro-forma ratio due to changes in the market
value of the portfolio securities of both the Reorganized Fund and the Acquired
Trust between December 31, 1995 and the Closing Date, and changes in the amounts
of undistributed net investment income and accrued liabilities of the
Reorganized Fund and the Acquired Trust during that period.
COMPARATIVE INFORMATION ABOUT THE FUNDS
MANAGEMENT AGREEMENTS. Upon consummation of the Reorganizations, an investment
management agreement between the Acquiring Fund and Lord Abbett will become
effective with terms that are substantially the same as those currently in
effect between the Reorganized Fund and Lord Abbett. Under this agreement, the
Acquiring Fund will pay Lord Abbett a monthly fee, based on average daily net
assets for each month, at the annual rate of .50 of 1% of the portion of its net
assets not in excess of $3,000,000,000 plus 0.45 of 1% of such assets over
$3,000,000,000. The Reorganized Fund's ratio of management fee expenses to
average net assets for the year ended November 30, 1995 was 0.50%. Under the
management agreement between the Acquired Trust and Lord Abbett, the Acquired
Trust pays Lord Abbett a monthly fee, based on average daily net assets for each
month, at the annual rate of .50 of 1%. The Acquired Trust's ratio of
management fee expenses to average net assets for the year ended October 31,
1995 was 0.50%. A vote in favor of the Fund Reorganization by a shareholder of
the Reorganized Fund will be deemed also to be a vote to authorize the
Reorganized Fund to approve the new investment management agreement between the
Acquiring Fund and Lord Abbett. (See "Meetings of Shareholders of the
Reorganized Fund and the Acquired Trust.")
19
<PAGE>
FEES AND EXPENSES. As shown above under "Fee Tables," the pro-forma expense
ratios of the Class C Shares for the year ended October 31, 1995, calculated as
if the Reorganizations had occurred at the beginning of such year, was 1.57%,
compared to 1.58% for the Acquired Trust. The Reorganizations are not expected
to have a significant effect on the expense ratio experienced by the
shareholders of the Reorganized Fund, except for the increase in the 12b-1 plan
expense that is expected to result from the modifications to be contained in the
Class A 12b-1 Plan as discussed above under "Information About the
Reorganizations -- Rule 12b-1 Plans". The pro forma expense ratio of the Class A
shares for the year ended November 30, 1995, calculated as if the
Reorganizations had occurred at the beginning of such year, was 0.91%, compared
to 0.90% for the Reorganized Fund.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The Reorganized Fund and the
Acquired Trust have identical investment objectives: to seek high current
income with relatively low risk of price decline. The investment objective of
the Acquiring Fund is substantially similar: to seek high current income
consistent with reasonable risk. The Reorganized Fund and the Acquired Fund
seek their objectives by investing primarily in intermediate- and long-term U.S.
Government securities. The Acquiring Fund will seek its objective by investing
exclusively in U.S. Government securities, which will be primarily intermediate-
and long-term. See the Acquiring Fund Prospectus under "How We Invest" for a
description of U.S. Government securities.
The Reorganized Fund and the Acquired Trust also have substantially the
same investment policies and restrictions. The investment policies and
restrictions of the Acquiring Fund, compared to those of the Reorganized Fund
and the Acquired Trust, have been simplified in order to provide greater
flexibility in managing the investment portfolio of the Acquiring Fund. A
number of the investment policies and restrictions that are classified as
fundamental for the Reorganized Fund and the Acquired Trust are classified as
non-fundamental for the Acquiring Fund. In other instances, certain fundamental
restrictions of the Reorganized Fund and the Acquired Trust have been modified
or eliminated in the case of the Acquiring Fund in accordance with developments
in Federal or state blue sky regulations or in the securities markets.
Fundamental investment restrictions may not be changed without approval of the
stockholders of a fund and the costs of shareholder meetings for these purposes
generally are borne by the fund and its shareholders. The board may amend a
non-fundamental restriction as it deems appropriate and in the best interest of
the fund and its stockholders, without incurring the costs of seeking a
shareholder vote. Also, certain of the fundamental investment restrictions of
the Acquiring Fund 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 restrictions have been drafted in this manner so
that a change in law would not require the Acquiring Fund to seek a shareholder
vote to amend the restriction to conform to applicable law.
A summary comparison of the investment policies and restrictions of the
Acquiring Fund, the Reorganized Fund and the Acquired Trust is set forth in
Exhibit C to this Proxy Statement and Prospectus. For a full discussion of the
Acquiring Fund investment objectives,
20
<PAGE>
policies and restrictions, see "Investment Objective" and "How We Invest" in
the Acquiring Fund Prospectus and "Investment Objective and Policies" in the
Acquiring Fund Statement of Additional Information. For a full discussion of
the investment objectives, policies and restrictions of the Reorganized Fund and
the Acquired Trust, see "Investment Objective" and "How We Invest" in the
Reorganized Fund Prospectus and the Acquired Trust Prospectus, respectively, and
"Investment Objective and Policies" in the Reorganized Fund Statement of
Additional Information and Acquired Trust Statement of Additional Information,
respectively. The summary comparison set forth in Exhibit C does not purport to
be complete, and is subject in all respects to, and is qualified in its entirety
by reference to such statements of such policies and restrictions.
SHAREHOLDERS' RIGHTS. After the Reorganizations, the rights of the former
shareholders of the Reorganized Trust will be governed by the Investment Trust's
Declaration of Trust, By-Laws and applicable Delaware law rather than by the
Articles of Incorporation and By-Laws of the Reorganized Fund and applicable
Maryland law. The Declaration of Trust and By-Laws of Securities Trust, of
which the Acquiring Trust is a series, are substantially the same as the
Declaration of Trust and By-Laws of Investment Trust, and both Securities Trust
and Investment Trust are business trusts under the law of Delaware. The
corporate law of Maryland, to which the Reorganized Fund is subject, requires
shareholder approval of a greater number of corporate actions than is the case
under the law of Delaware applicable to business trusts and the Declaration of
Trust of the Investment Trust. Thus, the Board of Trustees of the Investment
Trust may have somewhat greater authority, acting alone, to take corporate
actions than has been the case with the Board of Directors of the Reorganized
Fund. However, the Acquiring Fund believes that the responsibilities and
fiduciary duties of the trustees of the Acquiring Fund are substantially the
same as those of the directors of the Reorganized Fund and the trustees of the
Acquired Trust and the operations of the Acquiring Fund will continue to be
subject to the provisions of the 1940 Act and the rules and regulations of the
Commission thereunder.
The current Board of Directors of the Reorganized Fund and Board of
Trustees of the Acquired Trust are comprised of the same individuals as the
current Board of Trustees of the Investment Trust. The Reorganized Fund's By-
Laws provide for indemnification of the directors for actual liabilities arising
out of the directors' service in their capacity as directors of the Reorganized
Fund, subject only to the conditions and limitations of applicable law. Each of
the Investment Trust's and the Securities Trust's Declaration of Trust provides
for indemnification of the trustees against certain liabilities and expenses,
except with respect to (i) any matter as to which any trustee has been
adjudicated not to have acted in good faith in the reasonable belief that his or
her action was in the best interest of such Trust, (ii) any liability by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of
duties or (iii) any matter disposed of by settlement, compromise or consent
decree, unless it is in the best interests of such trust or if said trustee
acted in good faith in the reasonable belief that such act was in the best
interests of the trust. Reorganized Fund shareholders may remove, with or
without cause, any
21
<PAGE>
director by the affirmative vote of a majority of the votes cast. Investment
Trust shareholders and Securities Trust shareholders may remove a trustee by the
vote of shareholders of record of not less than two-thirds.
Neither the Reorganized Fund nor the Acquired Trust regularly holds
shareholder meetings, and the Acquiring Fund does not expect to hold such
meetings. The By-laws of each of the Funds provide that a meeting of
shareholders will be held upon the written request of holders of at least 25% of
votes entitled to be cast.
The foregoing is only a summary of certain rights of the shareholders of
the Reorganized Fund and the Acquired Trust and of the rights these shareholders
will have following the Reorganizations as holders of Class A shares and Class C
shares of the Acquiring Fund. It is not a complete description of the
Declaration of Trust of the Acquiring Fund or the Acquired Trust, the Articles
of Incorporation of the Reorganized Fund, the By-Laws of any of the Funds or
the applicable Delaware or Maryland law. Shareholders desiring additional
information about those documents and provisions of law should refer to such
Declarations of Trust, Articles of Incorporation, By-Laws and provisions.
The Board of Directors of the Reorganized Fund recommends that
shareholders of the Reorganized Fund vote FOR approval of the Fund Plan and the
Fund Reorganization, and the Board of Trustees of the Acquired Trust recommends
that shareholders of the Acquired Trust vote FOR approval of the Trust Plan and
the Trust Reorganization.
ITEM 2. - FOR REORGANIZED FUND
SHAREHOLDERS ONLY
(A) ELECTION OF DIRECTORS AND (B) RATIFICATION OR REJECTION
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Reorganized Fund believes that it is
important to ensure continuity of operation of the Reorganized Fund in the event
that the Fund Reorganization is not consummated. Accordingly, the Board has
determined that: (i) the persons who currently constitute the Board of Directors
of the Reorganized Fund should stand for re-election, for a term of office to
extend until their successors are elected and qualified, and (ii) the selection
of Deloitte & Touche LLP as auditors for the Reorganized Fund should be
ratified, as required by the 1940 Act if the Reorganized Fund continues to
engage in business as an investment company.
22
<PAGE>
A. ELECTION OF DIRECTORS OF THE REORGANIZED FUND
The nominees for election as directors of the Reorganized Fund 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 Directors 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 director of the Reorganized Fund. Management of the Reorganized Fund has
no reason to believe that any nominee will be unable to serve as a director. If
any nominee should be unable to serve as a director, it is the intention of the
individuals named as proxies to vote for the election of such person or persons
as the Board of Directors may, in its discretion, recommend.
Information about each person nominated for election as a director 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>
Director of
Names and Ages of the
Directors of the Fund Principal Occupation and Directorships Fund Since
- --------------------- ------------------------------------------ -----------
<C> <S> <C>
Ronald P. Lynch (1)(2) Chairman of the Board of the Reorganized 1983
60 Fund.
Partner of Lord Abbett.
Robert S. Dow (1)(2) President of the Reorganized Fund. 1993
50 Partner of Lord Abbett.
E. Thayer Bigelow President and Chief Executive Officer of 1994
(2) 54 Time Warner Cable Programming, Inc.,
formerly President and Chief Operating
Officer of Home Box Office, Inc.
Stewart S. Dixon (2) Partner in the law firm of Wildman, 1976
65 Harrold, Allen & Dixon.
John C. Jansing (2) Retired. Former Chairman of Independent 1978
70 Election Corporation of America, a proxy
tabulating firm.
</TABLE>
23
<PAGE>
<TABLE>
<C> <S> <C>
C. Alan MacDonald (2) General Partner, The Marketing 1988
62 Partnership, Inc., a full service marketing
consulting firm. Formerly Chairman and
Chief Executive Officer of Lincoln Snacks,
Inc., manufacturer or branded snack foods
(1992-1994). Formerly President & CEO
of Nestle Foods Corp., and prior to that,
President & CEO of Stouffer Foods Corp.,
both subsidiaries of Nestle SA,
Switzerland. Currently serves as Director
of Den West Restaurant Co., J. B.
Williams, and Fountainhead Water
Company.
Hansel B. Millican, Jr. (2) President and Chief Executive Officer of 1982
66 Rochester Button Company.
Thomas J. Neff (2) President, Spencer Stuart & Associates, an 1982
58 executive search consulting firm.
</TABLE>
(1) "Interested person" of the Reorganized 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 Reorganized Fund's outstanding
capital stock owned beneficially by each director as of December 31, 1995,
together with the number of "phantom" shares credited to the account of each
director under a plan (the "Deferred Plan") permitting independent directors to
defer their directors' fees and to have the deferred amounts deemed invested in
shares of the capital stock of the Reorganized Fund for later payment. Also
shown is the number of shares owned beneficially by the directors and officers
as a group, together with such "phantom" shares credited to the accounts of
directors and officers as a group. In each case, the amounts shown are less than
1% of the Reorganized Fund's outstanding capital stock.
24
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Beneficially
Name Owned and Phantom Shares/(1)/
- ----------------------------- ------------------------------
<S> <C>
Ronald P. Lynch 649,274
Robert S. Dow 72,990
E. Thayer Bigelow 5,356
Stewart S. Dixon 35,585
John C. Jansing 43,729
C. Alan MacDonald 237,757
Hansel B. Millican, Jr. 183,622
Thomas J. Neff 41,396
Directors and Officers as a
group
</TABLE>
___________________
(1) Of the shares listed in the foregoing table, the following constitute
"phantom" shares credited to directors under the Deferred Plan Mr. Bigelow,
5,356 shares; Mr. Dixon, 35,368 shares; Mr. Jansing, 39,663 shares; Mr.
MacDonald, 27,824 shares; Mr. Millican, 39,989 shares; Mr. Neff, 39,853
shares and; and directors and officers as a group: 188,053.
The board of the Reorganized Fund 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 Reorganized Fund to the
Board 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 directors who are not "interested persons" of the Reorganized Fund within
the meaning of the 1940 Act. The Audit Committee held four meetings during the
fiscal year of the Reorganized Fund ended November 30, 1995.
The Board of Directors of the Reorganized Fund met [eleven] times during
the fiscal year ended November 30, 1995, and each director 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.
25
<PAGE>
The second column of the following table sets forth the compensation
accrued by the Reorganized Fund for the Directors not associated with Lord
Abbett. The third and fourth columns set forth information with respect to the
retirement plan for the directors not associated with Lord Abbett maintained by
the Reorganized Fund and the other Lord Abbett-sponsored funds. The fifth
column sets forth the total compensation accrued by the Reorganized Fund and
such other funds for such directors. The second, third and fourth columns give
information for the Reorganized Fund's fiscal year ended November 30, 1995; the
fifth column gives information for the calendar year ended December 31, 1995.
No director associated with Lord Abbett and no officer of the Reorganized Fund
received any compensation from the Reorganized Fund for acting as a director or
officer.
<TABLE>
<CAPTION>
For Year Ended
For the Fiscal Year Ended November 30, 1995 December 31, 1995
-----------------------------------------------------------------------------
(I) (II) (III) (IV) (V)
- ------------------------ --------------- ------------------- ----------------- --------------------
Name of Director Aggregate Pension or Retire- Estimated Annual Total Compensation
Com- ment Benefits Benefits Upon Re- Accrued by the
pensation Ac- Accrued by the tirement Proposed Reorganized Fund
crued by the Reorganized Fund to be Paid by the and Fifteen Other
Reorganized and Fifteen Other Reorganized Fund Lord Abbett-
Fund/1/ Lord Abbett- and Fifteen Other sponsored Funds/3/
sponsored Funds/2/ Lord Abbett-spon-
sored Funds/2/
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
E. Thayer Bigelow $11,399 $ 9,772 $33,600 $41,700
- -------------------------------------------------------------------------------------------------------
Stewart S. Dixon $11,445 $22,472 $33,600 $42,000
- -------------------------------------------------------------------------------------------------------
John C. Jansing $11,747 $28,480 $33,600 $42,960
- -------------------------------------------------------------------------------------------------------
C. Alan MacDonald $11,790 $27,435 $33,600 $42,750
- -------------------------------------------------------------------------------------------------------
Hansel B. Millican, Jr. $11,755 $24,707 $33,600 $43,000
- -------------------------------------------------------------------------------------------------------
Thomas J. Neff $11,481 $16,126 $33,600 $42,000
- -------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fees for directors not associated with Lord Abbett, including attendance
fees for board and committee meetings, are allocated among all Lord Abbett-
sponsored funds based on net assets of each fund. Fees payable by the
Reorganized Fund to such directors are being deferred under a plan that
deems the deferred amounts to be invested in shares of the Reorganized Fund
for later payment to the directors. The total amount accrued under the
plan for each such director since the beginning of his tenure with the
Reorganized Fund, including dividends reinvested and changes in net asset
value applicable to such deemed investments, were as follows as of November
30, 1995: Mr. Bigelow, $ ; Mr. Dixon, $95,400; Mr. Jansing,
$105,950; Mr. MacDonald, $75,051; Mr. Millican, $106,820; and Mr. Neff,
$106,516.
26
<PAGE>
(2) Each Lord Abbett-sponsored fund has a retirement plan providing that
Directors not associated with Lord Abbett 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 director 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 November
30, 1995 with respect to the retirement benefits set forth in column (IV).
(3) This column shows aggregate director's fees, including attendance fees for
board and committee meetings, of a nature referred to in the first sentence
of footnote (1), accrued by the Lord Abbett-sponsored funds during the year
ended December 31, 1995.
Listed below are the executive officers of the Reorganized 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 1986.
Kenneth B. Cutler, age 63, Vice President and Secretary since 1985.
John J. Gargana, Jr., age 64, Vice President since 1985.
Thomas S. Henderson, age 64, Vice President since 1985.
Paul A. Hilstad, age 53, Vice President since 1995 (with Lord Abbett since 1995
- - formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.).
Thomas F. Konop, age 53, Vice President since 1987.
E. Wayne Nordberg, age 59, Vice President since 1988.
Robert G. Morris, age 51, Vice President since 1995.
27
<PAGE>
Keith F. O'Connor, age 40, Treasurer since 1987.
Victor W. Pizzolato, age 63, Vice President since 1985.
John J. Walsh, age 59, Vice President since 1985.
The Board of Directors of the Reorganized Fund recommends that the
shareholders vote FOR the election of each of the nominees as directors of the
Reorganized Fund.
28
<PAGE>
B. RATIFICATION OR REJECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Reorganized Fund has selected Deloitte &
Touche LLP as the independent public accountants of the Reorganized Fund for the
fiscal year ending November 30, 1996. The 1940 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 Reorganized Fund's independent auditors for the year ended
November 30, 1995, and for a number of years prior thereto. Based on
information in the possession of the Reorganized Fund, and information furnished
by Deloitte & Touche LLP, such firm has no direct financial interest and no
material indirect financial interest in the Reorganized 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. The
Board of Directors' recommendation of Deloitte & Touche LLP has been made so
that such firm may continue to serve as the public accountants of the
Reorganized Fund in the event that the Fund Reorganization does not occur for
any reason.
The Board of Directors of the Reorganized Fund recommends that shareholders
vote to ratify the selection of Deloitte & Touche LLP as the Reorganized Fund's
independent public accountants for the fiscal year ending November 30, 1996.
ITEM 3. - FOR ACQUIRED TRUST SHAREHOLDERS ONLY
RATIFICATION OR REJECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Trustees of the Securities Trust has selected Deloitte &
Touche LLP as the independent public accountants of the Securities Trust for the
fiscal year ending October 31, 1996. The 1940 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 Acquired Trust's independent auditors for the year ended
October 31, 1995, and for a number of years prior thereto. Based on in
formation in the possession of the Acquired Trust, and information furnished by
Deloitte & Touche LLP, such firm has no direct financial interest and no
material indirect financial interest in the Acquired Trust. 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.
The Board of Trustees of the Securities Trust recommends that shareholders
vote to ratify the selection of Deloitte & Touche LLP as the Acquired Trust's
independent public accountants for the fiscal year ending October 31, 1996.
29
<PAGE>
ADDITIONAL INFORMATION
Following the Fund Reorganization, the Acquiring Fund will adopt the
November 30 fiscal year of the Reorganized Fund.
To the knowledge of the Funds, as of March 22, 1996, no person owned of
record or beneficially 5% or more of the outstanding shares of any of the Funds.
As of March 22, 1996, the directors or trustees and officers of each of the
Acquired Funds, as a group, and the trustees and officers of the Acquiring Fund,
as a group, owned [less than 1%] of the outstanding shares of each of the Funds.
The Reorganized Fund, the Securities Trust (of which the Acquired Trust is
a series) and the Investment Trust (of which the Acquiring Fund is a series) are
subject to the informational requirements of the Securities Exchange Act of 1934
and in accordance therewith file reports, proxy statements and other information
with the Securities and Exchange Commission. Such reports, proxy statements and
other information filed by the Funds can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C., and at the Northeast Regional Office in New York, 7 World
Trade Center, 13th Floor, New York, New York. Copies of such material can also
be obtained by mail from the Public Reference Branch, Office of Consumer Affairs
and Information Services, Securities and Exchange Commission, Washington, D.C.
20549 at prescribed rates.
30
<PAGE>
Exhibit A-1
-----------
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this day of , 1996, by and between U.S. Government Securities Fund,
Inc. (the "Acquired Fund"), a Maryland corporation, and Lord Abbett Investment
Trust (the "Trust"), a Delaware business trust, on behalf of its series U.S.
Government Securities Series (the "Acquiring Fund").
WHEREAS, this Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(C) and
(F) of the United States Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the reorganization (the "Reorganization") will consist of the
transfer of all of the assets of the Acquired Fund in exchange for shares of
beneficial ownership of the Acquiring Fund (to be designated as Class A Shares,
the "Acquiring Fund Class A Shares" and each an "Acquiring Fund Class A Share")
and the assumption by the Acquiring Fund of all of the liabilities of the
Acquired Fund and the distribution, after the Closing Date herein referred to,
of Acquiring Fund Class A Shares to the shareholders of the Acquired Fund in
liquidation of the Acquired Fund, all upon the terms and conditions hereinafter
set forth in this Agree ment;
WHEREAS, the Trust and the Acquired Fund are open-end, registered
investment companies of the management type;
WHEREAS, the Acquired Fund owns securities that generally are of the
character in which the Acquiring Fund is permitted to invest;
WHEREAS, the Acquiring Fund is authorized to issue a single class of shares
(the "Acquiring Fund Class A Shares");
WHEREAS, after the multiple class share structure is authorized by the
Acquiring Fund but before the Acquiring Fund Class A Shares are issued to the
Acquired Fund, the Acquired Fund is to purchase one Acquiring Fund Class A share
and as sole shareholder (i) approve a plan pursuant to Section 12(b) of the
-
Investment Company Act of 1940 (the "1940 Act") and Rule 12b-1 thereunder (a
"Rule 12b-1 Plan") applicable to the Acquiring Fund Class A Shares and (ii)
--
approve the proposed investment management agreement between the Acquiring Fund
and Lord, Abbett & Co. ("Lord Abbett");
<PAGE>
WHEREAS, the Board of Directors, including a majority of the Directors who
are not "interested persons" (as defined under the 1940 Act) of the Acquired
Fund, has determined that the Reorganization is in the best interests of the
Acquired Fund's shareholders and that the interests of the existing shareholders
of the Acquired Fund will not be diluted as a result of this transaction;
WHEREAS, the Board of Trustees, including a majority of the Trustees who
are not "interested persons" (as defined under the 1940 Act ), of the Trust has
determined that the Reorganization is in the best interests of the Acquiring
Fund's shareholders and that the interests of the existing shareholders of the
Ac quiring Fund will not be diluted as a result of this transaction; and
NOW THEREFORE, in consideration of the premises and of the agreements
hereinafter set forth, the parties hereto agree as follows:
1. REORGANIZATION
1.1. Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Acquired Fund will
transfer its assets as set forth in paragraph 1.2 to the Acquiring Fund, and the
Acquiring Fund will in exchange therefor, (i) deliver to the Acquired Fund the
-
number of Acquiring Fund Class A Shares, including fractional Acquiring Fund
Class A Shares, equal to the number of the shares of capital stock of the
Acquired Fund as of the close of regular trading on the New York Stock Exchange
(the "NYSE") on the Closing Date (such time and date being hereinafter called
the "Valuation Date"); and (ii) to assume the liabilities of the Acquired Fund.
--
Such transactions shall take place at the closing provided for in paragraph 3.1
(the "Closing").
1.2. (a) The assets of the Acquired Fund to be acquired by the Acquiring
Fund shall consist of all of its property, including, without limitation, all
cash, securi ties and dividends or interest receivables and any deferred or
prepaid expenses shown as an asset on the books of the Acquired Fund on the
closing date provided in paragraph 3.1 (the "Closing Date").
(b) The Acquiring Fund has a list of all of the Acquired Fund's
assets as of the date of execution of this Agreement. The Acquired Fund has a
statement of the Acquiring Fund's investment objectives, policies and
restrictions. The Acquired Fund reserves the right to sell any of its securities
but will not, without the prior approval of the Acquiring Fund, acquire any
additional securities other than securities of the type in which the Acquiring
Fund is permitted to invest. The Acquiring Fund will, within a reasonable time
prior to the Closing Date, furnish the Acquired Fund
2
<PAGE>
with a list of the securities, if any, on the Acquired Fund's list referred to
in the first sentence of this paragraph which do not conform to the Acquiring
Fund's investment objectives, policies and restrictions. In the event that the
Acquired Fund holds any investments which the Acquiring Fund may not hold, the
Acquired Fund will dispose of such securities prior to the Closing Date. In
addition, if it is determined that the portfolios of the Acquired Fund and the
Acquiring Fund, when aggregated, would contain investments exceeding certain
percentage limitations imposed upon the Acquiring Fund with respect to such
investments, the Acquired Fund, if requested by the Acquiring Fund, will dispose
of and/or reinvest a sufficient amount of such in vestments as may be necessary
to avoid violating such limitations as of the Closing Date.
