1933 Act File No. 33-68090
1940 Act File No. 811-7988
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 14 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Amendment No. 13 [X]
LORD ABBETT INVESTMENT TRUST
Exact Name of Registrant as Specified in Charter
767 FIFTH AVENUE, NEW YORK, N.Y. 10153-0203
Address of Principal Executive Office
Registrant's Telephone Number (212) 848-1800
Thomas F. Konop, Vice President
767 FIFTH AVENUE, NEW YORK, N.Y. 10153
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately on filing pursuant to paragraph (b) of Rule 485
on July 15, 1996 pursuant to paragraph (b) of Rule 485
60 days after filing pursuant to paragraph (a)(1) of Rule 485
on (April 1, 1998) pursuant to paragraph (a)(1) of Rule 485
75 days after filing pursuant to paragraph (a)(2) of Rule 485
X on (April 1, 1998) pursuant to paragraph (a)(3) of Rule 485
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
LORD ABBETT INVESTMENT TRUST
N-1A
Cross Reference Sheet
Post-Effective Amendment No. 14
Pursuant to Rule 481(a)
This Post-Effective Amendment No. 14 (the "Amendment") to the Registrant's
Registration Statement relates only to the U.S. Government Securities Series,
the U.S. Government Limited Duration Series and the Balanced Series of the Lord
Abbett Investment Trust.
The other series and classes of shares of the Registrant are listed below and
are offered by the Prospectus and Statement of Additional Information in Parts A
and B, respectively, of the Post-Effective Amendment to the Registrant's
Statement as identified. The following are separate series and/or classes of
shares of the Registrant. This Amendment does not relate to, amend or otherwise
affect the Prospectus and Statement of Additional Information contained in the
prior Post-Effective Amendments listed below, and pursuant to Rule 485(d) under
the Securities Act of 1933, does not affect the effectiveness of such prior
Post-Effective Amendments.
Stragegic Core Series - Class Y Post-Effective Amendment No. 12
Core Series - Class Y Post-Effective Amendment No. 13
Form N-1A Location In Prospectus or
Item No. Statement of Additional Information
- --------- -----------------------------------
1 Cover Page
2 Fee Table
3 N/A
4 (a) (i) Cover Page
4 (a) (ii)I Investment Objectives
4 (b) (c) How We Invest
5 (a) (b) (c) Our Management; Last Page
5 (d) N/A
5 (e) Our Management
5 (f) N/A
5 (g) Purchases
6 (a) Cover Page
6 (b) (c) (d) N/A
6 (e) Cover Page; Purchases
6 (f) (g) Dividends, Capital Gains
Distributions and Taxes
7 (a) Back Cover Page
7 (b) (c) (d) Purchases
8 (a) (b) (c) (d) Redemptions
Purchases, Redemptions and Shareholder Services
9 N/A
10 Cover Page
11 Cover Page -- Table of Contents
12 N/A
13 (a) (b) (c) (d) Investment Objectives and Policies
14 Trustees and Officers
15 (a) (b) (c) Trustees and Officers
16 (a) (i) Investment Advisory and Other
Services
16 (a) (ii) Trustees and Officers
16 (a) (iii) Investment Advisory and Other
Services
16 (b) Investment Advisory and Other Services
16 (c) (d) (e) (g) N/A
16 (f) Purchases, Redemptions and Shareholder Services
16 (h) Investment Advisory and Other Services
16 (i) N/A
17 (a) Portfolio Transactions
17 (b) N/A
<PAGE>
17 (c) Portfolio Transactions
17 (d) (e) N/A
18 (a) Cover Page
18 (b) N/A
<PAGE>
Form N-1A Location in Prospectus or
Item No. Statement of Additional Information
- --------- -----------------------------------
19 (a) (b) Purchases; Redemptions and Shareholder Services;
Notes to Financial Statements
19 (c) N/A
20 Taxes
21 (a) Purchases, Redemptions and Shareholder Services
21 (b) (c) N/A
22 N/A
22 (b) Past Performance
23 Financial Statements; Supplementary
<PAGE>
This Prospectus sets forth concisely the information about the Lord Abbett
Limited Duration Series U.S. Government Securities Series ("Limited Duration
Government Series" and the Lord Abbett U.S. Government Securities Series ("U.S.
Governement Securities Series") of Lord Abbett Investment Trust (the "Fund")
that you should know before investing. Please read this Prospectus before
investing and retain it for future reference.
Each Series is sometimes referred to as "we" or the "Series" individually or
collectively. The Limited Duration Government Series has two classes of shares:
Class A and C. The U.S. Government Securities Series has three classes of
shares: Class A, B and C. The classes provide investors with different purchase
options. See "Purchases" for a description of these choices.
LIMITED DURATION GOVERNMENT SERIES.
The investment objective of the Series is to seek a high level of income from a
portfolio consisting primarily of limited duration U.S. Government securities.
U.S. GOVERNMENT SECURITIES SERIES.
The investment objective of the Series is high current income consistent with
reasonable risk.
See "How We Invest" for information. There can be no assurance that any Series
will achieve its objective.
The Statement of Additional Information dated April 1, 1998 has been filed with
the Securities and Exchange Commission and is incorporated by reference into
this Prospectus. You may obtain it, without charge, by writing to the Fund or by
calling 800-874-3733. Ask for "Part B of the Prospectus -- the Statement of
Additional Information."
Shaded terms are defined in the Glossary of Terms.
Mutual Fund shares are not deposits or obligations of, or guaranteed or endorsed
by, any bank. Shares are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other agency. An investment in
the Fund involves risks, including the possible loss of principal.
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.
LORD ABBETT
INVESTMENT TRUST
PROSPECTUS
April 1, 1998
<PAGE>
TABLE OF CONTENTS PAGE
How We Invest 2
Investor Expenses 2
Risk Factors 2
Financial Highlights 2
How We Invest 2
Investor Expenses 2
Risk Factors 2
Financial Highlights 3
Portfolio Management 2
Purchases 4
Opening Your Account 6
Shareholder Services 6
Redemptions 7
Dividends and Capital Gains 7
Our Management 8
Fund Performance 8
Investment Policies, Risks and Limits 8
Sales Compensation 9
Glossary of Terms 10
HOW WE INVEST
U.S. Government Securities Series
Normally we invest in U.S. Government securities which we expect to
produce high current income while presenting a relatively low risk of price
decline. Securities in which the Series invests include obligations issued by
the U.S. Treasury and certain obligations issued or guaranteed by U.S.
Government agencies or instrumentalities, including the Federal Home Loan Bank,
Federal Home Loan Mortgage Corporation ("FHLMC"), Federal National Mortgage
Association ("FNMA"), Federal Farm Credit Bank, Government National Mortgage
Association ("GNMA"), Student Loan Marketing Association, Tennessee Valley
Authority, Financing Corporation and Resolution Funding Corporation. Securities
backed by the U.S. Treasury or a U.S. Government agency in which the U.S.
Government Securities series may invest provide substantial protection against
credit risk, but are guaranteed only as to the timely payment of interest and
principal when held to maturity.
Growth of capital is not an objective of the Series, but capital
appreciation may result from efforts to secure high current income.
See "Investment Policies, Risks and Limits."
RISK FACTORS
U.S. Government Securities Series
<PAGE>
The market price for U.S. Government securities is not guaranteed and will
fluctuate, and such securities will not protect investors against price changes
due to changing interest rates. The value of shares of the Series will change as
the general levels of interest rates fluctuate. When interest rates decline,
share value rises. When interest rates rise, share value can be expected to
decline. The Series may employ other investment practices, such as investment in
illiquid and other securities, that could adversely affect performance. Before
you invest, please read "Investment Policies, Risks and Limits" for a
description of these investment practices, risks and restrictions.
INVESTOR EXPENSES
The expenses shown below are based on estimated expenses for the current fiscal
year. Future expenses may be different than those shown.
Class A Shares Class B Shares Class C Shares
Shareholder
Transaction
Expenses (as a
percentage of
offering price)
Maximum
Sales Charge
on Purchases 4.75% None None
Deferred Sales None 5% if shares 1% if shares are redeemed
Charge (1) are redeemed before 1st anniversary of
(See before 1st purchase
"Purchases") anniversary of
purchase,
declining to
1% before 6th
anniversary
and eliminated
on and after
6th
anniversary
Annual Fund Operating Expenses (as a % of average net assets) (after management
fee waiver)
Management
Fees (See "Our
Management") 0.50% 0.50% 0.50%
<PAGE>
12b-1 Fees 0.27% ___%(2)(3) 1.00%(2)
Other
Expenses (See
"Our
Management")
Total
Operating
Expenses)
Example: Assume U.S Government Securities Series' annual return is 5% and there
is no change in the level of expenses described above. For a $1,000 investment
with all dividends and distributions reinvested, you would have paid the
following total expenses assuming you sold your shares at the end of each time
period indicated.
1 Year 3 Years 5 years 10 Years
------ ------- ------- --------
U.S. Government Securities Series
Class A $__ $__ $__ $__
Class B(2) $__ $__ $__ $__
Class C $__ $__ $__ $__
You would pay the following expenses on the same investment, assuming you kept
your shares:
U.S. Government Securities Series
Class A $__ $__ $__ $__
Class B $__ $__ $__ $__
Class C $__ $__ $__ $__
This example is for comparison and is not a representation of the Series' actual
expenses and returns, either past or present.
(1)Because of the 12b-1 fee, long-term shareholders may indirectly pay more than
the equivalent of the maximum permitted front-end sales charge.
(2)Class B shares will automatically convert to Class A shares on the eighth
anniversary of your original purchase of Class B shares.
FINANCIAL HIGHLIGHTS
The following tables have been audited by Deloitte & Touche LLP, independent
accountants, in connection with their annual audit of the Fund's Financial
Statements, whose report may be obtained on request. Call 800-821-5129 and ask
for the Fund's 1997 annual report.
U.S. GOVERNMENT SECURITIES SERIES
<PAGE>
<TABLE>
<CAPTION>
Year Ended November 30,
Per Class A Share Operating
Performance: 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $2.63 $2.73 $2.59 $3.00 $2.94 $2.94 $2.83 $2.92 $2.91 $2.96
Income from
investment operations
Net investment income .20(e) .215 .235 .247 .239 .267 .282 .299 .309 .376
Net realized and
unrealized gain (loss)
on investments (.03) (.105) .136 (.3685) .070 (.003) .105 (.088) .010 (.062)
Total from investment
operations .17 .11 .371 (.1215) .309 .264 .387 .211 .319 .274
Distributions
Dividends from net
investment income (.21) (.210) (.231) (.246) (.249) (.264) (.277) (.301) (.369) (.324)
Distribution from net
realized gain -- -- -- (.0425) -- -- -- -- -- --
-----------------------
Net asset value, end of
period $2.59 $2.63 $2.73 $2.59 $3.00 $2.94 $2.94 $2.83 $2.92 $2.91
Total Return(b) 6.67% 4.41% 14.89% (4.24)% 10.70% 9.24% 14.35%(c) 7.82% 11.65%(c) 9.64%
Ratios to Average Net
Assets:
Expenses 0.92%(f) 0.88% 0.90% 0.90% 0.89% .87(f) .94%(c) .89%(f) .88%(c) .88%
Net investment income 7.82% 8.12% 8.85% 8.92% 7.94% 9.18% 9.63%(c) 10.55% 10.66%(c) 11.26%
==============================================================================================================================
<CAPTION>
Year Ended November 30,
Supplemental Data
for All Classes: 1997 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
Net assets, end
of period (000) $2,286,412 $2,907,291 $3,272,865 $3,232,012 $3,909,868 $3,275,052 $2,293,345
Portfolio
turnover rate 712.82% 820.59% 544.31% 790.57% 586.18% 458.70% 544.19%
====================================================================================================================
<CAPTION>
Year Ended November 30,
Supplemental Data
for All Classes: 1990 1989 1988
<S> <C> <C> <C>
Net assets, end
of period (000) $1,555,648 $1,241,218 $999,131
Portfolio
turnover rate 578.18% 440.32% 332.36%
=======================================================
</TABLE>
(a) Commencement of offering of Class Bshares.
<PAGE>
(b) Total return does not consider the effects of sales loads.
(c) Not annualized.
(d) Commencement of operations of Series.
(e) Calculated using average shares outstanding during the period.
(f) The ratios for 1997 include expenses paid through an expenses offset
arrangement.
<TABLE>
<CAPTION>
Class B Shares Class C Shares
Year Ended Year Ended
November 30, 8/1/96(a) November 30, 7/15/96(a)
Per Share Operating 1997 to 11/30/96 1997 to 11/30/96
Performance:
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $2.63 $2.57 $2.63 $2.55
Income from investment
operations
Net investment income .18(e) .063 .18(e) .066
Net realized and unrealized gain
(loss) on investments (.04) .060 (.03) .085
Total from investment
operations .14 .123 .15 .151
Distributions
Dividends from net investment
income (.19) (.063) (.19) (.071)
Distribution from net realized
gain -- -- -- --
Net asset value, end of period $2.58 $2.63 $2.59 $2.63
Total Return(b) 5.47% 5.45%(c) 5.86% 6.49%(c)
Ratios to Average Net Assets:
Expenses 1.64%(f) 0.48%(c) 1.55%(f) 0.60%(c)
Net investment income 6.77% 2.21%(c) 7.25% 2.60%(c)
======================================================================================================
<CAPTION>
Year Ended November 30,
Supplemental Data for 1997 1996 1995 1994 1993 1992 1991
All Classes:
<S> <C> <C> <C> <C> <C> <C> <C>
Net assets, end
of period (000) $2,286,412 $2,907,291 $3,272,865 $3,232,012 $3,909,868 $3,275,052 $2,293,345
Portfolio
turnover rate 712.82% 820.59% 544.31% 790.57% 586.18% 458.70% 544.19%
=====================================================================================================================
<CAPTION>
Year Ended November 30,
Supplemental Data for 1990 1989 1988
All Classes:
<S> <C> <C> <C>
Net assets, end
of period (000) $1,555,648 $1,241,218 $999,131
Portfolio
turnover rate 578.18% 440.32% 332.36%
========================================================
</TABLE>
<PAGE>
(a) Commencement of offering respective Class shares.
(b) Total return does not consider the effects of sales loads.
(c) Not annualized.
(d) Commencement of operations.
(e) Calculated using average shares outstanding during the period.
(f) The ratios for 1997 include expenses paid through an expenses offset
arrangement.
LIMITED DURATION GOVERNMENT SECURITIES SERIES
HOW WE INVEST
We invest solely in short- and intermediate-duration U.S. Government
securities that we expect to result in a high level of income. Securities
in which the Series invests include direct obligations of the U.S.
Treasury (such as Treasury bills, notes and bonds) and certain obligations
issued by U.S. Government agencies and instrumentalities, including the
Federal Home Loan Banks, FHLMC, FNMA and GNMA, as well as "component
securities," which are separated into their component parts of principal
and coupon payments, and mortgage-backed securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities. The Series is
not a money market fund.
See "Investment Policies, Risks and Limits."
RISK FACTORS
The U.S. Government securities in which the Series may invest are
guaranteed as to timely payment of interest and principal, but the market
prices for such securities are not guaranteed, and will rise and fall in
value as interest rates change. The Series does not seek to maintain a
stable net asset value, and may not be able return dollar-for-dollar the
money invested. The level of income will vary depending on interest rates
and the portfolio. When interest rates rise, the value of securities in
the portfolio and the Series' share value will fall. When interest rates
decline, the value of securities in the portfolio and the Series' share
value will rise. The Series may employ other investment practices, such as
investment in illiquid and other securities, that could adversely affect
performance. Before you invest, please read "Investment Policies, Risks
and Limits" for a description of these investment practices, risks and
restrictions.
INVESTOR EXPENSES
The expenses shown below are based on estimated expenses for the current
fiscal year. Future expenses may be different than those shown.
<PAGE>
Class A Shares Class C Shares
Shareholder Transaction Expenses (as
a percentage of offering price)
Maximum Sales Charge on Purchases 3.00% None
Deferred Sales Charge (1) (See
"Purchases") None 1% if shares are redeemed
before 1st anniversary of
purchase
Annual Fund Operating Expenses (as a % of average net assets) (after waiver)
Management Fees (See "Our
Management") 0.25% 0.25%
12b-1 Fees 0.00% 1.00%(2)
Other Expenses (See "Our
Management")
Total Operating Expenses)
Example: Assume Limited Duration U.S. Government Securities Series' annual
return is 5% and there is no change in the level of expenses described above.
For a $1,000 investment with all dividends and distributions reinvested, you
would have paid the following total expenses assuming you sold your shares at
the end of each time period indicated.
1 Year 3 Years 5 years 10 Years
------ ------- ------- --------
Limited Duration Government Series
Class A
Class C
You would pay the following expenses on the same investment, assuming you kept
your shares:
Limited Duration Government Series
Class A $__ $__ $__ $__
Class C $__ $__ $__ $__
This example is for comparison and is not a representation of the Series' actual
expenses and returns, either past or present.
(1)Because of the 12b-1 fee, long-term shareholders may indirectly pay more than
the equivalent of the maximum permitted front-end sales charge.
FINANCIAL HIGHLIGHTS
<PAGE>
The following tables have been audited by Deloitte & Touche LLP, independent
accountants, in connection with their annual audit of the Fund's Financial
Statements, whose report may be obtained on request. Call 800-821-5129 and ask
for the Fund's 1997 annual report.
LIMITED DURATION SERIES
<TABLE>
<CAPTION>
Class A Shares
Year One Year
Ended Month Year Year Ended
November Ended Ended Ended 11/4/93(d) November
Per Share Operating Performance: 30, 1997 11/30/96 10/31/96 10/31/95 to 10/31/94 30, 1997
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $4.42 $4.39 $4.53 $4.44 $4.85 $4.42
Income from investment operations
Net investment income .25(e) .0174 .1912 .2316 .2650 .21(e)
Net realized and unrealized gain (loss)
on investments (.02) .0333 (.0751) .1017 (.4123) (.02)
Total from investment operations .23 .0507 .1161 .3333 (.1473) .19
Distributions
Dividends from net investment income (.25) (.0207) (.2561) (.2433) (.2627) (.21)
Net asset value, end of period $4.40 $4.42 $4.39 $4.53 $4.44 $4.40
-------
Total Return(b) 5.46% 1.15%(c) 2.67% 8.16% (3.09)%(c) 4.45%
Ratios to Average Net Assets:
Expenses, including waiver and reimbursement 0.51% 0.11%(c) 1.81% 1.40% 0.89%(c) 1.44%(f)
Expenses, excluding waiver and reimbursement 1.40% 0.13%(c) 2.73% 1.71% 0.89%(c) 2.32%
Net investment income 5.81% 0.41%(c) 4.58% 5.62% 5.61%(c) 4.84%
=========================================================================================================================
<CAPTION>
Class C Shares
One Month
Ended 7/15/96(a)
Per Share Operating Performance: 11/30/96 to 10/31/96
<S> <C> <C>
Net asset value, beginning of period $4.39 $4.34
Income from investment operations
Net investment income .0138 .0667
Net realized and unrealized gain (loss)
on investments .0342 .0515
Total from investment operations .0480 .1182
Distributions
Dividends from net investment income (.0180) (.0682)
Net asset value, end of period $4.42 $4.39
Total Return(b) 1.09%(c) 2.98%(c)
Ratios to Average Net Assets:
Expenses, including waiver and reimbursement 0.19%(c) 0.69%(c)
Expenses, excluding waiver and reimbursement 0.21%(c) 0.77%(c)
Net investment income 0.33%(c) 1.26%(c)
===========================================================================
<CAPTION>
Year One
Ended Month
November Ended Year Ended Year Ended 11/4/93(d)
Supplemental Data for All Classes: 30, 1997 11/30/96 10/31/96 10/31/95 to 10/31/94
<S> <C> <C> <C> <C> <C>
Net assets, end of period (000) $10,276 $12,696 $12,735 $8,922 $10,256
Portfolio turnover rate 343.53% 175.98% 340.62% 222.00% 895.63%
======================================================================================================
</TABLE>
(a) Commencement of offering respective Class shares.
(b) Total return does not consider the effects of sales loads.
(c) Not annualized.
(d) Commencement of operations.
(e) Calculated using average shares outstanding during the period. (f) The
ratios for 1997 include expenses paid through an expenses offset
arrangement.
PORTFOLIO MANAGEMENT
Robert Gerber, Executive Vice President and portfolio manager of the Fund, is
primarily responsible for the day-to-day management of each Series. Mr. Gerber
has been with Lord, Abbett & Co. ("Lord Abbett") since 1997 and has over 10
years of investment experience. Mr.
<PAGE>
Gerber is assisted by, and may delegate management duties to, other Lord Abbett
employees who may be Fund officers.
PURCHASES
This Prospectus offers two classes of shares of Limited Duration Government
Series: Class A and C and three classes of shares of U.S. Government Securities
Series: Class A, B and C. These classes of shares represent investments in the
same portfolio of securities but are subject to different expenses. Our shares
are continuously offered based on the per share net asset value ("NAV") next
computed after we accept your purchase order submitted in proper form, plus a
front-end sales charge as described below, in the case of the Class A shares and
without a front-end sales charge, in the case of the Class B and C shares as
described below. Investors should read this section carefully to determine which
class of shares represents the best investment option for their particular
situation.
CLASS A
- - Normally offered with a front-end sales charge.
- - Lower annual expenses than Class B and Class C shares.
CLASS B
- - No front-end sales charge.
- - Higher annual expenses than Class A shares.
- - A contingent deferred sales charge is applied to shares sold prior to the
sixth anniversary of purchase.
- - Automatically convert to Class A shares after eight years.
CLASS C
- - No front-end sales charge.
- - Higher annual expenses than Class A shares.
- - A contingent deferred sales charge is applied to shares sold prior to the
first anniversary of purchase.
It may not be suitable for you to place a purchase order for Class B shares of
$500,000 or more or a purchase order for Class C shares of $1,000,000 or more.
You should discuss pricing options with your investment professional.
For more information, see "Alternative Sales Arrangements" in the Statement of
Additional Information.
<PAGE>
CLASS A SHARES. Front-end sales charges are as follows:
To Compute
As a % of As a % of Offering Price,
Offering Your Divide
Your Investment Price Investment NAV by
- --------------- ---------- ---------- ---------------
Less than $50,000 5.75% 6.10% .9425
$50,000 to $99,999 4.75% 4.99% .9525
$100,000 to $249,999 3.75% 3.90% .9625
$250,000 to $499,999 2.75% 2.83% .9725
$500,000 to $999,999 2.00% 2.04% .9800
$1,000,000 over No Sales Charge 1.0000
REDUCING YOUR CLASS A FRONT-END SALES CHARGES. There are several ways you can
qualify for a lower sales charge when purchasing Class A shares if you inform
the Fund that you are eligible at the time of purchase.
- - RIGHTS OF ACCUMULATION -- a Purchaser can add the share value of any Eligible
Fund already owned to the amount of the next purchase of Class A shares for
purposes of calculating the sales charge.
- - STATEMENT OF INTENTION -- a Purchaser can purchase Class A shares of any
Eligible Fund over a 13-month period and receive the same sales charge as if all
shares had been purchased at once. Shares purchased through reinvestment of
distributions are not included.
For more information on eligibility for these privileges, read the applicable
sections in the attached application.
CLASS A SHARE PURCHASES WITHOUT A FRONT-END SALES CHARGE. Class A shares may be
purchased without a front-end sales charge under the following circumstances.
1 Purchases of $1 million or more. *
2 Purchases by Retirement Plans with at least 100 eligible employees. *
3 Purchases under a Special Retirement Wrap Program. *
4 Purchases made with dividends and distributions on Class A shares of another
Eligible Fund.
5 Purchases representing repayment under the loan feature of the Lord
Abbett-sponsored prototype 403(b) plan for Class A shares.
6 Employees of any consenting securities dealer having a sales agreement with
Lord Abbett Distributor.
<PAGE>
7 Purchases under a Mutual Fund Wrap-Fee Program.
8 Lord Abbett Consultants/Advisers.
9 Employees of our shareholder servicing agent.
10 Employees of any national securities trade organization to which Lord Abbett
belongs.
11 Employees of Lord Abbett and our Directors/Trustees (active or retired),
their spouses, including surviving spouses, and other family members.
12 Trustees or custodians of any pension or profit sharing plan, or payroll
deduction IRA for the persons mentioned in 6, 9, 10 and 11 above.
* May be subject to a CDSC.
CONTINGENT DEFERRED SALES CHARGES ("CDSC"). The CDSC, regardless of class, is
not charged on shares acquired through reinvestment of dividends or capital
gains distributions and is charged on the original purchase cost or the current
market value of the shares being sold, whichever is lower.
CLASS A SHARE CDSC. If you buy Class A shares under one of the starred (* )
categories listed above subject to a dealer's concession of up to 1% and you
redeem any of the Class A shares within 24 months after the month in which you
initially purchased such shares, the Fund normally will collect a CDSC of 1%.
The Class A share CDSC generally will be waived under the following
circumstances.
- - Benefit payments such as Retirement Plan loans, hardship withdrawals, death,
disability, retirement, separation from service or any excess distribution under
Retirement Plans (documentation may be required).
- - Redemptions continuing as investments in another fund participating in a
Special Retirement Wrap Program.
CLASS B SHARE CDSC. The CDSC for Class B shares normally applies if you redeem
your shares before the sixth anniversary of their initial purchase. The CDSC
varies depending on how long you own your shares according to the following
schedule.
Contingent Deferred
Anniversary(1) Sales Charge on
of the Day on Redemptions
Which the Purchase (As % of Amount
Order Was Accepted Subject to Charge)
On Before
1st 5.0%
1st 2nd 4.0%
2nd 3rd 3.0%
3rd 4th 3.0%
4th 5th 2.0%
5th 6th 1.0%
on or after the None
6th anniversary(2)
<PAGE>
(1)Anniversary is the 365th day subsequent to a purchase or a prior anniversary.
(2)Class B shares will automatically convert to Class A shares on the eighth
anniversary of the purchase of Class B shares.
The Class B share CDSC generally will be waived under the following
circumstances.
- - Benefit payments such as Retirement Plan loans, hardship withdrawals, death,
disability, retirement, separation from service or any excess distribution under
Retirement Plans.
- - Eligible Mandatory Distributions under 403(b) plans and individual retirement
accounts.
- - Death of the shareholder (natural person).
- - On redemptions of shares in connection with Div-Move and Systematic Withdrawal
Plans (up to 12% per year).
See "Systematic Withdrawal Plan" for more information on CDSCs with respect to
Class B shares.
CLASS C SHARE CDSC. The 1% CDSC for Class C shares normally applies if you
redeem your shares before the first anniversary of your original purchase.
APPLICATION OF CDSC TO A REDEMPTION. To determine if a CDSC applies to a
redemption, the Fund redeems shares in the following order.
1 Shares acquired by reinvestment of dividends and capital gains.
2 Shares held for six years or more (Class B) or one year or more (Class C).
3 Shares held the longest before the sixth anniversary of their purchase (Class
B) or before the first anniversary of their purchase (Class C).
OPENING YOUR ACCOUNT
<PAGE>
MINIMUM INITIAL INVESTMENT
- - Regular account $250
- - Individual Retirement Accounts,
403(b) and employer-sponsored
retirement plans
under the Internal Revenue Code $250
- - Invest-A-Matic and Div-Move $250 initial
$50 subsequent minimum
For Retirement Plans and Mutual Fund Wrap Programs, there is no minimum
investment required, regardless of share class.
You may purchase shares through any independent securities dealer who has a
sales agreement with Lord Abbett Distributor or you can fill out the attached
application and send it to the Fund at the address stated below. You should read
this Prospectus carefully before placing your order to assure your order is in
proper form.
LORD ABBETT INVESTMENT TRUST
P.O. Box 419100
Kansas City, MO 64141
PROPER FORM. To be in proper form an order submitted directly to the Fund must
contain (1) a completed Application Form or information and documentation
required supplementally by the Fund, and (2) payment must be credited in U.S.
dollars to our custodian bank's account. For more information regarding proper
form of a purchase order, call the Fund at 800-821-5129.
IMPORTANT INFORMATION. If you fail to provide a correct taxpayer identification
number or to make certain required certifications, you may be subject to a $50
penalty under the Internal Revenue Code and we may be required to withhold a
portion (31%) of any redemption proceeds and of any dividend or distribution on
your account.
BY EXCHANGE. Telephone the Fund at 1-800-821-5129 to request an exchange from
any eligible Lord Abbett-sponsored fund.
We reserve the right to withdraw all or any part of the offering made by this
Prospectus or to reject any purchase order. We also reserve the right to waive,
increase or establish minimum investment requirements. All purchase orders are
subject to our acceptance and are not binding until confirmed or accepted in
writing.
SHAREHOLDER SERVICES
<PAGE>
Telephone Exchanges. You or your investment professional, with proper
identification, can instruct the Fund by telephone to exchange shares of any
class for the same class of any Eligible Fund. Instructions must be received by
the Fund in Kansas City by calling 1-800-821-5129 prior to the close of the New
York Stock Exchange ("NYSE") to obtain an Eligible Fund's NAV per class share on
that day. Exchanges will be treated as a sale for federal tax purposes.
For your protection, telephone requests for exchanges are recorded. We will take
measures to verify the identity of the caller, such as asking for your name,
account number, social security or taxpayer identification number and other
relevant information. The Fund will not be liable for following instructions
communicated by telephone that it reasonably believes to be genuine.
Expedited exchanges by telephone may be difficult to implement in times of
drastic economic or market change. The exchange privilege should not be used to
take advantage of short-term swings in the market. The Fund reserves the right
to limit or terminate this privilege for any shareholder making frequent
exchanges and may revoke the privilege for all shareholders upon 60 days' prior
written notice. You have this privilege unless you refuse it in writing. You
should read the prospectus of the other Lord Abbett-sponsored fund(s) selected
before making an exchange.
INVEST-A-MATIC. You can make fixed, periodic investments ($250 initial and $50
subsequent minimum) into the Fund by means of automatic money transfers from
your bank checking account. See the attached Application Form for instructions.
DIV-MOVE. You can invest the dividends paid on your account ($50 minimum) into
another account, within the same class, in any Eligible Fund. The account must
be either your account, a joint spousal account, or a custodial account for your
minor child.
SYSTEMATIC WITHDRAWAL PLAN ("SWP"). You can make periodic cash withdrawals from
your account which are automatically paid to you in fixed or variable amounts.
To participate, the value of your shares must be at least $10,000, except for
retirement plans for which there is no minimum.
With respect to Class B shares, the CDSC will be waived on redemptions of up to
12% of the current net asset value of your account at the time of your SWP
request. For Class B share redemptions over 12% per year, the CDSC will apply to
the entire redemption. Please contact the Fund for assistance in minimizing the
CDSC in this situation.
Redemption proceeds due to a SWP for Class B (up to 12% per year) and Class C
shares, will be redeemed in the order described under "Redemptions".
LORD ABBETT'S PROTOTYPE RETIREMENT PLANS. The Lord Abbett Family of Funds offers
a range of qualified retirement plans, including IRAs, SIMPLE IRAs, Simplified
Employee Pension Plans, 403(b) and pension and profit-sharing plans, including
401(k) plans. To find out more about these plans, call the Fund at
1-800-842-0828.
<PAGE>
ACCOUNT CHANGES. For any changes you need to make to your account, consult your
financial representative or call the Fund at 1-800-821-5129.
HOUSEHOLDING. Generally, shareholders with the same last name and address will
receive a single copy of an annual or semi-annual report, unless additional
reports are specifically requested in writing to the Fund.
REINVESTMENT PRIVILEGE. If you sell shares of the Fund, you have the one time
right to reinvest some or all of the proceeds in the same class of any Eligible
Fund within 60 days without a sales charge. If you paid a CDSC when you sold
your shares, you will be credited with the amount of the CDSC. All accounts
involved must have the same registration.
PRICING SHARES. The net asset value ("NAV") per share for each class of shares
is calculated each business day at the close of regular trading on the New York
Stock Exchange ("NYSE") by dividing a class's net assets by the number of shares
outstanding. The Fund is open on those business days when the NYSE is open.
Purchases and redemptions are executed at the next NAV to be calculated after
your request is accepted.
REDEMPTIONS
BY BROKER. Call your broker or investment professional for directions on how to
redeem your shares.
BY TELEPHONE. To obtain the proceeds of an expedited redemption of $50,000 or
less, you or your representative can call the Fund at 1-800-821-5129. The Fund
will employ the procedures described in telephone exchanges to confirm that the
instructions received are genuine.
The Fund will not be liable for following instructions communicated by telephone
that it reasonably believes to be genuine.
BY MAIL. Submit a written redemption request indicating your Fund's name, your
share class, your account number, the name(s) in which the account is registered
and the dollar value or number of shares you wish to sell.
Include all necessary signatures. If the signer has any Legal Capacity, the
signature and capacity must be guaranteed by an Eligible Guarantor. Certain
other legal documentation may be required. For more information regarding proper
documentation call 1-800-821-5129.
We will verify that the shares being redeemed were purchased at least 15 days
earlier. Your account balance must be sufficient to cover the amount being
redeemed or your redemption order will not be processed.
<PAGE>
Normally a check will be mailed to the name(s) and addresses in which the
account is registered, or otherwise according to your instruction within one
business day after receipt of your redemption request. The Fund reserves the
right to make payment within three business days.
To determine if a CDSC applies to a redemption, see "Contingent Deferred Sales
Charges" above.
DIVIDENDS AND CAPITAL GAINS
DIVIDENDS. Each Series distributes most or all of its net earnings in the form
of dividends which are expected to be paid to shareholders in monthly. A
supplemental dividend also may be paid in December or January.
CAPITAL GAINS DISTRIBUTIONS. Any capital gains distribution is expected to be
made in December and may be taken in cash or reinvested. Distributions by a
Series of any net long-term capital gains will be taxable to a shareholder as
long-term capital gains regardless of how long the shareholder has held the
shares. Under recently enacted legislation, the maximum tax rate on long-term
capital gains for a U.S. individual, estate or trust is reduced to 20% for
distributions derived from the sale of assets held by the Fund for more than 18
months. (If the taxpayer is in the 15% tax bracket, the rate is 10%.) For
distributions derived from the sale of assets held by the Fund between 12 and 18
months, the tax rate remains at 28% (15% if the taxpayer is in the 15% tax
bracket).
DIVIDENDS/CAPITAL GAINS RECEIPT OR REINVESTMENT. If you elect to receive
dividends or capital gains in cash, a check will be mailed to you as soon as
possible after the reinvestment date. If you arrange for direct deposit, your
payment will be electronically transmitted to your bank account within one day
after the payable date. Most investors reinvest their dividends and capital
gains. If you choose this option, or if you do not indicate any choice, your
dividends and capital gains distributions will be automatically reinvested in
additional shares.
TAXES. The Fund pays no federal income tax on the earnings it distributes to
shareholders. Consequently, dividends you receive from a Series, whether
reinvested or taken in cash, are generally considered taxable. Dividends
declared in December of any year will be treated for federal income tax purposes
as having been received by shareholders in that year if they are paid before
February 1 of the following year.
Each January the Fund will mail to you, if applicable, a Form 1099 tax
information statement detailing your dividends and capital gain distributions.
You should consult you tax adviser concerning applicable state and local taxes.
For more information about the tax consequences from dividends and
distributions, see the Statement of Additional Information.
OUR MANAGEMENT
<PAGE>
The Fund is supervised by a Board of Trustees, an independent body which has
ultimate responsibility for the Fund's activities. The Board has retained Lord
Abbett as investment manager pursuant to a Management Agreement. Lord Abbett has
been an investment manager for over 68 years and currently manages about $25
billion in a family of mutual funds and other advisory accounts. Lord Abbett
provides similar services to twelve other funds having various investment
objectives and also advises other investment clients. For more information about
the services Lord Abbett provides to the Fund, see the Statement of Additional
Information.
Each Series pays Lord Abbett a monthly fee based on average daily net assets for
each month. For the fiscal year ended November 30, 1997, the fee paid to Lord
Abbett was at an annual rate of .__ of 1% for the U.S. Government Securities
Series and .__ of 1% for the Limited Duration Government Series . In addition,
each Series pays all expenses not expressly assumed by Lord Abbett.
THE FUND. The Fund is a diversified open-end management investment company
established in 1993. Its Class A, B and C shares have equal rights as to voting,
dividends, assets and liquidation except for differences resulting from certain
class-specific expenses.
FUND PERFORMANCE
During the past year, the bond market continued to perform well, with both
Series benefitting from heavy weightings in mortgage-backed securities, such as
GNMAs and FNMAs. Over the year, the U.S. Government Securities Series increased
its holdings of mortgage-backed securities from approximately half to two-thirds
of its portfolio and the Limited Duration U.S. Government Securities Series
increased these holdings to nearly a third of its portfolio. We will continue to
emphasize mortgage-related securities and maintain a diversification of
maturities and mortgage types.
See the performance chart on the second to last page of this Prospectus.
INVESTMENT POLICIES, RISKS AND LIMITS
U.S. Government Securities Series
U.S. Government securities in which the Series may invest include: (1)
obligations issued by the U.S. Treasury with different interest rates,
maturities and issuance dates, including Treasury bills maturing in one year or
less, Treasury notes maturing in one to ten years and Treasury bonds with
maturities of over ten years, and (2) obligations issued or guaranteed by U.S.
