LORD ABBETT INVESTMENT TRUST
THE GENERAL MOTORS BUILDING
767 FIFTH AVENUE
NEW YORK, NY 10153-0203
800-426-1130
THE LORD ABBETT U.S. GOVERNMENT SECURITIES SERIES ("WE" OR THE "SERIES") IS A
SEPARATE SERIES OF LORD ABBETT INVESTMENT TRUST (THE "FUND"), A DIVERSIFIED,
OPEN-END MANAGEMENT INVESTMENT COMPANY ORGANIZED AS A DELAWARE BUSINESS TRUST ON
AUGUST 16, 1993. CURRENTLY, THE FUND CONSISTS OF THREE SEPARATE SERIES -- THE
LORD ABBETT LIMITED DURATION U.S. GOVERNMENT SECURITIES SERIES, THE LORD ABBETT
BALANCED SERIES, AND THE SERIES, WHICH IS A NEW SERIES. THIS PROSPECTUS PERTAINS
TO THE SERIES AND SHOULD BE USED ONLY IN CONNECTION WITH THE MEETINGS OF
SHAREHOLDERS OF LORD ABBETT U.S. GOVERNMENT SECURITIES, FUND, INC. ("LAUSGSF")
AND LORD ABBETT U.S. GOVERNMENT SECURITIES TRUST ("LAUSGST"), A SERIES OF LORD
ABBETT SECURITIES TRUST, TO BE HELD JUNE 19, 1996 TO CONSIDER APPROVAL OF
PROPOSED SALES BY LAUSGSF AND LAUSGST OF ALL THEIR ASSETS TO THE SERIES IN
EXCHANGE FOR, RESPECTIVELY, CLASS A SHARES AND CLASS C SHARES OF THE SERIES AND
THE ASSUMPTION BY THE SERIES OF ALL THEIR LIABILITIES. THIS PROSPECTUS MAY BE
USED IN CONJUNCTION WITH THE PROXY STATEMENT AND PROSPECTUS OF THE SERIES TO BE
ISSUED IN CONNECTION WITH SUCH MEETINGS.
THE SERIES' INVESTMENT OBJECTIVE IS HIGH CURRENT INCOME CONSISTENT WITH
REASONABLE RISK.
THE SERIES WILL SEEK ITS OBJECTIVE BY INVESTING PRIMARILY IN INTERMEDIATE - AND
LONG-TERM U.S. GOVERNMENT SECURITIES.
THE SERIES WILL NOT CHANGE THIS OBJECTIVE WITHOUT FIRST OBTAINING SHAREHOLDER
APPROVAL. THERE CAN BE NO ASSURANCE THAT THE SERIES WILL ACHIEVE ITS OBJECTIVE.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE SERIES THAT
PROSPECTIVE INVESTORS (SHAREHOLDERS OF LAUSGSF AND LAUSGST) SHOULD KNOW BEFORE
INVESTING. ADDITIONAL INFORMATION ABOUT THE FUND AND THE SERIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE UPON REQUEST
WITHOUT CHARGE. THE STATEMENT OF ADDITIONAL INFORMATION IS INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS AND MAY BE OBTAINED, WITHOUT CHARGE, BY WRITING
TO THE FUND OR BY CALLING 800-874-3733. ASK FOR "PART B OF THE PROSPECTUS -- THE
STATEMENT OF ADDITIONAL INFORMATION".
THE DATE OF THIS PROSPECTUS AND THE DATE OF THE STATEMENT OF ADDITIONAL
INFORMATION IS MARCH 20, 1996.
PROSPECTUS
INVESTORS SHOULD READ AND RETAIN THIS PROSPECTUS. SHAREHOLDER INQUIRIES SHOULD
BE MADE IN WRITING TO THE FUND OR BY CALLING 800-821-5129. YOU CAN ALSO MAKE
INQUIRIES THROUGH YOUR BROKER-DEALER.
SHARES OF THE SERIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. AN INVESTMENT IN THE SERIES INVOLVES RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
CONTENTS PAGE
1 INVESTMENT OBJECTIVES 2
2 FEE TABLE 2
3 HOW WE INVEST 2
4 PURCHASES 4
5 SHAREHOLDER SERVICES 6
6 OUR MANAGEMENT 7
7 DIVIDENDS, CAPITAL GAINS
DISTRIBUTIONS AND TAXES 7
8 REDEMPTIONS 8
9 PERFORMANCE 9
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
1 INVESTMENT OBJECTIVES
The investment objective of the Series is high current income consistent with
reasonable risk. The shares of the Series can fluctuate in value more than
short-duration U.S. Government securities and consistent with
intermediate-duration U.S. Government securities like those we hold. For
example, assuming a portfolio duration of eight years, an increase in interest
rates of 1%, a parallel shift in the yield curve and no change in the spread
relationships among mortgage-related securities, the value of the portfolio
would decline 8%. Using the same assumptions, if interest rates decrease 1%, the
value of the portfolio would increase 8%. This volatility, while not eliminated,
is managed by the investment policy of Lord, Abbett & Co. ("Lord Abbett") to
maintain the average duration of securities held by the Series at between three
and eight years. "Duration" is the weighted average time to receipt of all cash
flows due by maturity from an obligation.
2 FEE TABLE
A summary of the Series' expenses is set forth in the table below. The example
is not a representation of past or future expenses. Actual expenses may be
greater or less than those shown.
Shareholder Transaction Expenses Class A(6) Class C
(as a percentage of offering price) Shares Shares
Maximum Sales Load(1) on
Purchases (See "Purchases") 4.75% None(2)
Deferred Sales Load(1) (See "Purchases") None(3) 1.00%(4)
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee (See "Our Management") 0.49%(5) 0.49%(6)
12b-1 Fees (See "Purchases") 0.27%(5) 0.92%(6)
Other Expenses (See "Our
Management") 0.15%(5) 0.15%(6)
Total Operating Expenses 0.91%(5) 1.57%(6)
Example: Assume an annual return of 5% and there is no change in the level of
expenses described above. For every $1,000 invested, with reinvestment of all
distributions, you would pay the following total expenses if you closed your
account after the number of years indicated.
1 year 3 years
Class A Shares(6) $56 $75
Class C Shares(6) $16 $50
(1) Sales "load" is referred to as sales "charge" and "deferred sales load" is
referred to as "contingent deferred reimbursement charge" throughout this
Prospectus.
(2) Although the Series will not, with respect to the Class C shares, charge a
front-end sales charge, investors should be aware that long-term
shareholders may pay, under the Class C 12b-1 plan, more than the economic
equivalent of the maximum front-end sales charge as permitted by certain
rules of National Association of Securities Dealers, Inc. Long-term Class A
shareholders may also pay, as a fromt-end sales chargge and under the Class
A 12b-1 Plan, more than the economic equivalent of such maximum permitted
front-end sales charge.
(3) Class A share purchases of $1 million or more on which a distribution fee
has been paid will be subject to a contingent deferred reimbursement charge
of up to 1% if the redemption occurs more than 24 months after the month of
purchase, subject to certain exceptions described herein. See "12b-1 Plans"
under "Purchases".
(4) Class C share purchases will be subject to a 1% contingent deferred
reimbursement charge if the redemption occurs before the first anniversary
of the share purchase. See "12b-1 Plans" under "Purchases".
(5) The expenses of the Class A shares are estimated. The Class A 12b-1 plan
provides for annual fees, if approved by the Board of Directors, of up to
0.50% of the assets of the Fund attributable to the Class A Shares,
comprising a service fee of up to 0.25% and a distribution fee of up to
0.25%. The estimated 12b-1 fees for the Class A shares are based on the
distribution and service fee payments authorized by the board. See "12b-1
Plans" under "Purchases".
(6) The expenses of the Class C shares are estimated.
(7) Based on total estimated operating expenses shown in the tables above.
The foregoing is provided to give investors a better understanding of the
expenses that may be incurred by an investment In the Series.
3 HOW WE INVEST
The Series seeks high current income consistent with reasonable risk. To achieve
this goal, the Series will invest in U.S. Government securities. U.S. Government
securities include: (1) obligations issued by the U.S. Treasury, differing only
in their interest rates, maturities and time of issuance, and including Treasury
bills maturing in one year or less, Treasury notes maturing in one to ten years
and Treasury bonds with maturities of over ten years and (2) obligations issued
or guaranteed by U.S. Government agencies and instrumentalities which are
supported by any of the following: (a) the full faith and credit of the United
States (such as Government National Mortgage Association ("GNMA") certificates),
(b) the right of the issuer to borrow from the U.S. Treasury or (c) the credit
of the instrumentality. Agencies and instrumentalities include the Federal Home
Loan Bank, Federal Home Loan Mortgage Corporation, Federal National Mortgage
Association, Federal Farm Credit Bank, Student Loan Marketing Association,
Tennessee Valley Authority, Financing Corporation and Resolution Funding
Corporation. Obligations issued by the U.S. Treasury and by U.S. Government
agencies and instrumentalities include those so issued in a form separated into
their component parts of principal and coupon payments, i.e., "component
securities." A security backed by the U.S. Treasury or a U.S. Government agency,
although providing substantial protection against credit risk, is guaranteed
only as to the timely payment of interest and principal when held to maturity.
The market prices for such securities are not guaranteed and will fluctuate and,
accordingly, such securities will not protect investors against price changes
due to changing
<PAGE>
interest rates. Longer maturity U.S. Government securities may exhibit greater
price volatility in response to changes in interest rates than shorter maturity
securities. In addition, certain U.S. Government securities may show even
greater volatility if, for example, the interest payment component has been
removed, as with zero coupon bonds. The value of shares of the Series will
change as the general levels of interest rates fluctuate. When interest rates
decline, share value can be expected to rise. Conversely, when interest rates
rise, share value can be expected to decline.