1.3. As provided in paragraph 3.4, as soon after the Closing Date as is
conveniently practicable, the Acquired Fund will distribute pro rata to the
Acquired Fund's shareholders of record determined as of the close of business on
the Closing Date, the Acquiring Fund Class A Shares it receives pursuant to
paragraph 1.1. Such distribution will be accomplished by establishing Acquiring
Fund shareholder accounts in the names of each Acquired Fund shareholder,
representing the same number of full and fractional Acquiring Fund Class A
Shares due each shareholder. All issued and outstanding shares of the Acquired
Fund will simultaneously be canceled on the books of the Acquired Fund. The
Acquiring Fund shall not issue certificates representing the Acquiring Fund
Shares in connection with such exchange.
1.4. Any transfer taxes payable upon issuance of Acquiring Fund Class A
Shares in a name other than the registered holder of the shares of the Acquired
Fund on the books of the Acquired Fund as of that time shall, as a condition of
such issuance and transfer, be paid by the person to whom such Acquiring Fund
Class A Shares are to be issued and transferred.
1.5. The Acquired Fund shall, following the Closing Date and the making of
all distributions pursuant to paragraph 1.3, be liquidated pursuant to the law
of Maryland. Any reporting responsibility of the Acquired Fund is and shall
remain the responsibility of the Acquired Fund up to and including the Closing
Date and following the liquidation of the Acquired Fund.
2. VALUATION
2.1. The net value of the Acquired Fund's assets to be acquired by the
Acquiring Fund hereunder shall be the value of such assets, less the Acquired
Fund's liabilities assumed by the Acquiring Fund, computed as of the close of
regular trading
3
<PAGE>
on the Valuation Date, using the valuation procedures set forth in the
Declaration and Agreement of Trust of the Trust.
2.2. All computations of value shall be made by the Acquiring Fund and the
Acquired Fund in accordance with the regular practice of the Acquired Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be June 7, 1996, or such later date as the
parties may agree to in writing. All acts taking place at the Closing shall be
deemed to take place simultaneously as of the close of business on the Closing
Date unless otherwise provided. The Closing shall be held as of 5:00 p.m. at
the offices of [specify location in New Jersey], or at such other time and/or
place as the parties may agree.
3.2. In the event that on the Valuation Date (a) the NYSE or another
-
primary trading market for portfolio securities of the Acquiring Fund or the
Acquired Fund shall be closed to trading or trading thereon shall be restricted
or (b) trading or the reporting of trading on the NYSE or elsewhere shall be
-
disrupted so that accurate appraisal of the value of the net assets of the
Acquiring Fund or the Acquired Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.
3.3. At the Closing, the Acquired Fund shall direct its custodian to
deliver to the custodian of the Acquiring Fund, for the Acquiring Fund's
account, all of its portfolio securities and other assets held by such custodian
for the Acquired Fund's account, duly endorsed in proper form for transfer as
appropriate, in such condition as to constitute good delivery thereof in
accordance with the custom of the Acquiring Fund's custodian, and shall be
accompanied by all necessary federal and state stock transfer stamps or a check
for the appropriate purchase price thereof.
3.4. The Acquired Fund shall direct its transfer agent to deliver to the
transfer agent of the Acquiring Fund on the Closing Date a list of the names and
addresses of the Acquired Fund's shareholders and the number of outstanding
shares owned by each such shareholder immediately prior to the Closing. The
Acquiring Fund shall direct its transfer agent to issue and deliver a
confirmation evidencing the Acquiring Fund Class A Shares to be credited to the
Acquired Fund's account on the Closing Date to the transfer agent of the
Acquired Fund, or provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Class A Shares have been credited to the Acquired Fund's account
on the books of the Acquiring Fund. At the Closing, each party shall deliver to
the other such bills of sale, checks, assignments, share cer-
4
<PAGE>
tificates, if any, receipts, assumption agreements or other documents as such
other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1. The Acquired Fund represents and warrants to the Trust as follows:
(a) The Acquired Fund is a registered investment company classified
as a management company of the open-end type, and its registration with the
Securities and Exchange Commission (the "Commission") as an investment
company under the 1940 Act is in full force and effect.
(b) The Acquired Fund is duly organized, validly existing and in good
standing under the laws of the State of Maryland and has the power to own
all of its properties and assets and to carry out this Agreement.
(c) The current prospectus and statement of additional information of
the Acquired Fund conform (and any prospectus or statement of additional
information of the Acquired Fund issued prior to the Closing Date will
conform) in all material respects to the applicable requirements of the
Securi ties Act of 1933 Act, as amended (the "1933 Act"), and the 1940 Act
and the rules and regulations of the Commission thereunder and do not (and
will not) include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
(and will be) made, not materially misleading.
(d) The Acquired Fund is not in, and the execution, delivery and
performance of this Agreement will not result in a, material violation of
its Articles of Incorporation or By-laws or of any agreement, instrument,
contract or other undertaking to which the Acquired Fund is a party or by
which it is bound.
(e) The Acquired Fund has no material contracts or other commitments
which will be terminated with liability to the Acquired Fund on, prior to
or after the Closing Date.
(f) Except as otherwise disclosed in writing to and accepted by the
Acquiring Fund, no litigation or administrative proceeding or investigation
of or before any court or governmental body is presently pending or to its
knowledge threatened against the Acquired Fund or any of the Acquired
5
<PAGE>
Fund's properties or assets, which if adversely determined would materially and
adversely affect the financial condition of the Acquired Fund or the conduct of
the Acquired Fund's business. The Acquired Fund knows of no facts which might
form the basis of the institution of such a proceeding and is not party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects the business of the
Acquired Fund or the ability of the Acquired Fund to con summate the
transactions contemplated herein.
(g) True and correct copies of the Acquired Fund's (i) Statement of Net
-
Assets as at November 30, 1995 and (ii) Statements of Operations and Changes in
--
Net Assets for the 12-month period then ended, including the accompanying notes,
have been furnished to the Acquiring Fund. Such Statement of Net Assets and
such Statements of Operations and Changes in Net Assets (and the accompanying
notes) have been audited by Deloitte & Touche LLP, independent certified public
accountants. Such statements have been prepared in accordance with generally
accepted accounting principles consistently applied, and such statements fairly
reflect the financial condition and the operations and changes in net assets of
the Acquired Fund as of such date and for such period, respectively. There are
no known contingent liabilities of the Acquired Fund as of such date required to
be reflected or disclosed in such Statement of Net Assets or notes in
accordance with gener ally accepted accounting principles that are not so
reflected or disclosed.
(h) Since November 30, 1995, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or busi
ness other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one year from
the date such indebtedness was incurred, except as otherwise disclosed to and
accepted by the Acquiring Fund.
(i) At the Closing Date, all federal and other tax returns and reports of
the Acquired Fund required by law to have been filed prior to the Closing Date
shall have been filed, and all federal and other taxes shown as due on such
returns shall have been paid, or provision shall have been made for the payment
thereof, and to the best of the Acquired Fund's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to such
returns.
6
<PAGE>
(j) For the most recent fiscal year of its operation, the Acquired Fund
has met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company.
(k) All issued and outstanding shares of the Acquired Fund are, and at the
Closing Date will be, duly and validly issued and outstanding, fully paid and
non-assessable. All of the issued and outstanding shares of the Acquired Fund
will, at the time of Closing, be held of record by the persons and in the
amounts set forth in the records of the transfer agent as provided in paragraph
3.4. The Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any shares of the Acquired Fund, nor is
there outstanding any security convertible into any shares of the Acquired Fund.
(l) At the Closing Date, the Acquired Fund will have good and marketable
title to its assets to be transferred to the Acquiring Fund pursuant to
paragraph 1.1 and full right, power and authority to sell, assign, transfer and
deliver such assets hereunder and, upon delivery and payment for such assets,
the Acquiring Fund will acquire good and marketable title thereto, subject to no
restrictions on the full transfer thereof, including such restrictions as might
arise under the 1933 Act, other than as disclosed to the Acquiring Fund prior to
the date hereof.
(m) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action on the part of the Acquired Fund's Board
of Directors, and subject to the due approval of the Acquired Fund's
shareholders, this Agreement, assuming due authorization, execution and delivery
by the Acquiring Fund, constitutes a valid and binding obligation of the
Acquired Fund, enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights and to general equity principles. The
Acquired Fund's Board of Directors has called a meeting of the Acquired Fund
shareholders to consider and act upon this Agreement.
(n) The information furnished and to be furnished by the Acquired Fund for
use in registration statements, proxy materials and other documents which may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with federal securities and other laws and regulations thereunder
applicable thereto.
7
<PAGE>
(o) The combined prospectus and proxy statement (the "N-14 pro
spectus and proxy statement") and the related statement of additional
informa tion included in the Registration Statement on Form N-14 of the
Acquiring Fund (the "N-14 Registration Statement") did not on the effective
date of the N-14 Registration Statement contain any untrue statement of a
material fact relating to the Acquired Fund or the meeting of its
shareholders referred to therein or omit to state a material fact required
to be stated therein or neces sary to make the statements therein relating
to the Acquired Fund or such special meeting, in light of the circumstances
under which such statements were made, not materially misleading.
(p) The Acquiring Fund Class A Shares to be acquired by to the
Acquired Fund hereunder are not being acquired for the purpose of making
any distribution thereof other than in accordance with the terms of this
Agree ment.
4.2. With respect to the Acquiring Fund, the Trust represents and warrants
to the Acquired Fund as follows:
(a) The Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act is in full force and
effect.
(b) The Acquiring Fund is a series of the Trust. The Trust is duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has the power to own all of its properties and assets
and to carry out this Agreement.
(c) The current prospectus and statement of additional information of
the Trust relating to the Acquiring Fund conform (and any prospectus or
statement of additional information of the Trust Relating to the Acquiring
Fund issued prior to the Closing Date will conform) in all material
respects to the applicable requirements of the 1933 Act and the 1940 Act
and the rules and regulations of the Commission thereunder and do not (and
will not) include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
(and will be) made, not materially misleading.
8
<PAGE>
(d) The Trust is not in, and the execution, delivery and performance of
this Agreement will not result in, a material violation of its Declaration of
Trust or By-laws or of any agreement, instrument, contract or other undertak ing
to which the Trust is a party or by which it is bound.
(e) The Trust has no material contracts or other commitments which will be
terminated with liability to the Trust on, prior to or after the Closing Date.
(f) Except as otherwise disclosed in writing to and accepted by the
Acquired Fund, no litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or to its knowledge
threatened against the Trust or any of the Acquiring Fund's properties or
assets, which, if adversely determined, would materially and adversely affect
its financial condition or the conduct of its business. The Trust knows of no
facts which might form the basis of the institution of such a proceeding and is
not party to or subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely affects its
business or its ability to consummate the transactions contemplated herein.
(g) True and correct copies of the Trust's (i) Statement of Net Assets as
-
at October 31, 1995, and (ii) Statements of Operation and Changes in Net Assets
--
for the 12-month period then ended, including the accompanying notes, have been
furnished to the Acquired Fund. Such Statement of Net Assets and such
Statements of Operations and Changes in Net Assets (and the accompany ing notes)
have been audited by Deloitte & Touche LLP, independent certified public
accountants. Such statements have been prepared in accordance with generally
accepted accounting principles consistently applied, and such state ments fairly
reflect the financial condition and the operations and changes in net assets of
the Trust as of such date and for such period, respectively. There are no known
contingent liabilities of the Trust as of such date required to be reflected or
disclosed in such Statements of Net Assets or notes in accordance with generally
accepted accounting principles that are not so reflected or disclosed.
(h) Since October 31, 1995, there has not been any material adverse change
in the Trust's financial condition, assets, liabilities or business other than
changes occurring in the ordinary course of business, or any incurrence by the
Trust's of indebtedness maturing more than one year from the date such
9
<PAGE>
indebtedness was incurred, except as otherwise disclosed to and accepted by the
Acquired Fund.
(i) At the Closing Date, all federal and other tax returns and reports of
the Trust required by law to have been filed prior to the Closing Date shall
have been filed, and all federal and other taxes shown as due on such returns
and reports shall have been paid, or provision shall have been made for the
payment thereof, and to the best of the Trust's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to such
returns.
(j) For the most recent fiscal year of its operation, the Trust has met
the requirements of Subchapter M of the Code for qualification and treatment as
a regulated investment company and the Acquiring Fund intends to do so in the
future.
(k) At the Closing Date, all issued and outstanding shares of the
Acquiring Fund will be duly and validly issued and outstanding, fully paid and
non-assessable, with no personal liability attaching to the ownership thereof.
The Acquiring Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any shares of the Acquiring Fund, nor is
there outstanding any security convertible into shares of the Acquiring Fund.
(l) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action on the part of the Trust's Board of
Trustees, and assuming due authorization, execution and delivery by the Acquired
Fund, this Agreement constitutes a valid and binding obligation of the Trust on
behalf of the Acquiring Fund, enforceable in accordance with its terms, subject
as to enforcement to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights and to general equity
principles.
(m) The N-14 Registration Statement (except insofar as it relates to the
Acquired Fund or the special meeting of its shareholders referred to therein)
did not on the effective date of the N-14 Registration Statement contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not materially mis leading.
10
<PAGE>
(n) The Acquiring Fund Class A Shares to be issued and delivered to
the Acquired Fund pursuant to the terms of this Agreement have been duly
authorized by the Trust's Board of Trustees on behalf of the Acquiring
Fund, and when issued and delivered at the Closing in accordance with this
Agree ment, will be duly and validly issued Acquiring Fund Class A Shares
and will be fully paid and non-assessable with no personal liability
attaching to the ownership thereof.
(o) The Board of the Investment Trust has duly adopted a resolution
(a copy of which has been furnished to the Acquired Fund) setting forth an
amendment to the Declaration and Agreement of Trust of the Investment Trust
authorizing the creation and issuance of additional classes of shares
within series, including the Acquiring Fund Class C Shares.
5. COVENANTS
5.1. The Acquiring Fund will conduct no investment operations prior to the
Closing Date. The Acquired Fund will operate its business in the ordinary
course between the date hereof and the Closing Date. It is understood that such
ordinary course of business will include the declaration and payment of
customary dividends and distributions and any other dividends and distributions
deemed advisable.
5.2. At or after the Closing, the Acquired Fund will deliver or otherwise
make available to the Acquiring Fund a statement of the Acquired Fund's assets
and liabilities, together with a list of the Acquired Fund's portfolio
securities showing the tax costs of such securities to it and the holding
periods of such securities, as of the Closing Date.
5.3. The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the Acquired Fund's shares.
5.4. Subject to the provisions of this Agreement, the Acquired Fund and
the Acquiring Fund each will take, or cause to be taken, all action, and do or
cause to be done all things, reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.5. The Acquired Fund will provide the Acquiring Fund with any additional
information reasonably necessary for any revision of the N-14 Prospectus and
Proxy Statement referred to in paragraph 4.1(o), all to be included in any
amendment to the N-14 Registration Statement, in compliance with the 1933 Act,
the Securities Ex-
11
<PAGE>
change Act of 1934 (the "1934 Act") and the 1940 Act in connection with the
meeting of the Acquired Fund's shareholders to consider approval of this
Agreement and the Reorganization.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Trust, on behalf of the Acquiring Fund, in all material respects of all of the
obligations to be performed by it hereunder on or before the Closing Date and,
in addition thereto, the following further conditions:
6.1. All representations and warranties of the Trust contained in this
Agree ment shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date.
6.2. The Trust shall have delivered to the Acquired Fund a certificate
executed in its name by its President or a Vice President and its Treasurer or
an Assistant Treasurer, in form reasonably satisfactory to the Acquired Fund and
dated as of the Closing Date, to the effect that the representations and
warranties of the Trust made in this Agreement are true and correct at and as of
the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST
The obligations of the Trust, on behalf of the Acquiring Fund, to
consummate the transactions provided for herein shall be subject, at its
election, to the performance by the Acquired Fund in all material respects of
all the obligations to be performed by it hereunder on or before the Closing
Date and, in addition thereto, the following further conditions:
7.1. All representations and warranties of the Acquired Fund contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date.
12
<PAGE>
7.2. The Acquired Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by its President or a Vice
President and its Treasurer or an Assistant Treasurer, in form and substance
satisfactory to the Acquiring Fund and dated as of the Closing Date, to the
effect that the representations and warranties of the Acquired Fund made in this
Agreement are true and correct at and as of the Closing Date, except as they may
be affected by the transactions contemplated by this Agreement.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST AND THE ACQUIRED
FUND
If any of the conditions set forth below do not exist on the Closing Date
with respect to the Acquiring Fund or the Acquired Fund, either party to this
Agreement shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
8.1. This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Ac quired Fund. Notwithstanding anything herein to the contrary, neither
the Acquiring Fund nor the Acquired Fund may waive the conditions set forth in
this paragraph 8.1.
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the trans actions contemplated herein.
8.3. All consents of other parties and all other consents, orders, rulings
and permits of federal, state and local regulatory authorities (including those
of the Commission, the Internal Revenue Service and state Blue Sky and
securities authori ties) deemed necessary by the Acquiring Fund or the Acquired
Fund to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any
such consent, order, ruling or permit would not involve a risk of a material
adverse effect on the assets or properties of the Acquiring Fund or the Acquired
Fund.
8.4. The N-14 Registration Statement shall have become effective under the
1933 Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
13
<PAGE>
8.5. The parties shall have received a favorable opinion of Debevoise &
Plimpton, addressed to the Acquired Fund and the Trust and satisfactory to the
Secretary of each such party, substantially to the effect that for federal
income tax purposes:
(a) the acquisition by the Acquiring Fund of all of the assets of the
Acquired Fund solely in exchange for the issuance of Acquiring Fund Class C
Shares to the Acquired Fund and the assumption of all of the Acquired Fund
liabilities by the Acquiring Fund, followed by the distribution by the
Acquired Fund, in complete liquidation, of the Acquiring Fund Class C
Shares to the Acquired Fund shareholders in exchange for their Acquired
Fund shares, will be treated as a "reorganization" within the meaning of
Section 368(a) of the Code, and the Acquiring Fund and the Acquired Fund
will each be a "party to a reorganization" within the meaning of Section
368(b) of the Code;
(b) no gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund in exchange for the Acquiring
Fund Shares and the assumption by the Acquiring Fund of liabilities of the
Acquired Fund;
(c) no gain or loss will be recognized by the Acquiring Fund upon the
transfer of the Acquired Fund's assets to the Acquiring Fund in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of
liabilities of the Acquired Fund or upon the distribution of the Acquiring
Fund Shares to the Acquired Fund's shareholders;
(d) no gain or loss will be recognized by shareholders of the
Acquired Fund upon the exchange of their Acquired Fund shares for the
Acquiring Fund Shares;
(e) the aggregate tax basis for the Acquiring Fund Shares received by
each of the Acquired Fund's shareholders pursuant to the Reorganization
will be the same as the aggregate tax basis of the Acquired Fund shares
held by such shareholder immediately prior to the Reorganization, and the
holding period of the Acquiring Fund Shares to be received by each Acquired
Fund shareholder will include the period during which the Acquired Fund
shares exchanged therefor were held by such shareholder (provided that the
Acquired Fund shares were held as capital assets on the date of the
Reorganization); and
(f) the tax basis of the Acquired Fund's assets acquired by the Ac
quiring Fund will be the same as the tax basis of such assets to the
Acquired
14
<PAGE>
Fund immediately prior to the Reorganization, and the holding period of the
assets of the Acquired Fund in the hands of the Acquiring Fund will include
the period during which those assets were held by the Acquired Fund.
Notwithstanding anything herein to the contrary, neither the
Acquiring Fund nor the Trust may waive the conditions set forth in this
paragraph 8.5.
8.6. The Trust shall have duly adopted a Rule 12b-1 Plan for the Acquiring
Fund Class A Shares acceptable to the Acquired Fund.
9. BROKERAGE FEES AND EXPENSES
9.1. The Trust, on behalf of the Acquiring Fund, represents and warrants
to the Acquired Fund, and the Acquired Fund represents and warrants to the
Trust, that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
9.2. Except as may be otherwise provided herein, the Acquiring Fund and
the Acquired Fund each shall pay, or provide for the payment of, the expenses
incurred by it in connection with entering into and carrying out the provisions
of this Agree ment.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. The parties hereto agree that no party has made any representation,
warranty or covenant not set forth herein and that this Agreement constitutes
the entire agreement between the parties.
10.2. None of the representations and warranties included or provided for
herein shall survive the consummation of the transactions contemplated hereby.
11. TERMINATION
11.1. This Agreement may be terminated at any time prior to the Closing
Date: (1) by the mutual agreement of the Trust and the Acquired Fund; (2) by
- -
the Acquired Fund in the event that the Trust shall, or by the Trust in the
event that the Acquired Fund shall, materially breach any representation or
warranty contained herein or any agreement contained herein and to be performed
at or prior to the Closing Date; or (3) by either party if a condition herein
-
expressed to be precedent to the obligations of the terminating party has not
been met and it reasonably appears that it will not or cannot be met.
15
<PAGE>
11.2. In the event of any such termination, there shall be no liability
for damages on the part of either the Trust, the Acquired Fund or the Acquiring
Fund or their respective Trustees, Directors or officers to the other party, but
the Acquiring Fund and the Acquired Fund shall each bear, or provide for the
payment of, the expenses incurred by it incidental to the preparation and
carrying out of this Agree ment as provided in paragraph 9.2.
12. AMENDMENTS; WAIVERS
12.1. This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers of
the Trust and the Acquired Fund; provided, however, that following the approval
of the Acquired Fund Shareholders referred to in paragraph 8.1, no such
amendment may have the effect of changing the provisions for determining the
number of the Acquir ing Fund Class A Shares to be issued to the Acquired Fund's
shareholders under this Agreement to the detriment of such shareholders without
their further approval.
12.2. At or at any time prior to the Closing either party hereto may by
written instrument signed by it (i) waive any inaccuracies in the
-
representations and warranties made to it contained herein and (ii) waive
--
compliance with any of the covenants or conditions made for its benefit
contained herein.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by personal
delivery addressed to the Acquired Fund, 767 Fifth Avenue, New York, New York,
10153, Attention: Office of the Secretary; or to the Acquiring Fund, 767 Fifth
Avenue, New York, New York, 10153, Attention: Office of the Secretary.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
14.1. The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
16
<PAGE>
14.3. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
14.4. (a) This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm, corporation or other entity, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
(b) The Acquired Fund is hereby expressly put on notice of the
limitation of liability as set forth in Article IV of the Declaration and
Agreement of Trust of the Trust and agrees that the obligations assumed by the
Trust pursuant to this Agreement shall be limited in any case to the Acquiring
Fund and its assets and the Acquired Fund shall not seek satisfaction of any
such obligation from the
17
<PAGE>
shareholders of the Trust, the trustees, officers, employees or agents of the
Trust or any of them or from any other assets of the Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its Chairman of the Board, President or Vice President and
attested by its Secretary or Assistant Secretary.
Attest: LORD ABBETT INVESTMENT TRUST
on behalf of Lord Abbett
U.S. Government Securities Series
By: ____________________________
Name: _____________ Name:
Title: Secretary Title:
Attest: LORD ABBETT U.S. GOVERNMENT SECURI-
TIES FUND, INC.
By: ______________________________
Name: _____________ Name:
Title: Secretary Title:
18
<PAGE>
Exhibit A-2
-----------
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this day of , 1996, by and between Lord Abbett Investment Trust
(the "Investment Trust"), a Delaware business trust, on behalf of its series
Lord Abbett U.S. Government Securities Series (the "Acquiring Fund") and Lord
Abbett Securities Trust (the "Securities Trust"), a Delaware business trust, on
behalf of its series Lord Abbett U.S. Government Securities Trust (the "Acquired
Fund").
WHEREAS, this Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(C) and
(F) of the United States Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the reorganization (the "Reorganization") will consist of the
transfer of all of the assets of the Acquired Fund in exchange for Class C
shares of capital stock of the Acquiring Fund (the "Acquiring Fund Class C
Shares" and each an "Acquiring Fund Class C Share") and the assumption by the
Acquiring Fund of all of the liabilities of the Acquired Fund and the
distribution, after the Closing Date herein referred to, of Acquiring Fund Class
C Shares to the shareholders of the Acquired Fund in termination of the Acquired
Fund, all upon the terms and conditions hereinafter set forth in this Agreement;
WHEREAS, the Securities Trust and the Investment Trust are open-end,
registered investment companies of the management type;
WHEREAS, the Acquired Fund is a series of the Securities Trust and the
Acquired Fund owns securities that generally are of the character in which the
Acquiring Fund is permitted to invest;
WHEREAS, the Acquiring Fund is a new series of the Investment Trust that
has no investment portfolio or other assets but plans to acquire the assets of,
and to assume the liabilities, Lord Abbett U.S. Government Securities Fund, Inc.