Government agencies and instrumentalities which are supported by either: (a) the
full faith and credit of the United States (such as GNMA certificates), (b) the
right of the issuer to borrow from the U.S. Treasury or (c) the credit of the
instrumentality. Obligations issued by the U.S. Treasury and by U.S. Government
agencies and instrumentalities include component securities.
<PAGE>
Longer maturity U.S. Government securities may exhibit greater price volatility
in response to changes in interest rates than shorter maturity securities. In
addition, certain U.S. Government securities may show even greater volatility
if, for example, the interest payment component has been removed, as with zero
coupon bonds.
Investments in GNMA certificates (which represent an interest in a home mortgage
pool) and other mortgage-backed securities are subject to prepayment of
principal as mortgages are prepaid. The Series must reinvest these prepayments
at prevailing rates, which may be lower than the yield of the GNMA certificate
or other mortgage-backed security. These prepayments will result in a further
reduction in principal if the GNMA certificate or other mortgage-backed security
is trading over par. Mortgage prepayments generally increase when interest rates
fall and, accordingly, often result in a reduction of principal. Prepayments
tend to decline when interest rates are rising, resulting in an increase in the
duration and volatility of GNMA certificates and other mortgage-backed
securities.
The Series may invest in liquid interest-only and principal-only mortgage-backed
securities backed by fixed rate mortgages under guidelines established by the
Fund's Board of Trustees to assure that they may be sold promptly in the
reasonable course of business at a value reasonably close to that used in
calculating the Series' net asset value per share.
Although longer maturity U.S. Government securities, zero coupon bonds, GNMA
certificates and other mortgage-backed securities in which the Series may invest
may be volatile, Lord Abbett manages this volatility (but does not eliminate it)
by maintaining the average duration of securities held by the Series at between
three and eight years.
Limited Duration Government Securities Series
Obligations which are issued or guaranteed by U.S. government agencies or
instrumentalities in which the Series may invest include those that are
supported by either: (a) the full faith and credit of the United States (such as
GNMA certificates), (b) the right of the issuer to borrow from the U.S. Treasury
(such as Federal Home Loan Bank securities) or (c) the credit of the
instrumentality (such as FNMA and FHMLC securities). Component securities in
which the Series may invest include Treasury STRIPS, which are Treasury bonds
and notes separated on the books of the Federal Reserve into their component
parts of principal and coupon payments or principal and coupon strips, and which
are direct obligations of the U.S. Government.
The maximum dollar-weighted effective average maturity (not stated maturity) of
the Series' portfolio will be seven years. This effective average maturity
measures the average time principal is outstanding and (a) is different from
duration because it does not measure all cash flows and (b) includes securities
that prepay principal, thus shortening their dollar-weighted effective average
maturity. ("Duration" is generally the weighted average time to receipt of all
cash flows due by maturity from an obligation.) Stated maturity is the stated
time to final principal payment of an obligation without regard to any
prepayments of principal. Therefore, the maximum average stated maturity of the
portfolio may be substantially longer than seven years.
<PAGE>
Unlike a money market fund, which is designed for stability of principal and
consequently has a fluctuating level of income, a limited duration U.S.
Government securities fund, due to the nature of its portfolio securities,
generally has a steadier and higher level of income. However, the Series' share
value will fluctuate more than a money market fund's over time. Historically, a
portfolio with a duration averaging between one and four years, such as the
Series' portfolio, tends to have steadier and higher income over the course of
the business cycle than a short-term money market fund portfolio. In such a
business cycle, the Series' portfolio can "lock in" rates over a longer period,
allowing its income to continue over that period at the locked-in level (which
adjusts less often in response to changing interest rates). This ability to lock
in rates for a longer period softens the impact of more frequent interest-rate
changes to which a money market fund portfolio is exposed due to the shorter
period for which it is able to lock in rates. Of course, past performance is no
guarantee of future results.
In general, because the Series invests in longer term securities than a money
market fund, the value of its shares will fluctuate more than a money market
fund, but less than, for example, a long-term U.S. Government securities fund.
Component securities in which the Series may invest may show greater price
volatility in response to interest-rate changes than other debt securities in
which the Series may invest. The value of principal-only component securities
will be reduced in a rising interest-rate environment, or as the expected amount
of principal prepayments declines. The value of interest-only component
securities will be reduced in a falling interest-rate environment, or as the
expected amount of principal prepayments increases. The Series seeks to reduce
the effects of interest-rate volatility on principal by limiting the average
duration of the portfolio to a range of one to four years.
The Series limits its investments in mortgage-backed securities to those issued
or guaranteed by the U.S. Government or one of its agencies or
instrumentalities, primarily the GNMA, FNMA or FHLMC. Mortgage-backed securities
guaranteed by GNMA represent pass-through interests in pools of mortgage loans
guaranteed or issued by agencies or instrumentalities of the United States.
Mortgage-backed securities issued by FNMA and FHLMC most often represent
pass-through interests in pools of conventional mortgage loans or participations
in the pools. Such "pass-through" mortgage-backed securities represent undivided
interests in the underlying mortgage pool, and a proportionate share of both
regular interest and principal payments (net of certain fees), as well as
unscheduled prepayments on the underlying mortgage pool, are passed through
monthly to the holder such securities. The Series must reinvest such prepayments
at prevailing interest rates, which may be lower than those of the
mortgage-backed securities prepaid. Prepayment will result in a reduction of
principal if the pre-paid mortgage-backed security is trading over par.
Principal prepayments generally increase when interest rates fall, as indicated
above, and accordingly often result in a reduction of principal. Among the types
of mortgage-backed securities in which the Series may invest are collateralized
mortgage obligations ("CMOs"), which are debt obligations collateralized by
mortgage loans or mortgage pass-through securities guaranteed or issued by GNMA,
FNMA or FHLMC. The Series will not invest in privately issued CMOs. The issuer
of a series of CMOs may elect to be treated as a Real Estate Mortgage Investment
Conduit (a "REMIC"). In a CMO, a series of bonds or certificates are issued in
multiple classes. Each class, often referred to as a "tranche", is
<PAGE>
issued at a specific fixed or floating coupon rate and has a stated maturity or
final distribution date.
Investment Policies, Risks and Limits Common to Both Series
Both the U.S. Government Securities Series and the Limited Duration Government
Series may purchase U.S. Government securities on a when-issued basis and, while
awaiting delivery and before paying for them ("settlement"), normally may invest
in short-term U.S. Government securities without amortizing any premiums. Each
Series does not start earning interest on these when-issued securities until
settlement and often will sell them prior to settlement. This investment
strategy is expected to contribute significantly to a portfolio turnover rate
substantially in excess of 100% for each Series. This strategy will have little
or no transaction cost or adverse tax consequences for any Series. Transaction
costs normally will exclude brokerage because our fixed-income portfolio
transactions are usually on a principal basis when using this strategy, and any
mark-ups charged normally will be more than offset by the beneficial economic
consequences anticipated at the time of purchase. During the period between
purchase and settlement, the value of the securities will fluctuate and assets
consisting of cash and/or marketable securities marked to market daily in an
amount sufficient to make payment at settlement will be segregated at our
custodian in order to pay for the commitment. There is a risk that market yields
available at settlement may be higher than yields obtained on the purchase date,
which could result in depreciation of value.
Both the U.S. Government Securities Series and the Limited Duration Government
Series are permitted to utilize, within limits established by the Board of
Trustees, the following investment policies in an effort to enhance each Series'
performance. These policies have risks associated with them. However, each
Series follows certain practices that may reduce these risks. To the extent a
Series utilizes some of these policies, its overall performance may be
positively or negatively impacted.
Securities Lending: The lending of securities to financial institutions which
provide continuous collateral equal to the market value of the securities
loaned.
Risk: Delay in recovery of collateral and loss should the borrower of the
security fail financially.
Limit: Loans, in the aggregate, may not exceed 30% of the value of each Series'
total assets.
Repurchase Agreements: A repurchase agreement is a transaction by which the
buyer acquires a security and simultaneously commits to resell that security to
the seller at an agreed upon price on an agreed upon date.
Risk: The issuer of the security, or the seller who is counterparty to the
contract, may default or otherwise become unable to honor a financial
obligation.
Limit: Each Series may enter into repurchase agreements that are continuously
collateralized by cash or U.S. Government securities having a value equal to, or
in excess of, the value of the repurchase agreement.
<PAGE>
Illiquid Securities: Securities not traded on the open market. May include
illiquid Rule 144A securities.
Risk: Certain securities may be difficult or impossible to sell at the time and
price the seller would like.
Limit: Each Series may invest up to 15% of its net assets in illiquid
securities. Securities determined by the Trustees to be liquid are not subject
to this limit.
Borrowing Money: Each Series may borrow from banks (as defined in the Act) in
amounts up to 33 1/3% of its total assets (including the amount borrowed). Each
Series may borrow up to an additional 5% of its total assets for temporary
purposes and each Series may obtain such short-term credit as may be necessary
for the clearance of purchases and sales of portfolio securities.
Each Series will not change its investment objective or its fundamental
investment restrictions listed in its Statement of Additional Information
without shareholder approval. If we determine that a Series' objective can best
be achieved by a substantive change in investment policy, which may be changed
without shareholder approval, we may make such change by disclosing it in the
prospectus.
For more information about investment policies, restrictions and risk factors,
see the Statement of Additional Information.
Portfolio Turnover
The portfolio turnover rate for the U.S. Government Securities Series for
the year ended November 30, 1997 was 712.82%, versus 820.59% for the previous
fiscal year. The high portfolio turnover rate relates to substantial trading of
U.S. and U.S. agency mortgage-backed securities to take advantage of value
changes among different agencies, coupons and maturities.
The portfolio turnover rate for the Limited Duration Government Series for
the fiscal year ended November 30, 1997 was 343.53%, versus 340.62% for the
fiscal year ended October 31, 1996. The portfolio turnover rate for the one
month ended November 30, 1996 was 175.98%. The portfolio turnover rate was
primarily due to security purchases and sales relating to purchases and
redemptions of Series shares and some portfolio restructuring. The fiscal year
end for the Limited Duration Government Series was changed from October 31 to
November 30 to conform to the fiscal year end of the U.S. Government Securities
Series.
For more information about investment policies, restrictions and risk factors,
see the Statement of Additional Information.
SALES COMPENSATION
As part of its plan for distributing shares, each Series, along with Lord Abbett
Distributor, pays compensation to Authorized Institutions that sell each Series'
shares. These firms typically pass along a portion of this compensation to your
financial representative.
<PAGE>
Compensation payments originate from two sources: sales charges and 12b-1 fees
that are paid out of each Series' assets ("12b-1"refers to the federal
securities regulation authorizing annual fees of this type). The 12b-1 fee rates
vary by share class, according to the Rule 12b-1 plan adopted by each Series for
each share class. The sales charges and 12b-1 fees paid by investors are
detailed in the class-by-class information under "Investor Expenses" and
"Purchases". The portion of these expenses that are paid as compensation to
Authorized Institutions, such as your dealer, are shown in the chart on the last
page of this Prospectus. Sometimes compensation is not paid where tracking data
is not available for certain accounts and where the Authorized Institution
waives part of the compensation as with an account under a Mutual Fund Wrap-Fee
Program.
Rule 12b-1 distribution fees may be used to pay for sales compensation to
Authorized Institutions, for any activity which is primarily intended to result
in the sale of shares and, for Class B shares, the financing of sales
commissions.
First Year Compensation. Whenever you make an investment in the Fund, the
Authorized Institution receives compensation as described in the chart on the
last page of this Prospectus.
Annual Compensation After First Year. Beginning with the second year after an
investment is made, the Authorized Institution receives annual compensation as
described in the chart on the last page of this Prospectus.
Additional Concessions may be paid to Authorized Institutions from time to time.
GLOSSARY OF TERMS
ADDITIONAL CONCESSIONS. A supplemental annual distribution fee equal to 0.10% of
the average daily net asset value of the Class A shares is available to
Authorized Institutions which have a program for the promotion and retention of
such shares satisfying Lord Abbett Distributor. Class A shares held pursuant to
a satisfactory program would, for example, (i) constitute a significant
percentage of the Fund's net assets, (ii) be held for a substantial length of
time and/or (iii) have a lower than average redemption rate.
LORD ABBETT DISTRIBUTOR may, for specified periods, allow dealers to retain the
full sales charge for sales of shares or may pay an additional concession to a
dealer who sells a minimum dollar amount of our shares and/or shares of other
Lord Abbett-sponsored funds. In some instances, such additional concessions will
be offered only to certain dealers expected to sell significant amounts of
shares. Lord Abbett Distributor may, from time to time, implement promotions
under which Lord Abbett Distributor will pay a fee to dealers with respect to
certain purchases not involving imposition of a sales charge. Additional
payments may be paid from Lord Abbett Distributor'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 Lord Abbett's headquarters or other
locations, including meals and entertainment, or the receipt of merchandise. The
cash payments may include payment of various business expenses of the dealer.
<PAGE>
In selecting dealers to execute portfolio transactions for the Fund's portfolio,
if two or more dealers are considered capable of obtaining best execution, we
may prefer the dealer who has sold our shares and/or shares of other Lord
Abbett-sponsored funds.
AUTHORIZED INSTITUTIONS. Institutions and persons permitted by law to receive
service and/or distribution fees under a Rule 12b-1 plan are "authorized
institutions."
ELIGIBLE FUND. (a) Any Lord Abbett-sponsored fund except certain tax-free,
single-state series where the exchanging shareholder is a resident of a state in
which such series is not offered for sale; Lord Abbett Equity Fund; Lord Abbett
Series Fund; Lord Abbett Research Fund -- Mid-Cap Series; Lord Abbett U.S.
Government Securities Money Market Fund ("GSMMF") (except for holdings in GSMMF
which are attributable to any shares exchanged from the Lord Abbett family of
funds). (b) Any Authorized Institution's affiliated money market fund satisfying
Lord Abbett Distributor as to certain omnibus account and other criteria.
ELIGIBLE GUARANTOR. Any broker or bank that is a member of the medallion stamp
program. Most major securities firms and banks are members of this program. A
NOTARY PUBLIC IS NOT AN ELIGIBLE GUARANTOR.
ELIGIBLE MANDATORY DISTRIBUTIONS. If Class B shares represent a part of an
individual's total IRA or 403(b) investment, the CDSC waiver is available only
for that portion of a mandatory distribution which bears the same relation to
the entire mandatory distribution as the B share investment bears to the total
investment.
EMPLOYEES OF LORD ABBETT/FUND DIRECTORS (TRUSTEES). The terms "directors,"
"trustees" (of a Fund) and "employees" (of Lord Abbett) include a director's
(trustee's) or employee's spouse (including the surviving spouse of a deceased
director (trustee) or employee. The terms "directors," "trustees" and "employees
of Lord Abbett" also include other family members and retired directors
(trustees) and employees.
LEGAL CAPACITY. With respect to a redemption request, if (for example) the
request is on behalf of the estate of a deceased shareholder, John W. Doe, by a
person (Robert A. Doe) who has the legal capacity to act for the estate of the
deceased shareholder because he is the executor of the estate, then the request
must be executed as follows: Robert A. Doe, Executor of the Estate of John W.
Doe.
Similarly, if (for example) the redemption request is on behalf of the ABC
Corporation by a person (Mary B. Doe) that has the legal capacity to act on
behalf of this corporation, because she is the President of the corporation,
then the request must be executed as follows: ABC Corporation by Mary B. Doe,
President.
An acceptable form of guarantee would be as follows:
- - - In the case of the estate -
<PAGE>
Robert A. Doe, Executor
of the Estate of John W. Doe
[Date] Stamp
- - - In the case of the corporation -
ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date] Stamp
LORD ABBETT CONSULTANTS/ADVISERS. Consultants and advisers to Lord Abbett, Lord
Abbett Distributor or Lord Abbett-sponsored funds who consent to such purchase
if such persons provide services to Lord Abbett, Lord Abbett Distributor or such
funds on a continuing basis and are familiar with such funds.
LORD ABBETT DISTRIBUTOR LLC. Lord Abbett Distributor is the Fund's exclusive
selling agent. Lord Abbett Distributor is obligated to use its best efforts to
find purchasers for the shares of the Fund, and to make reasonable efforts to
sell Fund shares so long as, in Lord Abbett Distributor's judgment, a
substantial distribution can be obtained.
MUTUAL FUND WRAP-FEE PROGRAM. Certain unaffiliated authorized brokers, dealers,
registered investment advisers or other financial institutions who have entered
into an agreement with Lord Abbett Distributor in accordance with certain
standards approved by Lord Abbett Distributor, providing specifically for the
use of our shares in particular investment products made available for a fee to
clients of such brokers, dealers, registered investment advisers and other
financial institutions.
PURCHASER. The term "purchaser" includes: (i) an individual, (ii) an individual
and his or her spouse and children under the age of 21 and (iii) a trustee or
other fiduciary purchasing shares for a single trust estate or single fiduciary
account (including a pension, profit-sharing, or other employee benefit trust
qualified under Section 401 of the Internal Revenue Code -- more than one
qualified employee benefit trust of a single employer, including its
consolidated subsidiaries, may be considered a single trust, as may qualified
plans of multiple employers registered in the name of a single bank trustee as
one account), although more than one beneficiary is involved.
RETIREMENT PLANS. Employer-sponsored retirement plans under the Internal Revenue
Code.
SPECIAL RETIREMENT WRAP PROGRAM. A program sponsored by an authorized
institution showing one or more characteristics distinguishing it, in the
opinion of Lord Abbett Distributor from a mutual fund wrap fee program. Such
characteristics include, among other
<PAGE>
things, the fact that an authorized institution does not charge its clients any
fee of a consulting or advisory nature that is economically equivalent to the
distribution fee under Class A 12b-1 Plan and the fact that the program relates
to participant-directed Retirement Plans.
TOTAL RETURN. "Total return" for the one-, five- and ten-year periods represents
the average annual compounded rate of return on an investment of $1,000 in the
Fund at the maximum public offering price. When total return is quoted for Class
A shares, it includes the payment of the maximum initial sales charge. When
total return is shown for Class B and Class C shares, it reflects the effect of
the applicable CDSC. Total return also may be presented for other periods or
based on investments at reduced sales charge levels or net asset value. Any
quotation of total return not reflecting the maximum sales charge (front-end,
level, or back-end) would be reduced if such sales charge were used. Quotations
of yield or total return for any period when an expense limitation is in effect
will be greater than if the limitation had not been in effect. See "Past
Performance" in the Statement of Additional Information for a more detailed
description.
YIELD. Each class of shares calculates its "yield" by dividing the annualized
net investment income per share on the portfolio during a 30-day period by the
maximum offering price on the last day of the period. The yield of each class
will differ because of the different expenses (including actual 12b-1 fees) of
each class of shares. The yield data represents a hypothetical investment return
on the portfolio, and does not measure investment return based on dividends
actually paid to shareholders. To show that return, a dividend distribution rate
may be calculated. Dividend distribution rate is calculated by dividing the
dividends of a class derived from net investment income during a stated period
by the maximum offering price on the last day of the period. Yields and dividend
distribution rate for Class A shares reflect the deduction of the maximum
initial sales charge, but may also be shown based on the Fund's net asset value
per share. Yields for Class B and Class C shares do not reflect the deduction of
the CDSC.
This Prospectus does not constitute an offering in any jurisdiction in which
such offer is not authorized or in which the person making such offer is not
qualified to do so or to anyone to whom it is unlawful to make such offer.
No person is authorized to give any information or to make any representations
not contained in this Prospectus or in supplemental sales material authorized by
the Fund and no person is entitled to rely upon any information or
representation not contained herein or therein.
Comparison of change in value of a $10,000 investment in Class A shares in the
Fund, assuming reinvestment of all dividends and distributions and the unmanaged
Standard & Poor's 500 Index.
The following chart is represented by a line graph.
The performance of the Class A shares of each multi-class Series which is shown
in the comparisons below will be greater than or less than that shown below for
Class B and Class C shares based on the differences in sales charges and fees
paid by shareholders investing in the different classes.
<PAGE>
Comparison of change in value of a $10,000 investment in Class A shares of U.S.
Government Securities Series (formerly the Lord Abbett U.S. Government
Securities Fund), assuming reinvestment of all dividends and distributions,
Lipper's Average of General U.S. Government bond funds and the Lehman Government
Bond Index.
THE FUND THE FUND LIPPER'S AVG LEHMAN
AT NET AT MAXIMUM OF GENERAL GOVERNMENT
ASSET OFFERING U.S. GOV'T BOND
DATE VALUE PRICE BOND FUNDS FUNDS
11/30/87 10000 9516 10000 10000
11/30/88 10035 9550 9986 10118
11/30/89 11003 10471 10791 10917
11/30/90 12285 11690 12088 12496
11/30/91 13245 12604 12925 13402
11/30/92 15146 14413 14565 15176
11/30/93 16546 15745 15752 16549
11/30/94 18316 17429 17423 18549
11/30/95 17538 16689 16564 17883
11/30/96 20151 19175 19312 20994
11/30/97 21037 20019 20092 22107
Comparison of change in value of a $10,000 investment in Class A shares of
Limited Duration Government Series, Lipper's Average Short and Intermediate U.S.
Government Funds and the Lehman Intermediate Government Index.
<TABLE>
<CAPTION>
The Series The Series Lippers Average Lippers Average Lehman
at Net at Maximum Intermediate U.S. Short U.S. Intermediate
Date Asset Value Offering Price Government Funds Government Funds Gov't Index
<S> <C> <C> <C> <C> <C>
11/4/93 $10000 $ 9700 $10000 $10000 $10000
11/30/94 9691 9400 9575 9873 9799
11/30/95 10482 10168 10733 10659 11165
11/30/96 10762 10439 11223 11208 11899
11/30/97 1____ 1____ 1____ 1____ 1____
</TABLE>
<PAGE>
(1) Data reflects the deduction of the maximum sales charge as follows: 4.75%
for the U.S. Government Securities Series and 3.00% for the Limited Duration
Government Series.
(2) Source: Lipper Analytical Services.
(3) Performance numbers for the unmanaged Lehman Intermediate Government Index
and Lehman Government Bond Index not reflect transaction costs or management
fees. An investor cannot invest directly in these Indices.
(4) Total return is the percent change in value, after deduction of the maximum
sales charge of 3.00%, applicable to Class A shares of the Limited Duration
Government Series and 4.75%, applicable to Class A shares of the U.S. Government
Securities Series, with all dividends and distributions reinvested for the
periods shown ending October 31, 1996, one month ended Novmeber 30, 1996 and the
year ended November 30, 1997, with respect to the Limited Duration Government
Series. All periods so shown end November 30, 1997, with respect to the U.S.
Government Securities Series using the SEC-required uniform method to compute
such return.
(5) The Class B shares were first offered on 8/1/96. Performance numbers are not
annualized. Performance reflects the deduction of a 5% CDSC.
(6) The Class C shares were first offered on 7/15/96. Performance numbers are
not annualized. Performance reflects the deduction of a 1% CDSC.
FIRST YEAR COMPENSATION
Class A investments
<TABLE>
<CAPTION>
Front-end
sales charge Dealer's
paid by investors concession Service fee(1) Total compensation (2)
(% of offering price) (% of offering price) (%of net investment) (% of Offering price)
<S> <C> <C> <C> <C>
Less than $50,000 5.75% 5.00% 0.25% 5.24%
$50,000 - $99,999 4.75% 4.00% 0.25% 4.24%
$100,000 - $249,999 3.75% 3.25% 0.25% 3.49%
$250,000 - $499,999 2.75% 2.25% 0.25% 2.49%
$500,000 - $999,999 2.00% 1.75% 0.25% 2.00%
</TABLE>
$1 million or more(3) or
Retirement Plan - 100 or more eligible employees(3) or
Special Retirement Wrap Program(3)
<PAGE>
First $5 million no front-end sales charge 1.00% 0.25% 1.25%
Next $5 million no front-end sales charge 0.55% 0.25% 0.80%
above that
Next $40 million no front-end sales charge 0.250% 0.25% 0.50%
above that
Over $50 million no front-end sales charge 0.025% 0.25% 0.275%
Class B investments Paid at time of sale (% of net asset value)
All amounts no front-end sales charge 3.75% 0.25% 4.00%
Class C investments
All amounts no front-end sales charge 0.75% 0.25% 1.00%
ANNUAL COMPENSATION AFTER FIRST YEAR
Class A investments
All amounts no front-end sales charge none 0.25% 0.25%
Class B investments Percentage of average net assets (4)
All amounts no front-end sales charge none 0.25% 0.25%
Class C investments
All amounts no front-end sales charge 0.65% 0.25% 0.90%
(1) The service fee for Class A shares is paid quarterly and may not exceed
0.15% if sold prior to June 1, 1990. The first year's service fee on Class B and
C shares is paid at the time of sale.
(2) Reallowance/concession percentages and service fee percentages are
calculated from different amounts, and therefore may not equal total
compensation percentages if combined using simple addition. Additional
Concessions may be paid to Authorized Institutions from time to time.
(3) Concessions are paid at the time of sale on all Class A shares sold during
any 12-month period starting from the day of the first net asset value sale.
With respect to (a) Class A share purchases at $1 million or more, sales
qualifying at such level under rights of accumulation and statement of intention
privileges are included and (b) for Special Retirement Wrap Programs, only new
sales are eligible and exchanges into the Fund are excluded.
(4) With respect to Class B and C shares, 0.25% and 0.90%,respectively, of the
average annual net asset value of such shares outstanding during the quarter
(including distribution reinvestment shares after the first anniversary of their
issuance) is paid to Authorized Institutions. These fees are paid quarterly in
arrears. In the case of C shares for fixed-income series, such as U.S.
Government Securities Series and Limited Duration Government Series, 0.10% of
the average annual net asset value of such shares is retained by Lord Abbett
Distributor, thus Word not
<PAGE>
readable]0.75% to 0.65% after the first year. Lord Abbett Distributor uses the
0.10% for expenses primarily intended to result in the sale of such Series'
shares.
CDSC revenues collected by Lord Abbett Funds may be used to fund commission
payments when there is no initial sales charge.
INVESTMENT MANAGER AND UNDERWRITER
Lord, Abbett & Co. and Lord Abbett Distributor LLC
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
212-848-1800
CUSTODIAN
The Bank of New York
48 Wall Street
New York, New York 10286
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
United Missouri Bank of Kansas City, N.A.
Tenth and Grand
Kansas City, Missouri 64141
SHAREHOLDER SERVICING AGENT
DST Systems, Inc.
P.O. Box 419100
Kansas City, Missouri 64141
800-821-5129
AUDITORS
Deloitte & Touche LLP
COUNSEL
Debevoise & Plimpton
Printed in the U.S.A.
Lord Abbett
Investment Trust
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
<PAGE>
LORD ABBETT INVESTMENT TRUST
The General Motors Building
767 Fifth Avenue New York, NY 10153-0203
800-426-1130
The Balanced Series ("we" or the "Series") is a separate series of Lord Abbett
Investment Trust (the "Fund"). The Fund currently consists of five series. Only
shares of the Balanced Series are being offered by this Prospectus. The Series
has three classes called Class A, B, and C shares, which provide investors with
different options in purchasing shares of the Series. See "Purchases" for a
description of these choices.
We seek current income and capital growth. Although it has invested directly in
portfolio securities in the past, the Series intends to begin investing in a
diversified portfolio of underlying mutual funds, all of which are members of
the Lord Abbett Family of Funds. Currently, the Series invests in two of these
underlying mutual funds (the"Underlying Funds"). There can be no assurance that
we will achieve our objective.
This Prospectus sets forth concisely the information about the Series and the
Fund that a prospective investor should know before investing. Additional
information about the Series and the Fund has been filed with the Securities and
Exchange Commission. The Statement of Additional Information is incorporated by
reference into this Prospectus and may be obtained, without charge, by writing
to the Fund or by calling 800-874-3733. Ask for "Part B of the Prospectus -- The
Statement of Additional Information."
The date of this Prospectus and of the Statement of Additional Information is
April 1, 1998.
PROSPECTUS Investors should read and retain this Prospectus. Shareholder
inquiries should be made in writing to the Fund or by calling 800-821-5129. You
can also make inquiries through your broker-dealer. Shares of the Series are not
deposits or obligations of, or guaranteed or endorsed by, any bank, and the
shares are not federally insured by the Federal Deposit Insurance Corporation,
the Federal Reserve Board, or any other agency. An investment in the Series
involves risks, including the possible loss of principal.
Needs to be fixed
CONTENTS PAGE
1 Fee Table 2
2 Financial Highlights 3
3 How We Invest 3
4 Purchases 7
5 Shareholder Services 15
6 Our Management 16
7 Dividends, Capital Gains
Distributions and Taxes 17
8 Redemptions 18
9 Performance 18
<PAGE>
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.
1 FEE TABLE
A summary of expenses of the Balanced Series is set forth in the table below.
The example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
Class A Shares Class B Shares Class C Shares
Shareholder Transaction
Expenses(1) (as a percentage
of offering price)
Maximum Sales Load (2) on
Purchases (See "Purchases") 4.75% None None
Deferred Sales Load (3)
(See "Purchases") None 5% if shares are 1% if shares
redeemed before 1st are redeemed
anniversary of before 1st
purchase, declining anniversary
to 1% before 6th of purchase
anniversary and
eliminated on and
after 6th
anniversary(3)
Annual Fund Operating
Expenses(4) (as a
percentage of average
net assets) (after
management fee waiver)
Management Fees
(See "Our Management") (5) 0.00% 0.00% 0.00%
12b1 Fees (See
"Purchases")(1)(2) 0.25% 1.00% 1.00%
Other Expenses (See
"Our Management") 0.34% 0.34% 0.34%?
Total Operating Expenses(5) 0.59 1.34% 1.34%
<PAGE>
While each class of shares of the Balanced Series is expected to operate with
the direct total operating expenses shown above ("each Balanced Series class
expense ratio"), shareholders in the Balanced Series bear indirectly the Class Y
share expenses of the Underlying Funds in which the Balanced Series invests
exclusively. The following chart provides the expense ratio for the two
Underlying Funds invested in by the Balanced Series, as well as the percentage
of the Balanced Series' net assets proposed to be initially invested in each
Underlying Fund:
UNDERLYING PERCENTAGE OF
FUNDS' EXPENSE BALANCED SERIES' NET
RATIO ASSETS
Lord Abbett Affiliated Fund 0.42 % 50%
Lord Abbett Bond-Debenture Fund 0.63% 50%
100%
Based on these figures, the average weighted Class Y share expense ratio for
Underlying fund in which the Balanced Series invests is 0.53% (the "underlying
expense ratio"). This figure is only an approximation of the Balanced Series'
underlying expense ratio, since the assets of the Balanced Series invested in
each of the Underlying Funds change daily.
EXAMPLE: Using the underlying expense ratio combined with each Balanced Series
class expense ratio, the following example illustrates the expenses that you
would incur if you assume Balanced Series' annual return is 5% and there is no
change in the level of expenses described above. For a $1,000 investment, with
reinvestment of all dividends and distributions, you would pay the following
total expenses assuming redemption on the last day of each period indicated.
1 Year 3 Years 5 years 10 Years
------ ------- ------- --------
Balanced Series
Class A $53 $65 $79 $118
Class B $64 $72 $93 $141
Class C $24 $42 $73 $162
EXAMPLE: You would pay the following expenses on the same investment, assuming
no redemption:
Class A $53 $65 $79 $118
Class B $14 $42 $73 $141
Class C $14 $42 $73 $161
<PAGE>
(1) Although the Balanced Series does not, with respect to the Class B and Class
C shares, charge a front-end sales charge, investors should be aware that
long-term shareholders may pay, under each Rule 12b-1 plan applicable to the
Class B and Class C shares of the Series (both of which 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. Likewise, with respect to Class A shares, investors
should be aware that, over the long term, such maximum may be exceeded due to
the Rule 12b-1 plan applicable to certain net asset value Class A share
purchases which permits the Series to pay up to 0.50% in total annual fees, half
for service and the other half for distribution. The 12b-1 fees for the Class A
shares are based on estimated fees for the current fiscal year.
(2) Sales "load" is referred to as sales "charge", deferred sales "load" is
referred to as "contingent deferred sales charge" (or CDSC) and "12b-1 fees"
which consist of a "service fee" and a "distribution fee" are referred to by
either or both of these terms where appropriate with respect to Class A, Class B
and Class C shares throughout this Prospectus.
(3) Class B shares will automatically convert to Class A shares on the eighth
anniversary of the purchase of Class B shares.
(4) For Class A ,B and C shares, the annual operating expenses shown in the
summary have been estimated and include reductions due to subsidization of the
Series' expenses by the Underlying Funds and/or Lord, Abbett & Co. ("Lord
Abbett").
(5) The Balanced Series is obligated to pay Lord Abbett a management fee of .75
of 1% for investment advice. However, Lord Abbett anticipates waiving this fee
for the current fiscal year of the Series.
The foregoing is provided to give investors a better understanding of the
expenses that are incurred by an investment in the Series.
2 FINANCIAL HIGHLIGHTS The following table has been audited by Deloitte & Touche
LLP, independent accountants, in connection with their annual audit of the
Balanced Series' Financial Statements, whose report may be obtained on request.
Call 800-821-5129 and ask for the Balanced Series' 1997 annual report.
<TABLE>
<CAPTION>
Balanced Series Class A Shares Class C Shares
Year One Year
Ended Month Year Ended One Month
November Ended Ended 12/27/94(d) November Ended 7/15/96(a)
Per Share Operating Performance: 30, 1997 11/30/96 10/31/96 to 10/31/95 30, 1997 11/30/96 to 10/31/96
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.81 $11.30 $10.71 $9.52 $11.79 $11.29 $10.73
Income from investment operations
Net investment income .47(e) .0312 .472 .365 .35(e) .0067 .0349
Net realized and unrealized gain
on investments 1.15 .5208 .732 1.185 1.15 .5298 .6346
Total from investment operations 1.62 .552 1.204 1.55 1.50 .5365 .6695
Distributions
Dividends from net investment income (.46) (.0420) (.462) (.36) (.34) .0365) (.0730)
Distributions from net realized gain (.17) -- (.152) -- (.17) -- (.0365)
Net asset value, end of period $12.80 $11.81 $11.30 $10.71 $12.78 $11.79 $11.29
Total Return(b) 14.24% 4.89%(c) 11.55% 16.32%(c) 13.14% 4.76%(c) 7.78%(c)
Ratios to Average Net Assets:
Expenses, including waiver and reimbursement 1.10%(f) 0.07%(c) 0.93% 0.37%(c) 2.08%(f) 0.16%(c) 0.62%(c)
Expenses, excluding waiver and reimbursement 1.53% 0.11%(c) 1.59% 1.26%(c) 2.51% 0.20%(c) 0.77%(c)
Net investment income 3.89% 0.26%(c) 4.18% 4.39%(c) 2.88% 0.17%(c) 0.70%(c)
=============================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended One
November 30, Month Ended Year Ended 12/27/94(d)
Supplemental Data for All Classes: 1997 11/30/96 10/31/96 to 10/31/95
<S> <C> <C> <C> <C>
Net assets, end of period (000) $20,340 $11,406 $10,988 $5,713
Portfolio turnover rate 216.07% 10.05% 187.78% 131.80%
Average commissions per share paid
on equity transactions $ .058 $ .067 $ .057 $ .056
=============================================================================================
</TABLE>
(a) Commencement of offering of Class shares.
(b) Total return does not consider the effects of sales loads.
(c) Not annualized.
(d) Commencement of operations of the Series.
(e) Calculated using average shares outstanding during the period.
(f) The ratios for 1997 include expenses paid through an expenses offset
arrangement.
3 HOW WE INVEST
The Balanced Series Invests In Two Underlying Funds. The Balanced Series will
invest all of its assets in underlying mutual funds which are members of the
Lord Abbett Family of Funds. Currently, the Balanced Series invests in two
Underlying Funds. The following table shows how the Balanced Series' assets are
initially divided among the two Underlying Funds:
<PAGE>
INVESTMENT INITIAL UNDERLYING FUNDS
CATEGORY PERCENTAGE OF
BALANCED SERIES'
NET ASSETS
Equity 50% Lord Abbett Affiliated Fund
High Yield
Fixed-Income 50% Lord Abbett Bond-Debenture Fund
As investments for the Balanced Series Portfolio, the Fund's Trustees have
chosen Lord Abbett Affiliated Fund, Inc. and Lord Abbett Bond-Debenture Fund,
Inc. The selection of theUnderlying Funds in which the Balanced Series Portfolio
will invest, as well as the maximum and minimum amounts of the Balanced Series'
assets which can be invested in each Underlying Fund are determined from time to
time by the Fund's "management" (i.e., the officers of the Fund on a day-to-day
basis under the overall supervision of the Fund's Trustees based on the
investment advice of Lord, Abbett & Co. -- "Lord Abbett").
From time to time the Balanced Series' investments in the Underlying Funds may
be limited by certain factors and, therefore, the Balanced Series' offering of
its shares to the public may be limited by certain factors and, therefore, the
Balanced Series' offering of its share to the public may be limited. The Board
of Trustees or Directors of any of the underlying Underlying Funds may impose
limits on additional investments in a particular Underlying Fund. For example,
restrictions on additional investments in Lord Abbett Affiliated Fund imposed by
its Board of Directors could close the Balanced Series' investment in the
Affiliated Fund and, therefore, limit Balanced Series' offering of shares to the
public.
Implementation of Policies. The Underlying Funds in which the Series may
invest, as well as certain other investment practices of the Series are
described below. Investors desiring more information about an Underlying Fund
described below should call (1-800-874-3733) for the Underlying Fund's
prospectus.
