1940 Act File No. 811-9597
1933 Act File No. 33-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
LORD ABBETT LARGE-CAP GROWTH FUND
---------------------------------
(Exact Name of Registrant as Specified in Charter)
(800) 201-6984
(Area Code and Telephone Number)
90 Hudson Street
Jersey City, New Jersey 07302-3972
(Address of Principal Executive offices
Number, Street, City,
State, Zip Code)
Lawrence H. Kaplan, Vice President
90 Hudson Street
Jersey City, New Jersey 07302-3972
(Address of Principal Executive offices
Number, Street, City,
State, Zip Code)
Approximate Date of Proposed Public Offering: AS SOON AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE
UNDER THE SECURITIES ACT OF 1933.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
TITLE OF THE SECURITIES BEING REGISTERED: SHARES OF BENEFICIAL INTEREST WITH NO
PAR VALUE. NO FILING FEE IS REQUIRED BECAUSE AN INDEFINITE NUMBER OF SHARES HAVE
PREVIOUSLY BEEN REGISTERED PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY
ACT OF 1940. A RULE 24F-2 NOTICE FOR THE REGISTRANT'S FISCAL YEAR ENDED JULY 31,
2000 WILL BE FILED ON OR ABOUT OCTOBER 31, 2000
THIS FILING WILL BECOME EFFECTIVE ON MARCH 31, 2000, PURSUANT TO RULE 488
CROSS-REFERENCE SHEET
(Pursuant to Rule 481(a) under the Securities Act of 1933)
(ADD CROSS-REFERENCE SHEET FROM THE PROXY)
PART A ITEM CAPTION PROSPECTUS CAPTION
ITEM
NO.
1 Beginning of Registration Statement and Outside
Front Cover Page of Prospectus
2 Beginning and Outside Back Cover Page of Prospectus
3 Fee Table, Synopsis Information, and Risk Factors Fee Table; Summary of Proposal;
Capitalization
4 Information About the Transaction Information about the Reorganization
5 Information About the Registrant Comparative Information about the Large-Cap
Growth Fund and Equity Fund
6 Information About the Company Being Acquired Comparative Information about the Large-Cap
Growth Fund and Equity Fund
7 Voting Information Additional Information
8 Interest of Certain Persons and Experts Additional Information
9 Additional Information Required For Reoffering by Not applicable
Persons Deemed to be Underwriters
PART B ITEM CAPTION STATEMENT OF ADDITIONAL INFORMATION CAPTION
ITEM
NO.
10 Cover Page Cover Page
11 Table of Contents Not applicable
12 Additional Information About the Registrant Incorporated by reference
13 Additional Information About the Company Being Incorporated by reference
Acquired
14 Financial Statements Incorporated by reference
PART C PART C CAPTION
ITEM
NO.
15 Indemnification Indemnification
16 Exhibits Exhibits
17 Undertakings
[Letterhead of Lord Abbett Equity Fund]
FROM THE CHAIRMAN OF THE BOARD
- -----------------
Dear Shareholder,
Lord, Abbett & Co. is the investment manager for your Fund and the Lord
Abbett Large-Cap Growth Fund ("Large-Cap Growth Fund").
As you know, your Fund offered investors purchasing shares in the 1990
initial offering and holding them until May 31, 2000 the unique opportunity to
participate in the stock market without the risk of losing their original
investment. Shareholders who meet certain conditions are protected through the
guarantee issued by Financial Security Assurance, Inc., a private insurance
company. That guarantee will expire on May 31, 2000. After that date, all
outstanding Fund shares will be subject to the market risks inherent in equity
funds.
In view of the expiration of the guarantee and the possibility that your
Fund's assets will decline thereafter, the Fund's Board of Trustees, following
the recommendation of Lord, Abbett & Co., has determined unanimously that the
combination of your Fund with the Large-Cap Growth Fund would be in the best
interests of the Fund and its shareholders. Accordingly, the Board of Trustees
has called a Special Meeting of Shareholders to consider the proposed
combination.
As you evaluate this proposed combination of your Fund and the
Large-Cap Growth Fund (the "Funds"), please note the following points:
o Both Funds invest primarily in equity securities of large, established
companies, although they have different investment objectives and
strategies. Under normal market conditions, it is expected that the
Large-Cap Growth Fund will invest a lesser percentage of its assets in U.S.
government obligations and other debt securities than your Fund has been
required to do as a condition of its insurance policy. The Large-Cap Growth
Fund has not purchased an insurance policy like the one owned by your Fund.
o The proposed combination will be a tax-free reorganization for federal
income tax purposes.
o You will not be charged any sales loads, commissions or transaction fees in
the combination.
o The total value of the shares you will receive as a result of this
combination will be the same as the total value of your Fund shares as of
the close of business on the date that the combination is completed.
o The proposed combination may allow potential economies of scale in
portfolio management, administration and operations resulting from larger
asset size.
o A vote in favor of the proposed combination is a vote to terminate the
Equity Fund.
You may vote in any one of four ways:
o Via the Internet at __________ (or by going to ______
and clicking on "Proxy Voting").
o By telephone, with a toll-free call to the telephone
number listed on your proxy card.
o By mail, using the enclosed ballot.
o In person at the meeting.
We encourage you to vote by Internet or telephone, using the 12-digit "control"
number that appears on your proxy card. These voting methods will save your Fund
a good deal of money otherwise expended on postage. Regardless of the method you
choose, however, please take the time to read the full text of the Combined
Prospectus/Proxy Statement before voting.
YOUR VOTE ON THE PROPOSED COMBINATION IS CRITICAL. TO ENSURE THAT YOUR VOTE IS
COUNTED, IT IS IMPORTANT THAT YOU:
1. REVIEW THE ENCLOSED COMBINED PROSPECTUS/PROXY STATEMENT;
2. VOTE BY INTERNET OR TELEPHONE, OR
3. COMPLETE AND SIGN THE ENCLOSED PROXY CARD, AND RETURN THE PROXY CARD
IN THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE.
Your prompt response will help save your Fund the expense of additional
solicitations.
We encourage you to review the enclosed materials. Because we believe this
combination of Funds is in the best interests of shareholders, we encourage you
to vote in favor of this proposal.
Sincerely,
Robert S. Dow
Chairman of the Board
March ___, 2000
March __, 2000
LORD ABBETT EQUITY FUND
90 Hudson Street
Jersey City, NJ 07302-3972
Telephone No. (800) 426-1130
Notice of a Special Meeting of Shareholders
to be held on May 26, 2000
Notice is given hereby of a special meeting of the shareholders of Lord
Abbett Equity Fund. The meeting will be held in the offices of Lord, Abbett &
Co., at 90 Hudson Street, Jersey City, New Jersey, on May 26, 2000, at 10:00
a.m. for the following purposes.
To consider and act upon:
(1) an Agreement and Plan of Reorganization between Lord Abbett Equity
Fund (the Equity Fund) and Lord Abbett Large-Cap Growth Fund (the
Large-Cap Growth Fund), providing for: (a) the transfer of all of the
assets of the Equity Fund to the Large-Cap Growth Fund in exchange for
Class A Shares of the Large-Cap Growth Fund and the assumption by the
Large-Cap Growth Fund of all of the liabilities of the Equity Fund;
(b) the distribution of such Class A Shares to the shareholders of the
Equity Fund; and (c) the subsequent termination of the Equity Fund
under state law and the Investment Company Act of 1940; and
(2) such other business as may properly come before the meeting.
By order of the Board of Trustees
Paul A. Hilstad
Vice President and Secretary
The Board of Trustees has fixed the close of business on March 23, 2000 as the
record date for determination of shareholders of the Equity Fund entitled to
notice of and to vote at the meeting and any adjournments thereof. Shareholders
are entitled to one vote for each share held. As of March 23, 2000, there were
____ shares of the Equity Fund issued and outstanding.
- --------------------------------------------------------------------------------
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD.
SIGN, DATE, AND RETURN IT IN THE ENVELOPE PROVIDED.
TO SAVE THE COST OF ADDITIONAL SOLICITATIONS, PLEASE MAIL YOUR PROXY PROMPTLY.
- --------------------------------------------------------------------------------
Combined Prospectus/Proxy Statement Dated March ___, 2000
Acquisition Of The Assets Of
Lord Abbett Equity Fund
90 Hudson Street
Jersey City, NJ 07302-3972
by and in exchange for Class A shares of
Lord Abbett Large-Cap Growth Fund
90 Hudson Street
Jersey City, NJ 07302-3972
This Combined Prospectus/Proxy Statement relates to Class A shares (the
"Class A shares") of beneficial interest of the Lord Abbett Large-Cap Growth
Fund (the "Large-Cap Growth Fund") to be issued to, and in exchange for all the
assets of, Lord Abbett Equity Fund (the "Equity Fund", and together with the
Large-Cap Growth Fund, the "Funds"). In exchange for those assets, the Large-Cap
Growth Fund also will assume all of the liabilities of the Equity Fund.
Following receipt of the Large-Cap Growth Fund Class A shares, the Equity Fund
will terminate and distribute the Class A shares to the shareholders of the
Equity Fund. The shareholders of the Equity Fund are being asked to vote to
approve or disapprove these proposed transactions (the Reorganization), which
are more fully described in this Combined Prospectus/Proxy Statement.