Investments in GNMA certificates, which are pools of home mortgages and other
mortgage- backed securities, are subject to prepayment of principal as mortgages
are prepaid. The Series must reinvest these prepayments at prevailing rates,
which may be lower than the yield of the GNMA certificate or other
mortgage-backed securities. These prepayments will result in a further reduction
in principal if the GNMA certificate or other mortgage-backed security is
trading over par. Mortgage prepayments generally increase in a falling interest
rate environment and, accordingly, often result in a reduction of principal. In
a rising interest rate environment, prepayments tend to decline which increases
the duration and volatility of such GNMA certificates.
The Series may invest in liquid interest-only and principal-only mortgage-backed
securities backed by fixed-rate mortgages under guidelines established by the
Board of Trustees of the Fund to assure that they may be sold promptly in the
ordinary course of business at a value reasonably close to that used in
calculating the Series' net asset value per share.
Although the longer maturity U.S. Government securities, zero coupon bonds, GNMA
certificates and other mortgage-backed securities mentioned above may be
volatile, this volatility, while not eliminated, is managed by the
above-mentioned policy of Lord Abbett to maintain the average duration of
securities held by the Series at between three and eight years.
While growth of capital is not an objective of the Series, capital appreciation
may result from efforts to secure high current income.
The Series may purchase U.S. Government securities on a when-issued basis and,
while awaiting delivery and before paying for them ("settlement"), normally may
invest in short-term U.S. Government Securities. The Series does not start
earning interest on these when-issued securities until settlement and often they
are sold prior to settlement. While this investment strategy may contribute
significantly to a portfolio turnover rate in excess of 100% but not exceeding
800%, it will have little or no transaction cost or adverse tax consequences for
the Series. Transaction costs normally do not involve brokerage because the
Series' fixed-income portfolio transactions usually are on a principal basis and
at the time of purchase we normally anticipate that any markups charged will be
more than offset by the anticipated economic benefits of the transaction. During
the period between purchase and settlement, the value of the securities will
fluctuate and assets consisting of cash and/or marketable securities marked to
market daily in an amount sufficient to make payment at settlement will be
segregated at the Series' custodian in order to pay for the commitment. There is
a risk that market yields available at settlement may be higher than yields
obtained on the purchase date which could result in depreciation of value.
The Series may engage in the lending of its portfolio securities. These loans
may not exceed 30% of the value of the Series' total assets. In such an
arrangement the Series lends securities from its portfolio to registered
broker-dealers. Such loans are continuously collateralized by an amount at least
equal to 100% of the market value of the securities loaned. Cash collateral is
invested in obligations issued or guaranteed by the U.S. Government or its
agencies, or repurchase agreements with respect to the foregoing. As with other
extensions of credit, there are risks of delay in recovery and market loss
should the borrowers of the portfolio securities fail financially.
The Series will not borrow money except as a temporary measure for extraordinary
or emergency purposes and then not in excess of 5% of its gross assets (at cost
or market value, whichever is lower) at the time of borrowing.
The Series may enter into repurchase agreements with respect to a security. A
repurchase agreement is a transaction by which the Series acquires a security
and simultaneously commits to resell that security to the seller (a bank or
securities dealer) at an agreed upon price on an agreed upon date. Such
repurchase agreement must, at all times, be collateralized by cash or U.S.
Government securities having a value equal to, or in excess of, the value of the
repurchase agreement.
4 PURCHASES
As soon as the Series begins to offer shares to the public (projected date: July
15, 1996), you may buy shares of the Series through any independent securities
dealer having a sales agreement with Lord Abbett, our exclusive selling agent.
Place your order with your investment dealer or send
<PAGE>
it to Lord Abbett Investment Trust -- U.S. Government Securities Series (P.O.
Box 419100, Kansas City, Missouri 64141). The minimum initial investment is $500
except for Invest-A-Matic and Div-Move ($250 initial and $50 monthly minimum)
and Retirement Plans ($250 minimum). Subsequent investments may be made in any
amount. See "Shareholder Services".
The net asset value of the Series' shares will be calculated every business day
as of the close of the New York Stock Exchange ("NYSE") by dividing net assets
by the number of shares outstanding. Securities will be valued at their market
value as more fully described in the Statement of Additional Information.
Orders for shares received by the Series prior to the close of the NYSE, or
received by dealers prior to such close and received by Lord Abbett prior to the
close of its business day, will be confirmed at the applicable public offering
price effective at such NYSE close. Orders received by dealers after the NYSE
closes and received by Lord Abbett in proper form prior to the close of its next
business day will be executed at the applicable public offering price effective
as of the close of the NYSE on that next business day. The dealer will be
responsible for the timely transmission of orders to Lord Abbett. A business day
is a day on which the NYSE is open for trading.
For information regarding the proper form of a purchase or redemption order,
call the Fund at 800-821-5129. This offering may be suspended, changed or
withdrawn. Lord Abbett reserves the right to reject any order.
The offering price will be based on the per-share net asset value calculated as
of the times described above plus a sales charge as follows:
<TABLE>
<CAPTION>
Sales Charge as a Dealer's
Percentage of: Concession
as a To Compute
Net Percentage Offering
Offering Amount of Offering Price, Divide
Size of Investment Price Invested Price* NAV by
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.00% .9525
$50,000 to $99,999 4.75% 4.99% 4.25% .9525
$100,000 to $249,999 3.75% 3.90% 3.25% .9625
$250,000 to $499,999 2.75% 2.83% 2.50% .9725
$500,000 to $999,999 2.00% 2.04% 1.75% .9800
$1,000,000 or more No Sales Charge 1.00% 1.0000
<FN>
*Lord Abbett may, for specified periods, allow dealers to retain the full sales
charge for sales of shares during such period, or pay an additional concession
to a dealer who, during a specified period, sells a minimum dollar amount of our
shares and/or shares of other Lord Abbett-sponsored funds. In some instances,
such additional concessions will be offered only to certain dealers expected to
sell significant amounts of shares. Lord Abbett may from time to time implement
promotions under which Lord Abbett will pay a fee to dealers with respect to
certain purchases not involving imposition of a sales charge. Additional
payments may be paid from Lord Abbett's resources and will be made in the form
of cash or non-cash payments. The non-cash payments will include business
seminars at resorts or other locations, including meals and entertainment, or
the receipt of merchandise. The cash payments will include payment of various
business expenses of the dealer.
</FN>
</TABLE>
In selecting dealers to execute portfolio transactions, if two or more dealers
are considered capable of obtaining best execution, we may prefer the dealer who
has sold our shares and/or shares of other Lord Abbett-sponsored funds.
VOLUME DISCOUNTS. This section describes several ways to qualify for a lower
sales charge if you inform Lord Abbett or the Fund that you are eligible at the
time of purchase. (1) Any purchaser (as described below) may aggregate a
purchase in the Series with purchases of any other eligible Lord
Abbett-sponsored fund, together with the current value at maximum offering price
of any shares in the Fund and in any eligible Lord Abbett-sponsored funds held
by the purchaser. (Holdings in the following funds are not eligible for the
above rights of accumulation: Lord Abbett Equity Fund ("LAEF"), Lord Abbett
Series Fund ("LASF"), Lord Abbett Research Fund if not offered to the general
public ("LARF") and Lord Abbett U.S. Government Securities Money Market Fund
("GSMMF"), except for existing holdings in GSMMF which are attributable to
shares exchanged from a Lord Abbett-sponsored fund offered with a front-end
sales charge or from a fund in the Lord Abbett Counsel Group.) (2) A purchaser
may sign a non-binding 13 month statement of intention to invest $100,000 or
more in the Fund or in any of the above eligible funds. If the intended
purchases are completed during the period, each purchase will be at the sales
charge, if any, applicable to the aggregate of such purchaser's intended
purchases. If not completed, each purchase will be at the sales charge for the
aggregate of the actual purchases. Shares issued upon reinvestment of dividends
or distributions are not included in the statement of intention. The term
"purchaser" includes (i) an individual, (ii) an individual and his or her spouse
and children under the age of 21 and (iii) a trustee or other fiduciary
purchasing shares for a single trust estate or single fiduciary account
(including a pension, profit-sharing, or other employee benefit trust qualified
under Section 401 of the Internal Revenue Code -- more than one qualified
employee benefit trust of a single employer, including its consolidated
subsidiaries, may be considered a single trust, as may qualified plans of
multiple employers registered in the name of a single bank trustee as one
account), although more than one beneficiary is involved.
<PAGE>
Shares of the Series may be purchased at net asset value by trustees of the
Fund, employees of Lord Abbett, employees of our shareholder servicing agent and
employees of any securities dealer having a sales agreement with Lord Abbett who
consents to such purchases or by the trustee or custodian under any pension or
profit-sharing plan or Payroll Deduction IRA established for the benefit of such
persons or for the benefit of any national securities trade organization to
which Lord Abbett belongs or any company with an account(s) in excess of $10
million managed by Lord Abbett on a private-advisory-account basis. For purposes
of this paragraph, the terms "trustees" and "employees" include a trustee's or
employee's spouse (including the surviving spouse of a deceased trustee or
employee). The terms "trustees" and "employees of Lord Abbett" also include
other family members and retired trustees and employees. Shares of the Series
also may be purchased at net asset value (a) at $1 million or more, (b) with
dividends and distributions from other Lord Abbett-sponsored funds, except for
dividends and distributions on shares of LARF, LAEF, LASF and Lord Abbett
Counsel Group, (c) under the loan feature of the Lord Abbett-sponsored prototype
403(b) plan for share purchases representing the repayment of principal and
interest, (d) by certain authorized brokers, dealers, registered investment
advisers or other financial institutions who have entered into an agreement with
Lord Abbett in accordance with certain standards approved by Lord Abbett,
providing specifically for the use of the Series' shares in particular
investment products made available for a fee to clients of such brokers,
dealers, registered investment advisers and other financial institutions, (e) by
employees, partners and owners of unaffiliated consultants and advisers to Lord
Abbett or Lord Abbett-sponsored funds who consent to such purchase if such
persons provide services to Lord Abbett or such funds on a continuing basis and
are familiar with such funds and (f) subject to appropriate documentation,
through a securities dealer where the amount invested represents redemption
proceeds from shares ("Redeemed Shares") of a registered open-end management
investment company not distributed or managed by Lord Abbett (other than a money
market fund), if such redemptions have occurred no more than 60 days prior to
the purchase of the Series' shares, the Redeemed Shares were held for at least
six months prior to redemption and the proceeds of redemption were maintained in
cash or a money market fund prior to purchase. Purchasers should consider the
impact, if any, of contingent deferred sales charges in determining whether to
redeem shares for subsequent investment in our shares. Lord Abbett may suspend
or terminate the purchase option referred to in (f) above at any time.
