Securities Act Act File No. 33-68090
Investment Company 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. 26 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Amendment No. 26 [X]
LORD ABBETT INVESTMENT TRUST
----------------------------
Exact Name of Registrant as Specified in Charter
90 Hudson Street Jersey City, New Jersey 07302-3973
---------------------------------------------------
Address of Principal Executive Office
Registrant's Telephone Number (800) 201-6984
--------------------------------------------
Lawrence H. Kaplan, Vice President
90 Hudson Street, Jersey City, New Jersey 07302-3973
----------------------------------------------------
(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)
-----------
X on April 1, 2000 pursuant to paragraph (b)
-----------
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>
Lord Abbett
Investment Trust
Prospectus
April 1, 2000
Balanced Series
High Yield Fund
Limited Duration U.S.
Government Securities Series
U.S. Government Securities Series
[GRAPHIC OMITTED]
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 each 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 Funds
Information about the goal, Balanced Fund 2
principal strategy, main risks, High Yield Fund 6
performance, and fees Limited Duration U.S.
and expenses Government Securities Fund 9
U.S. Government Securities Fund 12
Your Investment
Information for managing Purchases 15
your Fund account Sales Compensation 18
Opening Your Account 19
Redemptions 19
Distributions and Taxes 20
Services For Fund Investors 20
Management 21
For More Information
How to learn more Other Investment Techniques 23
about the Funds Glossary of Shaded Terms 24
Recent Performance 26
Financial Information
Financial highlights and line Balanced Fund 27
graph comparison of each Fund High Yield Fund 29
Limited Duration U.S.
Government Securities Fund 31
U.S. Government Securities Fund 33
Compensation For Your Dealer 35
How to learn more about the Back Cover
Funds and other Lord Abbett Funds
<PAGE>
Balanced Fund
GOAL
The Fund's investment objective is current income and capital growth.
PRINCIPAL STRATEGY
To pursue its goal, the Fund invests in a portfolio of underlying funds
managed by Lord, Abbett & Co. ("Lord Abbett"). 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
without shareholder approval, but will have at least 65% of its assets in
the Affiliated Fund and Bond-Debenture Fund, taken together. In addition,
it will have at least 25% of its assets invested in fixed-income securities
through one or more of the underlying funds.
As of the date of this prospectus, the Fund invested approximately half of
its assets in each of the Affiliated Fund and the Bond-Debenture Fund.
The Fund may temporarily reduce its holdings in the underlying funds for
defensive purposes in response to adverse market conditions and invest in
short-term debt securities. This could potentially reduce the Fund's
ability to benefit from any upswing in the market and prevent the Fund from
realizing its investment objective.
MAIN RISKS
The Fund's investments are concentrated in the underlying funds and, as a
result, the Fund's performance is directly related to their performance.
The Fund's ability to meet its investment objective depends on the ability
of the underlying funds to achieve their investment objectives.
Consequently, the Fund is subject to the particular risks of the underlying
funds in the proportions in which the Fund invests in them.
AFFILIATED FUND, MID-CAP VALUE FUND AND GROWTH OPPORTUNITIES FUND. These
underlying funds are subject to the general risks and considerations
associated with equity investing. Their values will fluctuate in response
to movements in the stock market in general and to the changing prospects
of individual companies in which the underlying fund invests.
In addition, these Funds are subject to the particular risks associated
with the types of stocks in which they invest: bargain stocks in the case
of the Affiliated Fund and Mid- Cap Value Fund; and growth stocks in the
case of the Growth Opportunities Fund. Different types of stocks shift
in and out of favor depending on market and economic conditions
For instance, the market may fail to recognize the intrinsic value
of particular bargain stocks for a long time. Also, growth companies may
grow faster than other companies which may result in more volatility in
their stock prices.
If an underlying fund's assessment of a company's value, its prospects for
exceeding earnings expectations, or overall market conditions is wrong, the
fund
could suffer losses or produce poor performance relative to other funds,
even in a rising market.
We or the Fund refers to the Lord Abbett Balanced Series ("Balanced Fund"), a
portfolio of Lord Abbett Investment Trust (the "Company").
Underlying funds: currently consist of:
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 U.S. Government Securities Series ("U.S. Government Securities Fund")
About the Fund. The Fund is a professionally managed portfolio primarily holding
securities purchased with the pooled money of investors. It strives to reach its
stated goal, although as with all funds, it cannot guarantee results.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describes the other investment strategies used by the Fund and
their risks.
2 The Funds
<PAGE>
Balanced Fund
BOND-DEBENTURE FUND. This underlying fund is subject to the general risks
and considerations associated with investing in debt securities. The value
of an investment in the fund will change as interest rates fluctuate in
response to market movements. When interest rates rise, the prices of debt
securities are likely to decline, and when interest rates fall, the prices
of debt securities tend to rise.
There is also the risk that an issuer of a debt security will fail to make
timely payments of principal or interest to the underlying fund, a risk
that is greater with junk bonds. Some issuers, particularly of junk bonds,
may default as to principal and/or interest payments after the Fund
purchases their securities. This may result in losses to the Fund.
The Bond-Debenture Fund may invest up to 20% of its assets in foreign
securities. Investments in foreign securities may present increased market,
liquidity, currency, political, information and other risks.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. While the Fund offers a greater level of diversification
than many other types of mutual funds, it is not a complete investment
program and may not be appropriate for all investors. You could lose money
by investing in the Fund.
ABOUT THE BALANCED FUND'S UNDERLYING FUNDS
The Balanced Fund may invest in five Lord Abbett underlying funds: the
Affiliated Fund, Bond-Debenture Fund, Growth Opportunities Fund, Mid-Cap
Value Fund, and the U.S. Government Securities Fund. The following is a
concise description of the investment objectives and practices of each
underlying fund other than the U.S. Government Securities Fund whose
description may be found on page 12 of this prospectus. No offer is made in
this prospectus of the shares of the underlying funds, other than the U.S.
Government Securities Fund.
THE AFFILIATED FUND'S investment objective is long-term growth of capital
and income without excessive fluctuations in market value. The Affiliated
Fund uses quantitative and fundamental research to identify those large,
seasoned companies which the fund believes the market undervalues.
THE BOND-DEBENTURE FUND'S investment objective 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 or "junk bonds", at least 20% of its assets must be invested in
any combination of investment grade debt securities, U.S. Government
securities and cash equivalents.
THE GROWTH OPPORTUNITIES FUND'S investment objective is to seek 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.
THE MID-CAP VALUE FUND'S investment objective is to seek capital
appreciation, primar-ily 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.
The Funds 3
<PAGE>
Balanced Fund Symbols: Class A - LABFX
Class B - LABBX
Class C - BFLAX
PERFORMANCE
The bar chart and table below provide some indication of the risks of
investing in the Fund by illustrating the variability of the Fund's
returns. Each assumes reinvestment of dividends and distributions. The
Fund's past performance is not necessarily an indication of how the Fund
will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares
from calendar year to calendar year. This chart does not reflect the sales
charges applicable to Class A shares. If the sales charges were reflected,
returns would be less.
================================================================================
Bar Chart (per calendar year) - Class A Shares
================================================================================
1995 - 22.8%
1996 - 9.1%
1997 - 17.3%
1998 - 8.8%
1999 - 11.0%
Best Quarter 4th Q `98 12.2% Worst Quarter 3rd Q `98 -8.6%
================================================================================
The table below shows how the average annual total returns of the Fund's
Class A, B and C shares compare to those of a broad-based securities market
index and two more narrowly based indices that more closely reflect the
market sectors in which the Fund invests. The Fund's returns reflect
payment of the maximum applicable front-end or deferred sales charges.
================================================================================
Average Annual Total Returns Through December 31, 1999
================================================================================
Share Class 1 Year 5 Years Since Inception(1)
Class A shares 4.60% 12.31% 12.23%
- --------------------------------------------------------------------------------
Class B shares 5.09% - 4.82%
- --------------------------------------------------------------------------------
Class C shares 8.91% - 12.96%
- --------------------------------------------------------------------------------
Russell 3000 Index(2) 20.90% 26.94% 26.94%(3)
17.80%(4)
27.81%(5)
- --------------------------------------------------------------------------------
60% Russell 3000, 40% Lehman 12.22% 19.27% 19.27%(3)
Brothers Aggregate Bond Index(2) 12.16%(4)
19.28%(5)
- --------------------------------------------------------------------------------
Lipper Balanced Funds Average(2) 8.79% 16.26% 16.26%(3)
8.00%(4)
15.61%(5)
- --------------------------------------------------------------------------------
(1) The date of inception for each class are: A -12/27/94; B -5/1/98; and C
-7/15/96.
(2) Performance for the unmanaged indices does not reflect fees or expenses.
The performance of the indices is not necessarily representative of the
Fund's performance.
(3) Represents total returns for the period 12/31/94 to 12/31/99, to correspond
with Class A inception date.
(4) Represents total returns for the period 4/30/98 to 12/31/99, to correspond
with Class B inception date.
(5) Represents total returns for the period 7/31/96 to 12/31/99, to correspond
with Class C inception date.
4 The Funds
<PAGE>
Balanced Fund
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
<TABLE>
<CAPTION>
=====================================================================================================
Fee Table
=====================================================================================================
Class A Class B(2) 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) 5.75% none none none
- -----------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge none(1) 5.00% 1.00%(1) none
- -----------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from Fund assets) (as a % of average net assets)(3)
- -----------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.75% 0.75% 0.75% 0.75%
- -----------------------------------------------------------------------------------------------------
Distribution (12b-1) and Service Fees(4) 0.35% 1.00% 1.00% 0.45%
- -----------------------------------------------------------------------------------------------------
Other Expenses 0.00% 0.00% 0.00% 0.00%
- -----------------------------------------------------------------------------------------------------
Total Operating Expenses 1.10% 1.75% 1.75% 1.20%
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) A contingent deferred sales charge of 1.00% may be assessed on certain
redemptions of (a) Class A shares made within 24 months following any
purchases made without a sales charge, and (b) Class C shares if they are
redeemed before the first anniversary of their purchase.
(2) Class B shares will convert to Class A shares on the eighth anniversary of
your original purchase of Class B shares.
(3) The annual operating expenses have been restated from fiscal year amounts
to reflect current fees.
(4) Because 12b-1 fees 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.
While each class of shares of the Balanced Fund is expected to operate with the
direct total operating expenses shown under "Fee Table" above, shareholders in
the Balanced Fund bear indirectly the Class Y share expenses of the underlying
funds in which the Balanced Fund invests. The following chart provides the
expense ratio for each of the underlying fund's Class Y shares, as well as the
approximate percentage of the Balanced Fund's net assets invested in each
underlying fund on November 30, 1999:
Underlying Funds' % of Balanced Fund
expense ratios net assets
Affiliated Fund 0.43% 50%
================================================================================
Bond-Debenture Fund 0.60% 50%
================================================================================
Mid-Cap Value Fund 1.02% -
================================================================================
Growth Opportunities Fund 1.30% -
================================================================================
U.S. Government Securities Fund 0.69% -
================================================================================
Based on these figures, the weighted average Class Y share expense ratio for the
underlying funds in which Balanced Fund invests is 0.52% (the "underlying
expense ratio"). This figure is only an approximation of the Balanced Fund's
underlying expense ratio, since the amount of assets invested in each of the
underlying funds changes daily.
================================================================================
Example
================================================================================
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. This example, like that in
other funds' prospectuses, assumes that you invest $10,000 in the Fund at
maximum sales charge, if any, for the time periods indicated and then redeem all
of your shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. In addition, the example assumes the Fund pays the operating
expenses set forth in the fee table above and the Fund's pro rata share of the
Class Y expenses of the underlying funds. Although your actual costs may be
higher or lower, based on these assumptions your costs (including any applicable
contingent deferred sales charges) would be:
<TABLE>
<CAPTION>
Share Class 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Class A shares $730 $1,057 $1,406 $2,386
======================================================================================
Class B shares $730 $1,009 $1,415 $2,442
======================================================================================
Class C shares $330 $ 709 $1,215 $2,605
======================================================================================
Class P shares $175 $ 542 $ 933 $2,030
======================================================================================
You would have paid the following expenses if you did not redeem your shares:
Class A shares $730 $1,057 $1,406 $2,386
======================================================================================
Class B shares $230 $ 709 $1,215 $2,442
======================================================================================
Class C shares $230 $ 709 $1,215 $2,605
======================================================================================
Class P shares $175 $ 542 $ 933 $2,030
======================================================================================
</TABLE>
Management fees are payable to Lord Abbett for the Fund's investment management.
Lord Abbett is currently waiving the management fee for the Fund. Lord Abbett
may stop waiving the management fee at any time. Total operating expenses with
the management fee waiver are .35% (Class A shares), 1.00% (Class B and C
shares), and 0.45% (Class P 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 shareholder
service fees and professional fees. The Fund has entered into a servicing
arrangement with the underlying funds under which the underlying funds may bear
certain of the Fund's Other Expenses. As a result, the Fund does not expect to
bear any of these Other Expenses.
The Funds 5
<PAGE>
High Yield Fund
GOAL
The Fund's investment objective is to seek high current income and the
opportunity for capital appreciation to produce a high total return.
PRINCIPAL STRATEGY
To pursue its goal, the Fund normally invests in high-yield debt
securities, sometimes called "lower-rated bonds" or "junk bonds," which
entail greater risks than investments in higher-rated or investment-grade
debt securities. Under normal circumstances, the Fund invests at least 65%
of its total assets in lower-rated debt securities, some of which are
convertible into common stock or have warrants to purchase common stock.
We believe that a high total return (current income and capital
appreciation) may be derived from an actively managed, diversified
portfolio of investments. We seek unusual values, particularly in
lower-rated debt securities. Higher yield on debt securities can occur
during periods of high inflation when the demand for borrowed money is
high.
Also, buying lower-rated bonds when we believe the credit risk is
likely to decrease, may generate higher returns.
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 and prevent the Fund from
achieving its investment objective.
MAIN RISKS
The lower-rated bonds in which the Fund invests involve risks that the
bond's issuers will not make payments of interest and principal payments
when due. Some issuers may default as to principal and/or interest payments
after we purchase their securities. Through portfolio diversification,
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 in response to market movements. When
interest rates rise, the prices of debt securities are likely to decline,
and when interest rates fall, the prices tend to rise.
Also, the market for high yield bonds generally is less liquid than the
market for higher-rated securities.
The High Yield Fund may invest up to 20% of its assets in foreign
securities. Investments in foreign securities may present increased market,
liquidity, currency, political, information and other risks.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. The Fund is not a complete investment program and may
not be appropriate for all investors. You could lose money by investing in
the Fund.
We or the Fund refers to Lord Abbett High Yield Fund ("High Yield Fund"), a
portfolio of the Company.
About the Fund. This Fund is a professionally managed portfolio primarily
holding securities purchased with the pooled money of investors. It strives to
reach its stated goal, although as with all funds, it cannot guarantee results.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describes the other investment strategies used by the Fund and
their risks.
6 The Funds
<PAGE>
High Yield Fund Symbols: Class A - LHYAX
PERFORMANCE
The bar chart and table below provide some indication of the risks of
investing in the Fund by illustrating the variability of the Fund's
returns. Each assumes reinvestment of dividends and distributions. The
Fund's past performance is not necessarily an indication of how the Fund
will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares
from calendar year to calendar year. This chart does not reflect the sales
charges applicable to Class A shares. If the sales charges were reflected,
returns would be less.
- --------------------------------------------------------------------------------
Bar Chart (per calendar year) - Class A Shares
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
1999 - 6.6%
Best Quarter 4th Q `99 4.0% Worst Quarter 3rd Q `99 -0.8%
- --------------------------------------------------------------------------------
The table below shows how the average annual total returns of the Fund's
Class A, B and C shares compare to those of two broad-based securities
market indices. The Fund's returns reflect payment of the maximum
applicable front-end sales or deferred sales charges.
- --------------------------------------------------------------------------------
Average Annual Total Returns Through December 31, 1999
- --------------------------------------------------------------------------------
Share Class 1 Year Since Inception(1)
Class A shares 1.50% 1.50%
- --------------------------------------------------------------------------------
Class B shares .84% .84%
- --------------------------------------------------------------------------------
Class C shares 4.81% 4.81%
- --------------------------------------------------------------------------------
Merrill Lynch High Yield Master Index(2) 1.57% 1.57%(3)
- --------------------------------------------------------------------------------
First Boston High Yield Index(2) 3.28% 3.28%(3)
- --------------------------------------------------------------------------------
(1) The date of inception for Class A, B and C shares is 12/31/98.
(2) Performance for the unmanaged indices does not reflect any fees or
expenses. The performance of the indices is not necessarily representative
of the Fund's performance.
(3) Represents total return for the period 12/31/98 - 12/31/99, to correspond
with Class A, B and C shares inception date.
The Funds 7
<PAGE>
High Yield Fund
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Fee Table
- -----------------------------------------------------------------------------------------------------
Class A Class B(2) Class C Class P
Shareholder Fees (Fees paid directly from your investment)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum Sales Charge on Purchases
- -----------------------------------------------------------------------------------------------------
(as a % of offering price) 4.75% none none none
- -----------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge none(1) 5.00% 1.00%(1) none
- -----------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from Fund assets) (as a % of average net assets)(3)
- -----------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.60% 0.60% 0.60% 0.60%
- -----------------------------------------------------------------------------------------------------
Distribution (12b-1) and Service Fees(4) 0.50% 1.00% 1.00% 0.45%
- -----------------------------------------------------------------------------------------------------
Other Expenses 0.26% 0.26% 0.26% 0.26%
- -----------------------------------------------------------------------------------------------------
Total Operating Expenses 1.36% 1.86% 1.86% 1.31%
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) A contingent deferred sales charge of 1.00% may be assessed on certain
redemptions of (a) Class A shares made within 24 months following any
purchases made without a sales charge, and (b) Class C shares if they are
redeemed before the first anniversary of their purchase.
(2) Class B shares will convert to Class A shares on the eighth anniversary of
your original purchase of Class B shares.
(3) The annual operating expenses have been restated from fiscal year amounts
to reflect current fees.
(4) Because 12b-1 fees 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.
- --------------------------------------------------------------------------------
Example
- --------------------------------------------------------------------------------
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. This example, like that in
other funds' prospectuses, assumes that you invest $10,000 in the Fund at
maximum sales charge, if any, for the time periods indicated and then redeem all
of your shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs (including any applicable contingent deferred sales
charges) would be:
Share Class 1 Year 3 Years 5 Years 10 Years
Class A shares $607 $885 $1,184 $2,032
- --------------------------------------------------------------------------------
Class B shares $689 $885 $1,206 $2,049
- --------------------------------------------------------------------------------
Class C shares $289 $585 $1,006 $2,180
- --------------------------------------------------------------------------------
Class P shares $133 $415 $ 718 $1,579
- --------------------------------------------------------------------------------
You would have paid the following expenses if you did not redeem your shares:
Class A shares $607 $885 $1,184 $2,032
- --------------------------------------------------------------------------------
Class B shares $189 $585 $1,006 $2,049
- --------------------------------------------------------------------------------
Class C shares $189 $585 $1,006 $2,180
- --------------------------------------------------------------------------------
Class P shares $133 $415 $ 718 $1,579
- --------------------------------------------------------------------------------
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 shareholder
service fees and professional fees.
8 The Funds
<PAGE>
Limited Duration U.S. Government Securities Fund
GOAL
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. The Fund is not a money market fund.
PRINCIPAL STRATEGY
To pursue its goal, the Fund primarily invests in short- and
intermediate-duration U.S. Government securities which the Fund expects
will produce 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
instrumentalities, including mortgage-related securities, such as:
o Federal Home Loan Banks
o Federal Home Loan Mortgage Corporation
o Federal National Mortgage Association
o Government National Mortgage Association
The Fund attempts to manage, but not eliminate, interest rate risk through
its management of the average duration of the securities it holds. Duration
is a mathematical concept that measures a portfolio's exposure to interest
rate changes. The Fund expects to maintain its average duration range
between one and four years. The higher the Fund's duration, the more
sensitive it is to interest rate risk.