Both Funds are registered, open-end, management investment companies. Lord,
Abbett & Co. (Lord Abbett) is the investment manager to both Funds.
The Boards of Trustees of the Funds have decided that the Reorganization is
in the best interests of the Equity Fund and the Large-Cap Growth Fund and their
respective shareholders. The Boards also have determined that the Reorganization
would not result in a dilution of the interests of the shareholders of either
Fund.
Any shareholder having a question regarding the meeting agenda or needing
assistance in voting should contact the shareholder servicing agent of the
Large-Cap Growth Fund, DST Systems, Inc., 1-800-426-1130
================================================================================
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES NOR PASSED UPON THE ADEQUACY OF THIS COMBINED PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Combined Prospectus/Proxy Statement concisely sets forth the
information about the Large-Cap Growth Fund that a shareholder of the Equity
Fund should know before voting on the Reorganization. It should be read and
retained for future reference. Attached as Exhibit A to this Combined
Prospectus/Proxy Statement is a copy of the Agreement and Plan of Reorganization
(the Plan) for the Reorganization. This Combined Prospectus/Proxy Statement is
accompanied by the Prospectus of the Large-Cap Growth Fund dated December 30,
1999 (the Large-Cap Growth Fund Prospectus), which is incorporated by reference
into this Combined Prospectus/Proxy Statement. Also incorporated herein by
reference is the Statement of Additional Information dated March __, 2000
relating to this Combined Prospectus/Proxy Statement. The Statement of
Additional Information is available, upon oral or written request and at no
charge, from the Large-Cap Growth Fund at 90 Hudson Street, Jersey City, NJ
07302-3972, telephone no. (800) 426-1130.
TABLE OF CONTENTS
SPECIAL MEETING OF SHAREHOLDERS OF THE EQUITY FUND.............................1
FEES AND EXPENSES..............................................................2
SUMMARY OF PROPOSAL............................................................4
OVERVIEW OF PROPOSED REORGANIZATION.........................................4
LARGE-CAP GROWTH FUND CLASS A SHARES........................................5
INVESTMENT OBJECTIVES AND POLICIES OF THE EQUITY FUND AND
THE LARGE-CAP GROWTH FUND.................................................5
PURCHASES AND EXCHANGES.....................................................6
DIVIDEND POLICIES AND OPTIONS...............................................6
REDEMPTION PROCEDURES.......................................................6
TAX CONSIDERATIONS..........................................................7
RISK FACTORS................................................................7
INFORMATION ABOUT THE REORGANIZATION...........................................7
THE PLAN....................................................................7
REASONS FOR THE REORGANIZATION..............................................8
FEDERAL INCOME TAX CONSIDERATIONS...........................................8
EXPENSES OF THE REORGANIZATION.............................................10
CAPITALIZATION.............................................................10
COMPARATIVE INFORMATION ABOUT THE LARGE-CAP GROWTH FUND AND THE EQUITY FUND...11
MANAGEMENT.................................................................11
HISTORICAL PERFORMANCE OF PORTFOLIO MANAGER................................12
PERFORMANCE OF THE EQUITY FUND.............................................13
MANAGEMENT'S DISCUSSION OF EQUITY FUND'S FINANCIAL YEAR 1999 PERFORMANCE...14
FEES AND EXPENSES..........................................................16
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS...........................16
OTHER INVESTMENT TECHNIQUES................................................17
SHAREHOLDERS RIGHTS........................................................19
ADDITIONAL INFORMATION........................................................21
SPECIAL MEETING OF SHAREHOLDERS OF THE EQUITY FUND
This Combined Prospectus/Proxy Statement is furnished in connection with the
solicitation of proxies by and on behalf of the Board of Trustees of the Equity
Fund to be used at a Special Meeting of Shareholders of the Equity Fund to be
held at 10:00 a.m. on May 26, 2000, at the offices of Lord Abbett at 90 Hudson
Street, Jersey City, New Jersey, and at any adjournments thereof. This Combined
Prospectus/Proxy Statement and the enclosed proxy card are first being mailed to
shareholders of the Equity Fund on or about March __, 2000.
At the close of business on March 10, 2000 (the Record Date), there were issued
and outstanding ____ shares of the Equity Fund. Only shareholders of record as
of the close of business on the Record Date will be entitled to notice of, and
to vote at, the meeting or any adjournment thereof. Shareholders of the Equity
Fund are entitled to one vote for each full share, and a proportionate share of
a vote for each fractional share.
The presence in person or by proxy of the holders of a majority of the
outstanding shares entitled to vote is required to constitute a quorum of the
meeting. Approval of the Plan and the Reorganization requires the affirmative
vote of a majority of the outstanding voting securities (as defined in the
Investment Company Act of 1940 (Investment Company Act)) of the shares of the
Equity Fund. This means that the Plan and the Reorganization must be approved by
the lesser of: (i) 67% or more of the shares of Equity Fund, if holders of more
than 50% of the outstanding shares are present or represented by proxy; or (ii)
more than 50% of the outstanding shares of the Equity Fund. Shares for which
there is an abstention or broker non-vote shall be counted for quorum purposes
and shall not be treated as voted for purposes of determining whether the
proposal has passed. If the enclosed form of proxy is properly executed and
returned in time to be voted at the meeting, the proxies named therein will vote
the shares represented by the proxy in accordance with the instructions marked
thereon. A proxy may be revoked by the signer at any time at or before the
meeting by written notice to the Equity Fund, by execution of a later-dated
proxy or by voting in person at the meeting. Unless revoked, all valid proxies
will be voted in accordance with the specifications thereon or, in the absence
of such specifications, FOR approval of the Plan and the Reorganization, and on
any other matters as deemed appropriate. A vote in favor of the Reorganization
is a vote to terminate the Equity Fund.
Proxies will be solicited by mail. Additional solicitations may be made by
telephone, facsimile, or personal contact by officers or employees of Lord
Abbett and its affiliates. The Equity Fund may also request brokerage houses,
custodians, nominees, and fiduciaries who are shareholders of record to forward
proxy material to the beneficial owners. The cost of the solicitation will be
borne partially by Lord Abbett and partially by the Equity Fund and the
Large-Cap Growth Fund.
If sufficient votes to approve the Plan are not received by the meeting date,
the persons named as proxies may propose one or more adjournments of the meeting
to allow further solicitation of proxies. In determining whether to adjourn the
meeting, the following factors may be considered: the percentage of votes
actually cast, the percentage of negative votes actually cast and the nature of
any further solicitation and any information to be provided to shareholders with
respect to such solicitation. Any such adjournment will require an affirmative
vote of a majority of the shares present in person or by proxy and entitled to
vote at the meeting. The persons named as proxies will vote on an adjournment
after considering the best interests of all shareholders.
If the Plan is not approved by the shareholders of the Equity Fund, or if the
Reorganization is not completed for any other reason, the Equity Fund will
continue to engage in business.
FEES AND EXPENSES
This table provides a summary comparison of the expenses of the Class A shares
of the Large-Cap Growth Fund and the shares of the Equity Fund. The estimated
expenses of the Class A shares of the Large-Cap Growth Fund are not expected to
change as a result of the Reorganization.
---------------
Large-Cap Equity |Management fees
Growth Fund Fund |are payable to
Class A Shares Shares |Lord Abbett for
|the funds
|Investment
|Management
- ----------------------------------------------------------------|
Shareholder Fees (Fees paid None None |
directly from your investment) |
- ----------------------------------------------------------------|12b-1 fees
Minimum Sales Charge on Purchases |refer to fees
(As a % of offering price) 5.75%(1) 5.50% |incurred for
- ----------------------------------------------------------------|activities that
Maximum Deferred Sales Charge None (1)(2) None |are primarily
- ----------------------------------------------------------------|intended to
Annual Fund Operating Expenses |result in the
(Expenses deducted from fund |sale of fund
assets) |shares and
(As++ a % of average +net assets) |service fees
- ----------------------------------------------------------------|for shareholder
Management Fees (See 0.75% 0.65% |account
"Management" |service and
- ----------------------------------------------------------------|maintenance.
Distribution (12b-1) and Service 0.35% 0.25% |
Fees (3) |
- ----------------------------------------------------------------|Other expenses
Other Expenses 0.35% 0.26% |include fees
- ----------------------------------------------------------------|paid for
Total Annual Fund Operating 1.45% 1.16% |miscellaneous
Expenses (4) |items such as
|shareholder
|service fees
|and
|professional
|fees
---------------
(1) No sales charge will be imposed in connection with the Reorganization.
(2) A contingent deferred sales charge of 1.00% may be assessed on certain
redemptions of Class A shares made within 24 hours months following any
purchases made without a sales charge.
(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.
(4) The total annual operating expenses of the Large-Cap Growth Fund are based
on estimated expenses for the current fiscal year ending July 31, 2000.
The annual operating expenses of the Equity Fund have been restated from
the May 31, 1999 fiscal year amounts to reflect the termination on May 31,
2000, of the guarantee provided by Financial Security Assurance, Inc., and
the associated premium of .50% annually of the total amount guaranteed.