The Series' assets may be issued at net asset value in exchange for the assets,
subject to possible tax adjustment, of a personal holding company or an
investment company.
RULE 12B-1 PLAN. The trustees of the Fund have adopted a Rule 12b-1 plan (a
"Plan") for each class of shares to be issued by the Series, the Class A Plan
and the Class C Plan. The Class A Plan is to become effective upon the
consummation of the acquisition by the Series of the assets of LAUSGSF referred
to on the cover page of this prospectus, and the Class C Plan is to become
effective upon the consummation of the acquisition by the Series of the assets
of LAUSGST, also referred to on such cover page. Each Plan will authorize the
payment of fees by Lord Abbett Distributor LLC, a limited liability subsidiary
of Lord Abbett ("Lord Abbett Distributor"), to authorized institutions (except
as to certain accounts for which tracking data is not available) in order to
provide additional incentives for them (a) to provide continuing information and
investment services to their shareholder accounts and otherwise to encourage
their accounts to remain invested in the Series and (b) to sell shares of the
Series. Class A Plan: Under the Class A Plan the Series will pay Lord Abbett
Distributor, who in its discretion, utilizes and/or passes on to authorized
institutions, (1) an annual service fee (payable quarterly) of .25% of the
average daily net asset value of the Class A shares sold by authorized
institutions on or after September 1, 1985 and .15% of the average daily net
asset value of shares sold, or attributable to shares sold, by dealers prior to
that date, (2) a one-time sales distribution fee of up to 1% (reduced as
follows: 1% of the first $5 million, 0.55% of the next $5 million, 0.50% of the
next $40 million and 0.25% over $50 million) at the time of sale, on all shares
(i) at the $1 million level sold by authorized institutions including sales
qualifying at such level under the rights of accumulation and statement of
intention privileges and (ii) sold through Retirement Plans and (3) a
supplemental distribution fee to dealers who meet certain sales and redemption
criteria equal to 0.10% per annum of the average assets represented by such
dealers' Class A share accounts. Institutions and persons permitted by law to
receive such fees are authorized institutions. Retirement Plans refer to those
plans under Section 401(a) and (k) and 408(G) of the Internal Revenue Code with
at least 100 eligible employees. With respect to the supplemental distribution
fee, the applicable criteria include having accounts comprising a significant
percentage of the Class A share assets, having a lower than average redemption
rate and having a satisfactory program for the promotion of Class A shares.
Distribution fees will be subject to an overall Plan ceiling of 0.25% per year,
and the Board of Trustees may increase distribution fees to that level. Lord
Abbett will be permitted to use payments received under the Class A Plan to
provide continuing services to shareholder accounts not serviced by authorized
institutions and, with Board approval, to finance any activity which is
primarily intended to result in the sale of shares, subject to the overall Plan
ceiling of .25% for annual distribution fees. Holders of Class A shares on which
the sales distribution fee has been paid will be required to pay to the Series a
contingent deferred reimbursement charge of 1% of the original cost or the then
net asset value, whichever is less, of all shares so purchased which are
redeemed out of the Lord Abbett-sponsored family of funds on or before the end
of the twenty-fourth month after the month in which the purchase occurred. (An
exception is made for redemptions by retirement plans for any benefit payments
such as plan loans, hardship withdrawals, death, retirement or separation from
service with respect to plan participants or the distribution of any excess
contributions). If Class A shares have been exchanged into another Lord Abbett
fund and are thereafter redeemed out of the Lord Abbett family on or before the
end of such twenty-fourth month, the charge will be collected for the Series by
the other fund. The Series will collect such a charge for other Lord
Abbett-sponsored funds in a similar situation.
CLASS C PLAN: The Class C Plan provides for the payments to authorized
institutions through Lord Abbett Distributor of distribution and service fees
(a) at the time shares are sold, not to exceed 0.75% and 0.25%, respectively, of
the net asset value of such shares and (b) at each quarter-end after the first
anniversary of the sale of shares, at annual rates not to exceed 0.75% and
0.25%, respectively, of the average annual net asset value of such shares
outstanding. Sales in clause (a) exclude shares issued for reinvested dividends
and distributions and shares outstanding in clause (b) include shares issued for
reinvested dividends and distributions after the first anniversary of their
issuance. Lord Abbett Distributor may retain from the quarterly distribution
fee, for the payment of distribution expenses incurred directly by it, an amount
not to exceed 0.10% of the average annual net asset value of such shares
outstanding.
<PAGE>
If Class C shares are redeemed for cash before the first anniversary of their
purchase, the redeeming shareholder will be required to pay to the Series a
contingent deferred reimbursement charge of 1% of the lower of cost or the then
net asset value of the shares redeemed. If the shares are exchanged for Class C
shares of another Lord Abbett-sponsored fund or series and subsequently redeemed
before the first anniversary of their original purchase, the charge will be
collected by the other fund or series for the Series.
5 SHAREHOLDER SERVICES
We offer the following shareholder services:
Telephone Exchange Privilege: Class A share may be exchanged for Class A shares
and Class C shares may be exchanged for Class C shares, without a service charge
of any other Lord Abbett-sponsored fund or series that issues such shares,
except for certain tax-free single-state series where the exchanging shareholder
is a resident of a state in which such series is not offered for sale. You or
your representative with proper identification can instruct the Fund to exchange
uncertificated shares (held by the transfer agent) by telephone. Shareholders
have this privilege unless they refuse it in writing. The Fund will not be
liable for following instructions communicated by telephone that it reasonably
believes to be genuine and will employ reasonable procedures to confirm that
instructions received are genuine, including requesting proper identification,
and recording all telephone exchanges. Instructions must be received by the Fund
in Kansas City
<PAGE>
(800-521-5315) prior to the close of the NYSE to obtain each fund's net asset
value per share on that day. Expedited exchanges by telephone may be difficult
to implement in times of drastic economic or market change. The exchange
privilege should not be used to take advantage of short-term swings in the
market. The Fund reserves the right to terminate or limit the privilege of any
shareholder who makes frequent exchanges. The Fund can revoke the privilege for
all shareholders upon 60 days' prior written notice. A prospectus for the other
Lord Abbett-sponsored fund or series selected by you should be obtained and read
before an exchange. Exercise of the Exchange Privilege will be treated as a sale
for federal income tax purposes and, depending on the circumstances, a capital
gain or loss may be recognized.
SYSTEMATIC WITHDRAWAL PLAN: Except for retirement plans for which there is no
such minimum, if the maximum offering price value of your uncertificated shares
is at least $10,000, you may have periodic cash withdrawals automatically paid
to you in either fixed or variable amounts.
DIV-MOVE: You can invest the dividends paid on your account ($50 minimum monthly
investment) into an existing account in any other Lord Abbett-sponsored fund or
series that issues Class A shares or Class C shares, as the case may be. The
account must be either your account, a joint account for you and your spouse, a
single account for your spouse, or a custodial account for your minor child
under the age of 21. You should read the prospectus of the other fund before
investing.
INVEST-A-MATIC: You can make fixed, periodic investments ($50 minimum monthly
investment) into the Series and/or any Lord Abbett-sponsored fund or series that
issues Class A shares or Class C shares, as the case may be by means of
automatic money transfers from your bank checking account. You should read the
prospectus of the other fund before investing.
RETIREMENT PLANS: Lord Abbett makes available the retirement plan forms and
custodial agreements for IRAs (Individual Retirement Accounts including
Simplified Employee Pensions), 403(b) plans and pension and profit-sharing
plans.
6 OUR MANAGEMENT
All correspondence should be directed to Lord Abbett Investment Trust--U.S.
Government Securities Series (P.O. Box 419100, Kansas City, Missouri 64141;
800-821-5129).
Our business is managed by our officers on a day-to-day basis under the overall
direction of our Board of Trustees. Our board has approved a Management
Agreement with Lord Abbett under which Lord Abbett is to be employed as
investment manager of the Series. The agreement is to become effective upon the
consummation of the acquisition by the Series of the assets of LAUSGSF referred
to on the cover page of this prospectus. Lord Abbett has been an investment
manager for over 60 years and currently manages approximately $18 billion in a
family of mutual funds and other advisory accounts. Under the Management
Agreement, Lord Abbett will provide us with investment management services and
personnel, pay the remuneration of our officers and our directors affiliated
with Lord Abbett, provide us with office space and pay for ordinary and
necessary office and clerical expenses relating to research, statistical work
and supervision of our portfolio and certain other costs. Lord Abbett provides
similar services to the other series of the fund and to fifteen other funds
having various investment objectives and also advises other investment clients.
Zane E. Brown, director of the fixed-income group, will serve as portfolio
manager of the Series. Mr. Brown has over 19 years of investment experience and
has been with Lord Abbett since 1992. Mr. Brown will be assisted by, and may
delegate management duties to, other Lord Abbett employees who may be Fund
officers.
Under the Management Agreement, we will be obligated to pay Lord Abbett a
monthly fee based on average daily net assets for each month of .50 of 1%. In
addition, we will pay all expenses not expressly assumed by Lord Abbett.
We will not hold annual meetings of shareholders unless required to by the
Investment Company Act of 1940, the Board of Trustees or the shareholders with
one-quarter of the outstanding stock entitled to vote. See the Statement of
Additional Information for more details.