MAIN RISKS
The Fund is subject to the general risks and considerations associated with
investing in debt securities. Although the U.S. Government securities in
which the Fund invests are guaranteed as to payments of interest and
principal, their market prices are not guaranteed and will fluctuate in
response to market movements. When interest rates rise, the prices of debt
securities are likely to decline, and when interest rates fall, the prices
of debt securities tend to rise. Likewise, the value of your investment
will change as interest rates fluctuate. The Fund does not attempt to
maintain a stable net asset value.
The mortgage-related securities in which the Fund may invest, including
collateralized mortgage obligations ("CMOs"), may be particularly sensitive
to changes in prevailing interest rates. The holders of the underlying
mortgages may be able to repay principal in advance and may do so,
especially when interest rates are falling. When mortgages are prepaid, the
Fund may have to reinvest in securities with a lower yield. Conversely,
principal payments may arrive at a slower pace
in times of rising interest rates. The
Fund may then be unable to invest in higher yielding securities. These
circumstances may result in lower performance for the Fund.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. The Fund is not a complete investment program and may
not be appropriate for all investors. You could lose money by investing in
the Fund.
We or the Fund refers to Limited Duration U.S. Government Securities Series
("Limited Duration U.S. Government Fund"), a series of the Company.
About the Fund. The Fund is a professionally managed portfolio primarily holding
securities purchased with the pooled money of investors. It strives to reach its
stated goal, although as with all funds, it cannot guarantee results.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describes the other investment strategies used by the Fund and
their risks .
The Funds 9
<PAGE>
Limited Duration U.S. Gov't Securities Fund Symbols: Class A - LALDX
Class C - LDLAX
PERFORMANCE
The bar chart and table below provide some indication of the risks of
investing in the Fund by illustrating the variability of the Fund's
returns. Each assumes reinvestment of dividends and distributions. The
Fund's past performance is not necessarily an indication of how the Fund
will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares
from calendar year to calendar year. This chart does not reflect the sales
charges applicable to Class A shares. If the sales charges were reflected,
returns would be less.
================================================================================
Bar Chart (per calendar year) - Class A Shares
================================================================================
[GRAPHIC OMITTED]
1994 - -3.5%
1995 - 10.1%
1996 - 1.3%
1997 - 6.9%
1998 - 6.6%
1999 - 2.8%
Best Quarter 3rd Q `98 3.4% Worst Quarter 1st Q `94 -2.8%
================================================================================
The table below shows how the average annual total returns of the Fund's
Class A and C shares compare to those of a broad-based securities market
index and a more narrowly based index that more closely reflects the market
sectors in which the Fund invests. The Fund's returns reflect payment of
the maximum applicable front-end or deferred sales charges.
================================================================================
Average Annual Total Returns Through December 31, 1999
================================================================================
Share Class 1 Year 5 Years Since Inception(1)
Class A shares -.60% 4.80% 3.36%
- --------------------------------------------------------------------------------
Class C shares .81% - 4.70%
- --------------------------------------------------------------------------------
Lehman Intermediate .49% 6.93% 5.43%(3)
Government Bond Index(2) 5.95%(4)
- --------------------------------------------------------------------------------
(1) The date of inception for each class are: A -11/4/93; and C -7/15/96.
(2) Performance for the unmanaged indices does not reflect fees or expenses.
The performance of the indices is not necessarily representative of the
Fund's performance.
(3) Represents total returns for the period 11/30/93 to 12/31/99, to correspond
with Class A inception date.
(4) Represents total returns for the period 7/31/96 to 12/31/99, to correspond
with Class C inception date.
10 The Funds
<PAGE>
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
<TABLE>
<CAPTION>
=====================================================================================================
Fee Table
=====================================================================================================
Class A Class C Class P
<S> <C> <C> <C>
Shareholder Fees (Fees paid directly from your investment)
- -----------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
- -----------------------------------------------------------------------------------------------------
(as a % of offering price) 3.25% none none
- -----------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge none(1) 1.00%(1) none
- -----------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from Fund assets) (as a % of average net assets)(2)
- -----------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.50% 0.50%
- -----------------------------------------------------------------------------------------------------
Distribution (12b-1) and Service Fees(3) 0.00% 1.00% 0.45%
- -----------------------------------------------------------------------------------------------------
Other Expenses 0.50% 0.50% 0.50%
- -----------------------------------------------------------------------------------------------------
Total Operating Expenses 1.00% 2.00% 1.45%
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) A contingent deferred sales charge of 1.00% may be assessed on certain
redemptions of (a) Class A shares made within 24 months following any
purchases made without a sales charge, and (b) Class C shares if they are
redeemed before the first anniversary of their purchase.
(2) The annual operating expenses have been restated from fiscal year amounts
to reflect current fees.
(3) Because 12b-1 fees 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.
================================================================================
Example
================================================================================
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. This example, like that in
other funds' prospectuses, assumes that you invest $10,000 in the Fund at
maximum sales charge, if any, for the time periods indicated and then redeem all
of your shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs (including any applicable contingent deferred sales
charges) would be:
Share Class 1 Year 3 Years 5 Years 10 Years
Class A shares $424 $633 $ 860 $1,510
===============================================================================
Class C shares $303 $627 $1,078 $2,327
===============================================================================
Class P shares $148 $459 $ 792 $1,735
===============================================================================
You would have paid the following expenses if you did not redeem your shares:
Class A shares $424 $633 $ 860 $1,510
===============================================================================
Class C shares $203 $627 $1,078 $2,327
===============================================================================
Class P shares $148 $459 $ 792 $1,735
===============================================================================
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.
The 12b-1 Plan for the Fund will not become operative for Class A shares until
the Class A shares net assets reach $100 million. Other expenses include fees
paid for miscellaneous items such as shareholder service fees and professional
fees.
Lord Abbett is currently waiving the management fee and subsidizing a portion of
the other expenses of the Fund. Lord Abbett may stop waiving the management fee
and subsidizing a portion of the other expenses at any time. Total operating
expenses with the fee waiver and expense subsidy are 0.32%, 1.32% and 0.77% for
Class A, C, and P shares, respectively.
The Funds 11
<PAGE>
U.S. Government Securities Fund
GOAL
The Fund's investment objective is high current income consistent with
reasonable risk. By reasonable risk we mean that the volatility the Fund is
expected to have over time will approximate that of the Lehman Brothers
Government Bond Index.
PRINCIPAL STRATEGY
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 and instrumentalities, including mortgage-related securities, such
as:
o Federal Home Loan Banks
o Federal Home Loan Mortgage Corporation
o Federal National Mortgage Association
o Federal Farm Credit Bank
o Government National Mortgage Association
o Student Loan Marketing Association
o Tennessee Valley Authority
The Fund attempts to manage, but not eliminate, interest rate risk through
its management of the average duration of the securities it holds. Duration
is a mathematical concept that measures a portfolio's exposure to interest
rate changes. The Fund expects to maintain its average duration range
between three and eight years. The higher the Fund's duration, the more
sensitive it is to interest rate risk.
MAIN RISKS
The Fund is subject to the general risks and considerations associated with
investing in debt securities. Although the U.S. Government securities in
which the Fund invests are guaranteed as to payments of interest and
principal, their market prices are not guaranteed and will fluctuate in
response to market movements. When interest rates rise, the prices of debt
securities are likely to decline, and when interest rates fall, the prices
of debt securities tend to rise. Likewise, the value of your investment
will change as interest rates fluctuate. The Fund does not attempt to
maintain a stable net asset value.
The mortgage-related securities in which the Fund may invest, including
collateralized mortgage obligations ("CMOs"), may be particularly sensitive
to changes in prevailing interest rates. The holders of the underlying
mortgages may be able to repay principal in advance and may do so,
especially when interest rates are falling. When mortgages are prepaid, the
Fund may have to reinvest in securities with a lower yield. Conversely,
principal payments may arrive at a slower pace in times of rising interes
rates. The
Fund may then be unable to invest in higher yielding securities. These
circumstances may result in lower performance for the Fund.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. The Fund is not a complete investment program and may
not be appropriate for all investors. You could lose money by investing in
the Fund.
We or the Fund refers to U.S. Government Securities Series ("U.S. Government
Securities Fund"), a series of the Company.
About the Fund. The Fund is a professionally managed portfolio primarily holding
securities purchased with the pooled money of investors. It strives to reach its
stated goal, although as with all funds, it cannot guarantee results.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describes the other investment strategies used by the Fund and
their risks.
12 The Funds
<PAGE>
U.S. Government Securities Fund Symbols: Class A - LAGVX
Class B - LAVBX
Class C - LAUSX
PERFORMANCE
The bar chart and table below provide some indication of the risks of
investing in the Fund by illustrating the variability of the Fund's
returns. Each assumes reinvestment of dividends and distributions. The
Fund's past performance is not necessarily an indication of how the Fund
will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares
from calendar year to calendar year. This chart does not reflect the sales
charges applicable to Class A shares. If the sales charges were reflected,
returns would be less.
================================================================================
Bar Chart (per calendar year) - Class A Shares
================================================================================
[GRAPHIC OMITTED]
1990 - 9.3%
1991 - 16.9%
1992 - 7.1%
1993 - 9.2%
1994 - -4.3%
1995 - 15.7%
1996 - 1.7%
1997 - 9.2%
1998 - 7.9%
1999 - -1.6%
Best Quarter 3rd Q `91 6.8% Worst Quarter 1st Q `94 -3.4%
================================================================================
The table below shows how the average annual total returns of the Fund's
Class A, B and C shares compare to those of a broad-based securities market
index. The Fund's returns reflect payment of the maximum applicable
front-end or deferred sales charges.
================================================================================
Average Annual Total Returns Through December 31, 1999
================================================================================
Share Class 1 Year 5 Years 10 Years Since Inception(1)
Class A shares -6.20% 5.34% 6.37% 9.54%
- --------------------------------------------------------------------------------
Class B shares -6.89% - - 4.23%
- --------------------------------------------------------------------------------
Class C shares -2.80% - - 5.32%
- --------------------------------------------------------------------------------
Lehman Government Bond -2.23% 7.44% 7.48% 10.05%(3)
Index(2) 6.45%(4)
6.21%(5)
- --------------------------------------------------------------------------------
(1) The date of inception for each class are: A -1/1/82; B -8/1/96; and C
-7/15/96.
(2) Performance for the unmanaged index does not reflect fees or expenses. The
performance of the index is not necessarily representative of the Fund's
performance.
(3) Represents total returns for the period 12/31/81 to 12/31/99, to correspond
with Class A inception date.
(4) Represents total returns for the period 8/31/96 to 12/31/99, to correspond
with Class B inception date.
(5) Represents total returns for the period 7/31/96 to 12/31/99, to correspond
with Class C inception date.
The Funds 13
<PAGE>
U.S. Government Securities Fund
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
<TABLE>
<CAPTION>
=====================================================================================================
Fee Table
=====================================================================================================
Class A Class B(2) 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 none(1) 5.00% 1.00%(1) none
- -----------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from Fund assets) (as a % of average net assets)(3)
- -----------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.50% 0.50% 0.50%
- -----------------------------------------------------------------------------------------------------
Distribution (12b-1) and Service Fees(4) 0.35% 1.00% 1.00% 0.45%
- -----------------------------------------------------------------------------------------------------
Other Expenses 0.19% 0.19% 0.19% 0.19%
- -----------------------------------------------------------------------------------------------------
Total Operating Expenses 1.04% 1.69% 1.69% 1.14%
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) A contingent deferred sales charge of 1.00% may be assessed on certain
redemptions of (a) Class A shares made within 24 months following any
purchases made without a sales charge, and (b) Class C shares if they are
redeemed before the first anniversary of their purchase.
(2) Class B shares will convert to Class A shares on the eighth anniversary of
your original purchase of Class B shares.
(3) The annual operating expenses have been restated from fiscal year amounts
to reflect current fees.
(4) Because 12b-1 fees 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.
================================================================================
Example
================================================================================
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. This example, like that in
other funds' prospectuses, assumes that you invest $10,000 in the Fund at
maximum sales charge, if any, for the time periods indicated and then redeem all
of your shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs (including any applicable contingent deferred sales
charges) would be:
Share Class 1 Year 3 Years 5 Years 10 Years
Class A shares $576 $790 $1,022 $1,686
===============================================================================
Class B shares $672 $833 $1,118 $1,825
===============================================================================
Class C shares $272 $533 $ 918 $1,998
===============================================================================
Class P shares $116 $362 $ 628 $1,386
===============================================================================
You would have paid the following expenses if you did not redeem your shares:
Class A shares $576 $790 $1,022 $1,686
===============================================================================
Class B shares $172 $533 $ 918 $1,825
===============================================================================
Class C shares $172 $533 $ 918 $1,998
===============================================================================
Class P shares $116 $362 $ 628 $1,386
===============================================================================
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 shareholder
service fees and professional fees.
14 The Funds
<PAGE>
Your Investment
PURCHASES
This prospectus offers four classes of shares, Class A, B, C and P for the
Balanced Fund, the High Yield Fund and the U.S. Government Securities Fund,
and three classes of shares, Class A, C and P for the Limited Duration U.S.
Government Securities Fund, with different expenses and dividends. You may
purchase shares at net asset value ("NAV") per share 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 in the case of Class B, C and P shares, although
there may be a contingent deferred sales charge ("CDSC"), 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.
- --------------------------------------------------------------------------------
Share Classes
- --------------------------------------------------------------------------------
Class A o normally offered with a front-end sales charge
Class B o no front-end sales charge, however, a CDSC 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, however, a CDSC is applied to shares
sold prior to the first anniversary of purchase
o higher annual expenses than Class A shares
Class P o available to certain pension or retirement plans and pursuant to
a Mutual Fund Fee Based Program
- --------------------------------------------------------------------------------
Front-End Sales Charges - Class A Shares
(Balanced Fund Only)
- --------------------------------------------------------------------------------
To Compute
As a % of As a % of OfferingPrice
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 3.95% 4.11% .9605
- --------------------------------------------------------------------------------
$250,000 to $499,999 2.75% 2.83% .9725
- --------------------------------------------------------------------------------
$500,000 to $999,999 1.95% 1.99% .9805
- --------------------------------------------------------------------------------
$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") normally
4:00 p.m. Eastern time. Purchases and sales of Fund shares are executed at the
NAV next determined after the Fund receives your order in proper form. 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 of the Company.
Your Investment 15
<PAGE>
- --------------------------------------------------------------------------------
Front-End Sales Charges - Class A Shares
(High Yield and U.S. Government Securities Funds Only)
- --------------------------------------------------------------------------------
To Compute
As a % of As a % of OfferingPrice
Your Investment Offering Price Your Investment Divide NAV by
- --------------------------------------------------------------------------------
Less than $100,000 4.75% 4.99% .9525
- --------------------------------------------------------------------------------
$100,000 to $249,999 3.95% 4.11% .9605
- --------------------------------------------------------------------------------
$250,000 to $499,999 2.75% 2.83% .9725
- --------------------------------------------------------------------------------
$500,000 to $999,999 1.95% 1.99% .9805
- --------------------------------------------------------------------------------
$1,000,000 and over No Sales Charge 1.0000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Front-End Sales Charges - Class A Shares
(Limited Duration U.S. Government Securities Fund only)
- --------------------------------------------------------------------------------
To Compute
As a % of As a % of OfferingPrice
Your Investment Offering Price Your Investment Divide NAV by
- --------------------------------------------------------------------------------
Less than $50,000 3.25% 3.36% .9675
- --------------------------------------------------------------------------------
$50,000 to $99,999 2.75% 2.83% .9725
- --------------------------------------------------------------------------------
$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 and over 1.00% 1.01% .9900
- --------------------------------------------------------------------------------
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
conditions:
o Rights of Accumulation -- A Purchaser may apply the value of the
shares you already owned to a new purchase of Class A shares of any
Eligible Fund in order to reduce the sales charge.
o Letters 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 all shares were purchased at once.
Shares purchased through reinvestment of dividends or distributions
are not included. A Letter of Intention can be backdated 90 days.
Current holdings under rights of accumulation can be included in a
Letter 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 conditions:
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 Fee Based Program
Retirement Plans include employer-sponsored retirement plans under the Internal
Revenue Code, excluding Individual Retirement Accounts.
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
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.
16 Your Investment
<PAGE>
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
o purchases by each Lord Abbett-sponsored fund's Directors or Trustees
(including retired Directors or Trustees), officers of each Lord
Abbett-sponsored fund, employees and partners of Lord Abbett. These
categories of purchases also include other family members of such
purchasers.
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.
* These categories may be subject to a CDSC.
Class A Share CDSC. If you buy Class A shares under one of the starred (O)
categories listed above and you redeem any within 24 months after the month
in which you initially purchased them, the Fund will normally collect a
CDSC of 1%.
The Class A share CDSC generally will be waived for the following
conditions:
o benefit payments under Retirement Plans in connection with 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 (Balanced Fund, High Yield Fund and U.S. Government
Securities Fund only). 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
(Balanced Fund, High Yield Fund and U.S. Government Securities Fund Only)
- --------------------------------------------------------------------------------
Anniversary(1) of the day on Contingent Deferred Sales Charge
which the purchase order on redemption (as % of amount
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) The anniversary is the same calendar day in each respective year after the
date of purchase. For example, the anniversaries for shares purchased on
May 1 will be May 1 of each succeeding year.
(2) Class B shares will automatically convert to Class A shares on the eighth
anniversary of the purchase of Class B shares.
The Class B share CDSC generally will be waived under the following
circumstances:
o benefit payments under Retirement Plans in connection with 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
Benefit Payment Documentation (Class A CDSC 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 minimize the amount of any CDSC, each Fund redeems shares in the following
order:
1. shares acquired by reinvestment of dividends and capital gains (always free
of a CDSC)
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 17
<PAGE>
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 the purchase of such
shares.
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 (a) pursuant to a Mutual Fund Fee Based
Program, or (b) 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 Funds on behalf of the Class P
shareholders.
SALES 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 as shown in the table "Fees
and Expenses": sales charges which are paid directly by shareholders; and
12b-1 distribution fees that are paid out of the Fund's assets. Service
compensation originates from 12b-1 service fees. The total 12b-1 fees
payable with respect to each share class of each Fund are up to .35% of
Class A shares (plus distribution fees of up to 1.00% on certain qualifying
purchases), 1.00% of Class B and C shares, and .45% of Class P shares. The
amounts payable as compensation to Authorized Institutions, such as your
dealer, are shown in the chart at the end of this prospectus. The portion
of such compensation paid to Lord Abbett Distributor is discussed under
"Sales Activities" and "Service Activities." Sometimes we do not pay
compensation where tracking data is not available for certain accounts or
where the Authorized Institution waives part of the compensation. In such
cases, we may not require payment of any otherwise applicable CDSC.
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 the 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.
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, the 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.
18 Your Investment
<PAGE>
OPENING YOUR ACCOUNT
MINIMUM INITIAL INVESTMENT
o Regular Account (Balanced Fund, High Yield Fund and Limited Duration
U.S. Government Securities Fund)$1,000
(U.S. Government Securities Fund) $500
- --------------------------------------------------------------------------------
o Individual Retirement Accounts and
- --------------------------------------------------------------------------------
403(b) Plans under the Internal Revenue Code $250
- --------------------------------------------------------------------------------
o Uniform Gift to Minor Account $250
- --------------------------------------------------------------------------------
o Invest-A-Matic $250
- --------------------------------------------------------------------------------
For Retirement Plans and Mutual Fund Fee Based 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 ensure that your order will be
accepted.
Name of Fund
P.O. Box 219100
Kansas City, MO 64121
By Exchange. Telephone the Fund at 800-821-5129 to request an exchange from
any eligible Lord Abbett-sponsored fund.