("LAUSGSF, Inc.") immediately prior to the Reorganization;
WHEREAS, the Acquiring Fund is authorized to issue a single class of shares
(the "Acquiring Fund Class A Shares"), and prior to the consummation of the
Reorganization, will amend its Declaration and Agreement of Trust to provide for
the authorization and issuance of shares of additional classes of capital stock,
including Acquiring Fund Class C Shares, which will share pro rata with each
other class in the portfolio, income and expenses of the Acquiring Fund, except
that each class will
<PAGE>
bear the expense of its own distribution and shareholder servicing arrangements
and certain other expenses;
WHEREAS, after the multiple class share structure is authorized by the
Acquiring Fund but before the Acquiring Fund Class C Shares are issued to the
Acquired Fund pursuant to the Reorganization, the acquired Fund is to purchase
one Acquiring Fund Class C share and as sole shareholder approve a plan pursuant
to Section 12(b) of the Investment Company Act of 1940 (the "1940 Act") and Rule
12b-1 thereunder (a "Rule 12b-1 Plan") applicable to the Acquiring Fund Class C
Shares;
WHEREAS, the Board of Trustees, including a majority of the Trustees who
are not "interested persons" (as defined under the 1940 Act ), of the Securities
Trust has determined that the Reorganization is in the best interests of the
Acquired Fund's shareholders and that the interests of the existing shareholders
of the Acquired Fund will not be diluted as a result of this transaction; and
WHEREAS, the Board of Trustees, including a majority of the Trustees who
are not "interested persons" (as defined under the 1940 Act) of the Investment
Trust, has determined that the Reorganization is in the best interests of the
Acquiring Fund's shareholders and that the interests of the existing
shareholders of the Acquiring Fund will not be diluted as a result of this
transaction;
NOW THEREFORE, in consideration of the premises and of the agreements
hereinafter set forth, the parties hereto agree as follows:
1. REORGANIZATION.
1.1. Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Securities Trust
will transfer assets of the Acquired Fund as set forth in paragraph 1.2 to the
Acquiring Fund, and the Acquiring Fund will in exchange therefor, (i) deliver to
-
the Acquired Fund the number of Acquiring Fund Class C Shares, including
fractional Acquiring Fund Class C Shares, determined by dividing the net value
of the Acquired Fund's assets so transferred computed in the manner and as of
the time and date set forth in paragraph 2.1, by the net asset value of one
Acquiring Fund Class A Share, computed in the manner and as of the time and date
set forth in paragraph 2.2; and (ii) to assume all of the liabilities of the
--
Acquired Fund. Such transactions shall take place at the closing provided for
in paragraph 3.1 (the "Closing").
1.2. (a) The assets of the Acquired Fund to be acquired by the Acquiring
Fund shall consist of all of its property, including, without limitation, all
2
<PAGE>
cash, securities and dividends or interest receivables and any deferred or
prepaid expenses shown as an asset on the books of the Acquired Fund on the
closing date provided in paragraph 3.1 (the "Closing Date").
(b) The Acquiring Fund has a list of all of the Acquired Fund's assets as
of the date of execution of this Agreement. The Acquired Fund has a statement
of the Acquiring Fund's investment objectives, policies and restrictions. The
Acquired Fund reserves the right to sell any of its securities but will not,
without the prior approval of the Acquiring Fund, acquire any additional
securities other than securities of the type in which the Acquiring Fund is
permitted to invest. The Acquiring Fund will, within a reasonable time prior to
the Closing Date, furnish the Acquired Fund with a list of the securities, if
any, on the Acquired Fund's list referred to in the first sentence of this
paragraph which do not conform to the Acquiring Fund's investment objectives,
policies and restrictions. In the event that the Acquired Fund holds any
investments which the Acquiring Fund may not hold, the Acquired Fund will
dispose of such securities prior to the Closing Date. In addition, if it is
determined that the portfolios of the Acquired Fund and the Acquiring Fund, when
aggregated, would contain investments exceeding certain percentage limitations
imposed upon the Acquiring Fund with respect to such investments, the Acquired
Fund, if requested by the Acquiring Fund, will dispose of and/or reinvest a
sufficient amount of such in vestments as may be necessary to avoid violating
such limitations as of the Closing Date.
1.3. As provided in paragraph 3.4, as soon after the Closing Date as is
conveniently practicable, the Acquired Fund will distribute pro rata to the
Acquired Fund's shareholders of record determined as of the close of business on
the Closing Date, the Acquiring Fund Class C Shares it receives pursuant to
paragraph 1.1. Such distribution will be accomplished by establishing Acquiring
Fund shareholder accounts in the names of each Acquired Fund shareholder,
representing the respective pro rata number of full and fractional Acquiring
Fund Class C Shares due each shareholder. All issued and outstanding shares of
the Acquired Fund will simultaneously be canceled on the books of the Acquired
Fund. The Acquiring Fund shall not issue certificates representing the
Acquiring Fund Shares in connection with such exchange.
1.4. Any transfer taxes payable upon issuance of Acquiring Fund Class C
Shares in a name other than the registered holder of the shares of the Acquired
Fund on the books of the Acquired Fund as of that time shall, as a condition of
such issuance and transfer, be paid by the person to whom such Acquiring Fund
Class C Shares are to be issued and transferred.
3
<PAGE>
1.5. The Acquired Fund shall, following the Closing Date and the making of
all distributions pursuant to paragraph 1.3, be terminated by a majority of the
Securities Trust's Trustees' executing an instrument pursuant to Section 5.4 of
the Declaration and Agreement of Trust of the Securities Trust abolishing the
Acquired Fund. Any reporting responsibility of the Securities Trust with
respect to the Acquired Fund is and shall remain the responsibility of the
Securities Trust up to and including the Closing Date and following the
termination of the Acquired Fund.
2. VALUATION
2.1. The net value of the Acquired Fund's assets to be acquired by the
Acquiring Fund hereunder shall be the value of such assets, less the Acquired
Fund's liabilities assumed by the Acquiring Fund, computed as of the close of
regular trading on New York Stock Exchange, Inc. (the "NYSE") on the Closing
Date (such time and date being hereinafter called the "Valuation Date"), using
the valuation procedures set forth in the Investment Trust's Declaration and
Agreement of Trust.
2.2. The net asset value of one Acquiring Fund Class A Share shall be the
net asset value per share computed as of the close of regular trading on the
NYSE on the Valuation Date, using the valuation procedures set forth in the
Investment Trust's Declaration and Agreement of Trust.
2.3. All computations of value shall be made by the Acquiring Fund and the
Acquired Fund in accordance with the regular practice of the LAUSGSF, Inc.
3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be June 7, 1996, or such later date as the
parties may agree to in writing. All acts taking place at the Closing shall be
deemed to take place simultaneously as of the close of business on the Closing
Date unless otherwise provided. The Closing shall be held as of 5:00 p.m. at
the offices of [specify location in New Jersey], or at such other time and/or
place as the parties may agree.
3.2. In the event that on the Valuation Date (a) the NYSE or another
-
primary trading market for portfolio securities of the Acquiring Fund or the
Acquired Fund shall be closed to trading or trading thereon shall be restricted
or (b) trading or the reporting of trading on the NYSE or elsewhere shall be
-
disrupted so that accurate appraisal of the value of the net assets of the
Acquiring Fund or the Acquired Fund is impracticable, the Closing Date shall be
postponed until the first business day after
4
<PAGE>
the day when trading shall have been fully resumed and reporting shall have been
restored.
3.3. At the Closing, the Acquired Fund shall direct its custodian to
deliver to the custodian of the Acquiring Fund, for the Acquiring Fund's
account, all of its portfolio securities and other assets held by such custodian
for the Acquired Fund's account, duly endorsed in proper form for transfer as
appropriate, in such condition as to constitute good delivery thereof in
accordance with the custom of the Acquiring Fund's custodian, and shall be
accompanied by all necessary federal and state stock transfer stamps or a check
for the appropriate purchase price thereof.
3.4. The Acquired Fund shall direct its transfer agent to deliver to
the transfer agent of the Acquiring Fund on the Closing Date a list of the names
and addresses of the Acquired Fund's shareholders and the number of outstanding
shares owned by each such shareholder immediately prior to the Closing. The
Acquiring Fund shall direct its transfer agent to issue and deliver a
confirmation evidencing the Acquiring Fund Class C Shares to be credited to the
Acquired Fund's account on the Closing Date to the transfer agent of the
Acquired Fund, or provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Class C Shares have been credited to the Acquired Fund's account
on the books of the Acquiring Fund. At the Closing, each party shall deliver to
the other such bills of sale, checks, assignments, share certificates, if any,
receipts, assumption agreements or other documents as such other party or its
counsel may reasonably request.
4. REPRESENTATION AND WARRANTIES
4.1. With respect to the Acquired Fund, the Securities Trust
represents and warrants to the Investment Trust as follows:
(a) The Securities Trust is a registered investment company
classified as a management company of the open-end type, and its
registration with the Securities and Exchange Commission (the "Commission")
as an investment company under the 1940 Act is in full force and effect.
(b) The Acquired Fund is a series of the Securities Trust. The
Securities Trust is duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the power to own all of its
properties and assets and to carry out this Agreement.
(c) The current prospectus and statement of additional information of
the Securities Trust conform (and any prospectus or statement of additional
5
<PAGE>
information of the Securities Trust issued prior to the Closing Date will
conform) in all material respects to the applicable requirements of the
Securities Act of 1933 Act, as amended (the "1933 Act"), and the 1940 Act and
the rules and regulations of the Commission thereunder and do not (and will not)
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were (or will be) made, not
materially misleading.
(d) The Securities Trust is not in, and the execution, delivery and
performance of this Agreement will not result in a, material violation of its
Declaration and Agreement of Trust or By-laws or of any agreement, instrument,
contract or other undertaking to which the Securities Trust is a party or by
which it is bound.
(e) The Securities Trust has no material contracts or other commitments
which will be terminated with liability to the Securities Trust on, prior to or
after the Closing Date.
(f) Except as otherwise disclosed in writing to and accepted by the
Investment Trust, no litigation or administrative proceeding or investigation of
or before any court or governmental body is presently pending or to its
knowledge threatened against the Securities Trust or any of the Acquired Fund's
properties or assets, which if adversely determined would materially and
adversely affect the financial condition of the Acquired Fund or the conduct of
the Acquired Fund's business. The Securities Trust knows of no facts which
might form the basis of the institution of such a proceeding and is not party to
or subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects the business of the
Acquired Fund or the ability of the Securities Trust to consummate the
transactions contemplated herein.
(g) True and correct copies of the Acquired Fund's (i) Statement of Net
-
Assets as at October 31, 1995 and (ii) Statements of Operations and Changes in
--
Net Assets for the 12-month period then ended, including the accompanying notes,
have been furnished to the Acquiring Fund. Such Statement of Net Assets and
such Statements of Operations and Changes in Net Assets (and the accompanying
notes) have been audited by Deloitte & Touche LLP, independent certified public
accountants. Such statements have been prepared in accordance with generally
accepted accounting principles consistently applied, and such statements fairly
reflect the financial condition
6
<PAGE>
and the operations and changes in net assets of the Acquired Fund as of such
date and for such period, respectively. There are no known contingent
liabilities of the Acquired Fund as of such date required to be reflected or
disclosed in such Statement of Net Assets or notes in accordance with generally
accepted accounting principles that are not so reflected or disclosed.
(h) Since October 31, 1995, there has not been any material adverse change
in the Acquired Fund's financial condition, assets, liabilities or business
other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one year from
the date such indebtedness was incurred, except as otherwise disclosed to and
accepted by the Acquiring Fund.
(i) The Securities Trust will file the final federal and other tax returns
of the Acquired Fund for the period ending on the Closing Date in accordance
with the Code. At the Closing Date, all federal and other tax returns and
reports of the Acquired Fund required by law to have been filed prior to the
Closing Date shall have been filed, and all federal and other taxes shown as due
on such returns shall have been paid, or provision shall have been made for the
payment thereof, and to the best of the Securities Trust's knowledge, no such
return is currently under audit and no assessment has been asserted with respect
to such returns.
(j) For the most recent fiscal year of its operation, the Acquired Fund
has met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company.
(k) All issued and outstanding shares of the Acquired Fund are, and at the
Closing Date will be, duly and validly issued and outstanding, fully paid and
non-assessable. All of the issued and outstanding shares of the Acquired Fund
will, at the time of Closing, be held of record by the persons and in the
amounts set forth in the records of the transfer agent as provided in paragraph
3.4. The Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any shares of the Acquired Fund, nor is
there outstanding any security convertible into any shares of the Acquired Fund.
(l) At the Closing Date, the Acquired Fund will have good and marketable
title to its assets to be transferred to the Acquiring Fund pursuant to
paragraph 1.1 and full right, power and authority to sell, assign, transfer and
deliver such assets hereunder and, upon delivery and payment for such
7
<PAGE>
assets, the Acquiring Fund will acquire good and marketable title thereto,
subject to no restrictions on the full transfer thereof, including such
restrictions as might arise under the 1933 Act, other than as disclosed to the
Acquiring Fund prior to the date hereof.
(m) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action on the part of Securities Trust's
Trustees, and subject to the due approval of the Acquired Fund's shareholders,
this Agreement, assuming due authorization, execution and delivery by the
Acquiring Fund, constitutes a valid and binding obligation of the Securities
Trust on behalf of the Acquired Fund, enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, reorganization, moratorium
and other laws relating to or affecting creditors' rights and to general equity
principles. The Securities Trust's Board of Trustees has called a meeting of
the Securities Trust shareholders at which the shareholders of the Acquired Fund
are to consider and act upon this Agreement.
(n) The information furnished and to be furnished by the Securities Trust
on behalf of the Acquired Fund for use in registration statements, proxy
materials and other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete in all material
respects and shall comply in all material respects with federal securities and
other laws and regulations thereunder applicable thereto.
(o) The combined prospectus and proxy statement (the "N-14 prospectus and
proxy statement") and the related statement of additional information included
in the Registration Statement on Form N-14 of the Acquiring Fund (the "N-14
Registration Statement") did not on the effective date of the N-14 Registration
Statement contain any untrue statement of a material fact relating to the
Acquired Fund or the meeting of the Securities Trust shareholders referred to
therein or omit to state a material fact required to be stated therein or
necessary to make the statements therein relating to the Acquired Fund or such
special meeting, in light of the circumstances under which such statements were
made, not materially misleading.
(p) The Acquiring Fund Class C Shares to be acquired by to the Acquired
Fund hereunder are not being acquired for the purpose of making any distribution
thereof other than in accordance with the terms of this Agreement.
8
<PAGE>
4.2. With respect to the Acquiring Fund, the Investment Trust
represents and warrants to the Securities Trust as follows:
(a) The Investment Trust is a registered investment company
classified as a management company of the open-end type, and its
registration with the Commission as an investment company under the 1940
Act is in full force and effect .
(b) The Acquiring Fund is a series of the Investment Trust. The
Investment Trust is duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the power to own all of its
properties and assets and to carry out this Agreement.
(c) The current prospectus and statement of additional information of
the Investment Trust relating to the Acquiring Fund conform (and any
prospectus or statement of additional information of the Investment Trust
relating to the Acquiring Fund issued prior to the Closing Date will
conform) in all material respects to the applicable requirements of the
1933 Act and the 1940 Act and the rules and regulations of the Commission
thereunder and do not (and will not) include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were (and will be) made, not materially
misleading.
(d) The Investment Trust is not in, and the execution, delivery and
performance of this Agreement will not result in a, material violation of
its Declaration of Trust or By-laws or of any agreement, instrument,
contract or other undertaking to which the Investment Trust is a party or
by which it is bound.
(e) The Investment Trust has no material contracts or other
commitments which will be terminated with liability to the Investment Trust
on, prior to or after the Closing Date.
(f) Except as otherwise disclosed in writing to and accepted by the
Acquired Fund, no litigation or administrative proceeding or investigation
of or before any court or governmental body is presently pending or to its
knowledge threatened against the Investment Trust or any of the Acquiring
Fund's properties or assets, which, if adversely determined, would
materially and adversely affect its financial condition or the conduct of
its business. The Investment Trust knows of no facts which might form the
basis of the
9
<PAGE>
institution of such a proceeding and is not party to or subject to the
provisions of any order, decree or judgment of any court or governmental body
which materially and adversely affects its business or its ability to consummate
the transactions contemplated herein.
(g) True and correct copies of the Investment Trust's (i) Statement of Net
-
Assets as at October 31, 1995, and (ii) Statements of Operation and Changes in
--
Net Assets for the 12-month period then ended, including the accompanying notes,
have been furnished to the Securities Trust. Such Statement of Net Assets and
such Statements of Operations and Changes in Net Assets (and the accompanying
notes) have been audited by Deloitte & Touche LLP, independent certified public
accountants. Such statements have been prepared in accordance with generally
accepted accounting principles consistently applied, and such statements fairly
reflect the financial condition and the operations and changes in net assets of
the Investment Trust as of such date and for such period, respectively. There
are no known contingent liabilities of the Investment Trust as of such date
required to be reflected or disclosed in such Statements of Net Assets or notes
in accordance with generally accepted accounting principles that are not so
reflected or disclosed.
(h) Since October 31, 1995, there has not been any material adverse change
in the Investment Trust's financial condition, assets, liabilities or business
other than changes occurring in the ordinary course of business, or any
incurrence by the Investment Trust of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquired Fund.
(i) At the Closing Date, all federal and other tax returns and reports of
the Investment Trust required by law to have been filed prior to the Closing
Date shall have been filed, and all federal and other taxes shown as due on such
returns and reports shall have been paid, or provision shall have been made for
the payment thereof, and to the best of the Investment Trust's knowledge, no
such return is currently under audit and no assessment has been asserted with
respect to such returns.
(j) For the most recent fiscal year of its operation, the Investment Trust
has met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and the Acquiring Fund intends to do
so in the future.
10
<PAGE>
(k) At the Closing Date, all issued and outstanding shares of the
Acquiring Fund will be, duly and validly issued and outstanding, fully paid and
non-assessable, with no personal liability attaching to the ownership thereof.
The Acquiring Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any shares of the Acquiring Fund, nor is
there outstanding any security convertible into shares of the Acquiring Fund.
(l) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action on the part of the Investment Trust's
Board of Trustees, and assuming due authorization, execution and delivery by the
Acquired Fund, this Agreement constitutes a valid and binding obligation of the
Investment Trust on behalf of the Acquiring Fund, enforceable in accordance with
its terms, subject as to enforcement to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles.
(m) The N-14 Registration Statement (except insofar as it relates to the
Acquired Fund or the special meeting of its shareholders referred to therein)
did not on the effective date of the N-14 Registration Statement contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not materially misleading.
(n) The Acquiring Fund Class C Shares to be issued and delivered to the
Acquired Fund pursuant to the terms of this Agreement have been duly authorized
by the Board of Trustees of the Investment Trust, and, when issued and delivered
at the Closing in accordance with this Agreement, will be duly and validly
issued Acquiring Fund Class C Shares and will be fully paid and non-assessable
with no personal liability attaching to the ownership thereof.
(o) The Board of Trustees of the Investment Trust has duly adopted a
resolution (a copy of which has been furnished to the Securities Trust) setting
forth an amendment to the Declaration and Agreement of Trust of the Investment
Trust authorizing the creation and issuance of additional classes of shares
within series, including the Acquiring Fund Class C Shares.
11
<PAGE>
5. COVENANTS
5.1. The Acquiring Fund will conduct no investment operations prior to the
Closing Date. The Acquired Fund will operate its business in the ordinary
course between the date hereof and the Closing Date. It is understood that such
ordinary course of business will include the declaration and payment of
customary dividends and distributions and any other dividends and distributions
deemed advisable.
5.2. At or after the Closing, the Securities Trust will deliver or
otherwise make available to the Acquiring Fund a statement of the Acquired
Fund's assets and liabilities, together with a list of the Acquired Fund's
portfolio securities showing the tax costs of such securities to it and the
holding periods of such securities, as of the Closing Date.
5.3. The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the Acquired Fund's shares.
5.4. Subject to the provisions of this Agreement, the Acquired Fund and
the Acquiring Fund each will take, or cause to be taken, all action, and do or
cause to be done all things, reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.5. Prior to the Closing Date, the Board of Trustees of the Securities
Trust will declare such dividends and distributions, payable no later than [90]
days after the Closing Date, to shareholders of record of the Acquired Fund as
of the Closing Date, which, together with all such previous dividends and
distributions, shall have the effect of distributing to the shareholders of the
Acquired Fund all of the investment company taxable income and exempt-interest
income of the Acquired Fund for all taxable years ending on or prior to the
Closing Date. The dividends and distributions declared by the Acquired Fund
shall also include all of the Acquired Fund's net capital gain realized in all
taxable years ending on or prior to the Closing Date (after reduction for any
capital loss carry forward). Such dividends and distributions declared prior to
the Closing Date shall be paid by the Acquiring Fund no later than [90] days
after the Closing Date.
5.6. As promptly as practicable, but in any case within sixty days after
the Closing Date, the Acquired Fund shall furnish the Acquiring Fund, in such
form as is reasonably satisfactory to the Acquiring Fund, a statement of the
earnings and
12
<PAGE>
profits of the Acquired Fund for federal income tax purposes which will be
carried over to the Acquiring Fund as a result of Section 381 of the Code.
5.7. The Acquired Fund will provide the Acquiring Fund with any additional
information reasonably necessary for any revision of the N-14 Prospectus and
Proxy Statement referred to in paragraph 4.1(o), all to be included in any
amendment to the N-14 Registration Statement, in compliance with the 1933 Act,
the Securities Exchange Act of 1934 (the "1934 Act") and the 1940 Act in
connection with the meeting of the Acquired Fund's shareholders to consider
approval of this Agreement and the Reorganization.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SECURITIES TRUST
The obligations of the Securities Trust, on behalf of the Acquired Fund, to
consummate the transactions provided for herein shall be subject, at its
election, to the performance by the Investment Trust, on behalf of the Acquiring
Fund, in all material respects of all of the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto, the following
further conditions:
6.1. All representations and warranties of the Investment Trust contained
in this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date with the same force and effect as if
made on and as of the Closing Date.
6.2. The Acquiring Fund shall have delivered to the Acquired Fund a
certificate executed in its name by its President or a Vice President and its
Treasurer or an Assistant Treasurer, in form reasonably satisfactory to the
Acquired Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the Investment Trust made in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE INVESTMENT TRUST
The obligations of the Investment Trust, on behalf of the Acquiring Fund,
to consummate the transactions provided for herein shall be subject, at its
election, to the performance by the Securities Trust in all material respects of
all the
13
<PAGE>
obligations to be performed by it hereunder on or before the Closing Date and,
in addition thereto, the following further conditions:
7.1. All representations and warranties of the Securities Trust contained
in this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date with the same force and effect as if
made on and as of the Closing Date.
7.2. The Securities Trust shall have delivered to the Acquiring Fund on
the Closing Date a certificate executed in its name by its President or a Vice
President and its Treasurer or an Assistant Treasurer, in form and substance
satisfactory to the Acquiring Fund and dated as of the Closing Date, to the
effect that the representations and warranties of the Securities Trust made in
this Agreement are true and correct at and as of the Closing Date, except as
they may be affected by the transactions contemplated by this Agreement.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SECURITIES TRUST AND THE
INVESTMENT TRUST
If any of the conditions set forth below do not exist on the Closing Date
with respect to the Acquiring Fund or the Acquired Fund, either party to this
Agreement shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
8.1. The reorganization pursuant to the Agreement and Plan of
Reorganization between Lord Abbett Investment Trust-Lord Abbett U.S. Government
Securities Series and Lord Abbett U.S. Government Securities Fund, Inc. of even
date shall have been consummated.
8.2. This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of the Securities Trust's
Declaration and Agreement of Trust and By-laws. Notwithstanding anything herein
to the contrary, neither the Acquiring Fund nor the Acquired Fund may waive the
condi tions set forth in this paragraph 8.2.
8.3. On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
14
<PAGE>
8.4. All consents of other parties and all other consents, orders,
rulings and permits of federal, state and local regulatory authorities
(including those of the Commission, the Internal Revenue Service and state Blue
Sky and securities authorities) deemed necessary by the Acquiring Fund or the
Acquired Fund to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where failure
to obtain any such consent, order, ruling or permit would not involve a risk of
a material adverse effect on the assets or properties of the Acquiring Fund or
the Acquired Fund.
8.5. The N-14 Registration Statement shall have become effective
under the 1933 Act and no stop orders suspending the effectiveness thereof shall
have been issued and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the 1933 Act.
8.6. The parties shall have received a favorable opinion of Debevoise
& Plimpton, addressed to the Investment Trust and the Securities Trust and
satisfactory to the Secretary of each such party, substantially to the effect
that for federal income tax purposes:
(a) the acquisition by the Acquiring Fund of all of the assets of the
Acquired Fund solely in exchange for the issuance of Acquiring Fund Class C
Shares to the Acquired Fund and the assumption of all of the Acquired Fund
liabilities by the Acquiring Fund, followed by the distribution by the
Acquired Fund, in complete liquidation, of the Acquiring Fund Class C
Shares to the Acquired Fund shareholders in exchange for their Acquired
Fund shares, will be treated as a "reorganization" within the meaning of
Section 368(a) of the Code, and the Acquiring Fund and the Acquired Fund
will each be a "party to a reorganization" within the meaning of Section
368(b) of the Code;
(b) no gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund in exchange for the Acquiring
Fund Shares and the assumption by the Acquiring Fund of liabilities of the
Acquired Fund;
(c) no gain or loss will be recognized by the Acquired Fund upon the
transfer of the Acquired Fund's assets to the Acquiring Fund in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of
liabilities of the Acquired Fund or upon the distribution of the Acquiring
Fund Shares to the Acquired Fund's shareholders;
15
<PAGE>
(d) no gain or loss will be recognized by shareholders of the
Acquired Fund upon the exchange of their Acquired Fund shares for the
Acquiring Fund Shares ;
(e) the aggregate tax basis for the Acquiring Fund Shares received by
each of the Acquired Fund's shareholders pursuant to the Reorganization
will be the same as the aggregate tax basis of the Acquired Fund shares
held by such shareholder immediately prior to the Reorganization, and the
holding period of the Acquiring Fund Shares to be received by each Acquired
Fund shareholder will include the period during which the Acquired Fund
shares exchanged therefor were held by such shareholder (provided that the
Acquired Fund shares were held as capital assets on the date of the
Reorganization); and
(f) the tax basis of the Acquired Fund's assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the
Acquired Fund immediately prior to the Reorganization, and the holding
period of the assets of the Acquired Fund in the hands of the Acquiring
Fund will include the period during which those assets were held by the
Acquired Fund.