The Balanced Series Invests In Two Funds. The Underlying Funds consist of Lord
Abbett Affiliated Fund and Lord Abbett Bond-Debenture Fund.
Affiliated Fund. The investment objective of Lord Abbet Affiliated Fund is
long-term growth of capital and income without excessive fluctuations in market
value. The Affiliated Fund seeks to attain its objective by investing in
securities selling at reasonable prices in relation to value. It normally
invests in large, seasoned companies in sound financial condition which are
expected to perform above-average with respect to earnings and price
appreciation.
Bond-Debenture Fund. The investment objective of Lord Abbett Bond-Debenture Fund
is high current income and the opportunity for capital appreciation to produce a
high total return through a professionally-managed portfolio consisting
primarily of convertible and discount debt securities, many of which are
lower-rated. Such lower-rated debt
<PAGE>
securities entail greater risks than investments in higher-rated debt securities
and are referred to colloquially as "junk bonds."
Risk Reduction. The market risk is generally greater in equity securities than
in fixed-income securities. Therefore, the Balanced Series directly or
indirectly at all times maintains at least 25% of its net assets in fixed-income
securities. Moreover, in an effort to reduce risk, among other things, each
Underlying Fund is diversified with respect to its investments under both the
Internal Revenue Code and the Investment Company Act of 1940. Finally, Balanced
Series' assets are allocated according to maximum and minimum amounts which can
be invested in each Underlying Fund as determined from time to time by Fund
management. Collectively, these two Underlying Funds are invested in
approximately 200 to 300 or more companies at any particular time across the
spectrum of investment methods and diversification requirements and Balanced
Series' own asset allocation process between these two funds from time to time.
Regardless of these efforts to reduce risk, investors in the Balanced Series
should consider the following market risks.
Market Risks.
Stocks. As a mutual fund investing its assets primarily in common stocks, the
Affiliated Fund is subject to stock market risk - i.e., the possibility that
stock prices in general will decline over short or even extended periods. The
stock market tends to be cyclical, with periods when stock prices generally rise
and periods when stock prices generally decline.
Fixed-Income Securities. Bond-Debenture Fund may invest substantially in
lower-rated bonds because they tend to have higher yields. In general, the
market for lower-rated bonds is more limited than that for higher-rated bonds
and, therefore, may be less liquid. Market prices of lower-rated bonds may
fluctuate more than those of higher-rated bonds, particularly in times of
economic changes and stress. In addition, because the market for lower-rated
corporate debt securities has in past years experienced wide fluctuations in the
values of certain of these securities, past experience may not provide an
accurate indication of the future performance of that market or of the frequency
of default, especially during periods of recession. Objective pricing data for
lower-rated bonds may be more limited than for higher-rated bonds and valuation
of such securities may be more difficult and require greater reliance upon
judgment.
While the market for lower-rated bonds may be relatively insensitive to interest
rate changes, the market prices of these bonds structured as zero coupon or
pay-in-kind securities may be affected to a greater extent by such changes and
thus may be more volatile than prices of lower-rated securities paying interest
periodically in cash. Lower-rated bonds that are callable prior to maturity may
be more susceptible to refunding during periods of falling interest rates,
requiring replacement with lower-yielding securities.
Since the risk of default generally is higher among lower-rated bonds, the
research and analysis performed by Lord, Abbett & Co. ("Lord Abbett") are
especially important in the selection of such bonds. If bonds are rated BB/Ba or
lower, they are described as "high-yield bonds" because
<PAGE>
of their generally higher yields and are referred to colloquially as "junk
bonds" because of their greater risks. In selecting lower-rated bonds for
investment, Lord Abbett does not rely upon ratings, which evaluate only the
safety of principal and interest, not market value risk, and which, furthermore,
may not accurately reflect an issuer's current financial condition. We do not
have any minimum rating criteria for our investments in bonds. Some issuers may
default as to principal and/or interest payments subsequent to our purchase of
their securities. Through portfolio diversification, good credit analysis and
attention to current developments and trends in interest rates and economic
conditions, investment risk can be reduced, although there is no assurance that
losses will not occur.
Laws enacted from time to time could limit the tax or other advantages of, and
the issuance of, lower-rated securities and could adversely affect their
secondary market and the financial condition of their issuers. On the other
hand, such legislation (curtailing the supply of new issues) could improve the
liquidity, market values and demand for outstanding issues.
During the past fiscal year for the Bond-Debenture Fund, the percentages of its
average net assets invested in (a) rated bonds and (b) unrated bonds judged by
us to be of a quality comparable to rated bonds, on a dollar-weighted basis,
calculated monthly were as follows: 21.43% AAA/Aaa, 2.90% AA/Aa, 4.45% A/A,
6.08% BBB/Baa, 13.30% BB/Ba, 46.50% B/B, 1.93% CCC/Caa, 0.10% D and 1.93%
unrated.
Foreign Securities--Securities markets of foreign countries in which the
Underlying Funds may invest generally are not subject to the same degree of
regulation as the U.S. markets and may be more volatile and less liquid than the
major U.S. markets. Lack of liquidity may affect the Funds' ability to purchase
or sell large blocks of securities and thus obtain the best price. There may be
less publicly-available information on publicly-traded companies, banks and
governments in foreign countries than generally is the case for such entities in
the United States. The lack of uniform accounting standards and practices among
countries impairs the validity of direct comparisons of valuation measures (such
as price/earnings ratios) for securities in different countries. Other
considerations include political and social instability, expropriation, higher
transaction costs, withholding taxes that cannot be passed through as a tax
credit or deduction to shareholders, currency fluctuations and different
securities settlement practices. Settlement periods for foreign securities,
which are sometimes longer than those for securities of U.S. issuers, may affect
portfolio liquidity. In addition, foreign securities held by the Underlying
Funds may be traded on days that the Funds do not value their portfolio
securities, such as Saturdays and customary business holidays and, accordingly,
the underlying Fund's net asset values (and those of the Balanced Series) may be
significantly affected on days when shareholders do not have access to the Fund.
Some Policies Common To The Underlying Funds.
Diversification. Each Underlying Fund intends to meet the diversification
rules under Subchapter M of the Internal Revenue Code. Each Underling Fund met
the diversification rules under Subchapter M for its last fiscal year.
Generally, this requires, at the end of each quarter of
<PAGE>
the taxable year, that (a) not more than 25% of each Underlying Fund's total
assets be invested in any one issuer and (b) with respect to 50% of each
Underlying Fund's total assets, no more than 5% of such Fund's total assets be
invested in any one issuer except U.S. Government securities.
Each Underlying Fund, as a "diversified" investment company, under the
Investment Company Act of 1940, is prohibited, with respect to 75% of the value
of its total assets, from investing more than 5% of its total assets in
securities of any one issuer other than U.S. Government securities. For
diversification purposes, the identification of an "issuer" for the fixed-income
portion of a Lord Abbett Fund's assets will be determined on the basis of the
source of assets and revenues committed to meeting interest and principal
payments of the securities. When the assets and revenues of a sovereign
(domestic) state's political subdivision are separate from those of the
sovereign state government creating the subdivision, and the security is backed
only by the assets and revenues of the subdivision, then the subdivision would
be considered the sole issuer. Similarly, if a revenue bond is backed only by
the assets and revenues of a nongovernmental user, then such user would be
considered the sole issuer.
Illiquid Securities. Each Underlying Fund may invest up to 15% of its net
assets in illiquid securities.
Short-Term Fixed Income Securities. The Balanced Series and each of the
Underlying Funds are authorized to invest temporarily in certain short-term
fixed income securities. Such securities may be used to invest uncommitted cash
balances, to maintain liquidity to meet shareholder redemptions, or to take a
temporary defensive position against market declines. These securities include:
obligations of the U.S. Government and its agencies and instrumentalities;
commercial paper, bank certificates of deposit, and bankers' acceptances; and
repurchase agreements collateralized by these securities.
Change of Investment Objectives And Policies. Neither the Balanced Series
nor a Lord Abbett Fund will change its investment objective without shareholder
approval. If the Balanced Series or a Lord Abbett Fund determines that its
objective can best be achieved by a change in investment policy or strategy, it
may make such change without shareholder approval by disclosing it in its
prospectus.
Portfolio Turnover. The portfolio turnover rate for the equity portion of
the Balanced Series for the fiscal years ended November 30, 1997 and October 31,
1996 were % and 62.34%, respectively. The portfolio turnover rate for the debt
portion of the Series for the same periods were % and 363.31%, respectively.
4 PURCHASES The Balanced Series offers investors three different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will likely
have different share prices. Investors should read this section carefully to
determine which class represents the best investment option for their particular
situation.
<PAGE>
CLASS A SHARES. If you buy Class A shares, you pay an initial sales charge on
investments of less than $1 million (or on investments for employer-sponsored
retirement plans under the Internal Revenue Code (hereinafter referred to as
Retirement Plans) with less than 100 eligible employees or on investments that
do not qualify to be under a special retirement wrap program defined under Class
A Share Net Asset Value Purchases below). If you purchase Class A shares as part
of an investment of at least $1 million (or for Retirement Plans with at least
100 eligible employees or under a special retirement wrap program) in shares of
one or more Lord Abbett-sponsored funds, you will not pay an initial sales
charge, but if you redeem any of those shares within 24 months after the month
in which you buy them, you may pay to the Series a contingent deferred sales
charge (CDSC) of 1% except for redemptions under a special retirement wrap
program. Class A shares are subject to service and distribution fees that are
currently estimated to total annually approximately ? of 1% of the annual net
asset value of the Class A shares. The initial sales charge rates, the CDSC and
the Rule 12b-1 plan applicable to the Class A shares are described under General
below.
CLASS B SHARES. If you buy Class B shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the sixth anniversary of
buying them, you will normally pay a CDSC to Lord Abbett Distributor LLC ("Lord
Abbett Distributor"). That CDSC varies depending on how long you own shares.
Class B shares are subject to service and distribution fees at an annual rate of
1% of the annual net asset value of the Class B shares. The CDSC and the Rule
12b-1 plan applicable to the Class B shares are described under General below.
CLASS C SHARES. If you buy Class C shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the first anniversary of
buying them, you will normally pay the Series a CDSC of 1%. Class C shares are
subject to service and distribution fees at an annual rate of 1% of the annual
net asset value of the Class C shares. The CDSC and the Rule 12b-1 plan
applicable to the C shares are described under General below.
WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that the Series is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial adviser. The Series' class-specific expenses and the
effect of the different types of sales charges on your investment will affect
your investment results over time. The most important factors are how much you
plan to invest and how long you plan to hold your investment. If your goals and
objectives change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider another class of
shares.
In the following discussion, to help provide you and your financial adviser with
a framework in which to choose a class, we have made some assumptions using a
hypothetical investment in the Series. We used the sales charge rates that apply
to Class A, Class B and Class C shares, and considered the effect of the higher
distribution fees on Class B and Class C expenses (which will affect your
investment return). Of course, the actual performance of your investment cannot
be predicted and will vary, based on the Series' actual investment returns, the
operating expenses borne by each class of shares, and the class of shares you
purchase. The factors briefly discussed below are not intended to be investment
advice, guidelines or recommendations, because each
<PAGE>
investors financial considerations are different. The discussion below of the
factors to consider in purchasing a particular class of shares assumes that you
will purchase only one class of shares and not a combination of shares of
different classes.
HOW LONG DO YOU EXPECT TO HOLD YOUR INVESTMENT? While future financial needs
cannot be predicted with certainty, knowing how long you expect to hold your
investment will assist you in selecting the appropriate class of shares. For
example, over time, the reduced sales charges available for larger purchases of
Class A shares may offset the effect of paying an initial sales charge on your
investment, compared to the effect over time of higher class-specific expenses
on Class B or Class C shares for which no initial sales charge is paid. Because
of the effect of class-based expenses, your choice should also depend on how
much you plan to invest.
INVESTING FOR THE SHORT TERM. If you have a short-term investment horizon (that
is, you plan to hold your shares for not more than six years), you should
probably consider purchasing Class A or Class C shares rather than Class B
shares. This is because of the effect of the Class B CDSC if you redeem before
the sixth anniversary of your purchase, as well as the effect of the Class B
distribution fee on the investment return for that class in the short term.
Class C shares might be the appropriate choice (especially for investments of
less than $100,000), because there is no initial sales charge on Class C shares,
and the CDSC does not apply to shares you redeem after holding them for one
year.
However, if you plan to invest more than $100,000 for the short term, then the
more you invest and the more your investment horizon increases toward six years,
the more attractive the Class A share option may become. This is because the
annual distribution fee on Class C shares will have a greater impact on your
account over the longer term than the reduced front-end sales charge available
for larger purchases of Class A shares. For example, Class A shares might be
more appropriate than Class C shares for investments of more than $100,000
expected to be held for 5 or 6 years (or more). For investments over $250,000
expected to be held 4 to 6 years (or more), Class A shares may become more
appropriate than Class C shares. If you are investing $500,000 or more, Class A
shares may become more desirable as your investment horizon approaches 3 years
or more.
For most investors who invest $1 million or more, for Retirement Plans with at
least 100 eligible employees or for investments pursuant to a special retirement
wrap program, in most cases Class A shares will be the most advantageous choice,
no matter how long you intend to hold your shares.
INVESTING FOR THE LONGER TERM. If you are investing for the longer term (for
example, to provide for future college expenses for your child) and do not
expect to need access to your money for seven years or more, Class B shares may
be an appropriate investment option if you plan to invest less than $100,000. If
you plan to invest more than $100,000 over the long term, Class A shares will
likely be more advantageous than Class B shares or Class C shares, as discussed
above, because of the effect of the expected lower expenses for Class A shares
and the
<PAGE>
reduced initial sales charges available for larger investments in Class A shares
under the Series rights of accumulation.
Of course, these examples are based on approximations of the effect of current
sales charges and expenses on a hypothetical investment over time, and should
not be relied on as rigid guidelines.
You should discuss your purchase order for a specific class of shares with your
investment professional.
ARE THERE DIFFERENCES IN ACCOUNT FEATURES THAT MATTER TO YOU? Some account
features are available in whole or in part to Class A, Class B and Class C
shareholders. Other features (such as Systematic Withdrawal Plans) might not be
advisable in non-Retirement Plan accounts for Class B shareholders (because of
the effect of the CDSC on the entire amount of a withdrawal if it exceeds 12%
annually) and in any account for Class C shareholders during the first year of
share ownership (due to the CDSC on withdrawals during that year). See
Systematic Withdrawal Plan under Shareholder Services for more information about
the 12% annual waiver of the CDSC with respect to Class B shares. You should
carefully review how you plan to use your investment account before deciding
which class of shares you buy. For example, the dividends payable to Class B and
Class C shareholders will be reduced by the expenses borne solely by each of
these classes, such as the higher distribution fee to which Class B and Class C
shares are subject, as described below.
HOW DOES IT AFFECT PAYMENTS TO MY BROKER? A salesperson, such as a broker, or
any other person who is entitled to receive compensation for selling Series
shares may receive different compensation for selling one class than for selling
another class. As discussed in more detail below, such compensation is primarily
paid at the time of sale in the case of Class A and B shares and is paid over
time, so long as shares remain outstanding, in the case of Class C shares. It is
important that investors understand that the primary purpose of the CDSC for the
Class B shares and the distribution fee for Class B and Class C shares is the
same as the purpose of the front-end sales charge on sales of Class A shares: to
compensate brokers and other persons selling such shares. The CDSC, if payable,
supplements the Class B distribution fee and reduces the Class C distribution
fee expenses for the Series and Class C shareholders.
GENERAL
HOW MUCH MUST YOU INVEST? You may buy our shares through any independent
securities dealer having a sales agreement with Lord Abbett Distributor, our
exclusive selling agent. Place your order with your investment dealer or send it
to the Balanced Series of the Lord Abbett Securities Trust (P.O. Box 419100,
Kansas City, Missouri 64141). The minimum initial investment is $1,000 except
for Invest-A-Matic ($250 initial and $50 subsequent minimum), Div-Move ($50
minimum) and Individual Retirement Accounts ($250 minimum). For Retirement Plans
there is no minimum investment required. See Shareholder Services. For
information regarding the proper form of a purchase or redemption order, call
the Series at 800-821-5129.
<PAGE>
This offering may be suspended, changed or withdrawn. Lord Abbett Distributor
reserves the right to reject any order.
The net asset value of our shares is calculated every business day as of the
close of the New York Stock Exchange (NYSE) by dividing net assets by the number
of shares outstanding. Securities are valued at their market value as more fully
described in the Statement of Additional Information.
BUYING SHARES THROUGH YOUR DEALER. Orders for shares received by the Series
prior to the close of the NYSE, or received by dealers prior to such close and
received by Lord Abbett Distributor prior to the close of its business day, will
be confirmed at the applicable public offering price effective at such NYSE
close. Orders received by dealers after the NYSE closes and received by Lord
Abbett Distributor in proper form prior to the close of its next business day
are executed at the applicable public offering price effective as of the close
of the NYSE on that next business day. The dealer is responsible for the timely
transmission of orders to Lord Abbett Distributor. A business day is a day on
which the NYSE is open for trading.
Lord Abbett Distributor may, for specified periods, allow dealers to retain the
full sales charge for sales of shares during such periods, or pay an additional
concession to a dealer who, during a specified period, sells a minimum dollar
amount of our shares and/or shares of other Lord Abbett-sponsored funds. In some
instances, such additional concessions will be offered only to certain dealers
expected to sell significant amounts of shares. Lord Abbett Distributor may,
from time to time, implement promotions under which Lord Abbett Distributor will
pay a fee to dealers with respect to certain purchases not involving imposition
of a sales charge. Additional payments may be paid from Lord Abbett
Distributors' 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. In selecting dealers to execute portfolio
transactions for the Series, if two or more dealers are considered capable of
obtaining best execution, we may prefer the dealer who has sold our shares
and/or shares of other Lord Abbett-sponsored funds.
BUYING CLASS A SHARES. The offering price of Class A shares is based on the
per-share net asset value next computed after your order is accepted plus a
sales charge as follows.
<TABLE>
<CAPTION>
Sales Charges as Dealer's Commission To Compute
a Percentage of Net Amount as a Percentage of Offer Price
Size of Investment Offering Price Invested Offering Price Divide ? by
<S> <C> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00% .9425
$50,000-$99,000 4.75% 4.99% 4.00% .9525
$100,000-$249,999 3.75% 3.90% 3.25% .9625
$250,000-$499,999 2.75% 2.83% 2.25% .9725
$500,000-$999,999 2.00% 2.04% 1.75% .9800
$1,000,000 or more No Sales Charge 1.00% 1.000
</TABLE>
<PAGE>
Authorized institutions receive concessions on purchases made by a Retirement
Plan, pursuant to a special retirement wrap program or by another qualified
purchaser within a 12-month period (beginning with the first net asset value
purchase) as follows: 1.00% on purchases of $5 million, 0.55% of the next $5
million, 0.50% of the next $40 million and 0.25% on purchases over $50 million.
See Class A Rule 12b-1 Plan below.
CLASS A SHARE VOLUME DISCOUNTS. This section describes several ways to qualify
for a lower sales charge when purchasing Class A shares if you inform Lord
Abbett Distributor or the Series that you are eligible at the time of purchase.
(1) Any purchaser (as described below) may aggregate a Class A share purchase in
the Series with any share purchases of any other eligible Lord Abbett-sponsored
fund, together with the current value at maximum offering price of any shares in
the Series and in any eligible Lord Abbett-sponsored funds held by the
purchaser. (Holdings in the following funds are not eligible for the above
rights of accumulation: Lord Abbett Equity Fund (LAEF), Lord Abbett Series Fund
(LASF), any series of Lord Abbett Research Fund not offered to the general
public (LARF) and Lord Abbett U.S. Government Securities Money Market Fund
(GSMMF), except for holdings in GSMMF which are attributable to any shares
exchanged from a Lord Abbett-sponsored fund.) (2) A purchaser may sign a
non-binding 13-month statement of intention to invest $50,000 or more in any
shares of the Series or in any of the above eligible funds. If the intended
purchases are completed during the period, the total amount of your intended
purchases of any shares will determine the reduced sales charge rate for the
Class A shares purchased during the period. If not completed, each Class A share
purchase will be at the sales charge for the aggregate of the actual share
purchases. Shares issued upon reinvestment of dividends or distributions are not
included in the statement of intention. The term purchaser includes (i) an
individual, (ii) an individual and his or her spouse and children under the age
of 21 and (iii) a trustee or other fiduciary purchasing shares for a single
trust estate or single fiduciary account (including a pension, profit-sharing,
or other employee benefit trust qualified under Section 401 of the Internal
Revenue Code more than one qualified employee benefit trust of a single
employer, including its consolidated subsidiaries, may be considered a single
trust, as may qualified plans of multiple employers registered in the name of a
single bank trustee as one account), although more than one beneficiary is
involved.
CLASS A SHARE NET ASSET VALUE PURCHASES. Our Class A shares may be purchased at
net asset value by our directors, employees of Lord Abbett, employees of our
shareholder servicing agent and employees of any securities dealer having a
sales agreement with Lord Abbett Distributor who consents to such purchases or
by the trustee or custodian under any pension or
<PAGE>
profit-sharing plan or Payroll Deduction IRA established for the benefit of such
persons or for the benefit of any national securities trade organization to
which Lord Abbett or Lord Abbett Distributor belongs or any company with an
account(s) in excess of $10 million managed by Lord Abbett on a private-advise
account basis. For purposes of this paragraph, the terms directors and employees
include a directors or employees spouse (including the surviving spouse of a
deceased director or employee). The terms directors and employees of Lord Abbett
also include other family members and retired directors and employees. Our Class
A shares also may be purchased at net asset value (a) at $1 million or more, (b)
with dividends and distributions on Class A shares of other Lord
Abbett-sponsored funds, except for dividends and distributions on shares of
LARF, LAEF and LASF, (c) under the loan feature of the Lord Abbett-sponsored
prototype 403(b) plan for Class A share purchases representing the repayment of
principal and interest, (d) by certain authorized brokers, dealers, registered
investment advisers or other financial institutions who have entered into an
agreement with Lord Abbett Distributor in accordance with certain standards
approved by Lord Abbett Distributor, providing specifically for the use of our
Class A shares in particular investment products made available for a fee to
clients of such brokers, dealers, registered investment advisers and other
financial institutions (mutual fund wrap fee programs), (e) by employees,
partners and owners of unaffiliated consultants and advisers to Lord Abbett,
Lord Abbett Distributor or Lord Abbett-sponsored funds who consent to such
purchase if such persons provide services to Lord Abbett, Lord Abbett
Distributor or such funds on a continuing basis and are familiar with such fund,
(f) through Retirement Plans with at least 100 eligible employees, and (g)
through a special retirement wrap program sponsored by an authorized institution
having one or more characteristics distinguishing it, in the opinion of Lord
Abbett Distributor from a mutual fund wrap fee program. Such characteristics
include, among other things, the fact that an authorized institution does not
charge its clients any fee of a consulting or advisory nature that is
economically equivalent to the distribution fee under a Class A 12b-1 plan and
the fact that the program relates to participant-directed Retirement Plans.
CLASS A RULE 12B-1 PLAN. We have adopted a Class A share Rule 12b-1 plan (the A
Plan) which authorizes the payment of fees to authorized institutions (except as
to certain accounts for which tracking data is not available) in order to
provide additional incentives for them (a) to provide continuing information and
investment services to their Class A shareholder accounts and otherwise to
encourage those accounts to remain invested in the Series and (b) to sell Class
A shares of the Series. Under the A Plan, in order to save on the expense of
shareholders meetings and to provide flexibility to the Board of Trustees, the
Board, including a majority of the outside trustees who are not interested
persons of the Fund as defined in the Investment Company Act of 1940, is
authorized to approve annual fee payments from our Class A assets of up to 0.50
of 1% of the average net of such assets consisting of distribution and service
fees, each at a maximum annual rate not exceeding 0.25 of 1% (the Fee Ceiling).
Under the A Plan, the Board has approved payments by the Series to Lord Abbett
Distributor which uses or passes on to authorized institutions (1) an annual
service fee (payable quarterly) of .25% of the average daily net asset value of
the Class A shares serviced by authorized institutions and (2) a one-time
distribution fee of up to 1% (reduced according to the following schedule: 1% of
the first $5 million, .55% of the next $5 million, .50% of the next $40 million
and .25% over
<PAGE>
$50 million), payable at the time of sale on all Class A shares sold during any
12-month period starting from the day of the first net asset value sale (i) at
the $1 million level by authorized institutions, including sales qualifying at
such level under the rights of accumulation and statement of intention
privileges; (ii) through Retirement Plans with at least 100 eligible employees
or (iii) constituting new sales pursuant to a special retirement wrap program
and excluding exchanges into the Series under such a program. In addition, the
Board has approved for those authorized institutions which qualify a
supplemental annual distribution fee equal to 0.10% of the average daily net
asset value of the Class A shares serviced by authorized institutions which have
a program for the promotion and retention of such shares satisfying Lord Abbett
Distributor. Class A shares held pursuant to a satisfactory program would, for
example, (i) constitute a significant percentage of the Funds net assets, (ii)
be held for a substantial length of time and/or (iii) have a lower than average
redemption rate. Institutions and persons permitted by law to receive such fees
are authorized institutions.
Under the A Plan, Lord Abbett Distributor is permitted to use payments received
to provide continuing services to Class A 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
are subject to the Fee Ceiling. Any payments under that Plan not used by Lord
Abbett Distributor in this manner are passed on to authorized institutions.
Holders of Class A shares on which the 1% sales distribution fee has been paid
may be required to pay to the Series on behalf of its Class A shares a CDSC of
1% of the original cost or the then net asset value, whichever is less, of all
Class A shares so purchased which are redeemed out of the Lord Abbett-sponsored
family of funds on or before the end of the twenty-fourth month after the month
in which the purchase occurred. (Exceptions are made for: (i) redemptions by
Retirement Plans due to any benefit payment such as Plan loans, hardship
withdrawals, death, retirement or separation from service with respect to plan
participants or the distribution of any excess contributions and (ii)
participant-directed redemptions which continue as program investments in
another fund participating in a special retirement wrap program.) If the Class A
shares have been exchanged into another Lord Abbett-sponsored fund and are
thereafter redeemed out of the Lord Abbett family of funds on or before the end
of such twenty-fourth month, the charge will be collected for the Series Class A
shares by the other fund. The Series will collect such a charge for other Lord
Abbett-sponsored funds in a similar situation.
BUYING CLASS B SHARES. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed for
cash before the sixth anniversary of their purchase, a CDSC may be deducted from
the redemption proceeds. That sales charge will not apply to shares purchased by
the reinvestment of dividends or capital gains distributions. The charge will be
assessed on the lesser of the net asset value of the shares at the time of
redemption or the original purchase price. The Class B CDSC is paid to Lord
Abbett Distributor to compensate it for its services rendered in connection with
the distribution of Class B shares, including the payment and financing of sales
commissions. See Class B Rule 12b-1 Plan below.
<PAGE>
To determine whether the CDSC applies to a redemption, the Series redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held until the sixth anniversary of
their purchase or later, and (3) shares held the longest before the sixth
anniversary of their purchase.
The amount of the CDSC will depend on the number of years since you invested and
the dollar amount being redeemed, according to the following schedule.
Anniversary of the Contingent Deferred
Day on Which the Sales Charge on
Purchase Order Redemption (As % of
Was Accepted Amount Subject
To Charge)
On Before
- -- ------
1st 5%
1st 2nd 4%
2nd 3rd 3%
3rd 4th 3%
4th 5th 2%
5th 6th 1%
On or after the 6th Anniversary None
In the table, an anniversary is the 365th day subsequent to a purchase or a
prior anniversary. All purchases are considered to have been made on the
business day the purchase was made. See "Buying Shares Through Your Dealer"
above.
If Class B shares are exchanged into the same class of another Lord
Abbett-sponsored fund and the new shares are subsequently redeemed for cash
before the sixth anniversary of the original purchase, the CDSC will be payable
on the new shares on the basis of the time elapsed from the original purchase.
The Series will collect such a charge for other Lord Abbett-sponsored funds in a
similar situation.
WAIVER OF CLASS B SALES CHARGES. The Class B CDSC will not be applied to shares
purchased in certain types of transactions nor will it apply to shares redeemed
in certain circumstances as described below.
The Class B CDSC will be waived for redemptions of shares (i) in connection with
the Systematic Withdrawal Plan and Div-Move services, as described in more
detail under Shareholder Services below, (ii) by Retirement Plans due to any
benefit payment such as Plan loans, hardship withdrawals, death, retirement or
separation from service with respect to plan participants or the distribution of
any excess contributions, (iii) in connection with the death of the shareholder
(natural person), and (iv) in connection with mandatory distributions under
403(b) plans and individual retirement accounts. If Class B shares represent a
part of an individual's total IRA or
<PAGE>
403(b) investment, the CDSC wavier is available only for that portion of a
mandatory distribution which bears the same relation to the entire mandatory
distribution as the B share investment bears to the total investment.
CLASS B RULE 12B-1 PLAN. The Series has adopted a Class B share Rule 12b-1 Plan
(the B Plan) under which the Series periodically pays Lord Abbett Distributor
(i) an annual service fee of 0.25 of 1% of the average daily net asset value of
the Class B shares and (ii) an annual distribution fee of 0.75 of 1% of the
average daily net asset value of the Class B shares that are outstanding for
less than eight years.
Lord Abbett Distributor uses the service fee to compensate authorized
institutions (except as to certain accounts for which tracking data is not
available) for providing personal services for accounts that hold Class B
shares. Those services are similar to those provided under the A Plan, described
above.
Lord Abbett Distributor pays an up-front payment to authorized institutions
totaling 4%, consisting of 0.25% for service and 3.75% for a sales commission as
described below.
Lord Abbett Distributor pays the 0.25% service fee to authorized institutions in
advance for the first year after Class B shares have been sold by the authorized
institutions. After the shares have been held for a year, Lord Abbett
Distributor pays the service fee on a quarterly basis. Lord Abbett Distributor
is entitled to retain such service fee payable under the B Plan with respect to
accounts for which there is no authorized institution of record or for which
such authorized institution did not qualify. Although not obligated to do so,
Lord Abbett Distributor may waive receipt from the Series of part or all of the
service fee payments.
The 0.75% annual distribution fee is paid to Lord Abbett Distributor to
compensate it for its services rendered in connection with the distribution of
Class B shares, including the payment and financing of sales commissions.
Although Class B shares are sold without a front-end sales charge, Lord Abbett
Distributor pays authorized institutions responsible for sales of Class B shares
a sales commission of 3.75% of the purchase price. This payment is made at the
time of sale from Lord Abbett Distributors own resources. Lord Abbett has made
arrangements to finance these commission payments, which arrangements include
non-recourse assignments by Lord Abbett Distributor to the financing party of
such distribution and CDSC payments concerning Class B shares. The distribution
fee and CDSC payments described above allow investors to buy Class B shares
without a front-end sales charge while allowing Lord Abbett Distributor to
compensate authorized institutions that sell Class B shares. The CDSC is
intended to supplement Lord Abbett Distributors reimbursement for the commission
payments it has made with respect to Class B shares and its related distribution
and financing costs.
The distribution fee payments are at a fixed rate and the CDSC payments are of a
nature that, during any year, both forms of payment may not be sufficient to
reimburse Lord Abbett Distributor for its actual expenses. The Series is not
liable for any expenses incurred by Lord Abbett Distributor in excess of (i) the
amount of such distribution fee payments to be received by
<PAGE>
Lord Abbett Distributor and (ii) unreimbursed distribution expenses of Lord
Abbett Distributor incurred in a prior plan year, subject to the right of the
Board of Trustees or shareholders to terminate the B Plan. Over the long term,
the expenses incurred by Lord Abbett Distributor are likely to be greater than
such distribution fee and CDSC payments. Nevertheless, there exists a
possibility that for a short-term period Lord Abbett Distributor may not have
sufficient expenses to warrant reimbursement by receipt of such distribution fee
payments. Although Lord Abbett Distributor does not intend to make a profit
under the B Plan, the B Plan is considered a compensation plan (i.e.,
distribution fees are paid regardless of expenses incurred) in order to avoid
the possibility of Lord Abbett Distributor not being able to receive
distribution fees because of a temporary timing difference between its incurring
expenses and receipt of such distribution fees.
AUTOMATIC CONVERSION OF CLASS B SHARES. On the eighth anniversary of your
purchase of Class B shares, those shares will automatically convert to Class A
shares. This conversion relieves Class B shareholders of the higher annual
distribution fee that applies to Class B shares under the B Plan. The conversion
is based on the relative net asset values of the two classes, and no sales
charge or other charge is imposed. When Class B shares convert, any other Class
B shares that were acquired by the reinvestment of dividends and distributions
will also convert to Class A shares on a pro rata basis. The conversion feature
is subject to the continued availability of an opinion of counsel or a tax
ruling described in Purchases, Redemptions and Shareholder Services in the
Statement of Additional Information.
BUYING CLASS C SHARES. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed for
cash before the first anniversary of their purchase, a CDSC of 1% will be
deducted from the redemption proceeds. That reimbursement charge will not apply
to shares purchased by the reinvestment of dividends or capital gains
distributions. The charge will be assessed on the lesser of the net asset value
of the shares at the time of redemption or the original purchase price. The
Class C CDSC is paid to the Series to reimburse it, in whole or in part, for the
service and distribution fee payments made by the Series at the time such shares
were sold, as described below.
To determine whether the CDSC applies to a redemption, the Series redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held for one year or more and (3) shares
held the longest before the first anniversary of their purchase. If Class C
shares are exchanged into the same class of another Lord Abbett-sponsored fund
and subsequently redeemed before the first anniversary of their original
purchase, the charge will be collected by the other fund on behalf of this
Series Class C shares. The Series will collect such a charge for other Lord
Abbett-sponsored funds in a similar situation.
CLASS C RULE 12B-1 PLAN. The Series has adopted a Class C share Rule 12b-1 Plan
(the C Plan) under which (except as to certain accounts for which tracking data
is not available) the Series pays authorized institutions through Lord Abbett
Distributor (1) a service fee and a distribution fee, at the time shares are
sold, not to exceed 0.25 and 0.75 of 1%, respectively, of
<PAGE>
the net asset value of such shares and (2) at each quarter-end after the first
anniversary of the sale of shares, fees for services and distribution at annual
rates not to exceed 0.25 and 0.75 of 1%, respectively, of the average annual net
asset value of such shares outstanding (payments with respect to shares not
outstanding during the full quarter to be prorated). These service and
distribution fees are for purposes similar to those mentioned above with respect
to the A Plan. Sales in clause (1) exclude shares issued for reinvested
dividends and distributions and shares outstanding in clause (2) include shares
issued for reinvested dividends and distributions after the first anniversary of
their issuance.
5 SHAREHOLDER SERVICES
We offer the following shareholder services:
TELEPHONE EXCHANGE PRIVILEGE: Shares of any class may be exchanged without a
service charge: (a) for shares of the same class of any other Lord
Abbett-sponsored fund except for (i) LAEF, LASF and LARF and (ii) certain
tax-free, single-state series where the exchanging shareholder is a resident of
a state in which such series is not offered for sale and (b) for shares of any
authorized institutions affiliated money market fund satisfying Lord Abbett
Distributor as to certain omnibus account and other criteria (together, Eligible
Funds).
You or YOUR REPRESENTATIVE WITH PROPER IDENTIFICATION can instruct the Series to
exchange uncertificated shares of a class (held by the transfer agent) by
telephone. Shareholders have this privilege unless they refuse it in writing.
The Series will not be liable for following instructions communicated by
telephone that it reasonably believes to be genuine and will employ reasonable
procedures to confirm that instructions received are genuine, including
requesting proper identification and recording all telephone exchanges.
Instructions must be received by the Series in Kansas City (800-821-5129) prior
to the close of the NYSE to obtain each funds net asset value per class share on
that day. Expedited exchanges by telephone may be difficult to implement in
times of drastic economic or market change. The exchange privilege should not be
used to take advantage of short-term swings in the market. The Series reserves
the right to terminate or limit the privilege of any shareholder who makes
frequent exchanges. The Series can revoke the privilege for all shareholders
upon 60 days prior written notice. A prospectus for the other Lord
Abbett-sponsored fund selected by you should be obtained and read before an
exchange. Exercise of the exchange privilege will be treated as a sale for
federal income tax purposes and, depending on the circumstances, a capital gain
or loss may be recognized. SYSTEMATIC WITHDRAWAL PLAN (SWP): Except for
Retirement Plans for which there is no such minimum, if the maximum offering
price value of your uncertificated shares is at least $10,000, you may have
periodic cash withdrawals automatically paid to you in either fixed or variable
amounts. With respect to Class B shares, the CDSC will be waived on redemptions
of up to 12% per year of the current net asset value of your account at the time
your SWP is established. For Class B shares (over 12% per year) and C shares,
redemption proceeds due to a SWP will be derived from the following sources in
the order listed: (1) shares acquired by reinvestment of dividends and capital
gains, (2) shares held for six years or more (Class B) or one year or more
(Class C); and (3) shares held the longest before the sixth anniversary of their
purchase (Class B) or before the first anniversary of their purchase (Class C).
For Class B share
<PAGE>
redemptions over 12% per year, the CDSC will apply to the entire redemption.
Therefore, please contact the Series for assistance in minimizing the CDSC in
this situation. Shareholders should be careful in establishing a SWP, especially
to the extent that such a withdrawal exceeds the annual total return for a
class, in which case, the shareholders original principal will be invaded and,
over time, may be depleted.
