1940 Act File No. 811-7988
1933 Act File No. 333-00919
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. __
[X] Post-Effective Amendment No. 1
LORD ABBETT INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
The General Motors Building, 767 Fifth Avenue
New York, New York 10153
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: 800-426-1130
Kenneth B. Cutler
Vice President and Secretary
Lord Abbett Investment Trust
The General Motors Building
767 Fifth Avenue
New York, New York 10153
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of the registration statement.
NO FILING FEE IS REQUIRED BECAUSE AN INDEFINITE NUMBER OF SHARES ARE BEING
REGISTERED PURSUANT TO RULE 24f-2 UNDER THE INVESTMENT COMPANY ACT OF 1940.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE ON
THE DATE OF FILING PURSUANT TO PARAGRAPH (b) OF RULE 485.
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LORD ABBETT INVESTMENT TRUST
CROSS-REFERENCE SHEET
ITEMS REQUIRED BY FORM N-14
PART A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
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1. Beginning of Registration Statement and Outside Cover Page of Registration State-
Front Cover Page of Prospectus ment; Cover Page of Proxy Statement
and Prospectus
2. Beginning and Outside Back Cover Page of Table of Contents
Prospectus
3. Fee Table, Synopsis and Risk Factors Fee Tables; Summary of Proposals
4. Information about the Transaction Summary of Proposals; Information
About the Reorganizations
5. Information about the Registrant Summary of Proposals; Comparative
Information about the Funds; Ad-
ditional Information; Prospectus of
Lord Abbett Investment Trust dated
March 20, 1996
6. Information about the Company Being Acquired Summary of Proposals; Comparative
Information about the Funds
7. Voting Information Meetings of Shareholders of the Re-
organized Fund and the Securities
Trust; Notice of Special Meeting of
Shareholders; Notice of Annual
Meeting of Shareholders; Summary of
Proposals
8. Interest of Certain Persons and Experts Additional Information
9. Additional Information Required for Reoffering Not Applicable
by Persons Deemed to be Underwriters
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<TABLE>
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PART B STATEMENT OF ADDITIONAL
ITEM NO. ITEM CAPTION INFORMATION CAPTION
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10. Cover Page Cover Page
11. Table of Contents Not Applicable
12. Additional Information about the Registrant Cover Page of Proxy Statement and
Prospectus; Lord Abbett Investment
Trust Statement of Additional
Information dated March 20, 1996
incorporated by reference.
13. Additional Information about the Company Being Cover Page of Proxy Statement and
Acquired Prospectus; Reorganized Fund and
Securities Trust Statements of
Addi-
tional Information incorporated by
reference dated April 1, 1996 and
March 1, 1996, respectively.
14. Financial Statements Not Applicable
PART C
ITEM NO. PART C CAPTION
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15. Indemnification Indemnification
16. Exhibits Exhibits
17. Undertakings Undertakings
Signatures
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<PAGE>
[Letterhead of Lord Abbett U.S. Government Securities Fund, Inc.]
Dear Shareholder,
You are cordially invited to attend the Annual Meeting of Shareholders of
Lord Abbett U.S. Government Securities Fund, Inc. scheduled to be held on June
19, 1996, at 11:00 a.m., at the General Motors Building, 767 Fifth Avenue, New
York, New York. Your Board of Directors looks forward to greeting those
shareholders who are able to attend.
At the meeting, in addition to the election of directors and the
appointment of auditors, you will be asked to approve or disapprove a proposal
to reorganize your Fund as a separate series of another Lord Abbett fund that is
organized as a Delaware business trust. The trust form will provide to
investors in certain states the more favorable state tax treatment afforded to
investors in trusts whose assets consist primarily of U.S. Government
securities.
After the reorganization, if approved, your Fund's portfolio will continue
to be managed by Lord, Abbett & Co. under an investment management agreement
substantially similar to the Fund's current management agreement with Lord,
Abbett & Co. and will be invested under investment policies that have been
changed from those of your Fund to provide greater flexibility and uniformity.
In addition, if reorganized, your Fund will have a somewhat different 12b-1 Plan
and Distribution Agreement that is intended to maintain the Fund's competitive
position.
The proposed reorganization will be a tax-free reorganization for federal
income tax purposes. Such proposal is fully described in the enclosed proxy
statement and prospectus. I encourage you to review the proxy statement and
prospectus for all the details regarding the meeting agenda.
Your Board of Directors believes the matters proposed in the agenda are in
the best interests of the Fund and its shareholders and unanimously recommends a
vote "for" each proposal. Regardless of the number of shares you own, it is
important that they be represented and voted. Accordingly, please sign, date
and mail the enclosed proxy card in the postage paid return envelope.
Your prompt response will help save the Fund the expense of additional
solicitation.
Sincerely,
Ronald P. Lynch
Chairman of the Board
April 24, 1996
<PAGE>
LORD ABBETT U.S. GOVERNMENT SECURITIES FUND, INC.
767 Fifth Avenue
New York, New York 10153
Notice of Annual Meeting of Shareholders
to be held on June 19, 1996 April 24, 1996
Notice is given hereby of an annual meeting of the shareholders of Lord Abbett
U.S. Government Securities Fund, Inc. (the "Reorganized Fund"). The meeting
will be held in the offices of Lord, Abbett & Co., on the 11th floor of The
General Motors Building, 767 Fifth Avenue, New York, New York on Wednesday, June
19, 1996, at 11:00 a.m. for the following purposes and to transact such other
business as may properly come before the meeting and any adjournments thereof.
ITEM 1. To consider and act upon an Agreement and Plan of Reorganization
between Lord Abbett U.S. Government Securities Series (the "Acquiring
Fund"), a series of Lord Abbett Investment Trust, and the Reorganized
Fund providing for (a) a reorganization of the Reorganized Fund into
the Acquiring Fund (the "Reorganization") by means of the transfer of
all of the assets of the Reorganized Fund to the Acquiring Fund in
exchange for shares of the Acquiring Fund (to be designated "Class A
Shares") and the assumption by the Acquiring Fund of all of the
liabilities of the Reorganized Fund, (b) the distribution of such Class
A Shares to the shareholders of the Reorganized Fund and (c) the
subsequent dissolution of the Reorganized Fund. (The investment
policies and restrictions of the Acquiring Fund have been changed from
those of the Reorganized Fund to provide greater flexibility in the
management of the portfolio of the Acquiring Fund and to provide
greater uniformity in the investment policies and restrictions among
the various Lord Abbett-sponsored funds.) A vote in favor of this Item
1 will be deemed to be a vote to authorize the Reorganized Fund, as the
sole shareholder of Class A Shares of the Acquiring Fund prior to the
Reorganization, to (i) approve a proposed distribution plan pursuant to
Section 12 of the Investment Company Act of 1940, as amended, and Rule
12b-1 thereunder applicable to that class; and (ii) approve the
proposed investment management agreement between the Acquiring Fund and
Lord, Abbett & Co.
ITEM 2. In the event the Reorganization is not consummated for any reason:
(A) To elect directors to serve as members of the Board of Directors of
the Reorganized Fund; and
(B) To ratify the selection of Deloitte & Touche LLP as the independent
public accountants of the Reorganized Fund for the current fiscal
year.
By order of the Board of Directors
<PAGE>
Kenneth B. Cutler
Vice President and Secretary
The Board of Directors has fixed the close of business on March 22, 1996 as the
record date for determination of shareholders of the Reorganized Fund entitled
to notice of and to vote at the meeting. Shareholders are entitled to one vote
for each share held. As of March 22, there were 1,167,745,460 shares of the
Reorganized Fund issued and outstanding.
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PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD.
SIGN, DATE AND RETURN IT IN THE ENVELOPE PROVIDED.
TO SAVE THE COST OF ADDITIONAL SOLICITATIONS, PLEASE MAIL YOUR PROXY PROMPTLY.
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<PAGE>
[Letterhead of Lord Abbett Securities Trust-Lord Abbett U.S. Government
Securities Trust]
Dear Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders of
Lord Abbett Securities Trust scheduled to be held on June 19, 1996, at 11:00
a.m., at the General Motors Building, 767 Fifth Avenue, New York, New York.
Your Board of Trustees looks forward to greeting those shareholders who are able
to attend.
At the meeting, in addition to the appointment of auditors, you will be
asked to approve or disapprove a proposal to combine your Fund with another Lord
Abbett fund which has an investment objective substantially similar to that of
your Fund and has investment policies that have been changed from those of your
Fund to provide greater uniformity among the Lord Abbett-sponsored funds and
greater flexibility in the management of your Fund's portfolio.
Such proposal, if approved, will eliminate the offering of substantially
identical funds, as well as take advantage of potential economies of scale. In
addition, the proposed combination will be a tax-free reorganization for federal
income tax purposes. Such proposal is fully described in the enclosed proxy
statement and prospectus. I encourage you to review the proxy statement and
prospectus for all the details regarding the meeting agenda.
Your Board of Trustees believes the matters proposed in the agenda are in
the best interests of the Fund and its shareholders and unanimously recommends a
vote "for" each proposal. Regardless of the number of shares you own, it is
important that they be represented and voted. Accordingly, please sign, date
and mail the enclosed proxy card in the postage paid return envelope. If you
have any questions regarding the meeting agenda or need assistance in voting,
please contact our proxy solicitor, D.F. King & Co., Inc., at 1-800-207-3156.
Your prompt response will help save the Fund the expense of additional
solicitation.
Sincerely,
Ronald P. Lynch
Chairman of the Board
April 24, 1996
<PAGE>
LORD ABBETT SECURITIES TRUST--LORD ABBETT U.S. GOVERNMENT SECURITIES TRUST
767 Fifth Avenue
New York, New York 10153
Notice to shareholders of Lord Abbett U.S. Government Securities April 24,
1996
Trust (the"Acquired Trust") of a Special Meeting of shareholders of
Lord Abbett Securities Trust to be held on June 19, 1996
Notice is given hereby to the shareholders of the Acquired Trust of a special
meeting of the shareholders of Lord Abbett Securities Trust. The meeting will
be held in the offices of Lord, Abbett & Co., on the 11th floor of The General
Motors Building, 767 Fifth Avenue, New York, NY on June 19, 1996, at 11:00 a.m.
for the following purposes and to transact such other business as may properly
come before the meeting and any adjournments thereof.
ITEM 1. To consider and act upon an Agreement and Plan of Reorganization
between the Acquired Trust, a series of Lord Abbett Securities Trust,
and Lord Abbett U.S. Government Securities Series (the "Acquiring
Fund"), a series of Lord Abbett Investment Trust, providing for (a) the
transfer of all of the assets of the Acquired Trust to the Acquiring
Fund in exchange for shares of a new class of the Acquiring Fund (to be
designated "Class C Shares") and the assumption by the Acquiring Fund
of all of the liabilities of the Acquired Trust, (b) the distribution
of such Class C Shares to the shareholders of the Acquired Trust and
(c) the subsequent termination of the Acquired Trust. (The investment
policies and restrictions of the Acquiring Fund are expected to differ
from those of the Acquired Trust in ways that are intended to provide
greater flexibility in the management of the portfolio of the Acquiring
Fund and to provide greater uniformity in the investment policies and
restrictions among the various Lord Abbett-sponsored funds.) A vote in
favor of this Item 1 will be deemed to be a vote to authorize the
Acquired Trust, as the sole shareholder of Class C Shares prior to this
reorganization, to approve a proposed distribution plan pursuant to
Section 12 of the Investment Company Act of 1940, as amended, and Rule
12b-1 thereunder applicable to that class.
ITEM 2. To ratify the selection of Deloitte & Touche LLP as the independent
public accountants of Lord Abbett Securities Trust for the current
fiscal year.
By order of the Board of Directors
Kenneth B. Cutler
Vice President and Secretary
<PAGE>
The Board of Trustees has fixed the close of business on March 22, 1996 as the
record date for determination of shareholders of the Acquired Trust entitled to
notice of and to vote at the meeting. Shareholders are entitled to one vote for
each share held. As of March 22, there were 70,970,481 shares of the Acquired
Trust and 138,028,692 shares of Lord Abbett Securities Trust issued and
outstanding.
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PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD.
SIGN, DATE AND RETURN IT IN THE ENVELOPE PROVIDED.
TO SAVE THE COST OF ADDITIONAL SOLICITATIONS, PLEASE MAIL YOUR PROXY PROMPTLY.
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<PAGE>
PROXY STATEMENT AND PROSPECTUS DATED APRIL 24, 1996
ACQUISITION OF THE ASSETS OF
Lord Abbett U.S. Government Securities Fund, Inc. and
Lord Abbett U.S. Government Securities Trust, a series of
Lord Abbett Securities Trust
The General Motors Building, 767 Fifth Avenue
New York, NY 10153
BY AND IN EXCHANGE FOR CLASS A AND CLASS C SHARES, RESPECTIVELY, OF
Lord Abbett U.S. Government Securities Series, a series of
Lord Abbett Investment Trust
The General Motors Building, 767 Fifth Avenue
New York, NY 10153
This Proxy Statement and Prospectus relates to Class A shares (the "Class
A shares") and Class C shares (the "Class C shares") of Lord Abbett U.S.
Government Securities Series (the "Acquiring Fund"), a series of Lord Abbett
Investment Trust (the "Investment Trust"), to be issued to, and in exchange for
all the assets of, respectively, Lord Abbett U.S. Government Securities Fund,
Inc. (the "Reorganized Fund") and Lord Abbett U.S. Government Securities Trust
(the "Acquired Trust" and, together with the Reorganized Fund and the Acquiring
Fund, the "Funds"), a series of Lord Abbett Securities Trust (the "Securities
Trust"). The telephone number of the principal executive office of each of the
Funds is 1-800-426-1130. In exchange for such assets, the Acquiring Fund will
also assume all of the liabilities of the Reorganized Fund and the Acquired
Trust. Following receipt of the Class A shares and the Class C shares, the
Reorganized Fund will be dissolved and the Acquired Trust will be terminated and
the Class A shares and Class C shares will be distributed to the respective
shareholders of those Funds. The shareholders of the Reorganized Fund and the
Acquired Trust are being asked to vote to approve or disapprove these proposed
transactions (with respect to the Reorganized Fund, the "Fund Reorganization,"
and with respect to the Acquired Trust, the "Trust Reorganization," and
collectively, the "Reorganizations"), which are more fully described in this
Proxy Statement and Prospectus.
ANY SHAREHOLDER HAVING A QUESTION REGARDING THE MEETING AGENDA OR NEEDING
ASSISTANCE IN VOTING, SHOULD CONTACT THE REORGANIZED FUND'S SHAREHOLDER
SERVICING AGENT, DST SYSTEMS, INC.,
AT 1-800-821-5129
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>
The Reorganized Fund and the Securities Trust are open-end diversified
investment management companies. The Reorganized Fund and the Acquired Trust
seek high current income with relatively low risk of price decline. They seek
this objective by investing primarily in intermediate- and long-term U.S.
Government securities. The Investment Trust is also an open-end diversified
investment management company. It consists of two series in addition to the
Acquiring Fund. The Acquiring Fund is a new series of Investment Trust that
will seek high current income consistent with reasonable risk. It will conduct
no investment operations prior to the consummation of the Fund Reorganization.
Lord Abbett serves as investment manager to the Reorganized Fund and the
Acquired Trust and will serve as investment manager of the Acquiring Fund under
an investment management agreement substantially similar to the current
investment management agreement of the Reorganized Fund (see "Comparative
Information about the Funds -- Management Agreements").
The Class A shares and the Class C shares will share pro-rata in the
portfolio, income and expenses of the Acquiring Fund, except that each class
will bear the expense of its own distribution and shareholder servicing
arrangements and certain other expenses. See "Information About the
Reorganizations -- Shares of the Acquiring Fund." The directors of the
Reorganized Fund believe that the proposed Fund Reorganization will enable
shareholders of the Reorganized Fund to obtain the benefits of certain tax
advantages that flow from the trust form. The trustees of the Acquired Trust
believe that the proposed Trust Reorganization will enable the shareholders of
the Acquired Trust to benefit from economies of scale while continuing to invest
in a portfolio of securities managed by Lord Abbett under an investment
objective that is substantially similar to that of the Acquired Trust. See
"Information About the Reorganizations -- Reasons for the Reorganizations."
This Proxy Statement and Prospectus sets forth concisely the
information about the Acquiring Fund that shareholders of the Reorganized Fund
and Acquired Trust should know before voting on the Reorganizations. It should
be read and retained for future reference. Attached as Exhibits A(1) and (2) to
this Proxy Statement and Prospectus are copies of the Agreements and Plans of
Reorganization (the "Fund Plan" with respect to the Reorganized Fund and the
"Trust Plan" with respect to the Acquired Trust, and collectively, the "Plans")
for the respective Reorganizations of the Reorganized Fund and the Acquired
Trust. This Proxy Statement and Prospectus is accompanied by the Prospectus of
the Acquiring Fund dated March 20, 1996 (the "Acquiring Fund Prospectus"), which
Prospectus is incorporated by reference herein. Also incorporated herein by
reference are (a) the Statement of Additional Information dated the date hereof
relating to this Proxy Statement and Prospectus, including the Statement of
Additional Information of the Reorganized Fund dated April 1, 1996, the
Statement of Additional Information of the Lord Abbett Securities Trust dated
March 1, 1996 and the Statement of Additional Information of the Acquiring Fund
dated March 20, 1996, and (b) the Prospectus of the Reorganized Fund dated April
1, 1996 (the "Reorganized Fund Prospectus") and the Prospectus of the Securities
Trust dated March 1, 1996 (the "Acquired Trust Prospectus"). Such Statements of
Additional Information and such Prospectuses are available, upon oral or written
request, and at no charge, from the Acquiring Fund, at its above-noted address
or by calling 1-800-874-3733.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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MEETINGS OF SHAREHOLDERS OF THE REORGANIZED FUND AND THE
SECURITIES TRUST............................................................................. 2
FEE TABLES.................................................................................... 4
ITEM 1. APPROVAL OF THE AGREEMENTS
AND PLANS OF REORGANIZATION
SUMMARY OF PROPOSALS.................................................................. 6
INFORMATION ABOUT THE REORGANIZATIONS................................................. 10
COMPARATIVE INFORMATION ABOUT THE FUNDS............................................... 20
REQUIRED VOTES....................................................................... 23
ITEM 2. FOR REORGANIZED FUND SHAREHOLDERS ONLY --
A. Election of Directors of the Reorganized Fund.................................... 24
B. Ratification or Rejection of Independent Public Accountants...................... 30
ITEM 3. FOR ACQUIRED TRUST SHAREHOLDERS ONLY --
Ratification or Rejection of Independent Public Accountants.......................... 30
ADDITIONAL INFORMATION....................................................................... 31
</TABLE>
Exhibit A (1) - Agreement and Plan of Reorganization with respect to the
Reorganized Fund
(2) - Agreement and Plan of Reorganization with respect to the
Acquired Trust
Exhibit B - Proposed Class A 12b-1 Plan
Exhibit C - Comparison of Certain Investment Policies and Restrictions
<PAGE>
MEETINGS OF SHAREHOLDERS OF THE REORGANIZED FUND
AND THE SECURITIES TRUST
This Prospectus and Proxy Statement is furnished in connection with the
solicitation of proxies by and on behalf of the Board of Directors of the
Reorganized Fund and the Board of Trustees of the Securities Trust to be used at
an Annual Meeting of Shareholders of the Reorganized Fund and a Special Meeting
of Shareholders of Securities Trust and any adjournments thereof. Such meetings
are to be held at 11:00 a.m. on June 19, 1996, at the offices of Lord Abbett on
the 11th floor of the General Motors Building, 767 Fifth Avenue, New York, NY
10153. This Prospectus and Proxy Statement and the enclosed proxy card are
first being mailed to shareholders of the Reorganized Fund and the Acquired
Trust on or about April 24, 1996.
To avoid a need to call an Acquiring Fund shareholders' meeting after the
Reorganizations, the shareholders of the Reorganized Fund are being asked, as
part of their vote on the Fund Plan, to authorize the Reorganized Fund, as the
sole shareholder of the Acquiring Fund before the Fund Reorganization, to (a)
approve a proposed distribution plan pursuant to Section 12 of the Investment
Company Act of 1940, as amended (the "1940 Act"), and Rule 12b-1 thereunder
applicable to the Class A shares, and (b) approve a proposed investment
management agreement between the Acquiring Fund and Lord, Abbett & Co. ("Lord
Abbett") that will be substantially similar to the current investment management
agreement of the Reorganized Fund. For the same reason, the shareholders of the
Acquired Trust are being asked, as part of their vote on the Trust Plan, to
authorize the Acquired Trust, as the sole Class C shareholder of the Acquiring
Fund before the Trust Reorganization, to approve a proposed distribution plan
that is substantially the same as the current distribution plan of the Acquired
Trust. A vote in favor of a Reorganization will be deemed also to be a vote to
authorize the Reorganized Fund or the Acquired Trust, as the case may be, to
take such action.
At the close of business on March 22, 1996 (the "Record Date"), there were
issued and outstanding 1,167,745,460 shares of the Reorganized Fund, 70,970,481
shares of the Acquired Trust and 138,028,692 shares of the Securities Trust.
Only shareholders of record as of the close of business on the Record Date will
be entitled to notice of, and to vote at, the meetings or any adjournment
thereof. Shareholders of the Reorganized Fund and the Securities Trust are
entitled to one vote for each share. The Reorganized Fund is a Maryland
corporation and the Acquired Trust is a series of a Delaware business trust.
Under Maryland and Delaware law, shares owned by two or more persons (whether as
joint tenants, co-fiduciaries or otherwise) will be voted as follows, unless a
written instrument or court order providing to the contrary has been filed with
the Secretary of the Reorganized Fund or the Securities Trust, as the case may
be: (1) if only one votes, that vote binds all; (2) if more than one votes, the
vote of the majority binds all; and (3) if more than one votes and the vote is
evenly divided, the vote will be cast proportionately.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the applicable meeting, the proxies named therein will vote the
shares represented by the proxy in accordance with the instructions marked
thereon. A proxy may be revoked by the signer at any time at or before the
applicable meeting by written notice to the Reorganized Fund or the Securities
Trust, as the case may be, by execution of a later-dated proxy or by voting in
person at the meeting. Unless revoked, all valid proxies will be voted in
accordance with the specifications thereon or, in the absence of such
2
<PAGE>
specifications, FOR approval of the applicable Plan and Reorganization, FOR the
other matter or matters specified in the notice of such meeting and on any other
matters as deemed appropriate.
Proxies will be solicited by mail. Additional solicitations may be made
by telephone, facsimile or personal contact by officers or employees of Lord
Abbett and its affiliates. The Reorganized Fund and the Acquired Trust may also
request brokerage houses, custodians, nominees, and fiduciaries who are
stockholders of record to forward proxy materials to the beneficial owners. D.F.
King & Co. has been retained to assist in the solicitation of proxies. The cost
of the solicitations will be borne by the Reorganized Fund and the Acquired
Trust, respectively, at an estimated cost of $66,000 for the Reorganized Fund
and $20,000 for the Acquired Trust.
In the event that sufficient votes to approve a Plan are not received by
the meeting date, the persons named as proxies may propose one or more
adjournments of the applicable meeting to permit further solicitation of
proxies. In determining whether to adjourn a meeting, the following factors may
be considered: the percentage of votes actually cast, the percentage of
negative votes actually cast and the nature of any further solicitation and any
information to be provided to shareholders with respect to such a solicitation.
Any such adjournment will require an affirmative vote by the holders of a
majority of the shares present in person or by proxy and entitled to vote at the
meeting. The persons named as proxies will vote upon such adjournment after
consideration of the best interests of all shareholders.
If the Fund Plan is not approved by the shareholders of the Reorganized
Fund, or if the Fund Reorganization is not consummated for any other reason, the
Reorganized Fund will continue to engage in business as Lord Abbett U.S.
Government Securities Fund, Inc. If the Trust Plan is not approved by the
shareholders of the Acquired Trust, or if the Trust Reorganization is not
consummated for any other reason, the Acquired Trust will continue to engage in
business as Lord Abbett U.S. Government Securities Trust, a series of Lord
Abbett Securities Trust. If the Fund Plan is approved by the shareholders of
the Reorganized Fund, and all other conditions to consummation of the Fund
Reorganization are satisfied, the Fund Reorganization will occur regardless of
whether the Trust Plan is approved or the Trust Reorganization is consummated.