- --------------------------------------------------------------------------------
Examples
- --------------------------------------------------------------------------------
The Examples below are intended to help you compare the cost of investing in the
Large-Cap Growth Fund with the cost of investing in the Equity Fund. The first
example, like that in other funds' prospectuses, assumes that you invset $10,000
in the Funds for the time periods indicated and redeem all of your shares at the
end of those periods. The Example also assumes that your investment has a 5%
return each year, that the Funds' operating expenses remain the same, and that
you paid the maximum sales load. No sales charge will be imposed in connection
with the Reorganization. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
- --------------------------------------------------------------------------------
Share Class 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Large-Cap Growth Class A $714 $1,007 $1,322 $2,210
- --------------------------------------------------------------------------------
Equity Fund $662 $898 $1,153 $1,881
- --------------------------------------------------------------------------------
The Example below is intended to compare the costs you would pay as a result of
investing in the Large-Cap Growth Fund in the Reorganization with the costs of
holding Equity Fund shares. Like the Example above, it assumes that you invest
$10,000 in the Funds for the time periods indicated and 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 Funds' operating expenses
remain the same. (No sales load is deducted in this example.) Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
- --------------------------------------------------------------------------------
Share Class 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Large-Cap Growth Class A $148 $459 $792 $1,735
- --------------------------------------------------------------------------------
Equity Fund $118 $368 $638 $1,409
- --------------------------------------------------------------------------------
SUMMARY OF PROPOSAL
The following is a summary of certain information contained elsewhere or
incorporated by reference in this Combined Prospectus/Proxy Statement. You
should read the entire Combined Prospectus/Proxy Statement.
Overview Of Proposed Reorganization. The Plan provides for the transfer to the
Large-Cap Growth Fund of all of the assets of the Equity Fund in exchange for
Class A shares and the assumption by the Large-Cap Growth Fund of all of the
liabilities of the Equity Fund. The Class A shares then will be distributed to
the Equity Fund shareholders and the Equity Fund will be terminated. As a result
of the Reorganization, each shareholder of the Equity Fund will become the owner
of that number of full and fractional Class A shares having an aggregate net
asset value equal to the aggregate net asset value of their shares of the Equity
Fund, as of the close of business on the date the Equity Fund assets are
transferred to the Large-Cap Growth Fund. Completion of the Reorganization is
subject to the approval of the Equity Fund's shareholders and other conditions.
The Boards of Trustees of the Funds unanimously have decided that the
Reorganization is in the best interests of the Equity Fund and the Large-Cap
Growth Fund and their respective shareholders. The Boards also have determined
that the Reorganization would not result in a dilution of the interests of the
shareholders of either Fund. Among other factors, the Boards considered, based
upon the recommendation of Lord Abbett, the investment manager to both Funds,
the relative historical performance of the two Funds, the expiration of the
guarantee provided by Financial Security Assurance, Inc. ("Financial Security")
on May 31, 2000, the likely prospects for future sales of shares of the Equity
Fund, the prospect that the asset levels of the Equity Fund will decline
following the expiration of the guarantee, and the historical and projected
expense ratios of the Funds. In addition, the Boards considered the investment
management experience of Stephen Humphrey, the portfolio manager of the
Large-Cap Growth Fund, the prospects for future sales of shares of the Large-Cap
Growth Fund, in light of its investment objective and portfolio management, and
the likelihood that sales would be sufficient to allow it to reach an acceptably
high asset level to realize administrative, portfolio management, distribution,
shareholder service and other operating efficiencies.
The Boards also considered the tax-free nature of the Reorganization, the
similarities and differences among the investment objectives and policies of the
two Funds, their related risk factors, and the fact that the Funds share the
same service providers, including the investment manager, custodian and transfer
agent. The Board considered other alternatives, including liquidation of the
Equity Fund.
In light of these factors and their fiduciary duties under federal and state
law, the Boards unanimously have decided that the Reorganization is in the best
interests of the Equity Fund and the Large-Cap Growth Fund and their respective
shareholders. The Boards have also determined that the Reorganization would not
result in a dilution of the interests of the shareholders of either Fund.
Large-Cap Growth Fund Class A Shares. The Large-Cap Growth Fund has five classes
of shares: Classes A, B, C, P and Y, each of which invests in the same
portfolio, but bears different expenses and receives different levels of
dividends. If the Reorganization is completed, Equity Fund shareholders will
receive Class A shares.
Investment Objectives and Policies of the Equity Fund and the Large-Cap Growth
Fund. Although both Funds invest primarily in equity securities of large,
established companies, they have different investment objectives and strategies.
The investment objective of the Equity Fund is long-term growth of capital and
income without excessive fluctuations in market value. In addition, investments
in the Equity Fund are insured by Financial Security, which guarantees that the
net asset value of each initially purchased share will be not less than $10 on
May 31, 2000 if certain conditions are met. Under normal circumstances, at least
65% of the Equity Fund's net assets will be invested in equity securities,
although, under Financial Security's investment guidelines, due to market
conditions, the Equity Fund may be required to invest more than 35% of its net
assets in U.S. government securities. In addition, under Financial Security's
insurance investment guidelines, the Equity Fund may be required to invest a
portion of its assets in short-term debt securities, which could reduce the
benefit from any upswing in the equity market and prevent the Equity Fund from
achieving its investment objective.
The Equity Fund believes that the needs of its investors will best be served by
investment that exhibits growth, characterized by as few fluctuations in market
value as is possible. For this reason, the Equity Fund tries to keep its assets
invested in securities that are selling at reasonable prices in relation to
value and, thus, will forego some opportunities for gains when, in its judgment,
they are too risky.
The investment objective of the Large-Cap Growth Fund is long-term capital
growth. Under normal circumstances, the Large-Cap Growth Fund will invest at
least 65% of its total assets in equity securities of large, established
companies with market capitalizations of at least $8 billion. To identify
attractive companies for investment, the Large-Cap Growth Fund uses a bottom up
investment research approach that seeks to identify individual companies with
expected earnings growth potential and consistency that may not be recognized by
the market at large.
In addition, there are differences between the investment policies of, and
investment techniques used by, the Funds. In particular, the Large-Cap Growth
Fund may invest to a greater degree in illiquid securities, futures contracts,
options on futures contracts, and options, all of which may present investment
risks. In addition, although both Funds are diversified, the Large-Cap Growth
Fund's investment policy does not require as great a degree of diversification.
This means that the Large-Cap Growth Fund may invest to a greater extent in the
securities of a single issuer, which may increase its volatility.
Purchases And Exchanges. Large-Cap Growth Fund Class A shares are available
through certain authorized dealers at the public offering price, which is the
net asset value plus a front-end sales load. Shareholders of the Equity Fund may
exchange their shares now for shares of the Lord Abbett Large-Cap Growth Fund.
However, shareholders who exchange their shares before May 31, 2000 will lose
the benefit of the guarantee provided by Financial Security. In addition, each
such exchange would represent a sale of shares for which a shareholder may have
to recognize a gain or loss under federal income tax provisions. In contrast, no
gain or loss will be recognized by shareholders of the Equity Fund upon the
exchange of their Equity Fund shares for new Class A shares in the
Reorganization.
The Equity Fund currently is not offering its shares for purchase. If the
Reorganization is not approved, the Board of Trustees of the Equity Fund will
consider whether to offer its shares for purchase.
NAV per share for each class of Fund shares is calculated each business day at
the close of regular trading on the New Your Stock Exchange ("NYSE"), normally
4:00p.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 Fund.
Dividend Policies And Options. The Equity Fund distributes net investment income
and any net capital gains annually in December. It also may pay supplemental
dividends and capital gains distributions in January. It has paid all dividends
and distributions in the form of additional shares and uses reverse stock splits
to maintain the original number of shares purchased, assuming no shares are
redeemed.
The Large-Cap Growth Fund has a generally similar dividend and distribution
policy. It normally pays its shareholders dividends from its net investment
income and distributes its net capital gains (if any) annually. 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.
Redemption Procedures. The redemption procedures of the Equity Fund and the
Large-Cap Growth Fund are substantially the same. You may redeem your shares by
broker, by telephone, or by mail, as explained below.
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 Fund at 800-821-5129.
By Mail. Submit a written redemption request indicating the name(s) in which the
account is registered, the Funds name, the class of shares, your account number,
and the dollar value or number of shares you wish to sell.
Tax Considerations. The completion of the Reorganization is subject to receipt
of an opinion of counsel, substantially to the effect that, among other things,
the Reorganization will not cause gain or loss to be recognized by the Equity
Fund or its shareholders for federal income tax purposes.
Shareholders should note that prior to the Reorganization, the Equity Fund may,
to the extent permitted by law and consistent with the opinion to be issued by
Wilmer, Cutler & Pickering discussed above, dispose of some of the securities in
its portfolio and reinvest the proceeds in other securities consistent with its
investment objectives. In addition, immediately before the Reorganization, the
Equity Fund will declare and distribute a dividend that will have the effect of
distributing to the Equity Fund shareholders all of the Equity Fund's previously
undistributed investment company taxable income and net realized capital gains.