DIV-MOVE: You can invest the dividends paid on your account ($50 minimum
investment) into an existing account within the same class in any Eligible Fund.
The account must be either your account, a joint account for you and your
spouse, a single account for your spouse or a custodial account for your minor
child under the age of 21. Such dividends are not subject to a CDSC. You should
read the prospectus of any other fund before investing.
INVEST-A-MATIC: You can make fixed, periodic investments ($250 minimum initial
and $50 minimum subsequent investment) into the Series and/or any Eligible Fund
by means of automatic money transfers from your bank checking account. You
should read the prospectus of the other fund before investing.
RETIREMENT PLANS: Lord Abbett makes available the retirement plan documents,
including 401(k) plans and custodial agreements for IRAs (Individual Retirement
Accounts including Simple IRAs and Simplified Employee Pensions), 403(b) plans
and pension and profit-sharing plans.
HOUSEHOLDING: Generally, shareholders with the same last name and address will
receive a single copy of an annual or semi-annual report, unless additional
reports are specifically requested in writing to the Fund.
All correspondence should be directed to the Balanced Series of Lord Abbett
Securities Trust (P.O. Box 419100, Kansas City, Missouri 64141; 800-821-5129).
6 OUR MANAGEMENT
We employ Lord Abbett as investment manager for the Balanced Series pursuant to
a Management Agreement. Lord Abbett has been an investment manager for over 67
years and currently manages approximately $25 billion in a family of mutual
funds and other advisory accounts. Under the Management Agreement, Lord Abbett
is obligated to provide the Series with investment management services and
executive and other personnel, pay the remuneration of our officers and of our
trustees affiliated with Lord Abbett, provide us with office space and pay for
ordinary and necessary office and clerical expenses relating to research,
statistical work and supervision of the Series portfolio and certain other
costs. Lord Abbett provides investment management services to twelve other Lord
Abbett-sponsored funds having various investment objectives and also advises
other investment clients
The Series investment decisions are made by Robert G. Morris, Lord Abbett
Partner and Executive Vice President of the Fund and Portfolio Manager of the
Series. Mr. Morris has served as Portfolio Manager since the start of the
Series.
<PAGE>
Under the Management Agreement, the Series is obligated to pay Lord Abbett a
monthly fee, based on average daily net assets, at the annual rate of .75 of 1%
for allocating the Balanced Series assets among the Underlying Funds. However,
because Lord Abbett expects to waive this fee for the current fiscal year of the
Series, the effective fee payable to Lord Abbett by the Series as a percentage
of average daily net assets is expected to be at the annual rate of zero
percent. In addition, we pay all expenses not expressly assumed by Lord Abbett
or the Underlying Funds.
The Officers and Trustees of the Fund also serve in similar positions in the
Underlying Funds. If the interests of the Fund and the Underlying Funds were
ever to become divergent, a concern might arise that this could create a
potential conflict of interest which could affect how the Officers or Trustees
fulfill their fiduciary duties to the Balanced Series and the Underlying Funds.
The Trustees believe that the Fund policy described as follows will avoid the
concerns which could arise.
Conceivably, a situation could occur where proper portfolio or other action for
the Balanced Series could be adverse to the interests of an Underlying Fund, or
the reverse could occur. If such a possibility appears likely, the Trustees and
Officers will carefully analyze the situation and take all steps they believe
reasonable to minimize and, where possible, eliminate the potential conflict.
Moreover, limitations on aggregate investments in the Underlying Funds and other
restrictions will be adopted by the Balanced Series' management to minimize this
possibility from time to time, and close and continuous monitoring will be
exercised to avoid, insofar as possible, these concerns.
7 DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
With respect to the Series, dividends from taxable net investment income may be
taken in cash or invested in additional shares at net asset value (without a
sales charge) and will be paid to shareholders annually in December.
A capital gains distribution is made when the Series has net profits during the
year from sales of securities. Any capital gains distributions will be made
annually in December. They may be taken in cash or invested in more shares at
net asset value without a sales charge.
For tax-deferred retirement accounts (such as Individual Retirement Accounts or
other retirements plans sponsored by Lord Abbett), dividends and capital gains
distribution from the Series most likely will be reinvested in additional
shares.
Dividends and distributions declared in October, November or December of any
year will be treated for federal income tax purposes as having been received by
shareholders of the Series in that year if they are paid before February 1 of
the following year. A supplemental capital gains distribution also may be paid
in December.
<PAGE>
The Series intends to meet the requirements of Subchapter M of the Internal
Revenue Code. The Series will try to distribute to shareholders all of its net
investment income and net realized capital gains, so as to avoid the necessity
of paying federal income tax.
If you open an IRA or other tax deferred retirement account, dividend and
capital gains distributions from the Balanced Series will generally be exempt
from current taxation. You are advised to consult with a tax professional on the
specific rules governing your own tax deferred arrangement. There are varying
restrictions imposed by the Internal Revenue Service on eligibility,
contributions and withdrawals, depending on the type of tax deferred account you
selected. The rules governing tax deferred retirement plans are complex, and
failure to comply with the IRS's rules and regulations governing your specific
type of plan may result in substantial costs to you, including the loss of tax
advantages and the imposition of additional taxes and penalties by the IRS.
If you open an account in the Balanced Series outside a tax-deferred retirement
account, the following tax rules will generally apply. For the regular
investment accounts, dividends paid by the Balanced Series from the net
investment income and net short capital gains, whether received in cash or
reinvested in additional shares, will be taxable to shareholders at ordinary
income rates.
Any capital gains distribution may be taken in cash or reinvested. Distributions
of any net long-term capital gains will be taxable to a shareholder as long-term
capital gains, regardless of how long the shareholder has held the shares. Under
recently enacted legislation, the maximum tax rate on long-term capital gains
for a U.S. individual, estate or trust is reduced to 20% for distributions
derived from the sale of assets held by the Fund for more than 18 months. (If
the taxpayer is in the 15% tax bracket, the rate is 10%.) For distributions
derived from the sale of assets held by the Fund for between 12 and 18 months,
the tax rate remains at 28% (15% if the taxpayer is in the 15% tax bracket). If
you elect to receive dividends or capital gains in cash, a check will be mailed
to you as soon as possible after the reinvestment date. If you arrange for
direct deposit, your payment will be electronically transmitted to your bank
account within one day after the payable date.
Shareholders may be subject to a $50 penalty under the Internal Revenue Code and
we may be required to withhold and remit to the U.S. Treasury a portion (31%) of
any redemption or repurchase proceeds and of any dividend or distribution on any
account, where the payee (shareholder) failed to provide a correct taxpayer
identification number or to make certain required certifications.
Limitations imposed by the Internal Revenue Code on regulated investment
companies may restrict the Series ability to engage in transactions in options,
forward contracts and cross hedges.
We will inform shareholders of the federal tax status of each dividend and
distribution after the end of each calendar year.
<PAGE>
Shareholders should consult their tax advisers concerning applicable state and
local taxes as well as on the tax consequences of gains or losses from the
redemption or exchange of our shares.
8 REDEMPTIONS
To obtain the proceeds of an expedited redemption of $50,000 or less, you or
your representative with proper identification can telephone the Series. The
Series will not be liable for following instructions communicated by telephone
that it reasonably believes to be genuine and will employ reasonable procedures
to confirm that instructions received are genuine, including requesting proper
identification, recording all telephone redemptions and mailing the proceeds
only to the named shareholder at the address appearing on the account
registration.
If you do not qualify for the expedited procedures described above, to redeem
shares directly, send your request to the Balanced Series of the Lord Abbett
Investment Trust (P.O. Box 419100, Kansas City, Missouri 64141) with
signature(s) and any legal capacity of the signer(s) guaranteed by an eligible
guarantor, accompanied by any certificates for shares to be redeemed and other
required documentation. We will make payment of the net asset value of the
shares on the date the redemption order was received in proper form. Payment
will be made within three days. The Series may suspend the right to redeem
shares for not more than seven days or longer under unusual circumstances as
permitted by Federal law. If you have purchased Series shares by check and
subsequently submit a redemption request, redemption proceeds will be paid upon
clearance of your purchase check, which may take up to 15 days. To avoid delays
you may arrange for the bank upon which a check was drawn to communicate to the
Series that the check has cleared. Shares also may be redeemed by the Series at
net asset value through your securities dealer who, as an unaffiliated dealer,
may charge you a fee. If your dealer receives your order prior to the close of
the NYSE and communicates it to Lord Abbett, as our agent, prior to the close of
Lord Abbett's business day, you will receive the net asset value of the shares
being redeemed as of the close of the NYSE on that day. If the dealer does not
communicate such an order to Lord Abbett until the next business day, you will
receive the net asset value as of the close of the NYSE on that next business
day.
Shareholders who have redeemed their shares have a one-time right to reinvest
into another account having the identical registration in any of the Eligible
Funds at the then applicable net asset value of the shares being purchased, (i)
without the payment of a sales charge or (ii) with reimbursement for the payment
of any CDSC. Such reinvestment must be made within 60 days of the redemption and
is limited to no more than the dollar amount of the redemption proceeds.
Under certain circumstances and subject to prior written notice, our Board of
Trustees may authorize redemption of all of the shares in any account in which
there are fewer than 25 shares.
TAX-QUALIFIED PLANS: For redemptions of $50,000 or less, follow normal
redemption procedures. Redemptions over $50,000 must be in writing from the
employer, broker or plan administrator stating the reason for the redemption.
The reason for the redemption must be received by the Series prior to, or
concurrent with, the redemption request.
<PAGE>
9 PERFORMANCE
Over the last six months in particular, the bond marked continued to perform
will, resulting in our maintaining a 50%-50% ratio between bond and equity
holdings in the Balanced Series. The continued low rate of inflation, along with
the volatility of international financial markets, was the catalyst for
relatively strong returns on fixed-income securities over this period. On the
equity side, we continued to overweight financial holdings which benefited from
lower interest rates. Recently, shareholders approved a change to the Series'
investment policy to allow the Balanced Series to gradually shift to a "fund of
funds" structure, with equity assets allocated to the Affiliated Fund and the
fixed-income portion of the portfolio to the Bond-Debenture Fund.
YIELD AND TOTAL RETURN. Total return data may, from time to time, be included in
advertisements about the Series.
Total return for the one-, five- and ten-year periods represents the average
annual compounded rate of return on an investment of $1,000 in the Series at the
maximum public offering price. When total return is quoted for Class A shares,
it includes the payment of the maximum initial sales charge. When total return
is shown for Class B and Class C shares, it reflects the effect of the
applicable CDSC. Total return also may be presented for other periods or based
on investments at reduced sales charge levels or net asset value. Any quotation
of total return not reflecting the maximum sales charge (front-end, level, or
back-end) would be reduced if such sales charge were used. Quotations of total
return for any period when an expense limitation is in effect will be greater
than if the limitation had not been in effect. See Past Performance in the
Statement of Additional Information for a more detailed description.
The performance of the Class A shares of each multi-class Series which is shown
in the comparison below will be greater than that shown below for Class B and
Class C shares based on differences in sales charges and fees paid by
shareholders investing in the different classes.
Comparison of change in value of a $10,000 investment in Class A shares of
Balanced Series and the Merrill Lynch Wilshire Capital Market Index.
[Graph]
____ The Fund (Class A shares) at net asset value
____ The Fund (Class A shares) at maximum offering price
____ Merrill Lynch Wilshire Capital Market Index
-------------------------------------------------
Average Annual Total Return for Class A Shares(4)
1 Year 3 Years Life of Class
(12/27/94 - 11/30/97)
10.80% ____%
-------------------------------------------------
<PAGE>
-------------------------------------------------
Average Annual Total Return for Class A Shares(5)
1 Year 3 Years Life of Class
(7/15/96 - 11/30/97)
13.10% 6.72%
-------------------------------------------------
(1) Data reflects the deduction of the maximum sales charge of 4.75% for the
Balanced Series.
(2) Source Lipper Analytical Services.
(3) Performance numbers for the unmanaged Merrill Lynch Wilshire Capital Market
Index do not reflect transaction costs or management fees. An investor cannot
invest directly in these indices.
(4) Total return is the percent change in value, after deduction of the maximum
sales charge of 4.75%, applicable to Class A shares of the Balanced Series, with
all dividends and contributions reinvested for the period shown ending November
30, 1997 using the SEC-required uniform method to compute such return.
(5) The Class C shares were first offered on 7/15/96. Performance numbers are
not annualized. Performance reflects the deduction of a 1% CDSC.
This Prospectus does not constitute an offering or any jurisdiction in which
such offer is not authorized or in which the person making such offer is not
qualified to do so or to anyone to whom it is unlawful to make such offer. No
person is authorized to give any information or to make any representations not
contained in this Prospectus, or in supplemental sales material authorized by
the Fund and no person is entitled to rely upon any information or
representation not contained herein or therein.
<PAGE>
Statement of Additional Information April 1, 1998
Lord Abbett Investment Trust
U.S. Government Securities Series
Limited Duration U.S. Government Securities Series
Balanced Series
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from your securities dealer or from Lord Abbett Distributor LLC
("Lord Abbett Distributor") at The General Motors Building, 767 Fifth Avenue,
New York, New York 10153-0203. This Statement relates to, and should be read in
conjunction with, the Prospectus dated April 1, 1998.
Lord Abbett Investment Trust (referred to as the "Fund") was organized as a
Delaware business trust on August 16, 1993. The Fund's trustees have authority
to create separate classes and series of shares of beneficial interest, without
further action by shareholders. The Fund has five series, three of which are
discussed here -U.S. Government Securities Series, Limited Duration U.S.
Government Securities Series and Balanced Series (sometimes referred to as "U.S.
Government Securities Series," "Limited Duration Government Series" and
"Balanced Series," respectively, or "we" or the "Series," individually or
collectively). The U.S. Government Securities Series offers three classes of
shares: Class A, Class B, and Class C. The Limited Duration Government Series
offers two classes of shares: Class A and Class C. The Balanced Series offers
three classes of shares: Class A, Class B and Class C. All shares have equal
noncumulative voting rights and equal rights with respect to dividends, assets
and liquidation, except for certain class-specific expenses. They are fully paid
and nonassessable when issued and have no preemptive or conversion rights.
Further classes or series may be added in the future. The Investment Company Act
of 1940, as amended (the "Act") requires that where more than one class or
series exists, each class or series must be preferred over all other classes or
series in respect of assets specifically allocated to such class or series.
Rule 18f-2 under the Act provides that any matter required to be submitted, by
the provisions of the Act or applicable state law or otherwise, to the holders
of the outstanding voting securities of an investment company such as the Fund
shall not be deemed to have been effectively acted upon unless approved by the
holders of a majority of the outstanding shares of each class or series affected
by such matter. Rule 18f-2 further provides that a class or series shall be
deemed to be affected by a matter unless the interests of each class or series
in the matter are substantially identical or the matter does not affect any
interest of such class or series. However, the Rule exempts the selection of
independent public accountants, the approval of principal distributing contracts
and the election of trustees from its separate voting requirements.
Shareholder inquiries should be made by writing directly to the Fund or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
TABLE OF CONTENTS Page
1. Investment Policies...................................2
2. Trustees and Officers.................................5
3. Investment Advisory and Other Services................7
4. Portfolio Transactions................................8
5. Purchases, Redemptions and Shareholder Services.......9
6. Performance..........................................17
7. Taxes................................................19
8. Information About the Fund...........................19
9. Financial Statements.................................20
<PAGE>
1. Investment Policies
Fundamental Investment Restrictions
We are subject to the following investment restrictions which cannot be changed
without approval of a majority of our outstanding shares. Each Series may not:
(1) borrow money, except that (i) each Series may borrow from banks (as defined
in the Act) in amounts up to 33 1/3% of its total assets (including the amount
borrowed), (ii) each Series may borrow up to an additional 5% of its total
assets for temporary purposes, (iii) each Series may obtain such short-term
credit as may be necessary for the clearance of purchases and sales of portfolio
securities and (iv) each Series may purchase securities on margin to the extent
permitted by applicable law; (2) pledge its assets (other than to secure
borrowings, or to the extent permitted by the Series' investment policies as
permitted by applicable law); (3) engage in the underwriting of securities,
except pursuant to a merger or acquisition or to the extent that, in connection
with the disposition of its portfolio securities, it may be deemed to be an
underwriter under federal securities laws; (4) make loans to other persons,
except that the acquisition of bonds, debentures or other corporate debt
securities and investment in government obligations, commercial paper,
pass-through instruments, certificates of deposit, bankers acceptances,
repurchase agreements or any similar instruments shall not be subject to this
limitation, and except further that each series may lend its portfolio
securities, provided that the lending of portfolio securities may be made only
in accordance with applicable law; (5) buy or sell real estate (except that each
Series may invest in securities directly or indirectly secured by real estate or
interests therein or issued by companies which invest in real estate or
interests therein) or commodities or commodity contracts (except to the extent
each Series may do so in accordance with applicable law and without registering
as a commodity pool operator under the Commodity Exchange Act as, for example,
with futures contracts)); (6) with respect to 75% of its gross assets, buy
securities of one issuer representing more than (i) 5% of the its gross assets,
except securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities , and for the Balanced Series, securities issued by an
investment company or (ii) 10% of the voting securities of such issuer; (7)
invest more than 25% of its assets, taken at market value, in the securities of
issuers in any particular industry (excluding securities of the U.S. Government,
its agencies and instrumentalities); (8) issue senior securities to the extent
such issuance would violate applicable law or (9) (with respect to the U.S.
Government Securities Series only) invest in securities other than U.S.
Government securities, as described in the Prospectus.
With respect to the restrictions mentioned herein, compliance therewith will not
be affected by changes in the market value of portfolio securities but will be
determined at the time of purchase or sale of such securities.
Non-Fundamental Investment Restrictions
In addition to the investment restrictions above which cannot be changed without
shareholder approval, we also are subject to the policies described in the
Prospectus and the following investment policies which may be changed by the
Board of Trustees without shareholder approval. Each Series may not: (1) borrow
in excess of 33 1/3 % of its total assets (including the amount borrowed), and
then only as a temporary measure for extraordinary or emergency purposes; (2)
make short sales of securities or maintain a short position except to the extent
permitted by applicable law; (3) invest knowingly more than 15% of its net
assets (at the time of investment) in illiquid securities, except for securities
qualifying for resale under Rule 144A of the Securities Act of 1933, deemed to
be liquid by the Board of Trustees; (4) invest in the securities of other
investment companies except as permitted by applicable law; (5) invest in
securities of issuers which, with their predecessors, have a record of less than
three years' continuous operations, if more than 5% of the Series' total assets
would be invested in such securities (this restriction shall not apply to
mortgaged-backed securities, asset-backed securities or obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities); (6) hold
securities of any issuer if more than 1/2 of 1% of the securities of such issuer
are owned beneficially by one or more officers or trustees of the series or by
one or more partners or members of the Fund's underwriter or investment adviser
if these owners in the aggregate own beneficially more than 5% of the securities
of such issuer; (7) 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 Series' total assets (included within such limitation, but not to exceed
2% of the Series' total assets, are warrants which are not listed on the New
York or American Stock Exchange or a major foreign exchange); (8) 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 other development activities; (9) write, purchase or sell
puts, calls, straddles, spreads or combinations thereof, except to the extent
permitted in the Fund's prospectus and statement of additional information, as
they may be amended from time to time; or (10) buy from or sell to
2
<PAGE>
any of its officers, trustees, employees, or its investment adviser or any of
its officers, trustees, partners or employees, any securities other than shares
of beneficial interest in such series.
Although there is no current intention to do so, each Series may invest in
financial futures and options on financial futures.
Lending Portfolio Securities
Each Series may lend portfolio securities to registered brokers-dealers. These
loans, if and when made, may not exceed 30% of the Series' total assets. The
Series' loans of securities will be collateralized by cash or marketable
securities issued or guaranteed by the U.S. Government or its agencies ("U.S.
Government securities") or other permissible means in an amount at least equal
to the market value of the loaned securities. From time to time, the each series
may pay a part of the interest received with respect to the investment of
collateral to the borrower and/or a third party that is not affiliated with the
Fund and is acting as a "placing broker." No fee will be paid to affiliated
persons of the Fund.
By lending portfolio securities, each Series can increase its income by
continuing to receive income on the loaned securities as well as by either
investing the cash collateral in permissible investments, such as U.S.
Government securities, or obtaining yield in the form of interest paid by the
borrower when such U.S. Government securities or other forms of non-cash
collateral are used as security. Each series will comply with the following
conditions whenever it loans securities: (i) the Series must receive at least
100% collateral from the borrower; (ii) the borrower must increase the
collateral whenever the market value of the securities loaned rises above the
level of the collateral; (iii) the Series must be able to terminate the loan at
any time; (iv) the Series must receive reasonable compensation with respect to
the loan, as well as any dividends, interest or other distributions on the
loaned securities; (v) the Series may pay only reasonable fees in connection
with the loan; and (vi) voting rights on the loaned securities may pass to the
borrower except that, if the Fund has knowledge of a material event adversely
affecting the investment in the loaned securities, the Fund must terminate the
loan and regain the right to vote the securities.
Repurchase Agreements
Each Series may enter into repurchase agreements with respect to a security. A
repurchase agreement is a transaction by which the Series acquires a security
and simultaneously commits to resell that security to the seller (a bank or
securities dealer), and the seller commits to repurchase that security, at an
agreed upon price on an agreed upon date. The resale price reflects the purchase
price plus an agreed upon market rate of interest which is unrelated to the
coupon rate or date of maturity of the purchased security. (In this type of
transaction, the securities purchased by the Series have a total value in excess
of the value of the repurchase agreement.) Each Series requires at all times
that the repurchase agreement be collateralized by cash or U.S. Government
securities having a value equal to, or in excess of, the value of the repurchase
agreement. Such agreements permit the Series to keep all of its assets at work
while retaining flexibility in pursuit of investments of a longer term nature.
The use of repurchase agreements involves certain risks. For example, if the
seller of the agreement defaults on its obligation to provide additional
collateral or to repurchase the underlying securities at a time when the value
of these securities has declined, the Series may incur a loss upon disposition
of them. If the seller of the agreement becomes insolvent and subject to
liquidation or reorganization under the Bankruptcy Code or other laws, a
bankruptcy court may determine that the underlying securities are collateral not
within the control of the Series and are therefore subject to sale by the
trustee in bankruptcy. Even though the repurchase agreements may have maturities
of seven days or less, they may lack liquidity, especially if the issuer
encounters financial difficulties. While Fund management acknowledges these
risks, it is expected that they can be controlled through stringent selection
criteria and careful monitoring procedures. Fund management intends to limit
repurchase agreements for each Series to transactions with dealers and financial
institutions believed by Fund management to present minimal credit risks. Fund
management will monitor creditworthiness of the repurchase agreement sellers on
an ongoing basis.
Each Series will enter into repurchase agreements only with those primary
reporting dealers that report to the Federal Reserve Bank of New York and with
the 100 largest United States commercial banks and the underlying securities
purchased under the agreements will consist only of those securities in which
the Series otherwise may invest.
3
<PAGE>
When-Issued Transactions
As stated in the Prospectus, each Series may purchase portfolio securities on a
when-issued basis. When-issued transactions involve a commitment by the Series
to purchase securities, with payment and delivery ("settlement") to take place
in the future, in order to secure what is considered to be an advantageous price
or yield at the time of entering into the transaction. The value of fixed-income
securities to be delivered in the future will fluctuate as interest rates vary.
During the period between purchase and settlement, the value of the securities
will fluctuate and assets consisting of cash and/or marketable securities
(normally short-term U.S. Government securities) marked to market daily in an
amount sufficient to make payment at settlement will be segregated at our
custodian in order to pay for the commitment. There is a risk that market yields
available at settlement may be higher than yields obtained on the purchase date
which could result in depreciation of value of fixed-income when-issued
securities. At the time each Series makes the commitment to purchase a security
on a when-issued basis, it will record the transaction and reflect the liability
for the purchase and the value of the security in determining its net asset
value. Each Series, generally, has the ability to close out a purchase
obligation on or before the settlement date rather than take delivery of the
security. Under no circumstance will settlement for such securities take place
more than 120 days after the purchase date.
Average Duration
The Limited Duration Government Series limits its average dollar weighted
portfolio duration to a range of one to four years. However, many of the
securities in which the Series invests will have remaining durations in excess
of four years.
Some of the securities in the Limited Duration Government Series' portfolio may
have periodic interest rate adjustments based upon an index such as the 91-day
Treasury Bill rate. This periodic interest rate adjustment tends to lessen the
volatility of the security's price. With respect to securities with an interest
rate adjustment period of one year or less, the Limited Duration Government
Series will, when determining average-weighted duration, treat such a security's
maturity as the amount of time remaining until the next interest rate
adjustment.
Instruments such as GNMA, FNMA, FHLMC securities and similar securities backed
by amortizing loans generally have shorter effective maturities than their
stated maturities. This is due to changes in amortization caused by demographic
and economic forces such as interest rate movements. These effective maturities
are calculated based upon historical payment patterns and therefore have shorter
duration than would be implied by their stated final maturity. For purposes of
determining the Limited Duration Government Series' average maturity, the
maturities of such securities will be calculated based upon the issuing agency's
payment factors using industry-accepted valuation models.
Portfolio Turnover
For the fiscal year ended November 30, 1997, the portfolio turnover rate for the
U.S. Government Securities Series was 712.82% as compared to 820.59% for the
previous year; 343.53% for the Limited Duration Government Series compared to
340.62% for the year ended October 31, 1996 and 175.98% for the one month ended
November 30,1996; 216.07% for the Balanced Series as compared to 187.78% for
the year ended October 31, 1996 and 10.05% for the one month ended November 30,
1996.
On July 12, 1996, the Fund acquired the assets of the U.S. Government Securities
Fund, Inc. (the "Acquired Fund"), in exchange for the shares of the newly
created U.S. Government Securities Series. As discussed above, each Series may
purchase U.S. Government securities on a when-issued basis with settlement
taking place after the purchase date (without amortizing any premiums). This
investment technique is expected to contribute significantly to portfolio
turnover rates. However, it will have little or no transaction cost or adverse
tax consequences. Transaction costs normally will exclude brokerage because each
Series' fixed-income portfolio transactions are usually on a principal basis and
any markups charged normally will be more than offset by the beneficial economic
consequences anticipated at the time of purchase or no purchase will be made.
Generally, short-term losses on short-term U.S. Government securities purchased
under this investment technique tend to offset any short-term gains due to such
high portfolio turnover.
4
<PAGE>
2.
Trustees and Officers
The following trustees are partners of Lord Abbett, The General Motors Building,
767 Fifth Avenue, New York, New York 10153-0203. They have been associated with
Lord Abbett for over five years and are also officers and/or directors or
trustees of the twelve other Lord Abbett-sponsored funds. They are "interested
persons" as defined in the Act, and as such, may be considered to have an
indirect financial interest in the Rule 12b-1 Plan described in the Prospectus.
Robert S. Dow, age 52, Chairman and President
E. Wayne Nordberg, 59, Vice President and Trustee
The following outside trustees are also directors or trustees of the twelve
other Lord Abbett-sponsored funds referred to above.
E. Thayer Bigelow
Courtroom Television Network
600 Third Avenue
New York, New York
Chief Executive Officer of Courtroom Television Network. Formerly President and
Chief Executive Officer of Time Warner Cable Programming, Inc. Prior to that,
formerly President and Chief Operating Officer of Home Box Office, Inc. Age 56.
Stewart S. Dixon
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon. Age 67.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 72.
C. Alan MacDonald
Directorship Inc.
8 Sound Shore Drive
Stamford, Connecticut
Managing Director of Directorship Inc., a consultancy in board management and
corporate governance. Formerly General Partner of The Marketing Partnership,
Inc., a full service marketing consulting firm (1994 - 197). Prior to that, he
was Chairman and Chief Executive Officer of Lincoln Snacks, Inc., manufacturer
of branded snack foods (1992 - 1994). His career spans 36 years at Stouffers and
Nestle with 18 of the years as Chief Executive Officer. Currently serves as
Director of DenAmerica Corp., J.B. Williams Company, Inc., Fountainhead Water
Company and Exigent Diagnostics. Age 64.
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 69.
5
<PAGE>
Thomas J. Neff
Spencer Stuart U.S.
277 Park Avenue
New York, New York
Chairman of Spencer Stuart U.S., an executive search consulting firm. Age 60.
The second column of the following table sets forth the compensation accrued for
the Fund's outside trustees. The third and fourth columns set forth information
with respect to the retirement plan for outside trustees maintained by the Lord
Abbett-sponsored funds. The fifth column sets forth the total compensation
payable by such funds to the outside trustees. No trustees of the Fund
associated with Lord Abbett and no officer of the Fund received any compensation
from the Fund for acting as a trustee or officer.
For the Fiscal Year Ended November 30, 1997
(1) (2) (3) (4)
Pension or
Retirement
Benefits For Year Ended
Accrued by December 31, 1997
the Fund and Total Compensation
Aggregate Twelve Other Accrued by the Fund and
Compensation Lord Abbett- Twelve Other Lord
Accrued by sponsored Abbett-sponsored
Name of Director the Fund(1) Funds(2) Funds(3)
- ---------------- ------------ ------------ -----------------------
E. Thayer Bigelow $10,580 $17,068 $56,000
Stewart S. Dixon $10,388 $32,190 $55,000
John C. Jansing $10,388 $45,085(4) $55,000
C. Alan MacDonald $10,843 $30,703 $57,400
Hansel B. Millican, Jr. $10,438 $37,747 $55,000
Thomas J. Neff $10,528 $19,853 $56,000
1. Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on the
net assets of each fund. A portion of the fees payable by the Fund to its
outside directors is being deferred under a plan that deems the deferred
amounts to be invested in shares of the Fund for later distribution to the
directors.
2. The amounts in Column 3 were accrued by the Lord Abbett-Sponsored Funds
for the 12 months ended November 30, 1997 with respect to the equity based
plans established for independent directors in 1996. This plan supercedes
a previously approved retirement plan for all future directors. Current
directors had the option to convert their accrued benefits under the
retirement plan. All of the outside directors except one made such an
election. Each plan also provides for a pre-retirement death benefit and
actuarially reduced joint-and-survivor spousal benefits.
3. This column shows aggregate compensation, including directors fees and
attendance fees for board and committee meetings, of a nature referred to
in footnote one, accrued by the Lord Abbett-sponsored funds during the
year ended December 31, 1997. The amounts of the aggregate compensation
payable by the Fund as of November 30, 1997 deemed invested in Fund
shares, including dividends reinvested and changes in net asset value
applicable to such deemed investments, were: Mr. Bigelow, $39,081; Mr.
Dixon, $107,152; Mr. Jansing, $142,903; Mr. MacDonald, $84,555; Mr.
Millican, $143,927 and Mr. Neff, $143,008. If the amounts deemed invested
in Fund shares were added to each director's actual holdings of Fund
shares as of November 30, 1997, each would own, the following: Mr.
Bigelow, 1,233 shares; Mr. Dixon, 4,267.85 shares; Mr. Jansing, 8,833
shares; Mr. McDonald, 214,120 shares; Mr. Millican, 0 shares; and Mr.
Neff, 5,896 shares.
4. Mr. Jansing chose to continue to receive benefits under the retirement
plan which provides that outside directors (Trustees) may receive annual
retirement benefits for life equal to their final annual retainer
following retirement at or after age 72 with at least ten years of
service. Thus, if Mr. Jansing were to retire and the annual retainer
payable by the funds were the same as it is today, he would receive annual
retirement benefits of $50,000.
6
<PAGE>
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Brown, Carper, Hilstad, Morris, Noelke and Walsh are partners of Lord Abbett;
the others are employees: Zane Brown, age 46, Executive Vice President; Paul A.
Hilstad, age 55, Vice President and Secretary (with Lord Abbett since 1995 -
formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.); Daniel E. Carper, age 46; Robert I. Gerber, age 43
(with Lord Abbett since 1997 - formerly Senior Portfolio Manager and Shareholder
at Sanford Bernstein); Lawrence H. Kaplan, age 41 (with Lord Abbett since 1997 -
formerly Vice President and Chief Counsel of Salomon Brothers Asset Management
Inc from 1995 to 1997, prior thereto Senior Vice President, Director and General
Counsel of Kidder Peabody Asset Management, Inc.); Thomas F. Konop, age 55;
Robert A. Lee, age 28 (with Lord Abbett since 1997 - formerly Portfolio Manager
at ARM Capital Advisors, prior thereto Assistant Portfolio Manager at Peabody
Asset Management); Robert G. Morris, age 53; A. Edward Oberhaus, age 38; Keith
F. O'Connor, age 42; Walter H. Prahl, age 40 (with Lord Abbett since 1997 -
formerly Quantitative Analyst at Sanford Bernstsein); John J. Walsh, age 61;
Vice Presidents; and Donna M. McManus, age 37, Treasurer (with Lord Abbett since
1996, formerly a Senior Manager at Deloitte & Touche LLP).
The Fund does not hold annual meetings of shareholders unless one or more
matters are required to be acted on by shareholders under the Act. Under the
Fund's Declaration of Trust, shareholder meetings may be called at any time by
certain officers of the Fund or by a majority of the trustees (i) for the
purpose of taking action upon any matter requiring the vote or authority of the
Fund's shareholders or upon other matters deemed to be necessary or desirable or
(ii) upon the written request of the holders of at least one-quarter of the
shares of the Series outstanding and entitled to vote at the meeting.
As of February 1, 1998, our officers and trustees as a group owned less than 1%
of the outstanding shares of the Limited Duration Government Series, Balanced
Series and U.S. Government Securities Series.
3.
Investment Advisory and Other Services
As described under "Our Management" in the Prospectus, Lord Abbett is the Fund's
investment manager. Seven of the twelve general partners of Lord Abbett are
officers and/or directors of the Fund, as follows: Zane E. Brown, Daniel E.
Carper, Paul A. Hilstad, Robert S. Dow, Robert G. Morris, E. Wayne Nordberg and
John J. Walsh. The other partners who are neither officers nor directors of the
Fund are Stephen I. Allen, Daria Foster, W. Thomas Hudson, Michael McLaughlin
and Robert J. Noelke. The address of each partner is The General Motors
Building, 767 Fifth Avenue, New York, New York 10153-0203.
The services performed by Lord Abbett are described under "Our Management" in
the Prospectus. Under each Management Agreement, we are obligated to pay Lord
Abbett a monthly fee, based on average daily net assets for each month, at the
annual rate of .50 of 1% (in the case of the U.S. Government Securities Series
and the Limited Duration Government Series) and .75 of 1% (in the case of the
Balanced Series). These fees are allocated among the classes of each Series
based on the class' proportionate share of each Series average daily net assets.
Each Series pays all of its expenses not expressly assumed by Lord Abbett,
including, without limitation, 12b-1 expenses, outside trustees' fees and
expenses, association membership dues, legal and audit fees, taxes, transfer and
dividend disbursing agent fees, shareholder servicing costs, expenses relating
to shareholder meetings, expenses of preparing, printing and mailing share
certificates and shareholder reports, expenses of registering our shares under
federal and state securities laws, expenses of preparing, printing and mailing
prospectuses to existing shareholders, insurance premiums and brokerage and
other expenses connected with executing portfolio transactions.
The management fees paid to Lord Abbett by the Limited Duration Government
Series for the fiscal years ended October 31, 1995, October 31, 1996, and
November 30, 1997 amounted to $15,561, $9,897 and $2,770, respectively. For the
one month ended November 30, 1996 the management fee paid to Lord Abbett by the
Limited Duration Government Series was $2,770.
The management fees paid to Lord Abbett by the Balanced Series for the period
December 27, 1994 (commencement of operations) to October 31, 1995, and the
fiscal years ended October 31, 1996 and November 30, 1997 were $0, $8,607 and
$48,151, respectively. For the one month ended November 30, 1996, the management
fee paid to Lord Abbett by the Balanced Series was $2,240.
7
<PAGE>
The management fees paid to Lord Abbett by the Acquired Fund ( and subsequent to
July 12, 1996 by the U.S. Government Securities Series) for the fiscal years
ended October 31, 1995, October 31, 1996 and November 30, 1997 were $16,286,000,
$15,053,629 and $12,500,454, respectively.
Although not obligated to do so, Lord Abbett has waived and may waive all or
part of its management fees and has assumed or may assume other expenses of the
Limited Duration U.S. Government Securities Series and Balances Series. For the
fiscal year ended October 31, 1996, the one month ended November 30, 1996, and
the fiscal year ended November 30, 1997, Lord Abbett waived $28,804 , $2,657,
and $54,884 in management fees for the Limited Duration Government Series. With
respect to the Balanced Series, for the fiscal year ended October 31, 1996, the
one month ended November 30, 1996, and the fiscal year ended November 30, 1997,
Lord Abbett waived $53,375, $4,638 and $65,087 in management fees.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281, are
the independent auditors of the Fund and must be approved at least
annually by our trustees to continue in such capacity. Deloitte & Touche LLP
perform audit services for the Fund, including the examination of financial
statements included in our annual report to shareholders.
Bank of New York, 40 Wall Street, New York, New York, is the Fund's custodian.
4.
Portfolio Transactions
It is expected that purchases and sales of each Series' fixed-income portfolio
securities usually will be principal transactions and normally such securities
will be purchased directly from the issuer or from an underwriter or market
maker for the securities. Therefore, each Series usually will pay no brokerage
commissions for such purchases. Purchases from underwriters of portfolio
securities will include a commission or concession paid by the issuer to the
underwriter and purchases from dealers serving as market makers will include a
dealer's markup. Principal transactions, including riskless principal
transactions, are not afforded the protection of the safe harbor in Section 28
(e) of the Securities Exchange Act of 1934.