3
<PAGE>
FEE TABLES
FEE TABLE WITH RESPECT TO FUND REORGANIZATION. Set forth below is a summary
comparison of the expenses of (a) the shares of the Reorganized Fund and (b) on
a pro-forma basis after giving effect to the Fund Reorganization, the Class A
Shares of the Acquiring Fund (to be issued in the Fund Reorganization in
exchange for the shares of the Reorganized Fund). The annual operating expenses
shown in the summary comparison for the shares of the Reorganized Fund are the
actual expenses for the fiscal year ended November 30, 1995, and those shown on
a pro-forma basis for the Class A shares of the Acquiring Fund are such actual
expenses of the Reorganized Fund adjusted for estimated changes in management
fee and Rule 12b-1 plan expenses. The example set forth below is not a
representation of past or future expenses. Actual expenses may be greater or
less than those shown.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES REORGANIZED FUND SHARES ACQUIRING FUND
(AS A PERCENTAGE OF OFFERING PRICE) CLASS A SHARES (PRO-FORMA)
<S> <C> <C>
Maximum Sales Load on Purchases/(1)/.. 4.75% 4.75%
Deferred Sales Load /(1)/............. None/(2)/ None/(2)/
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee........................... 0.50% 0.49%/(3)/
Rule 12b-1 Fees.......................... 0.25% 0.27%/(3)/
Other Expenses........................... 0.15% 0.15%
TOTAL OPERATING EXPENSES................. 0.90% 0.91%/(3)/
</TABLE>
Example: Assume annual return is 5% and there is no change in the level of
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expenses described above. For every $1,000 invested, with reinvestment of all
distributions, you would pay the following total expenses if you closed your
account after the number of years indicated.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------
REORGANIZED FUND SHARES/(4)/ $56 $75 $95 $153
ACQUIRING FUND CLASS A SHARES $56 $75 $96 $154
(PRO-FORMA)/(4)/
/(1)/ Sales "load" is referred to as sales "charge" and "deferred sales load"
is referred to as "contingent deferred reimbursement charge" throughout
this Proxy Statement and Prospectus. Investors should be aware that long-
term Class A shareholders may pay, as a front-end sales charge and under
the Rule 12b-1 Plan of the Reorganized Fund and under the Rule 12b-1 Plan
to be applicable to the Class A shares of the Acquiring Fund, more than
the economic equivalent of the maximum permitted front-end sales charge
as permitted by certain rules of the National Association of Securities
Dealers, Inc.
/(2)/ With respect to shares on which the Reorganized Fund's Rule 12b-1
distribution fee for purchases of $1 million or more has been paid, and
Class A shares on which the Acquiring Fund's Rule 12b-1 distribution fee
will be paid, certain redemptions are subject to a contingent deferred
reimbursement charge of up to 1% if the redemption occurs within 24
months after the month of purchase. Holding periods for shares purchased
prior to the Fund Reorganization will carry over for the purpose of
determining the applicability of the CDRC to Class A shares. See "12b-1
Plans" under "Information About the Reorganizations" for a description of
the proposed 12b-1 Plan for the A shares.
/(3)/ The pro-forma Class A share management fee is lower than the actual fee
for the fiscal year ended November 30, 1995 because the addition of the
Acquired Trust assets in the pro-forma calculation increased the average
net assets of the Acquiring Fund above the break-point where the
management fee declines from 0.50% to 0.45%. The proposed Rule 12b-1 Plan
for the A shares provides for annual fees, if approved by the Board of
Directors, of up to 0.50% of the net 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% of the average value of the net assets of
the Fund attributable to the Class A shares. The pro-forma Rule 12b-1
fees for the Acquiring Fund Class A shares are based on the distribution
fee payments authorized by the board. See "12b-1 Plans" under
"Information About the Reorganizations."
/(4)/ Based on total actual operating expenses and pro-forma operating expenses
shown in the table above.
The foregoing is provided to assist shareholders of the Reorganized Fund in
understanding the various expenses the holders of shares of the Reorganized Fund
have incurred and that such holders might incur as holders of the Class A shares
following the Fund Reorganization.
4
<PAGE>
FEE TABLE WITH RESPECT TO TRUST REORGANIZATION. Set forth below is a summary
comparison of the expenses of (a) the shares of the Acquired Trust and (b) on a
pro-forma basis after giving effect to the Trust Reorganization, the Class C
shares of the Acquiring Fund (to be issued in the Trust Reorganization in
exchange for the shares of the Acquired Trust). The annual operating expenses
shown in the summary comparison for the shares of the Acquired Trust are the
actual expenses for the fiscal year ended October 31, 1995, and those shown on a
pro-forma basis for the Class C shares of the Acquiring Fund are the actual
expenses of the Reorganized Fund for the fiscal year ended November 30, 1995,
adjusted for estimated changes in management fee and Rule 12b-1 plan expenses.
The example set forth below is not a representation of past or future expenses.
Actual expenses may be greater or less than those shown.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES ACQUIRED TRUST SHARES ACQUIRING FUND
(AS A PERCENTAGE OF OFFERING PRICE) CLASS C SHARES (PRO-FORMA)
<S> <C> <C>
Maximum Sales Load on Purchases/(1)/....... None/(2)/ None/(2)/
Deferred Sales Load /(1)/.................. 1.00%/(3)/ 1.00%/(3)/
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee.............................. 0.50% 0.49%/(2)/
Rule 12b-1 Fees............................. 0.92%/(2)/ 0.92%/(2)/
Other Expenses.............................. 0.16% 0.15%
TOTAL OPERATING EXPENSES.................... 1.58% 1.56%
</TABLE>
Example: Assume each Fund's annual return is 5% and there is no change in the
- -------
level of expenses described above. For every $1,000 invested, with reinvestment
of all distributions, you would pay the following total expenses if you closed
your account after the number of years indicated.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------
ACQUIRED TRUST SHARES/(4)/
ACQUIRING FUND CLASS C SHARES $16 $49 $85 $186
(PRO-FORMA)/(4)/
/(1)/ Sales "load" is referred to as sales "charge" and "deferred sales load"
is referred to as "contingent deferred reimbursement charge" throughout
this Proxy Statement and Prospectus.
/(2)/ Although the Acquired Trust does not, and the Acquiring Fund will not
with respect to the Class C shares, charge a front-end sales charge,
investors should be aware that long-term shareholders may pay, under the
Rule 12b-1 Plan of the Acquired Trust and under the Rule 12b-1 Plan to be
applicable to the Class C shares of the Acquiring Fund (which pays and
will pay annual 0.25% service and 0.75% distribution fees), more than the
economic equivalent of the maximum front-end sales charge as permitted by
certain rules of the National Association of Securities Dealers, Inc. The
Pro-forma Class C share management fee is lower than the actual fee for
the fiscal year ended November 30, 1995 because the addition of the
Acquired Trust assets in the pro-forma calculation increased the average
net assets of the Acquiring Fund above the break-point where the
management fee declines from 0.50% to 0.45%.
/(3)/ Redemptions of the Acquired Trust shares are, and redemptions of the
Class C shares will be, subject to a 1% contingent deferred reimbursement
charge if the redemption occurs before the first anniversary of the share
purchase. Holding periods for shares purchased prior to the Trust
Reorganization will carry over for the purpose of determining the
applicability of the CDRC to Class C shares.
/(4)/ Based on total actual operating expenses and pro-forma operating expenses
shown in the table above.
The foregoing is provided to assist shareholders of the Acquired Trust in
understanding the various expenses the holders of shares of the Acquired Trust
have incurred and that such holders might incur as holders of the Class C shares
following the Trust Reorganization.
5
<PAGE>
ITEM 1. - APPROVAL OF THE AGREEMENTS AND
PLANS OF REORGANIZATION
SUMMARY OF PROPOSALS
The following is a summary of certain information contained elsewhere or
incorporated by reference in this Proxy Statement and Prospectus and is
qualified in its entirety by reference to such information.
OVERVIEW OF PROPOSED REORGANIZATIONS. The Plans provide for the transfer to the
Acquiring Fund of all of the assets of the Reorganized Fund and the Acquired
Trust in exchange for Class A shares and Class C shares, respectively, and the
assumption by the Acquiring Fund of all of the liabilities of those respective
Funds. The Class A shares and Class C shares will then be distributed to the
respective shareholders of the Reorganized Fund and the Acquired Trust and those
Funds will be dissolved and terminated. As a result of the Reorganizations,
each shareholder of the Reorganized Fund and each shareholder of the Acquired
Trust will become an owner of that number of full and fractional Class A shares
or Class C shares, as the case may be, having an aggregate net asset value equal
to the aggregate net asset value of his or her shares of the Reorganized Fund or
the Acquired Trust, as of the close of business on the date of the
Reorganizations. Consummation of the Fund Reorganization is subject to the
approval of the Reorganized Fund's shareholders and other conditions. It is not
subject to the consummation of the Trust Reorganization. Consummation of the
Trust Reorganization is subject to the approval of the Acquired Trust's
shareholders, the prior consummation of the Fund Reorganization and other
conditions.
To avoid a need to call an Acquiring Fund shareholders' meeting after the
Reorganizations, shareholders of the Reorganized Fund are being asked to
authorize the Reorganized Fund, as the sole Class A shareholder of the Acquiring
Fund before the Fund Reorganization, to (a) approve the proposed distribution
plan for the Class A shares, and (b) approve the proposed investment advisory
agreement for the Acquiring Fund, and shareholders of the Acquired Trust are
being asked to authorize the Acquired Trust, as the sole Class C shareholder of
the Acquiring Fund prior to the Trust Reorganization, to approve the proposed
distribution plan for the Class C shares. A vote in favor of a Reorganization
will be deemed also to be a vote to authorize the Reorganized Fund or the
Acquired Trust, as the case may be, to take such action.
The directors of the Reorganized Fund believe that it will be advantageous
for the Reorganized Fund to reorganize itself into a trust rather than to
continue in its current corporate form. This will permit the Reorganized Fund
to offer to investors in certain states the more favorable tax treatment
afforded by those states to shareholders of funds organized as trusts whose
assets consist primarily of U.S. Government securities. The trustees of the
6
<PAGE>
Acquired Trust believe that the proposed Trust Reorganization will enable the
shareholders of the Acquired Trust to benefit from economies of scale while
continuing to invest in a portfolio of securities managed by Lord Abbett under a
substantially similar investment objective. See "Information About the
Reorganizations -- Reasons for Reorganizations" for additional information about
the reasons for the Reorganizations.
BUSINESSES OF THE FUNDS. The Reorganized Fund is a diversified, open-end
management investment company organized in 1932 and reincorporated under the
laws of Maryland on July 9, 1975. It has a single class of shares with equal
rights as to voting, dividends, assets and liquidation. As of December 31,
1995, the Reorganized Fund's net assets were approximately $3,313 million.
The Acquired Trust is a diversified series of the Securities Trust, an
open-end management investment company organized as a Delaware business trust
under an Agreement and Declaration of Trust dated February 26, 1993. The
Securities Trust offers ten series, one of which is the Acquired Trust, each
consisting of one class of shares. The Acquired Trust commenced investment
operations on June 1, 1993. As of December 31, 1995, the Acquired Trust's net
assets were approximately $328 million.
The Acquiring Fund is a diversified series of the Investment Trust, an
open-end management investment company organized as a Delaware business trust
under an Agreement and Declaration of Trust dated August 16, 1993. Currently,
the Investment Trust consists of three separate series -- the Lord Abbett
Limited Duration U.S. Government Securities Series, the Lord Abbett Balanced
Series, and the Acquiring Fund. The Acquiring Fund will conduct no investment
operations prior to the consummation of the Fund Reorganization.
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS. The Reorganized Fund and the
Acquired Trust have identical investment objectives: to seek high current
income with relatively low risk of price decline. The investment objective of
the Acquiring Fund is substantially similar: to seek high current income
consistent with reasonable risk. The Reorganized Fund and the Acquired Trust
seek their objectives by investing primarily in intermediate- and long-term U.S.
Government securities. The Acquiring Fund will seek its objective by investing
exclusively in U.S. Government securities, which will be primarily intermediate-
and long-term. See the Acquiring Fund Prospectus under "How We Invest" for a
description of U.S. Government securities.
The Reorganized Fund and the Acquired Trust also have substantially
similar investment policies and restrictions. The investment policies and
restrictions of the Acquiring Fund have been simplified and made less
restrictive compared to those of the Reorganized Fund and the Acquired Trust in
order to provide greater flexibility in managing the investment portfolio of the
Acquiring Fund and to provide greater uniformity in the investment policies and
restrictions among the various Lord Abbett-sponsored funds. Most importantly, a
number of
7
<PAGE>
the investment policies and restrictions that are classified as fundamental for
the Reorganized Fund and the Acquired Trust are classified as non-fundamental
for the Acquiring Fund. See "Comparative Information About the Funds --
Investment Objectives, Policies and Restrictions."
The portfolios of the Reorganized Fund and the Acquired Trust are expected
to be suitable for the Acquiring Fund, and so no significant realignment of
those portfolios is expected in connection with the Reorganizations.
PURCHASES AND EXCHANGES. Shares of the Reorganized Fund and the Acquired Trust
are, and Class A and C Shares will be, available through certain authorized
dealers at the public offering price, which is the net asset value per share
plus, in the case of Class A shares, a one-time sales charge. Shares of the
Acquired Trust are, and Class C shares will be, subject to a contingent deferred
reimbursement charge equal to 1% of the lower of their cost or the net asset
value if redeemed for cash before the first anniversary of their purchase. See
"Information About the Reorganizations -- Shares of the Acquiring Fund."
Shareholders of the Reorganized Fund may now exchange their shares for shares of
up to 24 other funds and series in the Lord Abbett family of funds, and
shareholders of the Acquired Trust may now exchange their shares for shares of
the nine other series of Lord Abbett Securities Trust and for shares of Lord
Abbett U.S. Government Securities Money Market Fund, Inc. It is expected that
holders of Class A shares will be able to exchange their shares for Class A
shares of up to 25 other funds and series managed by Lord Abbett and that
holders of Class C shares will be able to exchange their shares for Class C
shares of up to 13 of such funds and series. Each exchange represents a sale of
shares for which a shareholder may have to recognize a gain or loss under
Federal income tax provisions.
RULE 12b-1 PLANS. The Reorganized Fund has adopted a plan pursuant to Section
12(b) of the 1940 Act and Rule 12b-1 thereunder (a "Rule 12b-1 Plan"), under
which it pays Lord Abbett (1) an annual service fee (payable quarterly) of 0.25%
of the average daily net asset value of shares sold, or attributable to shares
sold, by dealers on or after September 1, 1985 (0.15% of the average daily net
asset value of shares sold, or attributable to shares sold, by dealers prior to
that date) and (2) a one-time 1% distribution fee, at the time of sale, on all
shares sold at the $1 million level by dealers, including sales qualifying at
such level under the rights of accumulation and statement of intention
privileges described in the Fund's prospectus in effect at such time, subject to
a contingent deferred reimbursement charge for up to 24 months. Lord Abbett is
required to pay these service and distribution fees to dealers to provide
additional incentives for the dealers (a) to provide continuing information and
investment services to their shareholder accounts and otherwise to encourage
their accounts to remain invested in the Reorganized Fund and (b) to sell its
shares.
As part of the Fund Reorganization, the Acquiring Fund is adopting a new
Rule 12b-1 Plan applicable to the Class A shares that will be similar to the
Reorganized Fund's Rule 12b-1 Plan. The principal change is that under the
proposed new Rule 12b-1 Plan for the Class
8
<PAGE>
A shares the Board of Directors will be able to increase the amount of the total
annual fees up to 0.50% of the Fund's average annual net assets. For a fuller
description of the current Rule 12b-1 Plan of the Reorganized Fund and of the
proposed new Rule 12b-1 Plan for the A shares of the Acquiring Fund, see
"Information About the Reorganizations -- Rule 12b-1 Plans."
The Acquired Trust has adopted a Rule 12b-1 Plan under which it pays
service and distribution fees at the time shares are sold not to exceed 1% of
the net asset value of such shares and at each quarter-end after the first
anniversary of the sale of shares at an annual rate not to exceed 1% of the net
asset value of such shares then outstanding. As part of the Trust
Reorganization, the Acquiring Fund is adopting a Rule 12b-1 Plan applicable to
the Class C shares that will be substantially the same as the Acquired Trust's
Rule 12b-1 Plan except as noted below under "Information About the
Reorganizations -- Rule 12b-1 Plans."
DIVIDEND POLICIES AND OPTIONS. The Reorganized Fund and the Acquired Trust
distribute net investment income monthly as dividends. They also may pay
supplemental dividends and capital gains distributions in December or January.
The shareholders of each such Fund may reinvest such dividends and distributions
in additional shares at net asset value or take such amounts in cash. The
Acquiring Fund intends to continue these same practices.
REDEMPTION PROCEDURES. The redemption procedures of the Reorganized Fund and
the Acquired Trust are substantially the same. The Acquiring Fund will follow
the redemption procedures of the Reorganized Fund, which are described in the
Acquiring Fund Prospectus under "Redemptions."
TAX CONSIDERATIONS. The consummation of each Reorganization is subject to
receipt of an opinion of counsel substantially to the effect that, among other
things, such Reorganization will not cause a gain or loss to be recognized by
the Reorganized Fund or the Acquired Trust, as the case may be, or its
shareholders for federal income tax purposes. See "Information about the
Reorganizations--Federal Income Tax Considerations."
RISK FACTORS. Because of the similarities in the investment objectives of the
Funds, Lord Abbett believes that the relative risks involved in investing in the
Funds can be considered similar. However, the investment policies and
restrictions of the Acquiring Fund have been simplified and made less
restrictive compared to those of the Reorganized Fund and the Acquired Trust in
order to provide greater flexibility in the future management of the investment
portfolio of the Acquiring Fund and to provide greater uniformity in the
investment policies and restrictions among the various Lord Abbett-sponsored
funds. If the Acquiring Fund were to take to any significant extent the actions
permitted by these less restrictive policies and restrictions, a result not now
anticipated, the risks of investing in the Acquiring Fund could be greater than
those involved in investing in the Reorganized Fund and the Acquired Trust. See
"Comparative Information About the Funds -- Investment Objectives, Policies and
Restrictions."
9
<PAGE>
INFORMATION ABOUT THE REORGANIZATIONS
THE PLANS. On July 12, 1996, assuming the conditions referred to below are
satisfied, the Reorganized Fund will transfer all of its assets to the Acquiring
Fund (the date of such transfer is referred to herein as the "Closing Date") in
exchange for (i) Class A shares of the Acquiring Fund having an aggregate net
asset value equal to the aggregate value of the assets, less liabilities, of the
Reorganized Fund and (ii) the assumption by the Acquiring Fund of all the
liabilities of the Reorganized Fund. The Reorganized Fund will distribute as of
the Closing Date such Class A shares pro-rata to its shareholders of record,
determined as of the close of business on the Closing Date, in redemption and
cancellation of their shares of the Reorganized Fund. Approval and consummation
of the Trust Reorganization are not conditions to the consummation of the Fund
Reorganization. Assuming the other conditions referred to below are satisfied,
the Fund Reorganization will occur regardless of whether the Trust
Reorganization is expected to occur.
Upon the consummation of the Fund Reorganization and on the Closing Date,
assuming the other conditions referred to below are satisfied, the Acquired
Trust will transfer all of its assets to the Acquiring Fund in exchange for (i)
Class C shares of the Acquiring Fund having an aggregate net asset value equal
to the aggregate value of the assets, less liabilities, of the Acquired Trust
and (ii) the assumption by the Acquiring Fund of all the liabilities of the
Acquired Trust. The Acquired Trust will distribute as of the Closing Date such
Class C shares pro-rata to its shareholders of record, determined as of the
close of business on the Closing Date, in redemption and cancellation of their
shares of the Acquired Trust.
The net asset values of the Class A shares and Class C shares and the
values of the assets and the amounts of the liabilities of the Reorganized Fund
and the Acquired Trust will be determined as of the Closing Date in accordance
with the valuation procedures set forth in the Acquiring Fund's Declaration of
Trust (see "Purchases" in the Acquiring Fund Prospectus). The valuation
procedures used by the Acquiring Fund are the same as those used by the
Reorganized Fund and the Acquired Trust.
The obligations of the Reorganized Fund and the Acquired Trust to
consummate the Reor ganization to which it is to be a party are subject to the
satisfaction of certain conditions precedent, including (a) approval and
authorization of each Reorganization by the vote of not less than a majority of
the shares of the Reorganized Fund outstanding and entitled to vote or the vote
of a majority of the shares of the Acquired Trust voted in the matter if a
quorum is present, as the case may be, (b) receipt of a favorable ruling from
the Internal Revenue Service to the effect that the issuance of various classes
of shares by the Acquiring Fund will not result in dividends or distribu tions
of the Acquiring Fund constituting "preferential dividends" under the Internal
Revenue Code of 1986, as amended (the "Code") and (c) receipt
10
<PAGE>
of a favorable opinion of legal counsel as to the federal income tax
consequences of the proposed transaction as described below under "Federal
Income Tax Considerations."
The foregoing summary of the Plans does not purport to be complete, and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the Plans, copies of which are attached as Exhibits A(1) and
(2).
REASONS FOR THE REORGANIZATIONS. The Board of Directors of the Reorganized Fund
and the Board of Trustees of the Securities Trust, as well as the Board of
Trustees of the Investment Trust, including in each case a majority who are not
"interested persons" (as defined in the 1940 Act) of any of the Funds or of Lord
Abbett, approved the respective Plans and Reorganizations on March 14, 1996. In
this connection, the boards determined that participation in the proposed
Reorganizations is in the best interests of the shareholders of the respective
Funds and that the interests of existing shareholders of the Funds will not be
diluted as a result of their effecting the respective Reorganizations. In doing
so, the board of the Reorganized Fund considered that in some states
shareholders owning shares of funds whose assets consist primarily of U.S.
Government securities receive more favorable treatment under their states' tax
laws if the funds are organized as trusts rather than corporations. The
proposed Fund Reorganization is intended to assure that shareholders receive
such benefits. In addition, the boards of the Funds considered the estimated
expenses to be incurred by the Funds in connection with the Reorganizations and
several other factors, including (a) that the shareholders of the Acquired Trust
are expected to benefit from economies of scale as shareholders of the larger
Acquiring Fund following the Reorganizations, while continuing to invest in a
portfolio of securities managed by Lord Abbett under a substantially similar
investment objective, and (b) that the implementation of a multi-class fund
structure for the Acquiring Fund is expected to (i) enable investors in the
Acquiring Fund to choose the distribution option that best suits their
individual situations, (ii) facilitate distribution of the Acquiring Fund's
shares, and (iii) maintain the competitive position of the Acquiring Fund in
relation to other funds that have implemented or are seeking to implement
similar distribution arrangements.
The trustees of the Investment Trust and Securities Trust and the
directors of the Reorganized Fund are the same individuals.
SHARES OF THE ACQUIRING FUND. On or before the Closing Date, the Acquiring Fund
will have two classes of shares, Class A shares (to be received by the
shareholders of the Reorganized Fund in the Fund Reorganization) and Class C
shares (to be received by the shareholders of the Acquired Trust in the Trust
Reorganization). Each share of the Acquiring Fund, regardless of class, will
share pro-rata (based on net asset value) in the portfolio and income of the
Acquiring Fund and in the Acquiring Fund's expenses, except for differences in
expenses resulting from different Rule 12b-1 Plans for the various classes and
certain other class specific expenses. See "Rule 12b-1 Plans" below.