Proper Form. An order submitted directly to the Fund must contain: (1) a
completed application, and (2) payment by check. When purchases are made by
check, redemption proceeds will not be paid until the Fund or transfer
agent is advised that the check has cleared, which may take up to 15
calendar days. For more information call the Fund at 800-821-5129.
REDEMPTIONS
By Broker. Call your investment professional for instructions 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 should call the Funds 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(s) 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. Under unusual circumstances, the
Funds may suspend redemptions, or postpone payment for more than seven
days, as permitted by federal securities laws.
To determine if a CDSC applies to a redemption, see "Class A share CDSC,"
"Class B share CDSC" or "Class C share CDSC."
Exchange Limitations. Exchanges should not be used to try to take advantage of
short-term swings in the market. Frequent exchanges create higher expenses for
the Funds. Accordingly, the Funds reserve the right to limit or terminate this
privilege for any shareholder making frequent exchanges or abusing the
privilege. The Funds also may revoke the privilege for all share-holders upon 60
days' written notice.
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.
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 19
<PAGE>
DISTRIBUTIONS AND TAXES
The Balanced and High Yield Funds normally declare and pay dividends from
their net investment income monthly, while the Limited Duration and U.S.
Government Securities Funds normally declare dividends from their net
investment income on a daily basis and pay them on a monthly basis. Each
Fund distributes net capital gains (if any) as "capital gains
distributions" on an annual basis. Your distributions will be reinvested in
the 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 is the
same for all shareholders regardless of how long they have owned Fund
shares or whether distributions are reinvested or paid in cash.
Except in tax-advantaged accounts, any sale, redemption or exchange of Fund
shares may be taxable to the shareholder.
Information on the tax treatment of distributions, including the source of
dividends and distributions of capital gains by the Funds, will be mailed
to shareholders each year. Because everyone's tax situation is unique, you
should consult your tax adviser regarding the federal, state and local tax
rules that apply to you.
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 may 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) into
(Dollar-cost your Fund account by means of automatic money transfers from
averaging) your bank checking account. See the attached application for
instructions.
Div-Move You may automatically reinvest the dividends and
distributions from your account into another account in any
Eligible Fund ($50 minimum).
For selling shares
Systematic You may make regular withdrawals from most Lord Abbett
Withdrawal Funds. Automatic cash withdrawals will be paid to you from
Plan ("SWP") 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.
Class B shares The CDSC will be waived on SWP redemptions of up to 12% of
the current net asset value of your account at the time of
your SWPrequest. For Class B share SWP 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 "CDSC"
under "Purchases."
- --------------------------------------------------------------------------------
OTHER SERVICES
Telephone Investing. After we have received the attached application
(selecting "yes" under Section 8C and completing Section 7), you may
instruct us by phone to have money transferred from your bank account to
purchase shares of the Funds for an existing account. Each Fund will
purchase the requested shares when it receives the money from your bank.
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 Funds 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.
20 Your Investment
<PAGE>
Exchanges. You or your investment professional, may instruct the Funds to
exchange shares of any class for shares of the same class of any Eligible
Fund. Instruction may be provided in writing or by telephone, with proper
identification, by calling 800-821-5129. The Funds must receive
instructions for the exchange before the close of the NYSE on the day of
your call in which case 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.
MANAGEMENT
The investment adviser of each Fund is Lord, Abbett & Co., located at 90
Hudson St., Jersey City, NJ 07302-3973. Founded in 1929, Lord Abbett
manages one of the nation's oldest mutual fund complexes, with
approximately $35 billion in more than 40 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.
Lord Abbett is entitled to a monthly fee based on the following Funds'
average daily net assets for each month at the annual rate set forth below:
.75 of 1% for Balanced Fund
.60 of 1% for High Yield Fund and
.50 of 1% for Limited Duration U.S. Government Securities Fund.
For the fiscal year ended November 30, 1999, Lord Abbett waived its entire
management fees for these Funds. Lord Abbett also subsidized a portion of
the other expenses for High Yield Fund and Limited Duration U.S. Government
Securities Fund.
Lord Abbett is entitled to a monthly fee based on U.S. Government
Securities Fund's average daily net assets for each month at the annual
rate set forth below:
.50 of 1% on the first $3 billion of average daily net assets and
.45 of 1% on its assets over $3 billion.
For the fiscal year ended November 30, 1999, the fees paid to Lord Abbett
were at an effective annual rate of .50 of 1% for the U.S. Government
Securities Fund. Each Fund pays all expenses not expressly assumed by Lord
Abbett.
Portfolio Managers. Lord Abbett uses a team of portfolio managers and
analysts acting together to manage each Fund's investments.
Your Investment 21
<PAGE>
Balanced Fund. Zane E. Brown, Partner and Director of Fixed Income of Lord
Abbett, heads the team, other senior members of which include Robert G.
Morris and W. Thomas Hudson, Jr., each a Partner of Lord Abbett, and Eli
Salzman. Mr. Brown has been with Lord Abbett since 1992.
Messrs. Hudson and Morris have been with Lord Abbett since 1982 and 1991,
respectively. Mr. Salzman joined Lord Abbett in 1997 and previously was a
Vice President with Mutual of America Capital Corp. during 1997 and a Vice
President with Mitchell Hutchins Asset Management, Inc. from 1986 to 1997.
High Yield Fund. Christopher J. Towle, Partner of Lord Abbett, heads the
team, the other senior members of which include Richard Szaro, Michael
Goldstein and Thomas Baade. Messrs. Towle and Szaro have been with Lord
Abbett since 1988 and 1983, respectively. Mr. Goldstein has been with Lord
Abbett since 1997. Before joining Lord Abbett, Mr. Goldstein was a bond
trader for Credit Suisse BEA Associates from August 1992 through April
1997. Mr. Baade joined Lord Abbett in 1998; prior to that he was a credit
analyst with Greenwich Street Advisors.
Limited Duration U.S. Government Securities Fund and U.S. Government
Securities Fund. Robert Gerber, Partner of Lord Abbett
heads the team, the other senior members of which
include Walter H. Prahl and Robert A Lee. 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 C. Bernstein &
Co., Inc. since 1992. Mr. Prahl joined Lord Abbett in 1997 as Director of
Quantitative Research, Taxable Fixed Income. Before joining Lord Abbett,
Mr. Prahl served as a Fixed Income Research Analyst at Sanford C. Bernstein
& Co., Inc. since 1994. Mr. Lee joined Lord Abbett in 1997 as a Fixed
Income Portfolio Manager; prior to that he served as a Portfolio Manager at
ARM Capital Advisors since 1995 and an Assistant Portfolio Manager at
Kidder Peabody Asset Management from 1993.
22 Your Investment
<PAGE>
For More Information
OTHER INVESTMENT TECHNIQUES
This section describes some of the investment techniques that might be used
by each 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. Each 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.
Equity Securities. The High Yield Fund may invest up to 20% of its total
assets in equity securities. These include common stocks, preferred stocks,
convertible securities, warrants, and similar instruments. Common stocks,
the most familiar type, represent an ownership interest in a corporation.
Although equity securities have a history of long-term growth in their
value, their prices fluctuate based on changes in a company's financial
condition and on market and economic conditions.
Foreign Securities. Certain of the underlying funds in which the Balanced
Fund may invest may invest up to 10% (20% in the case of Bond-Debenture
Fund) of their assets in foreign securities. The High Yield Fund may invest
20% of it assets in foreign securities.
Foreign markets and the securities traded in them are not subject to the
same degree of regulation as U.S. markets. Securities clearance and
settlement procedures may be different in foreign countries. There may be
less trading volume in foreign markets, subjecting the securities traded in
them to higher price fluctuations. Transaction costs may be higher in
foreign markets. A fund may hold foreign securities which trade on days
when it does not sell shares. As a result, the value of a fund's portfolio
securities may change on days an investor may not purchase or sell Fund
shares.
Foreign issuers are generally not subject to similar, uniform accounting,
auditing and financial reporting requirements as U.S. issuers. Foreign
investments may be affected by changes in currency rates or currency
controls. Certain foreign countries may limit a fund's ability to remove
its assets from the country. With respect to certain foreign countries,
there is a possibility of nationalization, expropriation or confiscatory
taxation, imposition of withholding or other taxes, and political or social
instability which could affect investments in those countries.
Futures and Options Transactions. Certain of the underlying funds in which
the Balanced
Fund may invest and the other Funds may purchase and write put and call
options on securities or stock indices that are traded on national
securities exchanges and enter into financial futures transactions. A put
option gives the buyer of the option the right
to sell, and the seller of the option the obligation to buy, the underlying
instrument during the option period. Each of the underlying funds and the
Funds listed above will not purchase an option or purchase or sell a
futures contract if, as a result, more than 5% of its net assets would be
invested in premiums and initial margin deposits.
For More Information 23
<PAGE>
A call option gives the buyer of the option the right to buy, and the
writer (seller) of the option the obligation to sell, the underlying
instrument. All funds mentioned above may write (sell) only "covered"
options. This means that a fund may only sell call options on securities
which the fund owns. When a fund writes a call option it gives up the
potential for gain on the underlying securities in excess of the exercise
price of the option during the period that the option is open.
The High Yield Fund, Limited Duration U.S. Government Fund and U.S.
Government Fund will only write covered call options and secured put
options on securities having an aggregate market value not to exceed 25% of
their assets.
Risks of Futures Contracts and Options Transactions. Transactions in
derivative instruments such as futures and options involve additional
risk of loss.
Loss may result from a lack of correlation between changes in the value of
these derivative instruments and the Fund's assets being hedged, the
potential illiquidity of the markets for derivative instruments, or the
risks arising from margin requirements and related leverage factors
associated with such transactions. The use of these investment techniques
also involves the risk of loss if the portfolio managers are incorrect in
their expectation of fluctuations in securities prices. In addition, the
loss that may be incurred by a Fund in entering into futures contracts
and in writing call options on futures is potentially unlimited and may
exceed the amount of the premium received.
Reverse Repurchase Agreements. The Limited Duration U.S. Government Fund
and U.S. Government Fund may enter into 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 later at a set price. Reverse repurchase agreements expose a Fund
to cre dit 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. These Funds will attempt to minimize this risk by managing
their duration. Each 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 payments
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.
24 For More Information
<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 a Fund is not offered
for sale; (2) Lord Abbett Equity Fund; (3)
Lord Abbett Series Fund; (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. With respect to a redemption request, if (for example) the
request is on behalf of the estate of a deceased shareholder, John W. Doe,
by a person (Robert A. Doe) who has the legal capacity to act for the
estate of the deceased shareholder because he is the executor of the
estate, then the request must be executed as follows: Robert A.Doe,
Executor of the Estate of John W. Doe. That signature using that capacity
must be guaranteed by an Eligible Guarantor.
Similarly, if (for example) the redemption request is on behalf of the ABC
Corporation by a person (Mary B. Doe) that has the legal capacity to act on
behalf of this corporation, because she is the President of the
corporation, then the request must be executed as follows: ABC Corporation
by Mary B.Doe, President. That signature using that capacity must be
guaranteed by an Eligible Guarantor (see example in right column).
Mutual Fund Fee Based Program. Certain unaffiliated authorized brokers,
dealers, registered investment advisers or other financial institutions
("entities") who either (1) 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 entities, or (2) 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: (1) an individual, (2) an
individual and his or her spouse and children under the age of 21, and (3)
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 Fee Based Program.
Such characteristics include, among other things, the fact that an
Authorized Institution does not charge its clients any fee of
GUARANTEED SIGNATURE. An acceptable form of guarantee would be as follows:
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
[SIGNATURE ILLEGIBLE]
- --------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
In the case of the corporation --
ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
[SIGNATURE ILLEGIBLE]
- --------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
For More Information 25
<PAGE>
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
The following is a discussion of recent performance for the twelve month
period ending November 30, 1999.
The Balanced Fund utilizes a "Fund of Funds" format which currently divides
assets approximately 50%/50% between Lord Abbett Affiliated Fund (equity)
and Lord Abbett Bond-Debenture Fund (fixed income) respectively. Affiliated
Fund's performance was supported by its exposure to the technology sector.
However, the investment team is now beginning to scale back the portfolio's
allocation to technology stocks. The proceeds from those sales will most
likely be used to increase allocation to cyclical stocks such as paper,
chemicals and electrical equipment, as well as other industrial stocks that
tend to reflect improving global economies. They also began focusing some
attention on the property and casualty insurance sectors, and will seek out
companies in this market segment that display improving fundamentals. The
Fund was generally underweighted in financial companies, which worked to
its advantage since many of these stocks struggled as interest rates
increased. The overall strategy of the Bond-Debenture Fund is to identify
good bond values while being careful about credit selection. The investment
team has tried to sidestep the risk of rising interest rates by keeping
their exposure to Treasuries to a minimum and slightly increasing their
allocation to convertible securities. Bond-Debenture Fund maintained an
allocation of over 65% in high-yield bonds as they continued to see
tremendous yield advantages over Treasuries.
Lord Abbett High Yield Fund's strategy is to build a portfolio of
high-yield bonds from companies with strong earnings that are well managed
and are undervalued relative to their fundamentals. We continued to find
value among companies in the cable, media, technology and
telecommunications industries. With ongoing consolidation in these sectors,
many companies exhibit strong earnings potential due to the growth in data,
video and voice services. We increased our exposure to certain basic
industries such as paper companies, and increased our multinational
technology manufacturing and semiconductor holdings, which exhibited
visible price improvements and have the potential to benefit from global
economic growth. We remained underweighted in financial companies (e.g.,
banking, insurance), retail companies and other consumer-oriented companies
that were hurt by fierce competition in their respective industries.
The Limited Duration U.S. Government Securities Fund and the U.S.
Government Securities Fund continued to emphasize a large concentration of
non-Treasury securities to take advantage of the significantly higher
yields -- without incurring a proportionate increase in credit risk. If
market valuations remain unchanged, we expect to continue with the strategy
of emphasizing non-Treasury investments. If the spread (the difference in
yield between different types of bonds of the same maturity) narrows, we
expect to decrease our exposure to non-Treasury securities accordingly.
While the overall level of interest rates has a short-term impact on our
portfolio, it does not change our long-term investment strategy, which is
to seek out undervalued securities across various maturities to maximize
our total return (price appreciation plus coupon yield) potential.
26 For More Information
<PAGE>
Balanced 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, 1999 and the
Independent Auditors' Report thereon appear in the Annual Report to
Shareholders for the fiscal year ended November 30, 1999 and are
incorporated by reference into the Statement of Additional Information,
which is available upon request. Certain information reflects financial
results for a single Fund share.
<TABLE>
<CAPTION>
====================================================================================================================================
Class A Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Period Ended November 30,
Per Share Operating Performance: 1999 1998 1997 1996(d)
1996 1995(a)
<S> <C> <C> <C> <C>
<C> <C>
Net asset value, beginning of year $12.87 $12.80 $11.81 $11.30
$10.71 $9.52
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .54(e) .54(e) .47(e) .0312
.472 .365
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------------
gain on investments .61 .40 1.15 .5208
.732 1.185
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.15 .94 1.62 .552
1.204 1.55
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.54) (.52) (.46) (.0420)
(.462) (.36)
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain (1.14) (.35) (.17) --
(.152) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $12.34 $12.87 $12.80 $11.81
$11.30 $10.71
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(b) 10.01% 7.69% 14.24% 4.89%(c)
11.55% 16.32%(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, including waiver and reimbursement .25% 0.27%(f) 1.10%(f) 0.07%(c)
0.93% 0.37%(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver and reimbursement 1.00% 0.92%(f) 1.53%(f) 0.11%(c)
1.59% 1.26%(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.41% 4.28% 3.89% 0.26%(c)
4.18% 4.39%(c)
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Class C Shares
-------------- --------------
Period Ended November 30, Period Ended November 30,
Per Share Operating Performance: 1999 1998(a) 1999 1998 1997
1996(d) 1996(a)
<S> <C> <C> <C> <C> <C>
<C> <C>
Net asset value, beginning of year $12.86 $13.14 $12.85 $12.78 $11.79
$11.29 $10.73
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .52(e) .25(e) .52(e) .41(e) .35(e)
.0067 .0349
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------------
gain (loss) on investments .52 (.28) .52 .40 1.15
.5298 .6346
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.04 (.03) 1.04 .81 1.50
.5365 .6695
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.44) (.25) (.44) (.39) (.34)
(.0365) (.0730)
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain (1.14) -- (1.14) (.35) (.17)
- -- (.0365)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.32 $12.86 $12.31 $12.85 $12.78
$11.79 $11.29
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(b) 9.03% (0.16)%(c) 9.03% 6.62% 13.14%
4.76%(c) 7.78%(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, including waiver and
reimbursement 1.00% 0.61%(c)(f) 1.00% 1.26%(f) 2.08%(f)
0.16%(c) 0.62%(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver and
reimbursement 1.75% 1.26%(c)(f) 1.75% 1.91%(f) 2.51%(f)
0.20%(c) 0.77%(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.28% 1.98%(c) 4.28% 3.24% 2.88%
0.17%(c) 0.70%(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Period Ended November 30,
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Data For All Classes: 1999 1998 1997 1996(d) 1996 1995(a)
Net Assets, end of year (000) $100,130 $57,675 $20,340 $11,406 $10,988 $5,713
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 8.30% 131.36% 216.07% 10.05% 187.78% 131.80%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Commencement of offering (Class A shares: December 27, 1994; Class B
shares: May 1, 1998 and Class C shares: July 15, 1996) respective class
shares.
(b) Total return does not consider the effects of sales loads and assumes
reinvestment of all distributions.
(c) Not annualized.
(d) For the one month ended November 30, 1996.
(e) Calculated using average shares outstanding during the year.
(f) The ratio includes expenses paid through an expense offset arrangement.
Financial Information 27
<PAGE>
Balanced Fund
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in Class A shares
to the same investment in the Russell 3000 Index, 60% Russell 3000 40%
Lehman Brothers Aggregate Bond Index and Lipper Balanced Funds Average
assuming reinvestment of all dividends and distributions.
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
NAV MAX Russell Lipper Russell
3000 Balanced
11/30/95 12,070 11,372 13,461 12,395 12,751
11/30/96 13,611 12,823 16,869 14,461 14,996
11/30/97 15,547 14,648 21,534 16,863 17,943
11/30/98 16,743 15,774 25,638 18,806 20,676
11/30/99 18,419 17,354 30,989 20,500 23,246
================================================================================
Average Annual Total Return At Maximum Applicable
Sales Charge For The Periods Ending November 30, 1999
1 Year Life
- --------------------------------------------------------------------------------
Class A(3) 3.60% 11.82%
- --------------------------------------------------------------------------------
Class B(4) 4.25% 3.20%
- --------------------------------------------------------------------------------
Class C(5) 8.08% 12.41%
- --------------------------------------------------------------------------------
(1) Reflects the deduction of the maximum initial sales charge of 5.75%
(2) Performance for the unmanaged indices does not reflect fees or expenses.
Lipper Balanced Funds Average does reflect fees or expenses. The
performance of the indices, is not necessarily representative of the Fund's
performance.
(3) 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, 1999 using the SEC-required uniform method to
compute such return.
(4) The Class B shares were first offered on 5/1/98. Performance reflects the
deduction of a CDSC of 5%( for one year) and 3% (for the life of class).
(5) The Class C shares were first offered on 7/15/96. Performance reflects the
deduction of a CDSC of 1%( for one year) and 0% (for the life of class).
28 Financial Information
<PAGE>
High Yield 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, 1999 and the
Independent Auditors' Report thereon appear in the Annual Report to
Shareholders for the fiscal year ended November 30, 1999 and are
incorporated by reference into the Statement of Additional Information,
which is available upon request. Certain information reflects financial
results for a single Fund share.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares
Class C Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended November 30,(a)
Per Share Operating Performance: 1999
1999 1999
<S> <C> <C>
<C>
Net asset value, beginning of year $10.08 $10.08
$10.08
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income(d) .83
.78 .78
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------------
loss on investments (.34)
(.37) (.37)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .49
.41 .41
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.85)
(.79) (.79)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $9.72 $9.70
$9.70
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(b)(c) 4.99%
4.22% 4.21%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, including waiver and reimbursement .46%
.90% .90%
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver and reimbursement 1.25%
1.45% 1.45%
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 8.44%
7.92% 7.92%
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended November
30,(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Data For All Classes: 1999
Net assets, end of year (000) $28,689
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 109.57%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) From December 31, 1998 commencement of operations.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Not annualized.
