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]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 20 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Amendment No. 20 [X]
LORD ABBETT INVESTMENT TRUST
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Exact Name of Registrant as Specified in Charter
767 FIFTH AVENUE, NEW YORK, N. Y. 10153-0203
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Address of Principal Executive Office
Registrant's Telephone Number (212) 848-1800
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Thomas F. Konop, Vice President
767 FIFTH AVENUE, NEW YORK, N. Y. 10153
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(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)
|_| on (date) pursuant to paragraph (b) of
|X| 60 days after filing pursuant to paragraph (a)(1)
|_| on (date) pursuant to paragraph (a)(1)
|_| 75 days after filing pursuant to paragraph (a)(2)
|_| on (date) pursuant to paragraph (a)(2) 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>
Prospectus April 1, 1999
Lord Abbett
Balanced Fund
[LOGO](R) LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
As with all mutual funds, the Securities and Exchange Commission
does not guarantee that the information in this prospectus is
accurate or complete, and it has not judged these funds for
investment merit. It is a criminal offense to state otherwise.
Class P shares of the fund are neither offered to the general public
nor available in all states. Please call 800-821-5129 for further
information.
<PAGE>
Table of Contents
The Fund Page
Goal/Approach 2
Main Risks 3
Past Performance 4
Fees and Expenses 5
Your Investment
Information for managing Purchases 6
your fund account Opening Your Account 8
Redemptions 9
Distributions and Taxes 9
Services For Fund Investors 9
Sales Charges and Service Fees 11
Management 11
For More Information
How to learn more Other Investment Techniques 12
about the fund Glossary of Shaded Terms 14
Financial Information
Financial Highlights 16
How to learn more about the Recent Performance 17
fund and other Lord Abbett funds Broker Compensation 17
Back Cover 18
<PAGE>
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Balanced Fund Symbols: Class A - LABFX
Class B - LABBX
Class C - BFLAX
GOAL / APPROACH
The Balanced Fund seeks current income and capital growth. To pursue its
objective, the fund invests in a portfolio of five underlying funds
managed by Lord Abbett.
Affiliated Fund
o Uses quantitative research on a universe of large, seasoned companies to
identify bargain stocks.
o Uses fundamental research to determine a company's prospects for exceeding
the earnings expectations reflected in its stock price.
Growth Opportunities Fund
o Uses quantitative research on a universe of mid-sized companies to
identify those with superior growth possibilities.
o Uses fundamental research to verify companies likely to produce superior
returns over a thirty-six month time frame, by analyzing the dynamics in
each company within its industry and within the economy.
Bond-Debenture Fund
o Invests in high yield debt securities, sometimes called "junk bonds,"
which entail greater risks than investments in higher-rated debt
securities.
o Seeks unusual values, particularly in lower-rated debt securities, some of
which are convertible into common stocks or have warrants to purchase
common stocks.
U.S. Government
Securities Fund
o Invests in U.S. Government Securities.
o Seeks high current income consistent with reasonable risk, which means
that it, over time, will have a volatility approximating that of the
Lehman Government Bond Index.
Mid-Cap Value Fund
o Focuses on stocks of mid-sized companies.
o Attempts to identify undervalued stocks with potential for significant
market appreciation from growing recognition of substantial improvement in
financial results.
The fund will decide in which of the underlying funds it will invest at
any particular time, as well as the relative amounts invested in those
funds. The fund may change the amounts invested in any or all of the
underlying funds at any time, but will always have at least 65% of its
assets in Affiliated Fund and Bond-Debenture Fund, taken together. In
addition, it will always have at least 25% of its assets in Bond-Debenture
Fund and U.S. Government Fund, taken together. As of this Prospectus, __%
of the fund's assets were in Affiliated Fund, __% in Bond-Debenture Fund,
__% in Mid-Cap Value Fund, __% in Growth Opportunities Fund and __% in
U.S. Government Securities Fund.
We or the fund refers to the Lord Abbett Balanced Fund, Inc. ("Balanced Fund")
acting as a fund of funds by investing in the underlying funds. The fund is a
portfolio of Lord Abbett Investment Trust (the "com-pany"). The fund operates
under the supervision of its Board, with the advice of Lord, Abbett & Co. ("Lord
Abbett"), its investment manager
Underlying funds: currently,
o Lord Abbett Affiliated Fund ("Affiliated Fund")
o Lord Abbett Bond Debenture Fund ("Bond Debenture Fund")
o Lord Abbett Mid-Cap Value Fund ("Mid-Cap Value Fund")
o Lord Abbett Growth Opportunities Fund ("Growth Opportunities Fund")
o Lord Abbett U.S. Government Securities Fund ("U.S. Government Securities
Fund")
About each fund. Each fund is a professionally managed portfolio primarily
holding municipal bonds purchased with the pooled money of investors. It strives
to reach its stated goal, although as with all funds, it cannot guarantee
results.
An investment in each fund is not a bank deposit. It is not FDIC-insured or
government-endorsed. It is not a complete investment program. You could lose
money in each fund, but you also have the potential to make money.
Large companies are established companies that are considered "known
quantities." Large companies often have the resources to weather economic
shifts, though they can be slower to innovate than small companies.
Seasoned companies usually are established companies whose securities have
gained a reputation for quality with the investing public and enjoy liquidity in
the market.
Bargain stocks are stocks of companies that appear underpriced according to
certain financial measures of their intrinsic worth or business prospects.
Middle-sized companies usually have market capitalizations of rough-
2 The Funds
<PAGE>
Main risks
Stock Market Risks. Three of the underlying funds, Affiliated Fund, Growth
Opportunities Fund and Mid-Cap Value Fund, are subject to stock market
risk - i.e., the possibility that stock prices 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 Risks. Two of the underlying funds, Affiliated
Fund and U.S. Government Securities Fund, invest primarily or exclusively
in fixed-income securities and thus face interest rate risk and credit
risk.
o Interest Rate Risk. Generally, the prices of fixed-income securities
rise when interest rates fall and fall when interest rates rise.
Longer-term bonds are usually more sensitive to interest rate
changes. Put another way, the longer the maturity of a bond or other
debt security, the greater the effect a change in interest rates is
likely to have on the instrument's price.
o Credit Risk. The lower-rated bonds in which the Bond-Debenture Fund
invests involve risks that the interest and principal payments may
not be made. Some issuers may default as to principal and/or
interest payments after the fund purchases their securities.
The Fund and each underlying fund may take a temporary defensive position
by investing some of our assets in short-time debt securities. This could
reduce the benefits from any upswing in the market.
ly $500 million to $5 billion, but not less than $50 million.
Growth stocks are stocks that exhibit faster-than-average gains in earnings and
are expected to continue profit growth at a high-level, but also tend to be more
volatile than slower-growing stocks.
High yield debt securities or "junk bonds" are rated BB/Ba or lower or unrated
and typically pay a higher yield than investment grade debt securities. These
bonds have a higher risk of default than invest-ment grade bonds and their
prices can be much more volatile.
U.S. government securities are obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describe the other investment strategies used by the funds and
their risks.
The Funds 3
<PAGE>
PAST PERFORMANCE
The information below provides some indication of the risks of investing
in the fund, showing changes in the fund's performance from calendar year
to calendar year and by showing how the fund's average annual returns
compare with those of a broad measure of market performance.
AWAITING DATA
================================================================================
The table below shows a comparison of the fund's class A, B and C average
annual total return to that of Merrill Lynch Wilshire Capital Market
Index. Fund returns assume reinvestment of dividends and distributions and
payment of the maximum applicable front-end or deferred sales charge. All
periods end on December 31, 1998.
Class 1 Year Inception(i)
A 0.00% 0.00%
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B 0.00% 0.00%
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C 0.00% 0.00%
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Merrill Lynch Wilshire Capital Market Index(ii) 0.00% 0.00%(iii)
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Past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
(i) The dates of inception for class: A - 12/27/94; B- 5/1/98; and C -
7/15/96.
(ii) Performance for the unmanaged Merrill Lynch Wilshire Capital Market Index
does not reflect transaction costs or management fees.
(ii) Represents total returns for the period ____ ________, to correspond with
class B and C inception dates.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy
shares of the fund.
================================================================================
Fee table
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<TABLE>
<CAPTION>
Class A Class B Class C Class P
<S> <C> <C> <C> <C>
Shareholder Fees (Fees paid directly from your investment)
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Maximum Sales Charge on Purchases
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(as a % of offering price) 5.75% none none none
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Maximum Deferred Sales Charge (See "Purchases") none 5.00%(2,5) 1.00%(3) none
- ---------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from fund assets) (as a % of
average net assets)(1)
- ---------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.50% 0.50% 0.00%
- ---------------------------------------------------------------------------------------------
Distribution and Service (12b-1 Fees)(4) 0.35% 1.00% 1.00% 0.00%
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Other Expenses (See "Management") 0.00% 0.00% 0.11% 0.00%
- ---------------------------------------------------------------------------------------------
Total Operating Expenses 0.85% 1.50% 1.50% 0.00%
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</TABLE>
While each class of shares of the Balanced Fund is expected to operate
with the direct total operating expenses shown under "management fees"
above ("each Balanced class expense ratio"), shareholders in the Balanced
Fund bear indirectly the Class Y share expenses of the underlying funds in
which the Balanced Fund invests exclusively. The following chart provides
the expense ratio for each of the underlying funds, as well as the
percentage of the Balanced Fund's net assets invested in each underlying
fund on November 30, 1998:
underlying funds' % of Balanced Fund
expense ratios net assets
Lord Abbett Affiliated Fund 0.00% 0%
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Lord Abbett Bond-Debenture Fund 0.00% 0%
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Lord Abbett Mid-Cap Value Fund 0.00% 0%
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Lord Abbett Growth Opportunities Fund 0.00% 0%
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Lord Abbett U.S. Government Securities Fund 0.00% 0%
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100%
==================
Based on these figures, the average weighted Class Y share expense ratio
for the underlying funds in which Balanced Fund invests is 0.00% (the
"underlying expense ratio"). This figure is only an approximation of the
Balanced Fund's underlying expense ratio, since its assets invested in
each of the underlying funds changes daily.
Management fees are payable to Lord Abbett for the fund's investment management.
Total operating ex-penses in this situation are 0.35% (class A shares) and 1.00%
(class B and C shares).
12b-1 fees refer to fees incurred for activities that are primarily intended to
result in the sale of fund shares and service fees for shareholder account
service and maintenance.
Other expenses include fees paid for miscellaneous items such as transfer
agency, legal and share registration fees.
- --------------------------------------------------------------------------------
(1) The annual operating expenses have been restated from fiscal year amounts
to reflect current fees.
(2) 5.00% if shares are redeemed before 1st anniversary of purchase, declining
to 1% before 6th anniversary and eliminated on and after 6th anniversary.
(3) 1.00% if shares are redeemed before 1st anniversary of purchase.
(4) Because 12b-1 distribution fees (up to: 0.35%- class A; 0.75%- classes B
and C; and .20% - class P) are paid out on an ongoing basis, over time
they will increase the cost of your investment and may cost you more than
paying other types of sales charges. Service fees under each class's 12b-1
Plan are up to 0.25%.
(5) Class B shares will convert to class A shares on the eighth anniversary of
your original purchase of class B shares.
4 The Funds
<PAGE>
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Expense example
================================================================================
This example, like that in other funds' prospectuses, assumes a $10,000 initial
investment at maximum sales charge, if any, 5% total return each year and no
changes in expenses. You pay the following expenses over the course of each
period shown if you sell your shares at the end of the period, although your
actual cost may be higher or lower. The expenses include any applicable
contingent deferred sales charges.
Share class 1 Year 3 Years 5 Years 10 Years
Class A shares $000 $000 $000 $000
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Class B shares(5) $000 $000 $000 $000
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Class C shares $000 $000 $000 $000
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Class P shares $000 $000 $000 $000
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You would pay the following expenses on the same investment, assuming you kept
your shares.
Class A shares $000 $000 $000 $000
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Class B shares(5) $000 $000 $000 $000
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Class C shares $000 $000 $000 $000
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Class P shares $000 $000 $000 $000
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This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present.
- --------------------------------------------------------------------------------
(1) The annual fund operating expenses have been restated from fiscal year
amounts to reflect current fees.
(2) 5.00% if shares are redeemed before 1st anniversary of purchase, declining
to 1% before 6th anniversary and eliminated on and after 6th anniversary.
(3) 1.00% if shares are redeemed before 1st anniversary of purchase.
(4) Because 12b-1 distribution fees (up to: 0.35%- class A; 0.75%- class B and
C; and .20% - class P) are paid out on an ongoing basis, over time they
will increase the cost of your investment and may cost you more than
paying other types of sales charges. Service fees under each class's 12b-1
Plan equal are up to 0.25%.
(5) Class B shares will convert to class A shares on the eighth anniversary of
your original purchase of class B shares.
The Funds 5
<PAGE>
Your Investment
PURCHASES
This Prospectus offers four classes of shares, Class A, B, C and P. These
classes of shares represent investments in the same portfolio of
securities but are subject to different expenses. Although a fund may have
more than one class of shares, these different classes of shares represent
investments in the same portfolio of securities but are subject to
different expenses. Our shares are continuously offered. The offering
price is based on the Net Asset Value ("NAV") per share next determined
after we receive your purchase order submitted in proper form. A front-end
sales charge is added to the NAV, in the case of the class A shares. There
is no front-end sales charge, although there is a CDSC in the case of the
class B and C shares, as described below.
You should read this section carefully to determine which class of shares
represents the best investment option for your particular situation. 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.
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 or change minimum investment requirements. All purchase orders
are subject to our acceptance and are not binding until confirmed or
accepted in writing.
================================================================================
Front-End Sales Charges - Class A Shares
================================================================================
To Compute
As a % of As a % of Offering Price
Your Investment Offering Price Your Investment Divide 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
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$250,000 to $499,999 2.75% 2.83% .9725
- --------------------------------------------------------------------------------
$500,000 to $999,999 2.00% 2.04% .9800
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$1,000,000 and over No Sales Charge 1.0000
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Reducing Your Class A Front-End Sales Charges. Class A shares may be
purchased at a discount if you qualify under either of the following:
o Rights of Accumulation -- A Purchaser can apply the value (at public
offering price) of the shares you already own to a new purchase of
class A shares of any Eligible Fund in order to reduce the sales
charge.
o Statement of Intention -- A Purchaser of class A shares can purchase
additional shares of any Eligible Fund over a 13-month period and
receive the same sales charge as if you had purchased all shares at
once. Shares purchased through reinvestment of dividends or
distributions are not included. A statement of intention can be
back-dated 90 days. Current holdings under rights of accumulation
can be included in a statement of intention.
For more information on eligibility for these privileges, read the
applicable sections in the attached application.
NAV per share for each class of fund shares is calculated each business day at
the close of regular trading on the New York Stock Exchange ("NYSE"). The fund
is open on those business days when the NYSE is open. Purchases and sales of
fund shares are executed at the NAV next determined after the fund receives your
order. In calculating NAV, securities for which market quotations are available
are valued at those quotations. Securities for with such quotations are not
available are valued at fair value under procedures approved by the Board.
Share classes
Class A
o normally offered with a front- end sales charge
Class B
o no front-end sales charge, how-ever, a contingent deferred sales charge is
applied to shares sold prior to the sixth anniversary of purchase
o higher annual expenses than class A shares
o automatically convert to class A shares after eight years
Class C
o no front-end sales charge
o higher annual expenses than class A shares
o a contingent deferred sales charge is applied to shares sold prior to the
first anniversary of purchase
Class P
o available to certain pension or retirement plans and pursuant to a Mutual
Fund Advisory Program
6 Your Investment
<PAGE>
Class A Share Purchases Without A Front-End Sales Charge. Class A shares may be
purchased without a front-end sales charge under any of the following:
o purchases of $1 million or more *
o purchases by Retirement Plans with at least 100 eligible employees *
o purchases under a Special Retirement Wrap Program *
o purchases made with dividends and distributions on class A shares of
another Eligible Fund
o purchases representing repayment under the loan feature of the Lord
Abbett-sponsored prototype 403(b) plan for class A shares
o purchases by employees of any consenting securities dealer having a sales
agreement with Lord Abbett Distributor
o purchases under a Mutual Fund Advisory Program
o purchases by trustees or custodians of any pension or profit sharing plan,
or payroll deduction IRA for employees of any consenting securities dealer
having a sales agreement with Lord Abbett Distributor
See the Statement of Additional Information for a listing of other categories of
purchasers who qualify for class A share purchases without a front-end sales
charge.
Class A Share CDSC. If you buy class A shares under one of the starred (?)
categories listed above and you redeem any of them within 24 months after the
month in which you initially purchased them, the fund normally will collect a
CDSC of 1%.
The class A share CDSC generally will be waived for the following:
o 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)
o 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
declines the longer you own your shares, according to the following schedule:
- --------------------------------------------------------------------------------
Contingent Deferred Sales Charges - Class B Shares
- --------------------------------------------------------------------------------
Anniversary(1) of Contingent Deferred Sales Charge
the day on which the on redemption (as % of amount
purchase order was accepted subject to charge)
On Before
- --------------------------------------------------------------------------------
1st 5.0%
- --------------------------------------------------------------------------------
1st 2nd 4.0%
- --------------------------------------------------------------------------------
2nd 3rd 3.0%
- --------------------------------------------------------------------------------
3rd 4th 3.0%
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4th 5th 2.0%
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5th 6th 1.0%
- --------------------------------------------------------------------------------
on or after the 6th(2) None
- --------------------------------------------------------------------------------
(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.
* This may be subject to a Contingent Deferred Sales Charge ("CDSC").
Retirement Plans include employer-sponsored retirement plans under the Internal
Revenue Code, excluding Individual Retirement Accounts.
Lord Abbett Distributor LLC ("Lord Abbett Distributor") acts as agent for the
fund to work with investment professionals that buy and/or sell shares of the
fund on behalf of their clients. Generally, Lord Abbett Distributor does not
sell fund shares directly to investors.
Benefit Payment Documentation.
(Class A only)
o under $50,000 - no documentation necessary
o over $50,000 - reason for benefit payment must be received in writing. Use
the address indicated under opening your account.
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 at the time they are
being sold, which-ever is lower. In addition, repayment of loans under
Retirement Plans and 403(b) plans will constitute new sales for purposes of
assessing the CDSC.
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 two years or more after the
month of purchase (class A) or one year or more (class C)
3. shares held the longest before the sixth anniversary of their purchase
(class B) or before the second anniversary after the month of purchase
(class A) or before the first anniversary of their purchase (class C)
Your Investment 7
<PAGE>
The class B share CDSC generally will be waived under any one of the
following:
o benefit payments such as Retirement Plan loans, hardship
withdrawals, death, disability, retirement, separation from service
or any excess contribution or distribution under Retirement Plans
o Eligible Mandatory Distributions under 403(b) plans and individual
retirement accounts
o death of the shareholder (natural person)
o redemptions of shares in connection with Div-Move and Systematic
Withdrawal Plans (up to 12% per year)
See "Systematic Withdrawal Plan" under "Services For Fund Investors" below
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.
Class P Shares. Class P shares have lower annual expenses than class B and
class C shares, no front-end sales charge, and no CDSC. Class P shares are
currently sold and redeemed at NAV pursuant to Mutual Fund Advisory
Program, to the trustees of, or employer-sponsors with respect to, pension
or retirement plans with at least 100 eligible employees (such as a plan
under Section 401(a), 401(k) or 457(b) of the Internal Revenue Code) which
engage an investment professional providing or participating in an
agreement to provide, certain recordkeeping, administrative and/or
sub-transfer agency services to the fund on behalf of the class P
shareholders.
OPENING YOUR ACCOUNT
MINIMUM INITIAL INVESTMENT
o Regular account $1,000
o Individual Retirement Accounts and
403(b) plans under the Internal Revenue Code $250
o Uniform Gift to Minor Account $250
For Retirement Plans and Mutual Fund Advisory Programs, no minimum
investment is 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 you select at the address
stated below. You should carefully read the paragraph below entitled
"Proper Form" before placing your order to assure your order will be
accepted.
Name of Fund
P.O. Box 419100
Kansas City, MO 64141
Proper Form. An order submitted directly to the fund must contain: (1) a
completed application, and (2) payment by check. For more information
regarding proper form of a purchase order, call the fund at 800-821-5129.
Payment must be credited in U.S. dollars to our custodian bank's account.
By Exchange. Telephone the fund at 800-821-5129 to request an exchange
from any eligible Lord Abbett-sponsored fund.
Important Information. You may be subject to a $50 penalty under the Internal
Revenue Code if you do not provide a correct taxpayer identification number
(Social Security Number for individuals) or make certain required
certifications. In addition, we may be required to withhold from your account
and pay to the U.S. Treasury 31% of any redemption proceeds and any dividend or
distribution from your account.
Eligible Guarantor is 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.
8 Your Investment
<PAGE>
REDEMPTIONS
By Broker. Call your investment professional for directions on how to
redeem your shares.
By Telephone. To obtain the proceeds of a redemption of $50,000 or less
from your account, you or your representative can call the fund at
800-821-5129.
By Mail. Submit a written redemption request indicating, the name(s) in
which the account is registered, the fund's name, the class of shares,
your account number, 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 800-821-5129.
Normally a check will be mailed to the name and address in which the
account is registered (or otherwise according to your instruction) within
three business days after receipt of your redemption request. Your account
balance must be sufficient to cover the amount being redeemed or your
redemption order will not be processed. Redemptions of shares purchased by
check will take up to 15 days.We will verify that the shares being
redeemed (if purchased by check) were purchased at least 15 days earlier.
To determine if a CDSC applies to a redemption, see "Class A share CDSC,"
"Class B share CDSC" or "Class C share CDSC."
DISTRIBUTIONS AND TAXES
Each fund pays its shareholders dividends from its net investment income,
and distributes net capital gains that it has realized. Each fund expects
that its dividends from investment income will be tax exempt and expects
to pay such dividends to shareholders monthly. If a capital gain
distribution is declared, it will be paid annually. Your distributions
will be reinvested in your fund unless you instruct the fund to pay them
to you in cash. There are no sales charges on reinvestments.
The tax status of distributions are the same for all shareholders
regardless of how long they have been in the fund or whether distributions
are reinvested or paid in cash. In general, distributions are taxable as
follows:
================================================================================
Federal Taxability Of Distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket and above
- --------------------------------------------------------------------------------
Income Generally Generally
dividends tax exempt tax exempt
- --------------------------------------------------------------------------------
Short-term Ordinary
capital gains 15% income rate
- --------------------------------------------------------------------------------
Long-term
capital gains 10% 20%
- --------------------------------------------------------------------------------
Except in tax-advantaged accounts, any sale or exchange of fund shares may
be a taxable event.
SERVICES FOR FUND INVESTORS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described
below. With each service, you select a schedule and amount, subject to
certain restrictions. You can set up most of these services when filling
out your application or by calling 800-821-5129.
Small Accounts. Our Board may authorize closing any account in which there are
fewer than 25 shares if it is in a fund's best interest to do so.
Social Security and Railroad Retirement Benefit Recipients. Shareholders
receiving social security benefits and certain railroad re-tirement benefits may
be subject to federal income tax on up to 85% of such benefits as a result of
receiving investment income, including tax-exempt income (such as
exempt-interest dividends) and other distributions paid by each fund. The tax
will be imposed on up to one-half of such benefits only when the sum of the
recipient's adjusted gross income (plus miscellaneous adjustments), tax-exempt
interest income and one-half of social security income exceeds $25,000 for
individuals ($32,000 for individuals filing a joint return). The tax will be
imposed on up to 85% of such benefits only when such sum exceeds $34,000 for
individuals ($44,000 for individuals filing a joint return).
Taxes on Transactions. The chart at left also can provide a "rule of thumb"
guide for your potential U.S. federal tax liability when selling or exchanging
fund shares. The second row, "Short-term capital gains," applies to fund shares
sold within 12 months of purchase. The third row, "Long-term capital gains,"
applies to shares held for more than 12 months.