11
<PAGE>
After the Fund Reorganization, Class A shares will be offered to the
public at net asset value subject to an initial sales charge identical to the
sales charge currently imposed on sales of the Reorganized Fund shares, as
follows:
12
<PAGE>
<TABLE>
<CAPTION>
SALES CHARGE AS A DEALER'S CON-
PERCENTAGE OF: CESSION AS A
----------------- PERCENTAGE OF TO COMPUTE
NET AMOUNT OFFERING OFFERING PRICE,
SIZE OF INVESTMENT OFFERING PRICE INVESTED PRICE* DIVIDE NAV BY
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.00% .9525
- ----------------------------------------------------------------------------------------------------
$50,000 to $99,999 4.75% 4.99% 4.25% .9525
- ----------------------------------------------------------------------------------------------------
$100,000 to $249,999 3.75% 3.90% 3.25% .9625
- ----------------------------------------------------------------------------------------------------
$250,000 to $499,999 2.75% 2.83% 2.50% .9725
- ----------------------------------------------------------------------------------------------------
$500,000 to $999,999 2.00% 2.04% 1.75% .9800
- ----------------------------------------------------------------------------------------------------
$1,000,000 or more No Sales Charge** 1.00% 1.0000
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Lord Abbett may, for specified periods, allow dealers to retain the full
sales charge for sales of shares during such periods, or pay an additional
concession to a dealer who, during a specified period, sells a minimum dollar
amount of the Acquiring Fund's shares and/or shares of other Lord Abbett-
sponsored funds. In some instances, such additional concessions will be
offered only to certain dealers expected to sell significant amounts of
shares. Lord Abbett may, from time to time, implement promotions under which
Lord Abbett will pay a fee to dealers with respect to certain purchases not
involving the imposition of a sales charge. Additional payments may be paid
from Lord Abbett's own resources and will be made in the form of cash or, if
permitted, non-cash payments. The non-cash payments will include business
seminars at resorts or other locations, including meals and entertainment, or
the receipt of merchandise. The cash payments will include payment of various
business expenses of the dealer.
** As disclosed in the Acquiring Fund Prospectus, other sales in certain
categories are made at net asset value without a sales charge.
Subject to some exceptions, Class A shares sold without any sales charge
will be subject to a contingent deferred reimbursement charge (a "CDRC") of up
to 1% of the lower of their cost or their net asset value if they are redeemed
from the Lord Abbett-sponsored family of funds within 24 months after the month
of purchase. See "Rule 12b-1 Plans" below. Holding periods for shares
purchased prior to the Fund Reorganization will carry over for the purpose of
determining the applicability of the CDRC to Class A shares.
After the Trust Reorganization, Class C shares will be offered at net
asset value without an initial sales charge, but if redeemed for cash before the
first anniversary of their purchase, will be subject to a CDRC equal to 1% of
the lower of their cost or then net asset value. Holding periods for shares
purchased prior to the Trust Reorganization will carry over for the purpose of
determining the applicability of the CDRC to Class C shares.
After the Closing Date, the Acquiring Fund may create and issue one or
more classes of shares in addition to the Class A and C shares. Lord Abbett has
advised the Board of
13
<PAGE>
Trustees of the Acquiring Fund that it intends to propose to the board in the
near future that the board authorize the Acquiring Fund to issue a third class
of shares, to be designated the "Class B shares." If authorized, the Class B
shares are expected to be sold without an initial sales charge and otherwise to
be similar to the Class C shares except that (i) they will be subject to a
contingent deferred sales charge ("CDSC") that is payable to the distributor of
such shares, rather than subject to a contingent deferred reimbursement charge
payable to the Acquiring Fund as is the case with the Class C shares, (ii) the B
share CDSC will be substantially larger than the 1% CDRC charged on early
redemptions of Class C shares, (iii) the B share CDSC will apply over a period
of time substantially longer than the 12 months applicable to the C share CDRC,
and will scale down to zero over that longer period, and (iv) the Class B shares
will convert automatically into A shares at net asset value after a period of
time.
Shares of all classes of the Acquiring Fund will vote together on all
matters affecting the Acquiring Fund, except for matters, such as approval of a
Rule 12b-1 plan, affecting only a particular class or classes. Shares of the
Acquiring Fund will vote together with shares of other series of Investment
Trust on all matters affecting the Investment Trust, except for matters, such as
approval of an investment management agreement, affecting only one or more
particular series. All shares voting on a matter will have identical voting
rights. All issued shares of the Acquiring Fund will be fully paid and non-
assessable, and shareholders will have no preemptive or other right to subscribe
to any additional shares. Shares of all classes of the Acquiring Fund will have
the same rights and be subject to the same limitations with respect to
dividends, redemptions and liquidation except for differences resulting from
class-specific Rule 12b-1 plans and related service plans and certain other
class-specific expenses.
RULE 12b-1 PLANS. Class A Rule 12b-1 Plan. As part of the Fund Reorganization,
the Acquiring Fund is adopting a Rule 12b-1 plan applicable to the Class A
shares (the "Class A 12b-1 Plan") that will be similar to the plan currently in
effect for the Reorganized Fund, but with several changes as described below. A
copy of the Class A 12b-1 Plan is attached as Exhibit B to this Proxy Statement
and Prospectus. Under the Reorganized Fund's current plan (except as to certain
accounts for which tracking data is not available), the Fund pays Lord Abbett
(1) an annual service fee (payable quarterly) of 0.25% of the average daily net
asset value of shares sold by dealers on or after September 1, 1985 (0.15% of
the average daily net asset value of shares sold, or attributable to shares
sold, by dealers prior to that date) and (2) a one-time 1% distribution fee, at
the time of sale, on all shares sold at the $1 million level by dealers,
including sales qualifying at such level under the rights of accumulation and
statement of intention privileges described in the Reorganized Fund's prospectus
in effect at such time. These service and distribution fees provide additional
incentives for dealers (a) to provide continuing information and investment
services to their shareholder accounts and otherwise to encourage their accounts
to remain invested in the Reorganized Fund and (b) to sell shares of the
Reorganized Fund.
14
<PAGE>
Under the current plan of the Reorganized Fund, holders of shares on which
the 1% distribution fee has been paid are required to pay to the Reorganized
Fund a CDRC, or contingent deferred reimbursement charge, of 1% of the original
cost or the then net asset value, whichever is less, of such shares if they are
redeemed out of the Lord Abbett-sponsored family of funds on or before the end
of the twenty-fourth month after the month in which the purchase occurred. (An
exception is made for certain redemptions by tax-qualified plans under Section
401 of the Internal Revenue Code due to plan loans, hardship withdrawals, death,
retirement or separation from service with respect to plan participants.) If the
shares are exchanged into another Lord Abbett fund and are thereafter redeemed
out of the Lord Abbett family on or before the end of such twenty-fourth month,
the charge is collected for the Reorganized Fund by the other fund. The
Reorganized Fund collects such a charge for other Lord Abbett-sponsored funds in
a similar situation.
Set forth below is a description of the principal changes to be effected
under the proposed Class A 12b-1 Plan:
(a) Distribution Fees. The Acquiring Fund's Board of Trustees will be
-----------------
authorized under the Class A 12b-1 Plan, without further shareholder vote, to
increase the amount of distribution fees up to 0.25% of the average annual net
assets attributable to the Class A shares (the annual distribution and service
fees could total 0.50% of such average annual net assets if approved by the
Board of Trustees). This increased spending limit is intended primarily to
permit the trustees to increase the amount to be spent for distribution to meet
changing sales competition. The trustees believe it is desirable to be able to
make these changes without further shareholder approval because additional
shareholder meetings would be costly to the Acquiring Fund and its shareholders
and the time required for such meetings could delay the implementation of
advantageous changes. The Board of Trustees will approve additional charges
under this increased authority only if a majority of the trustees who are not
"interested persons" of the Acquiring Fund within the meaning of the 1940 Act
and who will have no direct or indirect financial interest in the operations of
the Class A 12b-1 Plan or in any agreements related thereto conclude in their
business judgment that there is a reasonable likelihood that the increase will
benefit the Acquiring Fund and its shareholders.
The one-time 1% distribution fee, payable at the time of certain sales as
described above, is to be charged against the 0.25% permitted annual
distribution fee. During the Reorganized Fund's last fiscal year, payments of
the one-time 1% distribution fee under that Fund's Rule 12b-1 plan totaled less
than 0.01% (less than a basis point) of the Reorganized Fund's average net
assets. Subject to approval of the Fund Reorganization by the shareholders of
the Reorganized Fund, the Board of Trustees of the Acquiring Fund has authorized
the Acquiring Fund to pay this one-time distribution fee with respect to sales
of Class A shares, subject to three changes: First, the payments will be made
-----
in connection with sales to retirement plans with 100 or more eligible
employees, in addition to sales at the $1 million level as under the Reorganized
Fund's 12b-1 plan; Second, the payments will be reduced as follows: 1.0% of
------
15
<PAGE>
the first $5 million, 0.55% of the next $5 million, 0.50% of the next $40
million and 0.25% over $50 million of shares sold to a retirement plan or other
qualifying purchaser within a 12-month period (beginning when the first purchase
is made at net asset value); and Third, the payments will be made to
-----
institutions and persons permitted by applicable law and/or rules to receive
such payments ("Authorized Institutions"), rather than just to dealers as is the
case under the Reorganized Fund's Rule 12b-1 plan.
Subject to such approval of the Fund Reorganization, the Acquiring Fund's
Board of Trustees has authorized the Acquiring Fund to pay, as an additional
distribution fee, a modest supplemental payment to dealers who have accounts
comprising a significant percentage of the Acquiring Fund's Class A share assets
and having a lower than average redemption rate and who have a satisfactory
program for the promotion of Class A Shares. Any such payments will be 0.10%
per annum of the average assets of the Acquiring Fund represented by the Class A
share accounts of qualifying dealers. This supplemental payment is intended by
the Board of Trustees to focus on the Acquiring Fund's relationships with those
dealers most likely to have a significant impact on the growth of the Class A
shares.
(b) Service Fees. Service fee payments, which are to be continued under
------------
the proposed Class A 12b-1 Plan at an annual rate of 0.25% of the average daily
net asset value of shares sold on or after September 1, 1985 (0.15% of the
average daily net asset value of shares sold, or attributable to shares sold,
prior to such date), could be made to all Authorized Institutions (institutions
and persons permitted by applicable law and/or rules to receive such payments),
rather than just to dealers as is the case under the Reorganized Fund's plan.
(c) Use of Payments by Lord Abbett. Lord Abbett will be permitted to use
------------------------------
payments received under the Class A 12b-1 Plan to provide continuing services to
shareholder accounts not serviced by Authorized Institutions and, with board
approval, to finance any activity which is primarily intended to result in the
sale of Class A shares. Any such payments to finance activities primarily
intended to result in the sale of Class A shares would be subject to the overall
ceiling of 0.25% for annual distribution fees.
(d) CDRC. The Board of Trustees of the Acquiring Fund has approved a CDRC
----
applicable to the Class A 12b-1 shares substantially similar to the CDRC payable
under the Rule 12b-1 Plan of the Reorganized Fund, except that no CDRC would be
payable in connection with redemptions by retirement plans (not just those
qualified under Section 401 of the Internal Revenue Code) attributable to any
benefit payment or distribution of any excess contribution thereunder (not just
those described above in connection with such exception under the Reorganized
Fund's plan). Because CDRC payments will be made directly to the Acquiring
Fund, they will have the effect of reducing the amount of the distribution fees
paid by the Acquiring Fund for the purpose of complying with the overall ceiling
of 0.25% for annual distribution fees. As in the case of the specific
distribution fees authorized by the Board of
16
<PAGE>
Trustees of the Acquiring Fund, the CDRC authorized from time to time by the
board for the Class A shares will be described in the then current prospectus of
the Acquiring Fund.
If this supplemental payment to dealers, the revised one-time distribution
fee and the other changes described above had been in effect for the Reorganized
Fund's last fiscal year, it is estimated that in the aggregate they would have
increased the 12b-1 fee of the Reorganized Fund from 0.25% to approximately
0.27%, a difference of 0.02%.
(e) Lord Abbett Distributor. The other party to the Class A 12b-1 Plan is
-----------------------
to be Lord Abbett Distributor LLC, a New York limited liability company, to be
formed as a subsidiary of Lord Abbett ("Lord Abbett Distributor"), rather than
Lord Abbett. Lord Abbett Distributor is to take on all the underwriting
functions currently performed directly by Lord Abbett.
The Class A 12b-1 Plan was approved on March 14, 1996 by the trustees of
the Acquiring Fund, including a majority of the trustees who are not "interested
persons" of the Acquiring Fund within the meaning of the 1940 Act and who will
have no direct or indirect financial interest in the operations of the Class A
12b-1 Plan or in any agreements related thereto. In considering whether to
approve the Class A 12b-1 Plan, the trustees considered, among other things, the
factors set forth below:
(i) Flexibility in Adapting Distribution Fees to Meet Industry-Wide
---------------------------------------------------------------
Changes. During the last several years, there has been significantly increased
competition and pricing experimentation in the mutual fund industry. As the
pace of change increases, the Board of Trustees believes it will be useful to be
able to respond more quickly to marketplace pressures, and to change in
appropriate cases the amount of the Class A 12b-1 distribution fees to be paid,
without unnecessarily burdening the shareholders with the costs of additional
proxy solicitations. The trustees believe that the increased distribution fees
described above are good examples of the desirability of this flexibility.
Based on advice received from Lord Abbett, the decision by the board to approve
the payment of distribution fees in connection with sales to retirement plans
with 100 or more eligible employees will enable the Class A shares to compete
more effectively in this growing and important market. The 0.10% per annum
supplemental payments to dealers who meet certain criteria will permit the
Acquiring Fund to enhance relationships with those dealers most likely to have a
significant impact on the growth of the Class A shares.
(ii) Expanding Categories of Persons Eligible to Receive Payments. The
------------------------------------------------------------
current Rule 12b-1 Plan of the Reorganized Fund limits payments thereunder to
dealers selling fund shares. Since that plan was adopted, different methods of
distribution, using different entities, have developed in the industry. The
Board of Trustees sees no reason to limit arbitrarily the categories of persons
eligible to receive payments under the proposed plan,
17
<PAGE>
and believes that the availability of payments under the plan will induce such
other entities to invest in Class A shares.
(iii) Flexibility in Distributor's Use of Payments. Lord Abbett has advised
--------------------------------------------
the Board of Trustees that allowing Lord Abbett Distributor to retain fees
received from the Fund to (i) provide continuing information and investment
services to shareholder accounts and (ii) finance, with board approval, any
activity which is primarily intended to result in the sale of Class A shares
will provide useful flexibility and will be in line with common practice in the
industry.
Prior to the Fund Reorganization, the Reorganized Fund will purchase one
Class A share, and as sole shareholder of the Acquiring Fund, will approve the
Class A 12b-1 Plan prior to the class being issued to the Reorganized Fund in
the Fund Reorganization. A vote in favor of the Fund Reorganization will be
deemed also to be a vote to authorize the Reorganized Fund to take such action.
Class C Rule 12b-1 Plan. The Acquiring Fund is adopting a Rule 12b-1 Plan
for the Class C shares (the "Class C 12b-1 Plan") substantially the same as the
plan currently in effect for the Acquired Trust, except as described below. The
Acquired Trust's plan provides for payments to dealers through Lord Abbett of
distribution and service fees (a) at the time shares are sold, not to exceed
0.75% and 0.25%, respectively, of the net asset value of the shares sold and (b)
at the end of the quarter following the first anniversary of the sale of shares,
and quarterly thereafter, at an annual rate not to exceed 0.75% and 0.25%,
respectively, of the net asset value of such shares, including any shares issued
for reinvested dividends and distributions after such first anniversary, so long
as such shares remain outstanding. Lord Abbett may retain from the quarterly
distribution fee, for the payment of distribution expenses incurred directly by
it, an amount not to exceed 0.10% of the average annual net asset value of such
shares outstanding. See the Acquired Trust Prospectus under "Purchases" for
additional information concerning the Rule 12b-1 Plan of the Acquired Trust.
There are two substantive changes in the Class C 12b-1 Plan: First,
-----
payment under the plan may be made to all Authorized Institutions (institutions
and persons permitted by applicable law and/or rules to receive such payments),
rather than just to dealers as is the case under the Acquired Trust's Rule 12b-1
plan; and Second, the other party to the Class C 12b-1 Plan is to be Lord Abbett
------
Distributor (a New York limited liability company to be formed as a subsidiary
of Lord Abbett), rather than Lord Abbett itself. Lord Abbett Distributor is to
take on all the underwriting functions currently performed directly by Lord
Abbett.
The Class C 12b-1 Plan was approved on March 14, 1996 by the trustees of
the Acquiring Fund, including a majority of the trustees who are not "interested
persons" of the Acquiring Fund within the meaning of the 1940 Act and who will
have no direct or indirect financial interest in the operations of such plan or
in any agreements related thereto. Prior to
18
<PAGE>
the Trust Reorganization, the Acquired Trust will purchase one Class C share,
and as sole Class C shareholder, will approve the Class C 12b-1 Plan prior to
that class being issued to the Acquired Trust in the Trust Reorganization. A
vote in favor of the Trust Reorganization will be deemed also to be a vote to
authorize the Acquired Trust to take such action.
FEDERAL INCOME TAX CONSIDERATIONS. The consummation of each Reorganization is
conditioned upon the receipt of an opinion of Debevoise & Plimpton, legal
counsel to the Funds, regarding the Federal income tax consequences of that
Reorganization substantially to the effect that, for Federal income tax
purposes:
(a) no gain or loss will be recognized by the Reorganized Fund or the
Acquired Trust, as the case may be, upon the transfer of its assets to the
Acquiring Fund in exchange for Class A shares or Class C shares, as the case may
be, and the assumption by the Acquiring Fund of its liabilities or upon the
distribution of the Class A shares or the Class C shares, as the case may be, to
its shareholders;
(b) no gain or loss will be recognized by the Acquiring Fund upon the receipt
of the assets of the Reorganized Fund or the Acquired Trust, as the case may be,
in exchange for Class A shares or Class C shares, as the case may be, and the
assumption by the Acquiring Fund of the liabilities of the Reorganized Fund or
the Acquired Trust, as the case may be;
(c) no gain or loss will be recognized by shareholders of the Reorganized
Fund or the Acquired Trust, as the case may be, upon the exchange of their
shares for Class A shares or Class C shares;
(d) the aggregate tax basis of the Class A shares received by any Reorganized
Fund shareholder or of the Class C shares received by any Acquired Trust
shareholder pursuant to the Reorganizations will be the same as the aggregate
tax basis of the Reorganized Fund or Acquired Trust shares held by such
shareholder immediately prior to the Reorganizations, and the holding period for
the Class A shares or Class C shares to be received by any such shareholder will
include the period during which the shares exchanged therefor were held by such
shareholder (provided that such shares are held as capital assets on the date of
the Reorganizations); and
(e) the tax basis of the assets of the Reorganized Fund or the Acquired Trust
acquired by the Acquiring Fund will be the same as the tax basis of such assets
to the Reorganized Fund or the Acquired Trust, as the case may be, immediately
prior to the Reorganizations, and the holding period of such assets in the hands
of the Acquiring Fund will include the period during which those assets were
held by the Reorganized Fund or the Acquired Trust, as the case may be.
19
<PAGE>
The Funds have not sought a tax ruling from the Internal Revenue Service
with respect to the tax consequences of the Reorganizations, but will act in
reliance upon the opinion of counsel. Such opinion is not binding on the
Internal Revenue Service. Since the foregoing discussion relates only to the
general Federal income tax consequences of the Reorganizations, shareholders
should also consult their tax advisors as to any state or local tax consequences
of the Reorganizations to them and any special considerations that may apply in
their individual circumstances.
EXPENSES OF THE REORGANIZATIONS. Expenses of the Reorganizations, including
legal and accounting expense, the costs of proxy solicitation and the
preparation of this Prospectus and Proxy Statement, will be borne by the
Reorganized Fund and the Acquired Trust. If the Reorganizations are
consummated, the respective expenses of the Reorganized Fund and the Acquired
Trust, to the extent not paid prior to the Closing Date, will be assumed by the
Acquiring Fund and taken into account in determining the net assets of those
Funds for the purpose of calculating the numbers of Class A and Class C shares
to be issued in the Reorganizations.
CAPITALIZATION. The following table sets forth the capitalization of the
Reorganized Fund and the Acquired Trust as of December 31, 1995, and the pro-
forma capitalization of the Acquiring Fund as if the Reorganizations had
occurred on that date:
<TABLE>
<CAPTION>
CLASS A
ACQUIRING CLASS C
REORGANIZED FUND ACQUIRING FUND
FUND ACQUIRED TRUST (PRO-FORMA - (PRO-FORMA -
(UNAUDITED) (UNAUDITED) UNAUDITED) UNAUDITED)
-------------------------------------------------------------
(In thousands, except per share values)
<S> <C> <C> <C> <C>
Net Assets................. $3,313,305 $327,717 $3,313,305 $327,717
Net Asset Value per Share.. $ 2.75 $ 4.65 $ 2.75 $ 2.75
Shares Outstanding 1,206,596 70,264 1,206,596 119,343
- -----------------------------------------------------------------------------------------
</TABLE>
The exchange ratio of Class A shares for Reorganized Fund shares is to
be one for one. The foregoing table reflects a pro-forma exchange ratio of
approximately 1.7 Class C shares for each Acquired Trust share. If the Trust
Reorganization is consummated, the actual exchange ratio of Class C and Acquired
Trust shares may vary from this pro-forma ratio due to changes in the market
value of the portfolio securities of both the Reorganized Fund and the Acquired
Trust between December 31, 1995 and the Closing Date, and changes in the amounts
of undistributed net investment income and accrued liabilities of the
Reorganized Fund and the Acquired Trust during that period.
20
<PAGE>
COMPARATIVE INFORMATION ABOUT THE FUNDS
MANAGEMENT AGREEMENTS. Upon consummation of the Reorganizations, an
investment management agreement between the Acquiring Fund and Lord Abbett will
become effective with terms that are substantially similar to those currently in
effect between the Reorganized Fund and Lord Abbett. Under this agreement, the
Acquiring Fund will pay Lord Abbett a monthly fee, based on average daily net
assets for each month, at the annual rate of .50 of 1% of the portion of its net
assets not in excess of $3,000,000,000 plus 0.45 of 1% of such assets over
$3,000,000,000. The Reorganized Fund's ratio of management fee expenses to
average net assets for the year ended November 30, 1995 was 0.50%. Under the
management agreement between the Acquired Trust and Lord Abbett, the Acquired
Trust pays Lord Abbett a monthly fee, based on average daily net assets for each
month, at the annual rate of .50 of 1%. The Acquired Trust's ratio of
management fee expenses to average net assets for the year ended October 31,
1995 was 0.50%. A vote in favor of the Fund Reorganization by a shareholder of
the Reorganized Fund will be deemed also to be a vote to authorize the
Reorganized Fund to approve the new investment management agreement between the
Acquiring Fund and Lord Abbett. (See "Meetings of Shareholders of the
Reorganized Fund and the Securities Trust.")
FEES AND EXPENSES. As shown above under "Fee Tables," the pro-forma expense
ratios of the Class C Shares was 1.56%, compared to the actual expense ratio of
1.58% for the Acquired Trust. The Reorganizations are not expected to have a
significant effect on the expense ratio experienced by the shareholders of the
Reorganized Fund, except for the increase in the 12b-1 plan expense that is
expected to result from the modifications to be contained in the Class A 12b-1
Plan as discussed above under "Information About the Reorganizations -- Rule
12b-1 Plans." The pro-forma expense ratio of the Class A shares was 0.91%,
compared to the actual expense ratio of 0.90% for the Reorganized Fund.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The Reorganized Fund and the
Acquired Trust have identical investment objectives: to seek high current
income with relatively low risk of price decline. The investment objective of
the Acquiring Fund is substantially similar: to seek high current income
consistent with reasonable risk. The Reorganized Fund and the Acquired Fund
seek their objectives by investing primarily in intermediate- and long-term U.S.
Government securities. The Acquiring Fund will seek its objective by investing
exclusively in U.S. Government securities, which will be primarily intermediate-
and long-term. See the Acquiring Fund Prospectus under "How We Invest" for a
description of U.S. Government securities.