(d) Calculated using average shares outstanding during the year.
Financial Information 29
<PAGE>
High Yield Fund
Line Graph Comparison
Immediately below is a comparison of a $10,000 investment in Class A shares
to the same investment in both the Merrill Lynch High Yield Master Index
and the First Boston High Yield Index, assuming reinvestment of all
dividends and distributions.
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
ML HY
Master FB HY NAV MAX
01/31/98 10,099 10,094 10,146 9,668
02/28/99 10,022 10,073 10,194 9,711
03/31/99 10,108 10,164 10,343 9,854
04/30/99 10,266 10,389 10,585 10,085
05/31/99 10,195 10,277 10,304 9,817
06/30/99 10,176 10,282 10,331 9,844
07/31/99 10,191 10,287 10,390 9,900
08/31/99 10,091 10,196 10,284 9,798
09/30/99 10,049 10,117 10,248 9,764
10/31/99 9,990 10,068 10,309 9,822
11/30/99 10,104 10,204 10,499 10,003
===
================================================================================
Average Annual Total Return At Maximum Applicable
Sales Charge For The Periods Ending November 30, 1999
Life
- --------------------------------------------------------------------------------
Class A(2) 0.03%
- --------------------------------------------------------------------------------
(1) Reflects the deduction of the maximum initial sales charge of 4.75%.
(2) Performance for the unmanaged indices does not reflect any fees or
expenses. The performance of the indices is not necessarily representative
of the Fund's performance.
(3) 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, 1999 using the SEC-required uniform method to
compute total return. The Class A share inception date is 12/31/98.
30 Financial Information
<PAGE>
Limited Duration U.S. Gov't 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, 1999 and the
Independent Auditors' Report thereon appear in the Annual Report to
Shareholders for the fiscal year ended November 30, 1999 and are
incorporated by reference into the Statement of Additional Information,
which is available upon request. Certain information reflects financial
results for a single Fund share.
<TABLE>
<CAPTION>
====================================================================================================================================
Class A Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
Per Share Operating Performance: 1999 1998 1997 1996(d)
1996 1995
<S> <C> <C> <C> <C>
<C> <C>
Net asset value, beginning of year $4.46 $4.40 $4.42 $4.39
$4.53 $4.44
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .27(e) .26(e) .25(e) .0174
.1912 .2316
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------------
gain (loss) on investments (.15) .04 (.02) .0333
(.0751) .1017
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .12 .30 .23 .0507
.1161 .3333
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.24) (.24) (.25) (.0207)
(.2561) (.2433)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $4.34 $4.46 $4.40 $4.42
$4.39 $4.53
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(b) 3.05% 7.06% 5.46% 1.15%(c)
2.67% 8.16%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, including waiver and reimbursement .32%(f) 0.47%(f) 0.51%(f) 0.11%(c)
1.81% 1.40%
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver and
reimbursement 1.00%(f) 1.38%(f) 1.40%(f) 0.13%(c)
2.73% 1.71%
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 6.21% 5.86% 5.81% 0.41%(c)
4.58% 5.62%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class C Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
Per Share Operating Performance: 1999 1998 1997
1996(d) 1996(a)
<S> <C> <C> <C>
<C> <C>
Net asset value, beginning of year $4.47 $4.40 $4.42
$4.39 $4.34
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .23(e) .22(e) .21(e)
.0138 .0667
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------------
gain (loss) on investments (.17) .05 (.02)
.0342 .0515
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .06 .27 .19
.0480 .1182
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.20) (.20) (.21)
(.0180) (.0682)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $4.33 $4.47 $4.40
$4.42 $4.39
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(b) 1.33% 6.23% 4.45%
1.09%(c) 2.98%(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, including waiver and reimbursement 1.29%(f) 1.35%(f) 1.44%(f)
0.19%(c) 0.69%(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver and reimbursement 1.97%(f) 2.26%(f) 2.32%(f)
0.21%(c) 0.77%(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 5.30% 4.94% 4.84%
0.33%(c) 1.26%(c)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended November 30, Year Ended
October 31,
Supplemental Data For All Classes: 1999 1998 1997 1996(d)
1996 1995
<S> <C> <C> <C> <C>
<C> <C>
Net assets, end of year (000) $16,249 $11,000 $10,276 $12,696
$12,735 $8,922
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 310.16% 346.67% 343.53% 175.98%
340.62% 222.00%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Commencement of offering respective Class shares (Class A - November 4,
1993 and; Class C - July 15, 1996).
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Not annualized.
(d) For the month ended November 30, 1996.
(e) Calculated using average shares outstanding during the year.
(f) The ratios includes expenses paid through an expense offset arrangement.
Financial Information 31
<PAGE>
Limited Duration U.S. Gov't 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.
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Lipper Lipper Lehman MAX NAV
Inter Short Interm
Govt Govt Govt.
Fd Fd Bd
11/30/94 9,632 9,990 9,834 9,362 9,672
11/30/95 11,034 10,915 11,177 10,241 10,579
11/30/96 11,580 11,489 11,810 10,538 10,886
11/30/97 12,287 12,108 12,552 11,113 11,480
11/30/98 13,307 12,814 13,675 11,899 12,292
11/30/99 13,194 13,168 13,839 12,263 12,667
================================================================================
Average Annual Total Return At Maximum Applicable
Sales Charge For The Periods Ending November 30, 1999
1 Year 5 Years 10 Years (or Life)
- --------------------------------------------------------------------------------
Class A(3) -0.30% 4.85% 3.41%
- --------------------------------------------------------------------------------
Class C(4) 0.36% - 4.77%
- --------------------------------------------------------------------------------
(1) Reflects the deduction of the maximum initial sales charge of 3.25%.
(2) Performance for the unmanaged Lipper's Short U.S. Government Fund Index and
Lipper's Intermediate U.S. Government Fund Index reflects fees or expenses.
Performance for the unmanaged Lehman Intermediate Government Bond Index
does not reflect fees or expenses. The performance of the indices, is not
necessarily representative of the Fund's performance.
(3) This shows total return which is the percent change in value, after
deduction of the maximum initial sales charge of 3.25% applicable to Class
A shares, with all dividends and distributions reinvested for the periods
shown ending November 30, 1999, using the SEC-required uniform method to
compute such return. The Class C shares were first offered on 7/15/96.
Performance reflects the deduction of a CDSC of 1% (for 1 year) and 0% (for
the life of the class).
(4) The Class C shares were first offered on 7/15/96. Performance reflects the
deduction of a CDSC of 1% (for 1 year) and 0% (for the life of the class).
32 Financial Information
<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, 1999 and the
Independent Auditors' Report thereon appear in the Annual Report to
Shareholders for the fiscal year ended November 30, 1999 and are
incorporated by reference into the Statement of Additional Information,
which is available upon request. Certain information reflects financial
results for a single Fund share.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
Per Share Operating Performance: 1999 1998 1997
1996 1995
<S> <C> <C> <C>
<C> <C>
Net asset value, beginning of year $2.64 $2.59 $2.63
$2.73 $2.59
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .15(d) .17(d) .20(d)
.215 .235
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------------
gain (loss) on investments (.18) .05 (.03)
(.105) .136
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (.03) .22 .17
.11 .371
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.16) (.17) (.21)
(.21) (.231)
- ------------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $2.45 $2.64 $2.59
$2.63 $2.73
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(b) (.72)% 8.86% 6.67%
4.41% 14.89%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses 1.02%(e) 0.96%(e) 0.92%(e)
0.88% 0.90%
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 6.07% 6.36% 7.82%
8.12% 8.85%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class B Shares Class C Shares
Year Ended November 30, Year Ended November
30,
Per Share Operating Performance: 1999 1998 1997 1996(a) 1999 1998
1997 1996(a)
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Net asset value, beginning of year $2.64 $2.58 $2.63 $2.57 $2.65 $2.59
$2.63 $2.55
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .14(d) .14(d) .18(d) .063 .14(d) .15(d)
.18(d) .066
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------------
gain (loss) on investments (.19) .07 (.04) .060 (.20) .06
(.03) .085
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (.05) .21 .14 .123 (.06) .21
.15 .151
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.14) (.15) (.19) (.063) (.14) (.15)
(.19) (.071)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $2.45 $2.64 $2.58 $2.63 $2.45 $2.65
$2.59 $2.63
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(b) (1.43)% 8.49% 5.47% 5.45%(c) (1.80)% 8.47%
5.86% 6.49%(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses 1.69%(e) 1.66%(e) 1.64%(e) .48%(c) 1.64%(e) 1.62%(e)
1.55%(e) 0.60%(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 5.33% 5.36% 6.77% 2.21%(c) 5.46% 5.69%
7.25% 2.60%(c)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Data For All Classes: 1999 1998 1997
1996 1995
<S> <C> <C> <C>
<C> <C>
Net assets, end of year (000) $1,505,590 $1,902,404 $2,286,412
$2,907,291 $3,272,865
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 396.37% 399.64% 712.82%
820.59% 544.31%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Commencement of offering respective Class shares (Class B - August 1, 1996
and; Class C - July 15, 1996).
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Not annualized.
(d) Calculated using average shares outstanding during the period.
(e) The ratio includes expenses paid through an expense offset arrangement.
Financial Information 33
<PAGE>
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 both the Lipper's General U.S. Government Bond
Fund Index and the Lehman Government Bond Index, assuming reinvestment of
all dividends and distributions.
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Lipper Lehman MAX NAV
Fd Fd Bd
11/30/90 10,688 10,724 10,255 10,782
11/30/91 12,030 12,144 11,727 12,329
11/30/92 13,035 13,245 12,811 13,469
11/30/93 14,441 14,843 14,181 14,910
11/30/94 13,735 14,310 13,579 14,278
11/30/95 16,087 16,800 16,602 16,402
11/30/96 16,801 17,690 16,288 17,125
11/30/97 17,915 18,990 17,375 18,268
11/30/98 19,524 21,032 18,915 19,887
11/30/99 19,121 20,742 18,780 19,744
================================================================================
Average Annual Total Return At Maximum Applicable
Sales Charge For The Periods Ending November 30, 1999
1 Year 5 Years 10 Years (or Life)
- --------------------------------------------------------------------------------
Class A(3) -5.40% 5.65% 6.50%
- --------------------------------------------------------------------------------
Class B(4) -6.09% - 4.57%
- --------------------------------------------------------------------------------
Class C(5) -2.73% - 5.56%
- --------------------------------------------------------------------------------
(1) Reflects the deduction of the maximum initial sales charge of 4.75%.
(2) Performance for the unmanaged Lipper's General U.S. Government Bond Fund
Index does reflect fees or expenses. Whereas, performance for the unmanaged
Lehman Government Bond Index does not reflect fees or expenses. The
performance of the indices is not necessarily representative of the Fund's
performance.
(3) 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, 1999, using the SEC-required uniform method to
compute such return.
(4) The Class B shares were first offered on 8/1/96. Performance reflects the
deduction of a CDSC of 5% (for 1 year) and 3% (for the life of the class).
(5) Class C shares were first offered on 7/15/96. Performance reflects the
deduction of a CDSC of 1% (for 1 year) and 0% (for the life of the class).
34 Financial Information
<PAGE>
COMPENSATION FOR YOUR DEALER - Balanced 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> <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 3.95% 3.25% 0.25%
3.49%
- ------------------------------------------------------------------------------------------------------------------------------------
$250,000 - $499,999 2.75% 2.25% 0.25%
2.49%
- ------------------------------------------------------------------------------------------------------------------------------------
$500,000 - $999,999 1.95% 1.75% 0.25%
1.99%
- ------------------------------------------------------------------------------------------------------------------------------------
$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(4) 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(4)
- ------------------------------------------------------------------------------------------------------------------------------------
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%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION AFTER FIRST YEAR
Class A investments Percentage of average net assets(5)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.25%
0.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Class B investments(4)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.25%
0.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Class C investments(4)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.75% 0.25%
1.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Class P investments
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20%
0.45%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The service fee for Class A and P shares are 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, such as your dealer,
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 Letters of
Intention privileges are included and (b) for Special Retirement Wrap
Programs, only new sales are eligible and exchanges into the Fund are
excluded. Certain purchases of Class A shares are subject to a CDSC.
(4) Class B and C shares are subject to CDSCs.
(5) With respect to Class B, C and P shares, 0.25%, 1.00% and 0.45%,
respectively, of the average annual net asset value of such shares
outstanding during the quarter, such as your dealer, (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 35
<PAGE>
COMPENSATION FOR YOUR DEALER - High Yield and U.S. Government Securities Funds
<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 4.75% 4.00% 0.25%
4.24%
- ------------------------------------------------------------------------------------------------------------------------------------
$100,000 - $249,999 3.95% 3.25% 0.25%
3.49%
- ------------------------------------------------------------------------------------------------------------------------------------
$250,000 - $499,999 2.75% 2.25% 0.25%
2.49%
- ------------------------------------------------------------------------------------------------------------------------------------
$500,000 - $999,999 1.95% 1.75% 0.25%
1.99%
- ------------------------------------------------------------------------------------------------------------------------------------
$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(4) 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(4)
- ------------------------------------------------------------------------------------------------------------------------------------
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%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION AFTER FIRST YEAR
Class A investments Percentage of average net assets(5)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.25%
0.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Class B investments(4)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.25%
0.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Class C investments(4)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.65% 0.25%
0.90%
- ------------------------------------------------------------------------------------------------------------------------------------
Class P investments
- ------------------------------------------------------------------------------------------------------------------------------------
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, such as your dealer,
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 Letters of
Intention privileges are included and (b) for Special Retirement Wrap
Programs, only new sales are eligible and exchanges into the Fund are
excluded. Certain purchases of Class A shares are subject to a CDSC.
(4) Class B and C shares are subject to CDSCs.
(5) With respect to Class B, C and P shares, 0.25%, 0.90% and 0.45%,
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 Funds, such as U.S. Government Securities
Fund, 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 Funds' shares.
36 Financial Information
<PAGE>
COMPENSATION FOR YOUR DEALER - Limited Duration U.S. Government Securities 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 3.25% 2.75% 0.00%
2.75%
- ------------------------------------------------------------------------------------------------------------------------------------
$50,000 - $99,999 2.75% 2.25% 0.00%
2.25%
- ------------------------------------------------------------------------------------------------------------------------------------
$100,000 - $249,999 2.50% 2.00% 0.00%
2.00%
- ------------------------------------------------------------------------------------------------------------------------------------
$250,000 - $499,999 2.00% 1.70% 0.00%
1.70%
- ------------------------------------------------------------------------------------------------------------------------------------
$500,000 - $999,999 1.50% 1.25% 0.00%
1.25%
- ------------------------------------------------------------------------------------------------------------------------------------
$1,000,000 1.00% 1.00% 0.00%
1.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Class C investments(3) 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%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION AFTER FIRST YEAR
Class A investments Percentage of average net assets(4)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.00%
0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Class C investments(3)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.65% 0.25%
0.90%
- ------------------------------------------------------------------------------------------------------------------------------------
Class P investments
- ------------------------------------------------------------------------------------------------------------------------------------
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 U.S. Government
Securities 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 Fund chart on the prior 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, such as your dealer,
from time to time.
(3) Class C shares are subject to CDSCs.
(4) With respect to Class C and P shares, 0.90% and 0.45%, 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. This fee
is paid quarterly in arrears. In the case of C shares for fixed-income
Funds, such as Limited Duration U.S. Government Securities 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.
Financial Information 37
<PAGE>
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 Fund's 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).
Lord Abbett Investment Trust -
Balanced Series
High Yield Fund
Limited Duration U.S. Government Securities Series
U.S. Government Securities Series
90 Hudson Street
Jersey City, NJ 07302-3973
SEC file number: 811-7988
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
90 Hudson Street
Jersey City, NJ 07302-3973
Via the Internet.
Lord, Abbett & Co.
www.lordabbett.com
Text only versions of Fund
documents can be viewed
online or downloaded from:
SEC
www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 202-942-8090) or by sending your request and a duplicating
fee to the SEC's Public Reference Section, Washington, DC 20549-6009 or by
sending your request electronically to [email protected].
LAIT-1-400
(4/00)
<PAGE>
LORD ABBETT
Statement of Additional Information April 1, 2000
Lord Abbett Investment Trust
U.S. Government Securities Series
Limited Duration U.S. Government Securities Series
Balanced Series
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 90 Hudson Street, Jersey City, N.J. 07302-3973.
This Statement relates to, and should be read in conjunction with, the
Prospectus dated April 1, 2000.
Shareholder inquiries should be made by directly contacting the Fund or by
calling 800-821-5129. The 1999 Annual shareholder report is available, without
charge, upon request by calling that number. In addition, you can make inquiries
through your dealer.
TABLE OF CONTENTS Page
1. Investment Policies...........................................2
2. Trustees and Officers.........................................5
3. Investment Advisory and Other Services........................9
4. Portfolio Transactions.......................................10
5. Purchases, Redemptions and Shareholder Services..............11
6. Performance..................................................19
7. Taxes........................................................20
8. Information About the Funds..................................21
9. Financial Statements.........................................22
10. Appendix.....................................................22
<PAGE>
1.
Investment Policies
Each Fund is a diversified open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "Act").
Fundamental Investment Restrictions. Each Fund is subject to the following
investment restrictions, which cannot be changed without approval of a majority
of each Fund's 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. 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 the investment restrictions in this section will be determined
at the time of purchase or sale of the portfolio investments.
2
<PAGE>
Non-Fundamental Investment Restrictions. In addition to the policies in the
Prospectus and the investment restrictions above which cannot be changed without
shareholder approval, each Fund is subject to the following non-fundamental
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, 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.
INVESTMENT TECHNIQUES
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 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.
3
<PAGE>
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. 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 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. 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.
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 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.
4
<PAGE>
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, the portfolio turnover rate for each Fund
is as follows:
1999 1998 1997
---- ---- ----
Balanced Series 8.30% 131.36% 216.07%
High Yield Fund 109.57% - -
Limited Duration U.S. Government
Securities Series 310.16% 346.67% 343.53%
U.S. Government Securities Series 396.37% 399.64% 712.82%
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.
2.
Trustees and Officers
The Board of Trustees of the Funds is responsible for the management of the
business and affairs of each Fund.
The following Trustee is a partner of Lord, Abbett & Co. ("Lord Abbett"), 90
Hudson Street, Jersey City, New Jersey 07302-3973. He has been associated with
Lord Abbett for over five years and is also an officer, director or trustee of
the thirteen other Lord Abbett-sponsored funds.
*Robert S. Dow, age 55, Chairman and President
*Mr. Dow is an "interested person" as defined in the Act.
The following outside trustees are also directors or trustees of thirteen other
Lord Abbett-sponsored funds.
E. Thayer Bigelow, Trustee
245 Park Avenue, Suite 2414
New York, New York
Senior Adviser, Time Warner Inc. (since 1998). 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 58.
5
<PAGE>
William H.T. Bush, Trustee
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 (since 1986). Age 61.
Robert B. Calhoun, Jr., Trustee
Monitor Clipper Partners
650 Madison Avenue, 9th Floor
New York, New York
Managing Director of Monitor Clipper Partners (since 1997) and President of the
Clipper Group L.P., both private equity investment funds (since 1990). Age 57.
Stewart S. Dixon, Trustee
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon (since 1990). Age 69.
John C. Jansing, Trustee
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 74.
C. Alan MacDonald, Trustee
415 Round Hill Road
Greenwich, Connecticut
Currently involved in golf development management on a consultancy basis (since
1999). Formerly, Managing Director of The Directorship Inc., a consultancy in
board management and corporate governance (1997-1999). Prior to that 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 66.