Starting January 1, 2001, sales of securities held for more than five years will
be taxed at special lower rates.
Any gains realized on a fund's transactions in options and financial futures
will be treated as taxable long- or short-term capital gains.
Your Investment 9
<PAGE>
================================================================================
For investing
Invest-A-Matic You can make fixed, periodic investments ($50 minimum)
(Dollar-cost into your fund account by means of automatic money
averaging) transfers from your bank checking account. See the
attached application for instructions.
Div-Move You can automatically reinvest the dividends and
distributions from your account into another account in
any Eligible Fund. ($50 minimum)
For selling shares
Systematic You can make regular withdrawals from most Lord Abbett
Withdrawal funds. Automatic cash withdrawals can be paid to you
Plan ("SWP") from your account in fixed or variable amounts. To
establish a plan, the value of your shares must be at
least $10,000, except for Retirement Plans for which
there is no minimum. Your shares must be in
non-certificate form.
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.
Class B and Redemption proceeds due to a SWP for class B and class C
C shares shares will be redeemed in the order described under
"Contingent Deferred Sales Charges" under "Purchases."
================================================================================
OTHER SERVICES
Telephone Investing. After we have received the attached application
(selecting "yes" under Section 7C and completing Section 7), you can
instruct us by phone to have money transferred from your bank account to
purchase shares of the fund for an existing account. The fund will
purchase the requested shares when it receives of the money from your
bank.
Telephone Exchanges. You or your investment professional, with proper
identification, can instruct your fund by telephone to exchange shares of
any class for shares of the same class of any Eligible Fund by calling
800-821-5129. The fund must receive instructions for the exchange before
the close of the NYSE on the day of your call. If you meet this
requirement, you will get the NAV per share of the Eligible Fund
determined on that day. Exchanges will be treated as a sale for federal
tax purposes. Be sure to read the current prospectus for any fund into
which you are exchanging.
Reinvestment Privilege. If you sell shares of the fund, you have a 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.
Account Statements. Every Lord Abbett investor automatically receives
quarterly account statements.
Householding. Shareholders with the same last name and address will
receive a single copy of a prospectus and an annual or semi-annual report,
unless additional reports are specifically requested in writing to the
fund.
Account Changes. For any changes you need to make to your account, consult
your investment professional or call the fund at 800-821-5129.
Systematic Exchange. You or your investment professional can establish a
schedule of exchanges between the same classes of any Eligible Fund.
Lord Abbett offers a variety of Retirement Plans.
Call 800-253-7299 for information about:
o Traditional, Rollover, Roth and Education IRAs
o Simple IRAs, SEP-IRAs, 401(k) and 403(b) accounts
o Defined Contribution Plans
Telephone Transactions. You have this privilege unless you refuse it in writing.
For your security, telephone transaction requests 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.
Transactions by telephone may be difficult to implement in times of drastic
economic or market change.
Exchanges by telephone 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 or abusing the privilege and may
revoke the privilege for all shareholders upon 60 days' written notice.
10 Your Investment
<PAGE>
SALES CHARGES AND SERVICE FEES
Sales and Service Compensation. As part of its plan for distributing
shares, each fund and Lord Abbett Distributor pay sales and service
compensation to Authorized Institutions that sell the fund's shares and
service its shareholder accounts.
Sales compensation originates from two sources: sales charges and 12b-1
distribution fees that are paid out of each fund's assets. Service
compensation originates from 12b-1 service fees. The 12b-1 fee rates vary
by share class, according to the Rule 12b-1 plan adopted by each fund. The
sales charges and 12b-1 fees paid by investors are shown in the
class-by-class information under "Fees and Expenses" and "Purchases." The
portion of these expenses that is paid as sales and service compensation
to Authorized Institutions, such as your dealer, is shown in the chart at
the end of this prospectus. The portion of such sales and service
compensation paid to Lord Abbett Distributor is discussed under "Sales
Activities" and "Service Activities". Sometimes we do not pay sales and
service compensation where tracking data is not available for certain
accounts or where the Authorized Institution waives part of the
compensation.
We may pay Additional Concessions to Authorized Institutions from time to
time.
Sales Activities. We may use 12b-1 distribution fees to pay Authorized
Institutions to finance any activity which is primarily intended to result
in the sale of shares. Lord Abbett Distributor uses its portion of the
distribution fees attributable to a fund's class A and class C shares for
activities which are primarily intended to result in the sale of such
class A and class C shares, respectively. These activities include, but
are not limited to, printing of prospectuses and statements of additional
information and reports for other than existing shareholders, preparation
and distribution of advertising and sales material, expenses of organizing
and conducting sales seminars, Additional Concessions to Authorized
Institutions, the cost necessary to provide distribution-related services
or personnel, travel, office expenses, equipment and other allocable
overhead.
Service Activities. We may pay Rule 12b-1 service fees to Authorized
Institutions for any activity which is primarily intended to result in
personal service and/or the maintenance of shareholder accounts. Any
portion of the service fees paid to Lord Abbett Distributor will be used
to service and maintain shareholder accounts.
MANAGEMENT
The funds' investment adviser is Lord, Abbett & Co., 767 Fifth Avenue, New
York, NY 10153-0203. Founded in 1929, Lord Abbett manages one of the
nation's oldest mutual fund complexes, with approximately $28 billion in
more than 35 mutual fund portfolios and other advisory accounts. For more
information about the services Lord Abbett provides to the funds, see the
Statement of Additional Information.
The fund pays Lord Abbett a monthly fee based on average daily net assets
for each month. For the fiscal year ended November 30, 1998, the fee paid
to Lord Abbett was at an annual rate of .__ of 1% for the fund. In
addition, the fund pays all expenses not expressly assumed by Lord Abbett.
Lord Abbett uses a team of portfolio managers and analysts acting together
to manage the company's investments. Robert G. Morris, Lord Abbett
Partner, Executive Vice President of the company, and Portfolio Manager of
the fund has primary responsibility for the management of the fund's
portfolio. He has been with Lord Abbett for over five years. He has over
twenty-five years of investment experience.
12b-1 fees are payable regardless of expenses. The amounts payable by a fund
need not be directly related to expenses. If Lord Abbett Distributor's actual
expenses exceed the fee payable to it, a fund will not have to pay more than
that fee. If Lord Abbett Distributor's expenses are less than the fee it
receives, Lord Abbett Distributor will keep the full amount of the fee.
Your Investment 11
<PAGE>
For More Information
OTHER INVESTMENT TECHNIQUES
This section describes some of the investment techniques that might be
used by the fund and their risks.
Adjusting Investment Exposure. Each fund may, but is not required to, use
various strategies to change its investment exposure to adjust to changing
security prices, interest rates, currency exchange rates, commodity prices
and other factors. These strategies may involve buying or selling
derivative instruments, such as options and futures contracts, stripped
securities, currency exchange contracts, swap agreements, short sales of
securities, indexed securities and rights and warrants. The fund may use
these transactions to change the risk and return characteristics of each
fund's portfolio. If we judge market conditions incorrectly or use a
strategy that does not correlate well with the fund's investments, it
could result in a loss, even if we intended to lessen risk or enhance
returns. These transactions may involve a small investment of cash
compared to the magnitude of the risk assumed and could produce
disproportionate gains or losses. Also, these strategies could result in
losses if the counterparty to a transaction does not perform as promised.
Affiliated Fund. The investment objective of the Affiliated Fund is
long-term growth of capital and income without excessive fluctuations in
market value. The Affiliated Fund uses quantitative research to identify
those large, seasoned companies whose stocks it believes represent the
best bargains, fundamental research to assess a company's operating
environment, resources and strategic plans and to determine its prospects
for exceeding the earnings expectations reflected in its stock price, and
business cycle analysis to assess the economic and interest rate
sensitivity of its portfolio.
Bond-Debenture Fund. The investment objective of the Bond-Debenture Fund
is high current income and the opportunity for capital appreciation to
produce a high total return. Although the Bond-Debenture Fund normally
invests in high yield debt securities, at least 20% of its assets must be
invested in any combination of investment grade debt securities, U.S.
government securities and cash equivalents.
Borrowing. Each underlying fund other than the U.S. Government Fund may
borrow from banks. If a fund borrows money, its share price may be subject
to greater fluctuation until the borrowing is paid off. Each underlying
fund may borrow only for temporary or emergency purposes, and not more
than 331/3% of its total assets.
Developing Growth Fund. The investment objective of the Developing Growth
Fund is long-term growth of capital through a diversified and
actively-managed portfolio consisting of developing growth companies, many
of which are traded over the counter. In pursuing Developing Growth Fund's
objective, it invests primarily in the common stocks of companies with
long-range growth potential, particularly smaller companies that Lord
Abbett believes to be in the developing growth phase.
Lord Abbett views the developing growth phase as a period of swift
development, when growth occurs at a rate rarely equaled by established
companies in their mature years. Lord Abbett Developing Growth Fund
focuses on companies which it believes are strongly positioned in this
phase. Of course, because the actual growth of a company cannot be
foreseen, Lord Abbett may not always be correct in its judgments about
which phase a company is in at a particular time.
Diversification. Each fund is a diversified fund, which means that with
respect to 3/4 of
12 Your Investment
<PAGE>
its total assets, it will not purchase a security if, as a result, more
than 5% of the fund's total assets would be invested in securities of a
single issuer or the fund would hold more than 10% of the outstanding
voting securities of the issuer. (Name of fund is a nondiversified mutual
fund. This means that the fund may invest a greater portion of its assets
in, and own a greater amount of the voting securities of, a single company
than a diversified fund. This may expose the fund to greater risk.)
Foreign Securities. These securities are not subject to the same degree of
regulation and may be more volatile and less liquid than securities traded
in major U.S. markets. This affect block trading. Foreign portfolio
securities maybe traded on days when an underlying fund does not value
them. Fund share prices could be affected on days an investor cannot
purchase or sell shares. Other risks include less information on public
companies, banks and governments; political and social instability;
expropriations; higher transaction costs; currency fluctuations;
nondeductable withholding taxes and different accounting and settlement
practices.
The Affiliated Fund may invest up to 10% of its assets, and the
Bond-Debenture Fund up to 20% of its assets, measured at the time of
investment in foreign securities.
Growth Opportunities Fund. The Growth Opportunities Fund seeks capital
appreciation, using a growth style of investing. This means that it favors
companies that show the potential for stronger than expected earnings or
growth.
Illiquid Securities. These securities include those that are not traded on
the open market or that trade irregularly or in very low volume. They may
be difficult or impossible to sell at the time and price the fund would
like. Each underlying fund may invest up to 15% of its assets in illiquid
securities.
Mid-Cap Value Fund. The Mid-Cap Value Fund seeks capital appreciation,
primarily by investing in common stocks of mid-sized companies, using a
value approach to investing. The fund selects stocks based on capital
appreciation potential, without regard to current income.
Portfolio Securities Lending. Each fund may lend securities to
broker-dealers and financial institutions, as a means of earning income.
This practice could result of a loss or delay in recovering a fund's
securities, if the borrower defaults. Each fund will limit its securities
loans to 331/3% of its total assets.
Repurchase Agreements. In a repurchase agreement, a fund buys a security
at one price from a broker-dealer or financial institution and
simultaneously agrees to sell the same security back to the same party at
a higher price in the future. If the other party to the agreement defaults
or becomes insolvent, the fund could lose money.
U.S. Government Securities Fund. The investment objective of the U.S.
Government Securities Fund is high current income consistent with
reasonable risk. This means that the fund, over time, will have a
volatility approximating that of the Lehman Government Bond Index. The
fund does not seek growth of capital, but capital appreciation may result
from efforts to secure high current income.
When-Issued or Delayed Delivery Transactions: Each fund may purchase or
sell securities with payment and delivery taking place as much as a month
or more later. A fund would do this in effort to buy or sell the
securities at an advantageous price and yield. The securities involved are
subject to market fluctuation and no interest accrues
For More Information 13
<PAGE>
to the purchaser during the period between purchase and settlement. At the
time of delivery of the securities, their market value may be less than
the purchase price. Also, if a fund commits a significant amount of assets
to when-issued or delayed delivery transactions, it may increase the
volatility of the fund's net asset value.
GLOSSARY OF SHADED TERMS
Additional Concessions. 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. Additional
pay-ments may be paid from Lord Abbett Distributor's own resources or from
distribution fees received from a fund 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.
In selecting dealers to execute portfolio transactions for a 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". Lord Abbett Distributor is an Authorized
Institution.
Eligible Fund. An Eligible Fund is any Lord Abbett-sponsored fund except
for (1) certain tax-free, single-state funds where the exchanging
shareholder is a resident of a state in which such series is not offered
for sale; (2) Lord Abbett Equity Fund; (3) Lord Abbett Series Fund; and
(4) 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). An Eligible Fund also is
any Authorized Institution's affiliated money market fund satisfying Lord
Abbett Distributor as to certain omnibus account and other criteria.
Eligible Mandatory Distributions. If class B shares represent a part of an
individual's total IRA or 403(b) investment, the CDSC will be waived only
for that part of a mandatory distribution which bears the same relation to
the entire mandatory distribution as the B share investment bears to the
total investment.
Legal Capacity. This term refers to the authority of an individual to act
on behalf of an entity or other person(s). For example, if a redemption
request were to be made 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. That signature using that capacity
must be guaranteed by an Eligible Guarantor.
To give another example, if a redemption request were to be made on behalf
of the ABC Corporation by a person (Mary B. Doe) the has the legal
capacity to act on the half of the Corporation, because she is the
president of the corporation, the request must be executed as follows: ABC
Corporation by Mary B. Doe, President. That signature using that capacity
must be guaranteed by an Eligible Guarantor.
Mutual Fund Advisory Program. Certain unaffiliated authorized brokers,
dealers,
Guaranteed signature. An acceptable form of guarantee would be as follows:
o In the case of the estate -
Robert A. Doe
Executor of the Estate of
John W. Doe
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
/s/ [ILLEGIBLE]
------------------------------------------------
AUTHORIZED SIGNATURE
( 960 ) X 9 8 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM(TM)
SR
o In the case of the corporation - ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
/s/ [ILLEGIBLE]
------------------------------------------------
AUTHORIZED SIGNATURE
( 960 ) X 9 8 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM(TM)
SR
14 For More Information
<PAGE>
registered investment advisers or other financial institutions who either
(a) have an arrangement with Lord Abbett Distributor in accordance with
certain standards approved by Lord Abbett Distributor, providing
specifically for the use of our shares (and sometimes providing for
acceptance of orders for such shares on our behalf) in particular
investment products made available for a fee to clients of such brokers,
dealers, registered investment advisers and other financial institutions,
or (b) who charge an advisory, consulting or other fee for their services
and buy shares for their own accounts or the accounts of their clients.
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.
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 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 the class A 12b-1 Plan and the fact that the program relates to
participant-directed Retirement Plans.
RECENT PERFORMANCE
[Disclosure to be added]
Year 2000 Issues. Each fund could be adversely affected if the computers used by
each fund and their service providers do not properly process and calculate
date-related information from and after January 1, 2000.
While year 2000-related computer problems could have a negative effect on each
fund, Lord Abbett is working to avoid such problems and has assurances from each
fund's service providers that they are taking similar steps. However, because
the problem is unprecedented and efforts to identify and fix it are on-going, we
don't know whether these efforts will be successful. Accordingly, each fund may
be adversely affected.
For More Informtion 15
<PAGE>
Financial Information
FINANCIAL HIGHLIGHTS
This table describes the fund's performance for the fiscal periods
indicated. "Total return" shows how much your investment in the fund would
have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These Financial Highlights
have been audited by Deloitte & Touche LLP, the fund's independent
auditors, in conjunction with their annual audit of the fund's financial
statements. Financial statements for the fiscal year ended November 30,
1998 and the Independent Auditors' Report thereon appear in the Annual
Report to Shareholders for the fiscal year ended November 30, 1998 and are
incorporated by reference into the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
==================================================================================================================
Class A Shares Class B Shares Class C Shares Class P Shares
-----------------------------------------------------------------
Period Ended November 30,
Per Share Operating Performance: 1998(b) 1998(b) 1998(b) 1998(b)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 0.00 $ 0.00 $ 0.00 $ 0.00
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
- ------------------------------------------------------------------------------------------------------------------
Net investment loss (0.00)(d) (0.00)(d) (0.00)(d) (0.00)(d)
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------
loss on investments and foreign
- ------------------------------------------------------------------------------------------------------------------
currency holdings (0.00) (0.00) (0.00) (0.00)
- ------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.00) (0.00) (0.00)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period$0.00 $ 0.00 $ 0.00 $ 0.00
- ------------------------------------------------------------------------------------------------------------------
Total Return(c) (0.00)% (0.00)% (0.00)% (0.00)%
- ------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:(c)
- ------------------------------------------------------------------------------------------------------------------
Expenses, including waiver 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.00)% (0.00)% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
Period Ended November 30,
- --------------------------------------------------------------------------------
Supplemental Data For All Classes: ----------------- 1998 -----------------
Net assets, end of period (000) ----------------- $106,279 -----------------
- --------------------------------------------------------------------------------
Portfolio turnover rate 0.01%
- --------------------------------------------------------------------------------
(a) Total return does not reflect the deduction of front-end or contingent
deferred sales charges.
(b) From commencement of operations for each class of shares: December 27,
1994 (class A). May 1, 1998 (class B), and July 15, 1996 (class C).
(c) Not annualized.
(d) Calculated using average shares outstanding during the period. See Notes
to Financial Statements.
16 Financial Information
<PAGE>
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in class A
shares to the same investment in the Merrill Lynch Wilshire Capital Market
Index, assuming reinvestment of all dividends and distributions.
================================================================================
AWAITING DATA
================================================================================
Average Annual Total Return At Maximum Applicable
Sales Charge For The Periods Ending November 30, 1998
1 Year 5 Years 10 Years (or Life)
- --------------------------------------------------------------------------------
Class A(4) 0.00% 0.00% 0.00%
- --------------------------------------------------------------------------------
Class C(6) 0.00% 0.00% 0.00%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) This shows total return which is the percent change in value, after
deduction of the maximum initial sales charge of 5.75% applicable to class
A shares, with all dividends and distributions reinvested for the periods
shown ending November 30, 1998 using the SEC-required uniform method to
compute such return.
(2) Performance for the unmanaged Merrill Lynch Wilshire Capital Market Index
does not reflect transaction costs, management fees or sales charges.
(3) The class A shares were first offered on 12/27/94. Performance reflects
the deduction of a CDSC of 4% (for 1 year) and 3% (for life of the class).
(4) The class C shares were first offered on 12/29/97. Performance is at net
asset value.
Financial Information 17
<PAGE>
COMPENSATION FOR YOUR DEALER
<TABLE>
<CAPTION>
====================================================================================================================================
FIRST YEAR COMPENSATION
Front-end
sales charge Dealer's
paid by investors concession Service fee(1) Total compensation(2)
Class A investments (% 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%
- ------------------------------------------------------------------------------------------------------------------------------------
$1 million or more(3) or Retirement Plan - 100 or more
eligible employees(3) or Special Retirement Wrap Program(3)
- ------------------------------------------------------------------------------------------------------------------------------------
First $5 million no front-end sales charge 1.00% 0.25% 1.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Next $5 million above thatno front-end sales charge 0.55% 0.25% 0.80%
- ------------------------------------------------------------------------------------------------------------------------------------
Next $40 million above thatno front-end sales charge 0.250% 0.25% 0.50%
- ------------------------------------------------------------------------------------------------------------------------------------
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%
- ------------------------------------------------------------------------------------------------------------------------------------
Class P investments Percentage of average net assets
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
====================================================================================================================================
ANNUAL COMPENSATION AFTER FIRST YEAR
Class A investments
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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% 1.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Class P investments Percentage of average net assets
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The service fee for class A shares is paid quarterly. 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 1.00%, 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 Class C shares for
fixed-income series, 0.10% of the average net asset value of such shares
is retained by Lord Abbett Distributor, thus reducing from 0.75% to 0.65%
after the first year. Lord, Abbett & Co. uses 0.10% for expenses primarily
intended to result in the sale of such series' shares. CDSC revenues
collected may be used to fund commission payments when there is no initial
sales charge.
18 Financial Information
<PAGE>
For More Information
More information on this fund is available free upon request, including
the following:
ANNUAL/SEMI-ANNUAL REPORT
Describes the fund, lists portfolio holdings and contains a letter from
the funds' manager discussing recent market conditions and the funds'
investment strategies.
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
Provides more details about the fund and their policies. A current SAI is
on file with the Securities and Exchange Commission ("SEC") and is
incorporated by reference (is legally considered part of this prospectus).
To obtain information:
By telephone. Call the funds at
800-426-1130
By mail. Write to the funds at:
The Lord Abbett Family of Funds
767 Fifth Avenue
New York, NY 10153-0203
Via the Internet. Text only versions of fund documents can be viewed online or
downloaded from:
Lord, Abbett & Co.
http://www.lordabbett.com
SEC
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 800-SEC-0330) or by sending your request and a duplicating
fee to the SEC's Public Reference Section, Washington, DC 20549-6009.
Balanced Fund
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
---------------------------
SEC file number: 811-7988
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BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 2405
NEW YORK, N.Y.
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<PAGE>
Prospectus April 1, 1999
Lord Abbett
Limited Duration U.S.
Government Securities Fund
Lord Abbett
U.S. Government
Securities Fund
Lord Abbett
High Yield Fund
[LOGO](R) LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
As with all mutual funds, the Securities and Exchange
Commission does not guarantee that the information in this
prospectus is accurate or complete, and it has not judged
these funds for investment merit. It is a criminal offense to
state otherwise.
Class P shares of the fund are neither offered to the general
public nor available in all states. Please call 800-821-5129
for further information.
<PAGE>
Table of Contents
Page
The Funds
Information about the goal/ High Yield Fund 2
approach, main risks, past Limited Duration U.S.
performance, fees and expenses Government Securities Fund 4
U.S. Government Securities Fund 6
Your Investment
Information for managing Purchases 8
your fund account Opening Your Account 10
Redemptions 11
Distributions and Taxes 11
Services For Fund Investors 12
Sales Charges and Service Fees 13
Management 14
For More Information
How to learn more Other Investment Techniques 15
about the funds Glossary of Shaded Terms 15
Financial Information
Financial highlights of High Yield 18
each fund and Limited Duration U.S.
broker compensation Government Securities Fund 20
U.S. Government Securities Fund 22
Recent Performance 24
How to learn more about the Back Cover
funds and other Lord Abbett
funds
<PAGE>
-----------------------
High Yield Fund Symbols: Class A -
Class B -
Class C -
GOAL / APPROACH
The Fund seeks high current income and the opportunity for capital
appreciation to produce a high total return. Normally, we invest in
lower-rated debt securities, sometimes called "junk bonds,"which entail
greater risks than investments in higher-rated debt securities.
We believe that a high total return (current income and capital
appreciation) may be derived from an actively managed, diversified
security portfolio. Under normal circumstances, we invest at least 65% of
our total assets in lower-rated debt securities, some of which are
convertible into common stock or have warrants to purchase common stock.
We seek unusual values, particularly in lower-rated debt securities, some
of which are convertible into common stocks or have warrants to purchase
common stocks. Higher yield on debt securities can occur during periods of
inflation when the demand for borrowed funds is high. Also, buying
lower-rated bonds when the credit risk is above average but, we think,
likely to decrease, may generate higher yields.
MAIN RISKS
The lower-rated bonds in which the fund invests involve risks that
interest and principal payments may not be made. Some issuers may default
as to principal and/or interest payments after we purchase their
securities. Through portfolio diversification, good credit analysis and
attention to current developments and trends in interest rates and
economic conditions, we attempt to reduce investment risk, but losses may
occur. In addition, the value of your investment will change as interest
rates fluctuate. When interest rates decline, share value may rise. When
interest rates rise, share value may decline. The fund uses investment
practices, such as investments in foreign securities, illiquid securities
and other securities, that could adversely affect performance.