The Fund was organized as a Delaware business trust on August 16, 1993. Each
outstanding share has one vote and an equal right to dividends and distributions
of its series. All shares have noncumulative voting rights for the election of
Trustees.
7 DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
You begin earning dividends on the business day that payment for shares
purchased is received. Dividends from net investment income are declared daily
and paid on the 15th of each month, or if the 15th is not a business day, on the
first business day after the 15th. Dividends may be taken in cash or reinvested
in additional shares at net asset value without a sales charge.
Checks representing dividends paid in cash will be mailed to shareholders as
soon as practicable after the payment date.
A long-term capital gains distribution is made when we have net profits during
the year from sales of securities which we have held more than one year. If we
realize net short-term capital gains, they also will be distributed. Any capital
gains distribution will be made in January. You may take the distribution in
cash or reinvest it in additional shares at net asset value without a sales
charge.
<PAGE>
Supplemental dividends and distributions also may be paid in December or
January. Dividends and distributions declared in October, November or December
of any year to shareholders of record as of a date in such a month will be
treated for federal income tax purposes as having been received by shareholders
in that year if they are paid before February 1 of the following year.
We intend to meet the requirements of Subchapter M of the Internal Revenue Code.
We will try to distribute to shareholders all our net investment income and net
realized capital gains, so as to avoid the necessity of the Series paying
federal income tax. Shareholders, however, must report dividends and capital
gains distributions as taxable income. Distributions derived from net long-term
capital gains which are designated by the Fund as "capital gains dividends" will
be taxable to shareholders as long-term capital gains, whether received in cash
or shares, regardless of how long a taxpayer has held the shares.
Under current law, net long-term capital gains are taxed at the rates applicable
to ordinary income, except that the maximum rate for long-term capital gains for
individuals is 28%. See "Performance" for a discussion of the purchase of
high-coupon securities at a premium and the distribution to shareholders as
ordinary income of all interest income on those securities. This practice
increases current income of the Series, but may result in higher taxable income
to Series shareholders than other portfolio management practices.
Shareholders may be subject to a $50 penalty under the Internal Revenue Code and
we may be required to withhold and remit to the U.S. Treasury a portion (31%) of
any redemption proceeds (including the value of shares exchanged into another
Lord Abbett-sponsored fund), and of any dividend or distribution on any account,
where the payee (shareholder) failed to provide a correct taxpayer
identification number or to make certain required certifications.
We will inform shareholders of the federal tax status of each dividend and
distribution after the end of each calendar year. Shareholders should consult
their tax advisers concerning applicable state and local taxes as well as the
tax consequences of gains or losses from the redemption or exchange of our
shares.
8 REDEMPTIONS
To obtain the proceeds of an expedited redemption of $50,000 or less, you or
your representative with proper identification can telephone the Fund. The Fund
will not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine and will employ reasonable procedures to
confirm that instructions received are genuine, including requesting proper
identification, recording all telephone redemptions and mailing the proceeds
only to the named shareholder at the address appearing on the account
registration.
If you do not qualify for the expedited procedures described above, to redeem
shares directly, send your request to Lord Abbett Investment Trust -- U.S.
Government Securities Series (P.O. Box 419100, Kansas City, Missouri 64141) with
signature(s) and any legal capacity of the signer(s) guaranteed by an eligible
guarantor, accompanied by any certificates for shares to be redeemed and other
required documentation.
The Fund will make payment of the net asset value of the shares on the date the
redemption order was received in proper form. Payment will be made within three
business days. The Fund may suspend the right to redeem shares for not more than
seven days or longer under unusual circumstances as permitted by Federal law. If
you have purchased shares of the Series by check and subsequently submit a
redemption request, redemption proceeds will be paid upon clearance of your
purchase check, which may take up to 15 days. To avoid delays you may arrange
for the bank upon which a check was drawn to communicate to the Fund that the
check has cleared. Shares also may be redeemed by the Fund at net asset value
through your securities dealer who, as an unaffiliated dealer, may charge you a
fee. If your dealer receives your order prior to the close of the NYSE and
communicates it to Lord Abbett, as our agent, prior to the close of Lord
Abbett's business day, you will receive the net asset value of the shares being
redeemed as of the close of the NYSE on that day. If the dealer does not
communicate such an order to Lord Abbett until the next business day, you will
receive the net asset value as of the close of the NYSE on that next business
day.
Shareholders who have redeemed their shares have a one-time right to reinvest
into another account having the identical registration, in any other Lord
Abbett-sponsored fund or series that issues Class A shares or class shares, as
the case may be,of the Eligible Funds, at the then applicable net asset value of
the shares being purchased without the payment of a sales charge. Such
reinvestment must be made within 60 days of the redemption and is limited to no
more than the dollar amount of the redemption proceeds.
<PAGE>
Under certain circumstances and subject to prior written notice, our Board of
Trustees may authorize redemption of all of the shares in any account in which
there are fewer than 50 shares.
Tax-qualified Plans: For redemptions of $50,000 or less, follow normal
redemption procedures. Redemptions over $50,000 must be in writing from the
employer, broker or plan administrator stating the reason for the redemption.
The reason for the redemption must be received by the Fund prior to, or
concurrent with, the redemption request.
9 PERFORMANCE
We will calculate our average annual total return for the Series for a given
period by determining an annual compounded rate that would cause the
hypothetical initial investment made on the first day of the period to equal the
ending redeemable value. The calculation assumes for the period a $1,000
hypothetical initial investment in the Series, the reinvestment of all income
and capital gains distributions on the reinvestment dates at the prices
calculated as stated in the Prospectus, and a complete redemption at the end of
the period to determine the ending redeemable value.
Further information about the Series' performance will be in its annual report
to shareholders which may be obtained without charge.
YIELD AND TOTAL RETURN. Yield and total return data may, from time to time, be
included in advertisements about the Series. "Yield" is calculated by dividing
the Series' annualized net investment income per share during a recent 30-day
period by the maximum public offering price per share on the last day of that
period. The Series' yield reflects the deduction of the maximum initial sales
charge and reinvestment of all income dividends and capital gains distributions.
"Total return" for the one-, five- and ten-year periods represents the average
annual compounded rate of return on an investment of $1,000 in the Series at the
maximum public offering price. Total return also may be presented for other
periods or based on investment at reduced sales charge levels or net asset
value. Any quotation of total return not reflecting the maximum initial sales
charge would be reduced if such sales charge were used. Quotations of yield or
total return for any period when an expense limitation is in effect will be
greater than if the limitation had not been in effect.
The Series' dividend distribution rate may differ from its SEC yield primarily
because the Series may purchase short- and intermediate-term high-coupon
securities at a premium and, consistent with applicable tax regulations,
distribute to shareholders all of the interest income on these securities
without amortizing the premiums. This practice also may be used by the Series
for financial statement purposes and is in accordance with generally accepted
accounting principles. In other words, the Series may pay more than face value
for a security that pays a greater-than-market rate of interest and then
distribute all such interest as dividends. The principal payable on the security
at maturity will equal the security's face value, and so the market value of the
security will gradually decrease to face value, assuming no changes in the
market rate of interest or in the credit quality of the issuer. Shareholders
should recognize that such dividends will therefore tend to decrease the net
asset value of the Series. Dividends paid from this interest income will be
taxable to shareholders at ordinary income tax rates. Dividend distribution rate
will be accompanied by SEC yield in any sales literature.
The Series may make distributions in excess of net investment income from time
to time to provide more stable dividends. Such distributions could cause slight
decreases in net asset values over time, but historically (for other Lord
Abbett-sponsored funds) have not resulted in a return of capital for tax
purposes.
See "Past Performance" in the Statement of Additional Information for a more
detailed discussion concerning the computation of the Series' total return and
yield.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFER IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER. NO
PERSON IS AUTHORIZED TO GIVE INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS OR IN SUPPLEMENTAL LITERATURE AUTHORIZED BY THE
FUND, AND NO PERSON IS ENTITLED TO RELY UPON ANY INFORMATION OR REPRESENTATION
NOT CONTAINED HEREIN OR THEREIN.
<PAGE>
Lord, Abbett & Co.
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
212-848-1800
Custodian
The Bank of New York
48 Wall Street, New York, New York 10268
Transfer Agent and Dividend
Disbursing Agent
United Missouri Bank of Kansas City, N.A.
Tenth and Grand
Kansas City, Missouri 64141
Shareholder Servicing Agent
DST Systems, Inc.
P.O. Box 419100
Kansas City, Missouri 64141 800-821-5129
Auditors
Deloitte & Touche LLP Counsel
Debevoise & Plimpton Printed in the U.S.A.
LAIT-1-1294
Investment
Trust
<PAGE>
LORD ABBETT
Statement of Additional Information March 20, 1996
Lord Abbett
Investment Trust
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from your securities dealer or from Lord, Abbett & Co. at The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. This
Statement relates to, and should be read in conjunction with, the Prospectus
dated March 20, 1996. The Prospectus and this Statement pertain to the Series
referred to below and should be used in connection with the meetings of
shareholders of Lord Abbett U.S. Government Securities Fund, Inc. ("LAUSGSF")
and Lord Abbett Securities Trust -- Lord Abbett U.S. Government Trust
("LAUSGST") called to consider approval of proposed sales by those funds of all
their assets to the Series in exchange for, respectively, Class A shares and
Class C shares of the Series and the assumption by the Series of all their
liabilities. The Prospectus and this Statement should be used in conjunction
with the Proxy Statement and Prospectus of the Series to be issued in connection
with such meetings.
Lord Abbett Investment Trust (referred to as the "Fund") was organized as a
Delaware business trust on August16, 1993. The Fund's trustees have authority
to create separate classes and series of shares of beneficial interest, without
further action by shareholders. To date, the Fund has three series consisting of
three classes of shares - Lord Abbett Limited Duration U.S. Government
Securities Series, Lord Abbett Balanced Series and Lord Abbett U.S. Government
Securities Series (a new series). Further classes or series may be added in the
future. The Investment Company Act of 1940, as amended (the "Act"), requires
that where more than one class or series exists, each class or series must be
preferred over all other classes or series of assets specifically allocated to
such class or series. Only shares of Lord Abbett U.S. Government Securities
Series (sometimes referred to as "we" or the "Series") are described in this
Statement of Additional Information.