Hansel B. Millican, Jr., Trustee
Rochester Button Company
1328 Broadway (Suite 816)
New York, New York
President and Chief Executive Officer of Rochester Button Company (since 1991).
Age 71.
Thomas J. Neff, Trustee
Spencer Stuart
277 Park Avenue
New York, New York
6
<PAGE>
Chairman of Spencer Stuart, an executive search consulting firm (since 1976).
Currently serves as Director of Ace, Ltd. (NYSE). Age 62.
The second column of the following table sets forth the compensation accrued by
the Company for outside directors/trustees. The third column sets forth
information with respect to the pension or retirement benefits accrued by all
Lord Abbett-sponsored funds for outside directors/trustees. The forth column
sets forth the total compensation paid by all Lord Abbett-sponsored funds to the
outside directors/trustees, and amounts payable but deferred at the option of
the director/trustee. No director/trustee of the Funds associated with Lord
Abbett and no officer of the Funds received any compensation from the Funds for
acting as a director/trustee or officer.
For the Fiscal Year ended November 30, 1999
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Pension or For Year Ended
Retirement Benefits December 31, 1999
Accrued by the Total Compensation
Aggregate Fund and Accrued by the Company and
Compensation Thirteen Other Lord Thirteen 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 $5,586 $17,622 $57,700
William H. T. Bush* $2,141 $15,846 $58,000
Robert B. Calhoun, Jr.** $2,724 $12,276 $57,000
Stewart S. Dixon $5,473 $32,420 $58,500
John C. Jansing $5,400 $41,108/4 $57,500
C. Alan MacDonald $5,375 $26,763 $57,500
Hansel B. Millican, Jr. $5,400 $37,822 $57,250
Thomas J. Neff $5,497 $20,313 $59,660
</TABLE>
*Elected as of August 13, 1998.
**Elected as of June 17, 1998.
1. Outside directors'/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 fee payable by the
Fund to its outside directors/trustees may be deferred under a plan
("equity-based plan") that deems the deferred amounts to be invested in
shares of the Fund for later distribution to the directors/trustees. The
amounts of the aggregate compensation payable by the Company in accordance
with the equity-based plan as of November 30, 1999 deemed invested in Fund
shares, including dividends reinvested and changes in net asset value
applicable to such deemed investments were: : Mr. Bigelow, $52,634; Mr.
Calhoun, $4,280; Mr. Dixon, $50,088 Mr. Jansing, $166,883; Mr. MacDonald,
$93,380; Mr. Millican, $168,013 and Mr. Neff, $167,171. 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, $ ; Mr. Calhoun, $ ; Mr. Dixon, $ ; Mr. Jansing, $
; Mr. McDonald, $ ; Mr. Millican, $ ; and Mr. Neff, $ .
2. The amounts in Column 3 were accrued by the Lord Abbett-sponsored funds for
the twelve months ended November 30, 1999.
3. This column shows aggregate compensation, including directors'/trustees'
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, 1999, including fees directors/trustees'
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, 1999, including fees
directors/trusttees' have chosen to defer but does not include amounts
accrued under the equity based plan and shown in Column 3.
4. The equity-based plans superseded a previously approved retirement plan for
all directors/trustees. Directors/trustees had the option to convert their
accrued benefits under the retirement plan. All of the current outside
directors/trustees except one made such an election. 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.
7
<PAGE>
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Messrs. Brown, Carper, Gerber,
Hilstad, Hudson , Morris and Towle are partners of Lord Abbett; the others are
employees. None have received compensation from the Funds.
Executive Vice Presidents:
Zane E. Brown, age 48
Christopher J. Towle, age 42
Robert Gerber, age 45 (with Lord Abbett since 1997, formerly Senior Portfolio
manager at Sanford C. Bernstein & Co. from 1992-1997)
Robert G. Morris, age 55
Vice Presidents:
Paul A. Hilstad, age 57, Vice President and Secretary (with Lord Abbett since
1995; formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.)
Thomas J. Baade, age 35 (with Lord Abbett since 1998, formerly a credit analyst
with Greenwich Street Advisors.
Joan A. Binstock, age 45 (with Lord Abbett since 1999, formerly Chief Operating
Office of Morgan Grenfell from 1996 to 1999, prior thereto Principal of Ernst &
Young LLP)
Daniel E. Carper, age 48
Michael S. Goldstein, age 31 (with Lord Abbett since 1997 - formerly involved in
Fixed Income trading and anaylsis at BEA Associated and Portfolio Administrator
for The Chase Manhattan Bank)
W. Thomas Hudson, age 58
Lawrence H. Kaplan, age 43 (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.)
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)
A.Edward Oberhaus III, age 40
Walter H. Prahl, age 40 (with Lord Abbett since 1997, formerly Quantitative
Analyst at Sanford C. Bernstein & Co. from 1994-1997)
Tracie E. Richter, age 31 (with Lord Abbett since 1999, formerly Vice President
- - head of Fund Administration of Morgan Grenfell from 1998 to 1999, Vice
President of Bankers Trust from 1996 to 1998, prior thereto tax associate of
Goldman Sachs).
Eli M. Salzmann, age 34 (with Lord Abbett since 1997 - formerly Vice President
of Mutual of America Capital Corp.; prior thereto Vice President of Mitchell
Hutchins Asset Mgmt. From 1986 to 1996)
Richard S. Szaro, age 57
8
<PAGE>
Treasurer:
Donna M. McManus, age 39 (with Lord Abbett since 1996, formerly a Senior Manager
at Deloitte & Touche LLP).
As of March 15, 2000 our officers and directors, as a group, owned less than 1%
of the Fund's outstanding shares and 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% (U.S. Government Securities Fund and the Limited Duration U.S.
Government Securities Fund), .75 of 1% (Balanced Fund) and .60 of 1% (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 for each Fund are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
1999 Waiver 1998 Waiver 1997 Waiver
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
Balanced Series $613,069 $613,069 $257,904 $224,311 $48,151 $48,151
High Yield Fund $113,526 $113,526 - - - -
Limited Duration $72,512 $72,512 $48,030 $48,030 $54,884 $54,884
U.S. Government
Securities Series
U.S. Governemnt $8,529,176 - $10,186,509 - $12,500,454 -
Securities Series
</TABLE>
Lord Abbett Distributor LLC, 90 Hudson Street, Jersey City, New Jersey
07302-3973, serves as the principal underwriter for each Fund.
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, 48 Wall Street, New York, New York, is the Company's
custodian.
United Missouri Bank of Kansas City, N.A., Tenth and Grand, Kansas City,
Missouri 64141, acts as the transfer agent and dividend disbursing agent for
each Fund.
9
<PAGE>
4.
Portfolio Transactions
Each Fund expects that purchases and sales of portfolio securities usually will
be principal transactions and normally such securities will be purchased
directly from the issuer or from an underwriter or 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.
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.
10
<PAGE>
During the fiscal year ended November 30, 1999, the commissions paid to
independent brokers is as follows:
1999
----
Balanced Series $892,059
High Yield Fund $276,728
Limited Duration $ 86,421
U.S. Government
Fund
U.S. Government $646,899
Series
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
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 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 Fund,
the Limited Duration U.S. Government Fund, the Balanced Fund and the High Yield
Fund on November 30, 1999 were computed as follows:
<TABLE>
<CAPTION>
- U.S.
Limited Duration Government High
Government Balanced Securities Yield
Fund Fund Fund Fund
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value per share (net assets divided
by shares outstanding)..................................$4.34 $12.34 $2.45 $9.72
11
<PAGE>
Maximum offering price per share - net asset
value divided by (.9700 for Limited Duration
Government Fund .9525 for U. S. Government Securities Fund and High Yield Fund)
and .9425 for Balanced Fund............................$4.47 $13.09 $2.57 $10.20
</TABLE>
The Company has entered into a distribution agreement with Lord Abbett
Distributor LLC, a New York limited liability company, 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:
............................................. Yr Ended Yr Ended
............................................. 11/30/97 11/30/98
Gross sales charge $269,184 $97,607
Amount allowed
to dealers $233,663 $84,045
--------- -------
Net Commissions received
by Lord Abbett $ 35,521 $13,562
======== =======
For the fiscal years ended 1999, 1998, and 1997, Lord Abbett as principal
underwriter received net commissions after allowance of a portion of the sales
charge to independent dealers with respect to Class A shares of the Acquired
Fund (and subsequent to July 12, 1996, the U.S. Government Securities Fund) as
follows:
1997 1998 1999
----- ---- ----
Gross sales charge $1,469,770 $1,111,095
Amount allowed
to dealers $1,259,215 $ 970,169
---------- ----------
Net Commissions received
by Lord Abbett $ 210,555 $ 140,926
=========== ==========
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
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 likely
have different share prices. Investors should read this section carefully to
determine which class represents the best investment option for their particular
situation.
12
<PAGE>
Class A Shares. If you buy Class A shares, you pay an initial sales charge on
investments of less than $1 million (or on investments for employer-sponsored
retirement plans under the Internal Revenue Code (hereinafter referred to as
"Retirement Plans") with less than 100 eligible employees or on investments that
do not qualify to be under a "special retirement wrap program" 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. 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 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 below.
Class P Shares. If you buy Class P shares, you pay no sales charge at the time
of purchase, and if you redeem your shares you pay no CDSC. Class P shares are
subject to service and distribution fees at an annual rate of .45 of 1% of the
average daily net asset value of the Class P shares. The Rule 12b-1 plan
applicable to the Class P shares is described in "Class P Rule 12b-1 Plan."
Class P shares are available to a limited number of investors.
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 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.
13
<PAGE>
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 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 nd and Class C shareholders.
Rule 12b-1 Plans. As described in the Prospectus, each Fund has adopted a
Distribution Plan and Agreement pursuant to Rule 12b-1 of the Act for each of
the four Classes: the "A Plan," the "B Plan" the "C Plan," and the "P Plan,"
respectively. In adopting each Plan and in approving its continuance, the Board
of Directors has concluded that there is a reasonable likelihood that each Plan
will benefit its respective Class and such Class's 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. Lord Abbett uses all amounts received under each Plan as described in
the Prospectus and for payments to dealers for (i) providing continuous services
to the 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
Company.
14
<PAGE>
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.
Each Plan requires the 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.
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:
15
<PAGE>
Anniversary of Contingent Deferred Sales
Purchase Charge 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 same calendar day in each respective year
after the date of purchase. For example, the anniversaries for shares purchased
on May 1 will be May 1 of each succeeding year. 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 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.
16
<PAGE>
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., .
Letters of Intention. Under the terms of the Letters 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 letter 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 Letter is not completed. The Letter
of Intention is neither a binding obligation on you to buy, nor on the fund to
sell, the full amount indicated.
Rights of Accumulation. As stated in the Prospectus, purchasers (as defined in
the Prospectus) may accumulate their investment in Lord Abbett-sponsored funds
(other than LAEF, LARF, LASF, and GSMMF, unless holdings in GSMMF are
attributable to shares exchanged from a Lord Abbett-sponsored fund offered with
a front-end, back-end or level sales charge) so that a current investment, plus
the purchaser's holdings valued at the current maximum offering price, reach a
level eligible for a discounted sales charge for Class A shares.
17
<PAGE>
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.
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.
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<PAGE>
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 '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.
19
<PAGE>
Using the method to compute average annual compounded total return described
above, the total annual return for each Fund are as follows:
<TABLE>
<CAPTION>
For the Year ended November 30, 1999
------------------------------------
<S> <C> <C> <C> <C>
U.S. Government Securities Fund 1 Year 5 Years 10 Years Life
------ ------- -------- ----
Class A -5.40% 5.65% 6.50% 9.63%
Class B -6.09% - - 4.57%
Class C -2.73% - - 5.56%
Limited Duration U.S. Government
Securities Fund
1 Year 5 Years 10 Years Life
------ ------- -------- ----
Class A -.30% 4.85% - 3.41%
Class C .36% - - 4.77%
Balanced Series 1 Year 5 Years 10 Years Life
------ ------- -------- ----
Class A 3.60% - - 11.82%
Class B 4.25% - - 3.20%
Class C 8.08% - - 12.41%
High Yield Life
----
Class A .10%
Class B 3.25%
Class C 2.38%
</TABLE>
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.
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
Each Fund intends to elect and to qualify for special tax treatment afforded
regulated investment companies under the Internal Revenue Code of 1986 (the
"Code"). If it so qualifies, each Fund (but not its shareholders) will be
relieved of federal income taxes on the amount it distributes to shareholders.
If in any taxable year the Funds do not qualify as a regulated investment
company, all of its taxable income will be taxed to the Fund at regular
corporate rates.
Each Fund contemplates declaring as dividends substantially all of its net
investment income. Dividends paid by a Fund from its investment income and
distributions of its net realized short-term capital gains are taxable to its
shareholders as ordinary income or capital gains, whether received in cash or
reinvested in additional shares of the Fund. Each Fund will send its
shareholders annual information concerning the tax treatment of dividends and
other distributions.
20
<PAGE>
Upon sale, exchange or redemption of shares of a Fund, a shareholder will
recognize short- or long-term capital gain or loss, depending upon the
shareholder's holding period in the Fund's shares. However, if a shareholder's
holding period in his shares is six month or less, any capital loss realized
from a sale or exchange of such shares must be treated as long-term capital loss
to the extent of dividends classified as "capital gains dividends" received with
respect to such shares. The maximum tax rates applicable to net capital gains
recognized by individuals and other non-corporate taxpayers are (i) the same as
ordinary income rates for capital assets held for one year or less and (ii) 20%
for capital assets held for more than one year. Capital gains or losses
recognized by corporate shareholders are subject to tax at the ordinary income
tax rates applicable to corporations.
Losses on the sale of 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 shares that are substantially identical.
Some shareholders may be subject to a 31% withholding tax on reportable
dividends, capital gains distributions and redemption payments ("backup
withholding"). Generally, shareholders subject to backup withholding will be
those for whom a certified taxpayer identification number is not on file with
the Fund or who, to the Fund's knowledge, have furnished an incorrect number.
When establishing an account, an investor must certify under penalties of
perjury that such number is correct and that he or she is not otherwise subject
to backup withholding.
The writing of call options and other investment techniques and practices which
the Funds may utilize may affect the character and timing of the recognition of
gains and losses. Such transactions may increase the amount of short-term
capital gain realized by the Funds, which is taxed as ordinary income when
distributed to shareholders.
The Funds may be subject to foreign withholding taxes, which would reduce the
yield on its investments. It is generally expected that Fund shareholders who
are subject to United States federal income tax will not be entitled to claim a
federal income tax credit or deduction for foreign income taxes paid by a Fund.
Each Fund will be subject to a 4% non-deductible excise tax on certain amounts
not distributed or treated as having been distributed on a timely basis each
calendar year. Each Fund intends to distribute to shareholders each year an
amount adequate to avoid the imposition of such excise tax.
Dividends paid by a Fund will qualify for the dividends-received deduction for
corporations to the extent they are derived from dividends paid by domestic
corporations.
Gain and loss realized by a 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 gain or loss is 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
gain and will be reduced by the net amount, if any, of such foreign exchange
loss.
If a Fund purchases shares in certain foreign investment entities called
"passive foreign investment companies," they may be subject to United States
federal income tax on a portion of any "excess distribution" or gain from the
disposition of such shares, even if such income is distributed as a taxable
dividend by the Fund to its shareholders. Additional charges in the nature of
interest may be imposed on either the Fund or its shareholders in respect of
deferred taxes arising from such distributions or gains. If the Funds were to
make a "qualified electing fund" election with respect to its investment in a
passive foreign investment company, in lieu of the foregoing requirements, such
Fund might be required to include in income each year a portion of the ordinary
earnings and net capital gains of the qualified electing fund, even if such
amount were not distributed to such Fund.
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 a
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.
8.
Information About the Funds
Lord Abbett Investment Trust was organized as a Delaware business trust on
August 16, 1993. The Company's trustees have authority to create separate
classes and shares of beneficial interest, without further action by
shareholders. The Company includes six funds, four of which are discussed in
this Statement of Additional Information: U.S. Government Securities Series
("U.S. Government Fund"), Limited Duration U.S. Government Securities Series
("Limited Duration U.S. Government Securities Fund"), Balanced Series ("Balanced
Fund") and High Yield Fund. The U.S. Government Securities Fund, Balanced Fund
and High Yield Fund each offers four classes of shares: Classes A, B, C and P;
Limited Duration U.S. Government Securities Fund offers three: Classes A, C and
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 funds may be added in the
future. The Investment Company Act of 1940, as amended (the "Act") requires that
where more than one class or fund exists, each class or fund must be preferred
over all other classes or funds with respect to assets specifically allocated to
such class or fund.
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 fund
affected by such matter. Rule 18f-2 further provides that a class or fund shall
be deemed to be affected by a matter unless the interests of each class or fund
in the matter are substantially identical or the matter does not affect any
interest of such class or fund. 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.
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.
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 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.
21
<PAGE>
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 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 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 fund's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security seven days
before or after any Lord Abbett-sponsored fund trades in such security,
profiting from trades of the same security within 60 days and trading on
material non-public information. The Code imposes similar requirements and
restrictions on the independent Trustees of the fund to the extent contemplated
by the recommendations of such Advisory Group.
9.
Financial Statements
The financial statements for fiscal year ended November 30, 1999 and the report
of Deloitte & Touche LLP, independent auditors, on such annual financial
statements contained in the 1999 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.
22
<PAGE>
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.
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.
<PAGE>
Lord Abbett
Investment Trust
Core Fixed Income Series
Strategic Core Fixed Income Series
Class Y Shares
Prospectus
April 1, 2000
[LOGO]
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
Class Y shares of each Fund are neither offered to the general public nor
available in all states through the Mutual Fund Fee Based Program. Please call
800-821-5129 for further information.
<PAGE>
TABLE OF CONTENTS
The Funds
Information about performance, Goal 2
fees and expenses Principal Strategy 2
Main Risks 3
Core Fixed Income Fund 4
Strategic Core Fixed Income Fund 6
Your Investment
Information for managing Purchases 8
your Fund account Redemptions 9
Distributions and Taxes 9
Services For Fund Investors 10
Management 10
For More Information
How to learn more Other Investment Techniques 11
about the Funds Glossary of Shaded Terms 13
Recent Performance 14
Financial Information
Financial highlights and Core Fixed Income Fund 15
line graph comparison Strategic Core Fixed Income Fund 17
How to learn more about the Back Cover
Funds and other Lord Abbett Funds
<PAGE>
Core Fixed Income Fund
Strategic Core Fixed Income Fund
THE FUNDS
GOAL
The investment objective of each Fund is to seek income and capital
appreciation to produce a high total return.
PRINCIPAL STRATEGY
The Core Fixed Income Fund invests primarily in U.S. government,
mortgage-backed and investment grade debt securities, including those
issued by non-U.S. entities but denominated in U.S. dollars (known as
"Yankees"). The Strategic Core Fixed Income Fund invests primarily in those
securities, as well as in high yield debt securities and securities issued
by non-U.S. entities and denominated in currencies other than the U.S.
dollar. Investments in high yield debt and non-U.S. debt denominated in
foreign currencies are each limited to 20% of the Strategic Core Fixed
Income Fund's net assets.
Both Funds attempt to manage, but not eliminate, interest rate risk through
their management of the average duration of the securities they hold.
Duration is a matematical concept that measures a portfolio's exposure to
interest rate changes. Using the average duration of the Lehman Brothers
Aggregate Bond Index(currently approximately 5 years) as the center, the
Funds will
establish their average duration range periodically by extending two years
above and below the center. The higher a Fund's duration, the more
sensitive it is to interest rate risk.
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 turn-over rates substantially in excess of 100%.
For the fiscal year ended November 30, 1999, the portfolio turnover rates
for the Core Fixed Income Fund and Strategic Core Fixed Income Fund were
412.77% and 415.82%, respectively. These rates vary year to year. High
turnover increases transactions costs and may increase taxable capital
gains.