While typically fully invested, we may take a temporary defensive position
by investing some of our assets in short-term debt securities. This could
reduce the benefit from any upswing in the market.
We or the fund refers to Lord Abbett High Yield Fund ("High Yield"), Lord Abbett
Limited Duration U.S. Government Securities Fund ("Limited Duration") or Lord
Abbett U.S. Government Securities Fund ("U.S. Government"). Each fund is a
portfolio of Lord Abbett Investment Trust (the "company"), which operates
through its officers under the supervision of its Board, with the advice of
Lord, Abbett & Co.("Lord Abbett"), its investment manager.
About each fund. Each fund is a professionally managed portfolio primarily
holding municipal bonds purchased with the pooled money of investors. It strives
to reach its stated goal, although as with all funds, it cannot guarantee
results.
An investment in each fund is not a bank deposit. It is not FDIC-insured or
government-endorsed. It is not a complete investment program. You could lose
money in each fund, but you also have the potential to make money.
High Yield Debt Securities. The fund may invest all of its assets in high yield
debt securities. High yield debt securities or "junk bonds" are rated BB/Ba or
lower and typically pay a higher yield than investment grade debt securities.
These bonds have a higher risk of default than investment grade bonds and their
prices can be much more volatile.
Foreign Securities. Foreign securities are securities primarily traded in
countries outside the United States. These securities are not subject to the
same degree of regulation and may be more volatile and less liquid than
securities traded in major U.S. markets. Other considerations include political
and social instability, expropriations, higher transaction costs, currency
fluctuations, nondeductable withholding taxes and different settlement
practices.
2 The Funds
<PAGE>
High Yield Fund
PAST PERFORMANCE
Because the High Yield Fund began operations on December _, 1998, there is
no bar chart or table of performance.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy
shares of the fund.
================================================================================
Fee table
================================================================================
<TABLE>
<CAPTION>
Class A Class B Class C Class P
<S> <C> <C> <C> <C>
Shareholder Fees (Fees paid directly
from your investment)
- ---------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
- ---------------------------------------------------------------------------------------
(as a % of offering price) 4.75% none none none
- ---------------------------------------------------------------------------------------
Maximum Deferred Sales Charge
(See "Purchases") none 5.00%(2)(5) 1.00%(3) none
- ---------------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from fund assets) (as a % of
average net assets)(1)
- ---------------------------------------------------------------------------------------
Management Fees (See "Management") 0.60% 0.60% 0.60% 0.00%
- ---------------------------------------------------------------------------------------
Distribution and Service (12b-1 Fees)(4) 0.35% 1.00% 1.00% 0.00%
- ---------------------------------------------------------------------------------------
Other Expenses (See "Management") 0.25% 0.25% 0.25% 0.00%
- ---------------------------------------------------------------------------------------
Total Operating Expenses 1.20% 1.85% 1.85% 0.00%
- ---------------------------------------------------------------------------------------
</TABLE>
================================================================================
Expense example
================================================================================
This example, like that in other funds' prospectuses, assumes a $10,000 initial
investment at maximum sales charge, if any, 5% total return each year and no
changes in expenses. You pay the following expenses over the course of each
period shown if you sell your shares at the end of the period, although your
actual cost may be higher or lower. The expenses include any applicable
contingent deferred sales charges.
Share class 1 Year 3 Years 5 Years 10 Years
Class A shares $560 $750 $000 $000
- --------------------------------------------------------------------------------
Class B shares(5) $660 $810 $000 $000
- --------------------------------------------------------------------------------
Class C shares $260 $510 $000 $000
- --------------------------------------------------------------------------------
Class P shares $000 $000 $000 $000
- --------------------------------------------------------------------------------
You would pay the following expenses on the same investment, assuming you kept
your shares.
Class A shares $560 $750 $000 $000
- --------------------------------------------------------------------------------
Class B. shares(5) $160 $510 $000 $000
- --------------------------------------------------------------------------------
Class C shares $160 $510 $000 $000
- --------------------------------------------------------------------------------
Class P shares $000 $000 $000 $000
- --------------------------------------------------------------------------------
This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describe the other investment strategies used by the funds and
their risks.
While stocks have historically been a leading choice of long-term investors,
they fluctuate in price. The value of your investment in the fund will go up and
down, which means that you could lose money.
Past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
(i) The dates of inception for each class are as follows: A - 11/30/98;
B-11/30/98; and C - 11/30/98.
Management fee: The fee paid to Lord Abbett for the fund's investment
management.
12b-1 fees: 12b-1 refers to the federal securities regulation that permits funds
to pay distribution fees for activities that are primarily intended to result in
the sale of fund shares and service fees for shareholder account service and
maintenance.
Other expenses: Fees paid by the fund for miscellaneous items such as transfer
agency, custody, accounting, legal and share registration fees.
- --------------------------------------------------------------------------------
(1) The annual operating expenses have been restated from fiscal year amounts
to reflect current fees.
(2) 5.00% if shares are redeemed before 1st anniversary of purchase, declining
to 1% before 6th anniversary and eliminated on and after 6th anniversary.
(3) 1.00% if shares are redeemed before 1st anniversary of purchase.
(4) Because 12b-1 distribution fees (up to: 0.25%- class A and 0.75%- class C)
are paid out of the fund's assets on an on-going basis, over time these
fees will increase the cost of your investment and may cost you more than
paying other types of sales charges. Service fees under each class's 12b-1
Plan equal up to 0.25%.
(5) Class B shares will automatically convert to class A shares on the eighth
anniversary of your original purchase of class B shares.
The Funds 3
<PAGE>
------------------------
Limited Duration Fund Symbols: Class A - LALDX
Class C - LDLAX
GOAL / APPROACH
The fund's investment objective is to seek a high level of income from a
portfolio consisting primarily of limited duration U.S. Government
securities.
To pursue its goal, the fund primarily invest in short- and intermediate-
duration U.S. Government securities which the fund expects would result in
a high level of income. Investments of the fund 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 its instrumentalities.
These obligations issued by U.S. Government agencies include:
o Federal Home Loan Banks
o FHLMC's, FNMA's and GNMA's
o Mortgage-backed securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, including "component
securities"
MAIN RISKS
The U.S. Government securities in which the fund invest are guaranteed as
to timely payments of interest and principal. However, the market price
for these securities are not guaranteed and will fluctuate. The Fund does
not seek to maintain a stable net asset value, and may not be able to
return dollar-for-dollar the money invested. Such securities will not
protect investors against price changes due to changing interest rates.
The value of shares of the fund will change as the general levels of
interest rates fluctuate. When interest rates decline, share value
generally rises. Conversely, when rates rise, share value generally
declines. The fund may employ other investment practices, such as
investing in illiquid and other securities, which could adversely affect
performance.
About each fund. Each fund is a professionally managed portfolio primarily
holding municipal bonds purchased with the pooled money of investors. It strives
to reach its stated goal, although as with all funds, it cannot guarantee
results.
An investment in each fund is not a bank deposit. It is not FDIC-insured or
government-endorsed. It is not a complete investment program. You could lose
money in each fund, but you also have the potential to make money.
Mortgage-backed securities directly or indirectly represent a participation in,
or are secured by and payable from, mortgage loans secured by real property. The
price of a mortgage-backed securities may be significantly affected by changes
in interest rates. Some mortgage-backed securities have structures that make
their reaction to interest rates and other factors difficult to predict, making
their prices very volatile.
While stocks have historically been a leading choice of long-term investors,
they fluctuate in price. The value of your investment in the fund will go up and
down, which means that you could lose money.
4 The Funds
<PAGE>
Limited Duration U.S. Government Securities Fund
PAST PERFORMANCE
The information below provides some indication of the risks of investing
in the fund, showing changes in the fund's performance from calendar year
to calendar year and by showing how the fund's average annual returns
compare with those of a broad measure of market performance.
AWAITING DATA
================================================================================
The table below shows a comparison of the fund's class A and C average
annual total return to that of the Lipper's Short U.S. Government Fund
Index, Lipper's Intermediate U.S. Government Fund Index, and the Lehman
Intermediate Government Bond Index. Fund returns assume reinvestment of
dividends and distributions and payment of the maximum applicable
front-end or deferred sales charge. All periods end on December 31, 1998.
Class 1 Year 5 Years 10 Years Inception(i)
A 0.00% 0.00% 0.00% 0.00%
- --------------------------------------------------------------------------------
C 0.00% 0.00% 0.00% 0.00%
- --------------------------------------------------------------------------------
Lipper's Short U.S. Gov't Fund Index, Lipper's Intermediate U.S. Gov't Fund
Index and the Lehman Intermediate Gov't
Bond Index(ii) 0.00% 0.00% 0.00% 0.00%
- --------------------------------------------------------------------------------
Past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
(i) The dates of inception for each class are as follows: A -11/4/93; and C
-7/15/96.
(ii) Performance for the unmanaged Lipper's Short U.S. Government Fund Index,
Lipper's Intermediate U.S. Government Fund Index, and the Lehman
Intermediate Government Bond Index does not reflect transaction costs or
management fees.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy
shares of the fund.
================================================================================
Fee table
================================================================================
Class A Class C Class P
Shareholder Fees (Fees paid directly from your investment)
- --------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
- --------------------------------------------------------------------------------
(as a % of offering price) 3.00% none none
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge
(See "Purchases") none 1.00%(2) none
- --------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from fund assets) (as a % of
average net assets)(1)
- --------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.05% 0.50%
- --------------------------------------------------------------------------------
Distribution and Service (12b-1 Fees)(3) 0.35% 1.00% 0.45%
- --------------------------------------------------------------------------------
Other Expenses (See "Management") 0.49% 0.00% 0.00%
- --------------------------------------------------------------------------------
Total Operating Expenses 0.49% 0.00% 0.00%
- --------------------------------------------------------------------------------
================================================================================
Expense example
================================================================================
This example, like that in other funds' prospectuses, assumes a $10,000 initial
investment at maximum sales charge, if any, 5% total return each year and no
changes in expenses. You pay the following expenses over the course of each
period shown if you sell your shares at the end of the period, although your
actual cost may be higher or lower. The expenses include any applicable
contingent deferred sales charges.
Share class 1 Year 3 Years 5 Years 10 Years
Class A shares $350 $450 $570 $900
- --------------------------------------------------------------------------------
Class C shares $260 $470 $810 $1,780
- --------------------------------------------------------------------------------
Class P shares $000 $000 $000 $000
- --------------------------------------------------------------------------------
You would pay the following expenses on the same investment, assuming you kept
your shares.
Class A shares $350 $450 $570 $900
- --------------------------------------------------------------------------------
Class C shares $150 $470 $810 $1,780
- --------------------------------------------------------------------------------
Class P shares $000 $000 $000 $000
- --------------------------------------------------------------------------------
This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present.
Management fees are payable to Lord Abbett for the fund's investment management.
12b-1 fees refer to fees incurred for activities that are primarily intended to
result in the sale of fund shares and service fees for shareholder account
service and maintenance.
Other expenses include fees paid for miscellaneous items such as transfer
agency, custody, accounting, legal and share registration fees.
- --------------------------------------------------------------------------------
(1) The annual operating expenses have been restated from fiscal year amounts
to reflect current fees.
(2) 1.00 if shares are redeemed before 1st anniversary of purchase.
(3) Because 12b-1 distribution fees (up to: 0.25%- class A and 0.75%- class C)
are paid out of the fund's assets on an on-going basis, over time these
fees will increase the cost of your investment and may cost you more than
paying other types of sales charges. Service fees under each class's 12b-1
Plan equal up to 0.25%.
The Funds 5
<PAGE>
------------------------
U.S. Government Fund Symbols: Class A - LAGVX
Class B - LAVBX
Class C - LAUSX
GOAL / APPROACH
The fund's investment objective is high current income consistent with
reasonable risk.
To pursue its goal, the fund invests in obligations issued by the U.S.
Treasury and certain obligations issued or guaranteed by U.S. Government
agencies or its instrumentalities. Such investments provide substantial
protection against credit risks.
MAIN RISKS
The market price for U.S. Government securities is not guaranteed and will
fluctuate. Such securities will not protect investors against price
changes due to changing interest rates. The value of fund shares 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 fund may employ other investment practices
such as investment in illiquid and other securities, that could adversely
affect performance.
About each fund. Each fund is a professionally managed portfolio primarily
holding municipal bonds purchased with the pooled money of investors. It strives
to reach its stated goal, although as with all funds, it cannot guarantee
results.
An investment in each fund is not a bank deposit. It is not FDIC-insured or
government-endorsed. It is not a complete investment program. You could lose
money in each fund, but you also have the potential to make money.
Reasonable risk is the volatility the fund has over time which we believe will
approximate the Lehman Brothers Government Bond Index.
While stocks have historically been a leading choice of long-term in-vestors,
they fluctuate in price. The value of your investment in the fund will go up and
down, which means that you could lose money.
6 The Funds
<PAGE>
U.S. Government Fund
PAST PERFORMANCE
The information below provides some indication of the risks of investing
in the fund, showing changes in the fund's performance from calendar year
to calendar year and by showing how the fund's average annual returns
compare with those of a broad measure of market performance.
AWAITING DATA
================================================================================
Class 1 Year Inception(i)
A 0.00% 0.00%
- --------------------------------------------------------------------------------
B 0.00% 0.00%
- --------------------------------------------------------------------------------
C 0.00% 0.00%
- --------------------------------------------------------------------------------
Lipper's General U.S. Gov't Bond Fund Index
Lehman Gov't Bond Index(ii) 0.00% 0.00%
- --------------------------------------------------------------------------------
Past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
(i) The dates of inception for each class are as follows: A -7/15/96; B -
8/1/96; and C -7/15/96.
(ii) Performance for the unmanaged Lipper's General U.S. Government Bond Fund
Index and the Lehman Government Bond Index do not reflect transaction
costs or management fees.
================================================================================
The table below shows a comparison of the fund's class A, B and C average
annual total return to that of the Lipper's General U.S. Government Bond
Fund Index, and the Lehman Government Bond Index which has no sales
charges. Fund returns assume reinvestment of dividends and distributions
and payment of the maximum applicable front-end or deferred sales charge.
All periods end on December 31, 1998.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy
shares of the fund.
================================================================================
Fee table
================================================================================
<TABLE>
<CAPTION>
Class A Class B Class C Class P
<S> <C> <C> <C> <C>
Shareholder Fees (Fees paid directly
from your investment)
- ----------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
- ----------------------------------------------------------------------------------
(as a % of offering price) 3.00% none none none
- ----------------------------------------------------------------------------------
Maximum Deferred Sales Charge
(See "Purchases") none 5.00%(2)(5) 1.00%(3) none
- ----------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from fund as sets)
(as a % of average net assets)(1)
- ----------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.75% 0.75% 0.50%
- ----------------------------------------------------------------------------------
Distribution and Service (12b-1 Fees)(4) 0.35% 1.00% 1.00% 0.45%
- ----------------------------------------------------------------------------------
Other Expenses (See "Management") 0.49% 0.31% 0.49% 0.00%
- ----------------------------------------------------------------------------------
Total Operating Expenses 0.49% 2.06% 1.49% 0.00%
- ----------------------------------------------------------------------------------
</TABLE>
================================================================================
Expense example
================================================================================
This example, like that in other funds' prospectuses, assumes a $10,000 initial
investment at maximum sales charge, if any, 5% total return each year and no
changes in expenses. You pay the following expenses over the course of each
period shown if you sell your shares at the end of the period, although your
actual cost may be higher or lower. The expenses include any applicable
contingent deferred sales charges.
Share class 1 Year 3 Years 5 Years 10 Years
Class A shares $350 $450 $570 $900
- --------------------------------------------------------------------------------
Class B shares(5) $000 $000 $000 $000
- --------------------------------------------------------------------------------
Class C shares $260 $470 $810 $1,780
- --------------------------------------------------------------------------------
Class P shares $000 $000 $000 $000
- --------------------------------------------------------------------------------
You would pay the following expenses on the same investment, assuming you kept
your shares.
Class A shares $350 $450 $570 $900
- --------------------------------------------------------------------------------
Class B. shares(5) $0 $0 $0 $0
- --------------------------------------------------------------------------------
Class C shares $150 $470 $810 $1,780
- --------------------------------------------------------------------------------
Class P shares $000 $000 $000 $000
- --------------------------------------------------------------------------------
This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present.
Management fee: The fee paid to Lord Abbett for the fund's investment
management.
12b-1 fees: 12b-1 refers to the federal securities regulation that permits funds
to pay distribution fees for activities that are primarily intended to result in
the sale of fund shares and service fees for shareholder account service and
maintenance.
Other expenses: Fees paid by the fund for miscellaneous items such as transfer
agency, custody, accounting, legal and share registration fees.
- --------------------------------------------------------------------------------
(1) The annual operating expenses have been restated from fiscal year amounts
to reflect current fees.
(2) 5.00% if shares are redeemed before 1st anniversary of purchase, declining
to 1% before 6th anniversary and eliminated on and after 6th anniversary.
(3) 1.00% if shares are redeemed before 1st anniversary of purchase.
(4) Because 12b-1 distribution fees (up to: 0.25%- class A; 0.75%- class B and
C; and .20% class P) are paid out of the fund's assets on an on-going
basis, over time they will increase the cost of your investment and may
cost you more than paying other types of sales charges. Service fees under
each class's 12b-1 Plan equal up to 0.25%.
(5) Class B shares will automatically convert to class A shares on the eighth
anniversary of your original purchase of class B shares.
The Funds 7
<PAGE>
Your Investment
PURCHASES
This Prospectus offers three classes of shares, classes A, C and P for the
Limited Duration U.S. Government Securities Fund and four classes of
shares, classes A, B, C and P for each of the U.S. Government Securities
Fund and the High Yield Fund. Although a fund may have more than one class
of shares, these different classes represent investments in the same
portfolio of securities but are subject to different expenses. Our shares
are continuously offered. The offering price is based on the Net Asset
Value ("NAV") per share next determined after we receive your purchase
order submitted in proper form. A front-end sales charge is added to the
NAV, in the case of the class A shares. There is no front-end sales charge
although there is a CDSC in the case of the class B and C shares, as
described below.
You should read this section carefully to determine which class of shares
represents the best investment option for your particular situation. 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.
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 or change minimum investment requirements. All purchase orders
are subject to our acceptance and are not binding until confirmed or
accepted in writing.
================================================================================
Front-End Sales Charges - Class A Shares
(Limited Duration Fund only)
================================================================================
As a % of As a % of To Compute Offering
Your Investment Offering Price Your Investment Price of Divide NAV by
================================================================================
Less than $100,000 3.00% 3.09% .9700
- --------------------------------------------------------------------------------
$100,000 to $249,999 2.50% 2.56% .9750
- --------------------------------------------------------------------------------
$250,000 to $499,999 2.00% 2.04% .9800
- --------------------------------------------------------------------------------
$500,000 to $999,999 1.50% 1.52% .9850
- --------------------------------------------------------------------------------
$1,000,000 to $2,999,999 1.00% 1.01% .9900
- --------------------------------------------------------------------------------
$3,000,000 to $9,999,999 0.50% 0.50% .9950
- --------------------------------------------------------------------------------
$10,000,000 or more 0.25% 0.25% .9975
- --------------------------------------------------------------------------------
================================================================================
Front-End Sales Charges - Class A Shares
(U.S. Government Fund Only)
================================================================================
As a % of As a % of To Compute Offering
Your Investment Offering Price Your Investment Price of Divide NAV by
================================================================================
Less than $50,000 4.75% 4.99% .9525
- --------------------------------------------------------------------------------
$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 and over No Sales Charge 1.0000
- --------------------------------------------------------------------------------
NAV per share for each class of fund shares is calculated each business day at
the close of regular trading on the New York Stock Exchange ("NYSE"). Each fund
is open on those business days when the NYSE is open. Purchases and sales of
fund shares are executed at the NAV next determined after the fund receives your
order. In calculating NAV, securities for which market quotations are available
are valued at those quotations. Securities for with such quotations are not
available are valued at fair value under procedures approved by the Board.
Share classes
Class A
o normally offered with a front- end sales charge
Class B
o no front-end sales charge, how-ever, a contingent deferred sales charge is
applied to shares sold prior to the sixth anniversary of purchase
o higher annual expenses than class A shares
o automatically convert to class A shares after eight years
Class C
o no front-end sales charge
o higher annual expenses than class A shares
o a contingent deferred sales charge is applied to shares sold prior to the
first anniversary of purchase
Class P
o available to certain pension or retirement plans and pursuant to a Mutual
Fund Advisory Program
8 Your Investment
<PAGE>
Reducing Your Class A Front-End Sales Charges. Class A shares maybe
purchased at a discount if you qualify under either of the following:
o Rights of Accumulation -- a Purchaser can apply the value (at public
offering price) of the shares you already own to a new purchase of class A
shares of any Eligible Fund in order to reduce the sales charge.
o Statement of Intention -- a Purchaser of class A shares can purchase
additional shares of any Eligible Fund over a 13-month period and receive
the same sales charge as if you had purchased all shares at once. Shares
purchased through reinvestment of dividends and distributions are not
included. A statement of intention can be back-dated 90 days. Current
holding under rights of accumulation can be included in a statement of
intention.
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 any of the following:
o purchases of $1 million or more [*]
o purchases by Retirement Plans with at least 100 eligible employees [*]
o purchases under a Special Retirement Wrap Program [*]
o purchases made with dividends and distributions on class A shares of
another Eligible Fund
o purchases representing repayment under the loan feature of the Lord
Abbett-sponsored prototype 403(b) plan for class A shares
o purchases by employees of any consenting securities dealer having a sales
agreement with Lord Abbett Distributor
o purchases under a Mutual Fund Advisory Program
o purchases by trustees or custodians of any pension or profit sharing plan,
or payroll deduction IRA for employees of any consenting securities dealer
having a sales agreement with Lord Abbett Distributor
See the Statement of Additional Information for a listing of other categories of
purchasers who qualify for class A share purchases without a front-end sales
charge.
Class A Share CDSC. If you buy class A shares under one of the starred ([*])
categories listed above and you redeem any of them within 24 months after the
month in which you initially purchased them, the fund normally will collect a
CDSC of 1%.
The class A share CDSC generally will be waived for the following:
o 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)
o 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
declines the longer you own your shares, according to the following schedule:
* May be subject to a Contingent Deferred Sales Charge ("CDSC").
Retirement Plans include employer-sponsored retirement plans under the Internal
Revenue Code, excluding Individual Retirement Accounts.
Lord Abbett Distributor LLC ("Lord Abbett Distributor") acts as agent for the
funds to work with investment professionals that buy and/or sell shares of the
funds on behalf of their clients. Generally, Lord Abbett Distributor does not
sell fund shares directly to investors.
Benefit Payment Documentation.
(Class A only)
o under $50,000 - no documentation necessary
o over $50,000 - reason for benefit payment must be received in writing. Use
the address indicated under opening your account.
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 at the time
they are being sold, which-ever is lower. In addition, repayment of loans under
Retirement Plans and 403(b) plans will constitute new sales for purposes of
assessing the CDSC.
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 two years or more after the
month of purchase (class A) or one year or more (class C)
3. shares held the longest before the sixth anniversary of their purchase (class
B) or before the second anni-versary after the month of purchase (class A) or
before the first anniversary of their purchase (class C)
Your Investment 9
<PAGE>
================================================================================
Contingent Deferred Sales Charges - Class B Shares
(High Yield Fund and U.S. Government Fund only)
================================================================================
Anniversary(1) of Contingent Deferred Sales Charge
the day on which the on redemptions (as a % of amount
purchase 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 6th(2) None
- --------------------------------------------------------------------------------
(1) Anniversary is the 365th day after 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 any one of the
following:
o benefit payments such as Retirement Plan loans, hardship
withdrawals, death, disability, retirement, separation from service
or any excess contribution or distribution under Retirement Plans
o Eligible Mandatory Distributions under 403(b) plans and individual
retirement accounts
o death of the shareholder (natural person)
o redemptions of shares in connection with Div-Move and Systematic
Withdrawal Plans (up to 12% per year)
See "Systematic Withdrawal Plan" under "Services For Fund Investors" below
for more information on CDSCs with respect to class B shares.