The Reorganized Fund and the Acquired Trust also have substantially
the same investment policies and restrictions. The investment policies and
restrictions of the Acquiring Fund, compared to those of the Reorganized Fund
and the Acquired Trust, have been simplified and made less restrictive in order
to provide greater flexibility in managing the investment portfolio of the
Acquiring Fund and to provide greater uniformity in the investment policies and
21
<PAGE>
restrictions among the various Lord Abbett-sponsored funds. A number of the
investment policies and restrictions that are classified as fundamental for the
Reorganized Fund and the Acquired Trust are classified as non-fundamental for
the Acquiring Fund. In other instances, certain fundamental restrictions of the
Reorganized Fund and the Acquired Trust have been modified or eliminated in the
case of the Acquiring Fund. Fundamental investment restrictions may not be
changed without approval of the stockholders of a fund and the costs of
shareholder meetings for these purposes generally are borne by the fund and its
shareholders. The board may amend a non-fundamental restriction as it deems
appropriate and in the best interest of the fund and its stockholders, without
incurring the costs of seeking a shareholder vote.
The principal effect for the shareholders of the Reorganized Fund and
the Acquired Trust of the changes in the fundamental policies of the Acquiring
Fund will be to permit the Acquiring Fund to take certain actions not now
permitted to the Reorganized Fund or the Acquired Trust, without obtaining
approval of the shareholders. The Acquiring Fund either will not be permitted
to, or does not intend to, take any such action unless such action is approved
by the Board of Trustees. The board does not now intend to approve any such
action or to do so in the future unless it deems such action to be an
appropriate means of seeking the Acquiring Fund's investment objective in the
best interests of the Acquiring Fund and its shareholders, in which case
disclosure of the change would be made in the Investment Trust's then current
prospectus or statement of additional information or both. Such actions, none
of which the board has a present intention of approving, involve the following
matters, among others: (i) short sales of securities and purchases of securities
on margin to the extent permitted by applicable law; (ii) borrowings from banks
in amounts up to one-third of total assets (and up to an additional 5% of total
assets for temporary purposes) and such short-term credits as may be necessary
for the clearance of purchases and sales of portfolio securities; (iii) loans of
portfolio securities to the extent permitted by law; (iv) purchases and sales of
securities directly or indirectly secured by real estate and interests therein
and of commodities and commodity contracts in accordance with applicable law so
long as registration would not be required as a commodity pool operator under
the Commodity Exchange Act; (v) with respect to 25% of gross assets, investments
of more than 5% of gross assets in the securities of any one issuer and
ownership of more than 10% of the voting securities of an issuer; (vi) pledges
to secure borrowings or in connection with the Acquiring Fund's investment
policies and as permitted by applicable law; (vii) investments in the securities
of other investment companies to the extent permitted by applicable law; and
(viii) for the Reorganized Fund, investments of more than 5% of gross assets in
securities of issuers in operation for less than three years.
A summary comparison of the fundamental and certain non-fundamental
investment policies and restrictions of the Acquiring Fund, the Reorganized Fund
and the Acquired Trust is set forth in Exhibit C to this Proxy Statement and
Prospectus. For a full discussion of the Acquiring Fund's investment
objectives, policies and restrictions, see "Investment Objective"
22
<PAGE>
and "How We Invest" in the Acquiring Fund Prospectus and "Investment Objective
and Policies" in the Acquiring Fund Statement of Additional Information. For a
full discussion of the investment objectives, policies and restrictions of the
Reorganized Fund and the Acquired Trust, see "Investment Objective" and "How We
Invest" in the Reorganized Fund Prospectus and the Acquired Trust Prospectus,
respectively, and "Investment Objective and Policies" in the Reorganized Fund
Statement of Additional Information and Acquired Trust Statement of Additional
Information, respectively. The summary comparison set forth in Exhibit C does
not purport to be complete, and is subject in all respects to, and is qualified
in its entirety by reference to, such statements of such policies and
restrictions.
SHAREHOLDERS' RIGHTS. After the Reorganizations, the rights of the former
shareholders of the Reorganized Fund and the Acquired Trust will be governed by
the Investment Trust's Declaration of Trust and By-Laws and applicable Delaware
law. Prior to the Fund Reorganization, the rights of the shareholders of the
Reorganized Fund are governed by the Articles of Incorporation and By-Laws of
the Reorganized Fund and applicable Maryland law. Prior to the Trust
Reorganization, the rights of the shareholders of the Acquired Trust are
governed by the Declaration of Trust and By-Laws of the Securities Trust and by
applicable Delaware law. The Declaration of Trust and By-Laws of the Securities
Trust are substantially the same as the Declaration of Trust and By-Laws of the
Investment Trust. The corporate law of Maryland, to which the Reorganized Fund
is subject, requires shareholder approval of a greater number of corporate
actions than is the case under the law of Delaware applicable to business trusts
and the Declaration of Trust of the Investment Trust. Thus, the Board of
Trustees of the Investment Trust may have somewhat greater authority, acting
alone, to take corporate actions than has been the case with the Board of
Directors of the Reorganized Fund. However, the Acquiring Fund believes that
the responsibilities and fiduciary duties of the trustees of the Acquiring Fund
are substantially the same as those of the directors of the Reorganized Fund and
the trustees of the Acquired Trust, and the operations of the Acquiring Fund
will continue to be subject to the provisions of the 1940 Act and the rules and
regulations of the Commission thereunder.
The current Board of Directors of the Reorganized Fund and Board of
Trustees of the Acquired Trust comprise the same individuals as the current
Board of Trustees of the Investment Trust. The Reorganized Fund's By-Laws
provide for indemnification of the directors for actual liabilities arising out
of the directors' service in their capacity as directors of the Reorganized
Fund, subject only to the conditions and limitations of applicable law. Each of
the Investment Trust's and the Securities Trust's Declaration of Trust provides
for indemnification of the trustees against certain liabilities and expenses,
except with respect to (i) any matter as to which any trustee has been
adjudicated not to have acted in good faith in the reasonable belief that his or
her action was in the best interest of such Trust, (ii) any liability by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of
duties or (iii) any matter disposed of by settlement, compromise or consent
decree, unless it is in the best
23
<PAGE>
interests of such trust or if said trustee acted in good faith in the reasonable
belief that such act was in the best interests of such Trust. Reorganized Fund
shareholders may remove, with or without cause, any director by the affirmative
vote of a majority of the votes cast. Investment Trust shareholders and
Securities Trust shareholders may remove a trustee by the vote of shareholders
of record of not less than two-thirds. Derivative actions on behalf of the
Investment Trust or the Acquiring Fund may be brought only by shareholders
owning not less than 50% of the then-outstanding shares of Investment Trust or
the Acquiring Fund, as the case may be. Similar restrictions apply in the case
of the Securities Trust and the Acquired Trust, but no such restrictions apply
to derivative actions on behalf of the Reorganized Fund.
Neither the Reorganized Fund nor the Acquired Trust regularly holds
shareholder meetings, and the Acquiring Fund does not expect to hold such
meetings. The By-laws of each of the Funds provide that a meeting of
shareholders will be held upon the written request of holders of at least 25% of
votes entitled to be cast.
The foregoing is only a summary of certain rights of the shareholders
of the Reorganized Fund and the Acquired Trust and of the rights these
shareholders will have following the Reorganizations as holders of Class A
shares and Class C shares of the Acquiring Fund. It is not a complete
description of the Declaration of Trust of the Acquiring Fund or the Acquired
Trust, the Articles of Incorporation of the Reorganized Fund, the By-Laws of
any of the Funds or the applicable Delaware or Maryland law. Shareholders
desiring additional information about those documents and provisions of law
should refer to such Declarations of Trust, Articles of Incorporation, By-Laws
and provisions.
REQUIRED VOTES
Approval of the Fund Plan and the Fund Reorganization will require the
affirmative vote of a majority of the outstanding shares of the Reorganized
Fund, and approval of the Trust Plan and the Trust Reorganization will require
the affirmative vote of a majority of the shares of the Acquired Trust voted on
the matter.
In the case of the Fund Plan and the Fund Reorganization, the effect
of an abstention or broker non-vote by a Reorganized Fund shareholder is the
same as a vote against.
If an Acquired Trust shareholder abstains from voting on this matter,
then the shares held by such shareholder shall be deemed present at the meeting
for purposes of determining a quorum, but shall not be deemed to have been voted
on this matter. If a broker returns a "non-vote" proxy for an Acquired Trust
shareholder, indicating a lack of authority to vote on this matter, then the
shares covered by such non-vote shall be deemed present at the meeting for
purposes of determining a quorum, but shall not be deemed to have been voted on
this matter.
24
<PAGE>
If the Fund Plan is not approved by the shareholders of the
Reorganized Fund, or if the Fund Reorganization is not consummated for any other
reason, the Reorganized Fund will continue to engage in business as Lord Abbett
U.S. Government Securities Fund, Inc. If the Trust Plan is not approved by the
shareholders of the Acquired Trust, or if the Trust Reorganization is not
consummated for any other reason, the Acquired Trust will continue to engage in
business as Lord Abbett U.S. Government Securities Trust, a series of Lord
Abbett Securities Trust.
The Board of Directors of the Reorganized Fund recommends that
shareholders of the Reorganized Fund vote FOR approval of the Fund Plan and the
Fund Reorganization, and the Board of Trustees of the Acquired Trust recommends
that shareholders of the Acquired Trust vote FOR approval of the Trust Plan and
the Trust Reorganization.
ITEM 2. - FOR REORGANIZED FUND
SHAREHOLDERS ONLY
The Board of Directors of the Reorganized Fund believes that it is
important to ensure continuity of operation of the Reorganized Fund in the event
that the Fund Reorganization is not consummated. Accordingly, the Board has
determined that: (i) the persons who currently constitute the Board of Directors
of the Reorganized Fund should stand for re-election, for a term of office to
extend until their successors are elected and qualified, and (ii) the selection
of Deloitte & Touche LLP as independent public accountants of the Reorganized
Fund should be submitted to shareholders for ratification, as required by the
1940 Act if the Reorganized Fund continues to engage in business as an
investment company.
A. ELECTION OF DIRECTORS OF THE REORGANIZED FUND
The nominees for election as directors of the Reorganized Fund are
Ronald P. Lynch, Robert S. Dow, E. Thayer Bigelow, Stewart S. Dixon, John C.
Jansing, C. Alan MacDonald, Hansel B. Millican, Jr. and Thomas J. Neff, who
have been nominated by the Board of Directors to succeed themselves. The
individuals named as proxies intend to vote the proxies, unless otherwise
directed, in favor of the election of such nominees, each of whom has agreed to
continue to serve as a director of the Reorganized Fund. Management of the
Reorganized Fund has no reason to believe that any nominee will be unable to
serve as a director. If any nominee should be unable to serve as a director, it
is the intention of the individuals named as proxies to vote for the election of
such person or persons as the Board of Directors may, in its discretion,
recommend.
25
<PAGE>
Information about each person nominated for election as a director is
set forth in the following table. Except where indicated, each of the persons
listed in the table has held the principal occupation listed opposite his name
for the past five years.
<TABLE>
<CAPTION>
Director of
Names and Ages of the
Directors of the Fund Principal Occupation and Directorships Fund Since
- ---------------------------------------------------------------------------------------------------
<C> <S> <C>
Ronald P. Lynch (1)(2) Chairman of the Board of the Reorganized 1983
60 Fund.
Partner of Lord Abbett.
Robert S. Dow (1)(2) President of the Reorganized Fund. 1993
50 Partner of Lord Abbett.
E. Thayer Bigelow President and Chief Executive Officer of 1994
(2) 54 Time Warner Cable Programming, Inc.,
formerly President and Chief Operating
Officer of Home Box Office, Inc.
Stewart S. Dixon (2) Partner in the law firm of Wildman, Harrold, 1976
65 Allen & Dixon.
John C. Jansing (2) Retired. Former Chairman of Independent 1978
70 Election Corporation of America, a proxy
tabulating firm.
C. Alan MacDonald (2) General Partner, The Marketing Partnership, 1988
62 Inc., a full service marketing consulting firm.
Formerly Chairman and Chief Executive
Officer of Lincoln Snacks, Inc., manufacturer
of branded snack foods (1992-1994).
Formerly President & CEO of Nestle Foods
Corp., and prior to that, President & CEO of
Stouffer Foods Corp., both subsidiaries of
Nestle SA, Switzerland. Currently serves as
Director of Den West Restaurant Co., J. B.
Williams, and Fountainhead Water Com-
pany.
Hansel B. Millican, Jr. (2) President and Chief Executive Officer of 1982
66 Rochester Button Company.
Thomas J. Neff (2) President, Spencer Stuart & Associates, an 1982
58 executive search consulting firm.
</TABLE>
- ---------------------------
26
<PAGE>
(1) "Interested person" of the Reorganized Fund and Lord Abbett, within the
meaning of the Investment Company Act of 1940, as amended, because of his
association with Lord Abbett.
(2) Also a director or trustee of the other Lord Abbett-sponsored funds except
for Lord Abbett Research Fund, Inc., of which only Messrs. Lynch, Dow,
Millican and Neff are directors.
Listed below is the number of shares of the Reorganized Fund's
outstanding capital stock owned beneficially by each director as of March 22,
1996, together with the number of "phantom" shares credited to the account of
each director under a plan (the "Deferred Plan") permitting independent
directors to defer their directors' fees and to have the deferred amounts deemed
invested in shares of the capital stock of the Reorganized Fund for later
payment. Also shown is the number of shares owned beneficially by the directors
and officers as a group, together with such "phantom" shares credited to the
accounts of directors as a group. In each case, the amounts shown are less than
1% of the Reorganized Fund's outstanding capital stock.
<TABLE>
<CAPTION>
Number of Shares Beneficially
Name Owned and Phantom Shares/(1)/
- ---------------------------------------------------------------
<S> <C>
Ronald P. Lynch 658,534
Robert S. Dow 36,940
E. Thayer Bigelow 5,765
Stewart S. Dixon 35,899
John C. Jansing 44,498
C. Alan MacDonald 238,001
Hansel B. Millican, Jr. 184,335
Thomas J. Neff 42,104
Directors and Officers as a 1,861,811
group
</TABLE>
___________________
(1) Of the shares listed in the foregoing table, the following constitute
"phantom" shares credited to directors under the Deferred Plan: Mr.
Bigelow, 5,765 shares; Mr. Dixon, 35,679 shares; Mr. Jansing, 40,374
shares; Mr. MacDonald, 28,068 shares; Mr. Millican, 40,702 shares; Mr.
Neff, 40,539 shares; and directors as a group: 191,127.
The board of the Reorganized Fund has only one standing committee, an
Audit Committee, consisting of Messrs. Bigelow, MacDonald and Millican. The
functions performed by the Audit Committee include recommendation of the
selection of independent public accountants for the Reorganized Fund to the
Board for approval, review of the scope and results
27
<PAGE>
of audit and non-audit services, the adequacy of internal controls and material
changes in accounting principles and practices and other matters when requested
from time to time by the directors who are not "interested persons" of the
Reorganized Fund within the meaning of the 1940 Act. The Audit Committee held
four meetings during the fiscal year of the Reorganized Fund ended November 30,
1995.
The Board of Directors of the Reorganized Fund met ten times during the
fiscal year ended November 30, 1995, and each director attended at least 75% of
the total number of meetings of the Board and, if he was a member of the Audit
Committee, of such committee.
The second column of the following table sets forth the compensation
accrued by the Reorganized Fund for the directors not associated with Lord
Abbett. The third and fourth columns set forth information with respect to the
retirement plan for the directors not associated with Lord Abbett maintained by
the Reorganized Fund and the other Lord Abbett-sponsored funds. The fifth column
sets forth the total compensation accrued by the Reorganized Fund and such other
funds for such directors. The second, third and fourth columns give information
for the Reorganized Fund's most recent fiscal year; the fifth column gives
information for the calendar year ended December 31, 1995. No director
associated with Lord Abbett and no officer of the Reorganized Fund received any
compensation from the Reorganized Fund for acting as a director or officer.
28
<PAGE>
<TABLE>
<CAPTION>
For Year Ended De-
For the Fiscal Year Ended November 30, 1995 cember 31, 1995
--------------------------------------------------------------------------
(I) (II) (III) (IV) (V)
- --------------------------------------------------------------------------------------------------------------
Estimated Annual
Pension or Retire- Benefits Upon Re-
ment Benefits tirement Proposed Total Compensation
Accrued by the to be Paid by the Accrued by the Re-
Aggregate Com- Reorganized Fund Reorganized Fund organized Fund and
pensation Accrued and Fifteen Other and Fifteen Other Fifteen Other Lord
by the Re- Lord Abbett-spon- Lord Abbett-spon- Abbett-sponsored
Name of Director organized Fund/1/ sored Funds/2/ sored Funds/2/ Funds/3/
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
E. Thayer Bigelow $11,399 $ 9,772 $33,600 $41,700
Stewart S. Dixon $11,445 $22,472 $33,600 $42,000
John C. Jansing $11,747 $28,480 $33,600 $42,960
C. Alan MacDonald $11,790 $27,435 $33,600 $42,750
Hansel B. Millican, Jr. $11,755 $24,707 $33,600 $43,000
Thomas J. Neff $11,481 $16,126 $33,600 $42,000
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fees for directors not associated with Lord Abbett, including attendance
fees for board and committee meetings, are allocated among all Lord Abbett-
sponsored funds based on net assets of each fund. A portion of fees
payable by the Reorganized Fund to such directors are being deferred under
a plan that deems the deferred amounts to be invested in shares of the
Reorganized Fund for later payment to the directors. The total amount
accrued under the plan for each such director since the beginning of his
tenure with the Reorganized Fund, including dividends reinvested and
changes in net asset value applicable to such deemed investments, were as
follows as of November 30, 1995: Mr. Bigelow, $13,468; Mr. Dixon, $95,400;
Mr. Jansing, $105,950; Mr. MacDonald, $75,051; Mr. Millican, $106,820; and
Mr. Neff, $106,516.
(2) Each Lord Abbett-sponsored fund has a retirement plan providing that
Directors not associated with Lord Abbett will receive annual retirement
benefits for life equal to 80% of their final annual retainers following
retirement at or after age 72 with at least 10 years of service. Each plan
also provides for a reduced benefit upon early retirement under certain
circumstances, a pre-retirement death benefit and actuarially reduced
joint-and-survivor spousal benefits. The amounts stated in column (IV)
would be payable annually under such retirement plans if the director were
to retire at age 72 and the annual retainers payable by such funds were the
same as they are today. The amounts set forth in column (III) were accrued
by the Lord Abbett-
29
<PAGE>
sponsored funds during the fiscal year ended November 30, 1995 with respect to
the retirement benefits set forth in column (IV).
(3) This column shows aggregate fees of directors who are not associated with
Lord Abbett, including attendance fees for board and committee meetings, of
a nature referred to in the first sentence of footnote (1), accrued by the
Lord Abbett-sponsored funds during the year ended December 31, 1995.
Listed below are the executive officers of the Reorganized Fund, other than
Messrs. Lynch and Dow who are listed above in the table of nominees. Each
executive officer has been associated with Lord Abbett for over five years,
except as indicated. Messrs. Allen, Carper, Cutler, Henderson, Morris, Nordberg
and Walsh are partners of Lord Abbett; the others listed below are employees.
Zane E. Brown, age 45, Executive Vice President since 1996.
Stephen I. Allen, age 42, Vice President since 1994.
Daniel E. Carper, age 44, Vice President since 1986.
Kenneth B. Cutler, age 63, Vice President and Secretary since 1985.
John J. Gargana, Jr., age 64, Vice President since 1985.
Thomas S. Henderson, age 64, Vice President since 1985.
Paul A. Hilstad, age 53, Vice President since 1995 (with Lord Abbett since 1995
- - formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.).
Thomas F. Konop, age 54, Vice President since 1987.
E. Wayne Nordberg, age 59, Vice President since 1988.
Robert G. Morris, age 51, Vice President since 1995.
Keith F. O'Connor, age 40, Treasurer since 1987.
Victor W. Pizzolato, age 63, Vice President since 1985.
John J. Walsh, age 60, Vice President since 1985.
30
<PAGE>
Pursuant to the Reorganized Fund's By-Laws, the election of each director of
the Reorganized Fund requires the affirmative vote of a majority of the votes
cast. If a shareholder abstains from voting on this matter, then the shares
held by such shareholder shall be deemed present at the meeting for purposes of
determining a quorum, but shall not be deemed to have been voted on this matter.
If a broker returns a "non-vote" proxy, indicating a lack of authority to vote
on this matter, then the shares covered by such non-vote shall be deemed present
at the meeting for purposes of determining a quorum but shall not be deemed to
have been voted on this matter.
The Board of Directors of the Reorganized Fund recommends that the
shareholders vote FOR the election of each of the nominees as directors of the
Reorganized Fund.
31
<PAGE>
B. RATIFICATION OR REJECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Reorganized Fund has selected Deloitte & Touche
LLP as the independent public accountants of the Reorganized Fund for the fiscal
year ending November 30, 1996. The 1940 Act requires that such selection be
submitted for ratification or rejection at the next annual meeting of
shareholders if such meeting be held. Deloitte & Touche LLP (or a predecessor
firm) acted as the Reorganized Fund's independent public accountants for the
year ended November 30, 1995, and for a number of years prior thereto. Based on
information in the possession of the Reorganized Fund, and information furnished
by Deloitte & Touche LLP, such firm has no direct financial interest and no
material indirect financial interest in the Reorganized Fund. A representative
of Deloitte & Touche LLP is expected to attend the meeting and will be provided
with an opportunity to make a statement and answer appropriate questions. The
Board of Directors' recommendation of Deloitte & Touche LLP has been made so
that such firm may continue to serve as the independent public accountants of
the Reorganized Fund in the event that the Fund Reorganization does not occur
for any reason.
Ratification of the selection of Deloitte & Touche LLP by the shareholders of
the Reorganized Fund requires the affirmative vote of a majority of the votes
cast. If a shareholder abstains from voting on this matter, then the shares
held by such shareholder shall be deemed present at the meeting for purposes of
determining a quorum, but shall not be deemed to have been voted on this matter.
If a broker returns a "non-vote" proxy, indicating a lack of authority to vote
on this matter, then the shares covered by such non-vote shall be deemed present
at the meeting for purposes of determining a quorum, but shall not be deemed to
have been voted on this matter.
The Board of Directors of the Reorganized Fund recommends that shareholders
vote to ratify the selection of Deloitte & Touche LLP as the Reorganized Fund's
independent public accountants for the fiscal year ending November 30, 1996.
ITEM 3. - FOR ACQUIRED TRUST SHAREHOLDERS ONLY
RATIFICATION OR REJECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Trustees of the Securities Trust has selected Deloitte & Touche
LLP as the independent public accountants of the Securities Trust for the fiscal
year ending October 31, 1996. The 1940 Act requires that such selection be
submitted for ratification or rejection at the next annual meeting of
shareholders if such meeting be held. Deloitte & Touche LLP (or a predecessor
firm) acted as the Securities Trust's independent public
32
<PAGE>
accountants for the year ended October 31, 1995, and for a number of years prior
thereto. Based on information in the possession of the Securities Trust, and
information furnished by Deloitte & Touche LLP, such firm has no direct
financial interest and no material indirect financial interest in the Securities
Trust. A representative of Deloitte & Touche LLP is expected to attend the
meeting and will be provided with an opportunity to make a statement and answer
appropriate questions.
Ratification of the selection of Deloitte & Touche LLP by the shareholders of
Securities Trust requires the affirmative vote of a majority of the shares of
the Securities Trust voted on this matter. If a shareholder abstains from
voting on this matter, then the shares held by such shareholder shall be deemed
present at the meeting for purposes of determining a quorum, but shall not be
deemed to have been voted on this matter. If a broker returns a "non-vote"
proxy, indicating a lack of authority to vote on this matter, then the shares
covered by such non-vote shall be deemed present at the meeting for purposes of
determining a quorum, but shall not be deemed to have been voted on this matter.
The Board of Trustees of the Securities Trust recommends that shareholders
vote to ratify the selection of Deloitte & Touche LLP as Securities Trust's
independent public accountants for the fiscal year ending October 31, 1996.
ADDITIONAL INFORMATION
Following the Fund Reorganization, the Acquiring Fund will adopt the November
30 fiscal year of the Reorganized Fund.
To the knowledge of the Funds, as of March 22, 1996, no person owned of record
or beneficially 5% or more of the outstanding shares of any of the Funds or of
the Securities Trust or the Investment Trust. As of March 22, 1996, the
trustees and officers of the Investment Trust, as a group, owned 2.4% of the
outstanding shares of the Investment Trust.