We or the Fund refers to Core Fixed Income Series ("Core Fixed Income Fund") or
Strategic Core Fixed Income Series ("Strate gic Core Fixed Income Fund"), each a
series of Lord Abbett Investment Trust (the "company").
About each Fund. Each Fund is a professionally managed portfolio primarily
holding securities purchased with the pooled money of investors. They strive to
reach their stated goals, although as with all funds, they cannot guarantee
results.
2 The Funds
<PAGE>
MAIN RISKS
These Funds are subject to the genreal risks and considerations associated
with investing in debt securities. The value of an investment in the fund
will change as interest rates fluctuate in response to market movements.
When interest rates rise, the prices of debt securities are likely to
decline, and when interest rates fall, the prices of debt securities tend
to rise. Likewise, the value of your investment will change as interest
rates fluctuate.
The mortgage-related securities in which each Fund may invest may be
particularly sensitive to changes in prevailing interest rates. The
holders of the underlying mortgages may be able to repay principal in
advance and may do so, especially when interest rates are falling. When
mortgages are prepaid, the Fund may have to reinvest in securities with a
lower yield. Conversely, holders may be able to extend their obligation to
pay principal to a later date then expected. This may happen in times of
rising interest rates. The Fund may then be unable to invest in higher
yielding securities. These circumstances may result in lower performance
for each Fund.
The lower-rated bonds in which the Strategic Core Fixed Income Fund may
invest involve risks that the bond's issuers will not make payments of
interest and principal interest when due. Some issuers may default as to
principal and/or interest payments after we purchase their securities.
This may result in losses to the Fund.
The Strategic Core Fixed Income Fund may invest in foreign securities.
Investments in foreign securities may present increased market, liquidity,
currency, political, information and other risks.
An investment in each Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Each Fund is not a complete investment program and may
not be appropriate for all investors. You could lose money by investing in
these Funds.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describes the other investment strategies used by the Funds and
their risks.
The Funds 3
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Core Fixed Income Fund
PERFORMANCE
The bar chart and table below provide some indication of the risks of
investing in the Fund by illustrating the variability of the Fund's
returns. Each assumes reinvestment of dividends and distributions. The
Fund's past performance is not necessarily an indication of how the Fund
will perform in the future.
The bar chart shows changes in the performance of the Fund's Class Y shares
from calendar year to calendar year.
- --------------------------------------------------------------------------------
Bar Chart (per calendar year) - Class Y Shares
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[GRAPHIC OMITTED]
1998 - 9.4%
Best Quarter 3rd Q `98 4.4% Worst Quarter 2nd Q `99 -0.9%
- --------------------------------------------------------------------------------
The table below shows how the average annual total returns of the Fund's
Class Y shares compare to those of a broad-based securities market index.
- --------------------------------------------------------------------------------
Average Annual Total Returns Through December 31, 1999
- --------------------------------------------------------------------------------
Share Class 1 Year Since Inception(1)
Class Y shares 0.22% 4.96%
- --------------------------------------------------------------------------------
Lehman Brothers
Aggregate Bond Index(2) -0.82% 3.82%(3)
(1) The date of inception of Class Y shares is 12/10/97.
(2) Performance for the unmanaged index does not reflect fees or expenses. The
performance of the index is not necessarily representative of the Fund's
performance.
(3) Represents total returns for the period 12/31/97 to 12/31/99, to correspond
with Class Y inception date.
4 The Funds
Core Fixed Income Fund
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Fee Table
<S> <C>
- ---------------------------------------------------------------------------------------------------------
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 none
- ---------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from Fund assets) (as a % of average net assets)(3)
- ---------------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50%
- ---------------------------------------------------------------------------------------------------------
Other Expenses 0.13%
Total Operating Expenses 0.63%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Example
- --------------------------------------------------------------------------------
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. This example, like that in
other Funds' prospectuses, assumes that you invest $10,000 in the Fund for the
time periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
\
Share Class 1 Year 3 Years
Class Y shares $64 $202
- --------------------------------------------------------------------------------
Management fees are payable to Lord, Abbett & Co. ("Lord Abbett") for the Fund's
investment management.
Other expenses include fees paid for miscellaneous items such as shareholder
service fees and professional fees.
Lord Abbett is currently waiving the management fees and subsidizing the other
expenses of the Fund. Accordingly, the expense ratio of the Fund is 0%. Lord
Abbett may stop waiving the management fees and subsidizing the other expenses
at any time.
The Funds 5
<PAGE>
Strategic Core Fixed Income Fund
PERFORMANCE
The bar chart and table below provide some indication of the risks of
investing in the Fund by illustrating the variability of the Fund's
returns. Each assumes reinvestment of dividends and distributions. The
Fund's past performance is not necessarily an indication of how the Fund
will perform in the future.
The bar chart shows changes in the performance of the Fund's Class Y shares
from calendar year to calendar year.
- --------------------------------------------------------------------------------
Bar Chart (per calendar year) - Class Y Shares
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
1999 - -0.8%
Best Quarter 3rd Q `98 1.0% Worst Quarter 2nd Q `99 -0.8%
- --------------------------------------------------------------------------------
The table below shows how the average annual total returns of the Fund's
Class Y shares compare to those of a broad-based securities market index.
- --------------------------------------------------------------------------------
Average Annual Total Returns Through December 31, 1999
- --------------------------------------------------------------------------------
Share Class 1 Year Since Inception(1)
Class Y shares 0.57% 0.57%
- --------------------------------------------------------------------------------
Lehman Brothers
Aggregate Bond Index(2) -0.82% -0.82%(3)
(1) The date of inception of Class Y shares is 12/14/98.
(2) Performance for the unmanaged index does not reflect fees or expenses. The
performance of the index is not necessarily representative of the Fund's
performance.
(3) Represents total returns for the period 12/31/97 to 12/31/99, to correspond
with Class Y inception date.
6 The Funds
<PAGE>
Strategic Core Fixed Income Fund
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Fee Table
- -------------------------------------------------------------------------------------------------------
Class Y
<S> <C>
Shareholder Fees (Fees paid directly from your investment)
- -------------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
- -------------------------------------------------------------------------------------------------------
(as a % of offering price) none
- -------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge none
- -------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from Fund assets) (as a % of average net assets)
- -------------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50%
- -------------------------------------------------------------------------------------------------------
Other Expenses 0.42%
Total Operating Expenses 0.92%
- -------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Example
- --------------------------------------------------------------------------------
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. This example, like that in
other funds' prospectuses, assumes that you invest $10,000 in the Fund for the
time periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
Share Class 1 Year 3 Years
Class Y shares $94 $293
- --------------------------------------------------------------------------------
Management fees are payable to Lord, Abbett & Co. for the Fund's investment
management.
Other expenses include fees paid for miscellaneous items such as shareholder
service fees and professional fees.
Lord Abbett is currently waiving the management fees and subsidizing the other
expenses of the Fund. Accordingly, the expense ratio of the Fund is 0%. Lord
Abbett may stop waiving the management fees and subsidizing the other expenses
at any time.
The Funds 7
<PAGE>
YOUR INVESTMENT
PURCHASES
Class Y shares. You may purchase Class Y shares at the net asset value
("NAV") per share next determined after we receive and accept your purchase
order submitted in proper form. No sales charges apply.
We reserve the right to withdraw all or 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 binding until confirmed or accepted in
writing.
Who May Invest? Eligible purchasers of Class Y shares include: (1) certain
authorized brokers, dealers, registered investment advisers or other
financial institutions ("entities") 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 Class Y
shares in particular investment products made available for a fee to
clients of such entities, or (b) charge an advisory, consulting or other
fee for their services and buy shares for their own accounts or the
accounts of their clients ("Mutual Fund Fee Based Programs"); (2) 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 (3) institutional investors, such as retirement plans,
companies, foundations, trusts, endowments and other entities where the
total amount of potential investable assets exceeds $50 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 money to the Fund you selected (P.O. Box 219100, Kansas City,
Missouri 64121). The minimum initial investment is $1 million except for
Mutual Fund Fee Based 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 the 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 NAV 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
NAV 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 you select, note Class Y shares and include your new account
NAV per share is calculated each business day at the close of regular trading on
the New York Stock Exchange ("NYSE"), normally 4:00 p.m. Eastern time. Purchases
and sales of Fund shares are executed at the NAV next determined after the Fund
receives your order in proper form. 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.
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.
Exchange Limitations. Exchanges should not be used to try to take advantage of
short-term swings in the market. Frequent exchanges create higher expenses for
the Funds. Accordingly, each Fund reserves the right to limit or terminate this
privilege for any shareholder making frequent exchanges or abusing the
privilege. The Funds also may revoke the privilege for all shareholders upon 60
days' written notice.
8 Your Investment
number and your name. To add to an existing account, 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 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, 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(s) 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. Under unusual circumstances, the
Fund may suspend redemptions, or postpone payment for more than seven days,
as permitted by federal securities laws.
By Wire. In order to receive funds by wire, our servicing agent must have
the wiring instructions on file. To verify that this feature is in place,
call 800-821-5129 Ext. 34028, Institutional Trading Dept. (minimum wire:
$1,000). Your wire redemption request must be received by the Fund before
the close of the NYSE for money to be wired on the next business day.
DISTRIBUTIONS AND TAXES
Each Fund normally pays its shareholders dividends from its net investment
income and distributes its net capital gains (if any) as "capital gains
distributions" on an annual basis. Your distributions will be reinvested in
the Fund unless you instruct the Fund to pay them to you in cash. The tax
status of distributions is the same for all shareholders regardless of how
long they have owned Fund shares or whether distributions are reinvested or
paid in cash.
Except in tax-advantaged accounts, any sale, redemption or exchange of Fund
shares may be taxable to the shareholder.
Information on the tax treatment of distributions, including the source of
dividends and distributions of capital gains by the Fund, will be mailed to
shareholders each year. Because everyone's tax situation is unique, you
should consult your tax adviser regarding the treatment of distributions
under the federal, state and local tax rules that apply to you.
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 9
<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 Fund among the Lord
Abbett-sponsored Funds.
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 Funds.
Account Changes. For any changes you need to make to your account, consult
your investment professional or call the Funds 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., located at 90 Hudson
St., Jersey City, NJ 07302-3973. Founded in 1929, Lord Abbett manages one
of the nation's oldest mutual fund complexes, with approximately $35
billion in more than 40 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.
Each Fund pays Lord Abbett a monthly fee based on average daily net assets
for each month at the annual rate of .50% of 1%. For the fiscal year ended
November 30, 1999, Lord Abbett waived its management fee for Core Fixed
Income Fund and Strategic Core Fixed Income Fund. In addition, each Fund
pays all expenses not expressly assumed by Lord Abbett.
Portfolio Managers. Lord Abbett uses a team of portfolio managers and
analysts act-ing together to manage each Fund's investments. Robert Gerber,
Partner of Lord Abbett heads the team, the other senior members of which
include Walter H. Prahl and Robert A Lee. 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 C. Bernstein &
Co., Inc. since 1992. Mr. Prahl joined Lord Abbett in 1997 as Director of
Quantitative Research, Taxable Fixed Income. Before joining Lord Abbett,
Mr. Prahl served as a Fixed Income Research Analyst at Sanford C. Bernstein
& Co., Inc. since 1994. Mr. Lee joined Lord Abbett in 1997 as a Fixed
Income Portfolio Manager; prior to that he served as a Portfolio Manager at
ARM Capital Advisors since 1995 and an Assistant Portfolio Manager at
Kidder Peabody Asset Management from 1993.
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.
10 Your Investment
<PAGE>
FOR MORE INFORMATION
OTHER INVESTMENT TECHNIQUES
This section describes some of the investment techniques that might be used
by each 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, inter-est 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. Each 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.
Foreign Currency Transactions. The Strategic Core Fixed Income Fund may use
currency forwards and options to hedge the risk to the portfolio if it
expects that foreign exchange price movements will be unfavorable for U.S.
investors. Generally, these instruments allow the Fund to lock in a
specified exchange rate for a period of time. If the Fund's forecast proves
to be wrong, such a hedge may cause a loss. Also, it may be difficult or
impractical to hedge currency risk in many emerging countries. The Fund
generally will not enter into a forward contract with a term greater than
one year. Under some circumstances, the Fund may commit a substantial
portion or the entire value of its portfolio to the completion of forward
contracts. Although such contracts will be used primarily to attempt to
protect the Fund from adverse currency movements, their use involves the
risk Lord Abbett will not accurately predict currency movements, and the
Fund's return could be reduced.
Foreign Securities. The Fund may invest up to 10% of its net assets in
foreign securities. Foreign securities are securities primarily traded
in countries outside the United States. Foreign markets and the securities
traded in them are
not subject to the same degree of regulation as U.S. markets. Securities
clearance and settlement procedures may be different in foreign countries.
There may be less trading volume in foreign markets, subjecting the
securities traded in them to higher price fluctuations. Transaction costs
may be higher in foreign markets. The Fund may hold foreign securities
which trade on days when the Fund does not sell shares. As a result, the
value of the Fund's portfolio securities may change on days an investor may
not purchase or sell Fund shares.
Foreign issuers are generally not subject to similar, uniform accounting,
auditing and financial reporting requirements as U.S. issuers. Foreign
investments may be affected by changes in currency rates or currency
controls. Certain foreign countries may limit the Fund's ability to remove
its assets from the country. With respect to certain foreign coun-
For More Information 11
<PAGE>
tries, there is a possibility of nationalization, expropriation or
confiscatory taxation, imposition of withholding or other taxes, and
political or social instability which could affect investments in those
countries.
High Yield Debt Securities. 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.
Investment Grade Debt Securities. These are debt securities which are rated
in one of the four highest grades assigned by Moody's Investors Service,
Inc., Standard & Poor's Ratings Services or Fitch Investors Service, or are
unrated but determined by Lord Abbett to be equivalent in quality.
Mortgage-Backed Securities. Investment grade debt 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.
Futures and Options Transactions. Each Fund may deal in options
on securities, securities indices, and financial futures transactions,
including options on financial futures to increase or decrease its exposure
to changing securities prices or interest rates or for bona fide hedging
purposes. Each Fund may write (sell) covered call options and secured put
options on up to 25% of its net assets and may purchase put and call
options and purchase and sell futures contracts provided that no more than
5% of its net assets (at the time of purchase) may be invested in premiums
on such options and initial margin deposits on such futures contracts.
In addition, the use of options and financial futures transactions to
achieve a Fund's 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 30% of its total assets and all loans will be fully
collateralized.
Repurchase Agreements. Each Fund may enter into 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.
Reverse Repurchase Agreements. Each Fund may enter into 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 later at a set price. Reverse repurchase
agreements expose a Fund to cre dit 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.
12 For More Information
<PAGE>
The value of a right or warrant may not necessarily change with the value
of the underlying securities and rights and warrants cease to have value
after their expiration date.
Short Sales. Each Fund may make short sales of securities or maintain a
short position, provided that at all times when a short position is open
the Fund owns an equal amount of such securities or securities convertible
into or exchangeable, without payment of any further consideration, for an
equal amount of the securities of the same issuer as the securities sold
short. Each Fund does not intend to have more than 5% of its net assets
(determined at the time of the short sale) subject to short sales against
the box.
U.S. Government Securities. U.S. government securities are obligations
issued or guaranteed by the U.S. government, its agencies or
instrumentalities.
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 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 a when-issued or
delayed delivery transactions, it may increase the volitility of the fund's
portfolio.
Yankees. Each Fund may invest in the securities of foreign issuers payable
in U.S. dollars.
GLOSSARY OF SHADED TERMS
Eligible Fund. An Eligible Fund is any Lord Abbett-sponsored Fund offering
Class Y shares.
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 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 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 (see example in right column).
Mutual Fund Fee Based Program. Certain unaffiliated authorized brokers,
dealers, registered investment advisers or other financial institutions
("entities") who either (1) 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 entities, or (2) charge an advisory, consulting or other fee for their
services and buy shares for their own accounts or the accounts of their
clients.
GUARANTEED SIGNATURE. An acceptable form of guarantee would be as follows:
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
[SIGNATURE ILLEGIBLE]
- --------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
In the case of the corporation --
ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
[SIGNATURE ILLEGIBLE]
- --------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
For More Information 13
<PAGE>
RECENT PERFORMANCE
The following is a discussion of recent performance for the twelve month
period ending November 30, 1999.
For the period under review, the Funds outperformed its benchmark, the
Lehman Aggregate Bond Index. The Fund's outperformance can be largely
attributed to its continued focus on what are termed "spread products,"
which include Freddie Macs (FHLMCs), corporate debentures and commercial
mortgage-backed securities (CMBs). These securities offered a yield
advantage over Treasurys, and therefore added performance to the Fund,
particularly as credit spreads widened. Also adding to performance was the
Fund portfolio's "barbell structure," a strategy that seeks to capture
returns provided by a combination of relatively short and long maturities,
over the returns provided by a portfolio comprised of primarily
intermediate maturities. The portfolio's average duration steadily remained
approximately 5 years.
Continued progress towards a slower level of economic growth in the coming
months should allow interest rates in the U.S. to level off and perhaps
begin decreasing again. This will depend on whether the Federal Reserve
Board (the "Fed") succeeds in reducing the current pace of economic growth
toward 3 percent. However, with consumer confidence and spending still
strong, we see few significant signs that the four rate increases by the
Fed since June 1999 have brought about this desired slowdown. In general,
the Fund's neutral exposure to interest rate risk has enabled it to provide
investors with good relative returns, and likewise, positions it well for
further changes in the economic environment.
14 For More Information
<PAGE>
Core Fixed Income 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, 1999 and the
Independent Auditors' Report thereon appear in the Annual Report to
Shareholders for the fiscal year ended November 30, 1999 and are
incorporated by reference into the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
========================================================================================================================
Class Y Shares
- ------------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
Per Share Operating Performance: 1999 1998(a)
<S> <C> <C>
Net asset value, beginning of year $10.97 $10.00
========================================================================================================================
Income from investment operations
========================================================================================================================
Net investment income .69 .62
========================================================================================================================
Net realized and unrealized gain (loss) on investments (.59) .35
========================================================================================================================
Total from investment operations .10 .97
========================================================================================================================
Net investment income (0.41)
========================================================================================================================
Net realized gain on investments (0.12)
========================================================================================================================
Total distributions (0.53)
========================================================================================================================
Net asset value, end of year $10.54 $10.97
========================================================================================================================
Total Return(c) 1.08% 9.70%(b)
========================================================================================================================
Ratios to Average Net Assets:
========================================================================================================================
Expenses, excluding waiver .63% 0.75%(b)
========================================================================================================================
Net investment income 6.62% 5.98%(b)
========================================================================================================================
========================================================================================================================
Year Ended November 30,
- ------------------------------------------------------------------------------------------------------------------------
Supplemental Data: 1999 1998(a)
Net Assets, end of year (000) $8,713 $4,694
========================================================================================================================
Portfolio turnover rate 412.77% 411.03%
========================================================================================================================
</TABLE>
(a) From December 10, 1997 commencement of operations.
(b) Not annualized.
(c) Total return assumes the reinvestment of all distributions.
Financial Information 15
<PAGE>
Core Fixed Income 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.
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
================================================================================
Average Annual Total Return At Maximum Applicable
Sales Charges For The Periods Ending November 30, 1999
1 Year Life(2)
- --------------------------------------------------------------------------------
Class Y(3) 1.08% 5.42%
- --------------------------------------------------------------------------------
(1) Performance for the unmanaged index does not reflect fees or expenses. The
performance of the index is not necessarily representative of the Fund's
performance.
(2) The Class Y share inception date for is 12/10/97.
(3) This shows total return which is the percent change in net asset value,
with all dividends and distributions reinvested for the periods shown
ending November 30, 1999 using the SEC-required uniform method to compute
total return.