Class C Share CDSC (High Yield and U.S. Government Fund only). The 1% CDSC
for class C shares normally applies if you redeem your shares before the
first anniversary of your original purchase.
Class P Shares. Class P shares have lower annual expenses than class B and
class C shares, no front-end sales charge, and no CDSC. Class P shares are
currently sold and redeemed at NAV pursuant to Mutual Fund Advisory
Program to the trustees of, or employer-sponsors with respect to, pension
or retirement plans with at least 100 eligible employees (such as a plan
under Section 401(a), 401(k) or 457(b) of the Internal Revenue Code) which
engage an investment professional providing or participating in an
agreement to provide, certain recordkeeping, administrative and/or
sub-transfer agency services to the fund on behalf of the class P
shareholders.
OPENING YOUR ACCOUNT
MINIMUM INITIAL INVESTMENT
o Regular account (Limited Duration and High Yield) $1,000
(U.S. Government) $500
o Individual Retirement Accounts and
403(b) plans under the Internal Revenue Code $250
o Uniform Gift to Minor Account $250
Important information. You may be subject to a $50 penalty under the Internal
Revenue Code if you do not provide a correct taxpayer identification number
(Social Security Number for individuals) or make certain required
certifications, In addition, we may be required to withhold from your account
and pay to the U.S. Treasury 31% of any redemption proceeds and of any dividend
or distribution from your account.
10 Your Investment
<PAGE>
For Retirement Plans and Mutual Fund Advisory Programs, no minimum
investment is 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 you select at the address
stated below. You should carefully read the paragraph below entitled
"Proper Form" before placing your order to assure your order will be
accepted.
Name of Fund
P.O. Box 419100
Kansas City, MO 64141
Proper Form. An order submitted directly to the fund must contain: (1) a
completed application, and (2) payment by check. For more information
regarding proper form of a purchase order, call the fund at 800-821-5129.
Payment must be credited in U.S. dollars to our custodian bank's account.
By Exchange. Telephone the fund at 800-821-5129 to request an exchange
from any eligible Lord Abbett-sponsored fund.
REDEMPTIONS
By Broker. Call your investment professional for directions on how to
redeem your shares.
By Telephone. To obtain the proceeds of a redemption of $50,000 or less
from your account, you or your representative can call the fund at
800-821-5129.
By Mail. Submit a written redemption request indicating, the name(s) in
which the account is registered, the fund's name, the class of shares,
your account number, 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 800-821-5129.
Normally a check will be mailed to the name and address in which the
account is registered (or otherwise according to your instruction) within
three business days after receipt of your redemption request. Your account
balance must be sufficient to cover the amount being redeemed or your
redemption order will not be processed. Redemptions of shares purchased by
check will take up to 15 days.We will verify that the shares being
redeemed (if purchased by check) were purchased at least 15 days earlier.
To determine if a CDSC applies to a redemption, see "Class A share CDSC,"
"Class B share CDSC" or "Class C share CDSC."
DISTRIBUTIONS AND TAXES
Each fund pays its shareholders dividends from its net investment income,
and distributes net capital gains that it has realized. Each fund expects
that its dividends from investment income will be tax exempt and expects
to pay such divi dends to shareholders monthly. If a capital gain
distribution is declared, it will be paid annually. Your distributions
will be reinvested in your fund unless you instruct the fund to pay them
to you in cash. There are no sales charges on reinvestments.
Small Accounts. Our Board may authorize closing any account in which there are
fewer than 25 shares if it is in a fund's best interest to do so.
Social Security and Railroad
Taxes on transactions. The chart at left also can provide a "rule of thumb"
guide for your potential U.S. federal tax liability when selling or exchanging
fund shares. The second row, "Short-term capital gains," applies to fund shares
sold within 12 months of purchase. The third row, "Long-term capital gains,"
applies to shares held for more than 12 months.
Starting January 1, 2001, sales of securities held for more than five years will
be taxed at special lower rates.
Eligible Guarantor is 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.)
Your Investment 11
<PAGE>
The tax status of distributions are the same for all shareholders
regardless of how long they have been in the fund or whether distributions
are reinvested or paid in cash. In general, distributions are taxable as
follows:
================================================================================
Federal Taxability Of Distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
================================================================================
Income Ordinary Income
dividends 15% Rate
- --------------------------------------------------------------------------------
Short-term Ordinary Income
capital gains 15% Rate
- --------------------------------------------------------------------------------
Long-term
capital gains 10% 20%
- --------------------------------------------------------------------------------
Except in tax-advantaged accounts, any sale or exchange of fund shares may
be a taxable event.
SERVICES FOR FUND INVESTORS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described
below. With each service, you select a schedule and amount, subject to
certain restrictions. You can set up most of these services when filling
out your application or by calling 800-821-5129.
==========================================================================
For investing
Invest-A-Matic You can make fixed, periodic investments ($50 minimum)
(Dollar-cost into your fund account by means of automatic money
averaging) transfers from your bank checking account. See the
attached application for instructions.
Div-Move You can automatically reinvest the dividends and
distributions from your account into another account in
any Eligible Fund. ($50 minimum)
For selling shares
Systematic You can make regular withdrawals from most Lord Abbett
Withdrawal funds. Automatic cash withdrawals can be paid to you
Plan ("SWP") from your account in fixed or variable amounts. To
establish a plan, the value of your shares must be at
least 10,000, except for Retirement Plans for which
there is no minimum. Your shares must be in
non-certificate form.
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 SWPrequest. 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.
Class B and Redemption proceeds due to a SWP for class B and class C
C shares shares will be redeemed in the order described under
"Contingent Deferred Sales Charges" under "Purchases".
================================================================================
OTHER SERVICES
Telephone Investing. After we have received the attached application
(selecting "yes" under Section 7C and completing Section 7), you can
instruct us by phone to have money transferred from your bank account to
purchase shares of the fund for an existing account. The fund will
purchase the requested shares when it receives of the money from your
bank.
Any gains realized on a fund's transactions in options and financial futures
will be treated as taxable long- or short-term capital gains.
Lord Abbett offers a variety of Retirement Plans. Call 800-253-7299 for
information about:
o Traditional, Rollover, Roth and Education IRAs
o Simple IRAs, SEP-IRAs, 401(k) and 403(b) accounts
o Defined Contribution Plans
Telephone Transactions. You have this privilege unless you refuse it in writing.
For your security, telephone transaction requests 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. Each fund will not be liable for following instructions
communicated by telephone that it reasonably believes to be genuine.
Transactions by telephone may be difficult to implement in times of drastic
economic or market change.
Exchanges by telephone should not be used to take advantage of short-term swings
in the market. Each fund reserves the right to limit or terminate this privilege
for any shareholder making frequent exchanges or abusing the privilege and may
revoke the privilege for all shareholders upon 60 days' written notice.
12 Your Investment
<PAGE>
Telephone Exchanges. You or your investment professional, with proper
identification, can instruct your fund by telephone to exchange shares of
any class for shares of the same class of any Eligible Fund by calling
800-821-5129. The fund must receive instructions for the exchange before
the close of the NYSE on the day of your call. If you meet this
requirement, you will get the NAV per share of the Eligible Fund
determined on that day. Exchanges will be treated as a sale for federal
tax purposes. Be sure to read the current prospectus for any fund into
which you are exchanging.
Reinvestment Privilege. If you sell shares of the fund, you have a 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.
Account Statements. Every Lord Abbett investor automatically receives
quarterly account statements.
Householding. Shareholders with the same last name and address will
receive a single copy of a prospectus and an annual or semi-annual report,
unless additional reports are specifically requested in writing to the
fund.
Account Changes. For any changes you need to make to your account, consult
your investment professional or call the fund at 800-821-5129.
Systematic Exchange. You or your investment professional can establish a
schedule of exchanges between the same classes of any Eligible Fund.
SALES CHARGES AND SERVICE FEES
Sales and Service Compensation. As part of its plan for distributing
shares, each fund and Lord Abbett Distributor pay sales and service
compensation to Authorized Institutions that sell the fund's shares and
service its shareholder accounts.
Sales compensation originates from two sources: sales charges and 12b-1
distribution fees that are paid out of each fund's assets. Service
compensation originates from 12b-1 service fees. The 12b-1 fee rates vary
by share class, according to the Rule 12b-1 plan adopted by each fund. The
sales charges and 12b-1 fees paid by investors are shown in the
class-by-class information under "Fees and Expenses" and "Purchases". The
portion of these expenses that is paid as sales and service compensation
to Authorized Institutions, such as your dealer, is shown in the chart at
the end of this prospectus. The portion of such sales and service
compensation paid to Lord Abbett Distributor is discussed under "Sales
Activities" and "Service Activities". Sometimes we do not pay sales and
service compensation where tracking data is not available for certain
accounts or where the Authorized Institution waives part of the
compensation.
We may pay Additional Concessions to Authorized Institutions from time to
time.
Sales Activities. We may use 12b-1 distribution fees to pay Authorized
Institutions to finance any activity which is primarily intended to result
in the sale of shares. Lord Abbett Distributor uses its portion of the
distribution fees attributable to a fund's class A and class C shares for
activities that are primarily intended to result in the sale of such class
A and class C shares, respectively. These activities include, but are not
limited to, printing of prospectuses and statements of additional
information and reports for other than existing shareholders, preparation
and distribution of advertising and sales material, expenses of organizing
and conducting sales seminars, Additional Concessions to Authorized
Institutions, the cost necessary to provide distribution-related services
or personnel, travel, office expenses, equipment and other allocable
overhead.
12b-1 fees payable regardless of expenses. The amounts payable by a fund need
not be directly related to expenses. If Lord Abbett Distributor's actual
expenses exceed the fee payable to it. A fund will not have to pay more than
that fee. If Lord Abbett Distributor's expenses are less than the fee it
receives, Lord Abbett Distributor will keep the full amount of the fee.
Your Investment 13
<PAGE>
Service Activities. We may pay Rule 12b-1 service fees to Authorized
Institutions for any activity which is primarily intended to result in
personal service and/or the maintenance of shareholder accounts. Any
portion of the service fees paid to Lord Abbett Distributor will be used
to service and maintain shareholder accounts.
MANAGEMENT
The fund's investment adviser is Lord, Abbett & Co., 767 Fifth Avenue, New
York, NY 10153-0203. Founded in 1929, Lord Abbett manages one of the
nation's oldest mutual fund complexes, with approximately $28 billion in
more than 35 mutual fund portfolios and other advisory accounts. For more
information about the services Lord Abbett provides to the funds, see the
Statement of Additional Information.
The fund pays Lord Abbett a monthly fee based on the average daily net
assets for each month. For the fiscal year ended November 31, 1998, the
fee paid to Lord Abbett was at an annual rate of .00 of 1%. In addition,
the fund pays all expenses not expressly assumed by Lord Abbett.
High Yield Fund. Christopher J. Towle, Partner of Lord Abbett and
Executive Vice President and Co-Portfolio Manager of the Fund, is
primarily responsible for the day-to-day management of the Fund. Mr. Towle
has been with Lord Abbett since 1988 and has over 17 years of investment
experience. Mr. Towle is assisted by, and may delegate management duties
to, other Lord Abbett employees.
Michael Goldstein serves as Co-Portfolio Manager of the Fund. Mr.
Goldstein has been with Lord Abbett since April 1997. Before joining Lord
Abbett, Mr. Goldstein was a bond trader for Credit Suisse BEA Associates
from August 1992 through April 1997.
Limited Duration and U.S. Government Fund. Robert Gerber serves as
Portfolio Manager of each Fund and is primarily responsible for the
management. He is Executive Vice President and Portfolio Manager of each
fund and has served in this capacity since __________. Mr Gerber joined
Lord Abbett in July 1997 as Director of Taxable Fixed Income. Before
joining Lord Abbett, Mr. Gerber served as a Senior Portfolio Manager at
Sanford Bernstein & Co., Inc. since 1992.
14 Your Investment
<PAGE>
For More Information
OTHER INVESTMENT TECHNIQUES
This section describes some of the investment techniques that might be
used by the funds and their risks.
Adjusting Investment Exposure. Each fund may, but is not required to, use
various strategies to change its investment exposure to adjust to changing
security prices, interest rates, currency exchange rates, commodity prices
and other factors. These strategies may involve buying or selling
derivative instruments, such as options and futures contracts, stripped
securities, currency exchange contracts, swap agreements, short sales of
securities, indexed securities and rights and warrants. The fund may use
these transactions to change the risk and return characteristics of each
fund's portfolio. If we judge market conditions incorrectly or use a
strategy that does not correlate well with the fund's investments, it
could result in a loss, even if we intended to lessen risk or enhance
returns. These transactions may involve a small investment of cash
compared to the magnitude of the risk assumed and could produce
disproportionate gains or losses. Also, these strategies could result in
losses if the counterparty to a transaction does not perform as promised.
Illiquid Securities. These securities include those that are not traded on
the open market or that trade irregularly or in very low volume. They may
be difficult or impossible to sell at the time and price the fund would
like. Each underlying fund may invest up to 15% of its assets in illiquid
securities.
Reverse Repurchase Agreements. In a reverse repurchase agreement, a fund
sells a U.S. government security to a securities dealer or bank for cash
and also agrees to repurchase the same security at a set price later.
Reverse repurchase agreements expose a fund to credit risk (that is, the
risk that the counterparty will fail to resell the security to the fund),
but this risk is greatly reduced because the fund receives cash equal to
100% of the price of the security sold. Engaging in reverse repurchase
agreements also involves the use of leverage, in that the fund may
reinvest the cash it receives in additional securities. Each fund will
attempt to minimize this risk by managing its duration. A fund's reverse
repurchase agreements will not exceed 20% of the fund's net assets.
GLOSSARY OF SHADED TERMS
Additional Concessions. 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. Additional
pay-ments may be paid from Lord Abbett Distributor's own resources or from
distribution fees received from a fund 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.
In selecting dealers to execute portfolio transactions for a 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.
For More Information 15
<PAGE>
Authorized Institutions. Institutions and persons permitted by law to
receive service and/or distribution fees under a Rule 12b-1 plan are
"authorized institutions". Lord Abbett Distributor is an Authorized
Institution.
Eligible Fund. An Eligible Fund is any Lord Abbett-sponsored fund except
for (1) certain tax-free, single-state funds where the exchanging
shareholder is a resident of a state in which such series is not offered
for sale; (2) Lord Abbett Equity Fund; (3) Lord Abbett Series Fund; and
(4) 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). An Eligible Fund also is
any Authorized Institution's affiliated money market fund satisfying Lord
Abbett Distributor as to certain omnibus account and other criteria.
Eligible Mandatory Distributions. If class B shares represent a part of an
individual's total IRA or 403(b) investment, the CDSC will be waived only
for that part of a mandatory distribution which bears the same relation to
the entire mandatory distribution as the B share investment bears to the
total investment.
Legal Capacity. This term refers to the authority of an individual to act
on behalf of an entity or other person(s). For example, if a redemption
request were to be made 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. That signature using that capacity
must be guaranteed by an Eligible Guarantor.
To give another example, if a redemption request were to be made on behalf
of the ABC Corporation by a person (Mary B. Doe) the has the legal
capacity to act on the half of the Corporation, because she is the
president of the corporation, the request must be executed as follows: ABC
Corporation by Mary B. Doe, President. That signature using that capacity
must be guaranteed by an Eligible Guarantor.
Mutual Fund Advisory 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 fund shares (and sometimes providing
for acceptance of orders for such shares on Lord Abbett Distributor's
behalf) 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.
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 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 the class A 12b-1 Plan and the fact that the program relates to
participant-directed Retirement Plans.
Guaranteed signature. An acceptable form of guarantee would be as follows:
o In the case of the estate -
Robert A. Doe
Executor of the Estate of
John W. Doe
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
/s/ [ILLEGIBLE]
------------------------------------------------
AUTHORIZED SIGNATURE
( 960 ) X 9 8 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM(TM)
SR
o In the case of the corporation - ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
/s/ [ILLEGIBLE]
------------------------------------------------
AUTHORIZED SIGNATURE
( 960 ) X 9 8 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM(TM)
SR
16
<PAGE>
Total Return.
Yield.
For More Information 17
<PAGE>
High Yield Fund
Financial Information
FINANCIAL HIGHLIGHTS
This table describes the fund's performance for the fiscal periods
indicated. "Total return" shows how much your investment in the fund would
have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These Financial Highlights
have been audited by Deloitte & Touche LLP, the fund's independent
auditors, in conjunction with their annual audit of the fund's financial
statements. Financial statements for the fiscal year ended November 30,
1998 and the Independent Auditors' Report thereon appear in the Annual
Report to Shareholders for the fiscal year ended November 30, 1998 and are
incorporated by reference into the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
================================================================================================
Class A Shares Class B Shares Class C Shares
----------------------------------------------------------
Year Ended November 30,
Per Share Operating Performance: 1998(a) 1998(a) 1998(a)
<S> <C> <C> <C>
Net asset value, beginning of period 0.00 $0.00 $0.00
- ------------------------------------------------------------------------------------------------
Income from investment operations
- ------------------------------------------------------------------------------------------------
Net investment income 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------
gain on investments and foreign
- ------------------------------------------------------------------------------------------------
currency holdings (0.00) (0.00) (0.00)
- ------------------------------------------------------------------------------------------------
Total from investment operations 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------
Dividends from net investment income (0.00) (0.00) (0.00)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $0.00 $0.00 $0.00
- ------------------------------------------------------------------------------------------------
Total Return(b)(c) 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:(c)
- ------------------------------------------------------------------------------------------------
Expenses, including waiver 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------
Expenses, excluding waiver 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------
Net investment income 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------
================================================================================
Supplemental Data For All Classes: Year Ended November 30, 1998(a)
Net assets, end of period (000) $10,134
- --------------------------------------------------------------------------------
Portfolio turnover rate 159.14%
- --------------------------------------------------------------------------------
</TABLE>
(a) From commencement of operations for each class of shares: class A, class
B, and class C is November 30, 1998.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Not annualized.
See Notes to Financial Statements.
18 Financial Information
<PAGE>
High Yield Fund
LINE GRAPH COMPARISON - HIGH YIELD FUND
Immediately below is a comparison of a $10,000 investment in class A
shares to the same investment in The JP Morgan Emerging Markets Bond Plus
Index, The Merrill Lynch High Yield Master II Index, and the JP Morgan
Global Government Bond Index, assuming reinvestment of all dividends and
distributions.
================================================================================
AWAITING DATA
================================================================================
Average Annual Total Return At Maximum Applicable
Sales Charge For The Periods Ending November 30, 1998
10 Years (or Life)
- --------------------------------------------------------------------------------
Class A(1) -4.00
- --------------------------------------------------------------------------------
Class B(3) -4.77
- --------------------------------------------------------------------------------
Class C(4) -0.76
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) This shows total return which is the percent change in value, after
deduction of the maximum initial sales charge of 4.75% applicable to class
A shares, with all dividends and distributions reinvested for the periods
shown ending November 30, 1998, using the SEC-required uniform method to
compute such return.
(2) Performance for the unmanaged The JP Morgan Emerging Markets Bond Plus
Index, The Merrill Lynch High Yield Master II Index, and the JP Morgan
Global Government Bond Index, do not reflect transaction costs, management
fees or sales charges. These three indices chosen to compare to the Fund's
performance have elements of these three categories but since there is no
one index combining all three in the same annual blend as the fund's
portfolio, these three separate indices may not be a valid comparison for
the fund.
(3) The class B shares were first offered on 11/30/98. For class B shares,
performance reflects the deduction of a CDSC of 4% (for 1 year) and 3%
(life of class).
(4) The class C shares were first offered on 11/30/98. Performance is at net
asset value.
Financial Information 19
<PAGE>
Limited Duration Fund
FINANCIAL HIGHLIGHTS
This table describes the fund's performance for the fiscal periods
indicated. "Total return" shows how much your investment in the fund would
have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These Financial Highlights
have been audited by Deloitte & Touche LLP, the fund's independent
auditors, in conjunction with their annual audit of the fund's financial
statements. Financial statements for the fiscal year ended November 30,
1998 and the Independent Auditors' Report thereon appear in the Annual
Report to Shareholders for the fiscal year ended November 30, 1998 and are
incorporated by reference into the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
==============================================================================================================================
Class A Shares
----------------------------------------------------------------------------------
Year Ended November 30, Year Ended October 31,
================================== =======================================
Per Share Operating Performance: 1998 1997 1996(a) 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $0.00 $4.42 $4.39 $4.53 $4.44 $4.85
- ------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income .00 .25(e) .0174 .1912 .2316 .2650
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------
gain (loss) on investments .00 (.02) .333 (.0751) .1017 (.4123)
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .00 .23 .0507 .1161 .3333 (.1473)
- ------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.00) (.25) (.207) (.2561) (.2433) (.2627)
- ------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain (.00) -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $0.00 $4.40 $4.42 $4.39 $4.53 $4.44
- ------------------------------------------------------------------------------------------------------------------------------
Total Return(b) 0.00% 5.46% 1.15%(c) 2.67% 8.16% 3.09%(c)
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses, including waiver and
reimbursements 0.00% 0.51%(f) 0.11%(c) 1.81% 1.40% 0.89%(c)
- ------------------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver and
reimbursements 0.00% 1.40% 0.13%(c) 2.73% 1.71% 0.89%(c)
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.00% 5.81% 0.41%(c) 4.58% 5.62% 5.61%(c)
==============================================================================================================================
<CAPTION>
Class C Shares
-----------------------------------------------------------------
Year Ended November 30,
Per Share Operating Performance: 1998 1997 1996 1996(a)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $0.00 $4.42 $4.39 $4.34
- ------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income .00 .21(d) .0138 .0667
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------
gain (loss) on securities .00 (.02) .0342 .0515
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .00 .19 .0480 .1182
- ------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income -- (.21) (.0180) (.0682)
- ------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain (.00) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $0.00 $4.40 $4.42 $4.39
- ------------------------------------------------------------------------------------------------------------------------------
Total Return(b) 0.00% 4.45% 1.09%(c) 2.98%(c)
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses, including waiver and reimbursements 0.00% 1.44%(e) 0.19%(c) 0.69%(c)
- ------------------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver and reimbursements 0.00% 2.32% 0.21%(c) 0.77%(c)
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.00% 4.84% 0.33%(c) 1.26%(c)
==============================================================================================================================
<CAPTION>
Year Ended November 30, Year Ended October 31,
------------------------------------------------------------------------------------------
Supplemental Data For All Classes: 1998 1997 1996(a) 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $0,000 $10,276 $12,696 $12,735 $8,922 $10,256
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 0.00% 343.53% 175.98% 340.62% 222.00% 895.63%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) From commencement of operations for class A shares: November 4, 1993 and
for class C shares: July 15, 1996.
(b) Total return does not consider the effects of front-end or contingent
deferred sales charges.
(c) Not annualized.
(d) Calculated using average shares outstanding during the period. (e) The
ratios for 1997 include expenses paid through an expense offset
arrangement.
(f) Amount less than $.01.
See Notes to Financial Statements.
20 Financial Information
<PAGE>
Limited Duration U.S. Government Securities Fund
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in class A
shares to the same investment in Lipper's Short U.S. Government Fund
Index, Lipper's Intermediate U.S. Government Fund Index, and Lehman
Intermediate Government Bond Index, assuming reinvestment of all dividends
and distributions.