The Reorganized Fund, the Securities Trust and the Investment Trust are
subject to the informational requirements of the Securities Exchange Act of 1934
and in accordance therewith file reports, proxy statements and other information
with the Securities and Exchange Commission. Such reports, proxy statements and
other information filed by such entities can be inspected and copied at the
public reference facilities of the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C., and at the Northeast Regional Office in New York, 7
World Trade Center, 13th Floor, New York, New York. Copies of such material can
also be obtained by mail from the Public Reference Branch, Office of Consumer
Affairs and Information Services, Securities and Exchange Commission,
Washington, D.C. 20549 at prescribed rates.
33
<PAGE>
EXHIBIT A-1
-----------
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this day of , 1996, by and between Lord Abbett U.S. Government
Securities Fund, Inc. (the "Acquired Fund"), a Maryland corporation, and Lord
Abbett Investment Trust (the "Trust"), a Delaware business trust, on behalf of
its series U.S. Government Securities Series (the "Acquiring Fund").
WHEREAS, this Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(C) and
(F) of the United States Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the reorganization (the "Reorganization") will consist of the
transfer of all of the assets of the Acquired Fund in exchange for shares of
beneficial ownership of the Acquiring Fund (to be designated as Class A Shares,
the "Acquiring Fund Class A Shares" and each an "Acquiring Fund Class A Share")
and the assumption by the Acquiring Fund of all of the liabilities of the
Acquired Fund and the distribution, after the Closing Date herein referred to,
of Acquiring Fund Class A Shares to the share holders of the Acquired Fund in
liquidation of the Acquired Fund, all upon the terms and conditions hereinafter
set forth in this Agreement;
WHEREAS, the Trust and the Acquired Fund are open-end, registered
investment companies of the management type;
WHEREAS, the Acquired Fund owns securities that generally are of the
character in which the Acquiring Fund is permitted to invest;
WHEREAS, the Acquiring Fund is authorized to issue a single class of
shares (the "Acquiring Fund Class A Shares");
WHEREAS, after the multiple class share structure is authorized by the
Acquiring Fund but before the Acquiring Fund Class A Shares are issued to the
Acquired Fund, the Acquired Fund is to purchase one Acquiring Fund Class A share
and as sole shareholder (i) approve a plan pursuant to Section 12(b) of the
-
Investment Company Act of 1940 (the "1940 Act") and Rule 12b-1 thereunder (a
"Rule 12b-1 Plan") applicable to the Acquiring Fund Class A Shares and (ii)
--
approve the proposed investment management agreement between the Acquiring Fund
and Lord, Abbett & Co. ("Lord Abbett");
WHEREAS, the Board of Directors, including a majority of the Directors
who are not "interested persons" (as defined under the 1940 Act) of the
<PAGE>
Acquired Fund, has determined that the Reorganization is in the best interests
of the Acquired Fund's shareholders and that the interests of the existing
shareholders of the Acquired Fund will not be diluted as a result of this
transaction;
WHEREAS, the Board of Trustees, including a majority of the Trustees
who are not "interested persons" (as defined under the 1940 Act ), of the Trust
has determined that the Reorganization is in the best interests of the Acquiring
Fund's shareholders and that the interests of the existing shareholders of the
Acquiring Fund will not be diluted as a result of this transaction; and
NOW THEREFORE, in consideration of the premises and of the agreements
hereinafter set forth, the parties hereto agree as follows:
1. REORGANIZATION
1.1. Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the Acquired Fund
will transfer its assets as set forth in paragraph 1.2 to the Acquiring Fund,
and the Acquiring Fund will in exchange therefor, (i) deliver to the Acquired
-
Fund the number of Acquiring Fund Class A Shares, including fractional Acquiring
Fund Class A Shares, equal to the number of the shares of capital stock of the
Acquired Fund as of the close of regular trading on the New York Stock Exchange
(the "NYSE") on the Closing Date (such time and date being hereinafter called
the "Valuation Date"); and (ii) to assume the liabilities of the Acquired Fund.
--
Such transactions shall take place at the closing provided for in paragraph 3.1
(the "Closing").
1.2. (a) The assets of the Acquired Fund to be acquired by the
Acquiring Fund shall consist of all of its property, including, without
limitation, all cash, securities and dividends or interest receivables and any
deferred or prepaid expenses shown as an asset on the books of the Acquired Fund
on the closing date provided in paragraph 3.1 (the "Closing Date").
(b) The Acquiring Fund has a list of all of the Acquired Fund's
assets as of the date of execution of this Agreement. The Acquired Fund has a
statement of the Acquiring Fund's investment objectives, policies and
restrictions. The Acquired Fund reserves the right to sell any of its securities
but will not, without the prior approval of the Acquiring Fund, acquire any
additional securities other than securities of the type in which the Acquiring
Fund is permitted to invest. The Acquiring Fund will, within a reasonable time
prior to the Closing Date, furnish the Acquired Fund with a list of the
securities, if any, on the Acquired Fund's list referred to in the first
sentence of this paragraph which do not conform to the Acquiring Fund's
investment
2
<PAGE>
objectives, policies and restrictions. In the event that the Acquired Fund
holds any investments which the Acquiring Fund may not hold, the Acquired Fund
will dispose of such securities prior to the Closing Date. In addition, if it
is determined that the portfolios of the Acquired Fund and the Acquiring Fund,
when aggregated, would contain in vestments exceeding certain percentage
limitations imposed upon the Acquiring Fund with respect to such investments,
the Acquired Fund, if requested by the Acquiring Fund, will dispose of and/or
reinvest a sufficient amount of such investments as may be necessary to avoid
violating such limitations as of the Closing Date.
1.3. As provided in paragraph 3.4, as soon after the Closing Date as is
conveniently practicable, the Acquired Fund will distribute pro rata to the
Acquired Fund's shareholders of record determined as of the close of business on
the Closing Date, the Acquiring Fund Class A Shares it receives pursuant to
paragraph 1.1. Such distribution will be accomplished by establishing Acquiring
Fund shareholder accounts in the names of each Acquired Fund shareholder,
representing the same number of full and fractional Acquiring Fund Class A
Shares due each shareholder. All issued and outstanding shares of the Acquired
Fund will simultaneously be canceled on the books of the Acquired Fund. The
Acquiring Fund shall not issue certificates representing the Acquiring Fund
Shares in connection with such exchange.
1.4. Any transfer taxes payable upon issuance of Acquiring Fund Class A
Shares in a name other than the registered holder of the shares of the Acquired
Fund on the books of the Acquired Fund as of that time shall, as a condition of
such issuance and transfer, be paid by the person to whom such Acquiring Fund
Class A Shares are to be issued and transferred.
1.5. The Acquired Fund shall, following the Closing Date and the making
of all distributions pursuant to paragraph 1.3, be dissolved pursuant to the law
of Maryland. Any reporting responsibility of the Acquired Fund is and shall
remain the responsibility of the Acquired Fund up to and including the Closing
Date and following the dissolution of the Acquired Fund.
2. VALUATION
2.1. The net value of the Acquired Fund's assets to be acquired by the
Acquiring Fund hereunder shall be the value of such assets, less the Acquired
Fund's liabilities assumed by the Acquiring Fund, computed as of the close of
regular trading on the Valuation Date, using the valuation procedures set forth
in the Declaration and Agreement of Trust of the Trust.
3
<PAGE>
2.2. All computations of value shall be made by the Acquiring Fund and
the Acquired Fund in accordance with the regular practice of the Acquired Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be July 12, 1996, or such later date as the
parties may agree to in writing. All acts taking place at the Closing shall be
deemed to take place simultaneously as of the close of business on the Closing
Date unless otherwise provided. The Closing shall be held as of 5:00 p.m. at the
offices of [specify location in New Jersey], or at such other time and/or place
as the parties may agree.
3.2. In the event that on the Valuation Date (a) the NYSE or another
-
primary trading market for portfolio securities of the Acquiring Fund or the
Acquired Fund shall be closed to trading or trading thereon shall be restricted
or (b) trading or the reporting of trading on the NYSE or elsewhere shall be
-
disrupted so that accurate appraisal of the value of the net assets of the
Acquiring Fund or the Acquired Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.
3.3. At the Closing, the Acquired Fund shall direct its custodian to
deliver to the custodian of the Acquiring Fund, for the Acquiring Fund's
account, all of its portfolio securities and other assets held by such custodian
for the Acquired Fund's account, duly endorsed in proper form for transfer as
appropriate, in such condition as to constitute good delivery thereof in
accordance with the custom of the Acquiring Fund's custodian, and shall be
accompanied by all necessary federal and state stock transfer stamps or a check
for the appropriate purchase price thereof.
3.4. The Acquired Fund shall direct its transfer agent to deliver to
the transfer agent of the Acquiring Fund on the Closing Date a list of the names
and addresses of the Acquired Fund's shareholders and the number of outstanding
shares owned by each such shareholder immediately prior to the Closing. The
Acquiring Fund shall direct its transfer agent to issue and deliver a
confirmation evidencing the Acquiring Fund Class A Shares to be credited to the
Acquired Fund's account on the Closing Date to the transfer agent of the
Acquired Fund, or provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Class A Shares have been credited to the Acquired Fund's account
on the books of the Acquiring Fund. At the Closing, each party shall deliver to
the other such bills of sale, checks, assignments, share certificates, if any,
receipts, assumption agreements or other documents as such other party or its
counsel may reasonably request.
4
<PAGE>
4. REPRESENTATIONS AND WARRANTIES
4.1. The Acquired Fund represents and warrants to the Trust as follows:
(a) The Acquired Fund is a registered investment company classified as a
management company of the open-end type, and its registration with the
Securities and Exchange Commission (the "Commission") as an investment company
under the 1940 Act is in full force and effect.
(b) The Acquired Fund is duly organized, validly existing and in good
standing under the laws of the State of Maryland and has the power to own all of
its properties and assets and to carry out this Agreement.
(c) The current prospectus and statement of additional information of
the Acquired Fund conform (and any prospectus or statement of additional
information of the Acquired Fund issued prior to the Closing Date will conform)
in all material respects to the applicable requirements of the Securities Act of
1933 Act, as amended (the "1933 Act"), and the 1940 Act and the rules and
regulations of the Commission thereunder and do not (and will not) include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were (and will be) made, not materially
misleading.
(d) The Acquired Fund is not in, and the execution, delivery and
performance of this Agreement will not result in a, material violation of its
Articles of Incorporation or By-laws or of any agreement, instrument, contract
or other undertaking to which the Acquired Fund is a party or by which it is
bound.
(e) The Acquired Fund has no material contracts or other commitments
which will be terminated with liability to the Acquired Fund on, prior to or
after the Closing Date.
(f) Except as otherwise disclosed in writing to and accepted by the
Acquiring Fund, no litigation or administrative proceeding or investigation of
or before any court or governmental body is presently pending or to its
knowledge threatened against the Acquired Fund or any of the Acquired Fund's
properties or assets, which if adversely determined would materially and
adversely affect the financial condition of the Acquired Fund or the conduct of
the Acquired Fund's business. The Acquired Fund knows of no facts which might
form the basis of the institution of such a proceeding and is
5
<PAGE>
not party to or subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely affects the
business of the Acquired Fund or the ability of the Acquired Fund to consummate
the transactions contemplated herein.
(g) True and correct copies of the Acquired Fund's (i) Statement of Net
-
Assets as at November 30, 1995 and (ii) Statements of Operations and Changes in
--
Net Assets for the 12-month period then ended, including the accompanying notes,
have been furnished to the Acquiring Fund. Such Statement of Net Assets and such
Statements of Operations and Changes in Net Assets (and the accompanying notes)
have been audited by Deloitte & Touche LLP, independent certified public
accountants. Such statements have been prepared in accordance with generally
accepted accounting principles consistently applied, and such statements fairly
reflect the financial condition and the operations and changes in net assets of
the Acquired Fund as of such date and for such period, respectively. There are
no known contingent liabilities of the Acquired Fund as of such date required to
be reflected or disclosed in such Statement of Net Assets or notes in accordance
with generally accepted accounting principles that are not so reflected or
disclosed.
(h) Since November 30, 1995, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one year from
the date such indebtedness was incurred, except as otherwise disclosed to and
accepted by the Acquiring Fund.
(i) At the Closing Date, all federal and other tax returns and reports
of the Acquired Fund required by law to have been filed prior to the Closing
Date shall have been filed, and all federal and other taxes shown as due on such
returns shall have been paid, or provision shall have been made for the payment
thereof, and to the best of the Acquired Fund's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to such
returns.
(j) For the most recent fiscal year of its operation, the Acquired Fund
has met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company.
(k) All issued and outstanding shares of the Acquired Fund are, and at
the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable. All of the issued and outstanding shares of the Acquired
6
<PAGE>
Fund will, at the time of Closing, be held of record by the persons and in the
amounts set forth in the records of the transfer agent as provided in paragraph
3.4. The Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any shares of the Acquired Fund, nor is
there outstanding any security convertible into any shares of the Acquired Fund.
(l) At the Closing Date, the Acquired Fund will have good and marketable
title to its assets to be transferred to the Acquiring Fund pursuant to
paragraph 1.1 and full right, power and authority to sell, assign, transfer and
deliver such assets hereunder and, upon delivery and payment for such assets,
the Acquiring Fund will acquire good and marketable title thereto, subject to no
restrictions on the full transfer thereof, including such restrictions as might
arise under the 1933 Act, other than as disclosed to the Acquiring Fund prior to
the date hereof.
(m) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action on the part of the Acquired Fund's Board
of Directors, and subject to the due approval of the Acquired Fund's
shareholders, this Agreement, assuming due authorization, execution and delivery
by the Acquiring Fund, constitutes a valid and binding obligation of the
Acquired Fund, enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights and to general equity principles. The
Acquired Fund's Board of Directors has called a meeting of the Acquired Fund
shareholders to consider and act upon this Agreement.
(n) The information furnished and to be furnished by the Acquired Fund
for use in registration statements, proxy materials and other documents which
may be necessary in connection with the transactions contemplated hereby shall
be accurate and complete in all material respects and shall comply in all
material respects with federal securities and other laws and regulations
thereunder applicable thereto.
(o) The combined prospectus and proxy statement (the "N-14 prospectus
and proxy statement") and the related statement of additional information
included in the Registration Statement on Form N-14 of the Acquiring Fund (the
"N-14 Registration Statement") did not on the effective date of the N-14
Registration Statement contain any untrue statement of a material fact relating
to the Acquired Fund or the meeting of its shareholders referred to therein or
omit to state a mate rial fact required to be stated therein or necessary to
make the statements therein relating to the Acquired Fund or such
7
<PAGE>
special meeting, in light of the circumstances under which such statements were
made, not materially misleading.
(p) The Acquiring Fund Class A Shares to be issued to the Acquired Fund
hereunder are not being acquired for the purpose of making any distribution
thereof other than in accordance with the terms of this Agreement.
4.2. With respect to the Acquiring Fund, the Trust represents and
warrants to the Acquired Fund as follows:
(a) The Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act is in full force and
effect.
(b) The Acquiring Fund is a series of the Trust. The Trust is duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the power to own all of its properties and assets and to carry
out this Agreement.
(c) The current prospectus and statement of additional information of
the Trust relating to the Acquiring Fund conform (and any prospectus or
statement of additional information of the Trust Relating to the Acquiring Fund
issued prior to the Closing Date will conform) in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder and do not (and will not) include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were (and will be) made, not materially
misleading.
(d) The Trust is not in, and the execution, delivery and performance of
this Agreement will not result in, a material violation of its Declaration of
Trust or By-laws or of any agreement, instrument, contract or other undertaking
to which the Trust is a party or by which it is bound.
(e) The Trust has no material contracts or other commitments which will
be terminated with liability to the Trust on, prior to or after the Closing
Date.
(f) Except as otherwise disclosed in writing to and accepted by the
Acquired Fund, no litigation or administrative proceeding or investigation of
8
<PAGE>
or before any court or governmental body is presently pending or to its
knowledge threatened against the Trust or any of the Acquiring Fund's properties
or assets, which, if adversely determined, would materially and adversely affect
its financial condition or the conduct of its business. The Trust knows of no
facts which might form the basis of the institution of such a proceeding and is
not party to or subject to the provisions of any order, decree or judgment of
any court or governmental body which materially and adversely affects its
business or its ability to consummate the transactions contemplated herein.
(g) True and correct copies of the Trust's (i) Statement of Net Assets
-
as at October 31, 1995, and (ii) Statements of Operation and Changes in Net
--
Assets for the 12-month period then ended, including the accompanying notes,
have been furnished to the Acquired Fund. Such Statement of Net Assets and such
Statements of Operations and Changes in Net Assets (and the accompanying notes)
have been audited by Deloitte & Touche LLP, independent certified public
accountants. Such statements have been prepared in accordance with generally
accepted accounting principles consistently applied, and such statements fairly
reflect the financial condition and the operations and changes in net assets of
the Trust as of such date and for such period, respectively. There are no known
contingent liabilities of the Trust as of such date required to be reflected or
disclosed in such Statements of Net Assets or notes in accordance with generally
accepted accounting principles that are not so reflected or disclosed.
(h) Since October 31, 1995, there has not been any material adverse
change in the Trust's financial condition, assets, liabilities or business other
than changes occurring in the ordinary course of business, or any incurrence by
the Trust's of indebtedness maturing more than one year from the date such
indebtedness was incurred, except as otherwise disclosed to and accepted by the
Acquired Fund.
(i) At the Closing Date, all federal and other tax returns and reports
of the Trust required by law to have been filed prior to the Closing Date shall
have been filed, and all federal and other taxes shown as due on such returns
and reports shall have been paid, or provision shall have been made for the
payment thereof, and to the best of the Trust's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to such
returns.
(j) For the most recent fiscal year of its operation, the Trust has met
the requirements of Subchapter M of the Code for qualification and treatment
9
<PAGE>
as a regulated investment company and the Acquiring Fund intends to do so in the
future.
(k) At the Closing Date, all issued and outstanding shares of the
Acquiring Fund will be duly and validly issued and outstanding, fully paid and
non-assessable, with no personal liability attaching to the ownership thereof.
The Acquiring Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any shares of the Acquiring Fund, nor is
there out standing any security convertible into shares of the Acquiring Fund.
(l) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action on the part of the Trust's Board of
Trustees, and assuming due authorization, execution and delivery by the Acquired
Fund, this Agreement constitutes a valid and binding obligation of the Trust on
behalf of the Acquiring Fund, enforceable in accordance with its terms, subject
as to enforcement to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights and to general equity
principles.
(m) The N-14 Registration Statement (except insofar as it relates to the
Acquired Fund or the special meeting of its shareholders referred to therein)
did not on the effective date of the N-14 Registration Statement contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not materially misleading.
(n) The Acquiring Fund Class A Shares to be issued and delivered to the
Acquired Fund pursuant to the terms of this Agreement have been duly authorized
by the Trust's Board of Trustees on behalf of the Acquiring Fund, and when
issued and delivered at the Closing in accordance with this Agreement, will be
duly and validly issued Acquiring Fund Class A Shares and will be fully paid and
non-assessable with no personal liability attaching to the ownership thereof.
(o) The Board of the Investment Trust has duly adopted a resolution (a
copy of which has been furnished to the Acquired Fund) setting forth an
amendment to the Declaration and Agreement of Trust of the Investment Trust
authorizing the creation and issuance of additional classes of shares within
series, including the Acquiring Fund Class C Shares.
5. COVENANTS
10
<PAGE>
5.1. The Acquiring Fund will conduct no investment operations prior to
the Closing Date. The Acquired Fund will operate its business in the ordinary
course between the date hereof and the Closing Date. It is understood that such
ordinary course of business will include the declaration and payment of
customary dividends and distributions and any other dividends and distributions
deemed advisable.
5.2. At or after the Closing, the Acquired Fund will deliver or
otherwise make available to the Acquiring Fund a statement of the Acquired
Fund's assets and liabilities, together with a list of the Acquired Fund's
portfolio securities showing the tax costs of such securities to it and the
holding periods of such securities, as of the Closing Date.
5.3. The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the Acquired Fund's shares.
5.4. Subject to the provisions of this Agreement, the Acquired Fund and
the Acquiring Fund each will take, or cause to be taken, all action, and do or
cause to be done all things, reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.5. The Acquired Fund will provide the Acquiring Fund with any
additional information reasonably necessary for any revision of the N-14
Prospectus and Proxy Statement referred to in paragraph 4.1(o), all to be
included in any amendment to the N-14 Registration Statement, in compliance with
the 1933 Act, the Securities Exchange Act of 1934 (the "1934 Act") and the 1940
Act in connection with the meeting of the Acquired Fund's shareholders to
consider approval of this Agreement and the Reorganization.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Trust, on behalf of the Acquiring Fund, in all material respects of all of the
obligations to be performed by it hereunder on or before the Closing Date and,
in addition thereto, the following further conditions:
6.1. All representations and warranties of the Trust contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as
11
<PAGE>
of the Closing Date with the same force and effect as if made on and as of the
Closing Date.
6.2. The Trust shall have delivered to the Acquired Fund a certificate
executed in its name by its President or a Vice President and its Treasurer or
an Assistant Treasurer, in form reasonably satisfactory to the Acquired Fund and
dated as of the Closing Date, to the effect that the representations and
warranties of the Trust made in this Agreement are true and correct at and as of
the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST
The obligations of the Trust, on behalf of the Acquiring Fund, to
consummate the transactions provided for herein shall be subject, at its
election, to the performance by the Acquired Fund in all material respects of
all the obligations to be performed by it hereunder on or before the Closing
Date and, in addition thereto, the following further conditions:
7.1. All representations and warranties of the Acquired Fund contained
in this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date with the same force and effect as if
made on and as of the Closing Date.
7.2. The Acquired Fund shall have delivered to the Acquiring Fund on
the Closing Date a certificate executed in its name by its President or a Vice
President and its Treasurer or an Assistant Treasurer, in form and substance
satisfactory to the Acquiring Fund and dated as of the Closing Date, to the
effect that the representations and warranties of the Acquired Fund made in this
Agreement are true and correct at and as of the Closing Date, except as they may
be affected by the transactions contemplated by this Agreement.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST AND THE ACQUIRED
FUND
If any of the conditions set forth below do not exist on the Closing
Date with respect to the Acquiring Fund or the Acquired Fund, either party to
this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1. This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Ac-
12
<PAGE>
quired Fund. Notwithstanding anything herein to the contrary, neither the
Acquiring Fund nor the Acquired Fund may waive the conditions set forth in this
paragraph 8.1.
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
8.3. All consents of other parties and all other consents, orders,
rulings and permits of federal, state and local regulatory authorities
(including those of the Commission, the Internal Revenue Service and state Blue
Sky and securities authorities) deemed necessary by the Acquiring Fund or the
Acquired Fund to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where failure
to obtain any such consent, order, ruling or permit would not involve a risk of
a material adverse effect on the assets or properties of the Acquiring Fund or
the Acquired Fund.
8.4. The N-14 Registration Statement shall have become effective under
the 1933 Act and no stop orders suspending the effectiveness thereof shall have
been issued and, to the best knowledge of the parties hereto, no investigation
or proceeding for that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act.
8.5. The parties shall have received a favorable opinion of Debevoise &
Plimpton, addressed to the Acquired Fund and the Trust and satisfactory to the
Secretary of each such party, substantially to the effect that for federal
income tax purposes:
(a) the acquisition by the Acquiring Fund of all of the assets of the
Acquired Fund solely in exchange for the issuance of Acquiring Fund Class C
Shares to the Acquired Fund and the assumption of all of the Acquired Fund
liabilities by the Acquiring Fund, followed by the distribution by the Acquired
Fund, in complete liquidation, of the Acquiring Fund Class C Shares to the
Acquired Fund shareholders in exchange for their Acquired Fund shares, will be
treated as a "reorganization" within the meaning of Section 368(a) of the Code,
and the Acquiring Fund and the Acquired Fund will each be a "party to a
reorganization" within the meaning of Section 368(b) of the Code;
(b) no gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund in exchange for the Acquiring Fund
Shares and the assumption by the Acquiring Fund of liabilities of the Acquired
Fund;
13
<PAGE>
(c) no gain or loss will be recognized by the Acquiring Fund upon the
transfer of the Acquired Fund's assets to the Acquiring Fund in exchange for the
Acquiring Fund Shares and the assumption by the Acquiring Fund of liabilities of
the Acquired Fund or upon the distribution of the Acquiring Fund Shares to the
Acquired Fund's shareholders;
(d) no gain or loss will be recognized by shareholders of the Acquired Fund
upon the exchange of their Acquired Fund shares for the Acquiring Fund Shares;
(e) the aggregate tax basis for the Acquiring Fund Shares received by each
of the Acquired Fund's shareholders pursuant to the Reorganization will be the
same as the aggregate tax basis of the Acquired Fund shares held by such
shareholder immediately prior to the Reorganization, and the holding period of
the Acquiring Fund Shares to be received by each Acquired Fund shareholder will
include the period during which the Acquired Fund shares exchanged therefor were
held by such shareholder (provided that the Acquired Fund shares were held as
capital assets on the date of the Reorganization); and
(f) the tax basis of the Acquired Fund's assets acquired by the Acquiring
Fund will be the same as the tax basis of such assets to the Acquired Fund
immediately prior to the Reorganization, and the holding period of the assets of
the Acquired Fund in the hands of the Acquiring Fund will include the period
during which those assets were held by the Acquired Fund.