Each Series' policy is to have purchases and sales of portfolio securities
executed at most favorable prices, considering all costs of the transaction
including brokerage commissions and dealer markups and markdowns, consistent
with obtaining best execution, except to the extent that we may pay a higher
commission rate as described below. This policy governs the selection of brokers
or dealers and the market in which the transaction is executed. To the extent
permitted by law, we may, if considered advantageous, make a purchase from or
sale to another Lord Abbett-sponsored fund without the intervention of any
dealer.
Broker-dealers are selected on the basis of their professional capability and
the value and quality of their brokerage and research services. Normally, the
selection is made by traders who are officers of the Fund and also are employees
of Lord Abbett. These traders do the trading as well for other accounts --
investment companies (of which they are also officers) and other investment
clients -- managed by Lord Abbett. They are responsible for the negotiation of
prices and any commissions.
We may pay a brokerage commission on the purchase or sale of a security that
could be purchased from or sold to a market maker if our net cost of the
purchase or the net proceeds to us of the sale are at least as favorable as we
could obtain on a direct purchase or sale. Brokers who receive such commissions
may also provide research services at least some of which are useful to Lord
Abbett in their overall responsibilities with respect to us and the other
accounts they manage. Research includes trading equipment and computer software
packages, acquired from third-party suppliers, that enable Lord Abbett to access
various information bases and may include the furnishing of analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts. Such services may be used by
Lord Abbett in servicing all their accounts, and not all of such services will
necessarily be used by Lord Abbett in connection with their management of the
Fund; conversely, such services furnished in connection with brokerage on other
accounts managed by Lord Abbett may be used in connection with their management
of the Fund, and not all of such services will necessarily be used by Lord
Abbett in connection with their advisory services to such other accounts. We
have been advised by Lord Abbett that research services received from brokers
cannot be allocated to any particular account, are not a substitute for Lord
Abbett's services but are supplemental to their own research effort and, when
utilized, are subject to internal analysis
8
<PAGE>
before being incorporated by Lord Abbett into their investment process. As a
practical matter, it would not be possible for Lord Abbett to generate all of
the information presently provided by brokers. While receipt of research
services from brokerage firms has not reduced Lord Abbett's normal research
activities, the expenses of Lord Abbett could be materially increased if it
attempted to generate such additional information through its own staff and
purchased such equipment and software packages directly from the suppliers.
No commitments are made regarding the allocation of brokerage business to or
among brokers, and trades are executed only when they are dictated by investment
decisions of the Fund to purchase or sell portfolio securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold our shares and/or
shares of other Lord Abbett-sponsored funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as we do, transactions will, to the extent practicable, be allocated among all
participating accounts in proportion to the amount of each order and will be
executed daily until filled so that each account shares the average price and
commission cost of each day. Other clients who direct that their brokerage
business be placed with specific brokers or who invest through wrap accounts
introduced to Lord Abbett by certain brokers may not participate with us in the
buying and selling of the same securities as described above. If these clients
wish to buy or sell the same security as we do, they may have their transactions
executed at times different from our transactions and thus may not receive the
same price or incur the same commission cost as we do.
We will not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from dealers as
consideration for the direction to them of portfolio business.
During the fiscal year ended October 31,1995, October 31 1996, the one month
ended November 30, 1996, and the fiscal year ended November 30, 1997, the
Limited Duration Government Series paid no commissions to independent brokers.
For the period December 17, 1994 to October 31, 1995, the fiscal year ended
October 31, 1996 , the one month ended November 30, 1996, and the fiscal year
ended November 30, 1997, the Balanced Series paid total commissions to
independent brokers of $4,566, $7,364, $767, and $9,927 .
5.
Purchases, Redemptions
and Shareholder Services
Securities in each Series' portfolio are valued at their market values as of the
close of the NYSE. Market value will be determined as follows: securities listed
or admitted to trading privileges on any national securities exchange are valued
at the last sales price on the principal securities exchange on which such
securities are traded or, if there is no sale, at the mean between the last bid
and asked prices on such exchange or, in the case of bonds, in the
over-the-counter market if, in the judgment of the Fund's officers, that market
more accurately reflects the market value of the bonds. Securities traded only
in the over-the-counter market are valued at the mean between the bid and asked
prices, except that securities admitted to trading on the NASDAQ National Market
System are valued at the last sales price. Securities for which market
quotations are not available are valued at fair value under procedures approved
by the Board of Trustees. With respect to the Balanced Series, all assets and
liabilities expressed in foreign currencies will be converted into United States
dollars at the mean between the buying and selling rates of such currencies
against United States dollars last quoted by any major bank. If such quotations
are not available, the rate of exchange will be determined in accordance with
policies established by the Board of Trustees of the Fund. The Board of Trustees
will monitor, on an ongoing basis, the Fund's method of valuation.
Information concerning how we value our shares for the purchase and redemption
of our shares is described in the Prospectus under "Purchases" and Redemptions,"
respectively.
As disclosed in the Prospectus, we calculate our net asset value and are
otherwise open for business on each day that the New York Stock Exchange
("NYSE") is open for trading. The NYSE is closed on Saturdays and Sundays and
the following holidays -- New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
9
<PAGE>
The net asset value per share for the Class B and Class C shares will be
determined in the same manner as for the Class A shares (net assets divided by
shares outstanding). Our Class B and Class C shares will be sold at net asset
value.
The offering price of Class A shares of the U. S. Government Securities Series,
the Limited Duration Government Series and the Balanced Series on November 30,
1997 were computed as follows:
Limited Duration U. S. Government
Government Balanced Securities
Series Series Series
---------------- -------- ----------------
Net asset value per share
(net assets divided
by shares outstanding).............$4.40 $12.80 $2.59
Maximum offering price per
share - net asset value
divided by (.9700 for Limited
Duration Government Series
and U. S. Government
Securities Series) and
(.9525 for Balanced Series)........$4.54 $13.44 $2.72
The Fund has entered into a distribution agreement with Lord Abbett Distributor
LLC, a New York limited liability company ("Lord Abbett Distributor"), under
which Lord Abbett Distributor is obligated to use its best efforts to find
purchasers for the shares of the Fund, and to make reasonable efforts to sell
Fund shares so long as, in Lord Abbett Distributor's judgment, a substantial
distribution can be obtained by reasonable efforts.
Since commencement of operations, Lord Abbett as our principal underwriter
received net commissions after allowance of a portion of the sales charge to
independent dealers with respect to Class A shares of the Limited Duration U.S.
Government Securities Series and the Balanced Series as follows:
<TABLE>
<CAPTION>
Year ended Year ended One month ended Year ended
October 31, 1995 October 31, 1996 November 30, 1996 November 30, 1997
---------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Gross sales charge $205,002 $140,941 $8,059 $269,184
Amount allowed
to dealers $192,792 $123,303 $7,068 $233,663
-------- -------- ------ --------
Net Commissions
received by
Lord Abbett $ 12,210 $ 17,638 $ 991 $ 35,521
======== ======== ====== --------
</TABLE>
10
<PAGE>
For the fiscal years ended November 30, 1995, 1996 and 1997, Lord Abbett as
principal underwriter received net commissions after allowance of a portion of
the sales charge to independent dealers with respect to Class A shares of the
Acquired Fund (and subsequent to July 12, 1996, the U.S. Government Securities
Series) as follows:
1995 1996 1997
---- ---- ----
Gross sales charge $8,891,483 $4,248,800 $1,469,770
Amount allowed
to dealers $7,684,528 $3,623,071 $1,259,215
---------- ---------- ----------
Net Commissions received
by Lord Abbett $1,206,955 $625,729 $210,555
========== ========== ==========
Conversion of Class B Shares. The conversion of Class B shares of the U.S.
Government Securities Series on the eighth anniversary of their purchase is
subject to the continuing availability of a private letter ruling from the
Internal Revenue Service or an opinion of counsel to the effect that the
conversion of Class B shares does not constitute a taxable event for the holder
under Federal income tax law. If such a revenue ruling or opinion is no longer
available, the automatic conversion feature may be suspended, in which event no
further conversions of Class B shares would occur while such suspension remained
in effect. Although Class B shares could then be exchanged for Class A shares on
the basis of relative net asset value of the two classes, without the imposition
of a sales charge or fee, such exchange could constitute a taxable event for the
holder.
ALTERNATIVE SALES ARRANGEMENTS
Classes of Shares. The Fund offers investors five different classes of shares.
This Prospectus offers four of those classes designated Class A, B, C and P. The
different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and will likely have different
share prices. Investors should read this section carefully to determine which
class represents the best investment option for their particular situation.
Class A Shares. If you buy Class A shares, you pay an initial sales charge on
investments of less than $1 million (or on investments for employer-sponsored
retirement plans under the Internal Revenue Code (hereinafter referred to as
"Retirement Plans") with less than 100 eligible employees or on investments that
do not qualify to be under a "special retirement wrap program" as a program
sponsored by an authorized institution showing one or more characteristics
distinguishing it, in the opinion of Lord Abbett Distributor from a mutual fund
wrap fee program). If you purchase Class A shares as part of an investment of at
least $1 million (or for Retirement Plans with at least 100 eligible employees
or under a special retirement wrap program) in shares of one or more Lord
Abbett-sponsored funds, you will not pay an initial sales charge, but if you
redeem any of those shares within 24 months after the month in which you buy
them, you may pay to the Fund a contingent deferred sales charge ("CDSC") of 1%
except for redemptions under a special retirement wrap program. Class A shares
are subject to service and distribution fees that are currently estimated to
total annually approximately 0.23 of 1% of the annual net asset value of the
Class A shares. The initial sales charge rates, the CDSC and the Rule 12b-1 plan
applicable to the Class A shares are described in "Buying Class A Shares" below.
Class B Shares. If you buy Class B shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the sixth anniversary of
buying them, you will normally pay a CDSC to Lord Abbett Distributor LLC ("Lord
Abbett Distributor"). That CDSC varies depending on how long you own shares.
Class B shares are subject to service and distribution fees at an annual rate of
1% of the annual net asset value of the Class B shares. The CDSC and the Rule
12b-1 plan applicable to the Class B shares are described in "Buying Class B
Shares" below.
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Class C Shares. If you buy Class C shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the first anniversary of
buying them, you will normally pay the Fund a CDSC of 1%. Class C shares are
subject to service and distribution fees at an annual rate of 1% of the annual
net asset value of the Class C shares. The CDSC and the Rule 12b-1 plan
applicable to the C shares are described in "Buying Class C Shares" below.
Which Class of Shares Should You Choose? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial adviser. The Fund's class-specific expenses and the
effect of the different types of sales charges on your investment will affect
your investment results over time. The most important factors are how much you
plan to invest and how long you plan to hold your investment. If your goals and
objectives change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider another class of
shares.
In the following discussion, to help provide you and your financial adviser with
a framework in which to choose a class, we have made some assumptions using a
hypothetical investment in the Fund. We used the sales charge rates that apply
to Class A, Class B and Class C, and considered the effect of the higher
distribution fees on Class B and Class C expenses (which will affect your
investment return). Of course, the actual performance of your investment cannot
be predicted and will vary, based on the Fund's actual investment returns, the
operating expenses borne by each class of shares, and the class of shares you
purchase. The factors briefly discussed below are not intended to be investment
advice, guidelines or recommendations, because each investor's financial
considerations are different. The discussion below of the factors to consider in
purchasing a particular class of shares assumes that you will purchase only one
class of shares and not a combination of shares of different classes.
How Long Do You Expect to Hold Your Investment? While future financial needs
cannot be predicted with certainty, knowing how long you expect to hold your
investment will assist you in selecting the appropriate class of shares. For
example, over time, the reduced sales charges available for larger purchases of
Class A shares may offset the effect of paying an initial sales charge on your
investment, compared to the effect over time of higher class-specific expenses
on Class B or Class C shares for which no initial sales charge is paid. Because
of the effect of class-based expenses, your choice should also depend on how
much you plan to invest.
Investing for the Short Term. If you have a short-term investment horizon (that
is, you plan to hold your shares for not more than six years), you should
probably consider purchasing Class A or Class C shares rather than Class B
shares. This is because of the effect of the Class B CDSC if you redeem before
the sixth anniversary of your purchase, as well as the effect of the Class B
distribution fee on the investment return for that class in the short term.
Class C shares might be the appropriate choice (especially for investments of
less than $100,000), because there is no initial sales charge on Class C shares,
and the CDSC does not apply to amounts you redeem after holding them one year.
However, if you plan to invest more than $100,000 for the short term, then the
more you invest and the more your investment horizon increases toward six years,
the more attractive the Class A share option may become. This is because the
annual distribution fee on Class C shares will have a greater impact on your
account over the longer term than the reduced front-end sales charge available
for larger purchases of Class A shares. For example, Class A might be more
appropriate than Class C for investments of more than $100,000 expected to be
held for 5 or 6 years (or more). For investments over $250,000 expected to be
held 4 to 6 years (or more), Class A shares may become more appropriate than
Class C. If you are investing $500,000 or more, Class A may become more
desirable as your investment horizon approaches 3 years or more.
For most investors who invest $1 million or more or for Retirement Plans with at
least 100 eligible employees or for investments pursuant to a special retirement
wrap program, in most cases Class A shares will be the most advantageous choice,
no matter how long you intend to hold your shares. For that reason, it may not
be suitable for you to place a purchase order for Class B shares of $500,000 or
more or a purchase order for Class C shares of $1,000,000 or more. In addition,
it may not be suitable for you to place an order for Class B or C shares for a
Retirement Plan with at least 100 eligible employees or for a special retirement
wrap program. You should discuss this with your financial advisor.
Investing for the Longer Term. If you are investing for the longer term (for
example, to provide for future college expenses for your child) and do not
expect to need access to your money for seven years or more, Class B shares may
be
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an appropriate investment option, if you plan to invest less than $100,000. If
you plan to invest more than $100,000 over the long term, Class A shares will
likely be more advantageous than Class B shares or Class C shares, as discussed
above, because of the effect of the expected lower expenses for Class A shares
and the reduced initial sales charges available for larger investments in Class
A shares under the Fund's Rights of Accumulation. Of course, these examples are
based on approximations of the effect of current sales charges and expenses on a
hypothetical investment over time, and should not be relied on as rigid
guidelines.
Are There Differences in Account Features That Matter to You? Some account
features are available in whole or in part to Class A, Class B and Class C
shareholders. Other features (such as Systematic Withdrawal Plans) might not be
advisable in non-Retirement Plan accounts for Class B shareholders (because of
the effect of the CDSC on the entire amount of a withdrawal if it exceeds 12%
annually) and in any account for Class C shareholders during the first year of
share ownership (due to the CDSC on withdrawals during that year). See
"Systematic Withdrawal Plan" under "Shareholder Services" in the Prospectus for
more information about the 12% annual waiver of the CDSC. You should carefully
review how you plan to use your investment account before deciding which class
of shares you buy. For example, the dividends payable to Class B and Class C
shareholders will be reduced by the expenses borne solely by each of these
classes, such as the higher distribution fee to which Class B and Class C shares
are subject, as described below.
How Does It Affect Payments to My Broker? A salesperson, such as a broker, or
any other person who is entitled to receive compensation for selling Fund shares
may receive different compensation for selling one class than for selling
another class. As discussed in more detail below, such compensation is primarily
paid at the time of sale in the case of Class A and B shares and is paid over
time, so long as shares remain outstanding, in the case of Class C shares. It is
important that investors understand that the primary purpose of the CDSC for the
Class B shares and the distribution fee for Class B and Class C shares is the
same as the purpose of the front-end sales charge on sales of Class A shares: to
compensate brokers and other persons selling such shares. The CDSC, if payable,
supplements the Class B distribution fee and reduces the Class C distribution
fee expenses for the Fund and Class C shareholders.
Class A, B and C Rule 12b-1 Plans. As described in the Prospectus, the Fund has
adopted a Distribution Plan and Agreement on behalf of each Series pursuant to
Rule 12b-1 of the Act for each class of shares available in the applicable
series: the "A Plan," the "B Plan" (U.S. Government Securities Series only) and
the "C Plan," respectively. In adopting each Plan and in approving its
continuance, the Board of Trustees has concluded that there is a reasonable
likelihood that each Plan will benefit its respective Class and such Class'
shareholders. The expected benefits include greater sales and lower redemptions
of Class shares, which should allow each Class to maintain a consistent cash
flow, and a higher quality of service to shareholders by authorized institutions
than would otherwise be the case. During the last fiscal year, the Fund accrued
or paid through Lord Abbett to authorized institutions $6,368,420 under the A
Plan, $93,175 under the B Plan and $1,929,168 under the C Plan. Both the B Plan
and the C Plans were adopted by the Fund subsequent to its last fiscal year.
Lord Abbett used all amounts received under the A Plan for payments to dealers
for (i) providing continuous services to the Class A shareholders, such as
answering shareholder inquiries, maintaining records, and assisting shareholders
in making redemptions, transfers, additional purchases and exchanges and (ii)
their assistance in distributing Class A shares of the Fund.
Each Plan requires the Board of Trustees to review, on a quarterly basis,
written reports of all amounts expended pursuant to the Plan and the purpose for
which such expenditures were made. Each Plan shall continue in effect only if
its continuance is specifically approved at least annually by vote of the Fund's
Board of Trustees and of the Fund's trustees who are not interested persons of
the Fund and who have no direct or indirect financial interest in the operation
of the Plan or in any agreements related to the Plan ("outside trustees"), cast
in person at a meeting called for the purpose of voting on such Plan and
agreements. No Plan may be amended to increase materially the amount spent for
distribution expenses without approval by a majority of the outstanding voting
securities of the appropriate class and the approval of a majority of the
trustees including a majority of the Fund's outside trustees. Each Plan may be
terminated at any time by vote of a majority of the Fund's outside trustees or
by vote of a majority of its Class's outstanding voting securities.
Contingent Deferred Sales Charges. A Contingent Deferred Sales Charge ("CDSC"),
applies upon early redemption of shares regardless of class, and (i) will be
assessed on the lesser of the net asset value of the shares at the time of
redemption or the original purchase price and (ii) is not imposed on the amount
of your account value represented by the increase in net
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asset value over the initial purchase price (including increases due to the
reinvestment of dividends and capital gains distributions).
Class A Shares. (all Series) As stated in the Prospectus, a CDSC is imposed with
respect to those Class A shares (or Class A shares of another Lord
Abbett-sponsored fund or series acquired through exchange of such shares) on
which a Series has paid the one-time 1% distribution fee if such shares are
redeemed out of the Lord Abbett-sponsored family of funds within a period of 24
months from the end of the month in which the original sale occurred.
Class B Shares. (U.S. Government Securities Series and Balanced Series) As
stated in the Prospectus, if Class B shares (or Class B shares of another Lord
Abbett-sponsored fund or series acquired through exchange of such shares) are
redeemed out of the Lord Abbett-sponsored family of funds for cash before the
sixth anniversary of their purchase, a CDSC will be deducted from the redemption
proceeds. The Class B CDSC is paid to Lord Abbett Distributor to reimburse its
expenses, in whole or in part, of providing distribution-related service to the
Series in connection with the sale of Class B shares.
To determine whether the CDSC applies to a redemption, the Series redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held on or after the sixth anniversary
of their purchase, and (3) shares held the longest before such sixth
anniversary.
The amount of the contingent deferred sales charge will depend on the number of
years since you invested and the dollar amount being redeemed, according to the
following schedule:
Anniversary of Contingent Deferred Sales Charge
Purchase on Redemptions (As % of Amount Subject to Charge)
Before the 1st.........................................5.0%
On the 1st, before the 2nd.............................4.0%
On the 2nd, before the 3rd.............................3.0%
On the 3rd, before the 4th.............................3.0%
On the 4th, before the 5th.............................2.0%
On the 5th, before the 6th ............................1.0%
On or after the 6th anniversary........................None
In the table, an "anniversary" is the 365th day subsequent to the acceptance of
a purchase order or a prior anniversary. All purchases are considered to have
been made on the business day on which the purchase order was accepted.
Class C Shares (All Series). As stated in the Prospectus, if Class C shares are
redeemed for cash before the first anniversary of their purchase, the redeeming
shareholder will be required to pay to the Series on behalf of Class C shares a
CDSC of 1% of the lower of cost or the then net asset value of Class C shares
redeemed. If such shares are exchanged into the same class of another Lord
Abbett-sponsored fund and subsequently redeemed before the first anniversary of
their original purchase, the charge will be collected by the other fund on
behalf of this Series' Class C shares.
General. Each percentage (1% in the case of Class A and C shares and 5% through
1% in the case of Class B shares) used to calculate CDSCs described above for
the Class A, Class B and Class C shares is sometimes hereinafter referred to as
the "Applicable Percentage."
With respect to Class A and Class B shares, no CDSC is payable on redemptions by
participants or beneficiaries from employer-sponsored retirement plans under the
Internal Revenue Code for benefit payments due to plan loans, hardship
withdrawals, death, retirement or separation from service and for returns of
excess contributions to retirement plan sponsors With respect to Class A shares
purchased pursuant to a special retirement wrap program, no CDSC is payable on
redemptions which continue or investments in another fund participating in the
program. In the case of Class A and Class C shares, the CDSC is received by the
Series and is intended to reimburse all or a portion of the amount paid by the
Series if the shares are redeemed before the Series has had an opportunity to
realize the anticipated benefits of having a long-term shareholder account in
the Series. In the case of Class B shares, the CDSC is received by Lord Abbett
Distributor and is intended to reimburse its expenses of providing
distribution-related service to the Series (including recoupment of the
commission payments made) in connection with the sale of Class B shares before
Lord Abbett Distributor has had an
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opportunity to realize its anticipated reimbursement by having such a long-term
shareholder account subject to the B Plan distribution fee.
The other funds and series which participate in the Telephone Exchange Privilege
(except (a) Lord Abbett U.S. Government Securities Money Market Fund, Inc.
("GSMMF"), (b) certain series of Lord Abbett Tax-Free Income Fund and Lord
Abbett Tax-Free Income Trust for which a Rule 12b-1 Plan is not yet in effect,
and (c) any authorized institution's affiliated money market fund satisfying
Lord Abbett Distributor as to certain omnibus account and other criteria,
hereinafter referred to as an "authorized money market fund" or "AMMF"
(collectively, the "Non-12b-1 Funds")) have instituted a CDSC for each class on
the same terms and conditions. No CDSC will be charged on an exchange of shares
of the same class between Lord Abbett funds or between such funds and AMMF. Upon
redemption of shares out of the Lord Abbett family of funds or out of AMMF, the
CDSC will be charged on behalf of and paid: (i) to the fund in which the
original purchase (subject to a CDSC) occurred, in the case of the Class A and
Class C shares and (ii) to Lord Abbett Distributor if the original purchase was
subject to a CDSC, in the case of the Class B shares. Thus, if shares of a Lord
Abbett fund are exchanged for shares of the same class of another such fund and
the shares of the same class tendered ("Exchanged Shares") are subject to a
CDSC, the CDSC will carry over to the shares of the same class being acquired,
including GSMMF and AMMF ("Acquired Shares"). Any CDSC that is carried over to
Acquired Shares is calculated as if the holder of the Acquired Shares had held
those shares from the date on which he or she became the holder of the Exchanged
Shares. Although the Non-12b-1 Funds will not pay a distribution fee on their
own shares, and will, therefore, not impose their own CDSC, the Non-12b-1 Funds
will collect the CDSC (a) on behalf of other Lord Abbett funds, in the case of
the Class A and Class C shares and (b) on behalf of Lord Abbett Distributor, in
the case of the Class B shares. Acquired Shares held in GSMMF and AMMF which are
subject to a CDSC will be credited with the time such shares are held in GSMMF
but will not be credited with the time such shares are held in AMMF. Therefore,
if your Acquired Shares held in AMMF qualified for no CDSC or a lower Applicable
Percentage at the time of exchange into AMMF, that Applicable Percentage will
apply to redemptions for cash from AMMF, regardless of the time you have held
Acquired Shares in AMMF.
In no event will the amount of the CDSC exceed the Applicable Percentage of the
lesser of (i) the net asset value of the shares redeemed or (ii) the original
cost of such shares (or of the Exchanged Shares for which such shares were
acquired). No CDSC will be imposed when the investor redeems (i) amounts derived
from increases in the value of the account above the total cost of shares being
redeemed due to increases in net asset value, (ii) shares with respect to which
no Lord Abbett fund or series paid a 12b-1 fee and, in the case of Class B
shares, Lord Abbett Distributor paid no sales charge or service or Series fee
(including shares acquired through reinvestment of dividend income and capital
gains distributions) or (iii) shares which, together with Exchanged Shares, have
been held continuously for 24 months from the end of the month in which the
original sale occurred (in the case of Class A shares); for six years or more
(in the case of Class B shares) or for one year or more (in the case of Class C
shares). In determining whether a CDSC is payable, (a) shares not subject to the
CDSC will be redeemed before shares subject to the CDSC and (b) of the shares
subject to a CDSC, those held the longest will be the first to be redeemed.
Exchanges. The Prospectus briefly describes the Telephone Exchange Privilege.
You may exchange some or all of your shares for those of (i) Lord
Abbett-sponsored funds currently offered to the public with a sales charge
(front-end, back-end or level), (ii) GSMMF or (iii) AMMF, to the extent offers
and sales may be made in your state. You should read the prospectus of the other
fund before exchanging. In establishing a new account by exchange, shares of the
Fund being exchanged must have a value equal to at least the minimum initial
investment required for the fund into which the exchange is made.
Shareholders in other Lord Abbett-sponsored funds have the same right to
exchange their shares for the corresponding class of the Series' shares.
Exchanges are based on relative net asset values on the day instructions are
received by the Fund in Kansas City if the instructions are received prior to
the close of the NYSE in proper form. No sales charges are imposed except in the
case of exchanges out of GSMMF or AMMF (unless a sales charge (front-end,
back-end or level) was paid on the initial investment in a Lord Abbett sponsored
fund). Exercise of the exchange privilege will be treated as a sale for federal
income tax purposes, and, depending on the circumstances, a gain or loss may be
recognized. In the case of an exchange of shares that have been held for 90 days
or less where no sales charge is payable on the exchange, the original sales
charge incurred with respect to the exchanged shares will be taken into account
in determining gain or loss on the exchange only to the extent such charge
exceeds the sales charge that would have been payable on the acquired shares had
they been acquired for cash rather than by exchange. The portion of the original
sales charge not so taken into account will increase the basis of the acquired
shares.
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Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as a means for taking advantage of
short-term swings in the market, and we reserve the right to terminate or limit
the privilege of any shareholder who makes frequent exchanges. We can revoke or
modify the privilege for all shareholders upon 60 days' prior notice. "Eligible
Funds" are AMMF and other Lord Abbett-sponsored funds which are eligible for the
exchange privilege, except Lord Abbett Series Fund ("LASF") which offers its
shares only in connection with certain variable annuity contracts, Lord Abbett
Equity Fund ("LAEF") which is not issuing shares, and series of Lord Abbett
Research Fund not offered to the general public ("LARF").
Statement of Intention. Under the terms of the Statement of Intention to invest
$50,000 or more over a 13-month period as described in the Prospectus, shares of
Lord Abbett-sponsored funds (other than shares of LAEF, LASF, LARF, and GSMMF,
unless holdings in GSMMF are attributable to shares exchanged from a Lord
Abbett-sponsored fund offered with a front-end, back-end or level sales charge)
currently owned by you are credited as purchases (at their current offering
prices on the date the Statement is signed) toward achieving the stated
investment and reduced initial sales charges for Class A shares. Class A shares
valued at 5% of the amount of intended purchases are escrowed and may be
redeemed to cover the additional sales charge payable if the Statement is not
completed. The Statement of Intention is neither a binding obligation on you to
buy, nor on the Fund to sell, the full amount indicated.
Rights of Accumulation. As stated in the Prospectus, purchasers (as defined in
the Prospectus) may accumulate their investment in Lord Abbett-sponsored funds
(other than LAEF, LARF, LASF, and GSMMF, unless holdings in GSMMF are
attributable to shares exchanged from a Lord Abbett-sponsored fund offered with
a front-end, back-end or level sales charge) so that a current investment, plus
the purchaser's holdings valued at the current maximum offering price, reach a
level eligible for a discounted sales charge for Class A shares.
Net Asset Value Purchases of Class A Shares. As stated in the Prospectus, our
Class A shares may be purchased at net asset value by our trustees, employees of
Lord Abbett, employees of our shareholder servicing agent and employees of any
securities dealer having a sales agreement with Lord Abbett who consents to such
purchases or by the trustee or custodian under any pension or profit-sharing
plan or Payroll Deduction IRA established for the benefit of such persons or for
the benefit of employees of any national securities trade organization to which
Lord Abbett belongs or any company with an account(s) in excess of $10 million
managed by Lord Abbett on a private-advisory-account basis. For purposes of this
paragraph, the terms "trustees" and "employees" include a trustee's or
employee's spouse (including the surviving spouse of a deceased director or
employee). The terms "directors" and "employees of Lord Abbett" also include
other family members and retired trustees and employees.
Our Class A shares also may be purchased at net asset value (a) at $1 million or
more, (b) with dividends and distributions from Class A shares of other Lord
Abbett-sponsored funds, except for LARF, LAEF and LASF, (c) under the loan
feature of the Lord Abbett-sponsored prototype 403(b) plan for share purchases
representing the repayment of principal and interest, (d) by certain authorized
brokers, dealers, registered investment advisers or other financial institutions
who have entered into an agreement with Lord Abbett Distributor in accordance
with certain standards approved by Lord Abbett Distributor, providing
specifically for the use of our shares in particular investment products made
available for a fee to clients of such brokers, dealers, registered investment
advisers and other financial institutions, ("mutual fund wrap fee program"), (e)
by employees, partners and owners of unaffiliated consultants and advisors to
Lord Abbett, Lord Abbett Distributor or Lord Abbett-sponsored funds who consent
to such purchase if such persons provide service to Lord Abbett, Lord Abbett
Distributor or such funds on a continuing basis and are familiar with such
funds, (f) through Retirement Plans with at least 100 eligible employees, (g)
our Class A shares also may be purchased at net asset value, subject to
appropriate documentation, through a securities dealer where the amount invested
represents redemption proceeds from shares ("Redeemed Shares") of a registered
open-end management investment company not distributed or managed by Lord Abbett
(other than a money market fund), if such redemption has occurred no more than
60 days prior to the purchase of our shares, the Redeemed Shares were held for
at least six months prior to redemption and the proceeds of redemption were
maintained in cash or a money market fund prior to purchase. Purchasers should
consider the impact, if any, of contingent deferred sales charges in determining
whether to redeem shares for subsequent investment in our Class A shares. Lord
Abbett may suspend, change or terminate this purchase option referred to in (g)
above at any time, we plan that on June 1, 1997 the net asset value transfer
privilege will be terminated, and (h) through a "special retirement wrap
program" sponsored by an authorized institution showing one or more
characteristics distinguishing it, in the opinion of Lord Abbett Distributor
from a mutual fund wrap program. Such characteristics include, among other
things, the fact that an authorized institution does
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not charge its clients any fee of a consulting or advisory nature that is
economically equivalent to the distribution fee under Class A 12b-1 Plan and the
fact that the program relates to participant-directed Retirement Plan with
respect to the U.S. Government Securities Series only,. Shares are offered at
net asset value to these investors for the purpose of promoting goodwill with
employees and others with whom Lord Abbett Distributor and/or the Fund has
business relationships.
Redemptions. A redemption order is in proper form when it contains all of the
information and documentation required by the order form or supplementally by
Lord Abbett Distributor or the Fund to carry out the order. The signature(s) and
any legal capacity of the signer(s) must be guaranteed by an eligible guarantor.
See the Prospectus for expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Trustees may authorize redemption of all of the shares in any
account in which there are fewer than 25 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least 30 days' prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
Div-Move. Under the Div-Move service described in the Prospectus, you can invest
the dividends paid on your account into an existing account in any other
Eligible Fund. The account must be either your account, a joint account for you
and your spouse, a single account for your spouse, or a custodial account for
your minor child under the age of 21. You should read the prospectus of the
other fund before investing.
Invest-A-Matic. The Invest-A-Matic method of investing in the Fund and/or any
other Eligible Fund is described in the Prospectus. To avail yourself of this
method you must complete the application form, selecting the time and amount of
your bank checking account withdrawals and the funds for investment, include a
voided, unsigned check and complete the bank authorization.
Systematic Withdrawal Plans. The Systematic Withdrawal Plan (the "SWP") also is
described in the Prospectus. You may establish a SWP if you own or purchase
uncertificated shares having a current offering price value of at least $10,000.
Lord Abbett prototype retirement plans have no such minimum. With respect to a
SWP for Class B shares, on redemptions over 12% per year, the CDSC will apply to
the entire redemption. Therefore, please contact the Fund for assistance in
minimizing the CDSC in this situation . With respect to Class C shares, the CDSC
will be waived on and after the first anniversary of their purchase. The SWP
involves the planned redemption of shares on a periodic basis by receiving
either fixed or variable amounts at periodic intervals. Since the value of
shares redeemed may be more or less than their cost, gain or loss may be
recognized for income tax purposes on each periodic payment. Normally, you may
not make regular investments at the same time you are receiving systematic
withdrawal payments because it is not in your interest to pay a sales charge on
new investments when in effect a portion of that new investment is soon
withdrawn. The minimum investment accepted while a withdrawal plan is in effect
is $1,000. The SWP may be terminated by you or by us at any time by written
notice.
Retirement Plans. The Prospectus indicates the types of retirement plans for
which Lord Abbett provides forms and explanations. Lord Abbett makes available
the retirement plan forms and custodial agreements for IRAs (Individual
Retirement Accounts including Simple IRAs and Simplified Employee Pensions),
403(b) plans and qualified pension and profit-sharing plans, including 401(k)
plans. The forms name Investors Fiduciary Trust Company as custodian and contain
specific information about the plans. Explanations of the eligibility
requirements, annual custodial fees and allowable tax advantages and penalties
are set forth in the relevant plan documents. Adoption of any of these plans
should be on the advice of your legal counsel or qualified tax adviser.
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6.
Performance
Each Series computes the average annual compounded rate of total return for each
Class during specified periods that would equate the initial amount invested to
the ending redeemable value of such investment by adding one to the computed
average annual total return, raising the sum to a power equal to the number of
years covered by the computation and multiplying the result by $1,000, which
represents a hypothetical initial investment. The calculation assumes deduction
of the maximum sales charge (as described in the next paragraph) from the amount
invested and reinvestment of all income dividends and capital gains
distributions on the reinvestment dates at net asset value. The ending
redeemable value is determined by assuming a complete redemption at the end of
the period(s) covered by the average annual total return computation.
In calculating total returns for Class A shares, the current maximum sales
charge of 3.0% with respect to the Balanced Series and 4.75% with respect to the
Limited Duration Government and U.S. Government Securities Series (as a
percentage of the offering price) is deducted from the initial investment
(unless the return is shown at net asset value). For Class B shares of the U.S.
Government Securities Series, the payment of the applicable CDSC (5.0% prior to
the first anniversary of purchase, 4.0% prior to the second anniversary of
purchase, 3.0% prior to the third and fourth anniversaries of purchase, 2.0%
prior to the fifth anniversary of purchase, 1.0% prior to the sixth anniversary
of purchase and no CDSC on and after the sixth anniversary of purchase) is
applied to the Series' investment result for that class for the time period
shown (unless the total return is shown at net asset value). For Class C shares,
the 1.0% CDSC is applied to the applicable Series' investment result for that
class for the time period shown prior to the first anniversary of purchase
(unless the total return is shown at net asset value). Total returns also assume
that all dividends and capital gains distributions during the period are
reinvested at net asset value per share, and that the investment is redeemed at
the end of the period.
Using the method to compute average annual compounded total return described
above, the total annual return for the Acquired Fund (and subsequent to July 12,
1996 for the U.S. Government Securities Series) for the one, five and ten year
periods ended November 30, 1997 were 1.60%, 5.22% and 7.85% for the Class A
shares. The total return for the Limited Duration Government Series for the
period from November 4, 1993 (commencement of operations) to October 31, 1994,
the fiscal year ended October 31, 1996 and fiscal year ended November 30, 1997
were -6.00%, 4.90%, and -0.40% for the Class A shares. For the period December
27, 1994 (commencement of operations) to October 31, 1995, the fiscal year ended
October 31, 1996, and the fiscal year ended November 30, 1997, the total returns
for the Balanced Series were 10.80%, 6.20%, and 8.80 % for the Class A shares.
The ending redeemable value of shares of the Limited Duration Government Series
and the Balanced Series for the fiscal year November 30, 1997 were $1,022 and
$1,088, respectively. The ending redeemable values for the Acquired Fund (and
subsequent to July 12, 1996 for the U.S. Government Securities Series) for the
one, five and ten year periods ended November 30, 1997 were $1,016, $1,290 and
$2,129, respectively.
The total return for Class C shares of the Limited Duration Government
Securities and Balanced Series for the period July 15, 1996 to October 31, 1996
,the one month ended November 30, 1996, and the fiscal year ended November 30,
1997 were 1.97% , 0.09%, 4.40% , and 6.72%, 3.65%, and 13.10% respectively. The
total return for Class C shares of the U.S. Government Securities Series for the
period July 15, 1996 to November 30, 1996 and the fiscal year ended November 30,
1997 were 5.34% and 5.90%.