================================================================================
AWAITING DATA
================================================================================
Average Annual Total Return At Maximum Applicable
Sales Charge For The Periods Ending November 30, 1998
1 Year 10 Years (or Life)
- --------------------------------------------------------------------------------
Class A(3) 0.00% 0.00%
- --------------------------------------------------------------------------------
Class B(3) 0.00% 0.00%
- --------------------------------------------------------------------------------
Class C(1) 0.00% 0.00%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) This shows total return applicable to class C shares, with all dividends
and distributions reinvested for the periods shown ending November 30,
1998, using the SEC-required uniform method to compute such return.
(2) Performance for the unmanaged S&P 500(R) does not reflect transaction
costs, management fees or sales charges.
(3) The class A and B shares were first offered on 7/15/96 and 6/5/97,
respectively. For class B shares, performance reflects the deduction of a
CDSC of 4% (for 1 year) and 3% (life of class). For class A shares,
performance is at net asset value.
Financial Information 21
<PAGE>
U.S. Government Securities Fund
FINANCIAL HIGHLIGHTS
This table describes the fund's performance for the fiscal periods
indicated. "Total return" shows how much your investment in the fund would
have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These Financial Highlights
have been audited by Deloitte & Touche LLP, the fund's independent
auditors, in conjunction with their annual audit of the fund's financial
statements. Financial statements for the fiscal year ended November 30,
1998 and the Independent Auditors' Report thereon appear in the Annual
Report to Shareholders for the fiscal year ended November 30, 1998 and are
incorporated by reference into the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
==============================================================================================================================
Class A Shares
-----------------------------------------------------------------------------------
Year Ended November 30,
Per Share Operating Performance: 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $0.00 $2.63 $2.73 $2.59 $3.00
- ------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income .00 .20(d) .215 .235 .247
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------
gain (loss) on investments .00 (.03) (.105) 1.36 (.3685)
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .00 .17 .11 .371 (.1215)
- ------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.00) (.21) (.210) (.231) (.246)
- ------------------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain (.00) -- -- -- (.0425)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $0.00 $2.59 $2.63 $2.73 $2.59
- ------------------------------------------------------------------------------------------------------------------------------
Total Return(b) 0.00% 6.67% 4.41% 14.89% 4.24%
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses 0.00% 0.92%(e) 0.88% 0.90% 0.90%
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.00% 7.82% 8.12% 8.85% 8.92%
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==============================================================================================================================
Class B Shares Class C Shares
=================================== ==========================================
Year Ended November 30, Year Ended November 30,
Per Share Operating Performance: 1998 1997 1996(b) 1998 1997 1996(b)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $0.00 $2.63 $2.57 $0.00 $2.63 $2.55
- ------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .00 .18(d) .063 (.00) .18(d) .066
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------
gain (loss) on investments .00 (.04) .060 .00 (.03) .085
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .00 .14 .123 .00 .15 .151
- ------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.00) (.19) (.063) (.19) (.071)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $0.00 $2.58 $2.63 $0.00 $2.59 $2.63
- ------------------------------------------------------------------------------------------------------------------------------
Total Return(b) 0.00% 5.47% 5.45%(c) 0.00% 5.86% 6.49%(c)
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ------------------------------------------------------------------------------------------------------------------------------
Expenses 0.00% 1.64%(e) 0.48%(c) 0.00% 1.55%(e) 0.60%(c)
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.00% 6.77% 2.21%(c) 0.00% 7.25% 2.60%(c)
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==============================================================================================================================
Year Ended November 30,
-----------------------------------------------------------------------------------------
Supplemental Data For All Classes: 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net assets, end of period (000) $0,000 $2,286,412 $2,907,291 $3,272,865 $3,232,012
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 0.00% 712.82% 820.59% 544.31% 790.57%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of front-end sales or
contingent deferred sales charges.
(b) From commencement of operations for each class of shares: August 1, 1996
(Class B), and July 15, 1996 (class C).
(c) Not annualized.
(d) Calculated using average shares outstanding during the period.
(e) The ratios for 1997 include expenses paid through an expense offset
arrangement.
See Notes to Financial Statements.
22 Financial Information
<PAGE>
U.S. Government Securities Fund
LINE GRAPH COMPARISON - U.S. Government Securities Fund
Immediately below is a comparison of a $10,000 investment in class A
shares to the same investment in both the Lipper's General U.S. Government
Bond Fund Index and the Lehman Government Bond Index, assuming
reinvestment of all dividends and distributions.
================================================================================
AWAITING DATA
================================================================================
Average Annual Total Return At Maximum Applicable
Sales Charge For The Periods Ending November 30, 1998
1 Year 10 Years (or Life)
- --------------------------------------------------------------------------------
Class A(1) 0.00% 0.00%
- --------------------------------------------------------------------------------
Class B(3) 0.00% 0.00%
- --------------------------------------------------------------------------------
Class C(4) 0.00% 0.00%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) This shows total return which is the percent change in value, after
deduction of the maximum initial sales charge of 5.75% applicable to class
A shares, with all dividends and distributions reinvested for the periods
shown ending November 30, 1998, using the SEC-required uniform method to
compute such return.
(2) The class B shares were first offered on 8/1/96. Performance reflects the
deduction of a CDSC of 4% (for 1 year) and 3% (life of the class).
(3) The class C shares were first offered on 7/15/96. Performance is at net
asset value.
Financial Information 23
<PAGE>
RECENT PERFORMANCE
While anticipating a slowing of corporate earnings might move stock prices
lower during the second half of the fund's fiscal year, investor concern
over economic problems abroad resulted in significant declines across
nearly all equity sectors. The fund's primarily value-based approach to
stock selection did not spare it from declining during the stock market
downturn.
The economy continues to slow, and the financial markets have shown
increased volatility over concerns regarding earnings shortfalls and
evidence of a global credit crunch. However, our expectation for the U.S.
economy at this time is not recession, but rather a point of slower
growth. Consumer activity continues to provide support for growth with
gains in job creation, income and spending. Business spending is an area
of greater concern. Recession abroad is likely to reduce exports and have
a flattening effect on corporate profit growth. Overall, gross domestic
product is likely to grow at an annual rate of approximately 1.5 - 2.0%
during the next 6 to 12 months. U.S. interest rates have fallen,
reflecting slowing growth and continuing low inflation. As of late October
1998, the market is still anticipating additional easing by the Federal
Reserve, a view with which we concur. In sum, it is our view that the
underpinnings of sound stock markets remain in place, and the price
declines of the third quarter created more opportunities for long-term
investors.
The fund's investment strategy consisted of holding a relatively
concentrated portfolio, comprised of a restricted number of markets and
stocks on industry-leading companies. The stocks were bought at low
valuation levels, and in line with our investment philosophy, which means
that we used the recent period of market weakness to steadily add to
existing positions.
In addition, the fund was not invested in the emerging and Far Eastern
markets, but was instead concentrated primarily in Europe and Canada.
This, in addition to the funds superior stock selection, contributed to
the last fiscal year's high performance. Throughout this period, portfolio
turnover remained low. We used new purchase monies to add to our existing
holdings during this period. As a result, there was very little actual
change to our list. Throughout this period, portfolio turnover remained
low.
High-quality assets tended to outperform during much of the year as
markets discounted the prospect of lower rates in a flight to quality. The
fund - with its limited exposure to emerging markets - was able to hold
its own in a falling market by maintaining exposure to the U.S. and
European high-yield markets as well as to high-grade markets. However, as
difficulties in various emerging markets become resolved, a prudent
reassessment of investment opportunities in such markets will be required.
Year 2000 Issues. Each fund could be adversely affected if the computers used by
each fund and their service providers do not properly process and calculate
date-related information from and after January 1, 2000.
While year 2000-related computer problems could have a negative effect on each
fund, Lord Abbett is working to avoid such problems and has assurances from each
fund's service providers that they are taking similar steps. However, because
the problem is unprecedented and efforts to identify and fix it are on-going, we
don't know whether these efforts will be successful. Accordingly, each fund may
be adversely affected.
Euro. On January 1, 1999, the eleven member states of the European Union
converted to a common currency, known as the "Euro." Each fund could be
adversely affected if the computers used by it and its service providers do not
properly process and calculate euro-related information from and after January
1, 1999. While euro-related computer problems could have a negative effect on
each fund, Lord Abbett is working to avoid such problems and has assurances from
each fund's service providers that they are taking similar steps. However,
because the problem is unprecedented, we don't know whether these efforts will
be successful and, accordingly, each fund may be adversely affected.
24 Financial Information
<PAGE>
COMPENSATION FOR YOUR DEALER - High Yield Fund
<TABLE>
<CAPTION>
====================================================================================================================================
FIRST YEAR COMPENSATION
Front-end
sales charge Dealer's
paid by investors concession Service fee(1) Total compensation(2)
Class A investments (% of offering price) (% of offering price) (% of net investment) (% of offering price)
====================================================================================================================================
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.00% 0.25% 4.24%
- ------------------------------------------------------------------------------------------------------------------------------------
$50,000 - $99,999 4.75% 4.25% 0.25% 4.49%
- ------------------------------------------------------------------------------------------------------------------------------------
$100,000 - $249,999 3.75% 3.25% 0.25% 3.49%
- ------------------------------------------------------------------------------------------------------------------------------------
$250,000 - $499,999 2.75% 2.50% 0.25% 2.74%
- ------------------------------------------------------------------------------------------------------------------------------------
$500,000 - $999,999 2.00% 1.75% 0.25% 2.00%
- ------------------------------------------------------------------------------------------------------------------------------------
$1 million or more(3) or Retirement Plan - 100 or more
eligible employees(3) or Special Retirement Wrap Program(3)
- ------------------------------------------------------------------------------------------------------------------------------------
First $5 million no front-end sales charge 1.00% 0.25% 1.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Next $5 million above that no front-end sales charge 0.55% 0.25% 0.80%
- ------------------------------------------------------------------------------------------------------------------------------------
Next $40 million above that no front-end sales charge 0.50% 0.25% 0.75%
- ------------------------------------------------------------------------------------------------------------------------------------
Over $50 million no front-end sales charge 0.25% 0.25% 0.50%
====================================================================================================================================
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%
- ------------------------------------------------------------------------------------------------------------------------------------
Class P investments Percentage of average net assets
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
====================================================================================================================================
Annual Compensation After first Year
Class A investments
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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%
- ------------------------------------------------------------------------------------------------------------------------------------
Class P investments Percentage of average net assets
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The service fee for Class A shares is paid quarterly. 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 1.00%, 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.
Financial Information 25
<PAGE>
COMPENSATION FOR YOUR DEALER - Limited Duration Fund
<TABLE>
<CAPTION>
==============================================================================================================================
FIRST YEAR COMPENSATION
Front-end
sales charge Dealer's
paid by investors concession Service fee(1) Total compensation(2)
Class A investments (% of offering price) (% of offering price) (% of net investment) (% of offering price)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $100,000 3.00% 2.50% 0.00% 2.50%
- ------------------------------------------------------------------------------------------------------------------------------
$100,000 - $249,999 2.50% 2.25% 0.00% 2.25%
- ------------------------------------------------------------------------------------------------------------------------------
$250,000 - $499,999 2.00% 1.75% 0.00% 1.75%
- ------------------------------------------------------------------------------------------------------------------------------
$500,000 - $999,999 1.50% 1.25% 0.00% 1.25%
- ------------------------------------------------------------------------------------------------------------------------------
$1,000,000 - $2,999,999 1.00% 1.00% 0.00% 1.00%
- ------------------------------------------------------------------------------------------------------------------------------
$3,000,000 - $9,999,999 0.50% 0.50% 0.00% 0.50%
- ------------------------------------------------------------------------------------------------------------------------------
Over $10 million 0.25% 0.25% 0.00% 0.25%
==============================================================================================================================
Class C investments Paid at time of sale (% of net asset value)
- ------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.75% 0.25% 1.00%
- ------------------------------------------------------------------------------------------------------------------------------
Class P investments Percentage of average net assets
- ------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==============================================================================================================================
Annual Compensation After first Year
Class A investments
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
All amounts no front-end sales charge none 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------
Class C investments Percentage of average net assets(3)
- ------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.65% 0.25% 0.90%
- ------------------------------------------------------------------------------------------------------------------------------
Class P investments Percentage of average net assets
- ------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Class A share 12b-1 Plan for the Limited Duration Fund will go into
effect on the first day of the calendar quarter subsequent to the Fund's
net assets reaching $100 million at which time for the following
categories: over $1 million, or a retirement plan -- 100 or more eligible
employees, or a special retirement wrap program, authorized institutions
will receive concessions as set forth on the U.S. Government Securities
chart on the next page for such categories.
(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) With respect to Class C shares, 0.90% 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. This fee is paid quarterly
in arrears. In the case of C shares for fixed-income, such as U.S.
Government Securities fund and Limited Duration Government fund, 0.10% of
the average annual net asset value of such shares is retained by Lord
Abbett Distributor, thus reducing the dealer's concession from 0.75% to
0.65% after the first year. Lord Abbett Distributor uses this 0.10% for
expenses primarily intended to result in the sale of such fund's shares.
26 Financial Information
<PAGE>
COMPENSATION FOR YOUR DEALER - U.S. Government Fund
<TABLE>
<CAPTION>
==============================================================================================================================
FIRST YEAR COMPENSATION
Front-end
sales charge Dealer's
paid by investors concession Service fee(1) Total compensation(2)
Class A investments (% of offering price) (% of offering price) (% of net investment) (% of offering price)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.00% 0.25% 4.25%
- ------------------------------------------------------------------------------------------------------------------------------
$50,000 - $99,999 4.75% 4.25% 0.25% 4.50%
- ------------------------------------------------------------------------------------------------------------------------------
$100,000 - $249,999 3.75% 3.25% 0.25% 3.50%
- ------------------------------------------------------------------------------------------------------------------------------
$250,000 - $499,999 2.75% 2.50% 0.25% 2.75%
- ------------------------------------------------------------------------------------------------------------------------------
$500,000 - $999,999 2.00% 1.75% 0.25% 2.00%
- ------------------------------------------------------------------------------------------------------------------------------
$1 million or more(3) or Retirement Plan - 100 or more
eligible employees(3) or Special Retirement Wrap Program(3)
- ------------------------------------------------------------------------------------------------------------------------------
First $5 million no front-end sales charge 1.00% 0.25% 1.25%
- ------------------------------------------------------------------------------------------------------------------------------
Next $5 million above that no front-end sales charge 0.55% 0.25% 0.80%
- ------------------------------------------------------------------------------------------------------------------------------
Next $40 million above that no front-end sales charge 0.50% 0.25% 0.75%
- ------------------------------------------------------------------------------------------------------------------------------
Over $50 million no front-end sales charge 0.25% 0.25% 0.50%
- ------------------------------------------------------------------------------------------------------------------------------
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%
- ------------------------------------------------------------------------------------------------------------------------------
Class P investments Percentage of average net assets
- ------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==============================================================================================================================
Annual Compensation After first Year
Class A investments
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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%
- ------------------------------------------------------------------------------------------------------------------------------
Class P investments Percentage of average net assets
- ------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The service fee for class A shares is paid quarterly and for class A
shares may not exceed 0.15% if sold prior to September 1, 1985. 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 class C shares for
fixed-income, 0.10% of the average net asset value of such shares is
retained by Lord Abbett Distributor, thus reducing from 0.75% to 0.65%
after the first year. Lord, Abbett & Co. uses 0.10% for expenses primarily
intended to result in the sale of such series' shares. CDSC revenues
collected may be used to fund commission payments when there is no initial
sales charge.
Financial Information 27
<PAGE>
For more Information
More information on these funds is available free upon request, including
the following:
ANNUAL/SEMI-ANNUAL REPORT
Describes the funds, lists portfolio holdings and contains a letter from
the funds' manager discussing recent market conditions and each fund's
investment strategies.
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
Provides more details about the funds and their policies. A current SAI is
on file with the Securities and Exchange Commission ("SEC") and is
incorporated by reference (is legally considered part of this prospectus).
To obtain information:
By telephone. Call the funds at 800-426-1130
By mail. Write to the funds at:
The Lord Abbett Family of Funds
767 Fifth Avenue
New York, NY 10153-0203
Via the Internet. Text only versions of fund documents can be viewed online or
downloaded from:
Lord, Abbett & Co.
http://www.lordabbett.com
SEC
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 800-SEC-0330) or by sending your request and a duplicating
fee to the SEC's Public Reference Section, Washington, DC 20549-6009.
Limited Duration Fund
U.S. Government Fund
High Yield Fund
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
---------------------------
SEC file number: 811-7988
================================================================================
-----------------
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 2405
NEW YORK, N.Y.
-----------------
<PAGE>
Prospectus April 1, 1999
Lord Abbett
Class Y Shares
Core Fund
Strategic Core Fund
[LOGO](R) LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
As with all mutual funds, the Securities and Exchange Commission
does not guarantee that the information in this Prospectus is
accurate or complete, and it has not judged these funds for
investment merit. It is a criminal offense to state otherwise.
Only class Y shares of certain funds are offered to the general
public and available in all states. Please call 800-821-5129 for
further information.
<PAGE>
Table of Contents
Page
The Funds
Information about the Core Fund 3
goal/approach, main risks, past Strategic Core Fund 4
performance, fees and expenses
Your Investment
Information for managing Purchases 13
your fund account Opening Your Account 15
Redemptions 16
Distributions and Taxes 16
Services For Fund Investors 17
Sales Charges and Service Fees 19
Management 19
For More Information
How to learn more Other Investment Techniques 20
about the funds Glossary of Shaded Terms 22
Financial Information
Financial highlights of each Core Fund 24
fund, and broker compensation Strategic Core Fund 26
Recent Performance 26
How to learn more about the Back Cover
funds and other Lord Abbett funds
<PAGE>
---------------------
Core Fund Symbol: Class Y -
Strategic Core Fund
The Funds
GOAL / APPROACH
Each fund seeks income and capital appreciation to produce a high total
return. In doing this, each fund will attempt to keep its exposure to
interest rate changes generally in line with that of the bond market
generally. It will do that by managing its duration. Duration is a
statistical concept that measures a portfolio's exposure to interest rate
changes. The higher a fund's duration, the more sensitive it is to
interest rate risk.
Both funds attempt to manage, but not eliminate, interest rate risk by
maintaining the average duration of the securities they hold within two
years of the duration of the Lehman Brothers Aggregate Bond Index
(currently __ years). Thus, each fund expects to have exposure to interest
rate risk (or volatility) approximating an average duration falling within
a range of ___ and ___ years. Using the average duration of the Lehman
Brothers Aggregate Bond Index (currently __ years) as the center, the
funds will establish their average duration range periodically by
extending two years above and below the center.
The Core Fund will invest in three sectors of the fixed-income securities
markets: U.S. government securities, mortgage-backed securities, and
investment grade debt securities. Lord Abbett will allocate the fund's
assets among these three sectors seeking incremental yield advantages.
There are no limits on allocations among these sectors.
The Strategic Core Fund will invest in five sectors of the fixed-income
securities markets: U.S. government securities, mortgage-backed
securities, investment grade debt securities, high yield debt securities,
and foreign debt securities. Lord Abbett will allocate the fund's assets
among these five sectors seeking incremental yield advantages. The fund
will not invest more than 20% of its net assets in high yield debt
securities. Also, it will not invest more than 20% of its assets in
foreign debt securities.
Each fund may engage in active and frequent trading of its portfolio
securities to achieve its principal investment strategies and can be
expected to have portfolio turnover rates substantially in excess of 100%.
The funds do not expect these strategies to have significant transaction
costs or adverse tax consequences.
MAIN RISKS
Both funds face interest rate risk, credit risk, and prepayment risk. In
addition, the Strategic Core Fund faces currency risk.
o Interest Rate Risk - Generally, the prices of fixed-income
securities rise when interest rates fall and fall when interest
rates rise. Longer-term bonds are usually more sensitive to interest
rate changes. Put another way, the longer the maturity of a bond or
other debt security, the greater the effect a change in interest
rates is likely to have on the instrument's price. Both funds expect
to have exposures to interest rate changes approximating that of the
overall bond market.
o Credit Risk - The lower-rated bonds, including high yield and
foreign debt securities, in which the Strategic Core Fund invests
involve risks that the interest and principal payments may not be
made. Some issuers may default as to principal and/or interest
payments after the fund purchases their securities.
o Prepayment Risk - If interest rate movements cause either fund's
mortgage-backed securities and callable securities to be paid off
substantially earlier than expected, the fund's share price or yield
could be hurt.
We or the fund refers to Lord Abbett Core Fund ("Core Fund") or Lord Abbett
Strategic Core Fund ("Strategic Core Fund"), each a portfolio of Lord Abbett
Investment Trust (the "company"). The funds operate under the supervision of the
company's Board, with the advice of Lord, Abbett & Co. ("Lord Abbett"), their
investment manager.
About each fund. Each fund is a professionally managed portfolio primarily
holding municipal bonds purchased with the pooled money of investors. They
strive to reach their stated goals, although as with all funds, they cannot
guarantee results.
An investment in each fund is not a bank deposit. It is not FDIC-insured or
government-endorsed. It is not a complete investment program. You could lose
money in each fund, but you also have the potential to make money.
U.S. government securities are obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Mortgage-backed securities directly or indirectly represent a participation in,
or are secured by and payable from, mortgage loans secured by real property. The
price of a mortgage-backed security may be significantly affected by changes in
interest rates. Some mortgage-backed securities have structures that make their
reaction to interest rates and other factors difficult to predict, making their
prices very volatile.
Foreign debt securities include obligations of foreign governments, their
agencies and instrumentalities, and fixed-income securities of other issuers
denominated in foreign-currency. Foreign securities are not subject to the same
degree of regulation and may be more volatile and
The Funds 2
<PAGE>
o Currency Risk - Because it invests in foreign securities, the
Strategic Core Fund faces the risk that unfavorable changes in
currency exchange rates could reduce the fund's share price.
less liquid than securities traded in major U.S. markets. This affects block
trading. Foreign securities may trade on days when a fund does not value them so
that fund share prices could be affected on days an investor cannot purchase or
sell shares. Other risks include less information on public companies, banks and
governments; political and social instability; expropriations; higher
transaction costs; currency fluctuations; nondeductable withholding taxes,
credit risk and different accounting and settlement practices.
Investment grade debt securities are, at the time of purchase, rated in one of
the four highest grades determined either by Moody's Investors Service, Inc. or
Standard & Poor's Ratings Services, or determined by Lord Abbett to be
equivalent in quality.
High yield debt securities or "junk bonds" are rated BB/Ba or lower or unrated
and typically pay a higher yield than investment grade debt securities. These
bonds have a higher risk of default than investment grade bonds and their prices
can be much more volatile.
You should read this entire prosepctus, including "Other Investment Techniques,"
which concisely describes the other investment strategies used by the funds and
their risks.
3 The Funds
<PAGE>
Core Fund
PAST PERFORMANCE
The information below provides some indication of the risks of investing
in the fund, showing changes in the fund's performance from calendar year
to calendar year and by showing how the fund's average annual returns
compare with those of a broad measure of market performance.
================================================================================
The table below shows a comparison of the fund's class Y average annual
total return to that of the Lehman Brothers Aggregate Bond Index. Fund
returns assume reinvestment of dividends and distributions and payment of
the maximum applicable front-end or deferred sales charge. All periods end
on December 31, 1998.
Class 1 Year Inception(i)
Y 0.00.% 0.00.%
- --------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index(ii) 0.00.% 0.00.%
- --------------------------------------------------------------------------------
Past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
(i) The dates of inception of class Y is 12/10/97.
(ii) Performance for the unmanaged Lehman Brothers Aggregate Bond Index does
not reflect transaction costs or management fees.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy
shares of the fund.