Financial Information 16
<PAGE>
Strategic Core Fixed Income 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, 1999 and the
Independent Auditors' Report thereon appear in the Annual Report to
Shareholders for the fiscal year ended November 30, 1999 and are
incorporated by reference into the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
=======================================================================================================================
Class Y Shares
- -----------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
Per Share Operating Performance: 1999(a)
<S> <C>
Net asset value, beginning of year $10.00
=======================================================================================================================
Income from investment operations
=======================================================================================================================
Net investment income .62
=======================================================================================================================
Net realized and unrealized gain on investments (.49)
=======================================================================================================================
Total from investment operations .13
=======================================================================================================================
Net asset value, end of year $10.13
=======================================================================================================================
Total Return(c) 1.30%(b)
=======================================================================================================================
Ratios to Average Net Assets:(b)
=======================================================================================================================
Expenses, excluding waiver 0.89%(b)
=======================================================================================================================
Net investment income 6.23%(b)
=======================================================================================================================
=======================================================================================================================
Year Ended November 30,
- -----------------------------------------------------------------------------------------------------------------------
Supplemental Data: 1999(a)
Net Assets, end of year (000) $2,103
=======================================================================================================================
Portfolio turnover rate 415.82%
=======================================================================================================================
</TABLE>
(a) From December 14, 1998 commencement of operations.
(b) Not annualized.
(c) Total return assumes the reinvestment of all distributions.
Financial Information 17
<PAGE>
Strategic Core Fixed Income 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.
[GRAPHIC OMITTED]
================================================================================
Average Annual Total Return At Maximum Applicable
Sales Charges For The Periods Ending November 30, 1999
Life(2)
- --------------------------------------------------------------------------------
Class Y(3) 0.90%
- --------------------------------------------------------------------------------
(1) Performance for the unmanaged index does not reflect fees or expenses. The
performance of the index is not necessarily representative of the Fund's
performance.
(2) The Class Y share inception date for is 12/14/98.
(3) This shows total return which is the percent change in net asset value,
with all dividends and distributions reinvested for the periods shown
ending November 30, 1999 using the SEC-required uniform method to compute
total return.
18 Financial Information
<PAGE>
More information on each Fund is or will be 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 90
Hudson Street Jersey City, NJ 07302-3973
Via the Internet.
Lord, Abbett & Co.
www.lordabbett.com
Text only versions of Fund
documents can be viewed
online or downloaded from:
SEC
www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 202-942-8090) or by sending your request and a duplicating
fee to the SEC's Public Reference Section, Washington, DC 20549-6009 or by
sending your request electronically to
[email protected].
Lord Abbett Investment Trust -
Core Fixed Income Series
Strategic Core Fixed Income Series
90 Hudson Street
Jersey City, NJ 07302-3973
- --------------------------------------------------------------------------------
SEC file number: 811-7988
LACORE-Y-1-400
(4/00)
<PAGE>
LORD ABBETT
Statement of Additional Information
April 1, 2000
LORD ABBETT INVESTMENT TRUST
Core Fixed Income Fund
Strategic Core Fixed Income Fund
Y SHARES
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 90 Hudson Street, Jersey City, New Jersey
07302-3973. This Statement of Additional Information relates to, and should be
read in conjunction with, the Prospectus dated April 1, 2000.
Shareholder inquiries should be made by directly contacting the Funds or by
calling 800-821-5129. The 1999 Annual shareholder report is available, without
charge, upon request by calling that number. In addition, you can make inquiries
through your dealer.
TABLE OF CONTENTS Page
1. Investment Policies 2
2. Trustees and Officers 5
3. Investment Advisory and Other Services 9
4. Portfolio Transactions 10
5. Purchases, Redemptions and Shareholder Services 11
6. Performance 12
7. Taxes 13
8. Information About the Fund 13
9. Financial Statements 14
1
<PAGE>
1.
Investment Policies
The Core Fixed Income Series and the Strategic Core Fixed Income Series (each a
"Company" or a "Fund") are diversified open-end investment management companies
registered under the Investment Company Act of 1940, as amended (the "Act").
Fundamental Investment Restrictions. Each Fund is subject to the following
fundamental investment restrictions, which cannot be changed without approval of
a majority of each Fund's 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 the gross assets of each Fund, buy securities of one
issuer representing more than (i) 5% of each Fund's gross assets, except
securities issued or guaranteed by the U.S. 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.
Compliance with these restrictions will be determined at the time of purchase or
sale of such securities.
Non-Fundamental Investment Restrictions. In addition to the policies in the
Prospectus and the investment restrictions above which cannot be changed without
shareholder approval, the Funds are also subject to the following
non-fundamental 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;
2
<PAGE>
(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 Act, 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, each Fund may invest in
financial futures and options on financial futures.
For the year ended November 30, 1999, the portfolio turnover rate was 412.77%
versus 411.03% for the period December 10, 1997 to November 30, 1998 for Core
Fixed Income Fund.
For the period December 14, 1998 to November 30, 1999, the portfolio turnover
rate was 415.82% for Strategic Core Fixed Income Fund.
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.
INVESTMENT TECHNIQUES
Foreign Currency Hedging Techniques. Strategic Core Fixed Income 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 Fixed Income 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.
3
<PAGE>
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.
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.
4
<PAGE>
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 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. As of March 31, 1999 this index currently
has a duration of approximately 5 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.
2.
Trustees and Officers
The Board of Trustees of each Fund is responsible for the management of the
business and affairs of each Fund.
The following Trustee is a partner of Lord, Abbett & Co. ("Lord Abbett"), 90
Hudson Street, Jersey City, New Jersey 07302-3973. He has been associated with
Lord Abbett for over five years and is also an officer, director or trustee of
the thirteen other Lord Abbett-sponsored funds.
*Robert S. Dow, age 55, Chairman and President
*Mr. Dow is an "interested person" as defined in the Act.
The following outside trustees are also directors or trustees of thirteen other
Lord Abbett-sponsored funds.
5
<PAGE>
E. Thayer Bigelow, Trustee
245 Park Avenue, Suite 2414
New York, New York
Senior Adviser, Time Warner Inc. (since 1998). 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 58.
William H. T. Bush, Trustee
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 (since 1986). Age 61.
Robert B. Calhoun, Jr., Trustee
Monitor Clipper Partners
650 Madison Avenue, 9th Floor
New York, New York
Managing Director of Monitor Clipper Partners (since 1997) and President of the
Clipper Group L.P., both private equity investment funds (since 1990). Age 57.
Stewart S. Dixon, Trustee
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon (since 1990). Age 69.
John C. Jansing, Trustee
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 74.
C. Alan MacDonald, Trustee
415 Round Hill Road
Greenwich, Connecticut
Currently involved in golf development management on a consultancy basis (since
1999). Formerly, Managing Director of The Directorship Inc., a consultancy in
board management and corporate governance (1997-1999). Prior to that 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 66.
Hansel B. Millican, Jr., Trustee
Rochester Button Company
1328 Broadway (Suite 816)
New York, New York
President and Chief Executive Officer of Rochester Button Company (since 1991).
Age 71.
6
<PAGE>
Thomas J. Neff, Trustee
Spencer Stuart
277 Park Avenue
New York, New York
Chairman of Spencer Stuart, an executive search consulting firm (since 1976).
Currently serves as Director of Ace, Ltd. (NYSE). Age 62.
The second column of the following table sets forth the compensation accrued for
the Company for outside directors/trustees. The third column sets forth
information with respect to the pension or retirement benefits accrued by all
Lord Abbett-sponsored funds for outside trustees/directors. The fourth column
sets forth the total compensation paid by all Lord Abbett-sponsored funds to the
outside trustees/directors, and amounts payable but deferred at the option of
the director/trustee. No director/trustee of the Funds associated with Lord
Abbett and no officer of the Funds received any compensation from the Funds for
acting as a director/trustee or officer.
For the Fiscal Year Ended November 30, 1999
-------------------------------------------
<TABLE>
<CAPTION>
Pension or For Year Ended
Retirement Benefits December 31, 1999
Accrued by the Total Compensation
Aggregate Fund and Paid by the Fund and
Compensation Thirteen Other Lord Thirteen Other Lord
Accrued by Abbett-sponsored Abbett-sponsored
Name of Trustee the Fund/1 Funds/2 Funds3
- --------------- --------------------- ------------------ ------
<S> <C> <C> <C>
E. Thayer Bigelow $11 $17,622 $57,720
William H. T. Bush* $ 4 $15,846 $58,000
Robert B. Calhoun, Jr.** $ 6 $12,276 $57,000
Stewart S. Dixon $11 $32,420 $58,500
John C. Jansing $11 $41,1084 $57,500
C. Alan MacDonald $11 $26,763 $57,500
Hansel B. Millican, Jr. $11 $37,822 $57,250
Thomas J. Neff $11 $20,313 $59,660
</TABLE>
*Elected as of August 13, 1998.
**Elected as of June 17, 1998.
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 fee payable by the
Fund to its outside directors/trustees may be deferred under a plan
("equity-based plan") that deems the deferred amounts to be invested in
shares of the Funds for later distribution to the directors/trustees. The
amounts of the aggregate compensation payable by the Company in accordance
with the equity-based plan as of November 30, 1999 deemed invested in Fund
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 Fund shares
were added to each director's actual holdings of Fund shares as of November
31, 999, each would own the following: Mr. Bigelow, $ ; Mr. Bush, $ ; Mr.
Calhoun, $ ; Mr. Dixon, $ ; Mr. Jansing, $ ; Mr. MacDonald, $ ; Mr.
Millican, $ ; and Mr. Neff, $ .
2. The amounts in Column 3 were accrued by the Lord Abbett-sponsored funds for
the twelve months ended November 30, 1999.
3. This column shows aggregate compensation, including directors/trustees'
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, 1999, including fees directors/trustees'
have chosen to defer but does not include amounts accrued under the equity
based plan and shown in Column 3.
7
<PAGE>
4. The equity-based plans superseded a previously approved retirement plan for
all directors/trustees. Directors/trustees had the option to convert their
accrued benefits under the retirement plan. All of the current outside
directors/trustees except one made such election. 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 each Fund have been
associated with Lord Abbett for over five years. Messrs. Brown, Carper, Gerber,
Hilstad, Hudson, Morris and Towle are partners of Lord Abbett; the others are
employees. None have received compensation from the Funds.
Executive Vice Presidents:
Zane E. Brown, age 48
Christopher J. Towle, age 42
Robert Gerber, age 45 (with Lord Abbett since 1997, formerly Senior Portfolio
manager at Sanford C. Bernstein & Co. from 1992-1997)
Robert G. Morris, age 55
Vice Presidents:
Paul A. Hilstad, age 57, Vice President and Secretary (with Lord Abbett since
1995; formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.)
Thomas J. Baade, age 35 (with Lord Abbett since 1998, formerly a credit analyst
with Greenwich Street Advisors)
Joan A. Binstock, age 45 (with Lord Abbett since 1999, formerly Chief Operating
Officer of Morgan Grenfell from 1996 to 1999, prior thereto Principal of Ernst &
Young LLP)
Daniel E. Carper, age 48
Michael S. Goldstein, age 31 (with Lord Abbett since 1997 - formerly involved in
Fixed Income trading and anaylsis at BEA Associated and Portfolio Administrator
for The Chase Manhattan Bank)
W. Thomas Hudson, Jr., age 58
Lawrence H. Kaplan, age 43 (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.)
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)
A.Edward Oberhaus III, age 40
Walter H. Prahl, age 40 (with Lord Abbett since 1997, formerly Quantitative
Analyst at Sanford C. Bernstein & Co. from 1994-1997)
Tracie E. Richter, age 32 (with Lord Abbett since 1999, formerly Vice President
- - Head of Fund Administration of Morgan Grenfell from 1998 to 1999, Vice
President of Bankers Trust from 1996 to 1998, prior thereto Tax Associate of
Goldman Sachs)
8
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Eli M. Salzmann, age 34 (with Lord Abbett since 1997 - formerly Vice President
of Mutual of America Capital Corp.; prior thereto Vice President of Mitchell
Hutchins Asset Mgt. From 1986 to 1996)
Richard S. Szaro, age 57
Treasurer:
Donna M. McManus, age 39 (with Lord Abbett since 1996, formerly a Senior Manager
at Deloitte & Touche LLP).
As of March 15, 2000, our officers and trustees, as a group, owned less than 1%
of the outstanding shares of each Fund and 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 the 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% for each the Core Fixed Income Fund and Strategic Core Fixed
Income 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 fee paid to Lord Abbett by the Core Fixed Income Fund for the
fiscal year ended November 30, 1999 and 1998 amounted to $39,615 and $ 21,264,
respectively. Lord Abbett waived all of its management fee for the fiscal year
ended November 30, 1999.
The management fee paid to Lord Abbett by the Strategic Core Fixed Income Fund
for the period December 14, 1998 to November 30, 1999 amounted to $10,023. Lord
Abbett waived all of its management fee for the period December 14, 1998 to
November 30, 1999.
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.
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.
Lord Abbett Distributor LLC, 90 Hudson Street, Jersey City, New Jersey
07303-3973, serves as the principal underwriter for the Funds.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281, are
the independent auditors of the Funds and must be approved at least annually by
our Board of Trustees to continue in such capacity. They perform audit services
for the Fund, including the examination of financial statements included in the
Fund's Annual Report to Shareholders.
Bank of New York, 48 Wall Street, New York, New York, 10286, is the Fund's
custodian.
9
<PAGE>
United Missouri Bank of Kansas City, N.A. Tenth and Grand Kansas City, Missouri,
64141, acts as the transfer agent and dividend disbursing agent for each Fund.
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.
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. When, in the
opinion of the Investment Adviser, two or more brokers (either directly or
through their correspondent clearing agents) are in a position to obtain the
best price and execution, preference may be given to brokers who have sold
shares of the fund or who have provided investment research, statistical, or
other related services to the Investment Adviser.
10
<PAGE>
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.
During the fiscal year ended November 30, 1999, the Core Fixed Income Fund and
Strategic Core Fixed Income Fund paid no commissions to independent brokers.
5.
Purchases, Redemptions and Shareholder Services
With respect to the foreign assets of the Strategic Core Fixed Income 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 contained in the Prospectus under "Purchases."
As disclosed in the Prospectus, we calculate our net asset value as of the close
of the New York Stock Exchange ("NYSE") on each day that the NYSE is open for
trading by dividing our total net assets by the number of shares outstanding at
the time of calculation. 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.
Each Fund values its portfolio securities at market value as of the close of the
NYSE. Market value will be determined as follows: securities listed or admitted
to trading privileges on the New York or American Stock Exchange or on the
NASDAQ National Market System are valued at the last sales price, or, if there
is no sale on that day, at the mean between the last bid and asked prices, or,
in the case of bonds, in the over-the-counter market if, in the judgment of the
Fund's officers, that market more accurately reflects the market value of the
bonds. Over-the-counter securities not traded on the NASDAQ National Market
System are valued at the mean between the last bid and asked prices. Securities
for which market quotations are not available are valued at fair market value
under procedures approved by the Board of Directors (Trustees).
The net asset value per share for the Class Y shares of each Fund will be
determined by taking the Class Y shares net assets and dividing by its
outstanding shares. Our Class Y shares will be offered at net asset value.
The offering price of Class Y shares of the Funds for the period indicated below
were computed as follows:
November 30, 1999
Core Fixed Income Fund
Net asset value per share (net assets divided
by shares outstanding)............................... $10.54
Strategic Core Fixed Income Fund
Net asset value per share (net assets divided
by shares outstanding)............................... $10.13
Each Fund has entered into a distribution agreement with Lord Abbett Distributor
LLC, a limited liability company and subsidiary of Lord Abbett under which Lord
Abbett Distributor is obligated to use its best efforts to find purchasers for
the shares of each 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.
11
<PAGE>
Class Y Share Exchanges. The Prospectus describes the Telephone Exchange
Privilege. You may exchange some or all of your Y shares for Y shares of any
Lord Abbett-sponsored funds currently offering Class Y shares to the public.
Currently those other funds consist of Lord Abbett Affiliated Fund, Inc., Lord
Abbett Investment Trust - High Yield Fund, Bond-Debenture Fund, Developing
Growth Fund, Mid-Cap Value Fund, International Fund, Growth Opportunities Fund,
Small-Cap Value Fund, Lord Abbett Securities Trust - Micro-Cap Growth Fund,
Micro-Cap Value Fund and Large Cap Growth Fund.
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 each Prospectus for expedited redemption procedures.
The right to redeem and receive payment, as described in each 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 (Affiliated Fund, Small-Cap
Fund, Growth Opportunities Fund, and High Yield Fund), and 60 shares
(International Fund). 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 6 month's 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 annual compounded rate of total return for 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 total return, raising the sum to a power equal to the number of years
covered by the computation and multiplying the result by one thousand dollars,
which represents a hypothetical initial investment. The calculation assumes
deduction of no sales charge from the initial amount invested and reinvestment
of all income dividends and capital gains distributions on the reinvestment
dates at prices calculated as stated in each Prospectus. The ending redeemable
value is determined by assuming a complete redemption at the end of the
period(s) covered by the annual total return computation.
In calculating total returns for Class Y shares no sales charge is deducted from
the initial investment and the 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.
Class Y share performance. Using the computation method described above, Core
Fixed Income Fund's total return for Class Y shares for the year ended November
30, 1999 was 1.08% and for the period from December 10, 1997 to November 30,
1998 was 5.42%.
Strategic Core Fixed Income Fund's total return for Class Y shares for the
period December 14, 1998 to November 30, 1999 was .90%.
Our yield quotation for Class Y shares is based on a 30-day period ended on a
specified date, computed by dividing the net investment income per share earned
during the period by the net asset value per share of such class on the last day
of the period. This is determined by finding the following quotient: take the
dividends and interest earned during the period for the class minus its expenses
accrued for the period and divide by the product of (i) the average daily number
of Class shares outstanding during the period that were entitled to receive
dividends and (ii) the net asset value per share of such class on the last day
of the period. To this quotient add one. This sum is multiplied by itself five
times. Then one is subtracted from the product of this multiplication and the
remainder is multiplied by two. Yields for Class Y shares do not reflect the
deduction of any sales charge.
These figures represent past performance, and an investor should be aware that
the investment return and principal value of 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.
12
<PAGE>
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 Fixed Income 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.
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
Lord Abbett Investment Trust was organized as a Delaware business trust on
August 16, 1993. The Fund's trustees have authority to create separate classes
of shares of beneficial interest and separate funds without further action by
shareholders. The Company has six Funds, two of which are discussed in this
Statement of Additional Information: 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 funds may be added in the future. The Act requires that where more
than one class or fund exists, each class or fund must be preferred over all
other classes or funds in respect of assets specifically allocated to such class
or fund.
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 fund
affected by such matter. Rule 18f-2 further provides that a class or fund shall
be deemed to be affected by a matter unless the interests of each class or fund
in the matter are substantially identical or the matter does not affect any
interest of such class or fund.
13
<PAGE>
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
The financial statements for fiscal year ended November 30, 1999 and the report
of Deloitte & Touche LLP, independent auditors, on such annual financial
statements contained in the 1999 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.
14
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PART C OTHER INFORMATION
This Post-Effective Amendment No. 26 (the "Amendment") to the Lord Abbett
Investment Trust's (the "Registrant") Registration Statement relates to Balanced
Series, Class A, B, C and P; Lord Abbett High Yield Fund, Class A, B, C, and P;
Limited Duration U.S. Government Securities Series, Class A, C and P; and U.S.
Government Securities Series, Class A, B, C and P. This Registration Statement
also relates to Core Fixed Income Series and Strategic Core Fixed Income Series,
Class Y shares.
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 filed on Form N-1A on December 30, 1998.
(c) Instruments Defining Rights of Security Holders. Not applicable.
(d) Management Agreement. Incorporated by reference to Post-Effective Amendment
No. 2 to the Registration Statement filed on Form N-1A on October 7, 1994.
Addendum to Management Agreement. Incorporated by reference to
Post-Effective Amendment No. 6 to the Registration Statement filed on Form
N-1A on December 22, 1995 and to Post-Effective Amendment No. 7 to the
Registration Statement filed on Form N-1A on February 14, 1996.