Notwithstanding anything herein to the contrary, neither the
Acquiring Fund nor the Securities Trust may waive the conditions set forth in
this paragraph 8.6.
8.7. The Acquiring Fund shall have duly adopted a Rule 12b-1 Plan for
the Acquiring Fund Class C Shares acceptable to the Securities Trust.
9. BROKERAGE FEES AND EXPENSES
9.1. The Investment Trust represents and warrants to the Acquired
Fund, and the Securities Trust represents and warrants to the Acquiring Fund,
that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
9.2. Except as may be otherwise provided herein, the Acquiring Fund
and the Acquired Fund each shall pay, or provide for the payment of, the
expenses incurred by it in connection with entering into and carrying out the
provisions of this Agreement.
16
<PAGE>
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. The parties hereto agree that no party has made any representation,
warranty or covenant not set forth herein and that this Agreement constitutes
the entire agreement between the parties.
10.2. None of the representations and warranties included or provided for
herein shall survive the consummation of the transactions contemplated hereby.
11. TERMINATION
11.1. This Agreement may be terminated at any time prior to the Closing
Date: (1) by the mutual agreement of the Securities Trust and the Investment
-
Trust; (2) by the Securities Trust in the event that the Investment Trust shall,
-
or by the Investment Trust in the event that the Securities Trust shall,
materially breach any representation or warranty contained herein or any
agreement contained herein and to be performed at or prior to the Closing Date;
or (3) by either party if a condition herein expressed to be precedent to the
-
obligations of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.
11.2. In the event of any such termination, there shall be no liability
for damages on the part of either the Securities Trust, the Investment Trust,
the Acquired Fund or the Acquiring Fund or their respective Trustees or officers
to the other party, but the Acquiring Fund and the Acquired Fund shall each
bear, or provide for the payment of, the expenses incurred by it incidental to
the preparation and carrying out of this Agreement as provided in paragraph 9.2.
12. AMENDMENTS; WAIVERS
12.1. This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers of
the Securities Trust and the Investment Trust; provided, however, that following
the approval of the Acquired Fund shareholders referred to in paragraph 8.2, no
such amendment may have the effect of changing the provisions for determining
the number of the Acquiring Fund Class C Shares to be issued to the Acquired
Fund's shareholders under this Agreement to the detriment of such shareholders
without their further approval.
12.2. At or at any time prior to the Closing either party hereto may by
written instrument signed by it (i) waive any inaccuracies in the
-
representations and
17
<PAGE>
warranties made to it contained herein and (ii) waive compliance with any of the
--
covenants or conditions made for its benefit contained herein.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by personal
delivery addressed to the Acquired Fund, 767 Fifth Avenue, New York, New York,
10153, Attention: Office of the Secretary; or to the Acquiring Fund, 767 Fifth
Avenue, New York, New York, 10153, Attention: Office of the Secretary.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
14.1. The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
14.3. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
14.4. (a) This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm, corporation or other entity, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
(b) The Investment Trust is hereby expressly put on notice of the
limitation of liability as set forth in Article IV of the Declaration and
Agreement of Trust of the Securities Trust and agrees that the obligations
assumed by the Securities Trust pursuant to this Agreement shall be limited in
any case to the Acquired Fund and its assets and the Investment Trust shall not
seek satisfaction of any such obligation from any shareholders of the Securities
Trust, the trustees, officers, employees or agents of the Securities Trust or
any of them or from any other assets of the Securities Trust.
18
<PAGE>
(c) The Securities Trust is hereby expressly put on notice of the
limitation of liability as set forth in Article IV of the Declaration and
Agreement of Trust of the Investment Trust and agrees that the obligations
assumed by the Investment Trust pursuant to this Agreement shall be limited in
any case to the Acquiring Fund and its assets and the Securities Trust shall not
seek satisfaction of any such obligation from any shareholders of the Investment
Trust, the trustees, officers, employees or agents of the Investment Trust or
any of them or from any other assets of the Investment Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its Chairman of the Board, President or Vice President and
attested by its Secretary or Assistant Secretary.
Attest: LORD ABBETT SECURITIES TRUST
on behalf of Lord Abbett
U.S. Government Securities Trust
By: _____________________________
Name: _____________ Name:
Title: Secretary Title:
Attest: LORD ABBETT INVESTMENT TRUST on
behalf of Lord Abbett
U.S. Government Securities Series
By: _____________________________
Name: _____________ Name:
Title: Secretary Title:
19
<PAGE>
EXHIBIT B
Rule 12b-1 Distribution Plan and Agreement
U.S. Government Securities Series -- Class A Shares
---------------------------------------------------
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996
by and between LORD ABBETT U.S. GOVERNMENT SECURITIES SERIES (the "Fund"), a
series of LORD ABBETT INVESTMENT TRUST (the "Investment Trust") and LORD ABBETT
DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Investment Trust is an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"Act"); and the Distributor is the exclusive selling agent of the Fund's Class A
shares of capital stock (the "Shares") pursuant to the Distribution Agreement
between the Investment Trust and the Distributor, dated as of the date hereof
(the "Distribution Agreement").
WHEREAS, the Investment Trust desires to adopt a Distribution Plan and
Agreement (the "Plan") with the Distributor, as permitted by Rule 12b-1 under
the Act, pursuant to which the Fund 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 Investment Trust's Board of Trustees has determined that
there is a reasonable likelihood that the Plan will benefit the Fund and the
holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other
good and valuable consideration, receipt of which is hereby acknowledged, it is
agreed as follows.
1. The 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 Fund in order to provide additional
incentives to such Authorized Institutions (i) to sell Shares and (ii) to
- --
provide continuing information and investment services to their accounts holding
Shares and otherwise to encourage their accounts to remain invested in the
Shares. No payments shall be made hereunder to any
<PAGE>
Authorized Institution with respect to any accounts for which tracking data is
not available.
2. The Fund also hereby authorizes the Distributor to use payments
received hereunder from the Fund in order to (a) finance any activity which is
-
primarily intended to result in the sale of Shares and (b) provide continuing
-
information and investment services to shareholder accounts not serviced by
Authorized Institutions receiving a service fee from the Distributor hereunder
and otherwise to encourage such accounts to remain invested in the Shares;
provided that any payments referred to in the foregoing clause (a) shall be
- --------
authorized by the Board of Trustees of the Investment Trust by a vote of the
kind referred to in paragraph 10 of this Plan and (ii) any payments referred to
--
in clause (b) shall not exceed the service fee rate applicable at the time under
paragraph 3 of this Plan.
3. The Fund 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. The Board
of Trustees of the Investment Trust shall from time to time determine the
amounts, within the foregoing maximum amounts, that the Fund 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 Investment Trust. Such
determinations and approvals by the Board of Trustees shall be made and given by
votes of the kind referred to in paragraph 10 of this Plan. Payments by holders
of Shares to the Fund of contingent deferred reimbursement charges relating to
distribution fees paid by the Fund 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 Fund 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 and Agreement of Trust of the Investment Trust. If the
Distributor waives all or a portion of the fees which are to be paid by the Fund
hereunder, the Distributor shall not be deemed to have waived its rights under
this Agreement to have the Fund pay such fees in the future.
2
<PAGE>
5. The Secretary of the Investment Trust, or in his absence the Chief
Financial Officer, is hereby authorized to direct the disposition of monies paid
or payable by the Fund hereunder and shall provide to the Investment Trust's
Board of Trustees, and the Trustees shall review at least quarterly, a written
report of the amounts so expended pursuant to this Plan and the purposes for
which such expendi tures 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 Investment Trust or 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, or other representatives of the
Distributor are or may be "interested persons" of the Investment Trust or 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 or any of the shareholders,
creditors, trustees, or officers of the Investment Trust or the Fund; provided
however, that nothing herein shall be deemed to protect the Distributor against
any liability to the Fund or its shareholders by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties hereunder, or by
reason of the reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective upon the date hereof, and shall
continue in effect for a period of more than one year from that date only so
long as such continuance is specifically approved at least annually by a vote of
the Board of Trustees of the Investment Trust, including the vote of a majority
of the trustees who are not "interested persons" of the Investment Trust or the
Fund and who have no direct or indirect financial interest in the operation of
this Plan or in any agreement related to this Plan, cast in person at a meeting
called for the purpose of voting on such renewal.
9. This Plan may not be amended to increase materially the amount to
be spent by the Fund 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 Investment
Trust, including the vote of a majority of the trustees who are not "interested
persons" of the Investment Trust or the Fund and who have no direct or indirect
financial interest in the
3
<PAGE>
operation of this Plan or in any agreement related to this Plan, cast in person
at a meeting called for the purpose of voting on such amendment. Amendments to
this Plan which do not increase materially the amount to be spent by the Fund
hereunder above the maximum amounts referred to in paragraph 3 of this Plan may
be made pursuant to paragraph 10 of this Plan.
10. Amendments to this Plan other than material amendments of the
kind referred to in the forgoing paragraph 9 may be adopted by a vote of the
Board of Trustees of the Investment Trust, including the vote of a majority of
the trustees who are not "interested persons" of the Investment Trust or 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 Investment Trust may, by such a vote, interpret this Plan and make all
determinations necessary or advisable for its administration.
11. This Plan may be terminated at any time without the payment of
any penalty (a) by the vote of a majority of the trustees of the Investment
-
Trust who are not "interested persons" of the Investment Trust or 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 Investment Trust who are not "interested
persons" of the Investment Trust or the Fund are committed to the discretion of
such disinterested directors. The terms "interested persons," "assignment" and
"vote of a majority of the outstanding voting securities" shall have the same
meanings as those terms are defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this 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, on behalf of
LORD ABBETT U.S. GOVERNMENT SECURITIES
SERIES
By:_____________________________
President
ATTEST:
___________________
4
<PAGE>
Assistant Secretary
LORD ABBETT DISTRIBUTOR LLC
By:_____________________________
5
<PAGE>
EXHIBIT C
---------
COMPARISON OF INVESTMENT POLICIES AND RESTRICTIONS
Comparison of certain investment policies and restrictions of Lord Abbett
U.S. Government Securities Fund, Inc. (the "Reorganized Fund"), Lord Abbett
Securities Trust-Lord Abbett U.S. Government Securities Trust (the "Acquired
Trust") and Lord Abbett Investment Trust-Lord Abbett U.S. Government Securities
Series (the "Acquiring Fund").
<TABLE>
<CAPTION>
POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF
REORGANIZED FUND ACQUIRED TRUST THE ACQUIRING FUND
- --------------------------- ------------------------------------ -----------------------------------------------------------------
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT SALES/MARGIN.
FUNDAMENTAL FUNDAMENTAL NON-FUNDAMENTAL
The Fund may not sell The Fund may not sell short or buy The Fund may not make short sales of securities or maintain a
short or buy on margin on margin. short position except to the extent permitted by applicable law.
FUNDAMENTAL
The Fund may purchase securities on margin to the extent
permitted by applicable law.
- ------------------------------------------------------------------------------------------------------------------------------------
BORROWING.
FUNDAMENTAL FUNDAMENTAL FUNDAMENTAL
The Fund may not borrow The Fund may not borrow securities. The Fund may not borrow money, except that (i) the Fund may
securities. Subject to Subject to certain exceptions, the borrow from banks (as defined in the 1940 Act) in amounts up to
certain exceptions, the Fund may not borrow money. 33 1/3% of its total assets (including the amount borrowed),
Fund may not borrow money. (ii) the Fund may borrow up to an additional 5% of its total
assets for temporary purposes, and (iii) the Fund may obtain
such short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities.
- ------------------------------------------------------------------------------------------------------------------------------------
UNDERWRITING.
FUNDAMENTAL FUNDAMENTAL FUNDAMENTAL
The Fund may not engage in The Fund may not engage in the The Fund may not engage in the underwriting of securities,
the underwriting of underwriting of securities, except, except, pursuant to a merger or acquisition or to the extent
securities. pursuant to a merger or acquisition. that, in connection with the disposition of its portfolio
securities, it may be deemed to be an underwriter under federal
securities laws.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF
REORGANIZED FUND ACQUIRED TRUST THE ACQUIRING FUND
- --------------------------- ------------------------------------ -----------------------------------------------------------------
<S> <C> <C>
LENDING.
FUNDAMENTAL FUNDAMENTAL FUNDAMENTAL
The Fund may not lend The Fund may not lend money or The Fund may not make loans to other persons, except that the
money or securities, securities, except that it may acquisition of bonds, debentures or other corporate debt
except that it may lend enter into certain short-term securities and investment in government obligations, commercial
portfolio securities to repurchase agreements in certain paper, pass-through instruments, certificates of deposit,
registered broker-dealers limited circumstances. bankers acceptances, repurchase agreements or any similar
subject to certain instruments shall not be subject to this limitation, and except
limitations. further that the Fund may lend its portfolio securities,
provided that the lending of portfolio securities may be made
only in accordance with applicable law and the guidelines set
forth in the Fund's Prospectus and Statement of Additional
Information, as they may be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE/ COMMODITIES.
FUNDAMENTAL FUNDAMENTAL FUNDAMENTAL
The Fund may not deal in The Fund may not deal in real The Fund may not buy or sell real estate (except that the Fund
real estate, commodities estate, commodities or commodity may invest in securities directly or indirectly secured by real
or commodity contracts. contracts. estate or interests therein or issued by companies which invest
in real estate or interests therein), commodity or commodity
contracts (except to the extent the Fund may do so in accordance
with applicable law and without registering as a commodity pool
operator under the Commodity Exchange Act as, for example, with
futures contracts).
NON-FUNDAMENTAL
The Fund 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 the Fund
may invest in securities issued by companies that engage in oil,
gas or other mineral exploration or development activities.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF
REORGANIZED FUND ACQUIRED TRUST THE ACQUIRING FUND
- --------------------------- ------------------------------------ -----------------------------------------------------------------
<S> <C> <C>
DIVERSIFICATION.
FUNDAMENTAL FUNDAMENTAL FUNDAMENTAL
The Fund may not buy The Fund may not buy securities if With respect to 75% of its gross assets, the Fund may not buy
securities if the the purchase would then cause it to securities if the purchase would then cause it to have more than
purchase would then cause have more than 5% of its gross 5% of its gross assets, at market value at the time of
it to have more than 5% assets, at market value at the time investment, invested in the securities of any one issuer, except
of its gross assets, at of investment, invested in the securities issued or guaranteed by the U.S. Government, its
market value at the time securities of any one issuer, agencies or instrumentalities, or to own more than 10% of the
of investment, invested except securities issued or voting securities of any issuer.
in the securities of any guaranteed by the U.S. Government,
one issuer, except its agencies or instrumentalities,
securities issued or or to own more than 10% of the
guaranteed by the U.S. voting securities of any issuer.
Government, its agencies
or instrumentalities, or
to own more than 10% of
the voting securities of
any issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT IN A SINGLE
INDUSTRY.
FUNDAMENTAL FUNDAMENTAL FUNDAMENTAL
The Acquiring Company may Subject to certain exceptions, the None stated, but see "U.S. Government Securities," below
not concentrate its Fund may not concentrate its
investments in any one investments in any one industry,
industry. excluding U.S. Government
securities.
- ------------------------------------------------------------------------------------------------------------------------------------
RESTRICTED/ILLIQUID
SECURITIES.
None None. Rule 144A does not affect NON-FUNDAMENTAL
U.S. government securities and The Fund may not invest, knowingly, more than 15% of its net
therefore the trustees have no assets (at the time of investment) in illiquid securities,
intention of investing in such Rule except for securities qualifying for resale under Rule 144A of
144A securities. the Securities Act of 1933, deemed to be liquid by the Board of
Trustees.
- ------------------------------------------------------------------------------------------------------------------------------------
MORTGAGING AND PLEDGING OF
ASSETS.
FUNDAMENTAL NON-FUNDAMENTAL FUNDAMENTAL
The Fund may not pledge, The Fund may not pledge, mortgage The Fund may not pledge its assets (other than to secure
mortgage or hypothecate or hypothecate its assets. borrowings, or to the extent permitted by the Fund's investment
its assets. policies, in connection with hedging transactions, short sales,
when-issued and forward commitment transactions and similar
investment strategies).
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF
REORGANIZED FUND ACQUIRED TRUST THE ACQUIRING FUND
- --------------------------- ------------------------------------ -----------------------------------------------------------------
<S> <C> <C>
INVESTMENTS IN SECURITIES
OF OTHER INVESTMENT
COMPANIES.
FUNDAMENTAL
The Fund may not invest in
the securities of other FUNDAMENTAL NON-FUNDAMENTAL
investment companies. The Fund may not invest in the The Fund may not invest in the securities of other investment
securities of other investment companies, except as permitted by applicable law.
companies, excluding U.S.
Government securities.
- ------------------------------------------------------------------------------------------------------------------------------------
OPTIONS.
NON-FUNDAMENTAL NON-FUNDAMENTAL
None stated, but see "U.S. None stated. None stated, but see "U.S. Government Securities," below
Government Securities,"
below
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
OF ISSUERS IN OPERATION
FOR LESS THAN THREE YEARS.
FUNDAMENTAL
The Fund may not invest in None stated. NON-FUNDAMENTAL
securities of issuers The Fund may not invest in securities of issuers which, with
which, with their their predecessors, have a record of less than three years
predecessors, have a continuous operations, except if more than 5% of the Fund's
record of less than three total assets would be invested in such securities (this
years continuous restriction shall not apply to mortgage-backed securities,
operations, except asset-backed securities or obligations issued or guaranteed by
through subscription or the U.S. Government, its agencies or instrumentalities).
other rights limited to
5% of net assets.
- ------------------------------------------------------------------------------------------------------------------------------------
OWNERSHIP OF PORTFOLIO
SECURITIES BY OFFICERS
AND DIRECTORS.
FUNDAMENTAL FUNDAMENTAL NON-FUNDAMENTAL
The Fund may not hold The Fund may not hold securities of The Fund may not hold securities of any issuer if more than 1/2
securities of any issuer any issuer if more than 1/2 of 1% of 1% of the securities of such issuer are owned beneficially by
if more than 1/2 of 1% of the securities of such issuer one or more officers, Directors or Trustees or by one or more
of the securities of such are owned beneficially by one or partners of the underwriter of investment advisor if together
issuer are owned more officers, Directors or they own more than 5% of the securities of such issuer.
beneficially by one or Trustees or by one or more partners
more officers, Directors of the underwriter of investment
or Trustees or by one or advisor if together they own more
more partners of the than 5% of the securities of such
underwriter of investment issuer.
manager if together they
own more than 5% of the
securities of such issuer.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF
REORGANIZED FUND ACQUIRED TRUST THE ACQUIRING FUND
- --------------------------- ------------------------------------ -----------------------------------------------------------------
<S> <C> <C>
TRANSACTIONS WITH CERTAIN
PERSONS.
FUNDAMENTAL
The Fund, subject to FUNDAMENTAL
certain exceptions, may The Fund, subject to certain None stated (but certain restrictions may exist under applicable
not engage in securities exceptions, may not engage in law).
transactions with its securities transactions with its
underwriter or investment underwriter or investment manager
manager or with officers, or with officers, trustees or firms
directors, trustees or (acting as principals) with which
firms (acting as any of the foregoing are associated.
principals) with which
any of the foregoing are
associated.
- ------------------------------------------------------------------------------------------------------------------------------------
SENIOR SECURITIES.
FUNDAMENTAL FUNDAMENTAL
None The Fund may not issue senior The Fund may not issue senior securities to the extent such
securities. issuance would violate applicable law.
- ------------------------------------------------------------------------------------------------------------------------------------
PURCHASE OF WARRANTS.
None NON-FUNDAMENTAL
None The Fund may not invest in warrants if, at the time of the
acquisition, its investment in warrants, valued at the lower of
cost or market, would exceed 5% of the Fund's total assets
(included within such limitation, but not to exceed 2% of the
Fund's total assets, are warrants which are not listed on the
New York or American Stock Exchange or a major foreign exchange).
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES.
FUNDAMENTAL
The Fund may not invest in FUNDAMENTAL
securities other than None The Fund may not invest in securities other than U.S. Government
U.S. Government securities as described in the Acquiring Fund Prospectus.
securities, even though
several of the above
restrictions (which were
adopted prior to the Fund
adopting a policy of
investing only in U.S.
Government securities)
may imply otherwise.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 20, 1996
ACQUISITION OF THE ASSETS OF
Lord Abbett U. S. Government Securities Fund, Inc. and
Lord Abbett U.S. Government Securities Trust, a series of
Lord Abbett Securities Trust
The General Motors Building, 767 Fifth Avenue
New York, NY 10153
(800) 426-1130
BY AND IN EXCHANGE FOR CLASS A SHARES AND CLASS C SHARES, RESPECTIVELY, OF
Lord Abbett U.S. Government Securities Series, a series of
Lord Abbett Investment Trust
The General Motors Building, 767 Fifth Avenue
New York, NY 10153
(800) 426-1130
This Statement of Additional Information, relating specifically to the
proposed transfer of the assets of Lord Abbett U.S. Government Securities Fund,
Inc. (the "Reorganized Fund") and Lord Abbett U.S. Government Securities Trust,
a series of Lord Abbett Securities Trust (the "Acquired Trust") to Lord Abbett
U.S. Government Securities Series, a series of Lord Abbett Investment Trust (the
"Acquiring Fund") in exchange for Class A Shares and Class C Shares,
respectively, of the Acquiring Fund and the assumption by the Acquiring Fund of
the liabilities of the Reorganized Fund and the Acquired Trust, consists of this
cover page and the following described documents, each of which accompanies this
Statement of Additional Information and is incorporated herein by reference:
1. Statement of Additional Information of the Reorganized Fund dated April
1, 1995
2. Statement of Additional Information of the Lord Abbett Securities Trust
dated December 27, 1994, insofar as it relates to the Acquired Trust.*
3. Statement of Additional Information of the Lord Abbett Investment Trust
dated March , 1996, insofar as it relates to the Acquiring Fund.*
4. The financial statements of Lord Abbett Investment Trust for the fiscal
year ended October 31, 1995, and the report thereon of Deloitte & Touche LLP,
independent public accountants, contained in the 1995 Annual Report of the
Acquiring Fund.
- ----------
* A pre-effective amendment is to be filed to incorporate by reference the
Statement of Additional Information of Lord Abbett Securities Trust to be dated
March 1, 1996 and the final Statement of Additional Information of Lord Abbett
Investment Trust.
B-1
<PAGE>
5. The financial statements of the Reorganized Fund for the fiscal year
ended November 30, 1995, and the report thereon of Deloitte & Touche LLP,
independent public accountants, contained in the 1995 Annual Report of the
Reorganized Fund.
6. The financial statements of Lord Abbett U.S. Government Securities
Trust, a series of Lord Abbett Securities Trust for the fiscal year ended
October 31, 1995, and the report thereon of Deloitte & Touche LLP, independent
public accountants, contained in the 1995 Annual Report of Lord Abbett
Securities Trust.
The financial statements referred to above are incorporated herein in
reliance upon the authority of Deloitte & Touche LLP as experts in auditing and
accounting. This Statement of Additional Information is not a prospectus. A
Proxy Statement and Prospectus dated the date hereof relating to the above-
referenced matter may be obtained without charge by calling or writing the
Acquiring Fund at the telephone number or address set forth above. This
Statement of Additional Information should be read in conjunction with such
Proxy Statement and Prospectus.
B-2
<PAGE>
PART C
ITEM 15. INDEMNIFICATION
The Registrant is a Delaware Business Trust established under Chapter 38 of
Title 12 of the Delaware Code. The Registrant's Declaration and Agreement of
Trust at Section 4.3 relating to indemnification of trustees, officers and
employees states the following.
The Trust shall indemnify each of its Trustees, officers, employees and agents
(including any individual who serves at its request as director, officer,
partner, trustee or the like of another organization in which it has any
interest as a shareholder, creditor or otherwise) against all liabilities and
expenses, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and counsel fees reasonably
incurred by him or her in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any court or
administrative or legislative body in which he or she may be or may have been
involved as a party or otherwise or with which he or she may be or may have been
threatened, while acting as Trustee or as an officer, employee or agent of the
Trust or the Trustees, as the case may be, or thereafter, by reason of his or
her being or having been such a Trustee, officer, employee or agent, except with
------
respect to any matter as to which he or she shall have been adjudicated not to
have acted in good faith in the reasonable belief that his or her action was in
the best interests of the Trust or any Series thereof. Notwithstanding anything
herein to the contrary, if any matter which is the subject of indemnification
hereunder relates only to one Series (or to more than one but not all of the
Series of the Trust), then the indemnity shall be paid only out of the assets of
the affected Series. No individual shall be indemnified hereunder against any
liability to the Trust or any Series thereof or the Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office. In addition, no such
indemnity shall be provided with respect to any matter disposed of by settlement
or a compromise payment by such Trustee, officer, employee or agent, pursuant to
a consent decree or otherwise, either for said payment or for any other expenses
unless there has been a determination that such compromise is in the best
interests of the Trust or, if appropriate, of any affected Series thereof and
that such Person appears to have acted in good faith in the reasonable belief
that his or her action was in the best interests of the Trust or, if
appropriate, of any affected Series thereof, and did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. All determinations that the
applicable standards of conduct have been met for indemnification hereunder
shall be made by (a) a majority vote of a quorum consisting of disinterested
Trustees who are not parties to the proceeding relating to indemnification, or
(b) if such quorum is not obtainable or, even if obtainable, if a majority vote
of such quorum so directs, by independent legal counsel in a written opinion, or
(c) a vote of Shareholders (excluding Shares owned of a record or beneficially
by such individual). In addition, unless a matter is disposed of with a court
determination (i) on the merits that such Trustee, officer, employee or agent
was not liable or (ii) that such Person was not guilty of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office, no indemnification shall be provided hereunder
unless there has been a determination by independent legal counsel in a written
opinion that such Person did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office.