================================================================================
Fee table
================================================================================
Class Y
Shareholder Fees (Fees paid directly from your investment)
- --------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
- --------------------------------------------------------------------------------
(as a % of offering price) none
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases") none
- --------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from fund assets)
(as a % of average net assets)(1)
- --------------------------------------------------------------------------------
Management Fees (See "Management") 0.50%
- --------------------------------------------------------------------------------
Other Expenses (See "Management") 0.30%
- --------------------------------------------------------------------------------
Total Operating Expenses 0.80%
- --------------------------------------------------------------------------------
================================================================================
Expense example
================================================================================
This example, like that in other funds' prospectuses, assumes a $10,000 initial
investment, 5% total return each year and no changes in expenses. You pay the
following expenses over the course of each period shown if you sell your shares
at the end of the period, although your actual cost may be higher or lower.
Share class 1 Year 3 Years
Class Y shares $80 $0
- --------------------------------------------------------------------------------
You would pay the following expenses on the same investment, assuming you kept
your shares.
Class Y shares $80 $0
- --------------------------------------------------------------------------------
This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present.
Management fees are payable to Lord Abbett for the fund's investment management.
Other expenses include fees paid for miscellaneous items such as transfer
agency, legal and share registration fees.
- --------------------------------------------------------------------------------
(1) Other expenses are based on estimated amounts for the current fiscal year.
The Funds 4
<PAGE>
-----------------------
Strategic Core Fund Symbols: Class Y -
PAST PERFORMANCE
As a new fund, past performance, financial highlights and performance of
the fund are not available as of the date of this prospectus.
Past performance is not a prediction of future results.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy
shares of the fund.
================================================================================
Fee table
================================================================================
Class Y
Shareholder Fees (Fees paid directly from your investment)
- --------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
- --------------------------------------------------------------------------------
(as a % of offering price) none
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases") none
- --------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from fund assets)
- --------------------------------------------------------------------------------
(as a % of average net assets)(1)
- --------------------------------------------------------------------------------
Management Fees (See "Management") 0.50%
- --------------------------------------------------------------------------------
Other Expenses (See "Management") 0.26%
- --------------------------------------------------------------------------------
Total Operating Expenses 0.76%
- --------------------------------------------------------------------------------
================================================================================
Expense example
================================================================================
This example, like that in other funds' prospectuses, assumes a $10,000 initial
investment, 5% total return each year and no changes in expenses. You pay the
following expenses over the course of each period shown if you sell your shares
at the end of the period, although your actual cost may be higher or lower.
Share class 1 Year
Class Y shares $76
- --------------------------------------------------------------------------------
You would pay the following expenses on the same investment, assuming you kept
your shares.
Class Y shares $76
- --------------------------------------------------------------------------------
This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present. You pay the following expenses over
the course of each period shown if you sell your shares at the end of the
period, although your actual cost may be higher or lower.
Management fees are payable to Lord Abbett for the fund's investment management.
Other expenses include fees paid for miscellaneous items such as transfer
agency, legal and share registration fees.
- --------------------------------------------------------------------------------
(1) Other expenses are based on estimated amounts for the current fiscal year.
5 The Funds
<PAGE>
Your Investment
PURCHASES
Class Y shares. Class Y shares are purchased at net asset value with no
sales charge of any kind. The net asset value of our shares is calculated
every business day as of the close of the New York Stock Exchange. Our
shares are continuously offered. The offering price is based on Net Asset
Value ("NAV") per share next determined after we accept your order
submitted in proper form. 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 or change minimum investement
requirements. All purchase orders are subject to our acceptance and are
not binding until confirmed or accepted in writing.
Who May Invest? Eligible purchasers of Class Y shares include: (i) 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 Y shares in
particular investment products made available for a fee to clients of such
brokers, dealers, registered investment advisers or other financial
institutions ("mutual fund wrap-fee programs"), (ii) the trustee or
custodian under any deferred compensation or pension or profit-sharing
plan or payroll deduction IRA established for the benefit of the employees
of any company with an account(s) in excess of $10 million managed by Lord
Abbett or its sub-advisors on a private-advisory-account basis, and (iii)
institutional investors, including retirement plans, companies,
foundations, trusts, endowments and other entities where the total amount
of potential investable assets exceeds $20 million that were not
introduced to Lord Abbett by persons associated with a broker or dealer
primarily involved in the retail security business. Additional payments
may be made by Lord Abbett out of its own resources with respect to
certain of these sales.
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 the funds to the fund you selected (P.O. Box 419100, Kansas City,
Missouri 64141). The minimum initial investment is $1 million except for
mutual fund wrap-fee programs which have no minimum. This offering may be
suspended, changed or withdrawn by Lord Abbett Distributor which reserves
the right to reject any order.
Buying Shares Through Your Dealer. Orders for shares received by a fund
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 net asset value 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 net asset value 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.
Buying Shares By Wire. To open an account, call 800-821-5129 Ext. 34028,
Institutional Trade Dept., to set up your account and to arrange a wire
transaction. Wire to: United Missouri Bank of Kansas City, N.A., Routing
number - 101000695, bank account number: 9878002611, FBO: (account name)
and (your Lord Abbett account number). Specify the complete name of the
fund of your choice, note Class Y shares and include your new account
number and your name. To add to an existing account, wire to: United
Missouri
NAV per share for fund shares is calculated each business day at the close of
regular trading on the New York Stock Exchange ("NYSE"). Each fund is open on
those business days when the NYSE is open. Purchases and sales of fund shares
are executed at the NAV next determined after the fund receives your order. In
calculating NAV, securities for which market quotations are available are valued
at those quotations. Securities for with such quotations are not available are
valued at fair value under procedures approved by the Board.
Lord Abbett Distributor LLC ("Lord Abbett Distributor") acts as agent for the
funds to work with investment professionals that buy and/or sell shares of the
funds on behalf of their clients. Generally, Lord Abbett Distributor does not
sell fund shares directly to investors.
Your Investment 6
<PAGE>
Bank of Kansas City, N.A., routing number - 101000695, bank account
number: 9878002611, FBO: (account name) and (your Lord Abbett account
number). Specify the complete name of the fund of your choice, note Class
Y shares and include your account number and your name.
REDEMPTIONS
By Broker. Call your investment professional for directions on how to
redeem your shares.
By Telephone. To obtain the proceeds of a redemption of $50,000 or less
from your account, you or your representative can call the fund at
800-821-5129.
By Mail. Submit a written redemption request indicating, the name(s) in
which the account is registered, the fund's name, your account number, 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 800-821-5129.
We will verify that the shares being redeemed (if purchased by check) 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.
Normally a check will be mailed to the name and address in which the
account is registered (or otherwise according to your instruction) within
three business days after receipt of your redemption request.
DISTRIBUTIONS AND TAXES
Each fund pays its shareholders dividends from its net investment income,
and distributes any net capital gains that it has realized. Each fund
expects to pay income dividends and capital gain distributions once a
year, usually in December. Your distributions will be reinvested in your
fund unless you instruct the fund to pay them to you in cash.
The tax status of distributions is the same regardless of how long they
have been in the fund or whether distributors are reinvested or paid in
cash. In general, distributions are taxable as follows:
================================================================================
U.S. federal income tax on distributions
Type of Tax rate for taxpayer Tax rate for taxpayer subject
distribution subject to 15% bracket to 28% bracket and above
================================================================================
Income Ordinary
dividends 15% income rate
- --------------------------------------------------------------------------------
Short-term Ordinary
capital gains 15% income rate
- --------------------------------------------------------------------------------
Long-term
capital gains 10% 20%
- --------------------------------------------------------------------------------
Small Accounts. Our Board may authorize closing any account in which there are
fewer than 25 shares if it is in a fund's best interest to do so.
Important Information. You may be subject to a $50 penalty under the Internal
Revenue Code if you do not provide a correct taxpayer identification number
(Social Security Number for individuals) or make certain required
certifications. In addition, we may be required to withhold from your account
and pay to the U.S. Treasury 31% of any redemption proceeds and any dividend or
distribution from your account.
Eligible Guarantor is 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.
Taxes on Transactions. The chart at left also can provide a "rule of thumb"
guide for your potential U.S. federal tax liability when selling or exchanging
fund shares. The second row, "Short-term capital gains," applies to fund shares
sold within 12 months of purchase. The third row, "Long-term capital gains,"
applies to shares held for more than 12 months.
Starting January 1, 2001, sales of securities held for more than five years will
be taxed at special lower rates.
Any gains realized on a fund's transactions in options and financial futures
will be treated as taxable long- or short-term capital gains.
Your Inestment 7
<PAGE>
SERVICES FOR FUND INVESTORS
AUTOMATIC SERVICES
We offer the following shareholder services:
Telephone Exchange Privilege: Class Y shares may be exchanged without a
service charge for Class Y shares of any eligible Lord Abbett-sponsored
fund.
Account Statements. Generally, shareholders with the same last name and
address will receive quarterly account statements.
Householding. Generally, shareholders with the same last name and address
will receive a single copy of a prospectus and an annual or semi-annual
report, unless additional reports are specifically requested in writing to
the funds.
Account Changes. For any changes you need to make to your account, consult
your investment professional or call the fund at 800-821-5129.
Account Changes. For any changes you need to make to your account,
consult your investment professional or call the fund at 800-821-5129.
Systematic Exchange. You or your investment professional can establish a
schedule of exchanges between the same classes of any Eligible Fund.
MANAGEMENT
The funds' investment adviser is Lord, Abbett & Co., 767 Fifth Avenue, New
York, NY 10153-0203. Founded in 1929, Lord Abbett manages one of the
nation's oldest mutual fund complexes, with approximately $28 billion in
more than 35 mutual fund portfolios and other advisory accounts. For more
information about the services Lord Abbett provides to the funds, see the
Statement of Additional Information.
The fund pays Lord Abbett a monthly fee based on average daily net assets
for each month. For the fiscal year ended September 30, 1998, the fee paid
to Lord Abbett was at an annual rate of .50 of 1% for both the Core Fund
and the Strategic Core Fund. The fee payable to Lord Abbett by each fund
will being the year subsequent to commencement of operations.
Robert Gerber, Partner of Lord Abbett, Executive Vice President of the
company and Portfolio Manager of each fund, is primarily responsible for
their day-to-day management. Mr. Gerber joined Lord Abbett in 1997 as
Director of High Grade Fixed Income. Before joining Lord Abbett, Mr.
Gerber was a Senior Portfolio Manager of Sanford C. Bernstein & Co. for
five years.
Lord Abbett offers a variety of Retirement Plans.
Call 800-253-7299 for information about:
o Traditional, Rollover, Roth and Education IRAs
o Simple IRAs, SEP-IRAs, 401(k) and 403(b) accounts
o Defined Contribution Plans
Telephone Transactions. You have this privilege unless you refuse it in writing.
For your security, telephone transaction requests 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.
Transactions by telephone may be difficult to implement in times of drastic
economic or market change.
Exchanges by telephone 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 or abusing the privilege and may
revoke the privilege for all shareholders upon 60 days' written notice.
The Funds 8
<PAGE>
===============================================================
Lord Abbett Affiliated Fund, Inc. Symbols: Class A - LAFFX
Class B - LAFBX
Class C - LAFCX
Class P -
OTHER INVESTMENT TECHNIQUES
GLOSSARY OF SHADED TERMS
Changing Investment Exposure. Each fund may, but is not required to, use
various strategies to change its investment exposure to adjust to changing
security prices, interest rates, currency exchange rates, commodity prices
and other factors. These strategies may involve buying or selling
derivative instruments, such as options and futures contracts, stripped
securities, currency exchange contracts, swap agreements, short sales of
securities, indexed securities and rights and warrants. The fund may use
these transactions to change the risk and return characteristics of each
fund's portfolio. If we judge market conditions incorrectly or use a
strategy that does not correlate well with the fund's investments, it
could result in a loss, even if we intended to lessen risk or enhance
returns. These transactions may involve a small investment of cash
compared to the magnitude of the risk assumed and could produce
disproportionate gains or losses. Also, these strategies could result in
losses if the counterparty to a transaction does not perform as promised.
Depository Receipts. The Strategic Core Fund may invest in Depository
Receipts, which are securities, typically issued by a financial
institution (a "depository"), that evidence ownership interests in a
security or a pool of securities issued by a foreign issuer (the
"underlying issuer") and deposited with the depository. Generally,
Depository Receipts in registered form are designed for use in the U.S.
securities market and Depository Receipts in bearer form are designed for
use in securities markets outside the United States. The fund may invest
in sponsored and unsponsored Depository Receipts. For purposes of the
fund's investment policies, investments in Depository Receipts will be
deemed to be investments in the underlying securities.
Diversification. Each fund is a diversified fund, which means that with
respect to 3/4 of its total assets, it will not purchase a security if, as
a result, more than 5% of the fund's total assets would be invested in
securities of a single issuer or the fund would hold more than 10% of the
outstanding voting securities of the issuer.
Eligible Fund. An Eligible Fund is any Lord Abbett-sponsored fund except
for (1) certain tax-free, single-state funds where the exchanging
shareholder is a resident of a state in which such series is not offered
for sale; (2) Lord Abbett Equity Fund; (3) Lord Abbett Series Fund; and
(4) 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). An Eligible Fund also is
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.
Illiquid Securities. These securities include those that are not traded on
the open market or that are traded irregularly or in very low volume. They
may be difficult or impossible to sell at the time and price the fund
would like. Each fund may invest up to 15% of its assets in illiquid
securities.
Legal Capacity. This term refers to the authority of an individual to act
on behalf of an entity or other person(s). For example, if a redemption
request were to be made 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
NAV per share for each class of fund shares is calculated each business day at
the close of regular trading on the New York Stock Exchange ("NYSE"). The fund
is open on those business days when the NYSE is open. Purchases and sales of
fund shares are executed at the NAV next determined after the fund receives your
order. In calculating NAV, securities for which market quotations are available
are valued at those quotations. Securities for which such quotations are not
available are valued at fair value under procedures approved by the Board.
Your Investment 9
<PAGE>
===============================================================
Lord Abbett Affiliated Fund, Inc. Symbols: Class A - LAFFX
Class B - LAFBX
Class C - LAFCX
Class P -
the executor of the estate, then the request must be executed as follows:
Robert A. Doe, Executor of the Estate of John W. Doe. That signature using
that capacity must be guaranteed by an Eligible Guarantor.
To give another example, if a redemption request were to be made on behalf
of the ABC Corporation by a person (Mary B. Doe) the has the legal
capacity to act on the half of the Corporation, because she is the
president of the corporation, the request must be executed as follows: ABC
Corporation by Mary B. Doe, President. That signature using that capacity
must be guaranteed by an Eligible Guarantor.
Mutual Fund Advisory 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 fund shares (and sometimes providing
for acceptance of orders for such shares on Lord Abbett Distributor's
behalf) in particular investment products made available for a fee to
clients of such brokers, dealers, registered investment advisers and other
financial institutions.
Portfolio Securities Lending. Each fund may lend securities to
broker-dealers and financial institutions, as a means of earning income.
This practice could result in a loss or delay in recovering a fund's
securities, if the borrower defaults. Each fund will limit its securities
loans to 331/3% of its total assets.
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.
Repurchase Agreements. In a repurchase agreement, a fund buys a security
at one price from a broker-dealer or financial institution and
simultaneously agrees to sell the same security back to the same party at
a higher price in the future. If the other party to the agreement defaults
or becomes insolvent, the fund could lose money.
Reverse Repurchase Agreements. In a reverse repurchase agreement, a fund
sells a U.S. government security to a securities dealer or bank for cash
and also agrees to repurchase the same security at a set price later.
Reverse repurchase agreements expose a fund to credit risk (that is, the
risk that the counterparty will fail to resell the security to the fund),
but this risk is greatly reduced because the fund receives cash equal to
100% of the price of the security sold. Engaging in reverse repurchase
agreements also involves the use of leverage, in that the fund may
reinvest the cash it receives in additional securities. Each fund will
attempt to minimize this risk by managing its duration. A fund's reverse
repurchase agreements will not exceed 5% of the fund's net assets.
When-Issued or Delayed Delivery Transactions: Each fund may purchase or
sell securities with payment and delivery taking place as much as a month
or more later. A fund would do this in effort to buy or sell the
securities at an advantageous price and yield. The securities involved are
subject to market fluctuation and no interest accrues to the purchaser
during the period between purchase and settlement. At the time of delivery
of the securities, their market value may be less than the purchase price.
Also, if a fund commits a significant amount of assets to when-issued or
delayed delivery transactions, it may increase the volatility of the
fund's net asset value.
The Funds 10
<PAGE>
For More Information
OTHER INVESTMENT TECHNIQUES
Adjusting Investment Exposure. Each fund may, but is not required to, use
various strategies to change its investment exposure to adjust to changing
security prices, interest rates, currency exchange rates, commodity prices
and other factors. These strategies may involve buying or selling
derivative instruments, such as options and futures contracts, stripped
securities, currency exchange contracts, swap agreements, short sales of
securities, indexed securities and rights and warrants. The fund may use
these transactions to change the risk and return characteristics of each
fund's portfolio. If we judge market conditions incorrectly or use a
strategy that does not correlate well with the fund's investments, it
could result in a loss, even if we intended to lessen risk or enhance
returns. These transactions may involve a small investment of cash
compared to the magnitude of the risk assumed and could produce
disproportionate gains or losses. Also, these strategies could result in
losses if the counterparty to a transaction does not perform as promised.
Diversification. Each fund is a diversified fund, which means that with
respect to 3/4 of its total assets, it will not purchase a security if, as
a result, more than 5% of the fund's total assets would be invested in
securities of a single issuer or the fund would hold more than 10% of the
outstanding voting securities of the issuer.
Foreign Securities. These securities are not subject to the same degree of
regulation and may be more volatile and less liquid than securities traded
in major U.S. markets. This affects block trading. Foreign portfolio
securities may trade on days when a fund does not value them. Fund share
prices could be affected on days an investor cannot purchase or sell
shares. Other risks include less information on public companies, banks
and governments; political and social instability; expropriations; higher
transaction costs; currency fluctuations; nondeductable withholding taxes
and different accounting and settlement practices.
Illiquid Securities. These securities include those that are not traded on
the open market or that trade irregularly or in very low volume. They may
be difficult or impossible to sell at the time and price the fund would
like. Each underlying fund may invest up to 15% of its assets in illiquid
securities.
In addition the use of options and financial futures transactions to
achieve a funds' investment objective could result in a loss due to
unanticipated market conditions and could increase the volatility of the
fund. These transactions may involve a small investment of cash relative
to the risks assumed.
Portfolio Securities Lending. Each fund may lend securities to
broker-dealers and financial institutions, as a means of earning income.
This practice could result in a loss or delay in recovering a fund's
securities, if the borrower defaults. Each fund will limit its securities
loans to 33 1/3% of its total assets.
Repurchase Agreements. In a Repurchase Agreement, a fund buys a security
at one price from a broker-dealer or financial institution and
simultaneously agrees to sell the same security back to the same party at
a higher price in the future. If the other party to the agreement defaults
or becomes insolvent, a fund could lose money.
When-Issued or Delayed Delivery Securities. Each fund may purchase or sell
securities with payment and delivery taking place as much as a month or
more later. A fund
For More Information 11
<PAGE>
would do this in an effort to buy or sell the securities at an
advantageous price and Yield. The securities involved are subject to
market fluctuation and no interest accrues to the purchaser during the
period between purchase and settlement. At the time of delivery of the
securities, their market value may be less than the purchase price. Also,
if a fund commits a significant amount of assets to when-issued or delayed
delivery transactions, it may increase the volatility of the fund's net
asset value.
GLOSSARY OF SHADED TERMS
Additional Concessions. 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. Additional
pay-ments may be paid from Lord Abbett Distributor's own resources or from
distribution fees received from a fund 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.
In selecting dealers to execute portfolio transactions for a 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." Lord Abbett Distributor is an Authorized
Institution. Eligible Fund. An Eligible Fund is any Lord Abbett-sponsored
fund except for: (1) certain tax-free, single-state funds where the
exchanging shareholder is a resident of a state in which such fund is not
offered for sale; (2) Lord Abbett Equity Fund; (3) Lord Abbett Series
Fund; and (4) 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). An Eligible Fund
also is any Authorized Institution's affiliated money market fund
satisfying Lord Abbett Distributor as to certain omnibus account and other
criteria.
Legal Capacity. This term refers to the authority of an individual to act
on behalf of an entity or other person(s). For example, if a redemption
request were to be made 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. That signature using that capacity
must be guaranteed by an Eligible Guarantor.
To give another example, if a redemption request were to be made on behalf
of the ABC Corporation by a person (Mary B. Doe) who has the legal
capacity to act on the behalf of the Corporation, because she is the
president of the Corporation, the request must be executed as follows: ABC
Corporation by Mary B. Doe, President. That signature using that capacity
must be guaranteed by an Eligible Guarantor.
Mutual Fund Advisory Program. This includes certain unaffiliated
authorized brokers, dealers, registered investment advisers or other
financial institutions who either (a) have an arrangement with Lord Abbett
Distributor in accordance with certain standards
Guaranteed signature. An acceptable form of guarantee would be as follows:
o In the case of the estate -
Robert A. Doe
Executor of the Estate of
John W. Doe
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
/s/ [ILLEGIBLE]
------------------------------------------------
AUTHORIZED SIGNATURE
( 960 ) X 9 8 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM(TM)
SR
o In the case of the corporation - ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
/s/ [ILLEGIBLE]
------------------------------------------------
AUTHORIZED SIGNATURE
( 960 ) X 9 8 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM(TM)
SR
The Funds 12
<PAGE>
approved by Lord Abbett Distributor, providing specifically for the use of
fund shares (and sometimes providing for acceptance of orders for such
shares on Lord Abbett Distributor's behalf) in particular investment
products made available for a fee to clients of such brokers, dealers,
registered investment advisers and other financial institutions or (b) who
charge an advisory, consulting or other fee for their services and buy
shares for their own accounts or the accounts of their clients.
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.
RECENT PERFORMANCE
Guaranteed signature. An acceptable form of guarantee would be as follows:
o In the case of the estate -
Robert A. Doe
Executor of the Estate of
John W. Doe
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
/s/ [ILLEGIBLE]
------------------------------------------------
AUTHORIZED SIGNATURE
( 960 ) X 9 8 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM(TM)
SR
o In the case of the corporation - ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
/s/ [ILLEGIBLE]
------------------------------------------------
AUTHORIZED SIGNATURE
( 960 ) X 9 8 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM(TM)
SR
For More Information 13
<PAGE>
Year 2000 Issues. Each fund could be adversely affected if the computers used by
each fund and their service providers do not properly process and calculate
date-related information from and after January 1, 2000.
While year 2000-related computer problems could have a negative effect on each
fund, Lord Abbett is working to avoid such problems and has assurances from each
fund's service providers that they are taking similar steps. However, because
the problem is unprecedented and efforts to identify and fix it are on-going, we
don't know whether these efforts will be successful. Accordingly, each fund may
be adversely affected.
Euro. On January 1, 1999, the eleven member states of the European Union
converted to a common currency, know as the "Euro." Each fund could be adversely
affected if the computers used by it and its service providers do not properly
process and calculate Euro-related information from and after January 1, 1999.
While Euro-related computer problems could have a negative effect on each fund,
Lord Abbett is working to avoid such problems and has assurances from each
fund's service providers that they are taking similar steps. However, because
the problem is unprecedented, we don't know whether these efforts will be
successful and, accordingly, each fund may be adversely affected.
The Funds 14
<PAGE>
Core Fund
Financial Information
FINANCIAL HIGHLIGHTS
This table describes the fund's performance for the fiscal periods
indicated. "Total return" shows how much your investment in the fund would
have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These Financial Highlights
have been audited by Deloitte & Touche LLP, the fund's independent
auditors, in conjunction with their annual audit of the fund's financial
statements. Financial statements for the fiscal year ended November 30,
1998 and the Independent Auditors' Report thereon appear in the Annual
Report to Shareholders for the fiscal year ended November 30, 1998 and are
incorporated by reference into the Statement of Additional Information,
which is available upon request.