The total return for Class B shares of the U. S. Government Securities Series
for the fiscal year ended November 30, 1997 was 1.28%.
Each Series' yield quotation is based on a 30-day period ended on a specified
date, computed by dividing our net investment income per share earned during the
period by our maximum offering price per share on the last day of the period.
This is determined by finding the following quotient: take the Series' dividends
and interest earned during the period minus its expenses accrued for the period
and divide by the product of (i) the average daily number of Series shares
outstanding during the period that were entitled to receive dividends and (ii)
the Series' at maximum offering price per share on the last day of the period.
To this quotient add one. This sum is multiplied by itself five times. Then one
is subtracted from the product of the multiplication and the remainder is
multiplied by two. Yield for the Class A shares reflects the deduction of the
maximum initial sales charge, but may also be shown based on the Fund's net
asset value per share. Yields for Class B and
18
<PAGE>
C shares do not reflect the deduction of the CDSC. For the 30-day period ended
November 30, 1997, the Limited Duration Government Series and Balanced Series
yields were 4.60% and 2.12%, respectively. For the 30-day period ended on
November 30, 1997, the yield for the U.S. Government Securities Series was
4.54%.
It is important to remember that any figures developed using the formulas above
represent past performance and an investor should be aware that the investment
return and principal value of the Series investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Therefore, there is no assurance that this performance will be repeated in
the future.
7.
Taxes
The value of any shares redeemed, repurchased or otherwise sold may be more or
less than your tax basis in the shares at the time the redemption, repurchase or
sale is made. Any gain or loss generally will be taxable for federal income tax
purposes. Any loss realized on the sale, redemption or repurchase of Series
shares which you have held for six months or less will be treated for federal
income tax purposes as a long-term capital loss to the extent of any capital
gains distributions which you received with respect to such shares. Losses on
the sale of Series shares are not deductible if, within a period beginning 30
days before the date of the sale and ending 30 days after the date of the sale,
the taxpayer acquires stock or securities that are substantially identical.
Each Series will be subject to a 4% nondeductible excise tax on certain amounts
not distributed (and not treated as having been distributed) on a timely basis
in accordance with a calendar year distribution requirement. Each Series intends
to distribute to shareholders each year an amount adequate to avoid the
imposition of such excise tax. Dividends paid by the Series will qualify for the
dividends-received deduction for corporations to the extent that they are
derived from dividends paid by domestic corporations.
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to United States persons (United States citizens or residents and
United States domestic corporations, partnerships, trusts and estates). Each
shareholder who is not a United States person should consult his tax adviser
regarding the U.S. and foreign tax consequences of the ownership of shares of
each Series, including a 30% (or lower treaty rate) United States withholding
tax on dividends representing ordinary income and net short-term capital gains
and the applicability of United States gift and estate taxes to non-United
States persons who own Series shares.
8.
Information About the Fund
Shareholder Liability. Delaware law provides that Fund shareholders shall be
entitled to the same limitations of personal liability extended to shareholders
of private corporations for profit. The courts of some states, however, may
decline to apply Delaware law on this point. The Fund's Declaration of Trust
contains an express disclaimer of shareholder liability for the acts,
obligations, or affairs of the Fund or any series and requires that a disclaimer
be given in each contract entered into or executed by the Fund. The Declaration
provides for indemnification out of the Fund's property of any shareholder or
former shareholder held personally liable for the obligations of the Fund. Thus,
the risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which Delaware law does not apply, no
contractual limitation of liability was in effect and the portfolio is unable to
meet its obligations. Lord Abbett believes that, in view of the above, the risk
of personal liability to shareholders is extremely remote.
General. The assets of the Fund received for the issue or sale of the shares of
each Series and all income, earnings, profits, and proceeds thereof, subject
only to the rights of creditors, are especially allocated to each Series, and
constitute the underlying assets of such Series. The underlying assets of each
Series are recorded on the books of account of the Fund, and are to be charged
with the liabilities with respect to such Series and with a share of the general
expenses of the Fund. Expenses with respect to the Fund are to be allocated in a
manner and on a basis (generally in proportion to relative assets) deemed fair
and equitable by the trustees. In the event of the dissolution or liquidation of
the Fund, the holders of the shares of each Series are entitled to receive as a
class the underlying assets of such Series available for distribution.
19
<PAGE>
Under the Fund's Declaration of Trust, the trustees may, upon shareholder vote,
cause the Fund to merge or consolidate into, or sell and convey all or
substantially all of, the assets of the Fund or any Series to one or more
trusts, partnerships or corporations, so long as the surviving entity is an
open-end management investment company that will succeed to or assume the Fund's
registration statement. In addition, the trustees may, without shareholder vote,
cause the Fund to be incorporated under Delaware law.
Derivative actions on behalf of the Fund or any Series may be brought only by
shareholders owning not less than 50% of the then outstanding shares of the Fund
or any Series, as applicable.
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment account. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Fund's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security seven days
before or after any Lord Abbett-sponsored fund trades in such security,
profiting from trades of the same security within 60 days and trading on
material non-public information. The Code imposes similar requirements and
restrictions on the independent Trustees of the Fund to the extent contemplated
by the recommendations of such Advisory Group.
9.
Financial Statements
The financial statements for fiscal year ended November 30, 1997 and the report
of Deloitte & Touche LLP, independent auditors, on such annual financial
statements contained in the 1997 Annual Report to Shareholders of the Lord
Abbett Investment Trust are incorporated herein by reference to such financial
statements and report in reliance upon the authority of Deloitte & Touche LLP as
experts in auditing and accounting.
20
<PAGE>
Part C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Part A - Financial Highlights for the ten years ended November
30, 1997.
Part B - Statement of Net Assets at November 30, 1997.
Statement of Operations for the year ended November 30, 1997.
Statements of Changes in Net Assets for the years ended
October 31, 1996 and 1997, and the month ended November 30,
1996. Financial Highlights for the four years ended October
31, 1996, the month ended November 30, 1996, and the year
ended November 30, 1997.
(b) Exhibits -
99.B1 Restated Declaration of Trust*
99.B2 By-Laws*
99.B6 Form of Distribution Agreement***
99.B11 Consent of Deloitte & Touche*****
99.B15a Forms of Rule 12b-1 Plans for Class A and Class C
shares***
99.B15b Form of Rule 12b-1 Plan for Class B shares***
99.B18 Form of Plan entered into by Registrant pursuant to
Rule 18f-3.****
Ex.16 Computation of Performance and Yield*
Ex.27 Financial Data Schedule*
* Filed herewith.
** Previously Filed
*** The form of this document is incorporated by Reference to
Post-Effective Amendment No. 41 to the Registration Statement
on Form N-1A of Lord Abbett Bond-Debenture Fund, Inc. (File
No. 811-2145). The Lord Abbett Bond-Debenture Fund document is
substantially identical to that form used for the Registrant
except for the name of the Registrant and/or its Series and
perhaps minor differences.
**** Incorporated by Reference to Post-Effective Amendment No. 40
to the Registration Statement on Form N-1A of Lord Abbett
Bond-Debenture Fund, Inc. (File No. 811-2145)
***** To Be Filed
Item 25. Persons Controlled by or Under Common Control with Registrant
None.
Item 26. Number of Record Holders of Securities
(as of February 27, 1998)
U.S. Government Securities 81,086 - (Class A)
527 - (Class B)
4,793 - (Class C)
Limited Duration Government 205 - (Class A)
182 - (Class C)
Balanced 1,181 - (Class A)
457 - (Class C)
Item 27. Indemnification
The Registrant is a Delaware Business Trust established under
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Chapter 38 of Title 12 of the Delaware Code. The Registrant's
Declaration and Instrument of Trust at Section 4.3 relating to
indemnification of Trustees, officers, etc. states the following.
The Trust shall indemnify each of its Trustees, officers, employees
and agents (including any individual who serves at its request as
director, officer, partner, trustee or the like of another
organization in which it has any interest as a shareholder, creditor
or otherwise) against all liabilities and expenses, including but
not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees reasonably
incurred by him or her in connection with the defense or disposition
of any action, suit or other proceeding, whether civil or criminal,
before any court or administrative or legislative body in which he
or she may be or may have been involved as a party or otherwise or
with which he or she may be or may have been threatened, while
acting as Trustee or as an officer, employee or agent of the Trust
or the Trustees, as the case may be, or thereafter, by reason of his
or her being or having been such a Trustee, officer, employee or
agent, except with respect to any matter as to which he or she shall
have been adjudicated not to have acted in good faith in the
reasonable belief that his or her action was in the best interests
of the Trust or any Series thereof. Notwithstanding anything herein
to the contrary, if any matter which is the subject of
indemnification hereunder relates only to one Series (or to more
than one but not all of the Series of the Trust), then the indemnity
shall be paid only out of the assets of the affected Series. No
individual shall be indemnified hereunder against any liability to
the Trust or any Series thereof or the Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her
office. In addition, no such indemnity shall be provided with
respect to any matter disposed of by settlement or a compromise
payment by such Trustee, officer, employee or agent, pursuant to a
consent decree or otherwise, either for said payment or for any
other expenses unless there has been a determination that such
compromise is in the best interests of the Trust or, if appropriate,
of any affected Series thereof and that such Person appears to have
acted in good faith in the reasonable belief that his or her action
was in the best interests of the Trust or, if appropriate, of any
affected Series thereof, and did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. All determinations
that the applicable standards of conduct have been met for
indemnification hereunder shall be made by (a) a majority vote of a
quorum consisting of disinterested Trustees who are not parties to
the proceeding relating to indemnification, or (b) if such a quorum
is not obtainable or, even if obtainable, if a majority vote of such
quorum so directs, by independent legal counsel in a written
opinion, or (c) a vote of Shareholders (excluding Shares owned of
record or beneficially by such individual). In addition, unless a
matter is disposed of with a court determination (i) on the merits
that such Trustee, officer, employee or agent was not liable or (ii)
that such Person was not guilty of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his or her office, no indemnification shall be provided
hereunder unless there has been a determination by independent legal
counsel in a written opinion that such Person did not engage in
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her
office.
The Trustees may make advance payments out of the assets of the
Trust or, if appropriate, of the affected Series in connection with
the expense of defending any action with respect to which
indemnification might be sought under this Section 4.3. The
C-2
<PAGE>
indemnified Trustee, officer, employee or agent shall give a written
undertaking to reimburse the Trust or the Series in the event it is
subsequently determined that he or she is not entitled to such
indemnification and (a) the indemnified Trustee, officer, employee
or agent shall provide security for his or her undertaking, (b) the
Trust shall be insured against losses arising by reason of lawful
advances, or (c) a majority of a quorum of disinterested Trustees or
an independent legal counsel in a written opinion shall determine,
based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the
indemnitee ultimately will be found entitled to indemnification. The
rights accruing to any Trustee, officer, employee or agent under
these provisions shall not exclude any other right to which he or
she may be lawfully entitled and shall inure to the benefit of his
or her heirs, executors, administrators or other legal
representatives.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to Trustees, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expense incurred or paid by a Trustee, officer or
controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such Trustee, officer
or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
Lord, Abbett & Co. acts as investment adviser and/or principal
underwriter for twelve other Lord Abbett open-end investment
companies (of which it is principal underwriter for thirteen), and
as investment adviser to approximately 6,220 private accounts, as of
December 31, 1997. Other than acting as Trustees (directors) and/or
officers of open-end investment companies managed by Lord, Abbett &
Co., none of Lord, Abbett & Co.'s partners has, in the past two
fiscal years, engaged in any other business, profession, vocation or
employment of a substantial nature for his own account or in the
capacity of director, officer, employee, partner or trustee of any
entity except as follows:
John J. Walsh
Trustee
Brooklyn Hospital
Parkside Avenue
Brooklyn, N.Y.
Item 29. Principal Underwriter
(a) Lord Abbett Affiliated Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Government Securities Money Market Fund, Inc.
Lord Abbett Tax-Free Income Trust
C-3
<PAGE>
Lord Abbett Global Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Series Fund, Inc.
Lord Abbett Research Fund, Inc.
Lord Abbett Securities Trust
Investment Adviser
American Skandia Trust (Lord Abbett Growth and Income
Portfolio)
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
Business Address (1) with Registrant
-------------------- ---------------------
Robert S. Dow Chairman and President
Paul A. Hilstad Vice President & Secretary
Stephen I. Allen Vice President
Zane E. Brown Vice President
Daniel E. Carper Vice President
Daria L. Foster Vice President
W. Thomas Hudson, Jr. Vice President
Robert G. Morris Vice President
Robert J. Noelke Vice President
E. Wayne Nordberg Vice President
John J. Walsh Vice President
The other general partner of Lord, Abbett & Co. who is neither
an officer nor a director of the Registrant] is Michael
McLaughlin.
(1) Each of the above has a principal business address at 767
Fifth Avenue, New York, NY 10153
(c) Not applicable
Item 30. Location of Accounts and Records
Registrant maintains the records, required by Rules 31a - 1(a) and
(b), and 31a - 2(a) at its main office.
Lord, Abbett & Co. maintains the records required by Rules 31a -
1(f) and 31a - 2(e) at its main office.
Certain records such as canceled stock certificates and
correspondence may be physically maintained at the main office of
the Registrant's Transfer Agent, Custodian, or Shareholder Servicing
Agent within the requirements of Rule 31a-3.
Item 31. Management Services
None.
Item 32. Undertakings
(c) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge. The
registrant undertakes, if requested to do so by the holders of at
least 10% of the registrant's outstanding shares, to call a meeting
of shareholders for the purpose of voting upon the question of
removal of a director or directors and to assist in communications
with other shareholders as required by Section 16(c).
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant has duly caused this Registration Statement
and/or any amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on the
18th day of March, 1998
LORD ABBETT INVESTMENT TRUST
By /s/ Robert S. Dow
------------------------------
Robert S. Dow
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Chairman, President
/s/ Robert S. Dow and Trustee 3/18/98
- ----------------------------- ---------------------------------- -----------
Robert S. Dow (Title) (Date)
Vice President and
/s/ Keith F. O'Connor Chief Financial Officer 3/18/98
- ----------------------------- ---------------------------------- -----------
Keith F. O'Connor (Title) (Date)
/s/ E. Wayne Nordberg Trustee 3/18/98
- ----------------------------- ---------------------------------- -----------
E. Wayne Nordberg (Title) (Date)
/s/ Stewart S. Dixon Trustee 3/18/98
- ----------------------------- ---------------------------------- -----------
Stewart S. Dixon (Title) (Date)
/s/ John C. Jansing Trustee 3/18/98
- ----------------------------- ---------------------------------- -----------
John C. Jansing (Title) (Date)
/s/ C. Alan MacDonald Trustee 3/18/98
- ----------------------------- ---------------------------------- -----------
C. Alan MacDonald (Title) (Date)
/s/ Hansel B. Millican, Jr. Trustee 3/18/98
- ----------------------------- ---------------------------------- -----------
Hansel B. Millican, Jr. (Title) (Date)
/s/ Thomas J. Neff Trustee 3/18/98
- ----------------------------- ---------------------------------- -----------
Thomas J. Neff (Title) (Date)
/s/ E. Thayer Bigelow Trustee 3/18/98
- ----------------------------- ---------------------------------- -----------
E. Thayer Bigelow (Title) (Date)
LORD ABBETT INVESTMENT TRUST
----------------------
RESTATED
DECLARATION AND AGREEMENT OF TRUST
March 12, 1998
----------------------
<PAGE>
Table of Contents
Page
ARTICLE I NAME AND DEFINITIONS...........................2
Section 1.1. Name...........................................2
Section 1.2. Definitions....................................2
Section 1.3. Purposes.......................................4
ARTICLE II TRUSTEES.......................................7
Section 2.1. Powers.........................................7
Section 2.2. Legal Title...................................14
Section 2.3. Number of Trustees; Term of Office............14
Section 2.4. Election of Trustees..........................15
Section 2.5. Resignation and Removal.......................15
Section 2.6. Vacancies.....................................16
Section 2.7. Committees; Delegation........................17
Section 2.8. Quorum; Voting................................18
Section 2.9. Action Without a Meeting; Participation
by Conference Telephone.......................18
Section 2.10. By-Laws.......................................19
Section 2.11. No Bond Required..............................19
Section 2.12. Reliance on Experts, Etc......................19
Section 2.13. Standard of Care of Trustees..................20
ARTICLE III CONTRACTS.....................................20
Section 3.1. Distribution Contract.........................20
Section 3.2. Advisory or Management Contracts..............21
Section 3.3. Affiliations of Trustees or Officers, Etc.....21
ARTICLE IV LIMITATION OF LIABILITY; INDEMNIFICATION......22
Section 4.1. No Personal Liability of Shareholders,
Trustees, Etc. ...............................22
Section 4.2. Execution of Documents; Notice;
Apparent Authority ...........................23
Section 4.3. Indemnification of Trustees, Officers, Etc....24
Section 4.4. Indemnification of Shareholders...............27
ARTICLE V SHARES OF BENEFICIAL INTEREST.................28
Section 5.1. Beneficial Interest...........................28
Section 5.2. Series Designation............................28
<PAGE>
Section 5.3. Additional Series; Classes.....................30
Section 5.4. Series Assets, Liabilities and Expenses........31
Section 5.4.1. Series Assets..................................31
Section 5.4.2. Series Liabilities and Expenses................32
Section 5.4.3. Termination of a Series........................33
Section 5.5. Rights of Shareholders.........................34
Section 5.6. Trust Only.....................................35
Section 5.7. Issuance of Shares.............................35
Section 5.7.1. General........................................35
Section 5.7.2. Price..........................................35
Section 5.7.3. On Merger or Consolidation.....................36
Section 5.7.4. Fractional Shares..............................36
Section 5.8. Register of Shares.............................36
Section 5.9. Share Certificates.............................37
Section 5.10. Transfer of Shares.............................37
Section 5.11. Voting Powers..................................38
Section 5.12. Meetings of Shareholders.......................39
Section 5.13. Action Without a Meeting.......................40
Section 5.14. Quorum and Required Vote.......................40
Section 5.15. Additional Provisions..........................41
Section 5.16. Removal of Trustees by Shareholders............41
Section 5.17. Derivative Suits...............................41
ARTICLE VI REDEMPTION AND REPURCHASE OF SHARES............42
Section 6.1. Redemption of Shares...........................42
Section 6.2. Price..........................................42
Section 6.3. Payment........................................42
Section 6.4. Effect of Suspension of Right of Redemption....43
Section 6.5. Repurchase by Agreement........................43
Section 6.6. Suspension of Right of Redemption..............44
Section 6.7. Involuntary Redemption of Shares;
Disclosure of Holding..........................44
ARTICLE VII DETERMINATION OF NET ASSET VALUE;
DISTRIBUTIONS..................................46
Section 7.1. By Whom Determined.............................46
Section 7.2. When Determined................................46
Section 7.3. Computation of Per Share Net Asset Value.......47
Section 7.3.1. Net Asset Value Per Share......................47
Section 7.3.2. Value of the Net Assets of a Series............47
Section 7.4. Interim Determinations.........................49
<PAGE>
Section 7.5. Outstanding Shares.............................49
Section 7.6. Distributions to Shareholders..................50
ARTICLE VIII DURATION; TERMINATION OF TRUST;
AMENDMENT: MERGERS, ETC........................51
Section 8.1. Duration and Termination.......................51
Section 8.2. Amendment Procedure............................53
Section 8.3. Merger, Consolidation and Sale of Assets.......54
Section 8.4. Incorporation..................................55
ARTICLE IX MISCELLANEOUS..................................55
Section 9.1. Registered Agent; Registered Office............55
Section 9.2. Governing Law..................................56
Section 9.3. Counterparts...................................57
Section 9.4. Reliance by Third Parties......................57
Section 9.5. Provisions in Conflict with Law or Regulations.58
Section 9.6. Use of Name....................................58
Section 9.7. Section Headings; Interpretation...............59
<PAGE>
RESTATED
DECLARATION AND AGREEMENT OF TRUST
OF
LORD ABBETT INVESTMENT TRUST
DECLARATION AND AGREEMENT OF TRUST restated on March 12, 1998 by and
among the individuals executing this Restated Declaration and Agreement of Trust
as Trustees and the holders from time to time of the shares of beneficial
interest issued hereunder.
WHEREAS, the Trustees desire to restate the Declaration and
Agreement of Trust for Lord Abbett Investment Trust pursuant to Section 8.2(b)
of such Declaration and Agreement of Trust; and
WHEREAS, the Declaration and Agreement of Trust is not amended by
this restatement; and
WHEREAS, the Trustees desire that the beneficial interest in the
trust assets remain divided into transferable shares of beneficial interest, as
hereinafter provided;
NOW THEREFORE, the Trustees hereby restate the Declaration and
Agreement of Trust for Lord Abbett Investment Trust, integrating into a single
document all of the provisions of this Declaration and Agreement of Trust which
are now in effect and operative.
ARTICLE I
<PAGE>
NAME AND DEFINITIONS
Section I.1. Name. The name of the trust created hereby is "Lord
Abbett Investment Trust", in which name the Trustees shall conduct the business
and activities of the Trust and execute all documents and take all actions
authorized herein.
Section I.2. Definitions. Wherever they are used herein, the
following terms have the following meanings:
"Affiliated Person" shall have the meaning set forth in Section
2(a)(3) of the 1940 Act.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange commission.
"Declaration" shall mean this Declaration and Agreement of Trust as
amended from time to time. This Declaration and any By-laws of the Trust shall
constitute the governing instrument of the Trust.
"Delaware Act" shall mean Chapter 38 of Title 12 of the Delaware
Code entitled "Treatment of Delaware Business Trusts", as it may be amended from
time to time.
"Interested Person" shall have the meaning set forth in Section
2(a)(19) of the 1940 Act.
<PAGE>
"Majority Shareholder Vote" or "Series Majority Shareholder's Vote"
shall mean the vote of a majority of the outstanding voting securities, as
defined in Section 2(a)(42) of the 1940 Act, of the Trust, provided that if
there are two or more Series of Shares outstanding, then "Series Majority
Shareholder Vote" shall have, when used with respect to any matter required to
be submitted to the holders of the outstanding Shares of any Series pursuant to
this Declaration or the 1940 Act, the meaning set forth in Rule 18f-2 under the
1940 Act.
"1940 Act" shall mean the Investment Company Act of 1940, as amended
from time to time.
"Person" shall mean an individual, a company, a corporation,
partnership, trust, or association, a joint venture, an organization, a
business, a firm or other entity, whether or not a legal entity, or a country, a
state, municipality or other political subdivision or any governmental agency or
instrumentality.
"Principal Underwriter" shall have the meaning set forth in Section
2(a)(29) of the 1940 Act.
"Series" shall mean the one or more separate series of Shares
authorized by Section 5.3 of this Declaration.
"Shareholder" shall mean a record owner of Shares.
"Shares" shall mean the units of interest into which the beneficial
interest in the Trust (or, if more than one Series or more than one class of
Series is authorized, in
<PAGE>
each Series and class thereof) shall be divided from time to time and includes
fractions of Shares as well as whole Shares. All references to Shares shall be
deemed to refer to Shares of any or all Series, or classes thereof, as the
context may require.
"Trust" shall mean the Delaware business trust established under the
Delaware Act by this Declaration, as from time to time amended. All provisions
herein relating to the Trust shall apply equally to each Series of the Trust,
and each class thereof, except as the context otherwise requires.
"Trust Property" shall mean any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees, including any and all assets of or allocated to any
Series, as the context may require.
"Trustees" shall mean the individuals who have signed this
Declaration, so long as they shall continue in office in accordance with the
terms hereof, and all other individuals who may from time to time be duly
elected or appointed, qualified and serving as Trustees in accordance with the
provisions of Article II hereof, and reference herein to a Trustee or the
Trustees shall refer to such person or persons in his or her capacity or their
capacities as trustees hereunder.
Section I.3. Purposes. This Trust is formed for the following
purpose or purposes:
(a) to conduct, operate and carry on the business of an investment
company;
<PAGE>
(b) to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, lend, write options on,
exchange, distribute or otherwise dispose of and deal in and with
securities of every nature, kind, character, type and form, including,
without limitation of the generality of the foregoing, all types of
stocks, shares, futures contracts, bonds, debentures, notes, bills and
other negotiable or non-negotiable instruments, obligations, evidences of
interest, certificates of interest, certificates of participation,
certificates, interests, evidences of ownership, guarantees, warrants,
options or evidences of indebtedness issued or created by or guaranteed as
to principal and interest by any state or local government or any agency
or instrumentality thereof, by the United States Government or any agency,
instrumentality, territory, district or possession thereof, by any foreign
government or any agency, instrumentality, territory, district or
possession thereof, by any foreign government or any agency,
instrumentality, territory, district or possession thereof, by any
corporation organized under the laws of any state, the United States or
any territory or possession thereof or under the laws of any foreign
country, bank certificates of deposit, bank time deposits, bankers'
acceptances and commercial paper; to pay for the same in cash or by the
issue of stock, including treasury stock, bonds or notes of the Trust or
otherwise; and to exercise any and all rights, powers and privileges of
ownership or interest in respect of any and all such investments of every
kind
<PAGE>
and description, including, without limitation, the right to consent
and otherwise act with respect thereto, with power to designate one or
more persons, firms, associations or corporations to exercise any said
rights, powers, and privileges in respect to any said instruments;
(c) to borrow money or otherwise obtain credit and to secure the
same by mortgaging, pledging or otherwise subjecting as security the
assets of the Trust;
(d) to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, and otherwise deal in, Shares including
Shares in fractional denominations, and to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares any funds or
other assets of the appropriate Series or class of Shares, whether capital
or surplus or otherwise, to the full extent now or hereafter permitted by
the laws of the State of Delaware;
(e) to conduct its business, promote its purposes, and carry on its
operations in any and all of its branches and maintain offices both within
and without the State of Delaware, in any and all States of the United
States of America, in the District of Columbia, and in any other parts of
the world; and
(f) to do all and everything necessary, suitable, convenient, or
proper for the conduct, promotion, and attainment of any of the businesses
and purposes herein specified or which at any time may be incidental
thereto or may appear conducive to or expedient for the accomplishment of
any such businesses and
<PAGE>
purposes and which might be engaged in or carried on by a Trust organized
under the Delaware Act, and to have and exercise all of the powers
conferred by the laws of the State of Delaware upon a Delaware business
trust.
The foregoing provisions of this Section 1.3 shall be construed both
as purposes and powers and each as an independent purpose and power.
ARTICLE II
TRUSTEES
Section II.1. Powers. The Trustees, subject only to the specific
limitations contained in this Declaration, shall have exclusive and absolute
power, control and authority over the Trust Property and over the conduct of the
affairs of the Trust set forth in Section 1.3 hereof, including such power,
control and authority to do all such acts and things as in their sole judgment
and discretion are necessary, incidental, convenient or desirable for the
carrying out of or conducting of the business of the Trust or in order to
promote the interests of the Trust, but with such powers of delegation as may be
permitted by this Declaration. The enumeration of any specific power, control or
authority herein shall not be construed as limiting the aforesaid power, control
and authority or any other specific power, control or authority. The Trustees
shall have power to conduct and carry on the business of the Trust, or any part
thereof, to have one or more offices and to exercise any or all of its trust
powers and rights, in the State of Delaware, in
<PAGE>
any other states, territories, districts, colonies and dependencies of the
United States and in any foreign countries. In construing the provisions of this
Declaration, the presumption shall be in favor of a grant of power to the
Trustees. Such powers of the Trustees may be exercised without order of or
resort to any court.
Without limiting the foregoing, the Trustees shall have the power:
a. To enter into contracts of any nature related to the business of
the Trust.
b. To appoint agents and employees of the Trust, which agents and
employees may be designated as officers of the Trust with corresponding
titles as the Trustees may determine in their discretion.
c. To exercise all rights, powers and privileges of ownership or
interest in all securities included in the Trust Property, including the
right to vote, give assent, execute and deliver proxies or powers of
attorney to such person or persons as the Trustees shall deem proper and
otherwise act with respect thereto and to do all acts for the
preservation, protection, improvement and enhancement in value of all such
securities and to delegate, assign, waive or otherwise dispose of any of
such rights, powers or privileges.
d. To exercise powers and rights of subscription or otherwise which
in any manner arise out of the Trust's ownership of securities.
<PAGE>
e. To declare (from interest, dividends or other income received or
accrued, from accruals of original issue or other discounts on obligations
held, from capital or other profits whether realized or unrealized and
from any other lawful sources) dividends and distributions on the Shares
and to credit the same to the account of Shareholders, or at the election
of the Trustees to accrue income to the account of Shareholders, on such
dates (which may be as frequently as every day) as the Trustees may
determine. Such dividends, distributions or accruals shall be payable in
cash, property or Shares as the Trustees may determine and at such
intervals as the Trustees may determine at any time in advance of such
payment or accrual, whether or not the amount of such dividend,
distribution or accrual can at the time of declaration be determined or
must be calculated subsequent to declaration and prior to payment or
accrual by reference to amounts or other factors not yet determined at the
time of declaration (including but not limited to the amount of a dividend
or distribution to be determined by reference to what is sufficient to
enable the Trust to qualify as a regulated investment company under the
Code or to avoid liability for Federal income or excise taxes).
The power granted by this Subsection (e) shall include, without
limitation, and if otherwise lawful, the power (A) to declare dividends or
distributions or to accrue income to the account of Shareholders by means
of a formula or other similar method of determination whether or not the
amount of such dividend or
<PAGE>
distribution can be calculated at the time of such declaration; (B) to
establish record or payment dates for dividends or distributions on any
basis, including the power to establish a number of record or payment
dates subsequent to the declaration of any dividend or distribution; (C)
to establish the same payment date for any number of dividends or
distributions declared prior to such date; (D) to provide for payment of
dividends or distributions declared and as yet unpaid, or unpaid accrued
income, to shareholders redeeming Shares prior to the payment date
otherwise applicable; and (E) to provide in advance for conditions under
which any dividend or distribution may be payable in Shares to all or less
than all of the Shareholders.
f. To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale, lease or otherwise) any
property, real or personal, and any interest therein.
g. To borrow money, and in this connection to issue notes or other
evidences of indebtedness; to secure borrowings by mortgaging, pledging or
otherwise subjecting to security interests the Trust Property; and to lend
Trust Property.
h. To aid by further investment any Person, if any obligation of or
interest in such Person is included in the Trust Property or if the
Trustees have any direct or indirect interest in the affairs of such
Person; to do anything designed to
<PAGE>
preserve, protect, improve or enhance the value of such obligation or
interest; and to endorse or guarantee or become surety on any or all of
the contracts), stocks, bonds, notes, debentures and other obligations of
any such Person; and to mortgage the Trust Property or any part thereof to
secure any of or all such obligations.
i. To enter into joint ventures, general or limited partnerships and
any other combinations or associations.
j. To purchase and pay for entirely out of Trust Property liability,
casualty, property and other insurance, including, without limitation,
insurance policies insuring the Shareholders, Trustees, officers,
employees and agents of the Trust, the Investment Adviser, the Distributor
and dealers or independent contractors of the Trust against all claims and
liabilities of every nature arising by reason of holding or having held
any such position or by reason of any action taken or omitted by any such
Person in such capacity, whether or not constituting negligence, to the
extent the Trust would have the power, under provisions of applicable law,
to indemnify such Person against such liability; provided, however that
such policy or policies shall be purchased solely at the cost of the
Series to which it or they pertain.
<PAGE>
k. To establish and carry out pension, profit-sharing, share
purchase, share bonus, savings, thrift and other retirement, incentive and
benefit plans for any Trustees, officers, employees or agents of the
Trust.
l. To the extent permitted by law and determined by the Trustees, to
indemnify any Person with whom the Trust has dealings, including, without
limitation, the Shareholders, the Trustees, the officers, employees and
agents of the Trust, the Investment Adviser, the Distributor, the transfer
agent, the custodian and dealers.
m. To incur and pay any charges, taxes and expenses which in the
opinion of the Trustees are necessary or incidental to or proper for
carrying out any of the purposes of this Trust, and to pay from the funds
of the Trust Property to themselves as Trustees reasonable compensation
and reimbursement for expenses.
n. To prosecute or abandon and to compromise, arbitrate or otherwise
adjust claims in favor of or against the Trust or any matter in
controversy, including but not limited to claims for taxes.
o. To exercise the right to consent, and to enter into releases,
agreements and other instruments, including, but not limited to, the right
to consent or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer any security of which
is or was held by the Trust; to consent to any contract, lease, mortgage,
purchase or sale of such property by said
<PAGE>
corporation or issuer, and to pay calls or subscriptions with respect to
securities held by the Trust.
p. To employ or contract with such Persons as the Trustees may deem
desirable for the transaction of the business of the Trust.
q. To adopt a seal for the Trust, but the absence of such seal shall
not impair the validity of any instrument executed on behalf of the Trust.
r. To employ one or more custodians of the assets of the Trust and
authorize such custodians to employ subcustodians and to deposit all or
any part of such assets in a system or systems for the central handling of
securities.
s. To take such actions as are authorized, incidental or required to
be taken by the Trustees pursuant to other provisions of this Declaration.
The foregoing enumeration of specific powers shall not be held to
limit or restrict in any manner the general powers of the Trustees.
The Trustees shall not be limited by any law now or hereafter in
effect limiting the investments which may be made or retained by fiduciaries,
but they shall have full power and authority to make any and all investments
within the limitation of this Declaration that they, in their sole and absolute
discretion, shall determine, and without liability for loss even though such
investments do not or may not produce income or are of a character or in an
amount not considered proper for the investment of trust funds.
<PAGE>
Section II.2. Legal Title. Legal title to all the Trust Property
shall be vested in the Trust as a separate legal entity under the Delaware Act,
provided that the Trustees shall have power to cause legal title to any Trust
Property to be held by or in the name of one or more of the Trustees with
suitable reference to their trustee status, or in the name of any Series of the
Trust, or in a form not indicating any trust, whether in bearer, unregistered or
other negotiable form, or in the name of a custodian or subcustodian or a
nominee or nominees or otherwise.
Section II.3. Number of Trustees; Term of Office. The number of
Trustees shall be one, which number may be increased or decreased from time to
time by written instrument signed by a majority of the Trustees, provided that
the number of Trustees shall not be fewer than one nor more than 15. Each
Trustee executing this Declaration of Trust and each Trustee thereafter
appointed or elected (whenever such election occurs) shall hold office until his
successor is elected and qualified or until the earlier occurrence of any of the
events specified in the first sentence of Section 2.6 hereof.
Section II.4. Election of Trustees. Trustees may succeed themselves
in office. Trustees may be elected at a Shareholders' meeting. At such a
Shareholders' meeting, Trustees shall be elected by a plurality of the votes
validly cast. The election of any Trustee (other than an individual who was
serving as a Trustee immediately prior thereto) shall not become effective,
however, until the individual named shall have
<PAGE>
accepted in writing such election and agreed in writing to be bound by the terms
of this Declaration. Trustees need not own Shares.
Section II.5. Resignation and Removal. Any Trustee may resign his
trust (without need for prior or subsequent accounting) by an instrument in
writing signed by him and delivered to the Chairman of the Board, or the
Secretary or any Assistant Secretary, and such resignation shall be effective
upon such delivery, or at any later date specified in the instrument. Any of the
Trustees may be removed (i) with cause by the affirmative vote of two-thirds of
the remaining Trustees (provided that the aggregate number of Trustees after
such removal shall not be less than two) or (ii) by the Shareholders pursuant to
Section 5.16 hereof.
Section II.6. Vacancies. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of the death, retirement,
resignation or removal (whether pursuant to Section 2.5 hereof or otherwise),
bankruptcy, adjudication of incompetence or other incapacity to perform the
duties of the office of a Trustee. A vacancy shall also occur upon an increase
in the number of Trustees in accordance with Section 2.3 hereof. No vacancy
shall operate to annul this Declaration or to revoke any existing agency created
pursuant to the terms of the Declaration. In the case of an existing vacancy,
including a vacancy existing by reason of an increase in the authorized number
of Trustees, the remaining Trustees shall fill such vacancy by the appointment
of such individual as they in their sole and absolute discretion shall see fit,
made by a written
<PAGE>
instrument signed by a majority of the Trustees then in office, provided that
such power of appointment shall be subject to and limited by all applicable
provisions of the 1940 Act and no such appointment shall become effective until
the person named shall have accepted in writing such appointment and agreed in
writing to be bound by the terms of this Declaration. Whenever a vacancy in the
number of Trustees shall occur, until such vacancy is filled as provided in
Section 2.4 or this Section 2.6, the Trustees in office, regardless of their
number, shall have all the powers granted to the Trustees and shall discharge
all the duties imposed upon the Trustees by the Declaration.
Section II.7. Committees; Delegation. The Trustees shall have the
power to appoint from their own number, and terminate, any one or more
committees consisting of two or more Trustees, including an executive committee
which may exercise some or all of the power and authority of the Trustees as the
Trustees may determine (including but not limited to the power to determine net
asset value and net income), subject to any limitations contained in the
By-Laws, and in general to delegate from time to time to one or more of their
number or to officers, employees or agents of the Trust such power and authority
and the doing of such things and the execution of such instruments, either in
the name of the Trust or the names of the Trustees or otherwise, as the Trustees
may deem expedient, provided that no committee shall have the power
(a) to change the principal office of the Trust;
(b) to amend the By-Laws;
<PAGE>
(c) to issue Shares of any Series;
(d) to elect or remove from office any Trustee or the Chairman of
the Board, the President, the Chief Financial Officer, the Treasurer or
the Secretary of the Trust;
(e) to increase or decrease the number of Trustees;
(f) to declare a dividend or other distribution on the Shares of any
Series;
(g) to authorize the repurchase of Shares of any Series; or
(h) to authorize any merger, consolidation or sale, lease or
exchange of all or substantially all of the Trust Property.