To the extent that the Equity Fund disposes of securities in its portfolio
before the Reorganization, the Equity Fund may realize a greater amount of net
capital gains that would then be distributed to Equity Fund shareholders. These
distributions will be taxable to the Equity Fund shareholders. The ability of
either Fund to dispose of assets in connection with the Reorganization is
limited by federal tax requirements. For additional information, see
"Information about the Reorganization -- Federal Income Tax Considerations."
Risk Factors. Each Fund is subject to the general risks and considerations
associated with equity investing. The value of an investment in the Funds will
fluctuate in response to movements in the stock market generally and to the
changing prospects of individual companies in which the Funds invest.
The Large-Cap Growth Fund is also subject to the particular risks associated
with growth stocks. Growth stocks may grow faster than other stocks and may be
more volatile. In addition, if the Large-Cap Growth Fund's assessment of a
company's potential for growth is wrong, the price of the company's stock may
decrease below the price at which the Fund bought the stock.
Investments in the Equity Fund are insured by Financial Security. Financial
Security guarantees that the net asset value of each initially purchased share
will not be less than $10 on May 31, 2000, subject to certain conditions. Under
Financial Security's insurance investment guidelines, the Fund may be required
to invest some of its assets in short-term debt securities, which reduces the
risk of excessive fluctuations in market value. As a result, an investment in
the Equity Fund historically may have been significantly less volatile than an
investment in other equity funds, including the Large-Cap Growth Fund.
INFORMATION ABOUT THE REORGANIZATION
The Plan. On May 31, 2000 (the Closing Date), assuming the conditions discussed
below are met, the Equity Fund will transfer all its assets to the Large-Cap
Growth Fund in exchange for new Class A shares of the Large-Cap Growth Fund
having an aggregate net asset value equal to the aggregate value of the assets,
less liabilities, of the Equity Fund and the assumption by the Large-Cap Growth
Fund of all the liabilities of the Equity Fund. The Equity Fund will distribute
as of the Closing Date such new Class A shares pro rata to its shareholders of
record, determined as of the close of business on the Closing Date, in exchange
for their shares of the Equity Fund. The net asset value of new Class A shares
and the value of the Equity Fund's assets and the amount of its liabilities will
be determined as of the Closing Date in accordance with the Large-Cap Growth
Fund's valuation procedures, which are the same as those used by the Equity
Fund.
Although the Equity Fund may dispose of some of the securities in its portfolio
prior to the Reorganization and reinvest the proceeds in other securities
consistent with its investment objective, the Equity Fund will not dispose of
assets which, in the aggregate, will result in less than 50% of the historic
business assets of the Equity Fund being transferred to the Large-Cap Growth
Fund in the Reorganization. The Equity Fund will make a final dividend prior to
the Reorganization that will have the effect of distributing all of its
undistributed investment company income and net realized capital gains to its
shareholders before the Reorganization.
The obligations of the Large-Cap Growth Fund and the Equity Fund to complete the
Reorganization are subject to the satisfaction of certain conditions, including:
(a) approval and authorization of the Reorganization by the vote of a majority
of the shares of the Equity Fund voted on the matter if a quorum is present and
(b) a favorable opinion of legal counsel as to the federal income tax
consequences of the proposed transaction as described below under Federal Income
Tax Considerations.
This summary of the Plan is not complete, and is subject in all respects to the
provisions of, and is qualified in its entirety by reference to, the Plan, a
copy of which is attached as Appendix A.
Reasons For The Reorganization. The Boards of Trustees of the Funds, including
in each case a majority who are not interested persons (as defined in the
Investment Company Act of 1940 (the Investment Company Act)) of either Fund or
of Lord Abbett, approved the Plan and the Reorganization on March 9, 2000, and
determined that participation in the proposed Reorganization is in the best
interests of the shareholders of each of the Funds and that the interests of
existing shareholders of the Funds will not be diluted as a result of the
Reorganization.
Federal Income Tax Considerations. The completion of the Reorganization is
conditioned on the receipt of an opinion of Wilmer, Cutler & Pickering, legal
counsel to the Large-Cap Growth Fund and the Equity Fund, substantially to the
effect that, for federal income tax purposes:
(a) The acquisition by the Large-Cap Growth Fund of substantially all the
assets of the Equity Fund in exchange for voting Class A shares of the
Large-Cap Growth Fund and the Large-Cap Growth Fund's assumption of the
Equity Fund's liabilities, followed by the distribution by the Equity Fund
to its shareholders of the Large-Cap Growth Fund shares, in complete
liquidation, will constitute a reorganization within the meaning of section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the"Code");
(b) No gain or loss will be recognized by the Equity Fund upon the transfer
of substantially all of its assets to the Large-Cap Growth Fund solely in
exchange for Class A shares of the Large-Cap Growth Fund and the Large-Cap
Growth Fund's assumption of the Equity Funds liabilities or upon the
distribution of such Large-Cap Growth Fund shares to the Equity Fund
shareholders;
(c) The Large-Cap Growth Fund will recognize no gain or loss upon the
receipt of substantially all of the assets of the Equity Fund in exchange
solely for voting Class A shares of the Large-Cap Growth Fund and the
assumption of the Equity Fund's liabilities;
(d) The shareholders of the Equity Fund will recognize no gain or loss on
the receipt of Class A shares of the Large-Cap Growth Fund (including any
fractional share interests to which they may be entitled) solely in
exchange for their Equity Fund shares;
(e) The basis of the assets of the Equity Fund in the hands of the
Large-Cap Growth Fund will be the same as the basis of such assets in the
hands of the Equity Fund immediately prior to the transfer;
(f) The holding period of the assets of the Equity Fund in the hands of the
Large-Cap Growth Fund will include the period during which those assets
were held by the Equity Fund;
(g) The basis of the Large-Cap Growth Fund shares received by each Equity
Fund shareholder will be the same as the basis of the Equity Fund shares
surrendered in exchange therefor; and
(h) The holding period of the Class A shares of the Large-Cap Growth Fund
received by each Equity Fund shareholder in exchange for Equity Fund shares
(including fractional shares to which such a shareholder may be entitled)
will include the period that the shareholder held the Equity Fund shares
exchanged therefor, provided that the shareholder held such shares as a
capital asset on the date of the exchange.
The Funds have not sought a tax ruling from the Internal Revenue Service as to
the tax consequences of the Reorganization, but will rely on the opinion of
counsel. Such an opinion is not binding on the Internal Revenue Service and does
not preclude the Internal Revenue Service from adopting a contrary position.
Shareholders should note that prior to the Reorganization, the Equity Fund may,
to the extent permitted by law and consistent with the opinion to be issued by
Wilmer, Cutler & Pickering discussed above, dispose of some of the securities in
its portfolio and reinvest the proceeds in other securities consistent with its
investment objectives. In addition, immediately before the Reorganization, the
Equity Fund will declare and distribute a dividend that will have the effect of
distributing to the Equity Fund shareholders all of the Equity Fund's previously
undistributed investment company taxable income and net realized capital gains.
To the extent that the Equity Fund disposes of securities in its portfolio
before the Reorganization, the Equity Fund may realize a greater amount of net
capital gains that would then be distributed to Equity Fund shareholders. These
distributions will be taxable to the Equity Fund shareholders. The ability of
either Fund to dispose of assets in connection with the Reorganization is
limited by federal tax requirements.
This discussion relates only to the general federal income tax consequences of
the Reorganization. Shareholders should consult their own tax advisors
concerning the tax consequences of the Reorganization to them, including any
state or local tax consequences of the Reorganization and any special
considerations that may apply in their individual circumstances.
Expenses Of The Reorganization. Expenses of the Reorganization, including legal
and accounting expenses, the costs of proxy solicitation, and the preparation of
this Combined Proxy Statement/Prospectus, will be borne partially by Lord Abbett
and partially by the Equity Fund and the Large-Cap Growth Fund. If the
Reorganization is completed, the expenses of the Equity Fund, to the extent not
paid before the Closing Date, will be assumed by the Large-Cap Growth Fund and
taken into account in determining the net assets of the Equity Fund for the
purpose of calculating the number of new Class A shares to be issued to the
Equity Fund.
Capitalization. The following table sets forth the capitalization of the
Large-Cap Growth Fund and the Equity Fund as of January 31, 2000, and the pro
forma capitalization of the Large-Cap Growth Fund as if the Reorganization had
occurred on that date. The net assets include an accrual for estimated
Reorganization expenses in the amount of $55,000 and a distribution of
undistributed income of $48,122 and undistributed realized capital gains of
$2,096,446. The table reflects a pro forma exchange ratio of
approximately 2.7 Class A shares for each Equity Fund share. If the
Reorganization is completed, the actual exchange ratio may vary from this ratio
due to changes in the market value of the portfolio securities of both the
Large-Cap Growth Fund and the Equity Fund between January 31, 2000, and the
Closing Date, and changes in the amounts of undistributed net investment income
and undistributed net realized gain/loss of the Large-Cap Growth Fund and the
Equity Fund during that period.