================================================================================
Class Y Shares
------------------------------------------
Year Ended November 30,
Per Share Operating Performance: 1998 1997(a)
Net asset value, beginning of year $0.00 $0.0
- --------------------------------------------------------------------------------
Income from investment operations
- --------------------------------------------------------------------------------
Net investment income 0.00 0.00
- --------------------------------------------------------------------------------
Net realized and unrealized
- --------------------------------------------------------------------------------
gain (loss) on investments 0.00 0.00
- --------------------------------------------------------------------------------
Total from investment operations 0.00 0.00
- --------------------------------------------------------------------------------
Distributions
- --------------------------------------------------------------------------------
Dividends from net investment income (0.00) (0.00)
- --------------------------------------------------------------------------------
Distributions from net realized gain -- --
- --------------------------------------------------------------------------------
Net asset value, end of year $0.00 $0.00
- --------------------------------------------------------------------------------
Total Return(b) 0.00% 0.00%
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
- --------------------------------------------------------------------------------
Expenses excluding waiver 0.00% 0.00%
- --------------------------------------------------------------------------------
Net investment income 0.00% 0.00%
- --------------------------------------------------------------------------------
================================================================================
Year Ended November 30,
------------------------------------------
Supplemental Data For All Classes: 1998 1997
- --------------------------------------------------------------------------------
Net Assets, end of year (000) $0,000 $0,000
- --------------------------------------------------------------------------------
Portfolio turnover rate 0.00% 0.00%
- --------------------------------------------------------------------------------
(a) From December 10, 1997 commencement of operations.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Amount less than 0.01%.
(d) Not annualized.
See Notes to Financial Statements.
15 Financial Information
<PAGE>
Core Fund
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in class Y
shares to the same investment in the Lehman Brothers Aggregate Bond Index,
assuming reinvestment of all dividends and distributions.
================================================================================
[LINE GRAPH OMITTED]
================================================================================
Average Annual Total Return At Maximum Applicable
Sales Charge For The Periods Ending November 30, 1998
1 Year 5 Years 10 Years (or Life)
================================================================================
Class A(4) 4.40% 4.66% 7.65%
- --------------------------------------------------------------------------------
Class B(5) 4.49% - 7.25%
- --------------------------------------------------------------------------------
Class C(6) 8.80% - 9.15%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Reflects the deduction of the maximum initial sales charge of 4.75%
(2) Performance for the unmanaged Lehman Municipal Bond Index does not reflect
transaction costs, management fees or sales charges.
(3) Source: Lipper Analytical Services.
(4) This shows total return which is the percent change in value, after
deduction of the maximum initial sales charge of 4.75% applicable to class
A shares, with all dividends and distributions reinvested for the periods
shown ending September 30, 1998 using the SEC-required uniform method to
compute total return. The class Y share inception date is 12/10/97.
Financial Information 16
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
17 The Funds
<PAGE>
For More Information
More information on these funds is available free upon request, including
the following:
ANNUAL/SEMI-ANNUAL REPORT
Describes the funds, lists portfolio holdings and contains a letter from
the funds' manager discussing recent market conditions and each fund's
investment strategies.
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
Provides more details about the funds and their policies. A current SAI is
on file with the Securities and Exchange Commission ("SEC") and is
incorporated by reference (is legally considered part of this prospectus).
To obtain information:
By telephone. Call the funds at: 800-426-1130
By mail. Write to the funds at:
The Lord Abbett Family of Funds
767 Fifth Avenue
New York, NY 10153-0203
Via the Internet. Text only versions of fund documents can be viewed online or
downloaded from:
Lord, Abbett & Co.
http://www.lordabbett.com
SEC
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 800-SEC-0330) or by sending your request and a duplicating
fee to the SEC's Public Reference Section, Washington, DC 20549-6009.
Core Fund
Strategic Core Fund
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
---------------------------
SEC file number: 811-?
================================================================================
-----------------
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 2405
NEW YORK, N.Y.
-----------------
<PAGE>
- --------------------------------------------------------------------------------
LORD ABBETT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Additional Information April 1, 1999
- --------------------------------------------------------------------------------
Lord Abbett Investment Trust
U.S. Government Securities Fund
Limited Duration U.S. Government Securities Fund
Balanced Fund
High Yield Fund
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, 1999.
Lord Abbett Investment Trust (referred to as the "Company") was organized as a
Delaware business trust on August 16, 1993. The Company's trustees have
authority to create separate classes and series of shares of beneficial
interest, without further action by shareholders. The Company has fivesix
series, four of which are discussed here -U.S. Government Securities Fund,
Limited Duration U.S. Government Securities Fund, Balanced Fund and High Yield
Fund. The U.S. Government Securities Fund offers four classes of shares: Class
A, Class B, Class C and Class P. The Limited Duration U.S.Government Fund offers
three classes of shares: Class A, Class C and Class P. The Balanced Fund offers
four classes of shares: Class A, Class B , Class C, and Class P. The High Yield
Fund offers four classes of shares, Class A, Class B, Class C and Class P. 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
Company 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 Company or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
TABLE OF CONTENTS Page
1. Investment Policies.................................2
2. Board Members and Officers..........................5
3. Investment Advisory and Other Services..............8
4. Portfolio Transactions..............................9
5. Purchases, Redemptions and Shareholder Services....10
6. Performance........................................18
7. Taxes..............................................19
8. Information About the Funds........................20
9. Financial Statements...............................21
10. Appendix...........................................21
<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 Seriesfund may
not: (1) borrow money, except that (i) each fund 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 fund may borrow up to an additional 5% of its total
assets for temporary purposes, (iii) each fund may obtain such short-term credit
as may be necessary for the clearance of purchases and sales of portfolio
securities and (iv) each Seriesfund 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 fund's 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 fund 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 fund 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 fund may do so
in accordance with applicable law and without registering as a commodity pool
operator under the Commodity Exchange Act as, for example, with futures
contracts)); (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 Fund, 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 Fund only) invest in securities other than U.S. government
securities, as described in the Prospectus.
Compliance with these restrictions will be determined at the time of purchase or
sale of such securities and will not be affected by changes in the market value
of portfolio securities
Non-Fundamental Investment Restrictions
Each fund also is 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 fund 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 fund's' total assets would be
invested in such securities (this restriction shall not apply to mortgage-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 fund or by one or more
partners or members of the Company'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 fund's total assets (included within such limitation, but not to exceed
2% of the funds' 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 each 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 any of its
officers,
2
<PAGE>
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 fund.
Although there is no current intention to do so, each fund may invest in
financial futures and options on financial futures.
Lending Portfolio Securities(applicable to High Yield?)
Each fund may lend portfolio securities to registered brokers-dealers. These
loans, if and when made, may not exceed 30% of the fund's total assets. The
fund's 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, each fund 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
Company.
By lending portfolio securities, each fund 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. gGovernment 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 fund will comply with the following conditions whenever it loans
securities: (i) the fund 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 fund must be able to terminate the loan at any time; (iv) the fund must
receive reasonable compensation with respect to the loan, as well as any
dividends, interest or other distributions on the loaned securities; (v) the
fund 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 und
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(applicable to High Yield?)
Each fund may enter into repurchase agreements with respect to a security. A
repurchase agreement is a transaction by which the fund 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 fund have a total value in excess
of the value of the repurchase agreement.) Each fund 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 fund 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 fund 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 fund 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 management acknowledges these risks, it is
expected that they can be controlled through stringent selection criteria and
careful monitoring procedures. Management intends to limit repurchase agreements
for each fund to transactions with dealers and financial institutions believed
by management to present minimal credit risks. Management will monitor
creditworthiness of the repurchase agreement sellers on an ongoing basis.
Each fund 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 fund otherwise may invest.
3
<PAGE>
When-Issued Transactions (applicable to High Yield?)
As stated in the Prospectus, each fund may purchase portfolio securities on a
when-issued basis. When-issued transactions involve a commitment by the fund 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 fund 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 fund, 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 fund limits its average dollar weighted
portfolio duration to a range of one to four years. However, many of the
securities in which the fund invests will have remaining durations in excess of
four years.
Some of the securities in the Limited Duration Government funds' 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 Fund
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 fund's 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, 1998, the portfolio turnover rate for the
U.S. Government Securities Fund was % as compared to 712.82% for the
previous year; % for the Limited Duration Government Fund compared to
343.53% for the year ended November 30, 1997 % 1996; % for the Balanced
Fund as compared to % for the year ended ended November 30, 1997.
As discussed above, each fund 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 fund's 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.
Board Members and Officers
The following trustee is a partner of Lord, Abbett & Co. ("Lord Abbett"), The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. He has
been associated with Lord Abbett for over five years and is also an officer,
director or trustee of the twelve other Lord Abbett-sponsored funds. He is an
"interested person" 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 53, Chairman and President
The following outside Board members are also directors or trustees of the twelve
other Lord Abbett-sponsored funds referred to above.
E. Thayer Bigelow
Time Warner Inc.
1271 Avenue of the Americas
New York, New York
Senior Adviser, Time Warner Inc. Formerly, Acting Chief Executive Officer of
Courtroom Television Network (1997-1998). Formerly, President and Chief
Executive Officer of Time Warner Cable Programming, Inc. (1991-1997). Prior to
that, President and Chief Operating Officer of Home Box Office, Inc. Age 57.
William H.T. Bush
Bush-O'Donnell & Co., Inc.
101 South Hanley Road, Suite 1025
St. Louis, Missouri
Co-founder and Chairman of the Board of the financial advisory firm of
Bush-O'Donnell & Company. Age 60.
Robert B. Calhoun, Jr.
Monitor Clipper Partners
650 Madision Avenue, 9th Floor
New York, New York
Managing Director of Monitor Clipper Partners and President of the Clipper Group
L.P., both private equity investment funds. 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 68.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 73.
C. Alan MacDonald
Directorship Inc.
5
<PAGE>
8 Sound Shore Drive
Greenwich, 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 (1994-1997). Prior to that,
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 eighteen 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 65.
Hansel B. Millican, Jr.
Rochester Button Company
1328 Broadway (Suite 816)
New York, New York
President and Chief Executive Officer of Rochester Button Company. Age 70.
Thomas J. Neff
Spencer Stuart
277 Park Avenue
New York, New York
Chairman of Spencer Stuart, an executive search consulting firm. Currently
serves as Director of Ace, Ltd. (NYSE). Age 61.
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 equity-based benefits accrued for outside directors/trustees
maintained by the Lord Abbett-sponsored funds. The fourth 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.
<TABLE>
<CAPTION>
For the Fiscal Year Ended November 30, 1998
(1) (2) (3) (4)
Pension or For Year Ended
Retirement Benefits December 31, 1998
Accrued by the Total Compensation
Aggregate Fund and Accrued by the Fund and
Compensation All Other Lord All Other Lord
Accrued by Abbett-sponsored Abbett-sponsored
Name of Board Member the Fund(1) Funds(2) Funds(3)
- -------------------- ------------ ------------------- -----------------------
<S> <C> <C> <C>
E. Thayer Bigelow $ $ $
William H. T. Bush* $ $ $
Robert B. Calhoun, Jr.** $ $ $
Stewart S. Dixon $ $ $
John C. Jansing $ $ $
C. Alan MacDonald $ $ $
Hansel B. Millican, Jr. $ $ $
Thomas J. Neff $ $ $
</TABLE>
* Elected as of August 13, 1998.
** Elected as of June 17, 1998.
1. Outside trustees' 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
6
<PAGE>
directors/trustees is being deferred under a plan that deems the deferred
amounts to be invested in shares of the fund for later distribution to the
directors/trustees.
2. The amounts in Column 3 were accrued by the Lord Abbett-Sponsored funds
for the twelve months ended November 30, 1998 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.
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, 1998 The amounts of the aggregate compensation
payable by the fund as of November 30, 1998 deemed invested in fund
shares, including dividends reinvested and changes in net asset value
applicable to such deemed investments, were: Mr. Bigelow, $ ; Mr. Dixon, $
; Mr. Jansing, $ ; Mr. MacDonald, $ ; Mr. Millican, $ and Mr. Neff, . If
the amounts deemed invested in fund shares were added to each director's
actual holdings of fund shares as of November 30, 1998, each would own,
the following: Mr. Bigelow, shares; Mr. Dixon, shares; Mr. Jansing,
shares; Mr. McDonald, shares; Mr. Millican, shares; and Mr. Neff, 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.
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, Gerber, Hilstad, Hudson and Morris are partners of Lord Abbett;
the others are employees.
Executive Vice Presidents:
Christopher J. Towle, age 41 (with Lord Abbett since 1988 and has over 17 years
of investment experience)
Robert Gerber, age 44 (with Lord Abbett since 1997, formerly Senior Portfolio
manager at Sanford C. Bernstein & Co. from 1992-1997)
Robert G. Morris, age 54
Vice Presidents:
Paul A. Hilstad, age 56, Vice President and Secretary (with Lord Abbett since
1995; formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.)
Zane E. Brown, age 46
Daniel E. Carper, age 46
W. Thomas Hudson, age 57
Lawrence H. Kaplan, age 42 (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 56
Robert A. Lee, age 29 (with Lord Abbett since 1997, formerly Portfolio Manager
at Arm Capital Advisors from 1995-1997; prior thereto Assistant Portfolio
Manager at Kidder Peabody Asset Management from 1993-1995)
7
<PAGE>
A.Edward Oberhaus III, age 38
Keith F. O'Connor, age 43
Walter H. Prahl, age 40 (wirh Lord Abbett since 1997, formerly Quantitative
Analyst at Sanford C. Bernstein & Co. from 1994-1997)
Treasurer:
Donna M. McManus, age 37 (with Lord Abbett since 1996, formerly a Senior Manager
at Deloitte & Touche LLP).
The Company 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
Company's Declaration of Trust, shareholder meetings may be called at any time
by certain officers of the Company or by a majority of the trustees (I) for the
purpose of taking action upon any matter requiring the vote or authority of the
Company'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 fund outstanding and entitled to vote at the meeting.
As of , 1999 our officers and directors, as a group, owned less than
1% of our outstanding shares. As of , 1999 there were no record
holders of 5% or more of the fund's outstanding shares.
3.
Investment Advisory and Other Services
The services performed by Lord Abbett are described under "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 Fund and the
Limited Duration Government Fund), .75 of 1% (in the case of the Balanced Fund)
and .60 of 1% (in the case of the High Yield Fund). These fees are allocated
among the classes of each fund based on the class' proportionate share of each
fund's average daily net assets.
Each fund 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 Fund
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 Fund was $2,770.
The management fees paid to Lord Abbett by the Balanced Fund fiscal years ended
October 31, 1996 November 30, 1997, and November 30, 1998 were$8,607, $48,151,
and $-------- respectively. For the one month ended November 30, 1996, the
management fee paid to Lord Abbett by the Balanced Fund was $2,240.
The management fees paid to Lord Abbett by the Acquired Fund (and subsequent to
July 12, 1996 by the U.S. Government Securities Fund) 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 Fund, Balanced Fund and
8
<PAGE>
High Yield Fund. 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 Fund. With respect to the Balanced Fund, 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 each fund and must be approved at least annually by
our trustees to continue in such capacity. Deloitte & Touche LLP perform audit
services for each 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 Company's
custodian.
4.
Portfolio Transactions
The fund expects that purchases and sales of fixed-income their 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 fund 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 fund's 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 Company 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 a
fund; conversely, such services furnished in connection with brokerage on other
accounts managed by Lord Abbett may be used in connection with their management
a 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 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.
9
<PAGE>
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 November 30, 1998, the Limited Duration Government
Fund, U.S. Government Fund and the High Yield Fund paid no commissions to
independent brokers. For the fiscal year ended November 30, 1998, the Balanced
Fund paid total commissions to independent brokers of $ .
5.
Purchases, Redemptions
and Shareholder Services
Securities in each fund's portfolio are valued at their market values as of the
close of the New York Stock Exchange ("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
Company'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 Fund, 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 Company. The Board of Trustees will monitor, on an ongoing basis, the
Company'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 ("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.
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
SeriesFund, the Limited Duration Government Fund, the Balanced Fund and the High
Yield Fund on November 30, 1998 were computed as follows:
10
<PAGE>
<TABLE>
<CAPTION>
U.S.
Limited Duration Government
Government Balanced Securities High Yield
Fund Fund Fund Fund
---------------- -------- ---------- ----------
<S> <C> <C> <C> <C>
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 Fund and
U. S. Government Securities Fund) and
(.9525 for Balanced Fund and High
Yield Fund) $4.54 $13.44 $2.72 $
</TABLE>
The Company 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 Fund and the Balanced Fund as follows:
Year ended One month ended Year ended
October 31, 1996 November 30, 1996 November 30, 1997
---------------- ----------------- -----------------
Gross sales charge $140,941 $8,059 $269,184
Amount allowed
to dealers $123,303 $7,068 $233,663
-------- ------ --------
Net Commissions received
by Lord Abbett $ 17,638 $ 991 $ 35,521
======== ====== ========
For the fiscal years ended , 1996 , 1997 and 1998, 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 Fund) as
follows:
1996 1997
---- ----
Gross sales charge $4,248,800 $1,469,770
Amount allowed
to dealers $3,623,071 $1,259,215
---------- ----------
Net Commissions received
by Lord Abbett $ 625,729 $ 210,555
========== ==========
Conversion of Class B Shares. The conversion of Class B shares of the U.S.
Government Securities Fund and the High Yield Fund 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
11
<PAGE>
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. This Prospectus offers four classes designed 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 kikely
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 Company 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.
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 Company 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 a 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
12
<PAGE>
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 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
13
<PAGE>
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 und and Class C shareholders.
Class A, B and C Rule 12b-1 Plans. As described in the Prospectus, each und has
adopted a Distribution Plan and Agreement pursuant to Rule 12b-1 of the Act for
each class of shares available in the applicable fund: the "A Plan," the "B
Plan" (U.S. Government Securities Fund 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 Company 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 Company subsequent to its last fiscal year. Lord Abbett uses 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 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
Company's Board of Trustees and of the Company trustees who are not interested
persons of the company 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 Company's outside trustees.
Each Plan may be terminated at any time by vote of a majority of the Company'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 asset value over the
initial purchase price (including increases due to the reinvestment of dividends
and capital gains distributions).
Class A Shares (all funds) 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 fund 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 Fund, Balanced Fund and High Yield
Fund) 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 fund in connection with the sale of Class B shares.
To determine whether the CDSC applies to a redemption, the fund 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.
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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 funds). 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 fund 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 fund's 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
fund and is intended to reimburse all or a portion of the amount paid by the
fund if the shares are redeemed before the fund has had an opportunity to
realize the anticipated benefits of having a long-term shareholder account in
the fund. 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 fund (including recoupment of the commission
payments made) in connection with the sale of Class B shares before Lord Abbett
Distributor has had an 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
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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 fund paid a 12b-1 fee and, in the case of Class B shares,
Lord Abbett Distributor paid no sales charge or service 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
und 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 funds' 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.
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 and Lord
Abbett Equity Fund ("LAEF") which is not issuing shares., .
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
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<PAGE>
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 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 Fund 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 Company 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.
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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.
6.
Performance
Each fund 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 Fund and 4.75% with respect to the
Limited Duration Government Fund, U.S. Government Securities Fund and High Yield
Fund (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 Fund and the High Yield Fund, 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 fund's 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'fund's 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.
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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 Fund) for the one, five and ten year
periods ended November 30, 1998 were %, % and % for the Class A
shares. The total return for the Limited Duration Government Fund for the fiscal
year ended October 31, 1996, fiscal year ended November 30, 1997 and fiscal year
ended November 30, 1998 were %, % and % for the Class A shares. The
total return for the Balanced Fund for the fiscal year ended October 31, 1996,
fiscal year ended November 30, 1997 and fiscal year ended November 30, 1998 were
%, % and % for the Class A shares.
The ending redeemable value of shares of the Limited Duration Government Fund
and the Balanced Fund for the fiscal year ended November 30, 1997 were $ ,
$ and $ , respectively. The ending redeemable value for the Acquired
Fund (and subsequent to July 12, 1996 for the U.S. Government Securities Fund)
for the one, five and ten year periods ended November 30, 1998 were $ ,
$ and $ , respectively.
The total return for Class C shares of the Limited Duration Government
Securities and Balanced Fund 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 and 1998 were 1.97%, 0.09$, 4.40% and %, respectively and 6.72%, 3.65%,
13.10% and %, respectively. The total return for Class C shares of the U.S.
Government Securities Fund for the period July 15, 1996 to November 30, 1996 and
for the fiscal year ended November 30, 1997 and 1998 were 5.34%, 5.90% and
%, respectively.
The total return for Class B shares of the U.S. Government Securities Fund for
the fiscal years ended November 30, 1997 and 1998 were 1.28% and %,
respectively.
Each fund's 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 fund's 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 fund shares
outstanding during the period that were entitled to receive dividends and (ii)
the fund's 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 C shares do not reflect the
deduction of the CDSC. For the 30-day period ended November 30, 1998, the
Limited Duration Government Fund and Balanced Fund yields were % and %,
respectively.
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 a fund's 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 fund 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 fund 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 fund 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 fund intends
to distribute to shareholders each year an amount adequate to avoid the
imposition of such excise tax. Dividends paid by the fund will qualify for the
dividends-received deduction for corporations to the extent that they are
derived from dividends paid by domestic corporations.
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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 fund, 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 fund shares.
8.
Information About the Funds
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 fFund. 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 fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to each fund, and
constitute the underlying assets of such fund. The underlying assets of each
fund are recorded on the books of account of the fund, and are to be charged
with the liabilities with respect to such fund 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 fund are entitled to receive as a
class the underlying assets of such fund available for distribution.
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
fFund'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.
20
<PAGE>
9.
Financial Statements
The financial statements for fiscal year ended November 30, 1998 and the report
of Deloitte & Touche LLP, independent auditors, on such annual financial
statements contained in the 1998 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.
10.
Appendix
Corporate Bond Ratings (High Yield Fund Only)
Moody's Investors Service, Inc.'s Corporate Bond Ratings
Aaa - Bonds which are rated Aaa are judged to be of the best quality and carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa - Bonds which are rated Aa are judged to be of high-quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance and
other terms of the contract over any long period of time may be small.
Caa - Bonds that are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds that are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C - Bonds that are rated C are the lowest-rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
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Standard & Poor's Corporation's Corporate Bond Ratings
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong and in the majority of instances they
differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
BB-B-CCC-CC-C - Debt rated BB, B, CCC, CC and C is regarded as having
predominately speculative characteristics with respect to capacity to pay
interest and repay principal. 'BB' indicates the least degree of speculation and
'CCC' the highest. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
D - Debt rated 'D' is in payment default. The 'D' rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes such payments will
be made during such grace period. The 'D' rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
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<PAGE>
- --------------------------------------------------------------------------------
LORD ABBETT
- --------------------------------------------------------------------------------
Statement of Additional Information April 1, 1998
Core Fund
Strategic Core Fund
----------------------------------------------------------------------
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 "Company") was organized as a
Delaware business trust on August 16, 1993. The Company's trustees have
authority to create separate classes and series of shares of beneficial
interest, without further action by shareholders. The Company has five series,
only two of which, Core Fund and Strategic Core Fund, are offered in this
Statement . There only class of shares is Class Y shares. 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
Company 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.
Shareholder inquiries should be made by writing directly to the Company or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
INSERT TABLE OF CONTENTS HERE
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 fund may not: (1)
borrow money, except that (i) each fund 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 fund may borrow up to an additional 5% of its total assets
for temporary purposes, (iii) each fund may obtain such short-term credit as may
be necessary for the clearance of purchases and sales of portfolio securities
and (iv) each fund 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 fund's 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 fund 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 fund 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 fund may do so in accordance with
applicable law and without registering as a commodity pool operator under the
Commodity Exchange Act as, for example, with futures contracts)); (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.