Section II.8. Quorum; Voting. At all meetings of the Trustees, the
presence of one-third of the total number of Trustees authorized, but not less
than two, shall constitute a quorum for the transaction of business. When a
quorum is present at any meeting, a majority of Trustees present may take any
action, except when a larger vote is required by this Declaration, the By-laws
or the 1940 Act.
Section II.9. Action Without a Meeting; Participation by Conference
Telephone. Unless the 1940 Act requires that a particular action must be taken
only at a meeting of Trustees, any action required or permitted to be taken at
any meeting of the Trustees (or of any committee of the Trustees) may be taken
without a meeting if written consents thereto are signed by a majority of the
Trustees then in office (or by a majority of
<PAGE>
the members of such committee) and such written consents are filed with the
records of the meetings. Unless the 1940 Act requires that Trustees must be
present in person at a meeting of Trustees, Trustees may participate in a
meeting of the Trustees (or of any committee of the Trustees) by means of a
conference telephone or similar communications equipment if all individuals
participating can hear each other at the same time. Participation in a meeting
by these means shall constitute presence at the meeting.
Section II.10. By-Laws. The Trustees may adopt By-Laws not
inconsistent with this Declaration or law to provide for the conduct of the
business of the Trust, and may amend or repeal such By-Laws.
Section II.11. No Bond Required. No Trustee shall be obliged to give
any bond or other security for the performance of any of his duties hereunder.
Section II.12. Reliance on Experts, Etc. Each Trustee, officer,
agent and employee of the Trust or any Series thereof shall, in the performance
of his duties, be fully and completely justified and protected by relying in
good faith upon the books of account or other records of the Trust, or upon
reports made to the Trustees (a) by any of the officers or employees of the
Trust or any Series thereof, (b) by the Investment Adviser, the Distributor, the
custodian or the transfer agent, or (c) by any accountants, selected dealers or
appraisers or other agents, experts or consultants selected with reasonable care
by the Trustees, regardless of whether such agent, expert or consultant may also
be a Trustee. The Trustees, officers, agents and employees of the Trust or any
Series thereof
<PAGE>
may take advice of counsel with respect to the meaning and operation of this
Declaration and with respect to other legal matters or questions, and shall be
under no liability for any act or omission in accordance with such advice or for
failing to follow such advice.
Section II.13. Standard of Care of Trustees. The exercise by the
Trustees of their powers and discretion hereunder and the construction in good
faith by the Trustees of the meaning or effect of any provision of this
Declaration shall be binding upon everyone interested. A Trustee, officer, agent
or employee shall be liable to the Trust or the Shareholders for his own willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office, and for nothing else, and shall not be
liable for errors of judgment or mistakes of fact or law.
ARTICLE III
CONTRACTS
Section III.1. Distribution Contract. The Trust may from time to
time enter into a distribution contract with another Person (the "Distributor")
providing for the sale of Shares, pursuant to which the Trust may agree to sell
Shares of one or more Series or classes of Series to the Distributor or appoint
the Distributor its sales agent for the Shares. Such contract may provide that
the Distributor may enter into contracts with other persons to sell the Shares
on behalf of the Distributor and the Trust. Such contract may also provide for
the repurchase of Shares by the Distributor as agent of the Trust and
<PAGE>
shall contain such terms and conditions, if any, as may be prescribed in the
By-Laws and such further terms and conditions not inconsistent with the
provisions of this Article III or of the By-Laws as the Trustees may in their
discretion determine.
Section III.2. Advisory or Management Contracts. Subject to approval
by a Majority Shareholder Vote or, where appropriate pursuant to Section 5.11
hereof, a Series Majority Shareholder Vote, the Trust may from time to time
enter into investment advisory or management contracts with one or more other
Persons (the "Investment Advisers") pursuant to which the Investment Adviser or
Advisers shall agree to furnish to the Trust management, investment advisory,
statistical and research facilities or other services with respect to one or
more Series of the Trust. Such contract shall contain such other terms and
conditions, if any, as may be prescribed in the By-Laws and such further terms
and conditions not inconsistent with the provisions of this Article III, the
By-Laws or applicable law as the Trustees may in their discretion determine,
including the grant of authority to the Investment Adviser to determine what
securities shall be purchased or sold by each such Series and what portion of
its assets shall be uninvested and to implement such determinations by making
changes in the Series' investments.
Section III.3. Affiliations of Trustees or Officers, Etc. The fact
that any Shareholder, Trustee, officer, agent or employee of the Trust or any
Series thereof is a shareholder, member, director, officer, partner, trustee,
employee, manager, adviser or distributor of or for any Person or of or for any
parent or affiliate of any Person with
<PAGE>
which an investment advisory or management contract, principal underwriter or
distributor contract or custodian, transfer agent, disbursing agent or similar
agency contract may have been or may hereafter be made, or that any such Person,
or any parent or affiliate thereof, is a Shareholder of or has any other
interest in the Trust or any Series thereof, or that any such Person also has
any one or more similar contracts with one or more other such Persons, or has
other businesses or interests, shall not affect the validity of any such
contract made or that may hereafter be made with the Trust or disqualify any
Shareholder, Trustee, officer, agent or employee of the Trust or any Series
thereof from voting upon or executing the same or create any liability or
accountability to the Trustees, the Trust, any Series thereof or the
Shareholders.
ARTICLE IV
LIMITATION OF LIABILITY; INDEMNIFICATION
Section IV.1. No Personal Liability of Shareholders, Trustees, Etc.
No Shareholder shall be subject to any personal liability whatsoever to any
Person in connection with Trust Property or the acts, obligations or affairs of
the Trust or any Series thereof. No Trustee shall have any power to bind
personally any Shareholder or to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay by way of subscription for any Shares or
otherwise. All Persons extending credit to, contracting
<PAGE>
with or having any claim against the Trust or any Series thereof shall look only
to the assets of the Trust or of any affected Series for payment under such
credit, contract or claim, and neither the Shareholders nor the Trustees, nor
any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor. No Trustee shall be subject to any
personal liability whatsoever to any person other than the Trust or the
Shareholders in connection with the Trust Property or the acts, obligations or
affairs of the Trust or any Series thereof. The Trustees shall not be
responsible or liable to the Trust or the Shareholders for any neglect or
wrongdoing of any officer, employee or agent (including, without limitation, the
Investment Advisers, the Distributor, the custodian and the transfer agent) of
the Trust or any Series thereof, nor shall any Trustee be responsible or liable
for the act or omission of any other Trustee.
Section IV.2. Execution of Documents; Notice; Apparent Authority.
Every note, bond, contract, instrument, certificate or undertaking and every
other act or thing whatsoever executed or done by or on behalf of the Trust or
any Series thereof or the Trustees or any of them in connection with the Trust
or any Series thereof shall be conclusively deemed to have been executed or done
only in or with respect to their or his or her capacity as Trustees or Trustee,
and such Trustees or Trustee shall not be personally liable thereon. Every note,
bond, contract, instrument, certificate or undertaking made or issued by the
Trustees or by any officers or officer shall recite that the obligations of such
instruments are not binding upon any of the Trustees, Shareholders, officers,
employees or agents of the Trust individually but are binding only upon the
assets and property of the Trust or of one or more Series, but the omission
thereof shall not operate to bind any Trustees,
<PAGE>
Shareholders or officers, employees and agents of the Trust individually. No
purchaser, lender, transfer agent or other Person dealing with the Trustees or
any officer, employee or agent of the Trust shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by the Trustees
or by such officer, employee or agent or make inquiry concerning or be liable
for the application of money or property paid, loaned or delivered to or on the
order of the Trustees or of such officer, employee or agent.
Section IV.3. Indemnification of Trustees, Officers, Etc. The Trust
shall indemnify each of its Trustees, officers, employees and agents (including
any individual who serves at its request as director, officer, partner, trustee
or the like of another organization in which it has any interest as a
shareholder, creditor or otherwise) against all liabilities and expenses,
including but not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees reasonably incurred by
him or her in connection with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, before any court or administrative
or legislative body in which he or she may be or may have been involved as a
party or otherwise or with which he or she may be or may have been threatened,
while acting as Trustee or as an
<PAGE>
officer, employee or agent of the Trust or the Trustees, as the case may be, or
thereafter, by reason of his or her being or having been such a Trustee,
officer, employee or agent, except with respect to any matter as to which he or
she shall have been adjudicated not to have acted in good faith in the
reasonable belief that his or her action was in the best interests of the Trust
or any Series thereof. Notwithstanding anything herein to the contrary, if any
matter which is the subject of indemnification hereunder relates only to one
Series (or to more than one but not all of the Series of the Trust), then the
indemnity shall be paid only out of the assets of the affected Series. No
individual shall be indemnified hereunder against any liability to the Trust or
any Series thereof or the Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office. In addition, no such indemnity shall be provided
with respect to any matter disposed of by settlement or a compromise payment by
such Trustee, officer, employee or agent, pursuant to a consent decree or
otherwise, either for said payment or for any other expenses unless there has
been a determination that such compromise is in the best interests of the Trust
or, if appropriate, of any affected Series thereof and that such Person appears
to have acted in good faith in the reasonable belief that his or her action was
in the best interests of the Trust or, if appropriate, of any affected Series
thereof, and did not engage in willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his or her
office. All determinations that the applicable standards of conduct
<PAGE>
have been met for indemnification hereunder shall be made by (a) a majority vote
of a quorum consisting of disinterested Trustees who are not parties to the
proceeding relating to indemnification, or (b) if such a quorum is not
obtainable or, even if obtainable, if a majority vote of such quorum so directs,
by independent legal counsel in a written opinion, or (c) a vote of Shareholders
(excluding Shares owned of record or beneficially by such individual). In
addition, unless a matter is disposed of with a court determination (i) on the
merits that such Trustee, officer, employee or agent was not liable or (ii) that
such Person was not guilty of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his or her
office, no indemnification shall be provided hereunder unless there has been a
determination by independent legal counsel in a written opinion that such Person
did not engage in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office.
The Trustees may make advance payments out of the assets of the
Trust or, if appropriate, of the affected Series in connection with the expense
of defending any action with respect to which indemnification might be sought
under this Section 4.3. The indemnified Trustee, officer, employee or agent
shall give a written undertaking to reimburse the Trust or the Series in the
event it is subsequently determined that he or she is not entitled to such
indemnification and (a) the indemnified Trustee, officer, employee or agent
shall provide security for his or her undertaking, (b) the Trust shall be
insured against losses arising by reason of lawful advances, or (c) a majority
of a quorum of
<PAGE>
disinterested Trustees or an independent legal counsel in a written opinion
shall determine, based on a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe that the indemnitee
ultimately will be found entitled to indemnification. The rights accruing to any
Trustee, officer, employee or agent under these provisions shall not exclude any
other right to which he or she may be lawfully entitled and shall inure to the
benefit of his or her heirs, executors, administrators or other legal
representatives.
Section IV.4. Indemnification of Shareholders. In case any
Shareholder or former Shareholder shall be held to be personally liable solely
by reason of his or her being or having been a Shareholder and not because of
acts or omissions or for some other reason, the Shareholder or former
Shareholder (or his or her heirs, executors, administrators or other legal
representatives or in the case of a corporation or other entity, its corporate
or other general successor) shall be entitled out of the assets of the Trust or,
if there are two or more Series of the Trust, the assets of the affected Series
of which such Shareholder held Shares, to be held harmless from and indemnified
against all loss and expense, including legal expenses reasonably incurred,
arising from such liability. The rights accruing to a Shareholder under this
Section 4.4 shall not exclude any other right to which such Shareholder may be
lawfully entitled, nor shall anything contained herein restrict the right of the
Trust or any Series thereof to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided herein.
<PAGE>
ARTICLE V
SHARES OF BENEFICIAL INTEREST
Section V.1. Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into transferable shares of beneficial interest
("Shares"), without par value. The Trustees may from time to time divide or
combine the Shares into a greater or lesser number without thereby changing the
proportionate beneficial interests in the Trust. The number of Shares authorized
hereunder is unlimited. All Shares issued hereunder, including without
limitation Shares issued in connection with a dividend in Shares or a split in
Shares, shall be fully paid and nonassessable. No Shares shall have any
approval, conversion or preemptive rights. The Trustees shall have full power
and authority, without Shareholder approval, to establish or change from time to
time the par value of Shares as the Trustees shall determine, provided the
rights of outstanding Shares shall not thereby be impaired in any material way.
The Trustees may hold as treasury Shares (of the same or some other Series),
reissue for such consideration and on such terms as they may determine, or
cancel any Shares of any Series repurchased or redeemed by the Trust at their
discretion from time to time.
Section V.2. Series Designation. Subject to the designation of
additional series pursuant to Section 5.3, the Shares shall constitute one
Series, the Lord Abbett Limited Duration U.S. Government Securities Series.
<PAGE>
[On November 16, 1994, this Declaration was amended through the
execution by the Trustees of an Amendment which established a new series of the
Trust to be designated the Lord Abbett Balanced Series.
On December 14, 1995, this Declaration was amended through the
execution by the Trustees of an Amendment which established a new series of the
Trust to be designated the Lord Abbett U.S. Government Securities Series.
On June 19, 1996, this Declaration was amended through the execution
by the Trustees of an Amendment which established, pursuant to Section 5.3 of
the Declaration, (i) a new class of shares for each Series of the Trust, to be
designated the Class C shares of such Series and (ii) a new class of shares for
the U.S. Government Securities Series of the Trust to be designated the Class B
shares of such series. This Amendment further provided that the initial class of
shares of each Series shall be designated the Class A shares of such Series, and
that any variations between such classes as to purchase price, determination of
net asset value, the price, terms and manner of redemption, special and relative
rights as to dividends and on liquidation, and conditions under which such
classes shall have separate voting rights, shall be as set forth in the
Declaration or as elsewhere determined by the Board of Trustees of the Trust.
On November 12, 1997, this Declaration was amended through the
execution by the Trustees of an Amendment which established, pursuant to Section
5.3 of the Declaration, two new series of the Trust to be designated as (i)
Strategic Core Series;
<PAGE>
and (ii) Core Series. This Amendment further provided that the initial class of
shares for each series shall be designated the Class Y shares, and that any
variations between such classes as to purchase price, determination of net asset
value, the price, terms and manner of redemption, special and relative rights as
to dividends and on liquidation, and conditions under which such classes shall
have separate voting rights, shall be as set forth in the Declaration or as
elsewhere determined by the Board of Trustees of the Trust.]
Section V.3. Additional Series; Classes. The Trustees may, without
Shareholder approval, from time to time authorize additional Series with
separate investment objectives and policies and distinct investment purposes and
one or more separate classes of any Series. The Trustees shall have full power
and authority, in their sole discretion, and without obtaining any prior
authorization or vote of the Shareholders of any Series of the Trust, to
establish and designate and to change in any manner any such Series, or any
classes thereof, to fix such preferences, voting powers, rights and privileges
of such Series, or classes thereof, as the Trustees may from time to time
determine, to classify or reclassify any issued Shares of any Series, or classes
thereof, into one or more Series or classes, and to take such other action with
respect to the Shares as the Trustees may deem desirable. The establishment and
designation of any Series additional to the initial Series of Shares or the
establishment and designation of any class of a Series additional to the initial
class shall be effective upon the execution by a majority of the Trustees of an
instrument setting forth the establishment and designation of such
<PAGE>
Series or classes thereof (which instrument shall have the status of an
amendment to this Declaration). All Shares of any Series or any classes thereof
shall have equal voting, distribution, redemption, liquidation and other rights
and shall be entitled to a preference over Shares of other Series or any classes
thereof with respect to the assets of or allocated (pursuant to subsection
5.4.1) to such Series or any classes thereof. Notwithstanding the foregoing, the
Trustees may establish variations between different Series, and classes of any
series, as to purchase price, determination of net asset value, the price, terms
and manner of redemption and special and relative rights as to dividends on
liquidation, conditions under which the several Series (and classes of any
Series) shall have separate voting rights and such other matters as the Trustees
may determine. The number of Shares of each Series and each class that may be
issued shall be unlimited.
Section V.4. Series Assets, Liabilities and Expenses.
Section V.4.1. Series Assets. All consideration received by the
Trust for the issue or sale of Shares of a particular Series, together with all
assets in which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds derived from the
sale, loan, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to that Series for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account of the
Trust. In the event that there are any assets, income, earnings, profits, and
proceeds thereof,
<PAGE>
funds, or payments which are not readily identifiable as belonging to any
particular Series, the Trustees shall allocate them among any one or more of the
Series established and designated from time to time in such manner and on such
basis as they, in their sole discretion, deem fair and equitable. Each such
allocation by the Trustees shall be conclusive and binding upon the Shareholders
of all Series for all purposes.
Section V.4.2. Series Liabilities and Expenses. The assets belonging
to each particular Series shall be charged with the liabilities of the Trust in
respect of that Series and all expenses, costs, charges and reserves
attributable to that Series, and any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily identifiable as belonging
to any particular Series shall be allocated and charged by the Trustees to and
among any one or more of the Series in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable. Each such allocation
by the Trustees shall be conclusive and binding upon the Shareholders of all
Series for all purposes. Without limitation of the foregoing, the liabilities
existing with respect to a particular Series shall be enforceable against the
assets of such Series only and not against the assets of the Trust generally.
Any person extending credit to, contracting with or otherwise having any claim
against any Series may look only to the assets of that Series to satisfy any
such obligation or claim. No Shareholder or former Shareholder of any Series
shall have any claim on or any right to any assets allocated to or belonging to
any other Series. Notice of this limitation on Series liabilities may, in the
Trustees' sole discretion,
<PAGE>
be set forth in the certificate of trust of the Trust (whether originally or by
amendment) as filed or to be filed in the office of the Secretary of State of
the State of Delaware pursuant to the Delaware Act, and upon the giving of such
notice in the certificate of trust, the statutory provisions of Section 3804 of
the Delaware Act relating to limitations on Series liabilities (and the
statutory effect under Section 3804 of setting forth such notice in the
certificate of trust) shall become applicable to the Trust and each Series.
Section V.4.3. Termination of a Series. Any series may be terminated
by the affirmative vote of at least two-thirds of the Shares of such Series
outstanding or, when authorized by a Series Majority Shareholder Vote, by an
instrument in writing signed by a majority of the Trustees. Upon the termination
of a Series, the Series shall carry on no business except for the purpose of
winding up its affairs, and the Trustees shall proceed to wind up the affairs of
the Series, having with respect to such Series all powers contemplated by
Section 8.1 of this Declaration in the event of the termination of the Trust.
At any time that there are no Shares outstanding of any particular
Series previously established, the Trustees may by an instrument executed by a
majority of their number, abolish the Series.
Section V.5. Rights of Shareholders. Shares shall be deemed to be
personal property giving only the rights provided in this Declaration. Every
Shareholder by virtue of having become a Shareholder shall be held to have
expressly assented and
<PAGE>
agreed to the terms hereof and to have become a party hereto. The right to
conduct any business hereinbefore described are vested exclusively in the
Trustees, and the Shareholders shall have no interest therein other than the
beneficial interest conferred by their Shares, and they shall have no right to
call for any partition or division of any property, profits, rights or interests
of the Trust or any Series thereof nor can they be called upon to share or
assume any losses of the Trust or any Series thereof or suffer an assessment of
any kind by virtue of their ownership of Shares. The death of a Shareholder
during the continuance of the Trust shall not operate to terminate the Trust or
any Series thereof nor to entitle the legal representative of such shareholder
to an accounting or to take any action in any court or otherwise against other
Shareholders or the Trustees or the Trust Property, but only to the rights of
such Shareholder hereunder. The Shares shall not entitle the holder to
preference, preemptive, appraisal, conversion or exchange rights.
Section V.6. Trust Only. The Trust shall be a Delaware business
trust organized under the Delaware Act. It is the intention of the Trustees to
create only the relationship of Trustee and beneficiary between the Trustees and
each Shareholder from time to time. It is not the intention of the Trustees to
create a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
<PAGE>
Section V.7. Issuance of Shares.
Section V.7.1. General. The Trustees may from time to time without
vote of the Shareholders issue and sell or cause to be issued and sold Shares of
any Series, except that only Shares previously contracted to be sold may be
issued during any period when the right of redemption is suspended pursuant to
the provisions of Section 6.6 hereof. All such Shares, when issued in accordance
with the terms of this Section 5.7, shall be fully paid and nonassessable.
Section V.7.2. Price. No Shares of any Series shall be issued or
sold by the Trustees for less than an amount which would result in proceeds to
the Trust, before taxes and other expenses payable by the Trust in connection
with such transaction, of at least the net asset value per share of Shares of
such Series determined as set forth in Article VII hereof as of the time
specified in the prospectus of the Trust at the time in effect.
Section V.7.3. On Merger or Consolidation. In connection with the
acquisition of assets (including the acquisition of assets subject to, and in
connection with the assumption of, liabilities), businesses or stock of another
Person, the Trustees may issue or cause to be issued Shares of any Series and
accept in payment therefor, in lieu of cash, such assets or businesses at their
market value (as determined by the Trustees) or such stock at the market value
(as determined by the Trustees) of the assets held by such other Person, either
with or without adjustment for contingent costs or liabilities, provided
<PAGE>
that the funds of the Trust are permitted by law to be invested in such assets,
businesses or stock.
Section V.7.4. Fractional Shares. The Trustees may issue and sell
fractions of Shares of any Series, to three decimal places, having pro rata all
the rights of full Shares of such Series, including, without limitation, the
right to vote and to receive dividends and distributions.
Section V.8. Register of Shares. A register shall be kept at the
principal office of the Trust or an office of the transfer agent of the Trust
which shall contain the names and addresses of the Shareholders of each Series,
the number of Shares of each such Series held by them respectively, a record of
all transfers thereof and any other information required by the Code, United
States Treasury Regulations or any other taxing authority with respect to
regulated investment companies. Such register shall be conclusive as to who are
the holders of the Shares and who shall be entitled to receive dividends or
distributions or otherwise to exercise or enjoy the rights of Shareholders of
each Series. No Shareholder shall be entitled to receive payment of any dividend
or distribution, nor to have notice given to him as herein or in the By-Laws
provided, until he has given his address to the transfer agent or such other
officer or agent of the Trust as shall keep the said register for entry thereon.
Section V.9. Share Certificates. No certificates certifying
ownership of Shares shall be issued except as the Trustees may otherwise
determine from time to time.
<PAGE>
Section V.10. Transfer of Shares. Shares of any Series shall be
transferable on the records of the Trust upon delivery to the Trust or its
transfer agent or agents of appropriate evidence of assignment, transfer,
succession or authority to transfer accompanied by any certificate or
certificates representing such Shares previously issued to the transferor. Upon
such delivery the transfer shall be recorded on the register of the appropriate
Series. Until such record is made, the Trustees, the transfer agent, and the
officers, employees and agents of the Trust or any Series shall not be entitled
or required to treat the assignee or transferee of any Share as the absolute
owner thereof for any purpose, and accordingly shall not be bound to recognize
any legal, equitable or other claim or interest in such Share on the part of any
Person, other than the holder of record, whether or not any of them shall have
express or other notice of such claim or interest.
Section V.11. Voting Powers. The Shareholders shall have power to
vote only: (a) for the election of Trustees as provided in Section 2.4 hereof;
(b) with respect to any investment advisory or management contract entered into
pursuant to Section 3.2 hereof; (c) with respect to the removal of Trustees
pursuant to Section 5.14 hereof; (d) with respect to any termination of the
Trust, as provided in Section 8.1 hereof; (e) with respect to any amendment of
this Declaration to the extent and as provided in Section 8.2 hereof; and (f)
with respect to such additional matters relating to the Trust as may be required
by this Declaration or the By-Laws or by reason of the registration of the Trust
<PAGE>
or the Shares with the Commission or any State or by any applicable law or any
regulation or order of the Commission or any State or as the Trustees may
consider necessary or desirable. On any matter submitted to a vote of
Shareholders, all Shares issued and outstanding shall, subject to applicable
law, be voted as a single class in the aggregate and not by Series, except with
respect to: (i) any matter determined by the Trustees to affect the Shareholders
of any particular Series in a material respect different from the Shareholders
of other Series; and (ii) such matters as may be otherwise required by this
Declaration or by the By-Laws or by reason of the registration of the Trust or
the Shares of such Series with the Commission or any State or by any applicable
law (including the 1940 Act) or any regulation or order of the Commission or any
State or as the Trustees may consider necessary or desirable. With respect to
such matters, the Shareholders of each affected Series shall have the power to
vote as a separate Series or as a class of separate Series, as determined by the
Trustees, and, if so determined by the Trustees, the other shareholders shall
not be entitled to vote. Each whole share shall be entitled to one vote as to
any matter on which Shareholders are entitled to vote and each fractional Share
shall be entitled to a proportionate fractional vote. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in person or
by proxy. Until Shares are issued, the Trustees may exercise all rights of
Shareholders (including, without limitation, the right to amend this
Declaration) and may take any action required by law, the By-Laws
<PAGE>
or this Declaration to be taken by Shareholders. The By-Laws may include further
provisions for Shareholders' votes and related matters.
Section V.12. Meetings of Shareholders. Meetings of the Shareholders
may be called at any time by the Chairman of the Board, the President or any
Vice President of the Trust, or by a majority of the Trustees for the purpose of
taking action upon any matter requiring the vote or authority of the
Shareholders as herein provided or upon any other matters deemed to be necessary
or desirable. Without limiting the provisions of Section 5.14 hereof, a special
meeting of Shareholders may also be called at any time upon the written request
of a holder or the holders of not less than 25% of all of the Shares entitled to
be voted at such meeting, provided that the Shareholder or Shareholders
requesting such meeting shall have paid to the Trust the reasonably estimated
cost of preparing and mailing the notice thereof, which the Secretary shall
determine and specify to such Shareholder or Shareholders.
Section V.13. Action Without a Meeting. Any action which may be
taken by Shareholders may be taken without a meeting if such proportion of
Shareholders as is required to vote for approval of the matter by law, this
Declaration or the By-Laws consents to the action in writing and the written
consents are filed with the records of Shareholders' meetings. Such consents
shall be treated for all purposes as a vote taken at a Shareholders' meeting.
<PAGE>
Section V.14. Quorum and Required Vote. One-third (33 1/3%) of the
outstanding Shares shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law or this
Declaration permits or requires that holders of any series or class shall vote
as a series or class, then one-third percent (33 1/3%) of the aggregate number
of Shares of that series or class entitled to vote shall be necessary to
constitute a quorum for the transaction of business by that series or class. Any
lesser number, however, shall be sufficient for adjournment and any adjourned
session or sessions may be held within 90 days after the date set for the
original meeting without the necessity of further notice. Except when a larger
vote is required by any provision of this Declaration of Trust or the By-Laws of
the Trust and subject to any applicable requirements of law, a majority of the
Shares voted shall decide any question, provided that where any provision of law
or of this Declaration of Trust permits or requires that the holders of any
series or class shall vote as a series or class, then a majority of the Shares
of that series or class voted on the matter shall decide that matter insofar as
that series or class is concerned.
Section V.15. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
Section V.16. Removal of Trustees by Shareholders. No Trustee shall
serve as trustee of the Trust after the holders of record of not less than
two-thirds of the outstanding Shares of the Trust have declared that such
Trustee be removed from office
<PAGE>
either by a declaration in writing filed with the Secretary of the Trust or by
votes cast in person or by proxy at a meeting called for such purpose.
Notwithstanding the provisions of Section 5.12 hereof, the Trustees shall comply
at all times with the provisions of the 1940 Act, including without limitation
Section 16(c) thereof or any successor section, pertaining to the removal of
Trustees by Shareholders.
Section V.17. Derivative Suits. No action may be brought by a
Shareholder on behalf of the Trust or a Series unless Shareholders owning not
less than fifty percent (50%) of the then outstanding Shares of the Trust or
such Series join in the bringing of such action.
ARTICLE VI
REDEMPTION AND REPURCHASE OF SHARES
Section VI.1. Redemption of Shares. The Trustees shall redeem Shares
of any Series, subject to the conditions and at the price determined in
accordance with this Declaration, upon proper application of the record holder
thereof at such office or agency as may be designated from time to time for that
purpose by the Trustees. The Trustees shall have power to determine from time to
time the form and the other accompanying documents which shall be necessary to
constitute a proper application for redemption.
Section VI.2. Price. Shares shall be redeemed for an amount equal to
the net asset value of such Shares next determined pursuant to Article VII
hereof after receipt
<PAGE>
of a proper application for redemption, less a charge, if and as fixed by
resolution of the Board of Trustees from time to time.
Section VI.3. Payment. Payment for such Shares redeemed shall be
made to the Shareholder of record within 7 days after the date upon which proper
application is received, subject to the Trustees or their designated agent being
satisfied that the purchase price of such Shares has been collected and to the
provisions of Section 6.4 hereof. Such payment shall be made in cash or other
assets of the Trust or both, as the Trustees shall prescribe. For the purposes
of such payment for Shares redeemed, the value of assets delivered shall be
determined as set forth in Article VII hereof as of the same time as of which
the per share net asset value of such Shares is determined.
Section VI.4. Effect of Suspension of Right of Redemption. If,
pursuant to Section 6.6 hereof, the Trustees shall declare a suspension of the
right of redemption, the rights of Shareholders (including those who shall have
applied for redemption pursuant to Section 6.1 hereof but who shall not yet have
received payment) to have Shares redeemed and paid for by the Trust shall be
suspended until the time specified in Section 6.6. Any record holder who shall
have his redemption right so suspended may, during the period of such
suspension, by appropriate written notice of revocation at the office or agency
where application was made, revoke any application for redemption not honored.
The redemption price of Shares for which redemption applications have not been
revoked shall not exceed the net asset value of such Shares next determined as
set forth in Article
<PAGE>
VII hereof after the termination of such suspension, and payment shall be made
within 7 days after the date upon which the application was made plus the period
after such application during which the determination of net asset value was
suspended.
Section VI.5. Repurchase by Agreement. The Trust may repurchase
Shares directly, or through the Distributor or another agent designated for the
purpose, by agreement with the owner thereof, or an agent designated by such
owner, at a price not exceeding the net asset value per share determined as set
forth in Article VII hereof as of the time specified in the prospectus of the
Trust at the time in effect.
Section VI.6. Suspension of Right of Redemption. The Trustees may
declare a suspension of the right of redemption or postpone the date of payment
or redemption as permitted by the 1940 Act and regulations and orders from time
to time in effect thereunder. Such suspension shall take effect at such time as
the Trustees shall specify, which shall not be later than the close of business
on the business day next following the declaration, and thereafter there shall
be no determination of net asset value until the Trustees shall declare the
suspension at an end, except that the suspension shall terminate in any event on
the first day on which (i) the condition giving rise to the suspension shall
have ceased to exist and (ii) no other condition exists under which suspension
is authorized under this Section 6.6. Each declaration by the Trustees pursuant
to this shall be consistent with such applicable rules and regulations, if any,
relating to the subject matter thereof as shall have been promulgated by the
Commission or any other
<PAGE>
governmental body having jurisdiction over the Trust and as shall be in effect
at the time. To the extent not inconsistent with such rules and regulations, the
determination of the Trustees shall be conclusive.
Section VI.7. Involuntary Redemption of Shares; Disclosure of
Holding. (a) If the Trustees shall, at any time and in good faith, be of the
opinion that direct or indirect ownership of Shares or other securities of the
Trust or any Series thereof has or may become concentrated in any Person to an
extent which would disqualify the Trust or any Series thereof as a regulated
investment company under the Code or would cause the Trust or any Series thereof
to be treated as a personal holding company under the Code, then the Trustees
shall have the power by lot or other means deemed equitable by them
(i) to call for redemption a number, or principal amount, of Shares
sufficient in the opinion of the Trustees to (A) maintain or bring the
direct or indirect ownership of Shares into conformity with the
requirements for such qualification or (B) avoid or to continue to avoid
the treatment of the Trust or any Series thereof as a personal holding
company under the Code, and
(ii) to refuse to transfer or issue Shares to any Person whose
acquisition of the Shares in question would in the opinion of the Trustees
result in such disqualification or treatment.
Any redemption pursuant to this Section 6.7(a) shall be effected at
a redemption price determined in accordance with Section 6.2 hereof.
<PAGE>
(b) The holders of Shares of the Trust or any Series thereof shall,
upon request, disclose to the Trustees in writing such information with respect
to direct and indirect ownership of Shares of the Trust or any Series thereof as
the Trustees deem necessary to comply with the provisions of the Code, United
States Treasury Regulations, or with the requirements of any other taxing
authority.
(c) The Trustees shall have the power to redeem Shares of any Series
in any Shareholder's account at a redemption price determined in accordance with
Section 6.2 hereof if at any time the total number of Shares of such Series held
in such account is fewer than an established minimum selected by the Trustees,
in which event the Shareholder shall be notified that the number of Shares in
the account is fewer than the minimum and shall be allowed a period, fixed by
the Trustees, in which to avoid such redemption by increasing the account to at
least the established minimum.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE; DISTRIBUTIONS
Section VII.1. By Whom Determined. The Trustees shall have the power
and duty to determine from time to time the net asset value per share of the
Shares of each Series. They may appoint one or more Persons to assist them in
the determination of the value of securities in the portfolio of each Series and
to make the actual calculations
<PAGE>
pursuant to their directions. Any determination made pursuant to this Article
VII shall be binding on all parties concerned.
Section VII.2. When Determined. The net asset value shall be
determined at such times as the Trustees shall prescribe in accordance with the
applicable provisions of the 1940 Act and regulations and orders from time to
time in effect thereunder. The Trustees may suspend the daily determination of
net asset value to the extent permitted by the 1940 Act or the regulations and
orders from time to time in effect thereunder.
Section VII.3. Computation of Per Share Net Asset Value.
Section VII.3.1. Net Asset Value Per Share. The net asset value of
each Share of each Series as of any particular time shall be the quotient
obtained by dividing the value of the net assets of such Series (determined in
accordance with Section 7.3.2.) by the total number of outstanding Shares of
that Series.
If any Series is divided into classes, the net asset value of Shares
of each class of such Series may be otherwise determined in any manner, to the
extent permitted by applicable law, determined by the Trustees and disclosed in
a prospectus relating to such class.
Section VII.3.2. Value of the Net Assets of a Series. The value of
the net assets of any series as of any particular time shall be the value of
that Series' assets less its liabilities, determined and computed as follows:
<PAGE>
(1) Assets. The assets of any Series shall be deemed to include the
following assets relating to that Series: (A) all cash on hand or on
deposit, including any interest accrued thereon, (B) all bills and demand
notes and accounts receivable, (C) all securities owned or contracted for
by the Trustees, (D) all stock and cash dividends and cash distributions
payable to but not yet received by the Trustees (when the valuation of the
underlying security is being determined ex-dividend), (E) all interest
accrued on any interest-bearing securities owned by the Trustees (except
accrued interest included in the valuation of the underlying security) and
(F) all other property of every kind and nature, including prepaid
expenses, but not any insurance policy of the kind referred to in Section
2.1(1)(ii) until such time as any amount payable thereunder becomes due
and payable to the Trust.
(2) Valuation of Assets. Determination of the value of such assets
shall be made, with respect to securities for which market quotations are
readily available, at the market value of such securities; and with
respect to other securities and assets, at the fair value as determined in
good faith by the Trustees.
(3) Liabilities. The liabilities of any Series shall not be deemed
to include any Shares of that Series and surplus, but they shall be deemed
to include the following liabilities relating to that Series: (A) all
bills and accounts payable, (B) all administrative expenses accrued and
unpaid, (C) all contractual obligations for
<PAGE>
the payment of money or property, including the amount of any declared but
unpaid dividends upon Shares of that Series and the amount of all income
accrued to the account of but not paid to Shareholders of that Series, (D)
all reserves established in accordance with generally accepted accounting
principles, for taxes or contingencies and (E) all other liabilities of
whatsoever kind and nature except any liabilities represented by Shares of
that Series and surplus.
The Board of Trustees is empowered, in its discretion, to establish other
methods for determining net asset value whenever such other methods are deemed
by it to be necessary or desirable, including, but without limiting the
generality of the foregoing, any method deemed necessary or desirable in order
to enable the Trust to comply with any provision of the Investment Company Act
of 1940 or any rule or regulation thereunder.
Section VII.4. Interim Determinations. Any determination of net
asset value other than as of the close of trading on the New York Stock Exchange
may be made either by appraisal or by calculation or estimate. Any such
calculation or estimate shall be based on changes in the market value of
representative or selected securities or on changes in recognized market
averages since the last closing appraisal and made in a manner which in the
opinion of the Trustees will fairly reflect the changes in the net asset value.
Section VII.5. Outstanding Shares. For the purposes of this Article
VII, outstanding Shares of any Series shall mean those Shares shown from time to
time on the
<PAGE>
books of such Series or the transfer agent of the Trust as then issued and
outstanding, adjusted as follows:
(a) Shares sold shall be deemed to be outstanding Shares from the
time as of which the Trust has agreed to such sale and the sale price in
currency has been determined.
(b) Shares distributed pursuant to Section 7.6 shall be deemed to be
outstanding as of the time that Shareholders who shall receive the
distribution are determined.