Notwithstanding anything herein to the contrary, neither the Acquiring
Fund nor the Trust may waive the conditions set forth in this paragraph 8.5.
8.6. The Trust shall have duly adopted a Rule 12b-1 Plan for the
Acquiring Fund Class A Shares acceptable to the Acquired Fund.
9. BROKERAGE FEES AND EXPENSES
9.1. The Trust, on behalf of the Acquiring Fund, represents and
warrants to the Acquired Fund, and the Acquired Fund represents and warrants to
the Trust, that there are no brokers or finders entitled to receive any payments
in connection with the transactions provided for herein.
9.2. Except as may be otherwise provided herein, the Acquiring Fund and
the Acquired Fund each shall pay, or provide for the payment of, the expenses
incurred by it in connection with entering into and carrying out the provisions
of this Agreement.
14
<PAGE>
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. The parties hereto agree that no party has made any
representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties.
10.2. None of the representations and warranties included or provided
for herein shall survive the consummation of the transactions contemplated
hereby.
11. TERMINATION
11.1. This Agreement may be terminated at any time prior to the Closing
Date: (1) by the mutual agreement of the Trust and the Acquired Fund; (2) by the
- -
Acquired Fund in the event that the Trust shall, or by the Trust in the event
that the Acquired Fund shall, materially breach any representation or warranty
contained herein or any agreement contained herein and to be performed at or
prior to the Closing Date; or (3) by either party if a condition herein
-
expressed to be precedent to the obligations of the terminating party has not
been met and it reasonably appears that it will not or cannot be met.
11.2. In the event of any such termination, there shall be no liability
for damages on the part of either the Trust, the Acquired Fund or the Acquiring
Fund or their respective Trustees, Directors or officers to the other party, but
the Acquiring Fund and the Acquired Fund shall each bear, or provide for the
payment of, the expenses incurred by it incidental to the preparation and
carrying out of this Agreement as provided in paragraph 9.2.
12. AMENDMENTS; WAIVERS
12.1. This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers of
the Trust and the Acquired Fund; provided, however, that following the approval
of the Acquired Fund Shareholders referred to in paragraph 8.1, no such
amendment may have the effect of changing the provisions for determining the
number of the Acquiring Fund Class A Shares to be issued to the Acquired Fund's
shareholders under this Agreement to the detriment of such shareholders without
their further approval.
12.2. At or at any time prior to the Closing either party hereto may by
written instrument signed by it (i) waive any inaccuracies in the
representations and warranties made to it contained herein and (ii) waive
compliance with any of the covenants or conditions made for its benefit
contained herein.
15
<PAGE>
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by personal
delivery addressed to the Acquired Fund, 767 Fifth Avenue, New York, New York,
10153, Attention: Office of the Secretary; or to the Acquiring Fund, 767 Fifth
Avenue, New York, New York, 10153, Attention: Office of the Secretary.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
14.1. The article and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
14.3. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
14.4. (a) This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm, corporation or other entity, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
(b) The Acquired Fund is hereby expressly put on notice of the
limitation of liability as set forth in Article IV of the Declaration and
Agreement of Trust of the Trust and agrees that the obligations assumed by the
Trust pursuant to this Agreement shall be limited in any case to the Acquiring
Fund and its assets and the Acquired Fund shall not seek satisfaction of any
such obligation from the
16
<PAGE>
shareholders of the Trust, the trustees, officers, employees or agents of the
Trust or any of them or from any other assets of the Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its Chairman of the Board, President or Vice
President and attested by its Secretary or Assistant Secretary.
Attest: LORD ABBETT INVESTMENT TRUST
on behalf of Lord Abbett U.S. Government
Securities Series
By: _______________________________
Name: _____________ Name:
Title: Secretary Title:
Attest: LORD ABBETT U.S. GOVERNMENT
SECURITIES FUND, INC.
By: _______________________________
Name: _____________ Name:
Title: Secretary Title:
17
<PAGE>
EXHIBIT A-2
-----------
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this day of , 1996, by and between Lord Abbett Investment
Trust (the "Investment Trust"), a Delaware business trust, on behalf of its
series Lord Abbett U.S. Government Securities Series (the "Acquiring Fund"), and
Lord Abbett Securities Trust (the "Securities Trust"), a Delaware business
trust, on behalf of its series Lord Abbett U.S. Government Securities Trust (the
"Acquired Fund").
WHEREAS, this Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(C) and
(F) of the United States Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the reorganization (the "Reorganization") will consist of the
transfer of all of the assets of the Acquired Fund in exchange for Class C
shares of capital stock of the Acquiring Fund (the "Acquiring Fund Class C
Shares" and each an "Acquiring Fund Class C Share") and the assumption by the
Acquiring Fund of all of the liabilities of the Acquired Fund and the
distribution, after the Closing Date herein referred to, of Acquiring Fund Class
C Shares to the shareholders of the Acquired Fund in termination of the
Acquired Fund, all upon the terms and conditions hereinafter set forth in this
Agreement;
WHEREAS, the Securities Trust and the Investment Trust are open-end,
registered investment companies of the management type;
WHEREAS, the Acquired Fund is a series of the Securities Trust and the
Acquired Fund owns securities that generally are of the character in which the
Acquiring Fund is permitted to invest;
WHEREAS, the Acquiring Fund is a new series of the Investment Trust
that has no investment portfolio or other assets but plans to acquire the
assets, and to assume the liabilities, of Lord Abbett U.S. Government Securities
Fund, Inc. ("LAUSGSF, Inc.") immediately prior to the Reorganization;
WHEREAS, the Acquiring Fund is authorized to issue a single class of
shares (the "Acquiring Fund Class A Shares"), and prior to the consummation of
the Reorganization, will amend its Declaration and Agreement of Trust to provide
for the authorization and issuance of shares of additional classes of capital
stock, including Acquiring Fund Class C Shares, which will share pro rata with
each other class in the portfolio, income and expenses of the Acquiring Fund,
except that each class will
<PAGE>
bear the expense of its own distribution and shareholder servicing arrangements
and certain other expenses;
WHEREAS, after the multiple class share structure is authorized by the
Acquiring Fund but before the Acquiring Fund Class C Shares are issued to the
Acquired Fund pursuant to the Reorganization, the Acquired Fund is to purchase
one Acquiring Fund Class C share and as sole shareholder approve a plan pursuant
to Section 12(b) of the Investment Company Act of 1940 (the "1940 Act") and Rule
12b-1 thereunder (a "Rule 12b-1 Plan") applicable to the Acquiring Fund Class C
Shares;
WHEREAS, the Board of Trustees, including a majority of the Trustees
who are not "interested persons" (as defined under the 1940 Act ), of the
Securities Trust has determined that the Reorganization is in the best interests
of the Acquired Fund's shareholders and that the interests of the existing
shareholders of the Acquired Fund will not be diluted as a result of this
transaction; and
WHEREAS, the Board of Trustees, including a majority of the Trustees
who are not "interested persons" (as defined under the 1940 Act) of the
Investment Trust, has determined that the Reorganization is in the best
interests of the Acquiring Fund's shareholders and that the interests of the
existing shareholders of the Acquiring Fund will not be diluted as a result of
this transaction;
NOW THEREFORE, in consideration of the premises and of the agreements
hereinafter set forth, the parties hereto agree as follows:
1. REORGANIZATION.
1.1. Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the Securities
Trust will transfer assets of the Acquired Fund as set forth in paragraph 1.2 to
the Acquiring Fund, and the Acquiring Fund will in exchange therefor, (i)
-
deliver to the Acquired Fund the number of Acquiring Fund Class C Shares,
including fractional Acquiring Fund Class C Shares, determined by dividing the
net value of the Acquired Fund's assets so transferred computed in the manner
and as of the time and date set forth in paragraph 2.1, by the net asset value
of one Acquiring Fund Class A Share, computed in the manner and as of the time
and date set forth in paragraph 2.2; and (ii) to assume all of the liabilities
--
of the Acquired Fund. Such transactions shall take place at the closing provided
for in paragraph 3.1 (the "Closing").
1.2. The assets of the Acquired Fund to be acquired by the Acquiring
Fund shall consist of all of its property, including, without limitation, all
2
<PAGE>
cash, securities and dividends or interest receivables and any deferred or
prepaid expenses shown as an asset on the books of the Acquired Fund on the
closing date provided in paragraph 3.1 (the "Closing Date").
(b) The Acquiring Fund has a list of all of the Acquired Fund's assets
as of the date of execution of this Agreement. The Acquired Fund has a statement
of the Acquiring Fund's investment objectives, policies and restrictions. The
Acquired Fund reserves the right to sell any of its securities but will not,
without the prior approval of the Acquiring Fund, acquire any additional
securities other than securities of the type in which the Acquiring Fund is
permitted to invest. The Acquiring Fund will, within a reasonable time prior to
the Closing Date, furnish the Acquired Fund with a list of the securities, if
any, on the Acquired Fund's list referred to in the first sentence of this
paragraph which do not conform to the Acquiring Fund's investment objectives,
policies and restrictions. In the event that the Acquired Fund holds any
investments which the Acquiring Fund may not hold, the Acquired Fund will
dispose of such securities prior to the Closing Date. In addition, if it is
determined that the portfolios of the Acquired Fund and the Acquiring Fund, when
aggregated, would contain investments exceeding certain percentage limitations
imposed upon the Acquiring Fund with respect to such investments, the Acquired
Fund, if requested by the Acquiring Fund, will dispose of and/or reinvest a
sufficient amount of such investments as may be necessary to avoid violating
such limita tions as of the Closing Date.
1.3. As provided in paragraph 3.4, as soon after the Closing Date as is
conveniently practicable, the Acquired Fund will distribute pro rata to the
Acquired Fund's shareholders of record determined as of the close of business on
the Closing Date, the Acquiring Fund Class C Shares it receives pursuant to
paragraph 1.1. Such distribution will be accomplished by establishing Acquiring
Fund shareholder accounts in the names of each Acquired Fund shareholder,
representing the respective pro rata number of full and fractional Acquiring
Fund Class C Shares due each shareholder. All issued and outstanding shares of
the Acquired Fund will simultaneously be canceled on the books of the Acquired
Fund. The Acquiring Fund shall not issue certificates representing the
Acquiring Fund Shares in connection with such exchange.
1.4. Any transfer taxes payable upon issuance of Acquiring Fund Class C
Shares in a name other than the registered holder of the shares of the Acquired
Fund on the books of the Acquired Fund as of that time shall, as a condition of
such issuance and transfer, be paid by the person to whom such Acquiring Fund
Class C Shares are to be issued and transferred.
3
<PAGE>
1.5. The Acquired Fund shall, following the Closing Date and the making
of all distributions pursuant to paragraph 1.3, be terminated by a majority of
the Securities Trust's Trustees' executing an instrument pursuant to Section 5.4
of the Declaration and Agreement of Trust of the Securities Trust abolishing the
Acquired Fund. Any reporting responsibility of the Securities Trust with respect
to the Acquired Fund is and shall remain the responsibility of the Securities
Trust up to and including the Closing Date and following the termination of the
Acquired Fund.
2. VALUATION
2.1. The net value of the Acquired Fund's assets to be acquired by the
Acquiring Fund hereunder shall be the value of such assets, less the Acquired
Fund's liabilities assumed by the Acquiring Fund, computed as of the close of
regular trading on New York Stock Exchange, Inc. (the "NYSE") on the Closing
Date (such time and date being hereinafter called the "Valuation Date"), using
the valuation procedures set forth in the Investment Trust's Declaration and
Agreement of Trust.
2.2. The net asset value of one Acquiring Fund Class A Share shall be
the net asset value per share computed as of the close of regular trading on the
NYSE on the Valuation Date, using the valuation procedures set forth in the
Investment Trust's Declaration and Agreement of Trust.
2.3. All computations of value shall be made by the Acquiring Fund and
the Acquired Fund in accordance with the regular practice of the LAUSGSF, Inc.
3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be July 12, 1996, or such later date as the
parties may agree to in writing. All acts taking place at the Closing shall be
deemed to take place simultaneously as of the close of business on the Closing
Date unless otherwise provided. The Closing shall be held as of 5:00 p.m. at
the offices of [specify location in New Jersey], or at such other time and/or
place as the parties may agree.
3.2. In the event that on the Valuation Date (a) the NYSE or another
-
primary trading market for portfolio securities of the Acquiring Fund or the
Acquired Fund shall be closed to trading or trading thereon shall be restricted
or (b) trading or the reporting of trading on the NYSE or elsewhere shall be
-
disrupted so that accurate appraisal of the value of the net assets of the
Acquiring Fund or the Acquired Fund is impracticable, the Closing Date shall be
postponed until the first business day after
4
<PAGE>
the day when trading shall have been fully resumed and reporting shall have been
restored.
3.3. At the Closing, the Acquired Fund shall direct its custodian to
deliver to the custodian of the Acquiring Fund, for the Acquiring Fund's
account, all of its portfolio securities and other assets held by such custodian
for the Acquired Fund's account, duly endorsed in proper form for transfer as
appropriate, in such condition as to constitute good delivery thereof in
accordance with the custom of the Acquiring Fund's custodian, and shall be
accompanied by all necessary federal and state stock transfer stamps or a check
for the appropriate purchase price thereof.
3.4. The Acquired Fund shall direct its transfer agent to deliver to the
transfer agent of the Acquiring Fund on the Closing Date a list of the names and
addresses of the Acquired Fund's shareholders and the number of outstanding
shares owned by each such shareholder immediately prior to the Closing. The
Acquiring Fund shall direct its transfer agent to issue and deliver a
confirmation evidencing the Acquiring Fund Class C Shares to be credited to the
Acquired Fund's account on the Closing Date to the transfer agent of the
Acquired Fund, or provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Class C Shares have been credited to the Acquired Fund's account
on the books of the Acquiring Fund. At the Closing, each party shall deliver to
the other such bills of sale, checks, assignments, share certificates, if any,
receipts, assumption agreements or other documents as such other party or its
counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1. With respect to the Acquired Fund, the Securities Trust represents
and warrants to the Investment Trust as follows:
(a) The Securities Trust is a registered investment company classified
as a management company of the open-end type, and its registration with the
Securities and Exchange Commission (the "Commission") as an investment company
under the 1940 Act is in full force and effect.
(b) The Acquired Fund is a series of the Securities Trust. The
Securities Trust is duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the power to own all of its properties
and assets and to carry out this Agreement.
(c) The current prospectus and statement of additional information of
the Securities Trust conform (and any prospectus or statement of additional
5
<PAGE>
information of the Securities Trust issued prior to the Closing Date will
conform) in all material respects to the applicable requirements of the
Securities Act of 1933 Act, as amended (the "1933 Act"), and the 1940 Act and
the rules and regulations of the Commission thereunder and do not (and will not)
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were (or will be) made, not
materially misleading.
(d) The Securities Trust is not in, and the execution, delivery and
performance of this Agreement will not result in a, material violation of its
Declaration and Agreement of Trust or By-laws or of any agreement, instrument,
contract or other undertaking to which the Securities Trust is a party or by
which it is bound.
(e) The Securities Trust has no material contracts or other commitments
which will be terminated with liability to the Securities Trust on, prior to or
after the Closing Date.
(f) Except as otherwise disclosed in writing to and accepted by the
Investment Trust, no litigation or administrative proceeding or investigation of
or before any court or governmental body is presently pending or to its
knowledge threatened against the Securities Trust or any of the Acquired Fund's
properties or assets, which if adversely determined would materially and
adversely affect the financial condition of the Acquired Fund or the conduct of
the Acquired Fund's business. The Securities Trust knows of no facts which might
form the basis of the institution of such a proceeding and is not party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects the business of the
Acquired Fund or the ability of the Securities Trust to consummate the
transactions contemplated herein.
(g) True and correct copies of the Acquired Fund's (i) Statement of Net
-
Assets as at October 31, 1995 and (ii) Statements of Operations and Changes in
--
Net Assets for the 12-month period then ended, including the accompanying notes,
have been furnished to the Acquiring Fund. Such Statement of Net Assets and such
Statements of Operations and Changes in Net Assets (and the accompanying notes)
have been audited by Deloitte & Touche LLP, independent certified public
accountants. Such statements have been prepared in accordance with generally
accepted accounting principles consistently applied, and such statements fairly
reflect the financial condition
6
<PAGE>
and the operations and changes in net assets of the Acquired Fund as of such
date and for such period, respectively. There are no known contingent
liabilities of the Acquired Fund as of such date required to be reflected or
disclosed in such Statement of Net Assets or notes in accordance with generally
accepted accounting principles that are not so reflected or disclosed.
(h) Since October 31, 1995, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one year from
the date such indebtedness was incurred, except as otherwise disclosed to and
accepted by the Acquiring Fund.
(i) The Securities Trust will file the final federal and other tax
returns of the Acquired Fund for the period ending on the Closing Date in
accordance with the Code. At the Closing Date, all federal and other tax returns
and reports of the Acquired Fund required by law to have been filed prior to the
Closing Date shall have been filed, and all federal and other taxes shown as due
on such returns shall have been paid, or provision shall have been made for the
payment thereof, and to the best of the Securities Trust's knowledge, no such
return is currently under audit and no assessment has been asserted with respect
to such returns.
(j) For the most recent fiscal year of its operation, the Acquired Fund
has met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company.
(k) All issued and outstanding shares of the Acquired Fund are, and at
the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable. All of the issued and outstanding shares of the Acquired
Fund will, at the time of Closing, be held of record by the persons and in the
amounts set forth in the records of the transfer agent as provided in paragraph
3.4. The Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any shares of the Acquired Fund, nor is
there outstanding any security convertible into any shares of the Acquired Fund.
(l) At the Closing Date, the Acquired Fund will have good and marketable
title to its assets to be transferred to the Acquiring Fund pursuant to
paragraph 1.1 and full right, power and authority to sell, assign, transfer and
deliver such assets hereunder and, upon delivery and payment for such
7
<PAGE>
assets, the Acquiring Fund will acquire good and marketable title thereto,
subject to no restrictions on the full transfer thereof, including such
restrictions as might arise under the 1933 Act, other than as disclosed to the
Acquiring Fund prior to the date hereof.
(m) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action on the part of Securities Trust's
Trustees, and subject to the due approval of the Acquired Fund's shareholders,
this Agreement, assuming due authorization, execution and delivery by the
Acquiring Fund, constitutes a valid and binding obligation of the Securities
Trust on behalf of the Acquired Fund, enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, reorganization, moratorium
and other laws relating to or affecting creditors' rights and to general equity
principles. The Securities Trust's Board of Trustees has called a meeting of the
Securities Trust shareholders at which the shareholders of the Acquired Fund are
to consider and act upon this Agreement.
(n) The information furnished and to be furnished by the Securities
Trust on behalf of the Acquired Fund for use in registration statements, proxy
materials and other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete in all material
respects and shall comply in all material respects with federal securities and
other laws and regulations thereunder applicable thereto.
(o) The combined prospectus and proxy statement (the "N-14 prospectus
and proxy statement") and the related statement of additional information
included in the Registration Statement on Form N-14 of the Acquiring Fund (the
"N-14 Registration Statement") did not on the effective date of the N-14
Registration Statement contain any untrue statement of a material fact relating
to the Acquired Fund or the meeting of the Securities Trust shareholders
referred to therein or omit to state a material fact required to be stated
therein or necessary to make the statements therein relating to the Acquired
Fund or such special meeting, in light of the circumstances under which such
statements were made, not materially misleading.
(p) The Acquiring Fund Class C Shares to be issued to the Acquired Fund
hereunder are not being acquired for the purpose of making any distribution
thereof other than in accordance with the terms of this Agreement.
8
<PAGE>
4.2. With respect to the Acquiring Fund, the Investment Trust
represents and warrants to the Securities Trust as follows:
(a) The Investment Trust is a registered investment company classified
as a management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act is in full force and
effect.
(b) The Acquiring Fund is a series of the Investment Trust. The
Investment Trust is duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the power to own all of its properties
and assets and to carry out this Agreement.
(c) The current prospectus and statement of additional information of
the Investment Trust relating to the Acquiring Fund conform (and any prospectus
or statement of additional information of the Investment Trust relating to the
Acquiring Fund issued prior to the Closing Date will conform) in all material
respects to the applicable requirements of the 1933 Act and the 1940 Act and the
rules and regulations of the Commission thereunder and do not (and will not)
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were (and will be) made, not
materially misleading.
(d) The Investment Trust is not in, and the execution, delivery and
performance of this Agreement will not result in a, material violation of its
Declaration of Trust or By-laws or of any agreement, instrument, contract or
other undertaking to which the Investment Trust is a party or by which it is
bound.
(e) The Investment Trust has no material contracts or other commitments
which will be terminated with liability to the Investment Trust on, prior to or
after the Closing Date.
(f) Except as otherwise disclosed in writing to and accepted by the
Acquired Fund, no litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or to its knowledge
threatened against the Investment Trust or any of the Acquiring Fund's
properties or assets, which, if adversely determined, would materially and
adversely affect its financial condition or the conduct of its business. The
Investment Trust knows of no facts which might form the basis of the
9
<PAGE>
institution of such a proceeding and is not party to or subject to the
provisions of any order, decree or judgment of any court or governmental body
which materially and adversely affects its business or its ability to consummate
the transactions contemplated herein.
(g) True and correct copies of the Investment Trust's (i) Statement of
-
Net Assets as at October 31, 1995, and (ii) Statements of Operation and Changes
--
in Net Assets for the 12-month period then ended, including the accompanying
notes, have been furnished to the Securities Trust. Such Statement of Net Assets
and such Statements of Operations and Changes in Net Assets (and the
accompanying notes) have been audited by Deloitte & Touche LLP, independent
certified public accountants. Such statements have been prepared in accordance
with generally accepted accounting principles consistently applied, and such
statements fairly reflect the financial condition and the operations and changes
in net assets of the Investment Trust as of such date and for such period,
respectively. There are no known contingent liabilities of the Investment Trust
as of such date required to be reflected or disclosed in such Statements of Net
Assets or notes in accordance with generally accepted accounting principles that
are not so reflected or disclosed.
(h) Since October 31, 1995, there has not been any material adverse
change in the Investment Trust's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Investment Trust of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquired Fund.
(i) At the Closing Date, all federal and other tax returns and reports
of the Investment Trust required by law to have been filed prior to the Closing
Date shall have been filed, and all federal and other taxes shown as due on such
returns and reports shall have been paid, or provision shall have been made for
the payment thereof, and to the best of the Investment Trust's knowledge, no
such return is currently under audit and no assessment has been asserted with
respect to such returns.
(j) For the most recent fiscal year of its operation, the Investment
Trust has met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and the Acquiring Fund intends to do
so in the future.
10
<PAGE>
(k) At the Closing Date, all issued and outstanding shares of the
Acquiring Fund will be, duly and validly issued and outstanding, fully paid and
non-assessable, with no personal liability attaching to the ownership thereof.
The Acquiring Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any shares of the Acquiring Fund, nor is
there out standing any security convertible into shares of the Acquiring Fund.
(l) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action on the part of the Investment Trust's
Board of Trustees, and assuming due authorization, execution and delivery by the
Acquired Fund, this Agreement constitutes a valid and binding obligation of the
Investment Trust on behalf of the Acquiring Fund, enforceable in accordance with
its terms, subject as to enforcement to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles.