Rule 18f-2 under the Act provides that any matter required to be submitted, by
the provisions of the Act or applicable state law or otherwise, to the holders
of the outstanding voting securities of an investment company such as the Fund
shall not be deemed to have been effectively acted upon unless approved by the
holders of a majority of the outstanding shares of each class or series affected
by such matter. Rule 18f-2 further provides that a class or series shall be
deemed to be affected by a matter unless the interests of each class or series
in the matter are substantially identical or the matter does not affect any
interest of such class or series. However, the Rule exempts the selection of
independent public accountants, the approval of principal distributing contracts
and the election of trustees from its separate voting requirements.
Rule 18f-3 under the Act requires that, if an investment company such as the
Fund issues more than one class of voting stock, each class shall have exclusive
voting rights on any matter submitted to shareholders that relates solely to its
different arrangement for shareholder services or the distribution of securities
and shall have separate voting rights on any matter submitted to shareholders in
which the interests of one class differ from the interests of any other class.
Shareholder inquiries should be made by writing directly to the Fund or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
TABLE OF CONTENTS Page
1. Investment Objective and Policies 2
2. Trustees and Officers 3
3. Investment Advisory and Other Services 6
4. Portfolio Transactions 6
5. Purchases, Redemptions
and Shareholder Services 7
6. Past Performance 12
7. Taxes 12
8. Information About The Fund 12
<PAGE>
1.
Investment Objective and Policies
Fundamental Investment Restrictions. The Series' investment objective and
policies are described in the Prospectus under "How We Invest". In addition to
those policies described in the Prospectus, we are subject to the following
fundamental investment restrictions which cannot be changed for the Series
without the approval of the holders of a majority of the Series' respective
shares. The Series may not: (1) borrow money (except that (i) the Series may
borrow from banks (as defined in the Act) in amounts up to 33 1/3% of its total
assets (including the amount borrowed), (ii) the Series may borrow up to an
additional 5% of its total assets for temporary purposes, (iii) the Series may
obtain such short-term credit as may be necessary for the clearance of purchases
and sales of portfolio securities and (iv) the Series may purchase securities on
margin to the extent permitted by applicable law); (2) pledge its assets (other
than to secure such borrowings or, to the extent permitted by the Series'
investment policies as permitted by applicable law; (3) engage in the
underwriting of securities except pursuant to a merger or acquisition or to the
extent that in connection with the disposition of its portfolio securities it
may be deemed to be an underwriter under federal securities laws; (4) make loans
to other persons, except that the acquisition of bonds, debentures or other
corporate debt securities and investment in government obligations, commercial
paper, pass-through instruments, certificates of deposit, bankers acceptances,
repurchase agreements or any similar instruments shall not be subject to this
restriction, and except further that the Series may lend its portfolio
securities, provided that the lending of portfolio securities may be made only
in accordance with applicable law; (5) buy or sell real estate (except that the
Series may invest in securities directly or indirectly secured by real estate or
interests therein or issued by companies which invest in real estate or
interests therein), commodities or commodity contracts (except to the extent the
Series may do so in accordance with applicable law and without registering as a
commodity pool operator under the Commodity Exchange Act as, for example, with
futures contracts); (6) with respect to 75% of the gross assets of the Series,
buy securities if the purchase would then cause it to (i) have more than 5% of
its gross assets, at market value at the time of investment, invested in the
securities of any one issuer except securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities or (ii) own more than 10% of the
voting securities of any issuer; (7) invest more than 25% of its assets, taken
at market value, in the securities of issuers in any particular industry
(excluding securities of the U.S. Government, its agencies and
instrumentalities);or (8) issue senior securities to the extent such issuance
would violate applicable law.
With respect to the restrictions mentioned herein, compliance therewith will not
be affected by change in the market value of portfolio securities but will be
determined at the time of purchase or sale of such securities.
Of course, as a matter of fundamental policy, we may not invest in securities
other than U.S. Government securities as described in the Prospectus.
If we enter into repurchase agreements as provided in clause (4) above, we will
do so only with those primary reporting dealers that report to the Federal
Reserve Bank of New York and with the 100 largest United States commercial banks
and the underlying securities purchased under the repurchase agreements will
consist only of U.S. Government securities in which we may otherwise invest.
Non-Fundamental Investment Restrictions. In addition to those policies described
in the Prospectus and the investment restrictions above which cannot be changed
without shareholder approval, we also are subject to the following
non-fundamental investment policies which may be changed by the Board of
Directors without shareholder approval. The Series may not: (1) make short sales
of securities or maintain a short position except to the extent permitted by
applicable law; (2) invest knowingly more than 15% of its net assets (at the
time of investment) in illiquid securities (securities qualifying for resale
under Rule 144A of the Securities Act of 1933 ("Rule 144A") that are determined
by the Directors, or by Lord Abbett pursuant to delegated authority, to be
liquid are considered liquid securities); (3) invest in securities issued by
other investment companies as defined in the Act, except as permitted by the
Act; (4) purchase securities of any issuer unless it or its predecessor has a
record of three years' continuous operation, except that the Series may purchase
securities of such issuers through subscription offers or other rights it
receives as a security holder of companies offering such subscriptions or
rights, and such purchases will then be limited in the aggregate to 5% of the
Series' net assets at the time of investment; (5) hold securities of any issuer
when more than 1/2 of 1% of the issuer's securities are owned beneficially by
one or more of the Fund's officers or directors or by one or more partners of
the Fund's underwriter or investment adviser if these owners in the aggregate
own beneficially more than 5% of such securities; (6) invest in warrants, valued
at the lower of cost or
2
<PAGE>
market, to exceed 5% of the Series' net assets, including warrants not listed on
the New York or American Stock Exchange which may not exceed 2% of such net
assets; or (7) invest in real estate limited partnership interests or interest
in oil, gas or other mineral leases, or exploration or development programs,
except that the Series may invest in securities issued by companies that engage
in oil, gas or other mineral exploration or development activities.
As stated in the Prospectus, we may purchase Government securities on a
when-issued basis. Under no circumstance will delivery and payment
("settlement") for such securities take place more than 120 days after the
purchase date.
Lending Portfolio Securities
The Series may lend its portfolio securities to registered broker-dealers. These
loans, if and when made, may not exceed 30% of the Series' total assets. The
Series' loans of securities will be collateralized by cash or marketable
securities issued or guaranteed by the U.S. Government or its agencies ("U.S.
Government Securities") or other permissible means. The cash or instruments
collateralizing the Fund's lending of securities will be maintained at all times
in an amount at least equal to the current market value of the loaned
securities. From time to time, the Series may allow a part of the interest
received with respect to the investment of collateral to be paid to the borrower
and/or a third party that is not affiliated with the Fund and is acting as a
"placing broker". No fee will be paid to affiliated persons of the Fund.
By lending portfolio securities, the Series can increase its income by
continuing to receive interest on the loaned securities as well as by either
investing the cash collateral in permissible investments, such as U.S.
Government Securities, or obtaining yield in the form of interest paid by a
borrower when such U.S. Government Securities are used as collateral. The Series
will comply with the following conditions whenever it loans securities: (i) the
Series must receive at least 100% collateral from the borrower; (ii) the
borrower must increase the collateral whenever the market value of the
securities loaned rises above the level of the collateral; (iii) the Series must
be able to terminate the loan at any time; (iv) the Series must receive
reasonable compensation with respect to the loan, as well as any dividends,
interest or other distributions on the loaned securities; (v) the Series may pay
only reasonable fees in connection with the loan and (vi) voting rights on the
loaned securities may pass to the borrower, except that if a material event
adversely affecting the investment in the loaned securities occurs, the Fund's
Board of Trustees must terminate the loan and regain the right to vote the
securities.
When-Issued Transactions
As stated in the Prospectus, the Series may purchase portfolio securities on a
when-issued basis. When-issued transactions involve a commitment by the Series
to purchase securities, with payment and delivery ("settlement") to take place
in the future, in order to secure what is considered to be an advantageous price
or yield at the time of entering into the transaction. When the Series enters
into a when-issued purchase, it becomes obligated to purchase securities and it
assumes all the rights and risks attendant to ownership of a security, although
settlement occurs at a later date. The value of securities to be delivered in
the future will fluctuate as interest rates vary. At the time the Series makes
the commitment to purchase a security on a when-issued basis, it will record the
transaction and reflect the liability for the purchase and the value of the
security in determining its net asset value. The Series, generally, has the
ability to close out a purchase obligation on or before the settlement date,
rather than take delivery of the security. Under no circumstance will settlement
for such securities take place more than 120 days after the purchase date.
2.
Trustees and Officers
The following trustees of the Fund are partners of Lord, Abbett & Co., The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. They
have been associated with Lord Abbett for over five years and are also officers
and/or directors or trustees of the fifteen other Lord Abbett-sponsored funds.
They are "interested persons" as defined in the Investment Company Act of 1940,
as amended, and as such, may be considered to have an indirect financial
interest in the Rule 12b-1 Plans described in the Prospectus.
Ronald P. Lynch, age 60, Chairman
Robert S. Dow, age 50, President
3
<PAGE>
The following outside trustees are also directors or trustees of the fifteen
other Lord Abbett-sponsored funds referred to above except for Lord Abbett
Research Fund, Inc., of which only Messrs. Millican and Neff are directors.
E. Thayer Bigelow
Time Warner Cable
300 First Stamford Place
Stamford, Connecticut
President and Chief Executive Officer of Time Warner Cable Programming, Inc.
Formerly President and Chief Operating Officer of Home Box Office, Inc. Age 54.
Stewart S. Dixon
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon. Age 65.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 70.
C. Alan MacDonald
The Marketing Partnership, Inc.