C-1
<PAGE>
The Trustees may make advance payments out of the assets of the Trust, or, if
appropriate, of the affected Series in connection with the expense of defending
any action with respect to which indemnification might be sought under this
Section 4.3. The indemnified Trustee, officer, employee or agent shall give a
written undertaking to reimburse the Trust or the Series in the event it
subsequently determined that he or she is not entitled to such indemnification
and (a) the indemnified Trustee, officer, employee or agent shall provide
security for his or her undertaking, (b) the Trust shall be insured against
losses arising by reason of lawful advances, or (c) a majority of a quorum of
disinterested Trustees or an independent legal counsel in a written opinion
shall determine, based on a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe that the indemnitee
ultimately will be found entitled to indemnification. The rights accruing to
any Trustee, officer, employee or agent under these provisions shall not exclude
any other right to which he or she may be lawfully entitled and shall inure to
the benefit of his or her heirs, executors, administrators or other legal
representatives.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to Trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expense incurred
or paid by a Trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 16. EXHIBITS
1. (a) Declaration and Agreement of Trust of the Registrant. (1)
(b) Form of Amendment designating the Lord Abbett U.S. Government
Securities Series of the Registrant and Class A and Class C shares
thereof; filed herewith.
2. By-Laws of the Registrant. (1)
3. Not Applicable.
4. (a) Form of Agreement and Plan of Reorganization between Registrant and
Lord Abbett U.S. Government Securities Fund, Inc.; filed herewith as
Exhibit A-1 contained in Part A of this Registration Statement.
(b) Form of Agreement and Plan of Reorganization between Registrant and
Lord Abbett Securities Trust-Lord Abbett U.S. Government Securities
Trust; filed herewith as Exhibit A-2 contained in Part A of this
Registration Statement.
5. Not Applicable.
C-2
<PAGE>
6. (a) Investment Management Agreement between the Registrant and Lord,
Abbett & Co. dated October 20, 1993.(8)
(b) Form of Investment Management Agreement between the Registrant (Lord
Abbett U.S. Government Securities Series) and Lord, Abbett & Co. (4)
7. (a) Form of Rule 12b-1 Plan for Registrant Class A Shares; filed herewith
as Exhibit B contained in Part A of this Registration Statement. (7)
(b) Form of Rule 12b-1 Plan for Registrant Class C Shares. (7)
(c) Distribution Agreement, dated May 19, 1993, between Registrant and
Lord, Abbett & Co.(1)
8. (a) Deferred Compensation Plan. (2)
(b) Retirement Plan. (2)
9. (a) Custody Agreement. (3)
(b) Form of Assignment and Assumption Agreement between Morgan Guaranty
Trust Company of New York and Bank of New York; filed herewith.
10. (a) See Item 7(a) above.
(b) Form of Rule 18f-3 Plan; filed herewith.
11. Form of opinion and Consent of Debevoise & Plimpton as to the legality
of securities being issued; filed herewith.
12. Form of opinion and Consent of Debevoise & Plimpton as to Tax Matters;
filed herewith.
13. Not Applicable.
14. (a) Consent of Deloitte & Touche LLP regarding financial statements of
Registrant, Lord Abbett U.S. Government Securities Fund, Inc. and
Lord Abbett Securities Trust; filed herewith.
(b) Ruling application submitted to the Internal Revenue Service, dated
October 19, 1995, supplemental application dated January 26, 1996 and
Ruling, dated February 5, 1996; filed herewith.
15. Not Applicable.
16. Not Applicable.
17. (a) Forms of Proxy Cards; filed herewith.
(b) Prospectus and Statement of Additional Information of the Registrant,
dated March ___, 1996. (7)
(c) Prospectus and Statement of Additional Information of Lord Abbett U.S.
Government Securities Fund, Inc., dated April 1, 1995. (5)
C-3
<PAGE>
(d) Prospectus and Statement of Additional Information of Lord Abbett
Securities Trust, dated December 27, 1994. (6)
- -------------------------
(1) Incorporated herein by reference to Registrant's Registration Statement on
Form N-1A (File Nos. 33-68090 and 811-7988) filed on or about February 26,
1993.
(2) Incorporated herein by reference to Post-Effective Amendment No. 7 to Lord
Abbett Securities Trust's Registration Statement on Form N-1A (File Nos.
33-68090 and 811-7988) filed on or about October 7, 1994.
(3) Incorporated herein by reference to Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-1A (File Nos. 33-68090 and
811-7988) filed on or about August 6, 1993.
(4) Incorporated herein by reference to Post-Effective Amendment No. 6 to
Registrant's Registration Statement on Form N-1A (File Nos. 33-68090 and
811-7988) filed on or about December 22, 1995.
(5) Incorporated herein by reference to Post-Effective Amendment No. 57 to Lord
Abbett U.S. Government Securities Fund, Inc.'s Registration Statement on
Form N-1A (File Nos. 811-3 and 2-10691) filed on or about March 30, 1995.
(6) Incorporated herein by reference to Post-Effective Amendment No. 7 to Lord
Abbett Securities Trust's Registration Statement on Form N-1A (File Nos.
811-7538 and 33-58846) filed on or about December 20, 1994.
(7) Incorporated herein by reference to Post-Effective Amendment No. 7 to
Registrant's Registration Statement on Form N-1A (File Nos. 33-68090 and
811-7988) Filed on or about February 12, 1996.
(8) Incorporated by reference to Post-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File Nos. 33-68090 and 811-7988) filed
on or about October 7, 1993.
ITEM 17. UNDERTAKINGS
(1) The undersigned registrant agrees that, prior to any public reoffering of
the securities registered through the use of a prospectus which is a part
of this registration statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act [17
CFR (S) 230.145c] the reoffering prospectus will contain the information
called for by the applicable registration form for reofferings by persons
who may be deemed underwriters, in addition to the information called for
by the other items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as part of an amendment to the
registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the 1933 Act, each
post-effective amendment shall be deemed to be a new registration statement
for the securities offered therein, and the offering of the securities at
that time shall be deemed to be the initial bona fide offering of them.
C-4
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has
been signed on behalf of the Registrant in the City of New York and State of New
York on the 14th day of February 1996.
LORD ABBETT INVESTMENT TRUST
By: /s/ Ronald P. Lynch
Ronald P. Lynch, Chairman of the Board
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities indicated and on the
dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Ronald P. Lynch Chairman of the Board 2/14/96
Ronald P. Lynch and Trustee
/s/ Robert S. Dow President and Trustee 2/14/96
Robert S. Dow
/s/ John J. Gargana, Jr. Vice President and
John J. Gargana, Jr. Chief Financial Officer 2/14/96
/s/E. Thayer Bigelow
- ------------------------- Trustee 2/14/96
E. Thayer Bigelow
Stewart S. Dixon
- -------------------------- Trustee ------
John C. Jansing
- -------------------------- Trustee ------
/s/ C. Alan MacDonald
- -------------------------- Trustee 2/14/96
C. Alan MacDonald
Hansel B. Millican, Jr.
- -------------------------- Trustee ------
/s/ Thomas J. Neff
- --------------------------- Trustee 2/14/96
Thomas J. Neff
C-5
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as a part of this Registration Statement
pursuant to General Instruction G of Form N-14.
PAGE
EXHIBIT DESCRIPTION NUMBER
------- ----------- ------
(1)(b) Form of Amendment designating the Lord Abbett U.S. Government
Securities Series of the Registrant and Class A and Class C
shares thereof
(4)(a) Form of Agreement and Plan of Reorganization between the
Registrant and Lord Abbett U.S. Government Securities Fund,
Inc.
(b) Form of Agreement and Plan of Reorganization between the
Registrant and Lord Abbett Securities Trust-U.S. Government
Trust
(9)(b) Form of Assignment and Assumption Agreement between Morgan
Guaranty Trust Company of New York and Bank of New York
(10)(b) Rule 18f-3 Plan
(11) Form of opinion and Consent of Debevoise & Plimpton as to
legality of securities being issued
(12) Forms of opinions and Consents of Debevoise & Plimpton as to
Tax Matters
(14)(a) Consent of Deloitte & Touche LLP regarding financial
statements
(b) Ruling application submitted to the Internal Revenue Service,
dated October 19, 1995, supplemental application dated
January 26, 1996 and Ruling, dated February 5, 1996.
(17)(a) Forms of Proxy Cards
C-6
3
<PAGE>
EXHIBIT 1(b)
LORD ABBETT INVESTMENT TRUST
----------------------------
AMENDMENT TO
DECLARATION OF TRUST
--------------------
The undersigned, being at least a majority of the Trustees of Lord Abbett
Investment Trust, a Delaware business trust (the "Trust"), organized pursuant to
a Declaration of Trust dated August 16, 1993 (the "Declaration"), do hereby
establish, pursuant to Section 5.3 of the Declaration:
(i) a new Series of shares of beneficial interest, to be designated the
- Lord Abbett U.S. Government Securities Series, which shares shall
represent undivided beneficial interests in the assets of the Trust
allocated to that Series pursuant to Section 5.4.1 of the Declaration.
The shares of beneficial interest for the Lord Abbett U.S. Government
Securities Series shall have the same rights and preferences as shares
of the other Series as set forth in the Declaration.
(ii) a new class of shares for each Series of the Trust, to be designated
-- the Class C shares of such Series. The initial class of shares of each
Series shall be designated the Class A shares of such Series. Any
variations between such classes as to purchase price, determination of
net asset value, the price, terms and manner of redemption, special
and relative rights as to dividends and on liquidation, and conditions
under which such classes shall have separate voting rights, shall be
as set forth in the Declaration or as elsewhere determined by the
Board of Trustees of the Trust.
This instrument shall constitute an amendment to the Declaration.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument this
_____ day of ____________, 1996.
------------------------------
------------------------------
------------------------------
------------------------------
------------------------------
------------------------------
------------------------------
------------------------------
------------------------------
2
<PAGE>
State of New York )
) ss.
Count of New York )
On _____________ ___, 1996, there personally appeared before me the above-
named [insert names of Trustees executing amendment] who severally acknowledged
the foregoing instrument to be their free act and deed.
Before me
--------------------------------------
Notary Public
My commission expires
- ---------------------
MORGAN GUARANTY
Letterhead
February 9, 1996
Lord Abbett Investment Trust
767 Fifth Avenue
New York, N.Y. 10153
Attention: Mr. Kenneth B. Cutler
Vice President
Dear Sirs:
Pursuant to Section 15 of the Global Custody Agreement, dated October 20, 1993,
between Lord Abbett Investment Trust (hereinafter called the "Corporation") and
Morgan GuarantyTrust Company of New York (hereinafter called "Morgan"), Morgan
hereby assigns to The Bank of New York (hereinafter called "successor
custodian"), as of January 1, 1996, all its rights and obligations under such
Agreement, and successor custodian hereby agrees with you to be bound by such
Agreement in accordance with its terms.
Sincerely,
____________________ Consented to:
Vice President LORD ABBETT INVESTMENT TRUST
Mutual Funds Division
Agreed and Confirmed By:___________________________
THE BANK OF NEW YORK Vice President
By:________________________
Vice President
<PAGE>
EXHIBIT 10(b)
Plans Pursuant to Rule 18f-3(d) under the
Investment Company Act of 1940
Rule 18f-3 (the "Rule") under the Investment Company Act of 1940, as
amended (the "1940 Act"), requires that the Board of Directors or Trustees of an
investment company desiring to offer multiple classes pursuant to the Rule adopt
a plan setting forth the separate arrangement and expense allocation of each
class, and any related conversion features or exchange privileges. This
document constitutes such a plan (individually, a "Plan" and collectively, the
"Plans") of each of the investment companies listed on Schedule A attached
hereto, or series thereof (each, a "Fund"). The Plan of any Fund is subject to
amendment by action of the Board of Directors or Trustees (the "Board") of such
Fund and without the approval of shareholders of any class, to the extent
permitted by law and by the governing documents of such Fund.
The Board, including a majority of the non-in terested Board members, has
determined that the following separate arrangement and expense allocation, and
the se lected exchange privileges, of each class of each Fund are in the best
interest of each class of each Fund individually and each Fund as a whole:
<PAGE>
1. Class Designation. Fund shares shall initially be divided into Class A
-----------------
shares and Class C shares.
2. Sales Charges and Distribution and Service Fees.
-----------------------------------------------
(a) Initial Sales Charge. Class A shares will be traditional front-end
--------------------
sales charge shares, offered at their net asset value ("NAV") plus a sales
charge in the case of each Fund as described in such Fund's Prospectus as from
time to time in effect.
Class C shares will be offered at their NAV with out an initial sales
charge.
(b) Service and Distribution Fees. In respect of the Class A shares and
-----------------------------
Class C shares, each Fund will pay service and distribution fees under plans
adopted for such classes pursuant to Rule 12b-1 under the 1940 Act (each a "12b-
1 Plan").
Pursuant to a 12b-1 Plan with respect to the Class A shares, if effective,
each Fund will pay (i) at the time such shares are sold, a one-time sales
-
distribution fee of up to 1% of the NAV of the shares sold in the amount of $1
million or more, including sales qualifying at such level under the rights of
accumulation and statement of intention privileges, or to retirement plans with
100 or more eligible employees, as described in the Fund's Prospectus as from
time to time in effect, (ii) a continuing distribution fee
--
2
<PAGE>
at an annual rate of 0.10% of the average daily NAV of the Class A share
accounts of dealers who meet certain sales and redemption criteria, and (iii) a
---
continuing service fee at an annual rate not to exceed 0.25% of the average
daily NAV of the Class A shares. The Board will have the authority to increase
the distribution fees payable under such 12b-1 Plan by a vote of the Board,
including a majority of the in dependent directors thereof, up to an annual rate
of 0.50% of the average daily NAV of the Class A shares. The effective dates of
various of the 12b-1 Plans for the Class A shares are based on achievement by
the Funds of specified total NAV's for the Class A shares of each Fund.
Pursuant to a 12b-1 Plan with respect to the Class C shares, each Fund will
pay a one-time service and distribution fee at the time such shares are sold of
up to 1% of their NAV and a continuing annual fee, commencing 12 months after
the first anniversary of such sale, of up to 1% of the average annual NAV of
such shares then outstanding (each fee comprised of .25% in service fees and
.75% in distribution fees).
(c) Contingent Deferred Reimbursement Charges ("CDRC"). Subject to some
--------------------------------------------------
exceptions, Class A shares subject to the one-time sales distribution fee of up
to 1% under the Rule 12b-1 Plan for the Class A shares will be subject to a CDRC
equal to 1% of the lower of the cost or then NAV of such shares if the shares
are redeemed for cash
3
<PAGE>
on or before the end of the twenty-fourth month after the month in which the
shares were purchased.
Class C shares will be subject to a CDRC equal to 1% of the lower of the
cost or then NAV of the shares if the shares are redeemed for cash before the
first anniversary of their purchase.
3. Liability and Expense Allocation. The following expenses and
--------------------------------
liabilities therefor shall be allocated, to the extent such expenses can
reasonably be identified as relating to a particular class, on a class-specific
basis: (a) fees under a 12b-1 Plan applicable to a specific class (net of any
CDRC paid with respect to shares of such class and retained by the Fund) and any
other costs relating to implementing or amending such Plan, including obtaining
shareholder approval of such Plan or any amendment thereto; (b) transfer and
shareholder servicing agent fees and shareholder servicing costs identifiable as
being attrib utable to the particular provisions of a specific class; (c)
stationery, printing, postage and delivery expenses related to preparing and
distributing materials such as shareholder reports, prospectuses and proxy
statements to current shareholders of a specific class; (d) Blue Sky reg
istration fees incurred by a specific class; (e) Board fees or expenses
identifiable as being attributable to a specific class; (f) auditor's fees and
expense relating solely to a
4
<PAGE>
specific class; (g) litigation expenses and legal fees and expense relating
solely to a specific class; (h) expenses incurred in connection with
shareholders meetings as a re sult of issues relating solely to a specific class
and (i) other expenses relating solely to a specific class. All such
liabilities and expenses incurred by a class of shares will be charged directly
to the net assets of the particular class and thus will be borne on a pro rata
basis by the outstanding shares of such class.
4. Dividends. Dividends paid by a Fund as to each class of its shares, to
---------
the extent any dividends are paid, will be calculated in the same manner, will
be paid at the same time, and will be in the same amount, except that any
liabilities and expenses allocated to a class as pro vided above will be borne
exclusively by that class.
5. Net Asset Values. The NAV of each share of stock of a class of a Fund
----------------
shall be determined in accordance with the Articles of Incorporation or
Declaration of Trust of such Fund with appropriate adjustments to reflect the
differing allocations of liabilities and expenses of such Fund between its
classes as provided above. [Attached hereto as Exhibit A is a sample
calculation of the NAV's of a Class A share and a Class C share.]
5
<PAGE>
6. Conversion Features. Subject to amendment by the Board, no class of
-------------------
shares shall be subject to any automatic conversion feature at this time.
7. Exchange Privileges. Except as set forth in the Fund's prospectus,
-------------------
shares of any class of a Fund may be exchanged, at the holder's option, for
shares of the same class of another Fund without the imposition of any sales
charge, fee or other charge.
Each Plan is qualified by and subject to the terms of the then current
prospectus for the applicable Fund; provided, however, that none of the terms
set forth in any such prospectus shall be inconsistent with the terms con tained
herein. The prospectus for each Fund contains addi tional information about
that Fund's classes and its multiple-class structure.
Each Plan is being adopted for a Fund with the approval of, and all
material amendments thereto must be approved by, a majority of the Board of such
Fund, including a majority of the Board who are not interested persons of the
Fund.
6
<PAGE>
Schedule A
----------
The Lord Abbett - Sponsored Funds
Establishing Multi-Class Structures
-----------------------------------
Affiliated Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett Investment Trust
Lord Abbett Securities Trust
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Tax-Free Income Trust
Lord Abbett U.S. Government Securities Money Market Fund, Inc.
Lord Abbett Value Appreciation Fund, Inc.
Lord Abbett Research Fund, Inc.
<PAGE>
EXHIBIT 11
[Debevoise & Plimpton Letterhead]
Lord Abbett Investment Trust
The General Motors Building
767 Fifth Avenue
New York, New York 10153
Lord Abbett Investment Trust
Registration Statement on Form N-14
-------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Lord Abbett Investment Trust (the
"Registrant"), a Delaware business trust, in connection with the preparation and
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, of a Registration Statement on Form N-14 (File No. 811-7988)
(the "Registration Statement"), relating to the issuance of shares of beneficial
interest of the Lord Abbett U.S. Government Securities Series (the "Acquiring
Fund"), a series of the Registrant.
Such shares of beneficial interest have been established and designated as
the Class A shares and the Class C shares (the "Class A shares" and the "Class C
shares"). The Class A shares are to be issued to Lord Abbett U.S. Government
Securities Fund, Inc., a Maryland
<PAGE>
Lord Abbett Investment Trust
Page 2
corporation (the "Reorganized Fund"), pursuant to an Agreement and Plan of
Reorganization (the "Reorganized Fund Plan") between the Registrant, on behalf
of the Acquiring Fund, and the Reorganized Fund substantially in the form of
Exhibit A-1 included in Part A of the Registration Statement. The Class C
shares are to be issued to Lord Abbett U.S. Government Securities Trust (the
"Acquired Trust"), a series of Lord Abbett Securities Trust (the "Securities
Trust"), a Delaware business trust, pursuant to an Agreement and Plan of
Reorganization (the "Acquired Trust Plan") between the Registrant, on behalf of
the Acquiring Fund, and the Securities Trust, on behalf of the Acquired Trust,
substantially in the form of Exhibit A-2 included in Part A of the Registration
Statement. Such issuances of the Class A and the Class C shares are to be made
in connection with the acquisitions by the Acquiring Fund of the assets of, and
the assumptions by the Acquiring Fund of the liabilities of, the Reorganized
Fund and the Acquired Trust, respectively.
In so acting, we have examined and relied upon the originals, or copies
certified or otherwise identified to our satisfaction, of such documents,
records, certificates and other instruments and have made such other
investigations as in our judgment are necessary or appropriate to enable us to
render the opinion expressed below. We have not, however, undertaken any
independent investigation of any factual matter set forth in any of the
foregoing.
Based on the foregoing, we are of the following opinion:
(a) Class A shares. Assuming that the Reorganized Fund and the Acquiring
--------------
Fund duly execute and deliver the Reorganized Fund Plan, that the Reorganized
Fund Plan and the reorganization provided for thereby are duly approved by the
shareholders of the Reorganized Fund and that the transactions contemplated by
the Reorganized Fund Plan are duly consummated, the Class A shares issued
pursuant to the Reorganized Fund Plan will be legally issued, fully paid and
non-assessable.
(b) Class B shares. Assuming that the Acquired Trust and the Acquiring
--------------
Fund duly execute and deliver the Acquired Trust Plan, that the Acquired Trust
Plan and the reorganization provided for thereby are duly
<PAGE>
Lord Abbett Investment Trust
Page 2
approved by the shareholders of the Acquired Trust and that the transactions
contemplated by the Acquired Trust Plan are duly consummated, the Class C
shares issued pursuant to the Acquired Trust Plan will be legally issued,
fully paid and non-assessable.
This opinion is limited solely to the federal law of the United States and
the Delaware Business Trust Act as in effect on the date hereof and the relevant
facts that exist as of the date hereof. Without limiting the generality of the
foregoing, we express no opinion concerning other laws of the State of Delaware,
including the securities laws of such state, or the laws of any other
jurisdiction other than the United States. No assurance can be given that the
law or facts will not change, and we have not undertaken to advise you or any
other person with respect to any event subsequent to the date hereof.
We are delivering this opinion to you and, without our prior written
consent, no other persons are entitled to rely on this opinion. We consent to
the filing of this opinion as an Exhibit to the Registration Statement. In
giving such consent, we do not thereby concede that we are within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933 or the Rules and Regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
<PAGE>
EXHIBIT 12
[Debevoise & Plimpton Letterhead]
[Dated as of the Closing Date]
Lord Abbett Investment Trust
The General Motors Building
767 Fifth Avenue
New York, New York 10153
Lord Abbett Securities Trust
The General Motors Building
767 Fifth Avenue
New York, New York 10153
Agreement and Plan of Reorganization
dated as of _______ __, 1996
by and between
Lord Abbett Investment Trust,
on behalf of its series,
Lord Abbett U.S. Government Series,
and Lord Abbett Securities Trust,
on behalf of its series,
Lord Abbett U.S. Government Securities Trust
--------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Lord Abbett Investment Trust, a Delaware
business trust ("Investment Trust"), acting on behalf of its series, Lord Abbett
U.S. Government Series ("Acquiring Fund"), and Lord Abbett Securities Trust,
<PAGE>
Lord Abbett Investment Trust
Lord Abbett Securities Trust
2 [Date of the Closing]
a Delaware business trust ("Securities Trust"), acting on behalf of its series,
Lord Abbett U.S. Government Securities Trust ("Acquired Fund") in connection
with the proposed acquisition (the "Reorganization") of all of the assets of
Acquired Fund by Acquiring Fund pursuant to the Agreement and Plan of
Reorganization dated as of _______ __, 1996, by and between Investment Trust, on
behalf of Acquiring Fund and Securities Trust, on behalf of Acquired Fund (the
"Reorganization Agreement").
In so acting, we have participated in the preparation of the Reorganization
Agreement and the preparation and filing by Acquiring Fund with the Securities
and Exchange Commission on February __, 1996 of a Registration Statement on Form
N-14, containing a Proxy Statement and Prospectus of Acquiring Fund relating to
the proposed Reorganization and to the shares of common stock of Acquiring Fund
to be issued to Acquired Fund shareholders in the Reorganization pursuant to the
Reorganization Agreement.
As required by Section 8.5 of the Reorganization Agreement, you have
requested that we render the opinion set forth below. In rendering such
opinion, we have examined and relied upon the accuracy as of the date hereof of
the representations and warranties as to factual matters set forth in the
documents referred to above and the Letters of Representation, dated as of the
date hereof, that you have provided to us, copies of which are attached hereto.
We have also examined the originals, or copies certified or otherwise identified
to our satisfaction, of such records, documents, certificates or other
instruments as in our judgment are necessary or appropriate to enable us to
render the opinions set forth below. We have not, however, undertaken any
independent investigation of any factual matter set forth in any of the
foregoing.