(m) The N-14 Registration Statement (except insofar as it relates to the
Acquired Fund or the special meeting of its shareholders referred to therein)
did not on the effective date of the N-14 Registration Statement contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not materially misleading.
(n) The Acquiring Fund Class C Shares to be issued and delivered to the
Acquired Fund pursuant to the terms of this Agreement have been duly authorized
by the Board of Trustees of the Investment Trust, and, when issued and delivered
at the Closing in accordance with this Agreement, will be duly and validly
issued Acquiring Fund Class C Shares and will be fully paid and non-assessable
with no personal liability attaching to the ownership thereof.
(o) The Board of Trustees of the Investment Trust has duly adopted a
resolution (a copy of which has been furnished to the Securities Trust) setting
forth an amendment to the Declaration and Agreement of Trust of the Investment
Trust authorizing the creation and issuance of additional classes of shares
within series, including the Acquiring Fund Class C Shares.
11
<PAGE>
5. COVENANTS
5.1. The Acquiring Fund will conduct no investment operations prior to
the Closing Date. The Acquired Fund will operate its business in the ordinary
course between the date hereof and the Closing Date. It is understood that such
ordinary course of business will include the declaration and payment of
customary dividends and distributions and any other dividends and distributions
deemed advisable.
5.2. At or after the Closing, the Securities Trust will deliver or
otherwise make available to the Acquiring Fund a statement of the Acquired
Fund's assets and liabilities, together with a list of the Acquired Fund's
portfolio securities showing the tax costs of such securities to it and the
holding periods of such securities, as of the Closing Date.
5.3. The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the Acquired Fund's shares.
5.4. Subject to the provisions of this Agreement, the Acquired Fund and
the Acquiring Fund each will take, or cause to be taken, all action, and do or
cause to be done all things, reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.5. Prior to the Closing Date, the Board of Trustees of the Securities
Trust will declare such dividends and distributions, payable no later than [90]
days after the Closing Date, to shareholders of record of the Acquired Fund as
of the Closing Date, which, together with all such previous dividends and
distributions, shall have the effect of distributing to the shareholders of the
Acquired Fund all of the investment company taxable income and exempt-interest
income of the Acquired Fund for all taxable years ending on or prior to the
Closing Date. The dividends and distributions declared by the Acquired Fund
shall also include all of the Acquired Fund's net capital gain realized in all
taxable years ending on or prior to the Closing Date (after reduction for any
capital loss carry forward). Such dividends and distributions declared prior to
the Closing Date shall be paid by the Acquiring Fund no later than [90] days
after the Closing Date.
5.6. As promptly as practicable, but in any case within sixty days
after the Closing Date, the Acquired Fund shall furnish the Acquiring Fund, in
such form as is reasonably satisfactory to the Acquiring Fund, a statement of
the earnings and
12
<PAGE>
profits of the Acquired Fund for federal income tax purposes which will be
carried over to the Acquiring Fund as a result of Section 381 of the Code.
5.7. The Acquired Fund will provide the Acquiring Fund with any
additional information reasonably necessary for any revision of the N-14
Prospectus and Proxy Statement referred to in paragraph 4.1(o), all to be
included in any amendment to the N-14 Registration Statement, in compliance with
the 1933 Act, the Securities Exchange Act of 1934 (the "1934 Act") and the 1940
Act in connection with the meeting of the Acquired Fund's shareholders to
consider approval of this Agreement and the Reorganization.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SECURITIES TRUST
The obligations of the Securities Trust, on behalf of the Acquired
Fund, to consummate the transactions provided for herein shall be subject, at
its election, to the performance by the Investment Trust, on behalf of the
Acquiring Fund, in all material respects of all of the obligations to be
performed by it hereunder on or before the Closing Date and, in addition
thereto, the following further conditions:
6.1. All representations and warranties of the Investment Trust
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
6.2. The Acquiring Fund shall have delivered to the Acquired Fund a
certificate executed in its name by its President or a Vice President and its
Treasurer or an Assistant Treasurer, in form reasonably satisfactory to the
Acquired Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the Investment Trust made in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE INVESTMENT TRUST
The obligations of the Investment Trust, on behalf of the Acquiring
Fund, to consummate the transactions provided for herein shall be subject, at
its election, to the performance by the Securities Trust in all material
respects of all the
13
<PAGE>
obligations to be performed by it hereunder on or before the Closing Date and,
in addition thereto, the following further conditions:
7.1. All representations and warranties of the Securities Trust
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
7.2. The Securities Trust shall have delivered to the Acquiring Fund on
the Closing Date a certificate executed in its name by its President or a Vice
President and its Treasurer or an Assistant Treasurer, in form and substance
satisfactory to the Acquiring Fund and dated as of the Closing Date, to the
effect that the representations and warranties of the Securities Trust made in
this Agreement are true and correct at and as of the Closing Date, except as
they may be affected by the transactions contemplated by this Agreement.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SECURITIES TRUST AND THE
INVESTMENT TRUST
If any of the conditions set forth below do not exist on the Closing
Date with respect to the Acquiring Fund or the Acquired Fund, either party to
this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1. The reorganization pursuant to the Agreement and Plan of
Reorganization between Lord Abbett Investment Trust-Lord Abbett U.S. Government
Securities Series and Lord Abbett U.S. Government Securities Fund, Inc. of even
date shall have been consummated.
8.2. This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of the Securities Trust's
Declaration and Agreement of Trust and By-laws. Notwithstanding anything herein
to the contrary, neither the Acquiring Fund nor the Acquired Fund may waive the
conditions set forth in this paragraph 8.2.
8.3. On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
14
<PAGE>
8.4. All consents of other parties and all other consents, orders,
rulings and permits of federal, state and local regulatory authorities
(including those of the Commission, the Internal Revenue Service and state Blue
Sky and securities authorities) deemed necessary by the Acquiring Fund or the
Acquired Fund to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where failure
to obtain any such consent, order, ruling or permit would not involve a risk of
a material adverse effect on the assets or properties of the Acquiring Fund or
the Acquired Fund.
8.5. The N-14 Registration Statement shall have become effective under
the 1933 Act and no stop orders suspending the effectiveness thereof shall have
been issued and, to the best knowledge of the parties hereto, no investigation
or proceeding for that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act.
8.6. The parties shall have received a favorable opinion of Debevoise &
Plimpton, addressed to the Investment Trust and the Securities Trust and
satisfactory to the Secretary of each such party, substantially to the effect
that for federal income tax purposes:
(a) the acquisition by the Acquiring Fund of all of the assets of the
Acquired Fund solely in exchange for the issuance of Acquiring Fund Class C
Shares to the Acquired Fund and the assumption of all of the Acquired Fund
liabilities by the Acquiring Fund, followed by the distribution by the Acquired
Fund, in complete liquidation, of the Acquiring Fund Class C Shares to the
Acquired Fund shareholders in exchange for their Acquired Fund shares, will be
treated as a "reorganization" within the meaning of Section 368(a) of the Code,
and the Acquiring Fund and the Acquired Fund will each be a "party to a
reorganization" within the meaning of Section 368(b) of the Code;
(b) no gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund in exchange for the Acquiring Fund
Shares and the assumption by the Acquiring Fund of liabilities of the Acquired
Fund;
(c) no gain or loss will be recognized by the Acquired Fund upon the
transfer of the Acquired Fund's assets to the Acquiring Fund in exchange for the
Acquiring Fund Shares and the assumption by the Acquiring Fund of liabilities of
the Acquired Fund or upon the distribution of the Acquiring Fund Shares to the
Acquired Fund's shareholders;
15
<PAGE>
(d) no gain or loss will be recognized by shareholders of the Acquired
Fund upon the exchange of their Acquired Fund shares for the Acquiring Fund
Shares;
(e) the aggregate tax basis for the Acquiring Fund Shares received by
each of the Acquired Fund's shareholders pursuant to the Reorganization will be
the same as the aggregate tax basis of the Acquired Fund shares held by such
shareholder immediately prior to the Reorganization, and the holding period of
the Acquiring Fund Shares to be received by each Acquired Fund shareholder will
include the period during which the Acquired Fund shares exchanged therefor were
held by such shareholder (provided that the Acquired Fund shares were held as
capital assets on the date of the Reorganization); and
(f) the tax basis of the Acquired Fund's assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the Acquired
Fund immediately prior to the Reorganization, and the holding period of the
assets of the Acquired Fund in the hands of the Acquiring Fund will include the
period during which those assets were held by the Acquired Fund.
Notwithstanding anything herein to the contrary, neither the Acquiring
Fund nor the Securities Trust may waive the conditions set forth in this
paragraph 8.6.
8.7. The Acquiring Fund shall have duly adopted a Rule 12b-1 Plan for
the Acquiring Fund Class C Shares acceptable to the Securities Trust.
9. BROKERAGE FEES AND EXPENSES
9.1. The Investment Trust represents and warrants to the Acquired Fund,
and the Securities Trust represents and warrants to the Acquiring Fund, that
there are no brokers or finders entitled to receive any payments in connection
with the transactions provided for herein.
9.2. Except as may be otherwise provided herein, the Acquiring Fund and
the Acquired Fund each shall pay, or provide for the payment of, the expenses
incurred by it in connection with entering into and carrying out the provisions
of this Agreement.
16
<PAGE>
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. The parties hereto agree that no party has made any
representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties.
10.2. None of the representations and warranties included or provided
for herein shall survive the consummation of the transactions contemplated
hereby.
11. TERMINATION
11.1. This Agreement may be terminated at any time prior to the Closing
(1) by the mutual agreement of the Securities Trust and the Investment
-
Trust; (2) by the Securities Trust in the event that the Investment Trust shall,
-
or by the Investment Trust in the event that the Securities Trust shall,
materially breach any representation or warranty contained herein or any
agreement contained herein and to be performed at or prior to the Closing Date;
or (3) by either party if a condition herein expressed to be precedent to the
-
obligations of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.
11.2. In the event of any such termination, there shall be no liability
for damages on the part of either the Securities Trust, the Investment Trust,
the Acquired Fund or the Acquiring Fund or their respective Trustees or officers
to the other party, but the Acquiring Fund and the Acquired Fund shall each
bear, or provide for the payment of, the expenses incurred by it incidental to
the preparation and carrying out of this Agreement as provided in paragraph 9.2.
12. AMENDMENTS; WAIVERS
12.1. This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers of
the Securities Trust and the Investment Trust; provided, however, that following
the approval of the Acquired Fund shareholders referred to in paragraph 8.2, no
such amendment may have the effect of changing the provisions for determining
the number of the Acquiring Fund Class C Shares to be issued to the Acquired
Fund's shareholders under this Agreement to the detriment of such shareholders
without their further approval.
12.2. At or at any time prior to the Closing either party hereto may by
written instrument signed by it (i) waive any inaccuracies in the
-
representations and
17
<PAGE>
warranties made to it contained herein and (ii) waive compliance with any of the
--
covenants or conditions made for its benefit contained herein.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by personal
delivery addressed to the Acquired Fund, 767 Fifth Avenue, New York, New York,
10153, Attention: Office of the Secretary; or to the Acquiring Fund, 767 Fifth
Avenue, New York, New York, 10153, Attention: Office of the Secretary.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
14.1. The article and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
14.3. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
14.4. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm, corporation or other entity, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
(b) The Investment Trust is hereby expressly put on notice of the
limitation of liability as set forth in Article IV of the Declaration and
Agreement of Trust of the Securities Trust and agrees that the obligations
assumed by the Securities Trust pursuant to this Agreement shall be limited in
any case to the Acquired Fund and its assets and the Investment Trust shall not
seek satisfaction of any such obligation from any shareholders of the Securities
Trust, the trustees, officers, employees or agents of the Securities Trust or
any of them or from any other assets of the Securities Trust.
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<PAGE>
(c) The Securities Trust is hereby expressly put on notice of the
limitation of liability as set forth in Article IV of the Declaration and
Agreement of Trust of the Investment Trust and agrees that the obligations
assumed by the Investment Trust pursuant to this Agreement shall be limited in
any case to the Acquiring Fund and its assets and the Securities Trust shall not
seek satisfaction of any such obligation from any shareholders of the Investment
Trust, the trustees, officers, employees or agents of the Investment Trust or
any of them or from any other assets of the Investment Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its Chairman of the Board, President or Vice
President and attested by its Secretary or Assistant Secretary.
Attest: LORD ABBETT SECURITIES TRUST
on behalf of Lord Abbett U.S. Government
Securities Trust
By: _______________________________
Name: _____________ Name:
Title: Secretary Title:
Attest: LORD ABBETT INVESTMENT TRUST on
behalf of Lord Abbett U.S. Government
Securities Series
By: _______________________________
Name: _____________ Name:
Title: Secretary Title:
19
<PAGE>
EXHIBIT B
---------
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996
by and between LORD ABBETT INVESTMENT TRUST, a Delaware business trust (the
"Fund"), on behalf of its U.S. GOVERNMENT SECURITIES SERIES (the "Series"), and
LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the
"Distributor").
WHEREAS, the Fund is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"); and
the Distributor is the exclusive selling agent of the Fund's shares of
beneficial interest, including the Series' Class A shares (the "Shares")
pursuant to the Distribution Agreement between the Fund and the Distributor,
dated as of the date hereof (the "Distribution Agreement").
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement
(the "Plan") for the Series with the Distributor, as permitted by Rule 12b-1
under the Act, pursuant to which the Series may make certain payments to the
Distributor to be used by the Distributor or paid to institutions and persons
permitted by applicable law and/or rules to receive such payments ("Authorized
Institutions") in connection with sales of Shares and/or servicing of accounts
of shareholders holding Shares.
WHEREAS, the Fund's Board of Trustees has determined that there is a
reasonable likelihood that the Plan will benefit the Series and the holders of
the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other
good and valuable consideration, receipt of which is hereby acknowledged, it is
agreed as follows:
1. The Fund hereby authorizes the Distributor to enter into
agreements with Authorized Institutions (the "Agreements") which may provide for
the payment to such Authorized Institutions of distribution and service fees
which the Distributor receives from the Series in order to provide additional
incentives to such Authorized Institutions (i) to sell Shares and (ii) to
- --
provide continuing information and investment services to their accounts holding
Shares and otherwise to encourage their accounts to remain invested in the
Shares.
<PAGE>
2. The Fund also hereby authorizes the Distributor to use payments
received hereunder from the Series in order to (a) finance any activity which is
-
primarily intended to result in the sale of Shares and (b) provide continuing
- -------
information and investment services to shareholder accounts not serviced by
Authorized Institutions receiving a service fee from the Distributor hereunder
and otherwise to encourage such accounts to remain invested in the Shares;
provided that (i) any payments referred to in the foregoing clause (a) shall not
- -
exceed the distribution fee permitted to be paid at the time under paragraph 3
of this Plan and shall be authorized by the Board of Trustees of the Fund by a
vote of the kind referred to in paragraph 10 of this Plan and (ii) any payments
referred to in clause (b) shall not exceed the service fee permitted to be paid
at the time under paragraph 3 of this Plan.
3. The Series is authorized to pay the Distributor hereunder for
remittance to Authorized Institutions and/or use by the Distributor pursuant to
this Plan (a) service fees and (b) distribution fees, each at an annual rate not
- -
to exceed .25 of 1% of the average annual net asset value of Shares outstanding,
except that service fees payable with respect to Shares that were initially
issued, or are attributable to shares that were initially issued, by the Fund or
a predecessor fund prior to September 1, 1985 shall not exceed .15 of 1% of the
average net asset value of such Shares. The Board of Trustees of the Fund shall
from time to time determine the amounts, within the foregoing maximum amounts,
that the Series may pay the Distributor hereunder. Any such fees (which may be
waived by the Authorized Institutions in whole or in part) may be calculated and
paid quarterly or more frequently if approved by the Board of Trustees of the
Fund. Such determinations and approvals by the Board of Trustees shall be made
and given by votes of the kind referred to in paragraph 10 of this Plan.
Payments by holders of Shares to the Series of contingent deferred reimbursement
charges relating to distribution fees paid by the Series hereunder shall reduce
the amount of distribution fees for purposes of the annual 0.25% distribution
fee limit. The Distributor will monitor the payments hereunder and shall reduce
such payments or take such other steps as may be necessary to assure that (i)
-
the payments pursuant to this Plan shall be consistent with Article III, Section
26, subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. with respect to investment companies
with asset-based sales charges and service fees, as the same may be in effect
from time to time and (ii) the Series shall not pay with respect to any
--
Authorized Institution service fees equal to more than .25 of 1% of the average
annual net asset value of Shares sold by (or attributable to Shares or shares
sold by) such Authorized Institution and held in an account covered by an
Agreement.
4. The net asset value of the Shares shall be determined as provided
in the Declaration of Trust of the Fund. If the Distributor waives all or a
portion
2
<PAGE>
of the fees which are to be paid by the Series hereunder, the Distributor shall
not be deemed to have waived its rights under this Agreement to have the Series
pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial
Officer, is hereby authorized to direct the disposition of monies paid or
payable by the Series hereunder and shall provide to the Fund's Board of
Trustees, and the trustees shall review at least quarterly, a written report of
the amounts so expended pursuant to this Plan and the purposes for which such
expenditures were made.
6. Neither this Plan nor any other transaction between the parties
hereto pursuant to this Plan shall be invalidated or in any way affected by the
fact that any or all of the trustees, officers, shareholders, or other
representatives of the Fund are or may be "interested persons" of the
Distributor, or any successor or assignee thereof, or that any or all of the
directors, officers, partners, members or other representatives of the
Distributor are or may be "interested persons" of the Fund, except as may
otherwise be provided in the Act.
7. The Distributor shall give the Fund the benefit of the
Distributor's best judgment and good faith efforts in rendering services under
this Plan. Other than to abide by the provisions hereof and render the services
called for hereunder in good faith, the Distributor assumes no responsibility
under this Plan and, having so acted, the Distributor shall not be held liable
or held accountable for any mistake of law or fact, or for any loss or damage
arising or resulting therefrom suffered by the Fund, the Series or any of the
shareholders, creditors, trustees, or officers of the Fund; provided however,
that nothing herein shall be deemed to protect the Distributor against any
liability to the Fund or the Series' shareholders by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
hereunder, or by reason of the reckless disregard of its obligations and duties
hereunder.
8. This Plan shall become effective upon the date hereof, and shall
continue in effect for a period of more than one year from that date only so
long as such continuance is specifically approved at least annually by a vote of
the Board of Trustees of the Fund, including the vote of a majority of the
trustees who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of this Plan or in any agreement
related to this Plan, cast in person at a meeting called for the purpose of
voting on such renewal.
9. This Plan may not be amended to increase materially the amount to
be spent by the Series hereunder above the maximum amounts referred to in
paragraph 3 of this Plan without a shareholder vote in compliance with Rule 12b-
1
3
<PAGE>
and Rule 18f-3 under the Act as in effect at such time, and each material
amendment must be approved by a vote of the Board of Trustees of the Fund,
including the vote of a majority of the trustees who are not "interested
persons" of the Fund and who have no direct or indirect financial interest in
the operation of this Plan or in any agreement related to this Plan, cast in
person at a meeting called for the purpose of voting on such amendment.
Amendments to this Plan which do not increase materially the amount to be spent
by the Series hereunder above the maximum amounts referred to in paragraph 3 of
this Plan may be made pursuant to paragraph 10 of this Plan.
10. Amendments to this Plan other than material amendments of the
kind referred to in the foregoing paragraph 9 may be adopted by a vote of the
Board of Trustees of the Fund, including the vote of a majority of the trustees
who are not "interested persons" of the Fund and who have no direct or indirect
financial interest in the operation of this Plan or in any agreement related to
this Plan. The Board of Trustees of the Fund may, by such a vote, interpret
this Plan and make all determinations necessary or advisable for its
administration.
11. This Plan may be terminated at any time without the payment of
any penalty (a) by the vote of a majority of the trustees of the Fund who are
-
not "interested persons" of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreement related to the Plan,
or (b) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under
-
the Act as in effect at such time. This Plan shall automatically terminate in
the event of its assignment.
12. So long as this Plan shall remain in effect, the selection and
nomination of those trustees of the Fund who are not "interested persons" of the
Fund are committed to the discretion of such disinterested trustees. The terms
"interested persons," "assignment" and "vote of a majority of the outstanding
voting securities" shall have the same meanings as those terms are defined in
the Act.
13. The obligations of the Fund and the Series, including those
imposed hereby, are not personally binding upon, nor shall resort be had to the
private property of, any of the trustees, shareholders, officers, employees or
agents of the Fund or Series individually, but are binding only upon the assets
and property of the Series. Any and all personal liability, either at common
law or in equity, or by statute or constitution, of every such trustee,
shareholder, officer, employee or agent for any breach of the Fund or Series of
any agreement, representation or warranty hereunder is hereby expressly waived
as a condition of and in consideration for the execution of this Agreement by
the Fund.
4
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and on its behalf by its duly authorized representative
as of the date first above written.
LORD ABBETT INVESTMENT TRUST
By: _____________________________
President
ATTEST:
___________________________
Assistant Secretary
LORD ABBETT DISTRIBUTOR LLC
By:____________________________
5
<PAGE>
EXHIBIT C
---------
COMPARISON OF CERTAIN INVESTMENT POLICIES AND RESTRICTIONS
Comparison of the fundamental and certain non-fundamental investment policies
and restrictions of Lord Abbett U.S. Government Securities Fund, Inc. (the
"Reorganized Fund"), Lord Abbett U.S. Government Securities Trust (the "Acquired
Trust"), a series of Lord Abbett Securities Trust, and Lord Abbett U.S.
Government Securities Series (the "Acquiring Fund"), a series of Lord Abbett
Investment Trust.
<TABLE>
<CAPTION>
POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF
REORGANIZED FUND ACQUIRED TRUST THE ACQUIRING FUND
- --------------------------- -------------------------------------- ---------------------------------------------------------------
<S> <C> <C>
SHORT SALES/MARGIN.
FUNDAMENTAL FUNDAMENTAL NON-FUNDAMENTAL
The Fund may not sell The Fund may not sell short or buy on The Fund may not make short sales of securities or maintain a
short or buy on margin margin. short position except to the extent permitted by applic able
law.
FUNDAMENTAL
The Fund may purchase securities on margin to the extent
permitted by applic able law.
BORROWING.
FUNDAMENTAL FUNDAMENTAL FUNDAMENTAL
The Fund may not borrow The Fund may not borrow securi ties. The Fund may not borrow money, except that (i) the Fund may
securities. Subject to Subject to certain exceptions, the borrow from banks (as defined in the 1940 Act) in amounts up
certain exceptions, the Fund may not borrow money. to 33 1/3% of its total assets (including the amount
Fund may not borrow money. borrowed), (ii) the Fund may borrow up to an additional 5% of
its total assets for tem porary purposes, and (iii) the Fund
may obtain such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio securities.
UNDERWRITING.
FUNDAMENTAL FUNDAMENTAL FUNDAMENTAL
The Fund may not engage in The Fund may not engage in the The Fund may not engage in the underwriting of securities,
the underwriting of underwriting of securities, except, except, pursuant to a merger or acquisition or to the extent
securities. pursuant to a merger or acquisition. that, in connection with the disposition of its portfolio
securities, it may be deemed to be an underwriter under
federal securities laws.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF
REORGANIZED FUND ACQUIRED TRUST THE ACQUIRING FUND
- --------------------------- -------------------------------------- ---------------------------------------------------------------
<S> <C> <C>
LENDING.
FUNDAMENTAL FUNDAMENTAL FUNDAMENTAL
The Fund may not lend The Fund may not lend money or The Fund may not make loans to other persons, except that the
money or securities, securities, except that it may enter acquisition of bonds, debentures or other corporate debt
except that it may lend into certain short-term repurchase securities and investment in government obligations,
portfolio securities to agreements in certain limited commercial paper, pass-through instruments, certificates of
registered broker-dealers circumstances. deposit, bankers acceptances, repurchase agreements or any
subject to certain similar instruments shall not be subject to this limitation,
limitations. and except further that the Fund may lend its portfolio
securities, provided that the lending of portfolio securities
may be made only in accordance with applicable law.
REAL ESTATE/ COMMODITIES.