27 Signal Road
Stamford, Connecticut
General Partner, The Marketing Partnership, Inc., a full service marketing
consulting firm. Formerly chairman and Chief Executive Officer of Lincoln
Snacks, Inc., manufacturer of branded snack foods (1992-1994). Formerly
President & CEO of Nestl Foods Corp, and prior to that, President & CEO of
Stouffer Foods Corp., both subsidiaries of Nestl SA, Switzerland. Currently
serves as Director of Den West Restaurant Co., J. B. Williams, and Fountainhead
Water Company. Age 62.
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 67.
Thomas J. Neff
277 Park Avenue
New York, New York
President of Spencer Stuart & Associates, an executive search consulting firm.
Age 58.
4
<PAGE>
The second column of the following table sets forth the compensation accrued for
the Fund's outside trustees. The third and fourth columns set forth information
with respect to the retirement plan for outside trustees maintained by the Lord
Abbett-sponsored funds. The fifth column sets forth the total compensation
payable by such funds to the outside trustees. The first four columns give
information for the Fund's fiscal year ended October 31, 1995; the fifth column
gives information for the year ended December 31, 1995. No trustee of the Fund
associated with Lord Abbett and no officer of the Fund received any compensation
from the Fund for acting as a trustee or officer.
<TABLE>
<CAPTION>
For the Fiscal Year Ended October 31, 1995
(1) (2) (3) (4) (5)
Pension or Estimated Annual For Year Ended
Retirement Benefits Benefits Upon December 31, 1995
Accrued by the Retirement Proposed Total Compensation
Aggregate Fund and to be Paid by the Accrued by the Fund and
Compensation Fifteen Other Lord Fund and Fifteen Fifteen Other Lord
Accrued by Abbett-sponsored Other Lord Abbett- Abbett-sponsored
Name of Director the Fund1 Funds sponsored Funds2 Funds3
<S> <C> <C> <C> <C>
E. Thayer Bigelow $4,970 $9,772 $33,600 $ 41,700
Stewart S. Dixon $5,696 $22,472 $33,600 $ 42,000
John C. Jansing $5,721 $28,480 $33,600 $42,960
C. Alan MacDonald $5,692 $27,435 $33,600 $42,750
Hansel B. Millican, Jr. $5,691 $24,707 $33,600 $43,000
Thomas J. Neff $5,594 $16,126 $33,600 $42,000
<FN>
1. Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on net
assets of each fund. A portion of the fees payable by the Fund to its outside
directors are being deferred under a plan that deems the deferred amounts to be
invested in shares of the Fund for later distribution to the directors. The
total amount accrued under the plan for each outside director since the
beginning of his tenure with the Fund, including dividends reinvested and
changes in net asset value applicable to such deemed investments, were as
follows as of October 31, 1995: Mr. Bigelow, $5,261; Mr. Dixon, $48,641; Mr.
Jansing, $52,388; Mr. MacDonald, $31,222; Mr. Millican, $52,823 and Mr. Neff,
$53,041.
2. Each Lord Abbett-sponsored fund has a retirement plan providing that outside
directors will receive annual retirement benefits for life equal to 80% of their
final annual retainers following retirement at or after age 72 with at least 10
years of service. Each plan also provides for a reduced benefit upon early
retirement under certain circumstances, a pre-retirement death benefit and
actuarially reduced joint-and-survivor spousal benefits. The amounts stated
would be payable annually under such retirement plans if the director were to
retire at age 72 and the annual retainers payable by such funds were the same as
they are today. The amounts accrued in column 3 were accrued by the Lord
Abbett-sponsored funds during the fiscal year ended October 31, 1995 with
respect to the retirement benefits in column 4.
3. This column shows aggregate compensation, including director's fees and
attendance fees for board and committee meetings, of a nature referred to in
footnote one, accrued by the Lord Abbett-sponsored funds during the year ended
December 31, 1995.
</FN>
</TABLE>
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Allen, Carper, Cutler, Nordberg and Walsh are partners of Lord Abbett; the
others are employees: Kenneth B. Cutler, age 63, Vice President and Secretary;
Stephen I. Allen, age 41, Daniel E. Carper, age 43, E. Wayne Nordberg, age 59,
John J. Walsh, age 58, Paul A. Hilstad, age 53 (with Lord Abbett since 1995 -
formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.), John J. Gargana, Jr., age 64, Thomas F. Konop, age
53, Victor W. Pizzolato, age 63, Vice Presidents; and Keith F. O'Connor, age 40,
Treasurer.
5
<PAGE>
The Fund does not hold annual meetings of shareholders unless one or more
matters are required to be acted on by shareholders under the Act. Under the
Fund's Declaration of Trust, shareholder meetings may be called at any time by
certain officers of the Fund or by a majority of the Trustees (i) for the
purpose of taking action upon any matter requiring the vote or authority of the
Fund's shareholders or upon matters deemed to be necessary or desirable or (ii)
upon the written request of the holders of at least one-quarter of the shares of
the Series outstanding and entitled to vote at the meeting.
As of March 20, 1996, our officers and trustees, as a group, owned less than 1%
of our outstanding shares.
3.
Investment Advisory and Other Services
As described under "Our Management" in the Prospectus, Lord Abbett is to be the
investment manager for the Series. The nine general partners of Lord Abbett, all
of whom are officers and/or trustees of the Fund, are: Stephen I. Allen, Daniel
E. Carper, Kenneth B. Cutler, Robert S. Dow, Thomas S. Henderson, Ronald P.
Lynch, Robert G. Morris, E. Wayne Nordberg and John J. Walsh. The address of
each partner is The General Motors Building, 767 Fifth Avenue, New York, New
York 10153-0203.
The services to be performed by Lord Abbett are described in the Prospectus
under "Our Management". Under the Management Agreement, we will pay Lord Abbett
a monthly fee, based on average daily net assets for each month, at the annual
rate of .50 of 1% of the portion of our net assets not in excess of
$3,000,000,000 plus .45% of 1% of such assets over $3,000,000,000.
We will pay all expenses not expressly assumed by Lord Abbett, including without
limitation 12b-1 expenses, outside trustees' fees and expenses, association
membership dues, legal and auditing fees, taxes, transfer and dividend
disbursing agent fees, shareholder servicing costs, expenses relating to
shareholder meetings, expenses of preparing, printing and mailing share
certificates and shareholder reports, expenses of registering our shares under
federal and state securities laws, expenses of preparing, printing and mailing
prospectuses to existing shareholders, insurance premiums and brokerage and
other expenses connected with executing portfolio transactions.
The Series expects to agree with the State of California to limit operating
expenses (including management fees but excluding taxes, interest, extraordinary
and brokerage commissions) to 2 1/2% of the Series' average annual net assets up
to $30,000,000, 2% of the next $70,000,000 of such assets and 1 1/2% of such
assets in excess of $100,000,000. Annual distribution expenses under Rule 12b-1
plans up to one percent of the Series' average net assets during its fiscal year
are to be excluded from this expense limitation. The expense limitation is a
condition on the registration of investment company shares for sale in the State
and is expected to apply so long as our shares are registered for sale in the
State.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281 are
the independent auditors of the Fund and must be approved at least annually by
our trustees to continue in such capacity. They perform audit services for the
Fund including the examination of financial statements included in our annual
report to shareholders.
The Bank of New York ("BNY"), 48 Wall Street, New York, New York, is the Fund's
custodian.
4.
Portfolio Transactions
Purchases and sales of portfolio securities usually will be principal
transactions and normally such securities will be purchased directly from the
issuer or from an underwriter or purchased from or sold to a market maker for
the securities. Therefore, the Series usually will pay no brokerage commissions
on such transactions. Purchases from underwriters of portfolio securities will
include a commission or concession paid by the issuer to the underwriter and
purchases from or sales to dealers serving as market makers will include a
dealer's markup or markdown. Principal transactions, including
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riskless principal transactions, are not afforded the protection of the safe
harbor in Section 28(e) of the Securities Exchange Act of 1934.
Our policy is to obtain best execution on all our portfolio transactions, which
means that we seek to have purchases and sales of portfolio securities executed
at the most favorable prices, considering all costs of the transaction including
dealer markups and markdowns and any brokerage commissions. This policy governs
the selection of dealers and brokers and the market in which the transaction is
executed. To the extent permitted by law, we may, if considered advantageous,
make a purchase from or sale to another Lord Abbett-sponsored fund without the
intervention of any broker-dealer.
We select broker-dealers on the basis of their professional capability and the
value and quality of their brokerage and research services.Normally, the
selection is made by our traders who are officers of the Fund and also are
employees of Lord Abbett.These traders do the trading as well for other
accounts -- investment companies (of which they are also officers) and other
investment clients -- managed by Lord Abbett.They are responsible for the
negotiation of prices and commissions.
We may pay a brokerage commission on the purchase or sale of a security that
could be purchased from or sold to a market maker if our net cost of the
purchase or the net proceeds to us of the sale are at least as favorable as we
could obtain on a direct purchase or sale. Brokers who receive such commissions
may also provide research services at least some of which are useful to Lord
Abbett in their overall responsibilities with respect to us and the other
accounts they manage. Research includes trading equipment and computer software
packages, acquired from third-party suppliers, that enable Lord Abbett to access
various information bases and may include the furnishing of analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts. Such services may be used by
Lord Abbett in servicing all their accounts, and not all of such services will
necessarily be used by Lord Abbett in connection with their management of the
Series; conversely, such services furnished in connection with brokerage on
other accounts managed by Lord Abbett may be used in connection with their
management of the Series, and not all of such services will necessarily be used
by Lord Abbett in connection with their advisory services to such other
accounts. We have been advised by Lord Abbett that research services received
from brokers cannot be allocated to any particular account, are not a substitute
for Lord Abbett's services but are supplemental to their own research effort
and, when utilized, are subject to internal analysis before being incorporated
by Lord Abbett into their investment process. As a practical matter, it would
not be possible for Lord Abbett to generate all of the information presently
provided by brokers. While receipt of research services from brokerage firms has
not reduced Lord Abbett's normal research activities, the expenses of Lord
Abbett could be materially increased if it purchased such equipment and software
packages directly from the suppliers and attempted to generate such additional
information through its own staff. No commitments are made regarding the
allocation of brokerage business to or among brokers and trades are executed
only when they are dictated by investment decisions of the Fund to purchase or
sell portfolio securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold our shares and/or
shares of other Lord Abbett-sponsored funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as we do, transactions will, to the extent practicable, be allocated among all
participating accounts in proportion to the amount of each order and will be
executed daily until filled so that each account shares the average price and
commission cost of each day.