Subject to the foregoing and to the qualifications and limitations set
forth herein, and assuming that the Reorganization is consummated in accordance
with the Reorganization Agreement and as described in the Registration
Statement, we are of the opinion that for United States federal income tax
purposes:
<PAGE>
Lord Abbett Investment Trust
Lord Abbett Securities Trust
3 [Date of the Closing]
1. The acquisition by Acquiring Fund of all of the assets of Acquired
Fund solely in exchange for the issuance of Acquiring Fund shares to
Acquired Fund and the assumption of all of the Acquired Fund liabilities by
Acquiring Fund, followed by the distribution by Acquired Fund, in complete
liquidation, of the Acquiring Fund shares to Acquired Fund shareholders in
exchange for their Acquired Fund shares, will be treated as a
"reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Acquiring Fund and Acquired Fund will each be "a party to the
reorganization" within the meaning of Section 368(b) of the Code.
3. No gain or loss will be recognized by Acquired Fund upon the transfer
of Acquired Fund's assets to Acquiring Fund in exchange for Acquiring Fund
shares and the assumption by Acquiring Fund of the liabilities of Acquired
Fund or upon the distribution of Acquiring Fund shares to Acquired Fund's
shareholders.
4. No gain or loss will be recognized by Acquiring Fund upon the receipt
of the assets of Acquired Fund in exchange for Acquiring Fund shares and
the assumption by Acquiring Fund of the liabilities of Acquired Fund.
5. No gain or loss will be recognized by shareholders of Acquired Fund
upon the exchange of their Acquired Fund shares for Acquiring Fund shares.
6. The aggregate tax basis of the Acquiring Fund shares received by any
Acquired Fund shareholder pursuant to the Reorganization will be the same
as the aggregate tax basis of the Acquired Fund shares held by such
shareholder immediately prior to the Reorganization, and the holding period
for the Acquiring Fund shares to be received by any Acquired Fund
shareholder will include the period during which the Acquired Fund shares
exchanged therefor were held by such shareholder (provided that the
Acquired Fund
<PAGE>
Lord Abbett Investment Trust
Lord Abbett Securities Trust
4 [Date of the Closing]
shares are held as capital assets on the date of the Reorganization).
7. The tax basis of Acquired Fund's assets acquired by Acquiring Fund will
be the same as the tax basis of such assets to Acquired Fund immediately
prior to the Reorganization, and the holding period of the assets of
Acquired Fund in the hands of Acquiring Fund will include the period during
which those assets were held by Acquired Fund.
This opinion is limited solely to the federal law of the United States
as in effect on the date hereof and the relevant facts that exist as of the date
hereof. No assurance can be given that the law or facts will not change, and we
have not undertaken to advise you or any other person with respect to any event
subsequent to the date hereof.
We are delivering this opinion to you and, without our prior written
consent, no other persons are entitled to rely on this opinion.
Very truly yours,
<PAGE>
[Debevoise & Plimpton Letterhead]
February 14, 1996
Lord Abbett Investment Trust
The General Motors Building
767 Fifth Avenue
New York, New York 10153
Lord Abbett Securitites Trust
The General Motors Building
767 Fifth Avenue
New York, New York 10153
Ladies and Gentlemen:
We hereby consent to the filing of the draft opinion attached hereto as an
exhibit to the Registration Statement on Form N-14, to be filed by Lord Abbett
U.S. Government Series ("Acquiring Fund"), a series of Lord Abbett Investment
Trust, a Delaware business trust ("Investment Trust"), with the Securities and
Exchange Commission, containing a Proxy Statement and Prospectus of Acquiring
Fund relating to (i) the proposed acquisition (the "Reorganization") of all of
-
the assets of Lord Abbett U.S. Government Securities Trust ("Acquired Fund"), a
series of Lord Abbett Securities Trust, a Delaware business trust ("Securities
Trust") by Acquiring Fund pursuant to an Agreement and Plan of Reorganization to
be entered into by and between Investment Trust, on behalf of Acquiring Fund,
and Securities Trust, on behalf of Acquired Fund and (ii) the shares of common
--
stock of Acquiring Fund to be issued to Acquired Fund shareholders in the
Reorganization. We also hereby consent to the use of our name under the caption
"Information About the Reorganization -- Federal Income Tax Consequences" in the
Registration Statement. In giving such consent, we do not thereby concede that
we are within the category of persons whose consent is required under Section 7
of the Securities Act of 1933 or the Rules and Regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
/s/ Debevoise & Plimpton
<PAGE>
[Debevoise & Plimpton Letterhead]
[Dated as of the Closing Date]
Lord Abbett Investment Trust
The General Motors Building
767 Fifth Avenue
New York, New York 10153
Lord Abbett U.S. Government Securities Fund, Inc.
The General Motors Building
767 Fifth Avenue
New York, New York 10153
Agreement and Plan of Reorganization
dated as of _______ __, 1996
by and between
Lord Abbett Investment Trust,
on behalf of its series,
Lord Abbett U.S. Government Series,
and Lord Abbett U.S. Government Securities Fund, Inc.
-----------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Lord Abbett Investment Trust, a Delaware
business trust (the "Trust"), acting on behalf of its series, Lord Abbett U.S.
Government Series ("Acquiring Fund"), and Lord Abbett U.S. Government Securities
Fund, Inc., a Maryland corporation ("Acquired Fund"), in connection with the
proposed acquisition (the
<PAGE>
Lord Abbett Investment Trust
Lord Abbett U.S. Government Securities Fund Inc.
2 [Date of the Closing]
"Reorganization") of all of the assets of Acquired Fund by Acquiring Fund
pursuant to the Agreement and Plan of Reorganization dated as of _______ __,
1996, by and between the Trust, acting on behalf of Acquiring Fund, and Acquired
Fund (the "Reorganization Agreement").
In so acting, we have participated in the preparation of the Reorganization
Agreement and the preparation and filing by Acquiring Fund with the Securities
and Exchange Commission on February __, 1996 of a Registration Statement on Form
N-14, containing a Proxy Statement and Prospectus of Acquiring Fund relating to
the proposed Reorganization and to the shares of common stock of Acquiring Fund
to be issued to Acquired Fund shareholders in the Reorganization pursuant to the
Reorganization Agreement.
As required by Section 8.5 of the Reorganization Agreement, you have
requested that we render the opinion set forth below. In rendering such
opinion, we have examined and relied upon the accuracy as of the date hereof of
the representations and warranties as to factual matters set forth in the
documents referred to above and the Letters of Representation, dated as of the
date hereof, that you have provided to us, copies of which are attached hereto.
We have also examined the originals, or copies certified or otherwise identified
to our satisfaction, of such records, documents, certificates or other
instruments as in our judgment are necessary or appropriate to enable us to
render the opinions set forth below. We have not, however, undertaken any
independent investigation of any factual matter set forth in any of the
foregoing.
Subject to the foregoing and to the qualifications and limitations set
forth herein, and assuming that the Reorganization is consummated in accordance
with the Reorganization Agreement and as described in the Registration
Statement, we are of the opinion that for United States federal income tax
purposes:
1. The acquisition by Acquiring Fund of all of the assets of Acquired
Fund solely in exchange for the issuance of Acquiring Fund shares to
Acquired Fund and the assumption of all of the Acquired Fund liabilities by
Acquiring Fund,
<PAGE>
Lord Abbett Investment Trust
Lord Abbett U.S. Government Securities Fund Inc.
3 [Date of the Closing]
followed by the distribution by Acquired Fund, in complete liquidation, of
the Acquiring Fund shares to Acquired Fund shareholders in exchange for
their Acquired Fund shares, will be treated as a "reorganization" within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
2. Acquiring Fund and Acquired Fund will each be "a party to the
reorganization" within the meaning of Section 368(b) of the Code.
3. No gain or loss will be recognized by Acquired Fund upon the
transfer of Acquired Fund's assets to Acquiring Fund in exchange for
Acquiring Fund shares and the assumption by Acquiring Fund of the
liabilities of Acquired Fund or upon the distribution of Acquiring Fund
shares to Acquired Fund's shareholders.
4. No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Acquired Fund in exchange for Acquiring Fund
shares and the assumption by Acquiring Fund of the liabilities of Acquired
Fund.
5. No gain or loss will be recognized by shareholders of Acquired
Fund upon the exchange of their Acquired Fund shares for Acquiring Fund
shares.
6. The aggregate tax basis of the Acquiring Fund shares received by
any Acquired Fund shareholder pursuant to the Reorganization will be the
same as the aggregate tax basis of the Acquired Fund shares held by such
shareholder immediately prior to the Reorganization, and the holding period
for the Acquiring Fund shares to be received by any Acquired Fund
shareholder will include the period during which the Acquired Fund shares
exchanged therefor were held by such shareholder (provided that the
Acquired Fund shares are held as capital assets on the date of the
Reorganization).
7. The tax basis of Acquired Fund's assets acquired by Acquiring Fund
will be the same as the tax
<PAGE>
Lord Abbett Investment Trust
Lord Abbett U.S. Government Securities Fund Inc.
4 [Date of the Closing]
basis of such assets to Acquired Fund immediately prior to the
Reorganization, and the holding period of the assets of Acquired Fund
in the hands of Acquiring Fund will include the period during which
those assets were held by Acquired Fund.
This opinion is limited solely to the federal law of the United
States as in effect on the date hereof and the relevant facts that exist as
of the date hereof. No assurance can be given that the law or facts will
not change, and we have not undertaken to advise you or any other person
with respect to any event subsequent to the date hereof.
We are delivering this opinion to you and, without our prior written
consent, no other persons are entitled to rely on this opinion.
Very truly yours,
<PAGE>
[Debevoise & Plimpton Letterhead]
February 14, 1996
Lord Abbett Investment Trust
The General Motors Building
767 Fifth Avenue
New York, New York 10153
Lord Abbett U.S. Government Securities Fund
The General Motors Building
767 Fifth Avenue
New York, New York 10153
Ladies and Gentlemen:
We hereby consent to the filing of the draft opinion attached hereto as an
exhibit to the Registration Statement on Form N-14, to be filed by Lord Abbett
U.S. Government Series ("Acquiring Fund"), a series of Lord Abbett Investment
Trust, a Delaware business trust (the "Trust"), with the Securities and Exchange
Commission, containing a Proxy Statement and Prospectus of Acquiring Fund
relating to (i) the proposed acquisition (the "Reorganization") of all of the
-
assets of Lord Abbett U.S. Government Securities Fund, Inc., a Maryland
corporation ("Acquired Fund"), by Acquiring Fund pursuant to an Agreement and
Plan of Reorganization to be entered into by and between the Trust, on behalf of
Acquiring Fund, and Acquired Fund and (ii) the shares of common stock of
--
Acquiring Fund to be issued to Acquired Fund shareholders in the Reorganization.
We also hereby consent to the use of our name under the caption "Information
About the Reorganization -- Federal Income Tax Consequences" in the Registration
Statement. In giving such consent, we do not thereby concede that we are within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 or the Rules and Regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
/s/ Debevoise & Plimpton
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Registration Statement on Form N-14 of Lord Abbett
Investment Trust of our reports on the financial statements of the Lord Abbett
Investment Trust dated December 8, 1995 , Lord Abbett U.S. Government Securities
Fund, Inc. dated January 5, 1996, and Lord Abbett Securities Trust - U.S.
Government Securities Trust dated December 8, 1995 , which are contained in the
respective 1995 Annual Reports and are incorporated by reference in such
Registration Statement. We also consent to the references to us under the
headings "Financial Highlights" in the Prospectus and to the references to us
under the headings of "Investment Advisory and Other Services" and "Financial
Statements" in the Statement of Additional Information of Lord Abbett U.S
Government Securities Fund , Inc. dated April 1, 1995 and Lord Abbett Securities
Trust - U.S Government Securities Trust dated December 27, 1994 , which are
incorporated by reference in such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
February 13, 1996
<PAGE>
EXHIBIT 14(b)
[Debevoise & Plimpton Letterhead]
January 26, 1996
BY HAND DELIVERY
- ----------------
Internal Revenue Service
Associate Chief Counsel (Domestic)
1111 Constitution Avenue, N.W.
Washington, D.C. 20224
Attention: CC:DOM:FIP2
- --------- Susan Baker
Room 4316
Re: TR-31-2400-95
Request for Rulings Under
Sections 562 and 852(b)(2)(D)
-----------------------------
Dear Associate Chief Counsel (Domestic):
By letter dated October 19, 1995 (the "Original Request"), the Lord Abbett
funds listed on Schedule A thereto requested that the Internal Revenue Service
issue rulings (1) that the dividends paid on each class of shares issued by them
-
will be eligible for the dividends-paid deduction under sections 561 and
852(b)(2)(D) of the Internal Revenue Code and (2) that the creation of multiple
-
classes of shares will not affect the classification of any such fund as a
regulated investment company under section 851(a) and (h) of the Code.
<PAGE>
Internal Revenue Service 2 January 26, 1996
We now wish to request that you issue similar rulings with respect to two
additional funds, Growth and Income Trust of Lord Abbett Securities Trust and
the Small-Cap Series of Lord Abbett Research Fund, Inc. All defined terms in
this request have the meanings set forth in the Original Request.
Growth and Income Trust
-----------------------
Growth and Income Trust (TIN 13-3731505) is a series of Lord Abbett
Securities Trust ("Securities Trust"), an open-end management investment company
organized as a Delaware business trust on February 26, 1993. Securities Trust
is registered as an open-end management investment company under the 1940 Act.
A copy of Securities Trust's most recent Post-Effective Amendment to its
Registration Statement on Form N-1A, dated June 15, 1995, is attached as Exhibit
N.
Growth and Income Trust is diversified and has met and intends to continue
to meet the diversification rules under Subchapter M of the Internal Revenue
Code. Its taxable year ends on October 31. The investment objective of Growth
and Income Trust is long-term growth of capital and income without excessive
fluctuations in market value. It normally invests in common stocks of large,
seasoned companies in sound financial condition which are expected to show
above-average price appreciation.
Growth and Income Trust currently has outstanding only a single class of
shares. All shares have equal voting rights and equal rights with respect to
dividends, assets, and liquidation. They are fully paid and non-assessable when
issued and have no preemptive or conversion rights. There are no restrictions
on transfer.
Growth and Income Trust has adopted a Rule 12b-1 Plan. Under the 12b-1
Plan, Growth and Income Trust pays Lord Abbett (1) a service fee and a
-
distribution fee, at the time shares are sold, not to exceed .25% and .75%,
respectively, of the net asset value of such shares and (2) at each quarter-end
-
after the first anniversary of the sale of shares, fees for services and
distribution at annual rates not to exceed .25% and .75%, respectively, of the
average annual net asset value of such shares outstanding (payments with respect
to shares
<PAGE>
Internal Revenue Service 3 January 26, 1996
not outstanding during the full quarter are prorated). Sales in clause (1)
exclude shares issued for reinvested dividends and distributions and shares
outstanding in clause (2) include shares issued for reinvested dividends and
distributions after the first anniversary of their issuance. Lord Abbett may
retain from the quarterly distribution fee, for the payment of distribution
expenses incurred directly by it, an amount not to exceed .10% of the average
annual net asset value of such shares outstanding. No dealer shall receive for
service more than .25% of the average annual net asset value of shares sold by
the dealer. Lord Abbett is required to pay the sales distribution fee to
dealers as compensation for selling Growth and Income Trust's shares.
If shares of Growth and Income Trust are redeemed for cash before the first
anniversary of their purchase, the redeeming shareholder will be required to pay
a contingent deferred reimbursement charge of 1% of the lower of cost or the
then net asset value of the shares redeemed. If the shares are exchanged into
another series of Securities Trust or Lord Abbett U.S. Government Securities
Money Market Fund ("GSMMF") and subsequently redeemed before the first
anniversary of their original purchase, the charge will be collected by the
other series or GSMMF for Growth and Income Trust.
The Small-Cap Series
--------------------
The Small-Cap Series (TIN 13-3862601) is a newly-organized series of
Research Fund, which is described at page 9 of the Original Request. It plans
to begin offering its shares on or after February 20, 1996. The Small-Cap
Series intends to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code. The Small Cap Series' taxable year ends on
November 30. The investment objective of the Small-Cap Series is to seek long-
term capital appreciation through investments primarily in equity securities
which are believed to be undervalued in the marketplace. A copy of Research
Fund's most recent amendment to its Form N-1A describing the Small-Cap Series,
which was filed with the Securities and Exchange Commission on December 7, 1995,
is attached as Exhibit O.
The Small-Cap Series currently has outstanding only a single class of
shares, $.001 par value. All shares have
<PAGE>
Internal Revenue Service 4 January 26, 1996
equal voting rights and equal rights with respect to dividends, assets, and
liquidation. They are fully paid and nonassessable when issued and have no
preemptive or conversion rights. There are no restrictions on transfer.
As stated in the Original Request, Research Fund has not adopted a Rule
12b-1 Plan.
The Statement of Facts, Rulings Requested, Dis cussion and Procedural
Statements with respect to Growth and Income Trust and the Small-Cap Series are
otherwise as set forth in the Original Request, except that "Revenue Procedure
96-1" is substituted for "Revenue Procedure 95-1" and the check for the user fee
specified in section 14.02 and Appendix A of Revenue Procedure 96-1 is endorsed
in the amount of $300.
Respectfully submitted,
/s/ Seth L. Rosen
Seth L. Rosen
<PAGE>
[Debevoise & Plimpton Letterhead]
October 19, 1995
BY HAND DELIVERY
- ----------------
Internal Revenue Service
Associate Chief Counsel (Domestic)
1111 Constitution Avenue, N.W.
Washington, D.C. 20224
Attention: CC:DOM:FI&P
- ---------
Request for Rulings Under
Sections 562 and 852(b)(2)(D)
-----------------------------
The Lord Abbett funds listed on Schedule A (collectively, the "Lord Abbett
Funds" or the "Funds") hereby request that the Internal Revenue Service (the
"Service") issue rulings (1) that the dividends paid on each class of shares
-
issued by them will be eligible for the dividends-paid deduction under sections
561 and 852(b)(2)(D) of the Internal Revenue Code (the "Code") and (2) that the
-
creation of multiple classes of shares will not affect the classification of any
Fund as a regulated investment company under section 851(a) and (h) of the Code.
<PAGE>
Internal Revenue Service 2 October 19, 1995
STATEMENT OF FACTS
------------------
THE FUNDS
- ---------
The principal office of each of the Lord Abbett Funds is located at
The General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203
(telephone number (212) 848-1800). Each of the Lord Abbett Funds files its tax
returns with the Internal Revenue Service Center in Holtsville, New York and is
subject to the audit jurisdiction of the District Director, Manhattan District,
New York, New York.
The Investment Manager for each of the Lord Abbett Funds is Lord,
Abbett & Co. ("Lord Abbett"), a partnership organized under the laws of New
York, located at The General Motors Building, 767 Fifth Avenue, New York, New
York 10153-0203 (Taxpayer ID No. 13-5620131). Pursuant to a Distribution
Agreement for each Fund, Lord Abbett also acts as the distributor of the shares
for each of the Funds (other than Lord Abbett Research Fund Inc.).
AFFILIATED FUND, INC. (TIN 13-6020600) ("Affiliated Fund") is a
diversified, open-end management investment company re-organized in 1934 and
incorporated under the laws of Maryland on November 26, 1975. The fund is
registered as a diversified, open-end management investment company under the
Investment Company Act of 1940, 15 U.S.C. (S) 80a-1 et seq. (the "1940 Act"). A
copy of Affiliated Fund's most recent Post-Effective Amendment to its
Registration Statement on Form N-1A, dated March 1, 1995 containing the fund's
Prospectus and Statement of Additional Information, is attached as Exhibit A.
Affiliated Fund currently has a single class of shares, $1.25 par
value, with equal rights as to voting, dividends, assets and liquidation. There
are no conversion or preemptive rights, and no restrictions on transfer.
Affiliated Fund qualifies as a regulated investment company under Subchapter M
of the Internal Revenue Code. Its taxable year ends on October 31. The
investment objective of Affiliated Fund is long-term growth of capital and
income without excessive fluctuations in market value.
<PAGE>
Internal Revenue Service 3 October 19, 1995
Affiliated Fund has adopted a distribution plan pursuant to Rule 12b-
1, 17 C.F.R. 270.12b-1, promulgated pursuant to Section 12(b) of the 1940 Act (a
"12b-1 Plan"). Under its 12b-1 Plan, Affiliated Fund pays Lord Abbett (1) an
-
annual service fee (payable quarterly) of .15% of the average daily net asset
value of Affiliated Fund's shares sold by dealers prior to June 1, 1990 and .25%
of the average daily net asset value of shares sold by dealers on or after that
date and (2) a one-time 1% sales distribution fee, at the time of sale, on all
-
sales of over $1 million by dealers, including sales qualifying at such level
under the rights of accumulation and statement of intention privil eges. /(1)/
Lord Abbett is required to pay the sales distribution fee to dealers as
compensation for selling Affiliated Fund's shares.
LORD ABBETT BOND-DEBENTURE FUND, INC. (TIN 13-2669319) ("Bond Fund")
is a diversified, open-end management investment company incorporated under the
laws of Maryland on January 23, 1976. Bond Fund is registered as a diversified,
open-end management investment company under the 1940 Act. A copy of the fund's
most recent Post-
- ---------------------------
/(1)/. For each of the Funds, each holder of Fund shares on which the 1% sales
distribution fee has been paid is required to pay to the Fund a contingent
deferred reimbursement charge of 1% of the original cost or the then net asset
value, whichever is less, of all shares so purchased which are redeemed out of
the Lord Abbett Funds on or before the end of the twenty-fourth month after the
month in which the purchase occurred (subject to certain exceptions, including
certain redemptions by tax-qualified plans under Section 401 of the Internal
Revenue Code). If the shares have been exchanged into another Lord Abbett Fund
and are thereafter redeemed out of the Lord Abbett family on or before the end
of such twenty-fourth month, the charge will be collected for the initial Fund
by the other Fund. Each Fund also collects such a charge for other Lord Abbett
Funds in similar situations. Shares of a Fund or series on which the 1% sales
distribution fee has been paid may not be exchanged into a Fund or series with a
Rule 12b-1 Plan for which the payment provisions have not been in effect for at
least one year.
<PAGE>
Internal Revenue Service 4 October 19, 1995
Effective Amendment to its Registration Statement on Form N-1A,
dated May 1, 1995, is attached as Exhibit B.
Bond Fund currently has outstanding a single class of shares, $1.00
par value, with equal rights as to voting, dividends, assets and liquidation.
The shares are fully paid and nonassessable when issued and have no preemptive
or conversion rights. There are no restrictions on transfer. Bond Fund
qualifies as a regulated investment company under Subchapter M of the Internal
Revenue Code. Its taxable year ends on December 31. The investment objective
of Bond Fund is high current income and the opportunity for capital appreciation
to produce a high total return through a professionally-managed portfolio
consisting primarily of convertible and discount debt securities, many of which
are lower-rated.
Bond Fund has adopted a Rule 12b-1 Plan. Under its Rule 12b-1 Plan,
Bond Fund pays Lord Abbett (1) an annual service fee (payable quarterly) of .25%
-
of the average daily net asset value of Bond Fund's shares sold by dealers on or
after June 1, 1990 and .15% of the average daily net asset value of shares sold
by dealers prior to that date and (2) a one-time 1% sales distribution fee, at
-
the time of sale, on all sales over $1 million by dealers, including sales
qualifying at such level under the rights of accumulation and statement of
intention privileges. Lord Abbett is required to pay the sales distribution fee
to dealers as compensation for selling Bond Fund shares.
LORD ABBETT CALIFORNIA TAX-FREE INCOME FUND, INC. (TIN 13-3271131)
("California Fund") is a diversified, open-end management investment company
incorporated under the laws of Maryland on May 21, 1985. California Fund is
registered as a diversified, open-end management investment company under the
1940 Act. A copy of the fund's most recent Post-Effective Amendment to its
Registration Statement on Form N-1A, dated January 1, 1995, is attached as
Exhibit C.
California Fund has a single class of shares, $.001 par value, with
equal rights as to voting, dividends, assets and liquidation. They are fully
paid and nonassessable when paid for and issued and have no preemptive or
conversion rights. There are no restrictions
<PAGE>
Internal Revenue Service 5 October 19, 1995
on transfer. California Fund qualifies as a regulated investment company under
Subchapter M of the Internal Revenue Code. Its taxable year ends on August 31.
The investment objective of California Fund is to seek as high a level of
interest income exempt from both federal income tax and California personal
income tax as is consistent with preservation of capital by investing primarily
in a diversified portfolio of California municipal bonds.
California Fund has adopted a Rule 12b-1 Plan whereby California Fund
pays Lord Abbett (1) an annual fee for services (payable quarterly) of .25% of
-
the average daily net asset value of shares sold by dealers and (2) a one-time
-
1% sales distribution fee, at the time of sale, on all sales over $1 million by
dealers, including sales qualifying at such level under the rights of
accumulation and statement of intention privileges. Lord Abbett is required to
pay the sales distribution fee to dealers as compensation for selling California
Fund's shares.
LORD ABBETT DEVELOPING GROWTH FUND, INC. (TIN 13-2755091) ("Growth
Fund") is a diversified, open-end management investment company incorporated
under the laws of Maryland on August 21, 1978 and its predecessor corporation
was organized on July 11, 1973. Growth Fund is registered as a diversified,
open-end management investment company under the 1940 Act. A copy of Growth
Fund's most recent Post-Effective Amendment to its Registration Statement on
Form N-1A, dated June 1, 1995, is attached as Exhibit D.
Growth Fund has a single class of shares, $1.00 par value, with equal
rights to voting, dividends, assets, and liquidation. There are no conversion
or preemptive rights and no restrictions on transfer. Growth Fund qualifies as
a regulated investment company under Subchapter M of the Internal Revenue Code.