(e) Distribution Plan and Agreement. Incorporated by reference to
Post-Effective Amendment No. 7 to the Registration Statement filed on Form
N-1A filed on February 14, 1996.
(f) Bonus or Profit Sharing Contracts. Incorporated by reference to
Post-Effective Amendment No. 7 to the Registration Statement on Form N-1A
to the Lord Abbett Equity Fund (File No. 811-7538) filed on September 22,
1994.
(g) Custodian Agreements. Incorporated by reference.
(h) Transfer Agency Agreement. Incorporated by reference.
(i) Consent to Legal Opinion. Filed herewith.
(j) Consent of Deloitte & Toouch LLP. Filed herewith.
(k) Financial Statements. Incorporated by reference to the Registrant's Form
N-30D filed on February 23, 2000 (Accession No. 0000911507-00-000003).
(l) Initial Capital Agreements. Incorporated by reference.
(m) Rule 12b-1 Plans. Incorporated by reference to Post-Effective Amendment No.
1 to the Registration Statement filed on Form N-1A on October 8, 1993.
(n) Financial Data Schedule. Incorporated by reference to the Registrant's Form
N-SAR filed on February 2, 2000 (Accession No. 0000911507-00-00002).
(o) Rule 18f-3 Plan. Incorporated by reference to Post-Effective Amendment No.
26 to the Registration Statement filed on Form N-1A on March 24, 2000.
(p) Code of Ethics. Filed herewith.
Item 24. Persons Controlled by or Under Common Control with the Fund
None.
1
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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
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.
2
<PAGE>
The Trustees may make advance payments out of the assets of the Trust
or, if appropriate, of the affected Series in connection with the
expense of defending any action with respect to which indemnification
might be sought under this Section 4.3. The indemnified Trustee,
officer, employee or agent shall give a written undertaking to
reimburse the Trust or the Series in the event it 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 adviser for the Lord Abbett
registered investment companies and provides investment management
services to various pension plans, institutions and individuals. Lord
Abbett Distributor, a limited liability corporation, serves as their
distributor and principal underwriter. 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 or her own
account or in the capacity of director, officer, employee, partner or
Trustee of any entity.
3
<PAGE>
Investment Sub-Adviser
American Skandia Trust (Lord Abbett Growth & Income Portfolio)
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
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
Business Address with Registrant
---------------- ---------------
Robert S. Dow Chairman and President
Zane E. Brown Executive Vice President
Robert I. Gerber Executive Vice President
Robert G. Morris Executive Vice President
Christopher J. Towle Executive Vice President
Paul A. Hilstad Vice President & Secretary
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 and John J. Walsh.
Each of the above has a principal business address at 90 Hudson Street,
Jersey City, New Jersey 07302-3973
(c) Not applicable
4
<PAGE>
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 cancelled stock and correspondence may be
physically maintained at the main office of the Registrant's Transfer
Agent, Custodian, or Shareholder Servicing Agent within the
requirements of Rule 31a-3.
Item 29. Management Services
None.
Item 30. Undertakings
The Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
The Registrant undertakes, if requested to do so by the holders of at
least 10% of the registrant's outstanding shares, to call a meeting of
shareholders for the purpose of voting upon the question of removal of
a director or directors and to assist in communications with other
shareholders as required by Section 16(c) of the Investment Company Act
of 1940, as amended.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act and the Investment
Company Act, the Fund certifies that it meets all of the requirements for
effectiveness of this registration statement under rule 485(b) under the
Securities Ace and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, duly authorized, in the City of Jersey City, and
State of New Jersey on the 31th day of March, 2000.
BY:/s/ Lawrence H. Kaplan /s/ Donna M. McManus
---------------------- --------------------
Lawrence H. Kaplan Donna M. McManus
Vice President Treasurer
LORD ABBETT INVESTMENT TRUST
Pursuant to the requirements of the Securities Act this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
Signatures Title Date
- ---------- ----- ----
Chairman, President
/s/Robert S. Dow* and Director/Trustee March 31, 2000
- ------------------ -------------------- --------------
Robert S. Dow
/s/ E. Thayer Bigelow* Director/Trustee March 31, 2000
- ---------------------------- -------------------- --------------
E. Thayer Bigelow
/s/William H. T. Bush* Director/Trustee March 31, 2000
- ---------------------------- ---------------- --------------
William H. T. Bush
/s/Robert B. Calhoun, Jr*. Director/Trustee March 31, 2000
- -------------------------- ---------------- --------------
Robert B. Calhoun, Jr.
/s/Stewart S. Dixon* Director/Trustee March 31, 2000
- ---------------------------- ---------------- --------------
Stewart S. Dixon
/s/John C. Jansing* Director/Trustee March 31, 2000
- ---------------------------- ---------------- --------------
John C. Jansing
/s/C. Alan MacDonald* Director/Trustee March 31, 2000
- ---------------------------- ---------------- --------------
C. Alan MacDonald
/s/Hansel B. Millican, Jr*. Director/Trustee March 31, 2000
- --------------------------- ---------------- --------------
Hansel B. Millican, Jr.
/s/Thomas J. Neff* Director/Trustee March 31, 2000
- ---------------------------- ---------------- --------------
Thomas J. Neff
March 27, 2000
Lord Abbett Investment Trust
90 Hudson Street
Jersey City, NJ 07302-3972
Dear Sirs:
You have requested our opinion in connection with your filing of Amendment
No. 26 to the Registration Statement on Form N-1A (the "Amendment") under the
Investment Company Act of 1940, as amended, of Lord Abbett Investment Trust, a
Delaware business trust (the "Company"), and in connection therewith your
registration of the following shares of beneficial interest, without par value,
of the Company (collectively, the "Shares"): Balanced Series (Classes A, B, C,
and P); Core Fixed Income Fund (Class Y); Lord Abbett High Yield Fund (Classes
A, B, C, and P); Limited Duration U.S. Government Securities Series (Classes A,
C, and P); Strategic Core Fixed Income Fund (Class Y); and U.S. Government
Securities Series (Classes A, B, C, and P).
We have examined and relied upon originals, or copies certified to our
satisfaction, of such company records, documents, certificates and other
instruments as in our judgment are necessary or appropriate to enable us to
render the opinion set forth below.
We are of the opinion that the Shares issued in the continuous offering
have been duly authorized and, assuming the issuance of the Shares for cash at
net asset value and receipt by the Company of the consideration therefore as set
forth in the Amendment, the Shares will be validly issued, fully paid and
nonassessable.
We express no opinion as to matters governed by any laws other than Title
12 of the Delaware Code. We consent to the filing of this opinion solely in
connection with the Amendment. In giving such consent, we do not hereby admit
that we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
WILMER, CUTLER & PICKERING
By:MARIANNE K. SMYTHE
Marianne K. Smythe, a partner
LORD, ABBETT & CO.
LORD ABBETT-SPONSORED FUNDS
AND
LORD ABBETT DISTRIBUTOR LLC
CODE OF ETHICS
I. Statement of General Principles
The personal investment activities of any officer, director, trustee or
employee of the Lord Abbett-sponsored Funds (the Funds) or any partner or
employee of Lord, Abbett & Co. (Lord Abbett) will be governed by the following
general principles: (1) Covered Persons have a duty at all times to place first
the interests of Fund shareholders and, in the case of employees and partners of
Lord Abbett, beneficiaries of managed accounts; (2) all securities transactions
by Covered Persons shall be conducted consistent with this Code and in such a
manner as to avoid any actual or potential conflict of interest or any abuse of
an individual's position of trust and responsibility; and (3) Covered Persons
should not take inappropriate advantage of their positions with Lord Abbett or
the Funds.
II. Specific Prohibitions
No person covered by this Code, shall purchase or sell a security, except
an Excepted Security, if there has been a determination to purchase or sell such
security for a Fund (or, in the case of any employee or partner of Lord, Abbett,
for another client of Lord Abbett), or if such a purchase or sale is under
consideration for a Fund (or, in the case of an employee or partner of Lord
Abbett, for another client of Lord Abbett), nor may such person have any
dealings in a security that he may not purchase or sell for any other account in
which he has Beneficial Ownership, or disclose the information to anyone, until
such purchase, sale or contemplated action has either been completed or
abandoned.
III. Obtaining Advance Approval
Except as provided in Sections V and VI of this Code, all proposed
transactions in securities (privately or publicly owned) by Covered Persons,
except transactions in Excepted Securities, should be approved consistent with
the provisions of this Code in advance by one of the partners of Lord Abbett. In
order to obtain approval, the Covered Person must send their request via e-mail
to Isabel Herrera, or in her absence, Chrissy DeCicco, who will obtain a
partner's approval. After approval has been obtained, the Covered Person may act
on it within the next seven business days, unless he sooner learns of a
contemplated action by Lord Abbett. After the seven business days, or upon
hearing of such contemplated action, a new approval must be obtained.
Furthermore, in addition to the above requirements, partners and employees
directly involved must disclose information they may have concerning securities
they may want to purchase or sell to any portfolio manager who might be
interested in the securities for the portfolios they manage.
IV. Reporting and Certification Requirements; Brokerage Confirmations
(1) Except as provided in Sections V and VI of this Code, within 10 days
following the end of each calendar quarter each Covered Person must file
with Ms. Herrera a signed Security Transaction Reporting Form. The form
must be signed and filed whether or not any security transaction has been
effected. If any transaction has been effected during the quarter for the
Covered Person's account or for any account in which he has a direct or
indirect Beneficial Ownership, it must be reported. Excepted from this
reporting requirement are transactions effected in any accounts over which
the Covered Person has no direct or indirect influence or control and
transactions in Excepted Securities. Ms. Herrera is responsible for
reviewing these transactions promptly and must bring any apparent violation
to the attention of the General Counsel of Lord Abbett.
(2) Each employee and partner of Lord Abbett will upon commencement of
employment and annually thereafter disclose all personal securities
holdings and annually certify that: (i) they have read and understand this
Code and recognize they are subject hereto; and (ii) they have complied
with the requirements of this Code and disclosed or reported all securities
transactions required to be disclosed or reported pursuant to the
requirements of this Code.
(3) Each employee and partner of Lord Abbett will direct his brokerage firm to
send copies of all confirmations and all monthly statements directly to Ms.
Herrera.
(4) Each employee and partner of Lord Abbett who has a Fully-Discretionary
Account (as defined in Section VI) shall disclose all pertinent facts
regarding such Account to Lord Abbett's General Counsel upon commencement
of employment. Each such employee or partner shall thereafter annually
certify on the prescribed form that he or she has not and will not exercise
any direct or indirect influence or control over such Account, and has not
discussed any potential investment decisions with such independent
fiduciary in advance of any such transactions.
V. Special Provisions Applicable to Outside Directors and Trustees of theFunds
The primary function of the Outside Directors and Trustees of the Funds is
to set policy and monitor the management performance of the Funds' officers and
employees and the partners and employees of Lord Abbett involved in the
management of the Funds. Although they receive complete information as to actual
portfolio transactions, Outside Directors and Trustees are not given advance
information as to the Funds' contemplated investment transactions.
An Outside Director or Trustee wishing to purchase or sell any security
will therefore generally not be required to obtain advance approval of his
security transactions. If, however, during discussions at Board meetings or
otherwise an Outside Director or Trustee should learn in advance of the Funds'
current or contemplated investment transactions, then advance approval of
transactions in the securities of such company(ies) shall be required for a
period of 30 days from the date of such Board meeting. In addition, an Outside
Director or Trustee can voluntarily obtain advance approval of any security
transaction or transactions at any time.
No report described in Section IV (1) will be required of an Outside
Director or Trustee unless he knew, or in the ordinary course of fulfilling his
official duties as a director or trustee should have known, at the time of his
transaction, that during the 15-day period immediately before or after the date
of the transaction (i.e., a total of 30 days) by the Outside Director or Trustee
such security was or was to be purchased or sold by any of the Funds or such a
purchase or sale was or was to be considered by a Fund. If he makes any
transaction requiring such a report, he must report all securities transactions
effected during the quarter for his account or for any account in which he has a
direct or indirect Beneficial Ownership interest and over which he has any
direct or indirect influence or control. Each Outside Director and Trustee will
direct his brokerage firm to send copies of all confirmations of securities
transactions to Ms. Herrera, and annually make the certification required under
Section IV(2)(i) and (ii). Outside Directors' and Trustees' transactions in
Excepted Securities are excepted from the provisions of this Code.
It shall be prohibited for an Outside Director or Trustee to (i) trade on
material non-public information, or (ii) trade in options with respect to
securities covered by this Code without advance approval from Lord Abbett. Prior
to accepting an appointment as a director of any company, an Outside Director or
Trustee will advise Lord Abbett and discuss with Lord Abbett's Managing Partner
whether accepting such appointment creates any conflict of interest or other
issues.
If an Outside Director or Trustee, who is a director or an employee of, or
consultant to, a company, receives a grant of options to purchase securities in
that company (or an affiliate), neither the receipt of such options, nor the
exercise of those options and the receipt of the underlying security, requires
advance approval from Lord Abbett. Further, neither the receipt nor the exercise
of such options and receipt of the underlying security is reportable by such
Outside Director or Trustee. Finally, neither the receipt nor the exercise of
such options shall be considered "trading in options" within the meaning of the
preceding paragraph of this Section V.
VI. Additional Requirements relating to Partners and Employees of Lord Abbett
It shall be prohibited for any partner or employee of Lord Abbett:
(1) To obtain or accept favors or preferential treatment of any kind or gift or
other thing having a value of more than $100 from any person or entity that
does business with or on behalf of the investment company---no partner or
employee shall have any ownership interest in a brokerage firm;
(2) to trade on material non-public information or otherwise fail to comply
with the Firm's Statement of Policy and Procedures on Receipt and Use of
Inside Information adopted pursuant to Section 15(f) of the Securities
Exchange Act of 1934 and Section 204A of the Investment Advisers Act of
1940;
(3) to trade in options with respect to securities covered under this Code;
(4) to profit in the purchase and sale, or sale and purchase, of the same (or
equivalent) securities within 60 calendar days (any profits realized on
such short-term trades shall be disgorged to the appropriate Fund or as
otherwise determined);
(5) to trade in futures or options on commodities, currencies or other
financial instruments, although the Firm reserves the right to make rare
exceptions in unusual circumstances which have been approved by the Firm in
advance;
(6) to engage in short sales or purchase securities on margin;
(7) to buy or sell any security within seven business days before or after any
Fund (or other Lord Abbett client) trades in that security (any profits
realized on trades within the proscribed periods shall be disgorged to the
Fund (or the other client) or as otherwise determined);
(8) to subscribe to new or secondary public offerings, even though the offering
is not one in which the Funds or Lord Abbett's advisory accounts are
interested;
(9) to become a director of any company without the Firm's prior consent and
implementation of appropriate safeguards against conflicts of interest.
In connection with any request for approval, pursuant to Section III of
this Code, of an acquisition by partners or employees of Lord Abbett of any
securities in a private placement, prior approval will take into account, among
other factors, whether the investment opportunity should be reserved for any of
the Funds and their shareholders (or other clients of Lord Abbett) and whether
the opportunity is being offered to the individual by virtue of the individual's
position with Lord Abbett or the Funds. An individual's investment in
privately-placed securities will be disclosed to the Managing Partner of Lord
Abbett if such individual is involved in consideration of an investment by a
Fund (or other client) in the issuer of such securities. In such circumstances,
the Fund's (or other client's) decision to purchase securities of the issuer
will be subject to independent review by personnel with no personal interest in
the issuer.
If a spouse of a partner or employee of Lord Abbett who is a director or an
employee of, or a consultant to, a company, receives a grant of options to
purchase securities in that company (or an affiliate), neither the receipt nor
the exercise of those options requires advance approval from Lord Abbett or
reporting. Any subsequent sale of the security acquired by the option exercise
by that spouse would require advance approval and is a reportable transaction.
Advance approval is not required for transactions in any account of a
Covered person if the Covered Person has no direct or indirect influence or
control ( a "Fully-Discretionary Account"). A Covered person will be deemed to
have "no direct or indirect influence or control" over an account only if : (i)
investment discretion for the account has been delegated to an independent
fiduciary and such investment discretion is not shared with the employee, (ii)
the Covered Person certifies in writing that he or she has not and will not
discuss any potential investment decisions with such independent fiduciary
before any transaction and (iii) the General Counsel of Lord Abbett has
determined that the account satisfies these requirements. Transaction in
Fully-Discretionary Accounts by an employee or partner of Lord Abbett are
subject to the post-trade reporting requirements of this Code.
VII. Enforcement
The Secretary of the Funds and General Counsel for Lord Abbett (who may be
the same person) each is charged with the responsibility of enforcing this Code,
and may appoint one or more employees to aid him in carrying out his enforcement
responsibilities. The Secretary shall implement a procedure to monitor
compliance with this Code through a periodic review of personal trading records
provided under this Code against transactions in the Funds and managed
portfolios. The Secretary shall bring to the attention of the Funds' Audit
Committees any apparent violations of this Code, and the Audit Committees shall
determine what action shall be taken as a result of such violation. The record
of any violation of this Code and any action taken as a result thereof, which
may include suspension or removal of the violator from his position, shall be
made a part of the permanent records of the Audit Committees of the Funds. The
Secretary shall also prepare an annual report to the directors or trustees of
the Funds that (a) summarizes Lord Abbett's procedures concerning personal
investing, including the procedures followed by partners in determining whether
to give approvals under Section III and the procedures followed by Ms. Herrera
in determining pursuant to Section IV whether any Funds have determined to
purchase or sell a security or are considering such a purchase or sale, and any
changes in those procedures during the past year, and (b) identifies any
recommended changes in the restrictions imposed by this Code or in such
procedures with respect to the Code and any changes to the Code based upon
experience with the Code, evolving industry practices or developments in the
regulatory environment.
The Audit Committee of each of the Funds and the General Counsel of Lord
Abbett may determine in particular cases that a proposed transaction or proposed
series of transactions does not conflict with the policy of this Code and exempt
such transaction or series of transactions from one or more provisions of this
Code.
VIII. Definitions
"Covered Person" means any officer, director, trustee, director or trustee
emeritus or employee of any of the Funds and any partner or employee of Lord
Abbett. (See also definition of "Beneficial Ownership.")
"Excepted Securities" are shares of the Funds, bankers' acceptances, bank
certificates of deposit, commercial paper, shares of registered open-end
investment companies and U.S. Government securities.
"Outside Directors and Trustees" are directors and trustees who are not
"interested persons" as defined in the Investment Company Act of 1940.
"Security" means any stock, bond, debenture or in general any instrument
commonly known as a security and includes a warrant or right to subscribe to or
purchase any of the foregoing and also includes the writing of an option on any
of the foregoing.
"Beneficial Ownership" is interpreted in the same manner as it would be
under Section 16 of the Securities Exchange Act of 1934 and Rule 16a-1
thereunder. Accordingly, "beneficial owner" includes any Covered Person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has or shares a direct or indirect pecuniary interest
(i.e. the ability to share in profits derived from such security) in any equity
security, including:
(i) securities held by a person's immediate family sharing the same house
(with certain exceptions);
(ii) a general partner's interest in portfolio securities held by a general
or limited partnership;
(iii) a person's interest in securities held in trust as trustee, beneficiary
or settlor, as provided in Rule 16a-8(b); and
(iv) a person's right to acquire securities through options, rights or other
derivative securities.
"Gender/Number" whenever the masculine gender is used herein, it includes
the feminine gender as well, and the singular includes the plural and the plural
includes the singular, unless in each case the context clearly indicates
otherwise.
6
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Post-
Effective Amendment No. 26 to Registration Statement
No.33-68090 of Lord Abbett Investment Trust on Form N-1A of our
report dated January 28, 2000, appearing in the annual report to
shareholders of Lord Abbett Investment Trust for the year ended
November 30, 1999, and to the references to us under the captions
"Financial Highlights" in the Prospectus and "Investment Advisory
and Other Services" and "Financial Statements" in the Statement
of Additional Information, both of which are part of such
Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
March 28, 2000