We will not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from
broker-dealers as consideration for the direction to them of portfolio business.
5.
Purchases, Redemptions
and Shareholder Services
The Series will value its portfolio securities at market value as of the close
of the New York Stock Exchange. Market value will be determined as follows:
securities listed or admitted to trading privileges on the New York or American
Stock Exchange or on the NASDAQ National Market System are valued at the last
sales price, or, if there is no sale on
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that day, at the mean between the last bid and asked prices, or, in the case of
bonds, in the over-the-counter market if, in the judgment of the Fund's
officers, that market more accurately reflects the market value of the
bonds.Over-the-counter securities not traded on the NASDAQ National Market
System are valued at the mean between the last bid and asked prices. Securities
for which market quotations are not available are valued at fair market value
under procedures approved by the Board of Trustees.
The Series is expected to commence operations on July 15, 1996. When the Series
commences operations, the net asset value per share is to be the same as the net
asset value per share of LAUSGSF at the time of the sale by that fund of its
assets to the Series as referred to on the cover page of this Statement. The
maximum offering price of our Class A shares will be computed in the same manner
as the maximum offering price of LAUSGSF shares. On July 15, 1996, the maximum
offering price of LAUSGSF shares will be computed as follows:
Net asset value per share (net assets divided by
shares outstanding)...................................................$2.64
Maximum offering price per share (net asset value
divided by .9525).....................................................$2.77
Our Class C shares will be sold at net asset value (net assets divided by shares
outstanding).
The Fund has entered into a distribution agreement with Lord Abbett under which
Lord Abbett is obligated to use its best efforts to find purchasers for the
shares of the Series and to make reasonable efforts to sell Series shares, so
long as, in Lord Abbett's judgment, a substantial distribution can be obtained
by reasonable efforts.
As described in the prospectus, the Board of Trustees has adopted a Rule 12b-1
Plan (a "Plan") for each class of shares to be issued by the Series, the Class A
Plan and the Class C Plan. The Class A Plan is to become effective upon the
consummation of the acquisition by the Series of the assets of LAUSGSF referred
to on the cover page of this statement, and the Class C Plan is to become
effective upon the consummation of the acquisition by the Series of the assets
of LAUSGST, also referred to on such cover page.
The Plans will require the Board of Trustees to review, on a quarterly basis,
written reports of all amounts expended pursuant to the Plans and the purposes
for which such expenditures were made. The Plans shall continue in effect only
if their continuance is specifically approved at least annually by vote of the
Fund's Board of Trustees and of the Fund's trustees who are not interested
persons of the Fund and who have no direct or indirect financial interest in the
operation of the Plans or in any agreements related to the Plans ("outside
trustees"), cast in person at a meeting called for the purpose of voting on such
Plans and agreements. The Plans may not be amended to increase materially the
amount permitted to be spent for distribution expenses without approval by a
majority of the outstanding of the Class A shares in the case of the Class A
Plan or the Class C shares in the case of the Class C Plan and the approval of a
majority of the trustees, including a majority of the Series' outside trustees.
The Plan may be terminated at any time by vote of a majority of the Fund's
outside trustees or by vote of a majority of the Series' outstanding voting
securities.
CDRC for Class A Shares: As stated in the Prospectus, a 1% contingent deferred
reimbursement charge ("CDRC") will be imposed with respect to those Class A
shares (or Class A shares of another Lord Abbett-sponsored fund or series
acquired through exchange of such shares) on which the Series has paid the
one-time 1% 12b-1 sales distribution fee if such shares are redeemed out of the
Lord Abbett-sponsored family of funds within a period of 24 months from the end
of the month in which the original sale occurred.
No CDRC is payable on redemptions of Class A shares by tax qualified plans under
section 401 of the Internal Revenue Code for benefit payments due to plan loans,
hardship withdrawals, death, retirement or separation from service with respect
to plan participants. The CDRC is received by the Series and is intended to
reimburse all or a portion of the amount paid by the Series if the Class A
shares are redeemed before the Series has had an opportunity to realize the
anticipated benefits of having a large, long-term Class A shareholder account in
the Series. Class A shares on which such
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1% sales distribution fee has been paid may not be exchanged into a fund or
series with a Rule 12b-1 plan for which the payment provisions have not been in
effect for at least one year.
The other Lord Abbett-sponsored funds and series which participate in the
Telephone Exchange Privilege (except Lord Abbett U.S. Government Securities
Money Market Fund, Inc. ("GSMMF") and certain series of Lord Abbett Tax-Free
Income Fund, Inc. and Lord Abbett Tax-Free Income Trust for which a Rule12b-1
Plan is not yet in effect (collectively, the "Non-Plan Series")) are to
institute a CDRC with respect to their Class A shares on the same terms and
conditions. No CDRC will be charged on an exchange of shares between Lord Abbett
funds. Upon redemption of Class A shares out of the Lord Abbett family of funds,
the CDRC will be charged on behalf of and paid to the fund in which the original
purchase (subject to a CDRC) occurred. Thus, if shares of a Lord Abbett fund are
exchanged for shares of another such fund and the shares tendered ("Exchanged
Class A Shares") are subject to a CDRC, the CDRC will carry over to the shares
being acquired, including GSMMF ("Acquired Class A Shares"). Any CDRC that is
carried over to Acquired Class A Shares is calculated as if the holder of the
Acquired Class A Shares had held those shares from the date on which he or she
became the holder of the Exchanged Class A Shares. Although GSMMF and the
Non-Plan Series will not pay a 1% sales distribution fee on $1 million purchases
of their own shares, and will therefore not impose their own CDRC, GSMMF will
collect the CDRC on behalf of other Lord Abbett funds. Acquired Class A shares
held in GSMMF which are subject to a CDRC will be credited with the time such
shares are held in that fund.
In no event will the amount of the Class A Share CDRC exceed 1% of the lesser of
(i) the net asset value of the shares redeemed or (ii) the original cost of such
shares (or of the Exchanged Class A Shares for which such shares were acquired).
No Class A share CDRC will be imposed when the investor redeems (i) amounts
derived from increases in the value of the account above the total cost of
shares being redeemed due to increases in net asset value, (ii) shares with
respect to which no Lord Abbett fund paid a 1% sales distribution fee on
issuance (including shares acquired through reinvestment of dividend income and
capital gains distributions) or (iii) shares which, together with Exchanged
Class A Shares, have been held continuously for 24 months from the end of the
month in which the original sale occurred. In determining whether a Class A
share CDRC is payable, (a) shares not subject to the CDRC will be redeemed
before shares subject to the CDRC and (b) of shares subject to a CDRC, those
held the longest will be the first to be redeemed.
CDRC for Class C Shares: As stated in the Prospectus, a 1% CDRC will also be
imposed with respect to those Class C shares (or Class C shares acquired through
exchange with any other Lord Abbett-sponsored fund or series) on which the
Series has paid, at the time of purchase, a service fee of 0.25% and a
distribution fee of 0.75%, if such shares are redeemed out of the Lord
Abbett-sponsored family of funds before the first anniversary of their original
purchase. The CDRC is received by the Series and is intended to reimburse all or
a portion of the amount paid by the Series if the Class C shares are redeemed
before the Series has had an opportunity to realize the anticipated benefits of
having a large, long-term Class C shareholder account in the Series.
No Class C share CDRC will be charged on an exchange of shares, although it will
be charged on behalf of and paid to the fund or series in which the original
purchase occurred, if shares subject to the Class C share CDRC are redeemed out
of the Lord Abbett-sponsored family of funds before the first anniversary of
their original purchase. Thus, if Class C shares of a participating fund or
series are acquired as a result of an exchange of its shares for those of
another such fund or series and the shares tendered ("Exchanged Class C Shares")
will be subject to a CDRC, the CDRC will carry over to the shares being acquired
("Acquired Class C Shares"). Any CDRC that is carried over to Acquired Class C
Shares is calculated as if the holder of the Acquired Class C Shares had held
those shares from the date on which he or she became the holder of Exchanged
Class C Shares.
In no event will the amount of the Class C share CDRC exceed 1% of the lesser of
(i) the net asset value of the Class C shares redeemed or (ii) the original cost
of such shares (or of Exchanged Class C Shares for which such shares were
acquired). No Class C share CDRC will be imposed when the investor redeems (i)
shares with respect to which no fund or series paid the 0.75% distribution and
0.25% service fees (including shares acquired through reinvestment of dividend
income and capital gains distributions) or (ii) Class C shares which, together
with Exchanged Class C Shares, have been held continuously until the first
anniversary of their original purchase. In determining whether a Class C share
CDRC is payable (a) shares not subject to a CDRC will be redeemed before shares
subject to a CDRC and (b) shares subject to a CDRC and held the longest will be
the first to be redeemed.
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Under the terms of the Statement of Intention to
invest $100,000 or more over a 13-month period as described in the Prospectus,
shares of Lord Abbett-sponsored funds (other than shares of Lord Abbett Equity
Fund ("LAEF"), Lord Abbett Series Fund ("LASF"), Lord Abbett Research Fund if
not offered to the general public ("LARF"), and GSMMF, unless holdings in GSMMF
are attributable to Class A or Class C shares exchanged from a Lord
Abbett-sponsored fund) currently owned by you are credited as purchases (at
their current offering prices on the date the Statement is signed) toward
achieving the stated investment.Shares valued at 5% of the amount of intended
purchases are escrowed and may be redeemed to cover the additional sales charge
payable if the Statement is not completed.The Statement of Intention is neither
a binding obligation on you to buy, nor on the Series to sell, the full amount
indicated.