Large-Cap Equity Large-Cap
Growth Fund Fund Growth Fund
(unaudited) (unaudited) (pro-forma and
unaudited)
CLASS A
Net Assets 1,121,215 $53,225,332 $54,346,547
Net Asset Value
Per Share $10.31 $26.61 $10.31
Shares Outstanding 108,725 1,909,974 5,271,221
CLASS B
Net Assets $1,162 $1,162
Net Asset Value
Per Share $10.32 $10.32
Shares Outstanding 112.545 112.545
CLASS C
Net Assets $1,163 $1,163
Net Asset Value
Per Share $10.32 $10.32
Shares Outstanding 112.698 112.698
CLASS P
Net Assets $1,165 $1,165
Net Asset Value
Per Share $10.32 $10.32
Shares Outstanding 112.866 112.886
CLASS Y
Net Assets $1,162 $1,162
Net Asset Value
Per Share $10.32 $10.32
Shares Outstanding 112.620 112.620
COMPARATIVE INFORMATION ABOUT THE LARGE-CAP GROWTH FUND AND
THE EQUITY FUND
Management. Lord Abbett is the investment adviser to both Funds. Founded in
1929, Lord Abbett manages one of the nation's oldest mutual fund complexes, with
approximately $33 billion in more than 40 mutual fund portfolios and other
advisory accounts.
Under its Management Agreement, the Equity Fund pays Lord Abbett a monthly fee
based on average daily net assets for each month at the annual rate of .65 of
1%. For the fiscal year ended May 31, 1999, the actual management fee paid by
the Equity Fund to Lord Abbett amounted to .65 of 1% of the Equity Fund's
average daily net assets. The Equity Fund pays all expenses not expressly
assumed by Lord Abbett, including, without limitation, 12b-1 Plan expenses,
trustees' fees and expenses, association membership dues, legal and auditing
fees, taxes, transfer and dividend disbursing agent fees, shareholder servicing
costs, custody fees, expenses relating to shareholder meetings,
expenses of preparing, printing and mailing shareholder reports,
insurance premiums, including the annual fee paid to Financial Security for its
guarantee, and brokerage and other expenses relating to the execution of
portfolio transactions.
Lord Abbett uses a team of portfolio managers and analysts acting together to
manage the Equity Fund's investments. Robert G. Morris heads the team, the other
senior member of which is John J. Walsh. Both Mr. Morris and Mr. Walsh are
Partners of Lord Abbett and have been with the company for more than five years.
Under its Management Agreement, the Large-Cap Growth Fund pays Lord Abbett a
monthly fee of .75 of 1% based on average daily net assets for each month. In
addition, the Large-Cap Growth Fund pays all expenses not expressly assumed by
Lord Abbett.
Stephen Humphrey serves as Executive Vice President and Portfolio Manager of the
Lord Abbett Large-Cap Growth Fund and is primarily responsible for the
day-to-day management of the Large-Cap Growth Fund. Mr. Humphrey joined Lord
Abbett in 1999; before that he was a Vice President and Portfolio Manager at
Chase Manhattan Bank from 1976 - 1999, managing private accounts from 1981 and
pooled investment funds from 1985.
Historical Performance of Portfolio Manager. From March 17, 1997 until August
17, 1999, Mr. Humphrey was primarily responsible for the day-to-day management
of the Chase Vista Select Large Cap Growth Fund, a registered investment
company. As the portfolio manager of this fund, Mr. Humphrey had full
discretionary authority over the selection of investments for the fund. From the
fund's inception on January 1, 1997 until March 17, 1997, a team of investment
professionals at Chase Manhattan Bank, including Mr. Humphrey, was responsible
for the management of the fund's portfolio.
The cumulative total return for the Chase Vista Select Large Cap Growth Fund
from March 17, 1997 through July 31, 1999 was 109.01%. At July 31, 1999, this
fund had $825.2 million in net assets. As shown in the table below, average
annual total returns for the one year period ended July 31, 1999 and for the
period during which Mr. Humphrey managed that fund, compared with the
performance of the Standard & Poor's 500(R)Composite Stock Price Index ("S&P
500(R)Index") and the Lipper Large Cap Growth Fund average, were:
- --------------------------------------------------------------------------------
Chase Vista Select S&P 500 (R) Lipper Large Cap
Large Cap Growth Fund(a) Index(b) Growth Fund Average
- --------------------------------------------------------------------------------
One Year 32.58% 20.20% 24.02%
- --------------------------------------------------------------------------------
Inception through
July 31, 1999 33.42%(c) 27.38(d) 28.20%(e)
- --------------------------------------------------------------------------------
(a) Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.
(b) The S&P 500(R)Index is an unmanaged index of common stocks that is
considered to be generally representative of the United States stock market. The
Index is adjusted to reflect reinvestment of dividends.
(c) The average annual total return for the period from March 17, 1997 through
July 31, 1999 was 35.52%.
(d) This percentage represents the average annual return of the S&P 500(R)Index
during the period from March 20, 1997 through July 31, 1999, during which Mr.
Humphrey managed the Chase Vista Select Large Cap Growth Fund.
(e) This percentage represents the average annual return of the Lipper Large Cap
Growth Fund average during the period from March 20, 1997 through July 31, 1999
during which Mr. Humphrey managed the Chase Vista Select Large Cap Growth Fund.
Historical performance is not indicative of future performance. Although the
Lord Abbett Large-Cap Growth Fund and the Chase Vista Select Large Cap Growth
Fund have substantially similar investment objectives, policies and strategies,
the Chase Vista Select Large Cap Growth Fund is a separate fund and its
historical performance is not indicative of the future performance of the Lord
Abbett Large-Cap Growth Fund. For the periods shown above, the anticipated
expenses of the Lord Abbett Large-Cap Growth Fund may be higher than the
expenses of the Chase Vista Select Large Cap Growth Fund. Higher expenses, of
course, would reduce a fund's performance. The Chase Vista Select Large Cap
Growth Fund was the only investment vehicle that Mr. Humphrey managed during the
period he was employed at Chase Manhattan Bank that has or had substantially
similar investment objectives, policies and strategies as those of the Lord
Abbett Large-Cap Growth Fund. Share prices and investment returns will fluctuate
reflecting market conditions, as well as changes in company-specific
fundamentals of portfolio securities.
Performance of the Equity Fund.
The bar chart and table below provide some indication of the risks of investing
in the Equity Fund by illustrating the variability of the Equity Fund's returns.
Each assumes reinvestment of dividends and distributions. The Equity Fund's past
performance is not necessarily an indication of how the Equity Fund will perform
in the future.
The bar chart shows changes in the performance of the Equity Fund's shares from
calendar year to calendar year. This chart does not reflect the sales charges
applicable to Equity Fund shares upon their original purchase in 1990. If the
sales charges were reflected, returns would be less.
Bar Chart (per calendar year)
"91" 19.15
"92" 9.54
"93" 13.55
"94" 2.27
"95" 28.19
"96" 11.21
"97" 22.41
"98" 9.04
"99" 5.01
Best Quarter 4th Q '98 14.1% Worst Quarter 3rd Q '98 -10.4%
The table below shows how the average annual total returns of the Equity Fund's
shares compare to those of a broad-based securities index and two more narrowly
based indices that more closely reflect the market sectors in which the Equity
Fund invests. The Equity Fund's returns reflect payment of the maximum
applicable sales charges.
Average Annual Total Returns Through December 31, 1999
1 Year 5 Years Since Inception
Equity Fund(1) 5.01% 14.85% 12.32%
S&P 500(R)Index(2) 21.03% 28.54% 18.58%(5)
Lipper Balanced Target
Maturity Funds Average(3) 13.21% 14.39% 10.78%(5)
6 Month Certificate
of Deposit(2)(3)(4) 5.59% 5.76% 5.41%(5)
(1) The date of inception is 6/1/90.
(2) Performance for the unmanaged S&P 500(R)Index and the 6 month certificate
of deposit ("CD") does not reflect any fees or expenses. Such performance is
not necessarily representative of the Equity Fund's performance.
(3) Source: Lipper, Inc.
(4) The Federal Deposit Insurance Corporation ("FDIC") insures CDs up
to $100,000.
(5) Represents total return for the period 5/31/90 - 12/31/99 to correspond
with the Equity Fund's inception date.
Management's Discussion of Equity Fund's Financial Year 1999 Performance.
Lord Abbett Equity Fund completed its most recent fiscal year on May 31, 1999.
The Equity Fund's net asset value was $29.36 per share versus $26.66 per share
on May 31, 1998. The Equity Fund's total return -- its percent change in net
asset value with all distributions reinvested -- for the period was 10.17%.
U.S. stocks were subject to significant volatility during the first half of your
Fund's fiscal year. However, a more favorable environment developed later in the
period as investors' concerns regarding diminished corporate earnings eased
somewhat and low inflation and strong economic growth continued in the U. S. In
the early months of 1999, investor sentiment continued to improve as Asian
countries, which had been hit hard by currency problems and fallout from the
faltering Japanese economy, began to recover. Japan's efforts to address its
economic and banking system problems have given support to other Pacific Rim
economies and have generated hope that the financial crises in that region may
be nearing an end.
The downturn in the market that occurred in the third quarter of 1998 created an
opportunity for the Fund to establish and add to positions in stocks that, in
our opinion, became undervalued due to investor sentiment rather than
deteriorating company fundamentals. During the period, positions the Equity Fund
established or strengthened in telecommunications, technology, and select
financial services companies performed well. An increase in long-term interest
rates, brought on by a rise in commodity prices, resulted in markdowns on the
Fund's electric utility holdings.