FUNDAMENTAL FUNDAMENTAL FUNDAMENTAL
The Fund may not deal in The Fund may not deal in real estate, The Fund may not buy or sell real estate (except that the Fund
real estate, commodities commodities or commodity contracts. may invest in securities directly or indirectly secured by
or commodity contracts. real estate or interests therein or issued by companies which
invest in real estate or interests therein) or commodities or
commodity contracts (except to the extent the Fund may do so
in accordance with applicable law and without registering as a
commodities pool operator under the Commodity Exchange Act as,
for example, with futures contracts).
NON-FUNDAMENTAL
The Fund may not invest in real estate limited partnership
interests or interests in oil, gas or other mineral leases, or
exploration or other development programs, except that the
Fund may invest in securities issued by companies that engage
in oil, gas or other mineral exploration or development
activities.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF
REORGANIZED FUND ACQUIRED TRUST THE ACQUIRING FUND
- --------------------------- -------------------------------------- ---------------------------------------------------------------
<S> <C> <C>
DIVERSIFICATION.
FUNDAMENTAL FUNDAMENTAL FUNDAMENTAL
The Fund may not buy The Fund may not buy securities if With respect to 75% of its gross assets, the Fund may not buy
securities if the the purchase would then cause it to securities of one issuer representing more than (i) 5% of its
purchase would then cause have more than 5% of its gross gross assets, at market value at the time of investment,
it to have more than 5% assets, at market value at the time invested in the securities of any one issuer, except
of its gross assets, at of investment, invested in the securities issued or guaranteed by the U.S. Government, its
market value at the time securities of any one issuer, except agencies or in strumentalities, or (ii) 10% of the voting
of investment, invested securities issued or guaranteed by securities of such issuer.
in the securities of any the U.S. Government, its agencies or
one issuer, except instrumentalities, or to own more
securities issued or than 10% of the voting securities of
guaranteed by the U.S. any issuer.
Government, its agencies
or instrumentalities, or
to own more than 10% of
the voting securities of
any issuer.
INVESTMENT IN A SINGLE
INDUSTRY.
FUNDAMENTAL FUNDAMENTAL FUNDAMENTAL
The Fund may not Subject to certain exceptions, the None stated, but see "U.S. Government Securities," below
concentrate its Fund may not concentrate its in
investments in any one vestments in any one industry,
industry. excluding U.S. Government securi ties.
RESTRICTED/ILLIQUID
SECURITIES.
None None. Rule 144A does not affect U.S. NON-FUNDAMENTAL
government securities and therefore The Fund may not invest, knowingly, more than 15% of its net
the trustees have no intention of assets (at the time of investment) in illiquid securities,
investing in such Rule 144A except for securities qualifying for resale under Rule 144A of
securities. the Securities Act of 1933, deemed to be liquid by the Board
of Trustees.
MORTGAGING AND PLEDGING OF
ASSETS.
FUNDAMENTAL FUNDAMENTAL FUNDAMENTAL
The Fund may not pledge, The Fund may not pledge, mortgage or The Fund may not pledge its assets (other than to secure
mortgage or hypothecate hypothecate its assets. borrowings, or to the extent permitted by the Fund's
its assets. investment policies, as permitted by applicable law).
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF
REORGANIZED FUND ACQUIRED TRUST THE ACQUIRING FUND
- --------------------------- -------------------------------------- ---------------------------------------------------------------
<S> <C> <C>
INVESTMENTS IN SECURITIES
OF OTHER INVESTMENT
COMPANIES.
FUNDAMENTAL FUNDAMENTAL NON-FUNDAMENTAL
The Fund may not invest in The Fund may not invest in the The Fund may not invest in the securities of other investment
the securities of other securities of other investment companies, except as permitted by applicable law.
investment companies. companies, excluding U.S. Government
securities.
OPTIONS.
NON-FUNDAMENTAL NON-FUNDAMENTAL
None stated, but see "U.S. None stated. None stated, but see "U.S. Government Securities," below
Government Securities,"
below
INVESTMENTS IN SECURITIES
OF ISSUERS IN OPERATION
FOR LESS THAN THREE YEARS.
FUNDAMENTAL
The Fund may not invest in None stated. NON-FUNDAMENTAL
securities of issuers The Fund may not invest in securities of issuers which, with
which, with their their predecessors, have a record of less than three years
predecessors, have a continuous operations, except if more than 5% of the Fund's
record of less than three total assets would be invested in such securities (this
years continuous restriction shall not apply to mortgage-backed securities,
operations, except asset-backed securities or obligations issued or guaranteed by
through subscription or the U.S. Government, its agencies or instrumentalities).
other rights limited to
5% of net assets.
OWNERSHIP OF PORTFOLIO
SECURITIES BY OFFICERS
AND DIRECTORS.
FUNDAMENTAL FUNDAMENTAL NON-FUNDAMENTAL
The Fund may not hold The Fund may not hold securities of The Fund may not hold securities of any issuer if more than
securities of any issuer any issuer if more than 1/2 of 1% of 1/2 of 1% of the securities of such issuer are owned
if more than 1/2 of 1% the securities of such issuer are beneficially by one or more officers, Directors or Trustees or
of the securities of such owned beneficially by one or more by one or more partners of the underwriter of investment
issuer are owned officers, Directors or Trustees or by advisor if together they own more than 5% of the securities of
beneficially by one or one or more partners of the such issuer.
more officers, Directors underwriter of investment advisor if
or Trustees or by one or together they own more than 5% of the
more partners of the securities of such issuer.
underwriter of investment
manager if together they
own more than 5% of the
securities of such issuer.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF THE POLICY/RESTRICTION OF
REORGANIZED FUND ACQUIRED TRUST THE ACQUIRING FUND
- --------------------------- -------------------------------------- ---------------------------------------------------------------
<S> <C> <C>
TRANSACTIONS WITH CERTAIN
PERSONS.
FUNDAMENTAL FUNDAMENTAL
The Fund, subject to The Fund, subject to certain None stated (but certain restrictions may exist under
certain exceptions, may exceptions, may not engage in applicable law).
not engage in securities securities transactions with its
transactions with its underwriter or investment manager or
underwriter or investment with officers, trustees or firms
manager or with officers, (acting as principals) with which any
directors, trustees or of the foregoing are associated.
firms (acting as
principals) with which
any of the foregoing are
associated.
SENIOR SECURITIES.
FUNDAMENTAL FUNDAMENTAL
None The Fund may not issue senior The Fund may not issue senior securities to the extent such
securities. issuance would violate applicable law.
PURCHASE OF WARRANTS.
None NON-FUNDAMENTAL
None The Fund may not invest in warrants if, at the time of the
acquisition, its investment in warrants, valued at the lower
of cost or market, would exceed 5% of the Fund's total assets
(included within such limitation, but not to exceed 2% of the
Fund's total assets, are warrants which are not listed on the
New York or American Stock Exchange or a major foreign
exchange).
U.S. GOVERNMENT SECURITIES.
FUNDAMENTAL
The Fund may not invest in FUNDAMENTAL
securities other than None The Fund may not invest in securities other than U.S.
U.S. Government Government securities as described in the Acquiring Fund
securities, even though Prospectus.
several of the above
restrictions (which were
adopted prior to the Fund
adopting a policy of
investing only in U.S.
Government securities)
may imply otherwise.
</TABLE>
5
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 24, 1996
ACQUISITION OF THE ASSETS OF
Lord Abbett U. S. Government Securities Fund, Inc. and
Lord Abbett U.S. Government Securities Trust, a series of
Lord Abbett Securities Trust
The General Motors Building, 767 Fifth Avenue
New York, NY 10153
BY AND IN EXCHANGE FOR CLASS A SHARES AND CLASS C SHARES, RESPECTIVELY, OF
Lord Abbett U.S. Government Securities Series, a series of
Lord Abbett Investment Trust
The General Motors Building, 767 Fifth Avenue
New York, NY 10153
This Statement of Additional Information, relating specifically to the
proposed transfer of the assets of Lord Abbett U.S. Government Securities Fund,
Inc. (the "Reorganized Fund") and Lord Abbett U.S. Government Securities Trust
(the "Acquired Trust"), a series of Lord Abbett Securities Trust, to Lord Abbett
U.S. Government Securities Series (the "Acquiring Fund"), a series of Lord
Abbett Investment Trust, in exchange for Class A shares and Class C shares,
respectively, of the Acquiring Fund and the assumption by the Acquiring Fund of
the liabilities of the Reorganized Fund and the Acquired Trust, consists of this
and the following page and the following described documents, each of which
accompanies this Statement of Additional Information and is incorporated herein
by reference:
1. Statement of Additional Information of the Reorganized Fund dated April
1,1996.
2. Statement of Additional Information of Lord Abbett Securities Trust
dated March 1, 1996, insofar as it relates to the Acquired Trust.
3. Statement of Additional Information of Lord Abbett Investment Trust
dated March 20, 1996.
4. The financial statements of Lord Abbett Investment Trust for the fiscal
year ended October 31, 1995, and the report thereon of Deloitte & Touche LLP,
independent public accountants, contained in the 1995 Annual Report of the
Acquiring Fund.
B-1
<PAGE>
5. The financial statements of the Reorganized Fund for the fiscal year ended
November 30, 1995, and the report thereon of Deloitte & Touche LLP, independent
public accountants, contained in the 1995 Annual Report of the Reorganized Fund.
6. The financial statements of the Acquired Trust for the fiscal year ended
October 31, 1995, and the report thereon of Deloitte & Touche LLP, independent
public accountants, contained in the 1995 Annual Report of Lord Abbett
Securities Trust.
The financial statements referred to above are incorporated herein in reliance
upon the authority of Deloitte & Touche LLP as experts in auditing and
accounting. This Statement of Additional Information is not a prospectus. A
Proxy Statement and Prospectus dated the date hereof relating to the above-
referenced matter may be obtained without charge by writing the Acquiring Fund
at the address set forth above or by calling 1-800-874-3733. This Statement of
Additional Information should be read in conjunction with such Proxy Statement
and Prospectus.
B-2
<PAGE>
PART C
ITEM 16. EXHIBITS
10. (b) Form of Rule 18f-3 Plan; filed herewith.
11. Opinion of Debevoise & Plimpton as to the legality of securities being
issued and Consent; filed herewith.
17. (a) Prospectus and Statement of Additional Information of Lord Abbett
Securities Trust, incorporated herein by reference to Post Effective Amendment
No. 10 to Registration Statement on Form N-1A of Lord Abbett Securities Trust
(File Nos. 33-58846 and 811-7538) filed on or about February 29, 1996.
17. (b) Prospectus and Statement of Additional Information of Lord Abbett
Investment Trust, incorporated herein by reference to Prospectus of Lord Abbett
Investment Trust filed under Rule 497 (File Nos. 33-68090 and 811-7988) on or
about March 28, 1996.
C-1
<PAGE>
SIGNATURES
*Post-effective amendment No. 1 to this Registration Statement has been
signed on behalf of the Registrant in the City of New York and State of New York
on the 24 day of April 1996, who certifies that this Post-Effective Amendment
No. 1 meets all the requirements for effectiveness under paragraph (b) of Rul
485 under the Securities Act of 1933, as amended
LORD ABBETT INVESTMENT TRUST
By: /s/ Ronald P. Lynch
--------------------------------------
Ronald P. Lynch, Chairman of the Board
*Post-Effective Amendment No. 1 to this Registration Statement has
been signed by the following persons in the capacities indicated and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ ----------------------- ----
<S> <C> <C>
/s/ Ronald P. Lynch Chairman of the Board 4/24/96
- ------------------------------ and Trustee
Ronald P. Lynch
/s/ Robert S. Dow President and Trustee 4/24/96
- ------------------------------
Robert S. Dow
/s/ John J. Gargana, Jr. Vice President and
- ------------------------------ Chief Financial Officer 4/24/96
John J. Gargana, Jr.
/s/ E. Thayer Bigelow Trustee 4/24/96
- ------------------------------
E. Thayer Bigelow
Trustee -------------
- ------------------------------
Stewart S. Dixon
Trustee -------------
- ------------------------------
John C. Jansing
/s/ C. Alan MacDonald Trustee 4/24/96
- ------------------------------
C. Alan MacDonald
Trustee -------------
- ------------------------------
Hansel B. Millican, Jr.
/s/ Thomas J. Neff Trustee 4/24/96
- ------------------------------
Thomas J. Neff
</TABLE>
C-2
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as a part of this Registration Statement
pursuant to General Instruction G of Form N-14.
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- -------
(10)(b) Rule 18f-3 Plan
(11) Opinion of Debevoise & Plimpton as to legality of securities being
issued and Consent.
C-3
[TYPE] EX-99.B10b
[DESCRIPTION] Rule 18f-3 Plan
EXHIBIT 10(b)
-------------
Plans Pursuant to Rule 18f-3(d) under the
Investment Company Act of 1940
Rule 18f-3 (the "Rule") under the Investment Company Act of 1940, as
amended (the "1940 Act"), requires that the Board of Directors or Trustees of an
investment company desiring to offer multiple classes pursuant to the Rule adopt
a plan setting forth the separate arrangement and expense allocation of each
class, and any related conversion features or exchange privileges. This
document constitutes such a plan (individually, a "Plan" and collectively, the
"Plans") of each of the investment companies, or series thereof, listed on
Schedule A attached hereto (each, a "Fund"). The Plan of any Fund is subject to
amendment by action of the Board of Directors or Trustees (the "Board") of such
Fund and without the approval of shareholders of any class, to the extent
permitted by law and by the governing documents of such Fund.
The Board, including a majority of the non-in terested Board members,
has determined that the following separate arrangement and expense allocation,
and the related exchange privileges, of each class of each Fund are in the best
interest of each class of each Fund individually and each Fund as a whole:
<PAGE>
1. Class Designation. Fund shares shall initially be divided into
-----------------
Class A shares and Class C shares.
2. Sales Charges and Distribution and Service Fees.
-----------------------------------------------
(a) Initial Sales Charge. Class A shares will be traditional front-
--------------------
end sales charge shares, offered at their net asset value ("NAV") plus a sales
charge in the case of each Fund as described in such Fund's Prospectus as from
time to time in effect.
Class C shares will be offered at their NAV with out an initial
sales charge.
(b) Service and Distribution Fees. In respect of the Class A shares
-----------------------------
and Class C shares, each Fund will pay service and distribution fees under plans
from time to time in effect adopted for such classes pursuant to Rule 12b-1
under the 1940 Act (each, a "12b-1 Plan").
Pursuant to a 12b-1 Plan with respect to the Class A shares, if
effective, each Fund will generally pay (i) at the time such shares are sold, a
-
one-time distribution fee of up to 1% of the NAV of the shares sold in the
amount of $1 million or more, including sales qualifying at such level under the
rights of accumulation and statement of intention privileges, or to retirement
plans with 100 or more eligible employees, as described in the Fund's Prospectus
as from time to time in effect, (ii) a
--
2
<PAGE>
continuing distribution fee at an annual rate of 0.10% of the average daily NAV
of the Class A share accounts of dealers who meet certain sales and redemption
criteria, and (iii) a continuing service fee at an annual rate not to exceed
---
0.25% of the average daily NAV of the Class A shares. The Board will have the
authority to increase the distribution fees payable under such 12b-1 Plan by a
vote of the Board, including a majority of the independent directors thereof, up
to an annual rate of 0.25% of the average daily NAV of the Class A shares. The
effective dates of various of the 12b-1 Plans for the Class A shares are based
on achievement by the Funds of specified total NAV's for the Class A shares of
each Fund.
Pursuant to a 12b-1 Plan with respect to the Class C shares, if
effective, each Fund will generally pay a one-time service and distribution fee
at the time such shares are sold of up to 1% of their NAV and a continuing
annual fee, commencing 12 months after the first anniversary of such sale, of up
to 1% of the average annual NAV of such shares then outstanding (each fee
comprised of .25% in service fees and .75% in distribution fees).
(c) Contingent Deferred Reimbursement Charges ("CDRC"). Subject to
--------------------------------------------------
some exceptions, Class A shares subject to the one-time sales distribution fee
of up to 1% under the Rule 12b-1 Plan for the Class A shares will be subject to
a CDRC equal to 1% of the lower of the cost or
3
<PAGE>
then NAV of such shares if the shares are redeemed for cash on or before the end
of the twenty-fourth month after the month in which the shares were purchased.
Class C shares will be subject to a CDRC equal to 1% of the lower of
the cost or then NAV of the shares if the shares are redeemed for cash before
the first anniversary of their purchase.
3. Liability and Expense Allocation. The fol lowing expenses and
--------------------------------
liabilities therefor shall be allocated, to the extent such expenses can
reasonably be identified as relating to a particular class, on a class-specific
basis: (a) fees under a 12b-1 Plan applicable to a specific class (net of any
CDRC paid with respect to shares of such class and retained by the Fund) and any
other costs relating to implementing or amending such Plan, including obtaining
shareholder approval of such Plan or any amendment thereto; (b) transfer and
shareholder servicing agent fees and shareholder servicing costs identifiable as
being attrib utable to the particular provisions of a specific class; (c)
stationery, printing, postage and delivery expenses related to preparing and
distributing materials such as shareholder reports, prospectuses and proxy
statements to current shareholders of a specific class; (d) Blue Sky reg
istration fees incurred by a specific class; (e) Securities and Exchange
Commission registration fees
4
<PAGE>
incurred by a specific class; (f) Board fees or expenses identifiable as being
attributable to a specific class; (g) auditor's fees and expense relating solely
to a specific class; (h) litigation expenses and legal fees and expense relating
solely to a specific class; (i) expenses incurred in connection with
shareholders meetings as a result of issues relating solely to a specific class
and (j) other expenses relating solely to a specific class. All such liabilities
and expenses incurred by a class of shares will be charged directly to the net
assets of the particular class and thus will be borne on a pro rata basis by the
outstanding shares of such class.
4. Dividends. Dividends paid by a Fund as to each class of its shares,
---------
to the extent any dividends are paid, will be calculated in the same manner,
will be paid at the same time, and will be in the same amount, except that any
liabilities and expenses allocated to a class as pro vided above will be borne
exclusively by that class.
5. Net Asset Values. The NAV of each share of a class of a Fund shall
----------------
be determined in accordance with the Articles of Incorporation or Declaration
of Trust of such Fund with appropriate adjustments to reflect the differing
allocations of liabilities and expenses of such Fund between its classes as
provided above. [Attached
5
<PAGE>
hereto as Exhibit A is a sample calculation of the NAV's of a Class A share and
a Class C share.]
6. Conversion Features. Subject to amendment by the Board, no class of
-------------------
shares shall be subject to any automatic conversion feature at this time.
7. Exchange Privileges. Except as set forth in the Fund's prospectus,
-------------------
shares of any class of a Fund may be exchanged, at the holder's option, for
shares of the same class of another Fund, or other Lord Abbett-sponsored fund or
series thereof, without the imposition of any sales charge, fee or other charge.
Each Plan is qualified by and subject to the terms of the then current
prospectus for the applicable Fund; provided, however, that none of the terms
set forth in any such prospectus shall be inconsistent with the terms con tained
herein. The prospectus for each Fund contains addi tional information about
that Fund's classes and its multiple-class structure.
Each Plan is being adopted for a Fund with the approval of, and all
material amendments thereto must be approved by, a majority of the Board of such
Fund, including a majority of the Board who are not interested persons of the
Fund.
6
<PAGE>
SCHEDULE A
----------
The Lord Abbett - Sponsored Funds
Establishing Multi-Class Structures
-----------------------------------
Lord Abbett Affiliated Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Global Fund, Inc.
Equity Series
Income Series
Lord Abbett Investment Trust
Lord Abbett Balanced Series
Lord Abbett Limited Duration U.S. Government Securities Series
Lord Abbett U.S. Government Securities Series
Lord Abbett Securities Trust
Lord Abbett Growth & Income Trust
Lord Abbett Tax-Free Income Fund, Inc.
California Series
National Series
New York Series
Lord Abbett Tax-Free Income Trust
Florida Series
Lord Abbett U.S. Government Securities Money Market Fund, Inc.
Exhibit 11
Debevoise & Plimpton
April 24, 1996
Lord Abbett Investment Trust
The General Motors Building
767 Fifth Avenue
New York, New York 10153
Lord Abbett Investment Trust
Registration Statement on Form N-14
-------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Lord Abbett Investment Trust (the
"Registrant"), a Delaware business trust, in connection with the preparation and
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, of a Registration Statement on Form N-14 (File No. 811-7988)
and Post-Effective Amendment No. 1 thereto (as so amended, the "Registration
Statement"), relating to the issuance of shares of beneficial interest of the
Lord Abbett U.S. Government Securities Series (the "Acquiring Fund"), a series
of the Registrant.
Such shares have been established and designated as the Class A shares and
the Class C shares (the "Class A shares" and the "Class C shares"). The Class A
shares are to be issued to Lord Abbett U.S. Government Securities Fund,
<PAGE>
Lord Abbett Investment Trust
Page 2
Inc., a Maryland corporation (the "Reorganized Fund"), pursuant to an Agreement
and Plan of Reorganization (the "Reorganized Fund Plan") between the Registrant,
on behalf of the Acquiring Fund, and the Reorganized Fund substantially in the
form of Exhibit A-1 included in Part A of the Registration Statement. The Class
C shares are to be issued to Lord Abbett U.S. Government Securities Trust (the
"Acquired Trust"), a series of Lord Abbett Securities Trust (the "Securities
Trust"), a Delaware business trust, pursuant to an Agreement and Plan of
Reorganization (the "Acquired Trust Plan") between the Registrant, on behalf of
the Acquiring Fund, and the Securities Trust, on behalf of the Acquired Trust,
substantially in the form of Exhibit A-2 included in Part A of the Registration
Statement. Such issuances of the Class A and the Class C shares are to be made
in connection with the acquisitions by the Acquiring Fund of the assets of, and
the assumptions by the Acquiring Fund of the liabilities of, the Reorganized
Fund and the Acquired Trust, respectively.
In so acting, we have examined and relied upon the originals, or copies
certified or otherwise identified to our satisfaction, of such documents,
records, certificates and other instruments and have made such other
investigations as in our judgment are necessary or appropriate to enable us to
render the opinion expressed below. We have not, however, undertaken any
independent investigation of any factual matter set forth in any of the
foregoing.
Based on the foregoing, we are of the following opinion:
(a) Class A shares. Assuming that the Reorganized Fund and the Acquiring
--------------
Fund duly execute and deliver the Reorganized Fund Plan, that the Reorganized
Fund Plan and the reorganization provided for thereby are duly approved by the
shareholders of the Reorganized Fund, that the transactions contemplated by the
Reorganized Fund Plan are duly consummated and that the amendment to the
Declaration of Trust of the Registrant substantially in the form of Exhibit 1(b)
to the Registration Statement is duly approved and executed, the Class A shares
issued pursuant to the Reorganized Fund Plan will be legally issued, fully paid
and non-assessable.
<PAGE>
Lord Abbett Investment Trust
Page 3
(b) Class C shares. Assuming that the Acquired Trust and the Acquiring
--------------
Fund duly execute and deliver the Acquired Trust Plan, that the Acquired Trust
Plan and the reorganization provided for thereby are duly approved by the
shareholders of the Acquired Trust, that the transactions contemplated by the
Acquired Trust Plan are duly consummated and that the amendment to the
Declaration of Trust of the Registrant substantially in the form of Exhibit 1(b)
to the Registration Statement is duly approved and executed, the Class C shares
issued pursuant to the Acquired Trust Plan will be legally issued, fully paid
and non-assessable.
This opinion is limited solely to the federal law of the United States and
the Delaware Business Trust Act as in effect on the date hereof and the relevant
facts that exist as of the date hereof. Without limiting the generality of the
foregoing, we express no opinion concerning other laws of the State of Delaware,
including the securities laws of such state, or the laws of any other
jurisdiction other than the United States. No assurance can be given that the
law or facts will not change, and we have not undertaken to advise you or any
other person with respect to any event subsequent to the date hereof.
We are delivering this opinion to you and, without our prior written
consent, no other persons are entitled to rely on this opinion. We consent to
the filing of this opinion as an Exhibit to the Registration Statement. In
giving such consent, we do not thereby concede that we are within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933 or the Rules and Regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Debevoise & Plimpton