As stated in the Prospectus, purchasers (as defined in the Prospectus) may
accumulate their Class A share investment in Lord Abbett-sponsored funds (other
than LAEF, LARF, LASF, and GSMMF, unless holdings in GSMMF are attributable to
Class A or Class C shares so that a current investment, plus the purchaser's
holdings valued at the current maximum offering price, reach a level eligible
for a discounted sales charge.
As stated in the Prospectus, our Class A shares may be purchased at net asset
value by our trustees, employees of Lord Abbett, employees of our shareholder
servicing agent and employees of any securities dealer having a sales agreement
with Lord Abbett who consents to such purchases or by the trustee or custodian
under any pension or profit-sharing plan or Payroll Deduction IRA established
for the benefit of such persons or for the benefit of employees of any national
securities trade organization to which Lord Abbett belongs or any company with
an account(s) in excess of $10 million managed by Lord Abbett on a
private-advisory-account basis. For purposes of this paragraph, the terms
"trustees" and "employees" include a trustee's or employee's spouse (including
the surviving spouse of a deceased trustee or employee). The terms "our
trustees" and "employees of Lord Abbett" also include other family members and
retired trustees and employees.
Our Class A shares also may be purchased at net asset value (a) at $1 million or
more, (b) with dividends and distributions from other Lord Abbett-sponsored
funds, except for LARF, LAEF and LASF and except for dividends and distributions
paid on any Class C shares, (c) under the loan feature of the Lord
Abbett-sponsored prototype 403(b) plan for share purchases representing the
repayment of principal and interest, (d) by certain authorized brokers, dealers,
registered investment advisers or other financial institutions who have entered
into an agreement with Lord Abbett in accordance with certain standards approved
by Lord Abbett, providing specifically for the use of our shares in particular
investment products made available for a fee to clients of such brokers,
dealers, registered investment advisers and other financial institutions, and
(e) by employees, partners and owners of unaffiliated consultants and advisors
to Lord Abbett or Lord Abbett-sponsored funds who consent to such purchase if
such persons provide service to Lord Abbett or such funds on a continuing basis
and are familiar with such funds. Class A Shares are offered at net asset value
to these investors for the purpose of promoting goodwill with employees and
others with whom Lord Abbett and/or the Fund have business relationships.
Our Class A shares also may be purchased at net asset value, subject to
appropriate documentation, through a securities dealer where the amount invested
represents redemption proceeds from shares ("Redeemed Shares") of a registered
open-end management investment company not distributed or managed by Lord Abbett
(other than a money market fund), if such redemption has occurred no more than
60 days prior to the purchase of our shares, the Redeemed Shares were held for
at least six months prior to redemption and the proceeds of redemption were
maintained in cash or a money market fund prior to purchase. Purchasers should
consider the impact, if any, of contingent deferred sales charges in determining
whether to redeem shares for subsequent investment in our shares. Lord Abbett
may suspend, change or terminate this purchase option at any time.
Our Class A shares may be issued at net asset value in exchange for the assets,
subject to possible tax adjustment, of a personal holding company or an
investment company. There are economies of selling efforts and sales-related
expenses with respect to offers to these investors and those referred to above.
The Prospectus briefly describes the Telephone Exchange Privilege.You may
exchange some or all of your Class A shares for Class A shares, and you may
exchange some or all of your Class C shares for Class C shares, of Lord
Abbett-sponsored funds offered at this time to the public, to the extent offers
and sales may be made in your state. You should
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read the prospectus of the other fund before exchanging.In establishing a new
account by exchange, shares being exchanged must have a value equal to at least
the minimum initial investment required for the fund into which the exchange is
made.
Shareholders in such other funds have the same right to exchange their shares
for the Series' shares. Exchanges are based on relative net asset values on the
day instructions are received by the Fund in Kansas City if the instructions are
received prior to the close of the NYSE in proper form. No sales charges are
imposed except in the case of exchanges of Class A shares out of GSMMF (unless a
sales charge was paid on the initial investment). Exercise of the exchange
privilege will be treated as a sale for federal income tax purposes, and,
depending on the circumstances, a gain or loss may be recognized. In the case of
an exchange of shares that have been held for 90 days or less where no sales
charge is payable on the exchange, the original sales charge, if any, incurred
with respect to the exchanged shares will be taken into account in determining
gain or loss on the exchange only to the extent such charge exceeds the sales
charge that would have been payable on the acquired shares had they been
acquired for cash rather than by exchange. The portion of the original sales
charge not so taken into account will increase the basis of the acquired shares.
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as a means for taking advantage of
short-term swings in the market, and we reserve the right to terminate or limit
the privilege of any shareholder who makes frequent exchanges. We can revoke or
modify the privilege for all shareholders upon 60 days' prior notice.
A redemption order is in proper form when it contains all of the information and
documentation required by the order form or supplementally by Lord Abbett or the
Fund to carry out the order. The signature(s) and any legal capacity of the
signer(s) must be guaranteed by an eligible guarantor. See the Prospectus for
expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Trustees may authorize redemption of all of the shares in any
account in which there are fewer than 50 shares.Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts.At least 60 days' prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
Under the Div-Move service described in the Prospectus, you can invest the
dividends paid on your account into an existing account in any other Lord
Abbett-sponsored fund or series that issues Class A shares or Class B shares, as
the case may be. The account must be either your account, a joint account for
you and your spouse, a single account for your spouse, or a custodial account
for your minor child under the age of 21. You should read the prospectus of the
other fund before investing.
The Invest-A-Matic method of investing is described in the Prospectus. To avail
yourself of this method you complete the application form, selecting the time
and amount of your bank checking account withdrawals and the funds for
investment, include a voided, unsigned check and complete the bank
authorization.
The Systematic Withdrawal Plan (the "SWP") also is described in the Prospectus.
You may establish a SWP if you own or purchase uncertificated shares having a
current offering price value of at least $10,000.Lord Abbett prototype
retirement plans have no such minimum. The SWP involves the planned redemption
of shares on a periodic basis by receiving either fixed or variable amounts at
periodic intervals.Since the value of shares redeemed may be more or less than
their cost, gain or loss may be recognized for income tax purposes on each
periodic payment.Normally, you may not make regular investments at the same
time you are receiving systematic withdrawal payments because it is not in your
interest to pay a sales charge on new investments when in effect a portion of
that new investment is soon withdrawn. The minimum investment accepted while a
withdrawal plan is in effect is $1,000.The SWP may be terminated by you or by
us at any time by written notice.
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The Prospectus indicates the types of retirement plans for which Lord Abbett
provides forms and explanations.Lord Abbett makes available the retirement plan
forms and custodial agreements for IRAs (Individual Retirement Accounts
including Simplified Employee Pensions), 403(b) plans and qualified pension and
profit-sharing plans, including 401(k) plans.The forms name Investors Fiduciary
Trust Company as custodian and contain specific information about the plans.
Explanations of the eligibility requirements, annual custodial fees and
allowable tax advantages and penalties are set forth in the relevant plan
documents. Adoption of any of these plans should be on the advice of your legal
counsel or qualified tax adviser.
6.
Past Performance
The Series will compute its average annual compounded rate of total return
during specified periods that would equate the initial amount invested to the
ending redeemable value of such investment by adding one to the computed average
annual total return, raising the sum to a power equal to the number of years
covered by the computation and multiplying the result by one thousand dollars,
which represents a hypothetical initial investment. The calculation assumes
deduction of the maximum sales charge from the initial amount invested and
reinvestment of all income dividends and capital gains distributions on the
reinvestment dates at prices calculated as stated in the Prospectus. The ending
redeemable value is determined by assuming a complete redemption at the end of
the period(s) covered by the average annual total return computation.
Our yield quotation will be based on a 30-day period ended on a specified date,
computed by dividing our net investment income per share earned during the
period by our maximum offering price per share on the last day of the period.
This is determined by finding the following quotient: take the Series' dividends
and interest earned during the period minus its expenses accrued for the period
and divide by the product of (i) the average daily number of Series shares
outstanding during the period that were entitled to receive dividends and (ii)
the Series' maximum offering price per share on the last day of the period. To
this quotient add one. This sum is multiplied by itself five times. Then one is
subtracted from the product of this multiplication and the remainder is
multiplied by two.
These figures represent past performance, and an investor should be aware that
the investment return and principal value of a Series investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. Therefore, there is no assurance that such performance will
be repeated in the future.
7.
Taxes
The value of any shares redeemed, repurchased or otherwise sold may be more or
less than your tax basis in the shares at the time the redemption, repurchase or
sale is made. Any gain or loss will generally be taxable for federal income tax
purposes. Any loss realized on the sale, redemption or repurchase of Series
shares which you have held for one year or less will be treated for tax purposes
as a long-term capital loss to the extent of any capital gains distributions
which you received with respect to such shares. Losses on the sale of stock or
securities are not deductible if, within a period beginning 30 days before the
date of the sale and ending 30 days after the date of the sale, the taxpayer
acquires stock or securities that are substantially identical.
The Series will be subject to a 4% non-deductible excise tax on certain amounts
not distributed (and not treated as having been distributed) on a timely basis
in accordance with a calendar-year distribution requirement. The Series intends
to distribute to shareholders each year an amount adequate to avoid the
imposition of such excise tax.
8.
Information About the Fund
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment accounts. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Fund's Code
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of Ethics which complies, in substance, with each of the recommendations of the
Investment Company Institute's Advisory Group on Personal Investing. Among other
things, the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security 7 days
before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account
considers a trade or trades in such security, from profiting on trades of the
same security within 60 days and from trading on material and non-public
information. The Code imposes certain similar requirements and restrictions on
the independent directors and trustees of each Lord Abbett-sponsored mutual fund
to the extent contemplated by the recommendations of the Advisory Group.