Lord Abbett anticipates that the domestic economy will continue to grow in 1999,
fueled in part by strong consumer spending. If recovery in Asia also continues,
a global economic expansion seems likely for 2000. In any event, Lord Abbett
expects to remain watchful of global inflationary pressures (brought on by
rising commodity prices and a tightening U. S. labor market), interest rates,
and valuations and volatility in the U. S. equity market. Presently, Lord Abbett
does not expect inflation to exceed our earlier forecast of approximately 2-2
1/2% in 1999. Lord Abbett will continue to seek out large-company stocks at
attractive prices, and expect that some of these values may be found in energy
companies and in the cyclical commodities sector, which includes aluminum and
paper companies and selected manufacturing companies.
Immediately below is a comparison of a $10,000 investment in Equity Fund shares
to the same investment in the S&P 500 (R) Index, Lipper's Average of Balanced
Target Maturity Funds and the 6 month CD, assuming reinvestment of all dividends
and distributions.
NAV MAX S&P 500(R) Lipper 6 Month CD
Balanced
10000 9450 - - -
10053 9500 10000 10000 10000
11979 11321 11176 11475 10762
13122 12400 12275 13047 11304
14900 14080 13697 14981 11692
15238 14400 14279 15243 12122
19534 18460 17158 17305 12859
21725 20530 22033 19416 13590
26593 25130 28519 21647 14375
28995 27400 37263 24962 15213
31079 29370 45099 26676 16020
The Fund shares at net asset value
The Fund shares at maximum offering price (1)
S&P 500 (R) Index (2)
Lipper Balanced Target Maturity Funds Average (3)
6 Month Certificate of Deposit (2)(3)(4)
Average Annual Total Returns At Maximum Applicable
Sales Charge For The Periods Ending May 31, 1999
1 Year 5 Years 10 Years (or Life)
Equity Fund(5) 4.10% 14.60% 13.43%
(1) Reflects the deduction of the maximum initial sales charge of 5.50%.
(2) Performance for the unmanaged S&P 500(R)Index and the 6 month CD does not
reflect any fees or expenses. Such performance is not necessarily representative
of the Fund's performance.
(3) Source: Lipper, Inc.
(4) The FDIC insures CDs up to $100,000.
(5) This shows total return which is the percent change in value, after
deduction of the maximum initial sales charge of 5.50% applicable to Equity Fund
shares, with all dividends and distributions reinvested for the periods shown
ending May 31, 1999 using the SEC-required uniform method to compute total
return. The inception date is 6/1/90.
Fees And Expenses. The Equity Fund's Rule 12b-1 plan provides for payments to
dealers through Lord Abbett of service fees at an annual rate not to exceed .25%
of the net asset value of such shares, including any shares issued for
reinvested dividends and distributions The Large-Cap Growth Fund has a Rule
12b-1 plan for Class A that provides for distribution and service fees of up to
.35% annually.
As shown above under Fee Table, the pro forma expense ratio for the Class A
shares of the Large-Cap Growth Fund for the current fiscal year is estimated to
be 1.45%, compared to an expense ratio for the fiscal year ended May 31, 1999 of
1.35% for the Equity Fund. This expense ratio for the Equity Fund includes
expenses of .19% related to the guarantee provided by Financial Security. After
May 31, 2000, the Equity Fund no longer will pay those expenses.
Investment Objectives, Policies And Restrictions. Although both Funds invest
primarily in equity securities of large, established companies, they have
different investment objectives and strategies.
The investment objective of the Equity Fund is long-term growth of capital and
income without excessive fluctuations in market value. In addition, investments
in the Equity Fund are insured by Financial Security, which guarantees that the
net asset value of each initially purchased share will be not less than $10 on
May 31, 2000 if certain conditions are met. Under normal circumstances, at least
65% of the Equity Fund's net assets will be invested in equity securities,
although, under Financial Security's investment guidelines, due to market
conditions, the Equity Fund may be required to invest more than 35% of its net
assets in U.S. government securities. In addition, under Financial Security's
insurance investment guidelines, the Equity Fund may be required to invest a
portion of its assets in short-term debt securities, which could reduce the
benefit from any upswing in the equity market and prevent the Equity Fund from
achieving its investment objective.
Typically, in choosing stocks, the Equity Fund looks for companies using a
three-step process:
o Quantitative research is performed on a universe of large, seasoned,
U.S. and multinational companies to identify which stocks we believe
represent the best bargains;
o Fundamental research is conducted to assess a company's operating
environment, resources and strategic plans and to determine its
prospects for exceeding the earnings expectations reflected in its
stock price;
o Business cycle analysis is used to assess the economic and
interest-rate sensitivity of our portfolio, helping us assess how
adding or deleting stocks changes our portfolio's overall sensitivity
to economic activity and interest rates.
The Equity Fund is intended for long-term investors who purchased shares and
might redeem shares to meet their own financial requirements rather than to take
advantage of price fluctuations. We believe the needs of such investors will
best be served by an investment which exhibits growth, characterized by as few
fluctuations in market value as possible. For this reason, the Equity Fund tries
to keep its assets invested in securities which are selling at reasonable prices
in relation to value and, thus, will forgo some opportunities for gains when, in
its judgment, they are too risky.
The investment objective of the Large-Cap Growth Fund is long-term capital
growth. Under normal circumstances, the Large-Cap Growth Fund will invest at
least 65% of its total assets in equity securities of large, established
companies with market capitalizations of at least $8 billion. To identify
attractive companies for investment, the Large-Cap Growth Fund uses a bottom up
investment research approach that seeks to identify individual companies with
expected earnings growth potential and consistency that may not be recognized by
the market at large. This approach is based on the following steps:
o Identifying large-capitalization companies with at least a 10%
consistent, sustainable growth rate;
o Focusing on those companies demonstrating a positive historical
performance as well as favorable earnings prospects for the future;
o Focusing on companies also demonstrating successful strategic business
plan selection, strategy and execution, reflecting strong management
leadership; and
o Focusing on companies demonstrating leadership positions within their
industries.
Other Investment Techniques. The Funds use similar investment techniques,
although there are some differences in the techniques used by each Fund. The
techniques, and the differences, are summarized below.
Adjusting Investment Exposure. Both Funds may, but are not required
to, use various strategies to change their investment exposure to
adjust to changing security prices, interest rates, currency exchange
rates, commodity prices and other factors. The Funds may use these
transactions to change the risk and return characteristics of their
portfolios. If they judge market conditions incorrectly or use a
strategy that does not correlate well with their investments, it could
result in a loss, even if the Fund intended to lessen risk or enhance
returns. These transactions may involve a small investment of cash
compared to the magnitude of the risk assumed and could produce
disproportionate gains or losses. Also, these strategies could result
in losses if the counterparty to a transaction does not perform as
promised.
Diversification. Although each Fund is diversified, the Equity Fund's
investment policy requires a greater degree of diversification. The
Equity Fund will not purchase a security if, as a result, more than 5%
of the Fund's total assets would be invested in securities of a single
issuer or the Fund would own more than 10% of the outstanding voting
securities of the issuer. U.S. government securities are not subject
to these requirements. The Large-Cap Growth Fund has similar
diversification requirements, but they apply only to 75% of its
assets. This means that the Large-Cap Growth Fund may invest 25% of
its assets in securities of a single issuer, which could result in
greater volatility.
Futures Contracts, Options on Futures Contracts, and Options
Transactions. The Funds differ in their use of futures contracts,
options on futures contracts, and options transactions.
Both Funds may only sell (write) covered call options. This means that
the Funds may only sell call options on securities that they own. A
call option on securities gives the buyer, in return for a premium
paid, the right for a specified period of time to buy the securities
subject to the option at a specified price (the exercise price). The
writer of a call option, in return for the premium, has the
obligation, upon exercise of the option, to deliver, depending upon
the terms of the option contract, the underlying securities to the
buyer upon receipt of the exercise price. 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.
Options on stock indices are similar to options on equity securities
except that, rather than the right to take or make delivery of stock
at a specified price, an option on a stock index gives the holder the
right, in return for a premium paid, to receive, upon exercise of the
option, an amount of cash if the closing level of the stock index upon
which the option is based is greater than, in the case of a call, or
less than, in the case of a put, the exercise price of the option. The
writer of an index option, in return for a premium, is obligated to
pay the amount of cash due upon exercise of the option.
The Equity Fund may write only covered put options to the extent that
cover for such options does not exceed 10% of the Equity Fund's gross
assets at the time an option is written.
The Large-Cap Growth Fund may buy and sell futures contracts, options
on futures contracts, and options on securities and securities
indices. A financial futures transaction is the purchase or sale of an
exchange-traded contract to buy or sell a specified financial
instrument or index at a specific future date and price. The Fund will
not enter into any futures contracts, or options thereon, if the
aggregate market value of the securities covered by futures contracts
plus options on such financial futures exceeds 50% of its total
assets.
The Large-Cap Growth Fund may purchase and write put and call options
on equity securities or stock indices that are traded on national
securities exchanges. 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. The Large-Cap Growth
Fund may write only covered put options to the extent that cover for
such options does not exceed 15% of the Fund's net assets. The Fund
will not purchase an option if, as a result of such purchase, more
than 10% of its total assets would be invested in premiums for such
options.