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government, its agencies or instrumentalities 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
(i) securities of the U.S. government, its agencies and instrumentalities and
(ii) mortgage-backed securities); and (8) issue senior securities to the extent
such issuance would violate applicable law.
With respect to these restrictions, compliance will be determined at the time of
purchase or sale of such securities and will not be affected by changes in the
market value of portfolio 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 fund may not: (1) borrow in
excess of 5% of its gross assets taken at cost or market value, whichever is
lower at the time of borrowing, and then only as a temporary measure for
extraordinary or emergency purposes; (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) 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 fund 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; (6) invest in
warrants if, at the time of the acquisition, its investment in warrants, valued
at the lower of cost or market, would exceed 5% of the fund's total assets
(included within such limitation, but not to exceed 2% of the fund's total
assets, are warrants which are not listed on the New York or American Stock
Exchange or a major foreign exchange); (7) invest in real estate limited
partnership interests or interests in oil, gas or other mineral leases, or
exploration or other development programs, except that each fund may invest in
securities issued by companies that engage in oil, gas or other mineral
exploration or other development activities; (8) 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 (9) buy from or sell to 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 fund.
Although there is no current intention to do so, Strategic Core Fund may invest
in financial futures and options on financial futures.
Foreign Currency Hedging Techniques
Strategic Core Fund may use various foreign currency hedging techniques
described below, including forward foreign currency contracts and foreign
currency put and call options.
Forward Foreign Currency Contracts. A forward foreign currency contract involves
an obligation to purchase or sell a specific amount of a specific currency at a
set price at a future date. Strategic Core Fund expects to enter into forward
foreign currency contracts in primarily two circumstances. First, when the fund
enters into a contract for the purchase or sale of a security denominated in a
foreign currency, it may desire to "lock in" the U.S. dollar price of the
security. By entering into a forward contract for the purchase or sale of the
amount of foreign currency involved in the underlying security transaction, the
fund will be able to protect against a possible loss resulting from an adverse
change in the relationship between the U.S. dollar and the subject foreign
currency during the period between the date the security is purchased or sold
and the date on which payment is made or received.
Second, when management believes that the currency of a particular foreign
country may suffer a decline against the U.S. dollar, the fund may enter into a
forward contract to sell the amount of foreign currency approximating the value
of some or all of the fund's portfolio securities denominated in such foreign
currency or, in the alternative, the fund may use a cross-hedging technique
whereby it sells another currency which the fund expects to decline in a similar
way but which has a lower transaction cost. Precise matching of the forward
contract amount and the value of the securities involved will not generally be
possible since the future value of such securities denominated in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date the forward contract is entered into and the
date it matures. The fund does not intend to enter into such forward contracts
under this second circumstance on a continuous basis.
2
<PAGE>
Foreign Currency Put and Call Options. The fund may also purchase foreign
currency put options and write foreign currency call options on U.S. exchanges
or U.S. over-the-counter markets. A put option gives the fund, upon payment of a
premium, the right to sell a currency at the exercise price until the expiration
of the option and serves to insure against adverse currency price movements in
the underlying portfolio assets denominated in that currency.
Exchange-listed options markets in the United States include several major
currencies, and trading may be thin and illiquid. A number of major investment
firms trade unlisted options which are more flexible than exchange-listed
options with respect to strike price and maturity date. Unlisted options
generally are available in a wider range of currencies, including those of most
of the developed countries. Unlisted foreign currency options are generally less
liquid than listed options and involve the credit risk associated with the
individual issuer. Unlisted options are subject to a limit of 5% of the fund's
net assets.
A call option written by the fund gives the purchaser, upon payment of a
premium, the right to purchase from the fund a currency at the exercise price
until the expiration of the option. The fund may write a call option on a
foreign currency only in conjunction with a purchase of a put option on that
currency. Such a strategy is designed to reduce the cost of downside currency
protection by limiting currency appreciation potential. The face value of such
writing may not exceed 90% of the value of the securities denominated in such
currency invested in by the fund or in such cross currency (referred to above)
to cover such call writing.
Lending Portfolio Securities
Each fund may lend portfolio securities to registered brokers-dealers. These
loans, if and when made, may not exceed 30% of the fund's total assets. The
funds' 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, each fund 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 a
fund.
By lending portfolio securities, each fund may 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 fund will comply with the following
conditions whenever it loans securities: (i) the fund 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 fund must be able to terminate the loan at any time; (iv)
the fund must receive reasonable compensation with respect to the loan, as well
as any dividends, interest or other distributions on the loaned securities; (v)
the fund 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 fund may enter into repurchase agreements with respect to a security. A
repurchase agreement is a transaction by which the fund 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 fund must have a total value in
excess of the value of the repurchase agreement.) Each fund 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 funds to keep all of their 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 fund 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 fund 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 management acknowledges
3
<PAGE>
these risks, it is expected that they can be controlled through stringent
selection criteria and careful monitoring procedures. Management intends to
limit repurchase agreements for the funds to transactions with dealers and
financial institutions believed to present minimal credit risks. Management will
monitor creditworthiness of the repurchase agreement sellers on an ongoing
basis.
Each fund 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 a
fund otherwise may invest.
When-Issued Transactions
As stated in the Prospectus, each fund may purchase portfolio securities on a
when-issued basis. When-issued transactions involve a commitment by a fund 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 a fund 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 fund 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
Each fund limits its average dollar weighted portfolio duration to a range of
between two years more than and two years less than the Lehman Brothers
Aggregate Bond Index. Since this index currently has a duration of ___ years,
this range currently is between ___ years and ___ years. However, many of the
securities in which each fund invests will have remaining durations in excess of
___ years.
Some of the securities in each fund's 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, each fund 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 each fund's 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, 1998, the Core Fund's portfolio turnover
rate was __%. The portfolio turnover rate for the Strategic Core Fund's first
year of operation is expected to be within a range of 100% - 1,000%. As
discussed above, each fund may purchase securities on a when-issued basis with
settlement taking place after the purchase date (without amortizing any
premiums). If the funds use this investment technique, it is expected to
contribute significantly to the portfolio turnover rates. However, it will have
little or no transaction cost or adverse tax consequences. Transaction costs
normally will exclude brokerage because each fund's 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.
2.
Trustees and Officers
4
<PAGE>
The following trustee is a partner of Lord Abbett, The General Motors Building,
767 Fifth Avenue, New York, New York 10153-0203. He has been associated with
Lord Abbett for over five years and also is an officer and/or director or
trustee of the twelve other Lord Abbett-sponsored funds. He is a "interested
person" 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
The following outside directors are also directors or trustees of the twelve
other Lord Abbett-sponsored funds referred to above.
E. Thayer Bigelow
Time Warner Inc.
1271 Avenue of the Americas
New York, New York
Senior Adviser, Time Warner Inc. Formerly, Acting Chief Executive Officer of
Courtroom Television Network (1997-1998). Formerly, President and Chief
Executive Officer of Time Warner Cable Programming, Inc. (1991-1997). Prior to
that, President and Chief Operating Officer of Home Box Office, Inc. Age 57.
William H. T. Bush
Bush-O'Donnell & Co., Inc.
101 South Hanley Road, Suite 1025
St. Louis, Missouri
Co-founder and Chairman of the Board of financial advisory firm of
Bush-O'Donnell & Company. Age 60.
Robert B. Calhoun
Monitor Clipper Partners
650 Madison Avenue, 9th Floor
New York, New York
Managing Director of Monitor Clipper Partners and President of the Clipper Group
L.P., both private equity investment funds. 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 68.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 73.
C. Alan MacDonald
Directorship Inc.
8 Sound Shore Drive
Greenwich, 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 (1994-1997). Prior to that,
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
5
<PAGE>
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 65.
Hansel B. Millican, Jr.
Rochester Button Company
1328 Broadway (Suite 816)
New York, New York
President and Chief Executive Officer of Rochester Button Company. Age 70.
Thomas J. Neff
Spencer Stuart
277 Park Avenue
New York, New York
Chairman of Spencer Stuart, an executive search consulting firm. Currently
serves as Director of Ace, Ltd. (NYSE). Age 61.
The second column of the following table sets forth the compensation accrued for
the Company's outside trustees. The third column sets forth information with
respect to the equity-based benefits accrued for outside trustees/directors
maintained by the Lord Abbett-sponsored funds. The fourth column sets forth the
total compensation payable by such funds to the outside trustees/directors. No
trustee of the Company associated with Lord Abbett and no officer of the Company
received any compensation from the Company for acting as a trustee or officer.
<TABLE>
<CAPTION>
For the Fiscal Year Ended November 30, 1998
-------------------------------------------
Pension or For Year Ended
Retirement Benefits December 31, 1998
Accrued by the Total Compensation
Aggregate Fund and Accrued by the Fund and
Compensation All Other Lord All Other Lord
Accrued by Abbett-sponsored Abbett-sponsored
Name of Board Member the Fund(1) Funds(2) Funds(3)
- -------------------- ------------ ------------------- -----------------------
<S> <C> <C> <C>
E. Thayer Bigelow $ $ $
William H. T. Bush* $ $ None
Robert B. Calhoun, Jr.** $ $ None
Stewart S. Dixon $ $ $
John C. Jansing $ $ $
C. Alan MacDonald $ $ $
Hansel B. Millican, Jr. $ $ $
Thomas J. Neff $ $ $
</TABLE>
* Elected trustee as of August 13, 1998.
** Elected trustee as of June 17, 1998.
and
1. Outside trustee/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
Company to its outside trustees is being deferred under a plan that deems
the deferred amounts to be invested in shares of the Company for later
distribution to the trustees.
2. The amounts in Column 3 were accrued by the Lord Abbett-sponsored Funds
for the twelve months ended November 30, 1998 with respect to the equity
based plans established for independent trustees/directors 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.
6
<PAGE>
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, 1998. The amounts of the aggregate compensation
payable by the Company as of December 31, 1998 deemed invested in Company
shares, including dividends reinvested and changes in net asset value
applicable to such deemed investments, were: Mr. Bigelow, $ ; Mr. Bush,
$ ; Mr. Calhoun, $ ; Mr. Dixon, $ ; Mr. Jansing, $ ; Mr.
MacDonald, $ ; Mr. Millican, $ and Mr. Neff, $ . If the amounts
deemed invested in Company shares were added to each director's actual
holdings of Company shares as of December 31, 1998, each would own the
following: Mr. Bigelow, shares; Mr. Bush, shares; Mr. Calhoun, shares; Mr.
Dixon, shares; Mr. Jansing, shares; Mr. McDonald, shares; Mr. Millican,
shares; and Mr. Neff, 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.
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Allen, Brown, Carper, Ms. Foster, Messrs. Gerber, Hilstad, Morris, Noelke, and
Walsh are partners of Lord Abbett; the others are employees; Robert Gerber, age
44 (with Lord Abbett since 1997 formerly Senior Portfolio Manager of Sanford C.
Bernstein & Co., Inc.), Executive Vice President; Paul A. Hilstad, age 56 (with
Lord Abbett since 1995 - formerly Senior Vice President and General Counsel of
American Capital Management & Research, Inc.), Vice President and Secretary;
Stephen I. Allen, age 45; Zane E. Brown, age 47; Daniel E. Carper, age 46; Daria
Foster, age 44; Lawrence H. Kaplan, age 42 (with Lord Abbett since 1997 -
formerly Vice President and Chief Counsel of Salomon Brothers Asset Management
Inc. from 1995 1997; before that, Senior Vice President, Director and General
Counsel of Kidder Peabody Asset Management, Inc.); Robert G. Morris, age 54;
Robert Noelke, age 41; Thomas F. Konop, age 56; A. Edward Oberhaus, age 38; John
J. Walsh, age 62; Vice Presidents; Keith F. O'Connor, age 43, Vice President and
Assistant Treasurer, and Donna McManus, age 38 (with Lord Abbett since 1996; 04
that, Senior Manager at Deloitte & Touche LLP), Treasurer.
The Company 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
Company's Declaration of Trust, shareholder meetings may be called at any time
by certain officers of the Company or by a majority of the trustees (i) for the
purpose of taking action upon any matter requiring the vote or authority of the
Company'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 December 31, 1998, our officers and trustees as a group owned __% of the
outstanding shares of Core Fund and __% of Strategic Core Fund.
3.
Investment Advisory and Other Services
As described under "Management" in the Prospectus, Lord Abbett is each fund's
investment manager.
The services performed by Lord Abbett are described under "Management" in the
Prospectus. Under the Management Agreement, each fund is obligated to pay Lord
Abbett a monthly fee, based on average daily net assets for that month, at the
annual rate of .50 of 1%.
Each fund 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
7
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mailing prospectuses to existing shareholders, insurance premiums and brokerage
and other expenses connected with executing portfolio transactions.
Although not obligated to do so, Lord Abbett may waive all or part of its
management fees and or may assume other expenses of each fund.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281, are
the independent public accountants of the Company and must be approved at least
annually by our trustees to continue in such capacity. Deloitte & Touche LLP
perform audit services for the Company, 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 Company's
custodian.
4.
Portfolio Transactions
The funds expect that purchases and sales of their 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, the funds 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 fund's 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 Company 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
funds, 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 funds, and not all of such services will necessarily be used by Lord
Abbett in connection with their advisory services to such other accounts. We
have been advised by Lord Abbett that research services received from brokers
cannot be allocated to any particular account, are not a substitute for Lord
Abbett's services but are supplemental to their own research effort and, when
utilized, are subject to internal analysis before being incorporated by Lord
Abbett into their investment process. As a practical matter, it would not be
possible for Lord Abbett to generate all of the information presently provided
by brokers. While receipt of research services from brokerage firms has not
reduced Lord Abbett's normal research activities, the expenses of Lord Abbett
could be materially increased if it attempted to generate such additional
information through its own staff and purchased such equipment and software
packages directly from the suppliers.
8
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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 each 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.
5.
Purchases, Redemptions
and Shareholder Services
Securities in each fund's 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 Company'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 foreign assets of the Strategic Core Fund, all assets and
liabilities expressed in foreign currencies will be converted into U.S. dollars
at the mean between the buying and selling rates of such currencies against U.S.
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 Company. The Board of Trustees will monitor, on an
ongoing basis, each 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".
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 Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
The offering price of Class Y shares of the funds for the period indicated below
were computed as follows:
December 31, 1997
-------------------------------
Core Fund Strategic Core Fund
--------- -------------------
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Net asset value per share (net assets
divided by shares outstanding)......... $xx.xx $xx.xx
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), or (ii) Lord Abbett U.S. Government Securities
Money Market Fund, the ("GSMMF"). 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 each fund's shares. Exchanges
are based on relative net asset values on the day instructions are received by
the Company 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 (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.
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 other Lord Abbett-sponsored funds which are eligible for the exchange
privilege, except (1) certain tax-free, single-state funds where the exchanging
shareholder is a resident of a state in which such fund is not offered for sale,
(2) Lord Abbett Series Fund ("LASF") which offers its shares only in connection
with certain variable annuity contracts, (3) Lord Abbett Equity Fund ("LAEF")
which is not issuing shares, and (4) Lord Abbett U.S. Government Securities
Money Market Fund ("GSMMF") (except for holdings in GSMMF that are attributable
to any shares exchanged from the Lord Abbett family of funds). An Eligible Fund
also is any Authorized Institution's affiliated money market fund satisfying
Lord Abbett Distributor as to certain omnibus account and other criteria.
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.
6.
Performance
Each fund computes the average annual compounded rate of total return for its
Class Y shares 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
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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 no 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 Y shares, no sales charge (as a
percentage of the offering price) is deducted from the initial investment. 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.
Each fund's 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 net asset value per share on the last day of the period. This is
determined by finding the following quotient: take the fund's 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 fund shares outstanding
during the period that were entitled to receive dividends and (ii) the fund's
net asset value 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 Y shares is shown based on the fund's net asset value per share.
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 fund 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 fund 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 distribution
designated by a fund as a "capital gains distribution" which you received with
respect to such shares. Losses on the sale of fund 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 fund 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 fund intends
to distribute to shareholders each year an amount adequate to avoid the
imposition of such excise tax. Dividends paid by each fund will qualify for the
dividends-received deduction for corporations to the extent that they are
derived from dividends paid by domestic corporations.
The Strategic Core Fund may be subject to foreign withholding taxes which would
reduce the yield on its investments. Tax treaties between certain countries and
the United States may reduce or eliminate such taxes. It is expected that fund
shareholders who are subject to United States federal income tax will be
entitled to claim a federal income tax credit or deduction for foreign income
taxes paid by the fund.
Gains and losses realized by the fund on certain transactions, including sales
of foreign debt securities and certain transactions involving foreign currency,
will be treated as ordinary income or loss for federal income tax purposes to
the extent, if any, that such gains or losses are attributable to changes in
exchange rates for foreign currencies. Accordingly, distributions taxable as
ordinary income will include the net amount, if any, of such foreign exchange
gains and will be reduced by the net amount, if any, of such foreign exchange
losses.
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The foregoing discussion relates solely to U.S. federal income tax law as
applicable to U.S. persons (U.S. citizens or residents and U.S. domestic
corporations, partnerships, trusts and estates). Each shareholder who is not a
U.S. person should consult his tax adviser regarding the U.S. and foreign tax
consequences of the ownership of shares of the fund, including a 30% (or lower
treaty rate) U.S. withholding tax on dividends representing ordinary income and
net short-term capital gains and the applicability of U.S. gift and estate taxes
to non-U.S. persons who own fund shares.
8.
Information about the Company
Shareholder Liability. Delaware law provides that Company 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 Company's Declaration of Trust
contains an express disclaimer of shareholder liability for the acts,
obligations, or affairs of the Company or any series (or fund) and requires that
a disclaimer be given in each contract entered into or executed by the Company.
The Declaration provides for indemnification out of the Company's property of
any shareholder or former shareholder held personally liable for the obligations
of the Company. 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 Company received for the issue or sale of the shares
of each fund and all income, earnings, profits, and proceeds thereof, subject
only to the rights of creditors, are especially allocated to each fund, and
constitute the underlying assets of such fund. The underlying assets of each
fund are recorded on the books of account of the Company, and are to be charged
with the liabilities with respect to such fund and with a share of the general
expenses of the Company. Expenses with respect to the Company 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 Company, the holders of the shares of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
Under the Company's Declaration of Trust, the trustees may, upon shareholder
vote, cause the Company to merge or consolidate into, or sell and convey all or
substantially all of, the assets of the Company or any fund 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
Company's registration statement. In addition, the trustees may, without
shareholder vote, cause the Company to be incorporated under Delaware law.
Derivative actions on behalf of the Company or any fund may be brought only by
shareholders owning not less than 50% of the then outstanding shares of the
Company or any fund, 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 Company'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 Company to the extent
contemplated by the recommendations of such Advisory Group.
9.
Financial Statements
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The financial statements for fiscal years ended November 30, 1997, and November
30, 1998 and the report of Deloitte & Touche LLP, independent public
accountants, on such annual financial statements contained in the 1998 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.
13
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PART C OTHER INFORMATION
Item 23 Exhibits
(a) Articles of Incorporation. Incorporated by reference.
(b) By-Laws. Incorporated by reference to Post-Effective Amendment No.
19 to the Registration Statement on Form N-1A filed on December 30,
1998.
(c) Instruments Defining Rights of Security Holders. Incorporated by
reference.
(d) Investment Advisory Contracts. Incorporated by reference.
(e) Underwriting Contracts. Incorporated by reference.
(f) Bonus or Profit Sharing Contracts. Incorporated by reference.
(g) Custodian Agreements. Incorporated by reference.
(h) Other Material Contracts. Incorporated by reference.
(i) Legal Opinion. Incorporated by reference.
(j) Other Opinions. Incorporated by reference.
(k) Omitted Financial Statements. Incorporated by reference.
(l) Initial Capital Agreements. Incorporated by reference.
(m) Rule 12b-1 Plan. Incorporated by reference.
(n) Financial Data Schedule.
(o) Rule 18f-3 Plan. Incorporated by reference.
Item 24. Persons Controlled by or Under Common Control with the Fund
None.
Item 25. Indemnification
The Registrant is a Delaware Business Trust established under 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
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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 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 26. Business and Other Connections of Investment Adviser
Lord, Abbett & Co. acts as investment manager and/or principal underwriter
for twelve other Lord Abbett open-end investment companies (of which it is
principal underwriter for thirteen), and, as of September 30, 1998, as
investment adviser to approximately 8,330 private accounts. 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.
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Item 27. 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
Lord Abbett Global Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Series Fund, Inc.
Lord Abbett Research Fund, Inc.
Lord Abbett Securities Trust
Investment Advisor
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 with Registrant
Robert S. Dow Chairman and President
Robert I. Gerber Executive Vice President
Robert G. Morris Executive Vice President
Paul A. Hilstad Vice President & Secretary
Zane E. Brown Vice President
Daniel E. Carper Vice President
W. Thomas Hudson, Jr. Vice President
The other general partners of Lord Abbett & Co. who are neither officers
nor directors of the Registrant are Stephen Allen, John E. Erard, Robert
P. Fetch, Daria L. Foster, Stephen J. McGruder, Michael McLaughlin, Robert
J. Noelke, R. Mark Pennington, Christopher Towle and John J. Walsh.
Each of the above has a principal business address at 767 Fifth Avenue,
New York, NY 10153
(c) Not applicable
Item 28. 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 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 29. Management Services
None.
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Item 30. Undertakings
(a) 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.
(b) 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).
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant had duly caused this Registration
Statement 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 29th day of
January, 1999.
BY: /s/ Thomas F. Konop
-------------------
Thomas F. Konop
Vice President
LORD ABBETT INVESTMENT TRUST
5
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below on this Amendment to the
Registration Statement hereby constitutes and appoints Paul A. Hilstad, Lawrence
H. Kaplan and Thomas F. Konop, each of them, with full power to act without the
other, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (until revoked in writing) to sign any and all amendments
to this Registration Statement of each Fund enumerated on Exhibit A hereto
(including post-effective amendments and amendments thereto), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
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.
Signatures Title Date
- ---------- ----- ----
Chairman, President
/s/ Robert S. Dow* and Director/Trustee January 29, 1999
- ------------------------ -------------------------- ----------------
Robert S. Dow
/s/ E. Thayer Bigelow* Director/Trustee January 29, 1999
- ------------------------- ------------------------ ------------------
E. Thayer Bigelow
/s/ William H. T. Bush* Director/Trustee January 29, 1999
- ------------------------- ------------------------ ------------------
William H. T. Bush
/s/ Robert B. Calhoun, Jr*. Director/Trustee January 29, 1999
- -------------------------- ------------------------ -----------------
Robert B. Calhoun, Jr.
/s/ Stewart S. Dixon* Director/Trustee January 29, 1999
- -------------------------- ------------------------ -----------------
Stewart S. Dixon
/s/ John C. Jansing* Director/Trustee January 29, 1999
- -------------------------- ------------------------ -----------------
John C. Jansing
/s/ C. Alan MacDonald* Director/Trustee January 29, 1999
- -------------------------- ------------------------ -----------------
C. Alan MacDonald
/s/ Hansel B. Millican, Jr*. Director/Trustee January 29, 1999
- --------------------------- ------------------------ ------------------
Hansel B. Millican, Jr.
6
<PAGE>
/s/ Thomas J. Neff* Director/Trustee January 29, 1999
- -------------------------- ------------------------ -----------------
Thomas J. Neff
*BY: /s/ Thomas F. Konop
-------------------
Thomas F. Konop
Attorney-in-Fact
7
<PAGE>
EXHIBIT A
Lord Abbett Affiliated Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett Investment Trust
Lord Abbett Securities Trust
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Tax-Free Income Trust
Lord Abbett U.S. Government Securities Money Market Fund, Inc.
Lord Abbett Research Fund, Inc.
Lord Abbett Series Fund, Inc.
Lord Abbett Equity Fund, Inc.
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