(c) Shares for which a proper application for redemption has been
made or which are subject to repurchase by the Trustees shall be deemed to
be outstanding Shares up to and including the time as of which the
redemption or repurchase price is determined. After such time, they shall
be deemed to be no longer outstanding Shares and the redemption or
repurchase price until paid shall be deemed to be a liability of the
Trust.
Section VII.6. Distributions to Shareholders. Without limiting the
powers of the Trustees under Subsection (f) of Section 2.1 of Article II hereof,
the Trustees may at any time and from time to time, as they may determine,
allocate or distribute to Shareholders of a Series such income and capital gains
of the Series, accrued or realized, as the Trustees may determine, after
providing for actual, accrued or estimated expenses and liabilities (including
reserves) determined in accordance with generally accepted
<PAGE>
accounting practices. The Trustees shall have full discretion to determine which
items shall be treated as income and which items as capital and their
determination shall be binding upon the Shareholders. Such distributions shall
be made in cash, property or Shares of the appropriate Series or any combination
thereof as determined by the Trustees. Any such distribution paid in Shares
shall be paid at the net asset value thereof as determined pursuant to this
Article VII. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans or related plans as the Trustees
shall deem appropriate. Inasmuch as the computation of net income and gains for
Federal income and excise tax purposes may vary from the computation thereof on
the books of the Trust, the above provisions shall be interpreted to give the
Trustees the power in their discretion to allocate or distribute for any fiscal
year as ordinary dividends and as capital gains distributions, respectively,
additional amounts sufficient to enable the Trust to avoid or reduce liability
for taxes after amended or modified.
ARTICLE VIII
DURATION; TERMINATION OF TRUST;
AMENDMENT: MERGERS, ETC.
Section VIII.1. Duration and Termination. (a) Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be
<PAGE>
terminated by the affirmative vote of at least 66 2/3% of the Shares outstanding
or by the Trustees. Upon the termination of the Trust,
(i) The Trust shall carry on no business except for the purpose of
winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust
and all of the powers of the Trustees under this Declaration shall
continue until the affairs of the Trust shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust,
collect its assets, sell, convey, assign, exchange, transfer or otherwise
dispose of all or any part of the remaining Trust Property to one or more
persons at public or private sale for consideration which may consist in
whole or in part of cash, securities or other property of any kind,
discharge or pay its liabilities, and do all other acts appropriate to
liquidate its business, provided that any sale, conveyance, assignment,
exchange, transfer or other disposition of all or substantially all the
Trust Property that requires Shareholder approval under Section 8.3 hereof
shall receive the approval so required.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property, in cash or in kind or partly
each, among the Shareholders according to their respective rights.
<PAGE>
(b) After termination of the Trust and distribution to the
Shareholders as herein provided, the Trustees shall provide for the making of
all filings and applications required by law, and shall execute and lodge among
the records of the Trust an instrument in writing setting forth the fact of such
termination. Thereupon, the Trustees shall be discharged from all further
liabilities and duties hereunder, and the rights and interests of all
Shareholders shall thereupon cease.
Section VIII.2. Amendment Procedure. (a) Except as specifically
provided herein, the Trustees may, without Shareholder vote, amend this
Declaration by an instrument in writing or an amended and restated Declaration
signed by a majority of the Trustees. Such an amendment shall be authorized by a
Majority Shareholder Vote, or subject to the provisions of Section 5.11, a
Series Majority Shareholder Vote, if it would limit the right of Shareholders to
vote under Section 5.11 or amend this Section 8.2 or if Shareholder
authorization is required by the 1940 Act. Notwithstanding anything else herein,
no amendment to this Declaration shall (i) limit the rights of indemnification
provided in Article IV hereof with respect to actions or omissions of Persons
covered thereby prior to such amendment, (ii) impair the exemption from personal
liability of the Shareholders, Trustees, officers, employees and agents of the
Trust or any Series thereof or permit assessments upon Shareholders.
(b) An instrument in writing setting forth the amendment or an
amended and restated Declaration, executed by a majority of the Trustees, shall
be conclusive
<PAGE>
evidence of such amendment when lodged among the records of the Trust. Subject
to the foregoing any such amendment shall be effective as provided in the
instrument containing the terms of such amendment or, if there is no provision
therein with respect to effectiveness, upon the execution of such instrument by
a majority of the Trustees (or by an officer of the Trust pursuant to a vote of
a majority of the Trustees).
Section VIII.3. Merger, Consolidation and Sale of Assets.
Notwithstanding anything else contained herein, the Trustees may, without prior
Shareholder approval, cause the Trust or any successor thereto to merge or
consolidate with or into, or sell and convey all or substantially all of the
assets of the Trust or any Series to one or more trusts, partnerships,
associations or corporations so long as the surviving or resulting or transferee
entity is an open-end management investment company under the 1940 Act, or is a
series thereof, that will succeed to or assume that Trust's registration under
the Act and which is formed, organized or existing under the laws of a state,
commonwealth possession or colony of the United States. Any agreement of merger
or consolidation or certificate of merger may be signed by a majority of
Trustees. Pursuant to and in accordance with the provisions of Section 3815(f)
of the Delaware Act, and notwithstanding anything to the contrary contained in
this Declaration, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section 8.3 may effect any amendment to the
Declaration or effect the adoption of a new trust
<PAGE>
instrument of the Trust if it is the surviving or resulting trust in the merger
or consolidation.
Section VIII.4. Incorporation. Notwithstanding anything else
contained herein, the Trustees may, without prior Shareholder approval, (i)
cause to be organized or assist in organizing under the laws of any jurisdiction
a corporation or corporations or any other trust, partnership, association or
other organization to take over all or less than all of the Trust Property or to
carry on any business in which the Trust shall directly or indirectly have any
interest, and may sell, convey and transfer Trust Property to any such
corporation, trust, partnership, association or other organization in exchange
for the shares or securities thereof or otherwise, and may lend money to,
subscribe for the shares or securities of, and enter into any contracts with any
such corporation, trust, partnership, association or other organization, or any
corporation, partnership, trust, association or other organization in which the
Trust holds or is about to acquire shares or any other interest or (ii) cause
the Trust to incorporate under the laws of Delaware.
ARTICLE IX
MISCELLANEOUS
Section IX.1. Registered Agent; Registered Office. The Registered
Agent of the Trust within the State of Delaware for service of process, and the
Registered Office of the Trust within the State of Delaware, shall be The
Prentice-Hall Corporation System,
<PAGE>
Inc., 32 Loockerman Square, Suite L-1000, Dover, Delaware 19901, or such other
agent or place, respectively, as the Trustees may designate from time to time by
any supplement to this Declaration of Trust.
Section IX.2. Governing Law. The Trust and this Declaration, and the
rights and obligations of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Act and the
laws of the State of Delaware; provided, however, that there shall not be
applicable to the Trust, the Trustees or this Declaration (a) the provisions of
Section 3540 of Title 12 of the Delaware Code or (b) any provisions of the laws
(statutory or common) of the State of Delaware (other than the Delaware Act)
pertaining to trusts which relate to or regulate (i) the filing with any court
or governmental body or agency of trustee accounts or schedules of trustee fees
and charges, (ii) affirmative requirements to post bonds for trustees, officers,
agents, or employees of a trust, (iii) the necessity for obtaining court or
other governmental approval concerning the acquisition, holding or disposition
of real or personal property, (iv) fees or other sums payable to trustees,
officers, agents or employees of a trust, (v) the allocation of receipts and
expenditures to income or principal, (vi) restrictions or limitations on the
permissible nature, amount or concentration of trust investments or requirements
relating to the titling, storage or other manner of holding of trust assets, or
(vii) the establishment of fiduciary or other standards or responsibilities or
limitations on the acts or powers of trustees, which are inconsistent with the
limitations or liabilities or
<PAGE>
authorities and powers of the Trustees set forth or referenced in this
Declaration. The Trust shall be of the type commonly called a "business trust",
and without limiting the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a trust under Delaware law. The Trust
specifically reserves the right to exercise any of the powers or privileges
afforded to trusts or actions that may be engaged in by trusts under the
Delaware Act, and the absence of a specific reference herein to any such power,
privilege or action shall not imply that the Trust may not exercise such power
or privilege or take such actions.
Section IX.3. Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
Section IX.4. Reliance by Third Parties. Any certificate executed by
an officer of the Trust or a Trustee certifying to: (a) the number or identity
of Trustees or Shareholders, (b) the due authorization of the execution of any
instrument or writing, (c) the form of any vote passed at a meeting of Trustees
or Shareholders, (d) the fact that the number of Trustees or Shareholders
present at any meeting or executing any written instrument satisfies the
requirements of this Declaration, (e) the form of any By-Laws adopted by or the
identity of any officers elected by the Trustees or (f) the existence of any
fact or facts which in any manner relate to the affairs of the Trust or any
Series
<PAGE>
thereof, shall be conclusive evidence as to the matters so certified in favor of
any Person dealing with the Trustees and their successors.
Section IX.5. Provisions in Conflict with Law or Regulations. (a)
The provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with requirements of the 1940 Act, would be inconsistent with any of
the conditions necessary for qualification of the Trust as a regulated
investment company under the Code or is inconsistent with other applicable laws
and regulations, such provision shall be deemed never to have constituted a part
of this Declaration, provided that such determination shall not affect any of
the remaining provisions of this Declaration or render invalid or improper any
action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
Section IX.6. Use of Name. The Trust is adopting its name through
permission of the firm of Lord, Abbett & Co., which is entering into a
management or advisory contract with the Trust. Such contract shall make
appropriate provisions that upon the termination of such contract for any cause,
or if such firm, or a subsidiary, affiliate or successor thereof, deems it
advisable to withdraw the right to the use of its
<PAGE>
name, the Trust will, at the request of such firm, or of a subsidiary, affiliate
or successor thereof lawfully using the name, take such action as may be
necessary to change its name to eliminate all use of or reference to the words
"Lord Abbett" in any form and will not use the registered service mark of Lord,
Abbett & Co. without the written consent of such firm, subsidiary, affiliate or
successor. The Trust shall also agree in such contract that investment companies
other than the Trust for which such firm or a subsidiary or successor thereof
may act as investment adviser, and other companies affiliated with Lord, Abbett
& Co., may be formed with the words "Lord Abbett" in their corporate titles.
Such agreements on the part of the Trust are hereby made binding upon it, its
Trustees, officers, shareholders, creditors and all other persons claiming under
or through it.
Section IX.7. Section Headings; Interpretation. Section headings in
this Declaration are for convenience of reference only, and shall not limit or
otherwise affect the meaning hereof. References in this Declaration to "this
Declaration" shall be deemed to refer to this Declaration as from time to time
amended, and all expressions such as "hereof", "herein" and "hereunder" shall be
deemed to refer to this Declaration as from time to time amended and not
exclusively to the article or section in which such words appear.
IN WITNESS WHEREOF, the undersigned have executed this instrument
this 12th day of March, 1998.
<PAGE>
/s/ Robert S. Dow
Robert S. Dow
/s/ E. Wayne Nordberg
E. Wayne Nordberg
/s/ E. Thayer Bigelow
E. Thayer Bigelow
/s/ Stewart D. Dixon
Stewart S. Dixon
/s/ J. C. Jansing
John C. Jansing
/s/ C. Alan MacDonald
C. Alan MacDonald
/s/ Hansel B. Millican, Jr.
Hansel B. Millican, Jr.
/s/Thomas J. Neff
Thomas J. Neff
================================================================================
BY-LAWS
OF
LORD ABBETT INVESTMENT TRUST
As adopted on October 20, 1993
================================================================================
<PAGE>
Table of Contents
Page
----
ARTICLE I Definitions............................................1
ARTICLE II Offices and Seal.......................................1
Section 2.1. Principal Office...............................1
Section 2.2. Other Offices..................................1
Section 2.3. Seal...........................................1
ARTICLE III Shareholders...........................................2
Section 3.1. Meetings.......................................2
Section 3.2. Place of Meeting...............................2
Section 3.3. Notice of Meetings.............................2
Section 3.4. Shareholders Entitled to Vote..................3
Section 3.5. Quorum.........................................3
Section 3.6. Adjournment....................................3
Section 3.7. Proxies........................................4
Section 3.8. Inspection of Records..........................4
Section 3.9. Record Dates...................................4
ARTICLE IV Meetings of Trustees...................................5
Section 4.1. Regular Meetings...............................5
Section 4.2. Special Meetings...............................5
Section 4.3. Notice.........................................5
Section 4.4. Waiver of Notice...............................5
Section 4.5. Adjournment and Voting.........................6
Section 4.6. Compensation...................................6
Section 4.7. Quorum.........................................6
ARTICLE V Executive Committee and Other Committees...............6
Section 5.1. How Constituted................................6
Section 5.2. Powers of the Executive Committee..............6
Section 5.3. Other Committees of Trustees...................7
Section 5.4. Proceedings, Quorum and Manner of Acting.......7
Section 5.5. Other Committees...............................7
ARTICLE VI Officers...............................................7
Section 6.1. General........................................7
Section 6.2. Election, Term of Office and Qualifications....8
Section 6.3. Resignations and Removals......................8
<PAGE>
Section 6.4. Vacancies and Newly Created
Offices........................................8
Section 6.5. Chairman of the Board..........................9
Section 6.6. President......................................9
Section 6.7. Vice President.................................9
Section 6.8. Chief Financial Officer, Treasurer
and Assistant Treasurers .....................10
Section 6.9. Secretary and Assistant
Secretaries...................................10
Section 6.10. Subordinate Officers..........................11
Section 6.11. Surety Bonds..................................11
ARTICLE VII Execution of Instruments; Voting of Securities........12
Section 7.1. Execution of Instruments......................12
Section 7.2. Voting of Securities..........................12
ARTICLE VIII Fiscal Year; Accountants..............................13
Section 8.1. Fiscal Year...................................13
Section 8.2. Accountants...................................13
ARTICLE IX Amendments; Compliance with Investment Company Act....13
Section 9.1. Amendments....................................13
Section 9.2. Compliance with Investment Company Act........14
<PAGE>
BY-LAWS
OF
LORD ABBETT INVESTMENT TRUST
ARTICLE I
Definitions
The terms "Affiliated Person", "Commission", "Interested Person",
"Investment Adviser", "Majority Shareholder Vote", "1940 Act", "Principal
Underwriter", "Series", "Series Majority Shareholder Vote", "Shareholder",
"Shares", "Trust", "Trust Property", and "Trustees" have the meanings given them
in the Declaration and Agreement of Trust (the "Declaration") of Lord Abbett
Investment Trust dated August 16, 1993, as amended from time to time.
ARTICLE II
Offices and Seal
Section II.1. Principal Office - The principal office of the Trust
shall be located in the City of New York, the State of New York.
Section II.2. Other Offices - The Trust may establish and maintain
such other offices and places of business within or without the State of New
York as the Trustees may from time to time determine.
Section II.3. Seal - The seal of the Trust shall be circular in form
and shall bear the name of the Trust, the year of its organization, and the
words "Common Seal" and "A Delaware Business Trust". The form of the seal shall
be subject to alteration by the Trustees and the seal may be used by causing it
or a facsimile to be impressed or affixed or printed or otherwise reproduced.
Any officer or Trustee of the Trust shall have authority to affix the seal of
the Trust to any document requiring the same but, unless otherwise required by
the Trustees, the seal shall not be necessary to be placed on, and its absence
shall not impair
<PAGE>
the validity of, any document, instrument or other paper executed and delivered
by or on behalf of the Trust.
ARTICLE III
Shareholders
Section III.1. Meetings - A Shareholders' meeting for the election
of Trustees and the transaction of other proper business shall be held when
authorized or required by the Declaration.
Section III.2. Place of Meeting - All Shareholders' meetings shall
be held at such place within or without the State of New York as the Trustees
shall designate.
Section III.3. Notice of Meetings - Notice of all Shareholders'
meetings, stating the time, place and purpose of the meeting, shall be given by
the Secretary or an Assistant Secretary of the Trust by mail to each Shareholder
entitled to notice of and to vote at such meeting at his address of record on
the register of the Trust. Such notice shall be mailed at least 10 days and not
more than 90 days before the meeting. Such notice shall be deemed to be given
when deposited in the United States mail, with postage thereon prepaid. Any
adjourned meeting may be held as adjourned without further notice. No notice
need be given (a) to any shareholder if a written waiver of notice, executed
before or after the meeting by such Shareholder or his attorney thereunto duly
authorized, is filed with the records of the meeting, or (b) to any Shareholder
who attends the meeting without protesting prior thereto or at its commencement
the lack of notice to him. A waiver of notice need not specify the purposes of
the meeting.
Section III.4. Shareholders Entitled to Vote - If, pursuant to
Section 3.9 hereof, a record date has been fixed for the determination of
Shareholders entitled to notice of and to vote at any Shareholders' meeting,
each Shareholder of the Trust entitled to vote in accordance with the applicable
provisions of the Declaration, shall be entitled to vote, in person or by proxy,
each Share or fraction thereof standing in his name on the register of the Trust
at the time of determining net asset value on such record date. If the
Declaration or the 1940 Act requires that Shares be voted by Series, each
Shareholder shall only be entitled to vote, in person or by proxy, each Share or
fraction thereof of such Series standing in his name on the register of the
<PAGE>
Trust at the time of determining net asset value on such record date. If no
record date has been fixed for the determination of Shareholders entitled to
notice of and to vote at a Shareholders' meeting, such record date shall be at
the close of business on the day on which notice of the meeting is mailed or, if
notice is waived by all Shareholders, at the close of business on the tenth day
next preceding the day on which the meeting is held.
Section III.5. Quorum - The presence at any Shareholders' meeting,
in person or by proxy, of Shareholders entitled to cast a third of the votes
thereat shall be a quorum for the transaction of business, unless applicable law
requires a larger number.
Section III.6. Adjournment - The holders of a majority of the Shares
entitled to vote at the meeting and present thereat, in person or by proxy,
whether or not constituting a quorum, or, if no Shareholder entitled to vote is
present thereat in person or by proxy, any Trustee or officer present thereat
entitled to preside or act as Secretary of such meeting may adjourn the meeting
sine die or from time to time. Any business that might have been transacted at
the meeting originally called may be transacted at any such adjourned meeting at
which a quorum is present.
Section III.7. Proxies - Shares may be voted in person or by proxy.
When any Share is held jointly by several persons, any one of them may vote at
any meeting, in person or by proxy, in respect of such Share unless at or prior
to exercise of the vote the Trustees receive a specific written notice to the
contrary from any one of them. If more than one such joint owners shall be
present at such meeting, in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote cast, such vote shall not be received
in respect of such Share. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or
<PAGE>
prior to its exercise and the burden of proving invalidity shall rest on the
challenger.
Section III.8. Inspection of Records - The records of the Trust
shall be open to inspection by Shareholders as is permitted shareholders of a
Delaware business trust.
Section III.9. Record Dates - The Trustees may fix in advance a date
as a record date for the purpose of determining the Shareholders who are
entitled to notice of and to vote at any meeting or any adjournment thereof, or
to express consent in writing without a meeting to any action of the Trustees,
or who shall receive payment of any dividend or of any other distribution, or
for the purpose of any other lawful action, provided that such record date shall
be not more than 90 days before the date on which the particular action
requiring such determination of Shareholders is to be taken. In such case,
subject to the provisions of Section 3.4, each eligible Shareholder of record on
such record date shall be entitled to notice of, and to vote at, such meeting or
adjournment, or to express such consent, or to receive payment of such dividend
or distribution or to take such other action, as the case may be,
notwithstanding any transfer of Shares on the register of the Trust after the
record date.
ARTICLE IV
Meetings of Trustees
Section IV.1. Regular Meetings - The Trustees from time to time
shall provide by resolution for the holding of regular meetings for the election
of officers and the transaction of other proper business and shall fix the place
and time for such meetings to be held within or without the State of New York.
Section IV.2. Special Meetings - Special meetings of the Trustees
shall be held whenever called by the Chairman of the Board, the President (or,
in the absence or disability of the President, by any Vice President), the Chief
Financial officer, the Secretary or two or more
<PAGE>
Trustees, at the time and place within or without the State of New York
specified in the respective notices or waivers of notice of such meetings.
Section IV.3. Notice - No notice of regular meetings of the Trustees
shall be required except as required by the Investment Company Act of 1940, as
amended. Notice of each special meeting shall be mailed to each Trustee, at his
residence or usual place of business, at least two days before the day of the
meeting, or shall be directed to him at such place by telegraph, telecopy or
cable, or be delivered to him personally not later than the day before the day
of the meeting. Every such notice shall state the time and place of the meeting
but need not state the purposes thereof, except as otherwise expressly provided
by these By-Laws or by statute. No notice of adjournment of a meeting of the
Trustees to another time or place need be given if such time and place are
announced at such meeting.
Section IV.4. Waiver of Notice - Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by him before or
after the meeting, is filed with the records of the meeting, or to any Trustee
who attends the meeting without protesting prior thereto or at its commencement
the lack of notice to him. A waiver of notice need not specify the purposes of
the meeting.
Section IV.5. Adjournment and Voting - At all meetings of the
Trustees, a majority of the Trustees present, whether or not constituting a
quorum, may adjourn the meeting, from time to time. The action of a majority of
the Trustees present at a meeting at which a quorum is present shall be the
action of the Trustees unless the concurrence of a greater proportion is
required for such action by law, by the Declaration or by these By-Laws.
Section IV.6. Compensation - Each Trustee may receive such
remuneration for his services as such as shall be fixed from time to time by
resolution of the Trustees.
Section IV.7. Quorum - One-third of the Trustees present at a
meeting shall constitute a quorum for the transaction of business, but in no
case shall a quorum be less than two Trustees.
<PAGE>
ARTICLE V
Executive Committee and Other Committees
Section V.1. How Constituted - The Trustees may, by resolution,
designate one or more committees, including an Executive Committee, an Audit
Committee and a Committee on Administration, each consisting of at least two
Trustees. The Trustees may, by resolution, designate one or more alternate
members of any committee to serve in the absence of any member or other
alternate member of such committee. Each member and alternate member of a
committee shall be a Trustee and shall hold office at the pleasure of the
Trustees. The Chairman of the Board and the President shall be members of the
Executive Committee.
Section V.2. Powers of the Executive Committee - Unless otherwise
provided by resolution of the Trustees, the Executive Committee shall have and
may exercise all of the power and authority of the Trustees, provided that the
power and authority of the Executive Committee shall be subject to the
limitations contained in the Declaration.
Section V.3. Other Committees of Trustees - To the extent provided
by resolution of the Trustees, other committees shall have and may exercise any
of the power and authority that may lawfully be granted to the Executive
Committee.
Section V.4. Proceedings, Quorum and Manner of Acting - In the
absence of appropriate resolution of the Trustees, each committee may adopt such
rules and regulations governing its proceedings, quorum and manner of acting as
it shall deem proper and desirable, provided that the quorum shall not be less
than two Trustees. In the absence of any member or alternate member of any such
committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint a Trustee to act in the place of such absent
member or alternate member.
<PAGE>
Section V.5. Other Committees - The Trustees may appoint other
committees, each consisting of one or more persons who need not be Trustees.
Each such committee shall have such powers and perform such duties as may be
assigned to it from time to time by the Trustees, but shall not exercise any
power which may lawfully be exercised only by the Trustees or a committee
thereof.
ARTICLE VI
Officers
Section VI.1. General - The designated officers of the Trust shall
be a Chairman of the Board, a President, a Secretary, a Chief Financial Officer,
a Treasurer and may include one or more Vice Presidents (one or more of whom may
be Executive Vice Presidents), one or more Assistant Secretaries, one or more
Assistant Treasurers, and such other officers as may be appointed in accordance
with the provisions of Section 6.10 of this Article VI.
Section VI.2. Election, Term of Office and Qualifications - The
designated officers of the Trust and any Series thereof (except those appointed
pursuant to Section 6.10) shall be elected by the Trustees at any regular or
special meeting of the Trustees. Except as provided in Sections 6.3 and 6.4 of
this Article VI, each officer elected by the Trustees shall hold office until
his successor shall have been chosen and qualified. Any two offices, except
those of the President and a Vice President, may be held by the same person, but
no officer shall execute, acknowledge or verify any instrument in more than one
capacity if such instrument be required by law, the Declaration or these By-Laws
to be executed, acknowledged or verified by any two or more officers. The
Chairman of the Board and the President shall be selected from among the
Trustees and may hold such offices only so long as they continue to be Trustees.
Any Trustee or officer may be but need not be a Shareholder of the Trust.
Section VI.3. Resignations and Removals - Any officer may resign his
office at any time by delivering a written resignation to the Trustees, the
President, the
<PAGE>
Secretary or any Assistant Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery. Any officer may be removed from
office with or without cause by the vote of a majority of the Trustees at any
regular meeting or any special meeting. Except to the extent expressly provided
in a written agreement with the Trust, no officer resigning and no officer
removed shall have any right to any compensation for any period following his
resignation or removal or any right to damages on account of such removal.
Section VI.4. Vacancies and Newly Created Offices - If any vacancy
shall occur in any office by reason of death, resignation, removal,
disqualification or other cause, or if any new office shall be created, such
vacancies or newly created offices may be filled by the Trustees at any regular
or special meeting or, in the case of any office created pursuant to Section
6.10 of this Article VI, by any officer upon whom such power shall have been
conferred by the Trustees.
Section VI.5. Chairman of the Board - The Chairman of the Board
shall be the chief executive officer of the Trust and each Series thereof, shall
preside at all Shareholders' meetings and at all meetings of the Trustees and
shall be ex officio a member of all committees of the Trustees and each Series
thereof, except the Audit Committee. Subject to the supervision of the Trustees,
he shall have general charge of the business of the Trust and each Series
thereof, the Trust Property and the officers, employees and agents of the Trust
and each Series thereof. He shall have such other powers and perform such other
duties as may be assigned to him from time to time by the Trustees.
Section VI.6. President - The President shall be the chief operating
officer of the Trust and each Series thereof and, at the request of or in the
absence or disability of the Chairman of the Board, he shall preside at all
Shareholders' meetings and at all meetings of the Trustees and shall in general
exercise the powers and perform the duties of the Chairman of the Board. Subject
to the supervision of the Trustees and such direction and control as the
Chairman of the Board may exercise, he shall
<PAGE>
have general charge of the operations of the Trust and each Series thereof and
its officers, employees and agents. He shallexercise such other powers and
perform such other duties as from time to time may be assigned to him by the
Trustees.
Section VI.7. Vice President - The Trustees may, from time to time,
designate and elect one or more Vice Presidents who shall have such powers and
perform such duties as from time to time may be assigned to them by the Trustees
or the President. At the request or in the absence or disability of the
President, the Executive Vice President (or, if there are two or more Executive
Vice Presidents, the senior in length of time in office or if there is no
Executive Vice President in the absence of both the President and any Executive
Vice President, the Vice President who is senior in length of time in office of
the Vice Presidents present and able to act) may perform all the duties of the
President.
Section VI.8. Chief Financial Officer, Treasurer and Assistant
Treasurers - The Chief Financial Officer shall be the principal financial and
accounting officer of the Trust and each Series thereof and shall have general
charge of the finances and books of account of the Trust and each Series
thereof. Except as otherwise provided by the Trustees, he shall have general
supervision of the funds and property of the Trust and each Series thereof and
of the performance by the custodian appointed pursuant to Section 2.1 (paragraph
r) of the Declaration of its duties with respect thereto. The Chief Financial
officer shall render a statement of condition of the finances of the Trust and
each Series thereof to the Trustees as often as they shall require the same and
he shall in general perform all the duties incident to the office of the Chief
Financial officer and such other duties as from time to time may be assigned to
him by the Trustees.
The Treasurer or any Assistant Treasurer may perform such duties of
the Chief Financial officer as the Chief Financial Officer or the Trustees may
assign. In the absence of the Chief Financial Officer, the Treasurer may perform
all duties of the Chief Financial Officer. In the absence of the Chief Financial
Officer and the Treasurer,
<PAGE>
any Assistant Treasurer may perform all duties of the Chief Financial Officer.
Section VI.9. Secretary and Assistant Secretaries - The Secretary
shall attend to the giving and serving of all notices of the Trust and each
Series thereof and shall record all proceedings of the meetings of the
Shareholders and Trustees in one or more books to be kept for that purpose. He
shall keep in safe custody the seal of the Trust, and shall have charge of the
records of the Trust and each Series thereof, including the register of shares
and such other books and papers as the Trustees may direct and such books,
reports, certificates and other documents required by law to be kept, all of
which shall at all reasonable times be open to inspection by any Trustee. He
shall perform such other duties as appertain to his office or as may be required
by the Trustees.
Any Assistant Secretary may perform such duties of the Secretary as
the Secretary or the Trustees may assign, and, in the absence of the Secretary,
he may perform all the duties of the Secretary.
Section VI.10. Subordinate Officers - The Trustees from time to time
may appoint such other subordinate officers or agents as they may deem
advisable, each of whom shall have such title, hold office for such period, have
such authority and perform such duties as the Trustees may determine. The
Trustees from time to time may delegate to one or more officers or agents the
power to appoint any such subordinate officers or agents and to prescribe their
respective rights, terms of office, authorities and duties.
Section VI.11. Surety Bonds - The Trustees may require any officer
or agent of the Trust and any Series thereof to execute a bond (including,
without limitation, any bond required by the 1940 Act and the rules and
regulations of the Commission) to the Trustees in such sum and with such surety
or sureties as the Trustees may determine, conditioned upon the faithful
performance of his duties to the Trust, including responsibility for negligence
and for the accounting of any of the Trust Property that may come into his
hands. In any such case, a new bond of like
<PAGE>
character shall be given at least every six years, so that the date of the new
bond shall not be more than six years subsequent to the date of the bond
immediately preceding.
ARTICLE VII
Execution of Instruments; Voting of Securities
Section VII.1. Execution of Instruments - All deeds, documents,
transfers, contracts, agreements, requisitions, orders, promissory notes,
assignments, endorsements, checks and drafts for the payment of money by the
Trust or any series thereof, and any other instruments requiring execution
either in the name of the Trust or the names of the Trustees or otherwise may be
signed by the Chairman, the President, a Vice President or the Secretary and by
the Chief Financial Officer, Treasurer or an Assistant Treasurer, or as the
Trustees may otherwise, from time to time, authorize, provided that instructions
in connection with the execution of portfolio securities transactions may be
signed by one such officer. Any such authorization may be general or confined to
specific instances.
Section VII.2. Voting of Securities - Unless otherwise ordered by
the Trustees, the Chairman, the President or any Vice President shall have full
power and authority on behalf of the Trustees to attend and to act and to vote,
or in the name of the Trustees to execute proxies to vote, at any meeting of
stockholders of any company in which the Trust may hold stock. At any such
meeting such officer shall possess and may exercise (in person or by proxy) any
and all rights, powers and privileges incident to the ownership of such stock.
The Trustees may by resolution from time to time confer like powers upon any
other person or persons.
ARTICLE VIII
Fiscal Year; Accountants
<PAGE>
Section VIII.1. Fiscal Year - The fiscal year of the Trust and any
Series thereof shall be established by resolution of the Trustees.
Section VIII.2. Accountants - (a) The Trustees shall employ a public
accountant or a firm of independent public accountants as their accountant to
examine the accounts of the Trust and each Series thereof and to sign and
certify at least annually financial statements filed by the Trust. The
accountant's certificates and reports shall be addressed both to the Trustees
and to the Shareholders.
(b) A majority of the Trustees who are not Interested Persons of the
Trust shall select the accountant at any meeting held before the initial
registration statement of the Trust becomes effective, and thereafter shall
select the accountant annually by votes, cast in person, at a meeting held
within 90 days before or after the beginning of the fiscal year of the Trust.
(c) Any vacancy occurring due to the death or resignation of the
accountant may be filled at a meeting called for the purpose by the vote, cast
in person, of a majority of those Trustees who are not Interested Persons of the
Trust.
ARTICLE IX
Amendments; Compliance with Investment Company Act
Section IX.1. Amendments - These By-Laws may be amended or repealed,
in whole or in part, by a majority of the Trustees then in office at any meeting
of the Trustees, or by one or more writings signed by such a majority.
Section IX.2. Compliance with Investment Company Act - No provision
of these By-Laws shall be given effect to the extent inconsistent with the
requirements of the Investment Company Act of 1940, as amended.
EXHIBIT 16
Lord Abbett Investment Trust Balanced Series
Post Effective Amendment No. 14
Results of a $1,000 investment reflecting the maximum sales charge and the
reinvestment of all distributions:
Period Ending November 30, 1997
P = (1 + T)^N = ERV
1 Year Life of Fund *
------ --------------
$1088 $1481
P=1,000 P = 1,000
N = 1 N = 2.93
ERV= 1088 ERV = 1296
T - Average annual total return
1,000 (1 + T)^1 = 1088 1,000 (1 + T)^2.93 = 1481
(1 + T) = (1088)^1 (1 + T)^1.93 = 1481
------ ----
1000 1000
1 + T = (1088) -1 1 + T = (1481)^.3413
------ ------
(1000) (1000)
T = (1088) -1 T = (1481)^.3413 -1
------ ------
(1000) (1000)
T = 8.80% T = 14.34%
* The Trust's Balanced Series commenced operations on 12/27/94.
<PAGE>
EXHIBIT 16
Lord Abbett Investment Trust U. S. Government Securities Series
Post Effective Amendment No. 14 on form N-1A
Results of a $1,000 investment reflecting the maximum sales charge and the
reinvestment of all distributions.
Period ending November 30, 1997
P = (1 + T)^N = ERV,
1 Year 5 Year 10 Year
------ ------ -------
$1016 $1290 $2129
P = 1,000 P = 1,000 P = 1,000
N = 1 N= 5 N = 10
ERV = 1016 ERV= 1290 ERV = 2129
T = Average annual total return
1,000 (1 + T)^1 = 1016 1,000 (1 + T)^5 = 1290 1,000 (1 + T)^10 = 2129
(1 + T)^1 = 1016 (1 + T)^5 = 1290 (1 + T)^10 = 2129
----- -----
1,000 1,000
1 + T = (1016)^1 (1 + T) = (1290)^.2 (1 + T) = (2129)^.1
------ ------ ------
(1,000) (1,000) (1,000)
T = (1016)^1-1 T = (1290)^.2-1 T = (2129)^.1-1
------ ------ ------
(1,000) (1,000) (1,000)
T = -1.60% T = 5.22% T = 7.85%
<PAGE>
EXHIBIT 16
Lord Abbett Investment Trust Limited Duration U. S. Government Series
Post Effective Amendment No. 14 on form N-1A
Results of a $1,000 investment reflecting the maximum sales charge and the
reinvestment of all distributions.
Period ending November 30, 1997
-------------------------------
P = (1 + T)^N = ERV
1 Year Life of Fund*
------ -------------
$1022 $1114
P = 1,000 P = 1,000
N = 1 N = 4.07
ERV =1022 ERV = 1114
T = Average annual total return
1,000 (1 + T)^1 = 1022 1,000 (1 + T)^4.07 = 1114
(1 + T)^1 = 1022 (1 + T)^.308 = (1114)^.245
------
(1,000)
1 + T =(1022)^1 (1 + T) = (1114)^.245
------ ------
(1,000) (1,000)
T = (1022)1 -1 T = (1114).245 -1
------- ------
(1,000) (1,000)
T = -2.20% T = 2.68%
* The Trust's Limited Duration Series commenced operations on 11/4/93.
<PAGE>
EXHIBIT 16
Calculation of yield appearing in the Statement of additional Information for
Lord Abbett Investment Trust, Class A Shares of the Balanced Series, Post Effect
Amendment No. 14 of Form N-1A.
YIELD FORMULA
For the 30 Days
Ended November 30, 1997
YIELD = 2[(a-b + 1)^6 -1] = 2.12%
cd
Where: a = Fund dividends and interest earned during the period in
the amount of $44,262
b = Fund expenses accrued for the period (net of
reimbursements) in the amount of $18,723
c = the average daily number of Fund shares outstanding
during the period that were entitled to receive
dividends were 1,306,903
d = the maximum offering price per Fund share on the
last day of the period was $13.44
<PAGE>
EXHIBIT 16
Calculation of yield appearing in the Statement of Additional Information for
Lord Abbett Investment Trust, Class A Shares U. S.Government Series, Post
Effective Amendment No. 14
YIELD FORMULA
For the 30 Days
Ended November 30, 1997
YIELD = 2[(a-b + 1)^6 -1] = 4.54%
cd
Where: a = Fund dividends and interest earned during the period
in the amount of $9,874,351
b = Fund expenses accrued for the period (net of
reimbursements) in the amount of $1,615,477
c = the average daily number of Fund shares outstanding
during the period that were entitled to receive
dividends were 810,705,008
d = the maximum offering price per Fund share on the
last day of the period was $2.72
<PAGE>
EXHIBIT 16
Calculation of yield appearing in the Statement of Additional Information for
Lord Abbett Investment Trust, Class A Shares of the Limited Duration U. S.
Government Series, Post Effective Amendment No. 14
YIELD FORMULA
For the 30 Days
Ended November 30, 1997
YIELD = 2[(a-b + 1)^6 -1] = 4.60%
cd
Where: a = Fund dividends and interest earned during the period
in the amount of $20,275
b = Fund expenses accrued for the period (net of
reimbursements) in the amount of $1,503
c = the average daily number of Fund shares outstanding
during the period that were entitled to receive
dividends were 1,089,270
d = the maximum offering price per Fund share on the
last day of the period was $4.54
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