The Large-Cap Growth Fund's transactions, if any, in futures, options
on futures and other 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 Lord Abbett is incorrect
in its expectation of fluctuations in securities prices. In addition,
the loss that may be incurred by the 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.
Investments in Illiquid Securities. Both Funds may invest in illiquid
securities, which include securities that are not traded on the open
market or that trade irregularly or in very low volume. They may be
difficult or impossible to sell at the time and price a Fund would
like. The Equity Fund may invest up to 10% of its assets in illiquid
securities. In addition, this policy is fundamental, which means that
it may be changed only by a vote of shareholders. The Large-Cap Growth
Fund may invest up to 15% of its assets in illiquid securities. The
Large-Cap Growth Fund policy is not fundamental and may be changed by
its Board of Trustees, without a shareholder vote.
Portfolio Securities Lending. Both Funds 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. The Funds limit their
loans to no more than 5% of their gross assets. All loans are fully
collateralized.
Shareholders Rights. The rights of the Equity Fund shareholders will not change
in an adverse way as a result of the Reorganization. After the Reorganization,
the rights of the former shareholders of the Equity Fund (new Class A
shareholders of the Large-Cap Growth Fund) will be governed by the Large-Cap
Growth Fund's Declaration of Trust, By-Laws and applicable Delaware law, rather
than by the Equity Fund's Declaration of Trust and By-Laws and applicable
Massachusetts law. The operations of the Large-Cap Growth Fund will continue to
be subject to the provisions of the Investment Company Act and the rules and
regulations of the Commission thereunder.
The current Boards of Trustees of the Funds are comprised of the same
individuals. The responsibilities, powers and fiduciary duties of the trustees
of the Funds are substantially the same. The Fund's Declarations of Trust
provide for indemnification of the trustees for actual or threatened liabilities
arising out of the trustees' service in their capacity as trustees of the Funds,
except with respect to any matter as to which a trustee has been adjudicated as
to have not been acting in good faith in the reasonable belief that his or her
action was in the best interest of the Funds or any securities thereof.
Shareholders of the Funds may remove trustees by a vote of two-thirds of the
eligible shares.
Neither the Equity Fund nor the Large-Cap Growth Fund regularly holds
shareholder meetings. The Declarations of Trust of both Funds provide that a
meeting of shareholders will be held upon the written request of holders of at
least 25% of votes entitled to be cast.
The foregoing is only a summary of certain rights of the shareholders of the
Equity Fund and of the rights these shareholders will have following the
Reorganization as holders of new Class A shares of the Large-Cap Growth Fund. It
is not a complete description of the Declarations of Trust or the By-Laws of the
Funds, or the applicable Delaware or Massachusetts law. Shareholders desiring
additional information about those documents and provisions of law should refer
to such documents and provisions.
ADDITIONAL INFORMATION
This Combined Prospectus/Proxy Statement is being furnished in connection with
the solicitation of proxies by the Equity Fund's Board of Trustees in connection
with the meeting of shareholders. It is expected that the solicitation of
proxies will be primarily by mail. Officers and service contractors of Equity
Fund also may solicit proxies by telephone, telegraph, facsimile or personal
interview. Authorizations for another person to execute proxies may be obtained
by telephonic or electronically transmitted instructions in accordance with
procedures designed to authenticate the shareholder's identity. In all cases
where a telephonic proxy is solicited, the shareholder will be asked to provide
his or her address, Social Security number (in the case of an individual) or
taxpayer identification number (in the case of an entity) and the number of
shares owned and to confirm that the shareholder has received the Combined
Prospectus/Proxy Statement and proxy card in the mail. Within 72 hours of
receiving a shareholder's telephonic or electronically transmitted voting
instructions, a confirmation will be sent to the shareholder to ensure that the
vote has been taken in accordance with the shareholder's instructions and to
provide a telephone number to call immediately if the shareholder's instructions
are not correctly reflected in the confirmation. Shareholders requiring further
information as to telephonic or electronically transmitted voting instructions
or the proxy generally should contact the Equity Fund toll-free at
1-800-426-1130. Any shareholder giving a proxy may revoke it at any time before
it is exercised by submitting to the Equity Fund the written notice of
revocation or subsequently executed proxy or by attending the meeting and voting
in person.
As of the Record Date, there were _______ outstanding shares of the Equity Fund
and _____ outstanding shares of the Large-Cap Growth Fund. As of the Record
Date, the officers and Trustees of the Funds beneficially owned as a group less
than 1% of the outstanding shares of each of the Equity Fund and the Large-Cap
Growth Fund. To the best knowledge of the Trustees of the Equity Fund, as of the
Record Date, other than as set forth below, no shareholder or group (as that
term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended
(the Exchange Act)) owns beneficially or of record more than 5% of the
outstanding shares of the Equity Fund.
- --------------------------------------------------------------------------------
Name Percentage of Equity Pro Forma Percentage
and Address Fund Owned on of Equity Fund Owned
Owner Record Date on Consummation
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
To the best knowledge of the Trustees of the Large-Cap Growth Fund, as of the
Record Date, other than as set forth below, the following shareholder (as that
term is used in Section 13(d) of the Exchange Act) owned beneficially or of
record more than 5% of the Large-Cap Growth Fund.
- --------------------------------------------------------------------------------
Pro Forma
Percentage of Percentage of
Percentage Large-Cap Large-Cap
Name Class of of Class Growth Growth Fund
and Shares Owned on Fund Owned on Owned on
Owner Address Owned Record Date Record Date Consummation
- --------------------------------------------------------------------------------
Lord, 90 Hudson
Abbett St.; Jersey
& Co. City, NJ
0732-3972
- --------------------------------------------------------------------------------
Equity Fund shareholders are not entitled to any rights of share appraisal under
Equity Fund's Declaration of Trust or By-laws, or under the laws of the
Commonwealth of Massachusetts, in connection with the Reorganization.
Shareholders have, however, the right to redeem from Equity Fund their shares at
net asset value until the Closing Date. Thereafter, shareholders may redeem the
Class A shares of the Large-Cap Growth Fund acquired by them in the
Reorganization at the net asset value of such Class A shares.
The Equity Fund and the Large-Cap Growth Fund each are subject to the
information requirements of the Investment Company Act, and accordingly file
reports, proxy statements and other information with the Securities and Exchange
Commission. Such reports, proxy statements, and other information filed by such
entities can be inspected and copied at the public reference facilities of the
Commission at 450 Fifth Street, N.W., Washington, D.C. Copies of such material
can also be obtained by mail from the Public Reference Branch, Office of
Consumer Affairs and Information Services, Securities and Exchange Commission,
Washington, D.C. 20549, at prescribed rates.
APPENDIX 1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of this
__ day of March, 2000, by and between Lord Abbett Large-Cap Growth Fund (the
"Acquiring Fund"), a Delaware business trust, and Lord Abbett Equity Fund (the
"Acquired Fund"), a Massachusetts business trust.
WHEREAS, this Agreement is intended to be and is adopted as a plan of
reorganization within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the reorganization (the "Reorganization") will consist of the transfer
of all of the assets of the Acquired Fund in exchange for Class A shares of
beneficial interest of the Acquiring Fund (the "Acquiring Fund Class A Shares"
and each an "Acquiring Fund Class A Share") and the assumption by the Acquiring
Fund of all of the liabilities of the Acquired Fund and the distribution, on or
after the Closing Date herein referred to, of Acquiring Fund Class A Shares to
the shareholders of the Acquired Fund in termination of the Acquired Fund, all
upon the terms and conditions hereinafter set forth in this Agreement;
WHEREAS, the Acquiring Fund and the Acquired Fund are open-end, registered
investment companies of the management type;
WHEREAS, the Acquired Fund owns securities that generally are of the character
in which the Acquiring Fund is permitted to invest;
WHEREAS, the Board of Trustees, including a majority of the Trustees who are not
"interested persons" (as defined under the Investment Company Act of 1940
(Investment Company Act)), of the Acquired Fund has determined that the
Reorganization is in the best interests of the Acquired Fund's shareholders and
that the interests of the existing shareholders of the Acquired Fund will not be
diluted as a result of this transaction; and
WHEREAS, the Board of Trustees, including a majority of the Trustees who are not
"interested persons" (as defined under the Investment Company Act) of the
Acquiring Fund, has determined that the Reorganization is in the best interests
of the Acquiring Fund's shareholders and that the interests of the existing
shareholders of the Acquiring Fund will not be diluted as a result of this
transaction;
NOW THEREFORE, in consideration of the premises and of the agreements
hereinafter set forth, the parties hereto agree as follows:
1. REORGANIZATION
1.1. Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the Acquired Fund
will transfer its assets as set forth in paragraph 1.2 to the Acquiring Fund,
and the Acquiring Fund will in exchange therefor (i) deliver to the Acquired
Fund the number of Acquiring Fund Class A Shares, including fractional Acquiring
Fund Class A Shares, determined by dividing the net value of the Acquired Fund's
assets so transferred computed in the manner and as of the time and date set
forth in paragraph 2.1, by the net asset value of one Acquiring Fund Class A
Share, computed in the manner and as of the time and date set forth in paragraph
2.2; and (ii) to assume all of the liabilities of the Acquired Fund. Such
transactions shall take place at the closing provided for in paragraph 3.1 (the
"Closing").