Its taxable year ends on January 31. The investment objective of Growth Fund is
long-term growth of capital through a diversified and actively-managed portfolio
consisting of developing growth companies, many of which are traded over the
counter.
Growth Fund has adopted a Rule 12b-1 Plan. Under the 12b-1 Plan,
Growth Fund pays Lord Abbett (1) an annual service fee (payable quarterly) of
-
.25% of the average daily net asset value of Growth Fund's shares sold by
dealers on
<PAGE>
Internal Revenue Service 6 October 19, 1995
or after June 1, 1990 and .15% of the average daily net asset value of shares
sold by dealers prior to that date and (2) a one-time 1% sales distribution fee,
-
at the time of sale, on all sales over $1 million by dealers, including sales
qualifying at such level under the rights of accumulation and statement of
intention privileges. Lord Abbett is required to pay the sales distribution fee
to dealers as compensation for selling Growth Fund's shares.
LORD ABBETT FUNDAMENTAL VALUE FUND, INC. (TIN 13-3342841)
("Fundamental Value Fund") is a diversified, open-end management investment
company incorporated under the laws of Maryland on March 26, 1986. Fundamental
Value Fund is registered as a diversified, open-end management investment
company under the 1940 Act. A copy of the fund's most recent Post-Effective
Amendment to its Registration Statement on Form N-1A, dated November 1, 1994, is
attached as Exhibit E.
All of Fundamental Value Fund's shares are of a single class and each
has a par value of $.10. All shares have equal noncumulative voting rights and
equal rights with respect to dividends, assets and liquidation. There are no
conversion or preemptive rights, and no restrictions on transfer. Fundamental
Value Fund qualifies as a regulated investment company under Subchapter M of the
Internal Revenue Code. Its taxable year ends on June 30. The investment
objectives of Fundamental Value Fund are growth of capital and growth of income
consistent with reasonable risk. Production of current income is a secondary
consideration.
Fundamental Value Fund has adopted a Rule 12b-1 Plan. The 12b-1 Plan
provides for the payment to Lord Abbett of (1) an annual service fee (payable
-
quarterly) of .25% of the average daily net asset value of Fundamental Value
Fund shares sold by dealers, and (2) a one-time 1% sales distribution fee, at
-
the time of sale, on all sales over $1 million by dealers, including sales
qualifying at such level under the rights of accumulation and statement of
intention privileges. Lord Abbett is required to pay the full amount of the
sales distribution fees to dealers as compensation for selling Fundamental Value
Fund's shares.
<PAGE>
Internal Revenue Service 7 October 19, 1995
LORD ABBETT GLOBAL FUND, INC. ("Global Fund") is a diversified, open-
end management investment company incorporated under the laws of Maryland on
February 23, 1988. The fund is registered as a diversified, open-end management
investment company under the 1940 Act. A copy of the fund's most recent Post-
Effective Amendment to its Registration Statement on Form N-1A, dated May 1,
1995, is attached as Exhibit F.
Global Fund is organized as a series fund, currently comprised of two
separate portfolios, EQUITY SERIES (TIN 13-3460109) and INCOME SERIES (TIN 13-
3460111). Each series qualifies as a regulated investment company under
Subchapter M of the Internal Revenue Code. Each series' taxable year ends on
December 31. The investment objective of Equity Series is long-term growth of
capital and income consistent with reasonable risk. The production of current
income is a secondary consideration for Equity Series. The investment objective
of Income Series is high current income consistent with reasonable risk.
Capital appreciation is a secondary consideration for Income Series.
Lord Abbett has entered into an agreement with Dunedin Fund Managers
Limited, under which it provides Lord Abbett with advice with respect to that
portion of Global Fund's assets invested in foreign countries.
Each series currently has outstanding only a single class of shares
and each share has a par value of $.001. Within each series, all shares have
equal rights as to voting, dividends, assets and liquidation. There are no
conversion or preemptive rights, and no restrictions on transfer.
Global Fund has adopted a Rule 12b-1 Plan. Under the 12b-1 Plan,
Global Fund pays to Lord Abbett (1) an annual service fee (payable quarterly) of
-
.25% of the average daily net asset value of Global Fund's shares sold by
dealers and (2) a one-time 1% sales distribution fee, at the time of sale, on
-
all sales over $1 million by dealers on or after June 1, 1990, including sales
qualifying at that level under the rights of accumulation and statement of
intention privileges. Lord Abbett is required to pay the full amount of the
sales distribution fees to dealers as compensation for selling Global Fund's
shares.
<PAGE>
Internal Revenue Service 8 October 19, 1995
LORD ABBETT INVESTMENT TRUST ("Investment Trust"), is a diversified,
open-end management investment company organized as a Delaware business trust on
August 16, 1993. Investment Trust is registered as a diversified, open-end
management investment company under the 1940 Act. A copy of the fund's most
recent Post-Effective Amendment to its Registration Statement on Form N-1A,
dated June 15, 1995, is attached as Exhibit G.
Investment Trust is organized as a series fund, currently comprised of
two separate portfolios, LIMITED DURATION U.S. GOVERNMENT SECURITIES SERIES (TIN
13-3731507) and BALANCED SERIES (TIN 13-3799450). Each series qualifies as a
regulated investment company under Subchapter M of the Internal Revenue Code.
Each series' taxable year ends on October 31. The investment objective of
Limited Duration U.S. Government Securities Series is to seek a high income from
a portfolio consisting primarily of limited duration U.S. government securities.
The investment objective of Balanced Series is to seek current income and
capital growth.
Each series currently has outstanding only a single class of shares.
Each share has no par value. Within each series, all shares have equal rights as
to voting, dividends, assets and liquidation. There are no conversion or
preemptive rights, and no restrictions on transfer.
Investment Trust has adopted a Rule 12b-1 Plan. Under the 12b-1 Plan,
Investment Trust pays Lord Abbett (1) an annual service fee (payable quarterly)
-
of .25% of the average daily net asset value of the series' shares sold by
dealers from the commencement of the series' public offering and (2) with
-
respect to sales at the breakpoint of $1 million or more, a one-time 1%, .50% or
.25% distribution fee, with respect to sales at the time of sale, on shares sold
at net asset value of $1 million but less than $3 million, $3 million but less
than $10 million or $10 million or more, respectively. Sales qualifying at such
levels in clause (2) under rights of accumulation and statement of intention
privileges are included. Lord Abbett is required to pay the sales distribution
fee to dealers as compensation for selling Investment Trust's shares.
<PAGE>
Internal Revenue Service 9 October 19, 1995
LORD ABBETT RESEARCH FUND, INC. ("Research Fund") is a diversified,
open-end management investment company incorporated under the laws of Maryland
on April 6, 1992. Research Fund is registered as a diversified, open-end
management investment company under the 1940 Act. A copy of Research Fund's
most recent Post-Effective Amendment to Registration Statement on Form N-1A,
dated April 1, 1995, is attached as Exhibit H.
Research Fund is organized as a series fund, currently comprised of
two separate portfolios, SERIES 1 (TIN 13-6995863), and LORD ABBETT MID CAP
RESEARCH FUND (TIN 13-3842507). Each series qualifies as a regulated investment
company under Subchapter M of the Internal Revenue Code. Each series' taxable
year ends on November 30. The investment objective of Series 1 is growth of
capital and growth of income consistent with reasonable risk. Production of
current income is a secondary consideration. The investment objective of Lord
Abbett Mid Cap Research Fund is to seek capital appreciation through investments
primarily in equity securities which are believed to be undervalued in the
marketplace.
Each series currently has outstanding only a single class of shares,
$.001 par value. Within each series, all shares have equal voting rights and
equal rights with respect to dividends, assets, and liquidation. They are fully
paid and nonassessable when issued and have no preemptive or conversion rights.
There are no restrictions on transfer.
Research Fund has not adopted a Rule 12b-1 Plan.
LORD ABBETT TAX-FREE INCOME FUND, INC. (the "Tax-Free Fund") is an
open-end management investment company incorporated under the laws of Maryland
on December 27, 1983. Tax-Free Fund is registered as an open-end management
investment company under the 1940 Act. A copy of the fund's most recent Post-
Effective Amendment to its Registration Statement on Form N-1A, dated June 15,
1995, is attached as Exhibit I.
Tax-Free Fund is organized as a series fund, currently comprised of
nine separate portfolios, NATIONAL SERIES (TIN 13-3397836), CONNECTICUT SERIES
(TIN 13-
<PAGE>
Internal Revenue Service 10 October 19, 1995
3608057), HAWAII SERIES (TIN 13-3635800), MINNESOTA SERIES (TIN 13-
3799448), MISSOURI SERIES (TIN 13-3616715), NEW JERSEY SERIES (TIN 13-3603812),
NEW YORK SERIES (TIN 13-3386492), TEXAS SERIES (TIN 13-3386494) and WASHINGTON
SERIES (TIN 13-3664187). National Series is diversified under the 1940 Act;
each of the other series is nondiversified. All of the series have met and
intend to continue to meet the diversification rules under Subchapter M of the
Internal Revenue Code. Each series' taxable year ends on September 30. The
investment objective for each series is to seek as high a level of interest
income exempt from federal income tax as is consistent with preservation of
capital by investing in municipal bonds. Except for National, Texas and
Washington Series, each series also seeks as high a level of interest income
exempt from its state's personal income tax and, in the case of New York Series,
from New York City personal income tax, as is consistent with preservation of
capital.
Each series currently has outstanding only a single class of shares.
Each share has a par value of $.001 and has one vote. There are no liquidation,
conversion or preemptive rights, and no restrictions on transfer.
Each series has adopted a Rule 12b-1 Plan. National, New York and
Texas Series have each adopted a 12b-1 Plan under which each series pays Lord
Abbett (1) an annual fee for services (payable quarterly) of .15% of the average
-
daily net asset value of each series' shares sold by dealers prior to June 1,
1990 and .25% of the average daily net asset value of shares sold by dealers on
or after that date, and (2) a one-time 1% sales distribution fee, at the time of
-
sale, on all sales over $1 million by dealers, including sales qualifying at
such level under the rights of accumulation and statement of intention
privileges. Lord Abbett is required to pay the sales distribution fee to
dealers as compensation for selling Tax-Free Fund's shares.
Separate 12b-1 Plans have been adopted by each of Connecticut, Hawaii,
Minnesota, Missouri, New Jersey and Washington Series. Each 12b-1 Plan has
become effective except for Washington and Minnesota Series which will go into
effect on the first day of the quarter subsequent to its net assets reaching
$100 million. Each 12b-1 Plan provides for the payment of the series to Lord
Abbett of
<PAGE>
Internal Revenue Service 11 October 19, 1995
(1) an annual service fee (payable quarterly) of .25% of the average daily net
-
asset value of shares sold by dealers from commencement of the series' public
offering (in the case of Hawaii, Minnesota, New Jersey and Washington Series,
.15% of the average daily net asset value of such shares sold prior to its
effective date and .25% of the average daily net asset value of such shares sold
on or after that date), and (2) a one-time 1% sales distribution fee, at the
-
time of sale, on all sales over $1 million by dealers on or after the series'
effective date, including sales qualifying at such level under the rights of
accumulation and statement of intention privileges.
LORD ABBETT TAX-FREE INCOME TRUST ("Tax-Free Trust") is an open-end
non-diversified management investment company organized as a Massachusetts
business trust on September 11, 1991. Tax-Free Trust is registered as an open-
end management investment company under the 1940 Act. A copy of Tax-Free Trust's
most recent Post-Effective Amendment to its Registration Statement on Form N-1A,
dated June 15, 1995, is attached as Exhibit J.
Tax-Free Trust is organized as a series fund, currently comprised of
four separate portfolios, FLORIDA SERIES (TIN 13-3633027), GEORGIA SERIES (TIN
13-3799446), PENNSYLVANIA SERIES (TIN 13-3646755) and MICHIGAN SERIES (TIN 13-
3692073). Each of the four series, although non diversified under the 1940 Act,
meets the diversification rules of and qualifies as a regulated investment
company under Subchapter M of the Internal Revenue Code. Each series' taxable
year ends on October 31. The investment objective of each series is to seek as
high a level of interest income exempt from federal income tax and its
respective state's personal income tax, if any, as is consistent with
preservation of capital by investing primarily in a diversified portfolio of
municipal bonds.
Each series currently has outstanding only a single class of shares.
Each share has no par value. Within each series, all shares have equal voting
rights and equal rights with respect to dividends, assets, and liquidation.
There are no conversion or preemptive rights, and no restrictions on transfer.
<PAGE>
Internal Revenue Service 12 October 19, 1995
Each series has adopted a Rule 12b-1 Plan. The 12b-1 Plan fees
indicated below will go into effect on the first day of the calendar quarter
subsequent to the series' net assets reaching $100 million. Under the 12b-1
Plan the series will pay Lord Abbett (1) an annual service fee (payable
-
quarterly) of .25% of the average daily net asset value of the series' shares
sold by dealers on or after the 12b-1 Plans' effective date and .15% of the
average daily net asset value of shares sold by dealers prior to that date and
(2) a one-time 1% sales distribution fee, at the time of sale, on all sales over
- --
$1 million by dealers, on or after the series' effective date, including sales
qualifying at such level under the rights of accumulation and statement of
intention privileges. Lord Abbett is required to pay the sales distribution fee
to dealers as compensation for selling Tax-Free Trust's shares.
LORD ABBETT U.S. GOVERNMENT SECURITIES FUND, INC. (TIN 13-6020601)
("Government Fund") is a diversified, open-end management investment company
organized in 1932 and re-incorporated under the laws of Maryland on July 9,
1975. The fund is registered as a diversified, open-end management investment
company under the 1940 Act. A copy of the fund's most recent Post-Effective
Amendment to its Registration Statement on Form N-1A, dated April 1, 1995, is
attached as Exhibit K.
Government Fund has a single class of shares, $1.00 par value, with
equal rights as to voting, dividends, assets and liquidation. There are no
conversion or preemptive rights, and no restrictions on transfer. Its taxable
year ends on November 30. The investment objective of Government Fund is high
current income with relatively low risk of price decline. This objective is
sought by investing primarily in U.S. government securities.
Government Fund has adopted a Rule 12b-1 Plan. Under the 12b-1 Plan,
Government Fund pays Lord Abbett (1) an annual service fee (payable quarterly)
-
of .25% of the average daily net asset value of Government Fund's shares
attributable to sales by dealers on or after September 1, 1985 and .15% of the
average daily net asset value of shares sold by dealers prior to that date and
(2) a one-time 1% sales distribution fee, at the time of sale, on all sales over
- --
$1 million by dealers, including sales qualifying at
<PAGE>
Internal Revenue Service 13 October 19, 1995
such level under the rights of accumulation and statement of intention
privileges. Lord Abbett is required to pay the sales distribution fee to
dealers as compensation for selling Government Fund's shares.
LORD ABBETT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND, INC. (TIN
13-2986729) ("Money Market Fund") is a diversified, open-end management
investment company incorporated under the laws of Maryland on May 9, 1979. Money
Market Fund is registered as a diversified, open-end management investment
company under the 1940 Act. A copy of Money Market Fund's most recent
Registration Statement on Form N-1A, dated November 1, 1994, is attached as
Exhibit L.
Money Market Fund has a single class of shares, $.001 par value, with
equal rights as to voting, dividends, assets and liquidation. There are no
conversion or preemptive rights, and no restrictions on transfer. Money Market
Fund qualifies as a regulated investment company under Subchapter M of the
Internal Revenue Code. Its taxable year ends on June 30. The investment
objective of Money Market Fund is to provide high current income and
preservation of capital through investments in high-quality, short-term liquid
securities. The Money Market Fund seeks to obtain its objective by investing at
least 65% of its total assets in obligations issued or backed by the U.S.
Government or its agencies or instrumentalities.
Money Market Fund has adopted a Rule 12b-1 Plan. However, payment of
the 12b-1 Plan fees has been waived since July 1, 1992. Under the 12b-1 Plan,
Money Market Fund would pay Lord Abbett, which would pass on to dealers, an
annual service fee (payable quarterly) of .15% of the average daily net asset
value of Money Market Fund's shares sold by dealers.
LORD ABBETT VALUE APPRECIATION FUND, INC. (TIN 13-3166900) ("Value
Fund"), is a diversified, open-end management investment company incorporated
under the laws of Maryland on March 14, 1983. Value Fund is registered as a
diversified, open-end management investment company under the 1940 Act. A copy
of Value Fund's most recent Post-Effective Amendment to its Registration
Statement on Form N-1A, dated May 1, 1995, is attached as Exhibit M.
<PAGE>
Internal Revenue Service 14 October 19, 1995
Value Fund has a single class of shares, $.10 par value, with equal
rights as to voting, dividends, assets and liquidation. They are fully paid and
nonassessable when issued and have no preemptive or conversion rights. There
are no restrictions on transfer. Value Fund qualifies as a regulated investment
company under Subchapter M of the Internal Revenue Code. Its taxable year ends
on December 31. The investment objective of Value Fund is to seek capital
appreciation through investments, primarily in equity securities, which are
believed to be undervalued in the marketplace.
Value Fund has adopted a Rule 12b-1 Plan. Under the 12b-1 Plan, Value
Fund pays to Lord Abbett, which passes on to dealers, (1) an annual service fee
(payable quarterly) of .25% of the average daily net asset value of Value Fund's
shares attributable to sales by dealers on or after June 1, 1990 and .15% of the
average daily net asset value of shares sold by dealers prior to that date and
(2) a one-time 1% sales distribution fee, at the time of sale, on all sales over
$1 million by dealers, including sales qualifying at such level under the rights
of accumulation and statement of intention privileges. Lord Abbett is required
to pay the full amount of the sales distribution fees to dealers as compensation
for selling Value Fund's shares.
<PAGE>
Internal Revenue Service 15 October 19, 1995
PROPOSED TRANSACTIONS
- ---------------------
Management of the Lord Abbett Funds /(2)/ has proposed that the
Articles of Incorporation or Declaration of Trust of each Fund be amended to
permit each to issue additional, separate classes of shares with characteristics
designed for particular markets. A draft of the proxy materials soliciting the
approval of each Fund's shareholders for the amendment to the Articles of
Incorporation or Declaration of Trust permitting the issuance of separate
classes (including the text of the proposed amendment), will be submitted when
it is filed with the Securities and Exchange Commission. /(3)/
Subject to the shareholders' approval of the amendments, the Board of
Directors of each Fund will redesignate its currently outstanding shares as a
separate class and will authorize the issuance of additional separate classes of
shares of each series ("Additional Classes").
The precise terms of each Additional Class will be determined by the
Board of Directors of each Fund at the time of issuance. However, each Fund
represents that, although the Additional Classes may be sold under different
sales arrangements, the shares of the Additional Classes offered by each Fund
will otherwise be identical to the currently outstanding shares of that Fund,
with the following exceptions:
(i) A 12b-1 Fee equal to a percentage of average daily net asset
-
value may or may not be charged under a 12b-1 Plan to each of the Additional
Classes, and the level of 12b-1 Fees may vary from class to class. The
- ------------------------
/(2)/. As used herein, the term "Fund" refers to each taxpayer designated on
Schedule A, regardless of whether the entity is structured as a separate
corporation or trust or as a series of a corporation or trust.
/(3)/. No shareholder vote is required for Tax-Free Trust. A copy of its
proposed amendment will be submitted with the other amendments. No amendment is
required for Investment Trust.
<PAGE>
Internal Revenue Service 16 October 19, 1995
Additional Classes may bear different service and distribution fees under
12b-1 Plans, may bear different costs relating to shareholder or director
(trustee) approval of or amendments to 12b-1 Plans or may have front end
loads or other sales charges or non-12b-1 shareholder service plan fees
(collectively, "Plan Payments"). Services provided pursuant to 12b-1 Plans
or non-12b-1 shareholder service plans may include (1) preparing,
producing, and delivering printed materials to shareholders, including
reports, prospectuses and proxies, (2) advertising, and (3) promoting and
selling shares. Such services may also include certain administrative
services associated with (1) maintaining and processing customer accounts
and records, such as data maintenance and communication, and systems
servicing; (2) handling shareholder inquiries and communications, including
postage and shipping charges; (3) recordkeeping and shareholder accounting,
including related storage and shipping; (4) shareholder servicing; and (5)
processing dividend payments on behalf of customers.
(ii) Each class will bear different "Specially Allocated Expenses,"
--
which are Fund expenses and fees (other than Plan Payments) allocated to
that class and not allocated on a pro rata basis across different classes.
These may include registration fees under state Blue Sky laws; SEC
registration fees; accounting expenses; auditors fees, litigation expenses
and legal fees and expenses relating to a class; and expenses incurred in
connection with shareholder or director (trustee) meetings as a result of
issues relating to a class.
Specially Allocated Expenses may also include other expenses related
solely to a particular class of shareholders and administrative expenses
required to support shareholders of that class, to the extent that such
expenses are incidental to the class expenses specifically enumerated in
the paragraph above.
The taxpayer represents that the only expenses allocated to the
classes disproportionately will be Specially Allocated Expenses and Plan
Payments. The Specially Allocated Expenses allocated to each share of
<PAGE>
Internal Revenue Service 17 October 19, 1995
a class during a year will differ from the Specially Allocated Expenses
allocated to each share of any other class of the same Fund by less than 50
basis points of the average daily net asset value of the class of shares of
such Fund with the smallest average net asset value.
Any distribution on shares of a class will differ from the
distribution on shares of other classes of the same Fund only as a result
of the allocation of Specially Allocated Expenses and Plan Payments and the
effects of such allocation.
(iii) The designation of each class of shares of a Fund will be
---
different.
(iv) The effect of the sales charges for each class will differ.
--
(v) Voting rights on matters affecting only one class will vary in
-
accordance with the procedures set forth in Rule 12b-1 and Rule 18f-3.
(vi) Different classes of shares may have different conversion
--
features.
(vii) Each class may have different privileges of reinvestment with a
---
reduced sales load after redemption, as will be specified from time to time
in the relevant prospectus disclosure.
(viii) Different classes of shares may have different exchange
privileges.
Dividends paid by each Fund with respect to various classes of shares
will be calculated in the same manner and at the same time on the same day.
Amounts payable as dividends, however, will vary because of the differing
amounts of Specially Allocated Expenses and Plan Payments borne exclusively by a
particular class.
The net asset value per share and net income per share of a
particular class will also vary owing to the differing amounts of Specially
Allocated Expenses and Plan Payments. Because gross income and other expenses
would be
<PAGE>
Internal Revenue Service 18 October 19, 1995
allocated daily to a class based on its net asset value, more income would be
allocated per share to classes with lower per share class expenses than to
classes with higher per share expenses. Further, this net income differential
would tend to increase during the course of the dividend period until the
accumulated income is declared as a dividend at the close of the period.
On each day that it determines net asset value per share each Fund
will first allocate its gross investment income less expenses other than
Specially Allocated Expenses or Plan Payments among all shares of that Fund
regardless of class in accordance with net asset values determined as of the
preceding day. Specially Allocated Expenses and Plan Payments allocated to a
particular class will then be subtracted from the amounts otherwise allocable to
that class, to determine the net asset value of the shares of each class.
RULINGS REQUESTED
-----------------
We respectfully request that you rule that:
1. The adoption of the proposed multiple class system will not cause
dividends declared and paid by any of the Funds to be preferential
dividends within the meaning of section 562(c) of the Code and each
Fund will therefore be eligible for the dividends paid deduction
under sections 561 and 852 of the Code, provided that each Fund
otherwise continues to meet the criteria of those two sections.
2. The creation of multiple classes of shares within each Fund will not
affect the classification of each Fund as a regulated investment
company under section 851(a) or (h).
3. There will be no federal income tax consequences to the holders of
currently outstanding shares of any Fund as a result of the
reclassification of the shares held by such holders as a separate
class of each Fund.
<PAGE>
Internal Revenue Service 19 October 19, 1995
DISCUSSION
----------
Each share of each Additional Class that will be offered by each Fund
will represent an equal interest in the same portfolio of investments and
(except as specified in paragraphs (i) through (viii) above) will have voting,
dividend, and liquidation rights that are identical to those of the currently
outstanding shares of that Fund. Each class of new shares may be subject to its
own 12b-1 Fees, non-12b-1 shareholder service plan fees or other Plan Payments
and some of the classes may be subject to different levels of Plan Payments.
Although Specially Allocated Expenses will be allocated differently between the
classes, each Fund has represented that the Specially Allocated Expenses
allocated to each share of a class during a year will differ from Specially
Allocated Expenses allocated to each share of any other class of the same Fund
by less than 0.50% of the average net asset value per share of the class with
the smallest net asset value per share.
The facts and representations presented above are similar to those
described in Private Letter Ruling 9522045 (March 7, 1995), Private Letter
Ruling 9422026 (March 1, 1994) and numerous other rulings.
In those rulings, the Service has stated that for purposes of section
562(c) of the Code, sales loads, 12b-1 Fees and other Plan Payments are
essentially treated as direct and indirect shareholder expenses that should not
be taken into account in determining whether distributions are preferential.
Cf., Treas. Reg. (S) 1.67-2T(k), Examples 3 and 4. As a result, amounts
- --
distributed with respect to different classes of shares of each Fund will
effectively differ only as a result of the Specially Allocated Expenses, which
will be limited as described in paragraph (ii) above. As noted in the prior
rulings, section 562(c) treats as pro rata those distributions that differ by a
de minimis amount because of the allocation of fund expenses. H.R. Rep. No.
1860, 75th Cong., 3d Sess. 23 (1938). Accordingly, dividends paid by each Fund
after the adoption of the multiple class system will not be preferential within
the meaning of section 562(c) of the Code.
Moreover, the Service has found in the prior rulings that differences
in class-designations, voting
<PAGE>
Internal Revenue Service 20 October 19, 1995
rights, sales charges and class-specific expenses, like those described above,
are insufficient to cause the shares to be classified as different classes for
purposes of the Code. As a result, the designation of outstanding shares as
belonging to a particular class should have no tax effect.
As a result, the adoption of the multiple class system as described
above should have no effect on the qualification of each Fund as a regulated
investment company under sections 851 and 852 of the Code.
PROCEDURAL STATEMENTS
---------------------
To the best of the knowledge of each Fund and its representative,
issues identical to those involved in this ruling request are not raised in an
earlier return of any Fund (or in a return for any year of a related taxpayer
within the meaning of section 267 of the Code, or of a member of an affiliated
group of which any Fund is also a member within the meaning of section 1504).
To the best of the knowledge of each Fund and its representative, the
Service has not previously ruled on issues identical or similar to those raised
in this ruling request for any Fund (or a related taxpayer within the meaning of
section 267 of the Code, or a member of an affiliated group within the meaning
of section 1504) or a predecessor, nor has any Fund, a related taxpayer, a
predecessor, or their representatives previously submitted the same or similar
issues to the Service but withdrawn them before a letter ruling or determination
letter was issued.
To the best of the knowledge of each Fund and its representative, the
taxpayer, a related taxpayer, or a predecessor has not previously submitted a
request involving the same or a similar issue that is currently pending with the
Service, nor is the taxpayer or a related taxpayer presently submitting another
request involving the same or similar issues to the Service at the same time as
this request.
Each Fund believes that the law in connection with this ruling request
is unclear and that the issues raised herein are not adequately addressed by the
relevant authorities.
<PAGE>
Internal Revenue Service 21 October 19, 1995
No Fund is aware of any pending legislation which may affect the
proposed transactions nor is any Fund aware of any authorities contrary to the
positions advanced herein.
The declarations required by section 601.201(e)(1) of the Regulations,
signed by an officer of each Fund on behalf of that Fund, who has personal
knowledge of the material facts, is enclosed.
If any additional information is desired, please call Seth L. Rosen of
Debevoise & Plimpton ((212) 909-6373). Enclosed herewith are powers of attorney
authorizing Mr. Rosen and Jonathan A. Small of this firm to represent each Fund
in this matter. If for any reason the rulings request ed cannot be issued on
the basis of the information con tained herein, together with any additional
information, we hereby request a conference.
Your ruling letter should be addressed to each Fund, with a copy to
the undersigned.
We request that an advance copy of the letter ruling be issued by
facsimile pursuant to section 8.02(5) of Revenue Procedure 95-1, 1995-1 I.R.B.
9. The facsimile copy should be sent to Seth L. Rosen, c/o Debevoise &
Plimpton, at (212) 909-6836. The Funds hereby waive any disclosure violations
which may result from the facsimile transmission, but ask that you take certain
precautions to protect confidential information in accordance with section
8.02(5) of Revenue Procedure 95-1.
A check in the amount of $7475 is enclosed as the user fee specified
in section 14.02 and Appendix A of Reve nue Procedure 95-1.
Respectfully submitted,
/s/ Seth L. Rosen
Seth L. Rosen
Enclosures
<PAGE>
SCHEDULE A
----------
<TABLE>
<CAPTION>
Fund T.I.N.
- ---- ------
<S> <C>
Affiliated Fund, Inc. 13-6020600
Lord Abbett Bond-Debenture Fund, Inc. 13-2669319
Lord Abbett California Tax-Free
Income Fund, Inc. 13-3271131
Lord Abbett Developing Growth Fund, Inc. 13-2755091
Lord Abbett Fundamental Value Fund, Inc. 13-3342841
Lord Abbett Global Fund, Inc.
-- Equity Series 13-3460109
-- Income Series 13-3460111
Lord Abbett Investment Trust
-- Limited Duration U.S. Government
Securities Series 13-3731507
-- Balanced Series 13-3799450
Lord Abbett Research Fund, Inc.
-- Series 1 13-6995863
-- Lord Abbett Mid Cap Research Fund 13-3842507
Lord Abbett Tax-Free Income Fund, Inc.
-- National Series 13-3397836
-- Connecticut Series 13-3608057
-- Hawaii Series 13-3635800
-- Minnesota Series 13-3799448
-- Missouri Series 13-3616715
-- New Jersey Series 13-3603812
-- New York Series 13-3386492
-- Texas Series 13-3386494
-- Washington Series 13-3664187
Lord Abbett Tax-Free Income Trust
-- Florida Series 13-3633027
-- Georgia Series 13-3799446
-- Pennsylvania Series 13-3646755
-- Michigan Series 13-3692073
Lord Abbett U.S. Government Securities
Fund, Inc. 13-6020601
Lord Abbett U.S. Government Securities
Money Market Fund, Inc. 13-2986729
Lord Abbett Value Appreciation Fund, Inc. 13-3166900
</TABLE>
<PAGE>
Internal Revenue Service Department of the Treasury
Washington, DC 20024
U.I.L. Nos.: 0561.05-00, 0562.03-02
0851.00-00, 0852.00-01
Seth Rosen Person to Contact:
Debevoise & Plimpton Susan T. Baker
875 Third Avenue
New York, NY 10022
Telephone Number:
(202) 622-3940
Refer Reply to:
CC:DOM:FI&P:2
Date:
Legend:
State A = Maryland
State B = Delaware
State C = Massachusetts
Investment Manager and Distributor = Lord, Abbett & Company
Fund 1 = Affiliated Fund, Inc.
EIN: 13-6020600
Fund 2 = Lord Abbett Bond-Debenture Fund, Inc.
EIN: 13-2669319
TR-31-2400-95
Fund 3 = Lord Abbett California Tax-Free Income Fund, Inc.
EIN: 13-3271131
TR-31-2401-95
Fund 4 = Lord Abbett Developing Growth Fund, Inc.
EIN: 13-2755091
TR-31-2402-95
Fund 5 = Lord Abbett Fundamental Value Fund, Inc.
EIN: 13-3342841
TR-31-2403-95
<PAGE>
Fund 6 = Lord Abbett Global Fund, Inc.--Equity Series
EIN: 13-3460109
TR-31-2404-95
Fund 7 = Lord Abbett Global Fund, Inc.--Income Series
EIN: 13-3460111
TR-31-2405-95
Fund 8 = Lord Abbett Investment Trust--Limited Duration
U.S. Government Securities Series
EIN: 13-3731507
TR-31-2406-95
Fund 9 = Lord Abbett Investment Trust--Balanced Series
EIN: 13-3799450
TR-31-2410-95
Fund 10 = Lord Abbett Research Fund, Inc.--Series I
EIN: 13-6995863
TR-31-2411-95
Fund 11 = Lord Abbett Research Fund, Inc.--Lord Abbett Mid
Cap Research Fund
EIN: 13-3842507
TR-31-2412-95
Fund 12 = Lord Abbett Tax-Free Income Fund, Inc.--National
Series
EIN: 13-3397836
TR-31-2415-95
Fund 13 = Lord Abbett Tax-Free Income Fund, Inc.--
Connecticut Series
EIN: 13-3608057
TR-31-2417-95
Fund 14 = Lord Abbett Tax-Free Income Fund, Inc.--Hawaii
Series
EIN: 13-3635800
TR-31-2419-95
Fund 15 = Lord Abbett Tax-Free Income Fund, Inc.--Minnesota
Series
EIN: 13-3799448
TR-31-2420-95
<PAGE>
Fund 16 = Lord Abbett Tax-Free Income Fund, Inc.--Missouri
Series
EIN: 13-3616715
TR-31-2425-95
Fund 17 = Lord Abbett Tax-Free Income Fund,.Inc.--New Jersey
Series
EIN: 13-3603812
TR-31-2426-95
Fund 18 = Lord Abbett Tax-Free Income Fund, Inc.--New York
Series
EIN: 13-3386492
TR-31-2427-95
Fund 19 = Lord Abbett Tax-Free Income Fund, Inc.--Texas
Series
EIN: 13-3386494
TR-31-2428-95
Fund 20 = Lord Abbett Tax-Free Income Fund, Inc.--Washington
Series
EIN: 13-3664187
TR-31-2429-95
Fund 21 = Lord Abbett Tax-Free Income Trust--Florida Series
EIN: 13-3633027
TR-31-2430-95
Fund 22 = Lord Abbett Tax-Free Income Trust--Georgia Series
EIN: 13-3799446
TR-31-2431-95
Fund 23 = Lord Abbett Tax-Free Income Trust--Pennsylvania
Series
EIN: 13-3646755
TR-31-2432-95
Fund 24 = Lord Abbett Tax-Free Income Trust--Michigan Series
EIN: 13-3692073
TR-31-2433-95
Fund 25 = Lord Abbett U.S. Government Securities Money
Market Fund, Inc.
EIN: 13-2986729
TR-31-2435-95
<PAGE>
Fund 26 = Lord Abbett U.S. Government Securities Fund, Inc.
EIN: 13-6020601
TR-31-2435-95
Fund 27 = Lord Abbett Value Appreciation Fund, Inc.
EIN: 13-3166900
TR-31-2436-95
Fund 28 = Lord Abbett Securities Trust--Growth and Income
Trust
EIN: 13-3731505
TR-31-268-96
Fund 29 = Lord Abbett Research Fund, Inc.--Small-Cap Series
EIN: 13-3862601
TR-31-269-96
a = .50
Dear Mr. Rosen:
This ruling replies to your letters dated October 19, 1995,
and January 26, 1996, submitted an behalf of Funds I through 29, in which you
request that the Internal Revenue Service rule as follows:
(1) that the adoption of the proposed multiple class system
will not cause dividends paid on each class of shares issued by the
funds to be preferential dividends under section 562(c) of the Code,
and there fore that each fund will be eligible for the dividends-paid
deduction under sections 561 and 852(b)(2)(D) of the Code;
(2) that the creation of multiple classes of shares will not
affect the classification of the Funds as regulated investment
companies (RICs) under section 851 of the Code; and
(3) that the redesignation of currently out standing shares of
each fund as a separate class of shares pursuant to the proposed
multiple class system will not result in gain or loss or in other
Federal income tax consequences to the holders of currently outstanding
shares.
<PAGE>
FACTS
Funds are open-end management investment companies registered
under the Investment Company Act of 1940, 15 U.S.C. 80a-1 et seq., as amended
(the 1940 Act) , and are structured as corporations, as trusts, or as series of
corporations or trusts. Each qualified as a regulated investment company (RIC)
under Subchapter M, part 1, of the Code. Funds 1 through 7, 10 through 20, and
25 through 27 are incorporated under the laws of State A. Funds 6 and 7, Funds
10, 11, and 29, and Funds 12 through 20 are organized as series funds under the
laws of State A. Funds 8 and 9 are organized as business trusts under the laws
of State B. Funds 21 through 24 are organized as a series fund under the laws of
State C. Fund 28 is organized as a series fund under the laws of State B.
Investment Advisor and Distributor provides in vestment advice
for each of the funds. The shares of the funds, with the exception of shares of
Funds 10 and 11, are marketed pursuant to distribution agreement with Investment
Advisor and Distributor.
Shares of the funds are sold subject to differing sales
arrangements. Under Rule 12b-1 plans adopted by certain of the funds, an annual
service fee equal to a percentage of the average daily net asset value of shares
of the fund is payable to Investment Advisor and Distributor. The level of the
annual service fee varies from fund to fund. Also payable to Investment Advisor
and Distributor under the Rule 12b-1 plans are one-time sales distribution fees,
payable at the time of sale, on sales of greater than certain specified amounts.
Investment Advisor and Dis tributor is required to pay the sales distribution
fees to dealers as compensation for selling shares of the funds.
Funds each have outstanding only a single class of shares.
Funds have proposed that the articles of in corporation or declaration of trust
of each fund be amended to permit each to issue additional, separate classes of
shares with characteristics designed for particular markets.
The precise terms of each additional class will be determined
by the Board of Directors of each fund at the time of issuance. Each fund
represents, however, that although the additional classes may be sold under
differing sales arrangements the shares of the additional classes offered by
each fund will otherwise be identical to out standing shares of that fund, with
the following exceptions:
<PAGE>
(1) The designation of each class of shares will
be different.
(2) Different classes of shares may have dif
ferent conversion features.
(3) Different classes may have different exchange
privileges.
(4) Each class may have different privileges of reinvestment
with a reduced sales load after re demption.
(5) The additional classes may adopt Rule 12b-1 plans which
bear different service and distribution fees or different costs
relating to approval of or amendments to the Rule 12b-1 plans. The
level of Rule 12b-1 plan fees may vary from class to class. Voting
rights on matters affecting only one class will vary in accordance with
the procedures set forth in Rule 12b-1 and Rule 18f-3.
(6) The additional classes may be sold subject to asset-based
sales charges and the effect of the sales charges for each class will
differ.
(7) The additional classes may be sold subject to non-Rule
12b-1 plan shareholder services plan fees.
(8) Each class will bear different specially allocated
expenses. To the extent the following classes of expenses can
reasonably be identified as relating to a particular class, they will
be allocated to that class and, if so allocated, will be referred to as
Class Expenses:
(a) registration fees under state Blue Sky
laws;
(b) SEC registration fees;
(c) accounting expenses, including auditors'
fees;
(d) legal fees, including expenses of liti
gation;
(e) expenses incurred in connection with
shareholder, director, or trustee meetings; and
(f) administrative expenses required to
support shareholders of a particular class, to the
<PAGE>
extent incidental to the expenses enumerated in
(a) through (e).
The funds represent that the only expenses allo cated to the
classes disproportionately are Class Expenses, Rule 12b-1 plan fees and
shareholder services plan fees. The Class Expenses allocated to each share of a
class during a year will differ from the Class Expenses allocated to each share
of any other class of the same fund by less than a% of the average daily net
asset value of the class of shares with the smallest average net asset value.
Any distribution on shares of a class will differ from the
distribution on shares of other classes of the same fund only as a result of the
allocation of Class Expenses, Rule 12b-1 plan fees and shareholder services plan
fees and the effects of such allocation.
Investment Advisor and Distributor may waive a Rule 12b-1 plan
fee in whole or in part.
Dividends paid by each fund with respect to various classes of
shares will be calculated in the same manner and at the same time on the same
day. Amounts pay able as dividends, however, will vary because of the differing
amounts of Class Expenses, Rule 12b-1 plan fees, and shareholder services plan
fees borne exclusively by a particular class.
LAW
Section 851(a) defines a RIC, in part, as a domes tic
corporation registered under the 1940 Act as a manage ment company.
Section 851 (b) limits the definition of a RIC to a
corporation meeting certain election, gross income, and diversification
requirements.
Section 851(h) of the Code provides a special rule for a RIC
having more than one fund. This provision treats each fund as a separate
corporation for all purposes of the Code, other than the definitional
requirement of section 851(a).
A corporation that is a RIC within the meaning of section 851
and that is taxable under Subchapter M, part I, pays tax on its investment
company taxable income under section 852(b)(2) and on the excess, if any, of its
net
<PAGE>
capital gain over its deduction for dividends paid, deter mined with reference
to capital gains dividends only under section 852(b)(3).
Section 852 provides that a RIC is not taxable under
Subchapter M, part I, unless its deduction for divi dends paid (as that term is
defined in section 561(a) with certain modifications) for the taxable year
equals or ex ceeds a specified portion of its taxable income (with cer tain
adjustments) and its net tax-exempt interest income.
Section 561(a) defines the deduction for dividends paid, for
purposes of section 852, to include dividends paid during the taxable year.
Section 562(a) states that the term "dividend", except as
otherwise provided, includes only dividends de scribed in section 316, which
provides a definition of dividends for purposes of corporate distributions.
Section 316(a) defines the term "dividend" as any distribution
of property made by a corporation to its shareholders (1) out of its earnings
and profits (E & P) accumulated after February 28, 1913, or (2) out of its E & P
of the taxable year (computed as of the close of the taxable year without
diminution by reason of any distributions made during the taxable year), without
regard to the amount of the E & P at the time the distribution was made.
Section 562(c) provides that the amount of any distribution
shall not be considered as a dividend for purposes of the dividends paid
deduction under section 561 unless the distribution is pro rata, does not prefer
any shares of stock of a class over other shares of stock of that same class,
and does not prefer one class of stock over another class except to the extent
the former class is entitled (without reference to waivers of their rights by
shareholders) to be preferred.
The legislative history and regulations show that each shareholder within a
class, as that term is used in section 562(c), has certain inherent rights. The
Revenue Act of 1936: Hearings on H.R. 12395 Before the Senate Comm. on Finance,
74th Cong., 2d Sess. 62 (1936); H.R. Rep. No. 1860, 75th Cong., 3d Sess. 23
(1938); section 1.562-2 of the Income Tax Regulations. Each shareholder within a
class has the right to receive the same distribution an each of his shares
belonging to the class as every other shareholder within the class. In addition,
the class has the right not
<PAGE>
to receive less than that to which it is entitled when compared to other
classes.
A class for purposes of section 562(c), therefore, is a group
of shareholders whose rights are so closely aligned and so different from other
shareholders' rights as to warrant a conclusion that members of the group should
all be treated the same and should be protected against the infringement of
shareholders outside the group with respect to distributions. For example,
section 1.562-2(b), Example (3) of the income Tax Regulations indicates that
cumulative preferred and common stock may form two classes for these purposes.
Among the characteristics that cause cumulative preferred shareholders to be
viewed as a unit separate from common shareholders is their right to certain
preferences on distributions, on redemption, and on liquidation, and their right
to vote to protect those preferences.
ANALYSIS
In this case, shares proposed under the multiple class
distribution system represent an equal interest in the same fund of investments
and will be identical in all ways, except as follows:
1. Each class of shares will have a different
designation.
2. The amount and type of asset-based sales load,
if any, may differ on each class of shares.
3. The amounts assessed to a class as a result of
a shareholder servicing plan may differ.
4. The Class Expanses enumerated above will be allocated
separately to the class of shares to which they are attributable.
5. Certain classes may adopt Rule 12b-1 plans which bear
different service and distribution fees or different costs relating to
approval of or amendments to the Rule 12b-1 plans. The level of Rule
12b-1 plan fees may vary from class to class. Voting rights on matters
affecting only one class will vary in ac cordance with the procedures
act forth in Rule 12b-1 and Rule l8f-3.
6. Different classes of shares may have different
conversion features.
<PAGE>
7. Different classes may have different privi leges of
reinvestment with a reduced sales load after redemption.
8. Different classes of shares may have different
exchange privileges.
These differences alone are insufficient to cause the shares
proposed under the multiple class distribution system to be treated as different
classes of shares under section 562(c).
The Rule 12b-1 fee is a fund expense for purposes of computing
investment company taxable income because it is paid by a fund from fund assets,
unlike a front-end sales load, which is viewed as a shareholder cost. See United
States v. Cartwright, 411 U.S. 546 (1973), aff'q 457 F.2d 567 (1972), in which
the Supreme Court describes a front-end sales load as a type of brokerage
commission that is a shareholder cost. Nonetheless, fees paid pursuant to Rule
12b-1 plans are akin to front-end sales loads because both amounts are primarily
for distribution expenses. The Securities and Exchange Commission has described
Rule 12b-1 plan fees as substitutes for front-end sales loads. See Exemptions
for Certain Registered Open-End Management In vestment Companies to Impose
Deferred Sales Loads, In vestment Company Act Release No. 16,619, 53 FR 45,275
at 45,277-78 (Nov. 9, 1988) and Payment of Asset-Based Sales Loads by Registered
Open-End Management Investment Companies, Investment Company Act Release No.
16,431, 53 FR 23,258 at 23,270 (June 21, 1988). Thus, it appears that fees paid
pursuant to a Rule 12b-1 plan indirectly are shareholder expenses. A fund is
never out-of-pocket for amounts paid under the Rule 12b-1 plan; it is reimbursed
for these outlays by shareholders participating in the plan.
Under this analysis, a Rule 12b-1 fee can be considered an
indirect shareholder expense in determining whether distributions are
preferential under section 562(c) of the Code. Payments made pursuant to
shareholder servicing agreements also must be considered in determining whether
a fund's distributions are preferential.
When the Rule 12b-1 plan fees and fees payable under
shareholder servicing agreements are taken into ac count, the amounts
distributed on the shares of a fund differ by less than a%, which is de mininis.
Section 562(c) of the Code treats as pro rata those distributions that
<PAGE>
differ by a de minimis amount. H.R. Rep. No. 1860, 75th
Cong., 3d Sess. 23 (1938).
We conclude from this analysis that each fund has only a
single class of stock. The differences specified above are insufficient to cause
the shares to be classified as different classes under section 562(c) of the
Code. The rights of all shareholders are so closely aligned and simi lar as to
mandate that all shareholders, who will have the benefit of the same economic
distributions, should be treated as a single class and that the conversion of
shares within that single class will have no tax affect.
HOLDINGS
Based on the facts as represented by the funds, and provided
that each fund otherwise meets the criteria of sections 561(a) and 852, we rule
as follows:
(1) that the adoption of the proposed multiple class system
will not cause dividends paid on each class of shares issued by the
funds to be preferential dividends under section 562(c) of the Code,
and there fore that each fund will be eligible for the dividends-paid
deduction under sections 561 and 852(b)(2)(D) of the Code,
(2) that the creation of multiple classes of shares will not
affect the classification of the Funds as regulated investment
companies (RICs) under section 851 of the Code,
and
(3) that the redesignation of currently out standing shares of
each fund as a separate class of shares pursuant to the proposed
multiple class system will not result in gain or loss or in other
Federal income tax consequences to the holders of currently outstanding
shares.
Except as specifically ruled upon above, no opin ion is
expressed or implied regarding the Federal tax as pects of this transaction. We
express no opinion as to whether each fund will qualify as a RIC that is taxable
under Subchapter M, part 1, if expenses other than the Rule 12b-1 fees, fees
paid pursuant to shareholder servicing plans, and the Class Expenses described
in this letter are allocated to the shareholders disproportionately.
<PAGE>
This ruling is directed only to the funds. Sec tion 6110(j)(3)
of the Code provides that it may not be used or cited as precedent.
A copy Of this letter Should be attached to the Federal income
tax return of each fund for each taxable year in which the fund has outstanding
classes of shares de scribed above.
Sincerely yours,
Assistant Chief Counsel
(Financial Institutions & Products)
By_________________________
William E. Coppersmith
Chief, Branch 2
Enclosure:
<PAGE>
EXHIBIT 17(a)
LORD ABBETT U.S. GOVERNMENT SECURITIES FUND, INC.
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 annual meeting of shareholders of LORD
ABBETT U.S. GOVERNMENT SECURITIES FUND, INC. (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 DIRECTORS WHO RECOMMEND THAT
YOU AUTHORIZE THE PROXIES TO VOTE FOR THE ELECTION OF DIRECTORS AND FOR THE
OTHER MATTERS SPECIFIED BELOW.
UNMARKED PROXIES WILL BE VOTED IN FAVOR OF THE ELECTION OF DIRECTORS AND FOR
EACH OF THE OTHER MATTERS SPECIFIED BELOW.
1. For [ ] or against [ ] or abstain from [ ] the approval of the
Agreement and Plan of Reorganization and the reorganization provided
for therein, as described in the proxy statement and prospectus.
2. With [ ] or without [ ] authority to vote for the election of
directors. (NOTE: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL
NOMINEE, STRIKE OUT 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.
3. For [ ] or against [ ] or abstain from [ ] the ratification of the
selection of Deloitte & Touche LLP as independent public accountants
of the Fund for the fiscal year ending November 30, 1996.
ACCOUNT NUMBER SHARES PROXY NUMBER
LORD ABBETT U.S. GOVERNMENT SECURITIES FUND, INC.
PLEASE FILL IN, DATE AND SIGN
PROXY AND RETURN IN THE
ENCLOSED ENVELOPE.
<PAGE>
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 author ized officers should sign for corporations.
Date:......................................................
Signature(s) of Shareholder(s) as shown at left
.............................................................
.............................................................
(Please read other side)
2
<PAGE>
LORD ABBETT SECURITIES TRUST-LORD ABBETT U.S. GOVERNMENT SECURITIES TRUST
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 SECURITIES TRUST 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 WHO RECOMMEND THAT
YOU AUTHORIZE THE PROXIES TO VOTE FOR THE MATTERS SPECIFIED BELOW.
UNMARKED PROXIES WILL BE VOTED IN FAVOR OF EACH OF THE MATTERS SPECIFIED BELOW.
1. For [_] or against [_] or abstain from [_] the approval of the
Agreement and Plan of Reorganization and the reorganization provided
for therein, as described in the proxy statement and prospectus.
2. For [_] or against [_] or abstain from [_] the ratification of the
selection of Deloitte & Touche LLP as independent public accountants
of Lord Abbett Securities Trust for the fiscal year ending October
31, 1996.
ACCOUNT NUMBER SHARES PROXY NUMBER
LORD ABBETT SECURITIES TRUST-
LORD ABBETT U.S. GOVERNMENT SECURITIES TRUST
PLEASE FILL IN, DATE AND SIGN
PROXY AND RETURN IN THE
ENCLOSED ENVELOPE.
<PAGE>
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 author ized officers should
sign for corporations.
Date:..........................
Signature(s) of Shareholder(s) as shown at left
...............................
...............................
(Please read other side)
2