1.2. (a) The assets of the Acquired Fund to be acquired by the
Acquiring Fund shall consist of all of its property, including, without
limitation, all cash, securities and dividends or interest receivables and any
deferred or prepaid expenses shown as an asset on the books of the Acquired Fund
on the closing date provided in paragraph 3.1 (the "Closing Date").
(b) The Acquiring Fund has a list of all of the Acquired Fund's
assets as of the date of execution of this Agreement. The Acquired Fund has a
statement of the Acquiring Fund's investment objectives, policies and
restrictions. The Acquired Fund reserves the right to sell any of its securities
but will not, without the prior approval of the Acquiring Fund, acquire any
additional securities other than securities of the type in which the Acquiring
Fund is permitted to invest. The Acquiring Fund will, within a reasonable time
before the Closing Date, furnish the Acquired Fund with a list of the
securities, if any, on the Acquired Fund's list referred to in the first
sentence of this paragraph that do not conform to the Acquiring Fund's
investment objectives, policies and restrictions. In the event that the Acquired
Fund holds any investments that the Acquiring Fund may not hold, the Acquired
Fund will dispose of such securities before the Closing Date. In addition, if it
is determined that the portfolios of the Acquired Fund and the Acquiring Fund,
when aggregated, would contain investments exceeding certain percentage
limitations imposed upon the Acquiring Fund with respect to such investments,
the Acquired Fund, if requested by the Acquiring Fund, will dispose of and/or
reinvest a sufficient amount of such investments as may be necessary to avoid
violating such limitations as of the Closing Date.
1.3. As provided in paragraph 3.4, on or as soon after the Closing
Date as is practicable, the Acquired Fund will distribute pro rata to the
Acquired Fund's shareholders of record determined as of the close of business on
the Closing Date, the Acquiring Fund Class A Shares it receives pursuant to
paragraph 1.1. Such distribution will be accomplished by establishing Acquiring
Fund shareholder accounts in the names of each Acquired Fund shareholder,
representing the respective pro rata number of full and fractional Acquiring
Fund Class A Shares due each shareholder. All issued and outstanding shares of
the Acquired Fund will simultaneously be canceled on the books of the Acquired
Fund. The Acquiring Fund shall not issue certificates representing the Acquiring
Fund Class A Shares in connection with such exchange.
1.4. Any transfer taxes payable upon issuance of Acquiring Fund
Class A Shares in a name other than the registered holder of the shares of the
Acquired Fund on the books of the Acquired Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Class A Shares are to be issued and transferred.
1.5. The Acquired Fund shall, following the Closing Date and the
making of all distributions pursuant to paragraph 1.3, be terminated by a
majority of the Acquired Fund's Trustees' executing an instrument pursuant to
Section 5.4 of the Declaration and Agreement of Trust of the Acquired Fund
terminating the Acquired Fund. Any reporting responsibility of the Acquired Fund
is and shall remain the responsibility of the Acquired Fund up to and including
the Closing Date and following the termination of the Acquired Fund.
2. VALUATION
2.1. The net value of the Acquired Fund's assets to be acquired by the
Acquiring Fund hereunder shall be the value of such assets, less the Acquired
Fund's liabilities assumed by the Acquiring Fund, computed as of the close of
regular trading on New York Stock Exchange, Inc. (the "NYSE") on the Closing
Date (such time and date being hereinafter called the "Valuation Time"), using
the valuation procedures set forth in the Acquiring Fund's Declaration and
Agreement of Trust.
2.2. The net asset value of one Acquiring Fund Class A Share shall be
the net asset value per share computed as of the close of regular trading on
the NYSE on the Valuation Time, using the valuation procedures set forth in the
Acquiring Fund's Declaration and Agreement of Trust.
2.3. All computations of value shall be made by the Acquiring Fund
and the Acquired Fund in accordance with the regular practice of the Acquiring
Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be May 31, 2000, or such other date as
the parties may agree to in writing. All acts taking place at the Closing shall
be deemed to take place simultaneously as of the close of business on the
Closing Date unless otherwise provided. The Closing shall be held as of 5:00
p.m. at 90 Hudson Street, Jersey City, New Jersey, or at such other time and/or
place as the parties may agree.
3.2. In the event that on the Valuation Time (a) the NYSE or another
primary trading market for portfolio securities of the Acquiring Fund or the
Acquired Fund shall be closed to trading or trading thereon shall be restricted
or (b) trading or the reporting of trading on the NYSE or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of the
Acquiring Fund or the Acquired Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.
3.3. At the Closing, the Acquired Fund shall direct its custodian to
deliver to the custodian of the Acquiring Fund, for the Acquiring Fund's
account, all of its portfolio securities and other assets held by such custodian
for the Acquired Fund's account, duly endorsed in proper form for transfer as
appropriate, in such condition as to constitute good delivery thereof in
accordance with the custom of the Acquiring Fund's custodian, and shall be
accompanied by all necessary federal and state stock transfer stamps or a check
for the appropriate purchase price thereof.
3.4. The Acquired Fund shall direct its transfer agent to deliver to
the transfer agent of the Acquiring Fund on the Closing Date a list of the names
and addresses of the Acquired Fund's shareholders and the number of outstanding
shares owned by each such shareholder immediately before the Closing. The
Acquiring Fund shall direct its transfer agent to issue and deliver a
confirmation evidencing the Acquiring Fund Class A Shares to be credited to the
Acquired Fund's account on the Closing Date to the transfer agent of the
Acquired Fund, or provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Class A Shares have been credited to the Acquired Fund's account
on the books of the Acquiring Fund. At the Closing, each party shall deliver to
the other such bills of sale, checks, assignments, share certificates, if any,
receipts, assumption agreements or other documents as such other party or its
counsel may reasonably request.
4. REPRESENTATION AND WARRANTIES
4.1. The Acquired Fund represents and warrants to the Acquiring Fund
as follows:
(a) The Acquired Fund is a registered investment company
classified as a management company of the open-end type, and its registration
with the Securities and Exchange Commission (the "Commission") as an investment
company under the Investment Company Act is in full force and effect.
(b) The Acquired Fund is duly organized, validly existing and in
good standing under the laws of the State of Massachusetts and has the power to
own all of its properties and assets and to carry out this Agreement.
(c) The current prospectus and statement of additional
information of the Acquired Fund conform (and any prospectus or statement of
additional information of the Acquired Fund issued before the Closing Date will
conform) in all material respects to the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the Investment
Company Act and the rules and regulations of the Commission thereunder and do
not (and will not) include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were (and
will be) made, not materially misleading.
(d) The Acquired Fund is not, and the execution, delivery and
performance of this Agreement will not result in, a material violation of its
Declaration and Agreement of Trust or By-laws or of any agreement, instrument,
contract or other undertaking to which the Acquired Fund is a party or by which
it is bound.
(e) The Acquired Fund has no material contracts or other
commitments that will be terminated with liability to the Acquired Fund on,
before or after the Closing Date.
(f) Except as otherwise disclosed in writing to and accepted by
the Acquiring Fund, no litigation or administrative proceeding or investigation
before any court or governmental body is presently pending or to its knowledge
threatened against the Acquired Fund or any of the Acquired Fund's properties
or assets that if adversely determined would materially and adversely affect the
financial condition of the Acquired Fund or the conduct of the Acquired Fund's
business. The Acquired Fund knows of no facts that might form the basis of the
institution of such a proceeding and is not party to or subject to the
provisions of any order, decree or judgment of any court or governmental body
that materially and adversely affects the business of the Acquired Fund or the
ability of the Acquired Fund to consummate the transactions contemplated herein.
(g) True and correct copies of the Acquired Fund's (i)
Statement of Net Assets as at May 31, 1999 and (ii) Statements of Operations and
Changes in Net Assets for the 12-month period then ended, including the
accompanying notes, have been furnished to the Acquiring Fund. Such Statement of
Net Assets and such Statements of Operations and Changes in Net Assets (and the
accompanying notes) have been audited by Deloitte & Touche LLP, independent
certified public accountants. Such statements have been prepared in accordance
with generally accepted accounting principles consistently applied, and such
statements fairly reflect the financial condition and the operations and changes
in net assets of the Acquired Fund as of such date and for such period,
respectively. There are no known contingent liabilities of the Acquired Fund as
of such date required to be reflected or disclosed in such Statement of Net
Assets or notes in accordance with generally accepted accounting principles that
are not so reflected or disclosed.
(h) Since May 31, 1999, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or
any incurrence by the Acquired Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquiring Fund.
(i) The Acquired Fund will file its final federal and other tax
returns for the period ending on the Closing Date in accordance with the Code.
At the Closing Date, all federal and other tax returns and reports of the
Acquired Fund required by law to have been filed before the Closing Date shall
have been filed, and all federal and other taxes shown as due on such returns
shall have been paid, or provision shall have been made for the payment thereof,
and to the best of the Acquired Fund's knowledge, no such return is currently
under audit and no assessment has been asserted with respect to such returns.
(j) For the most recent fiscal year of its operation, the
Acquired Fund has met the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company.
(k) All issued and outstanding shares of the Acquired Fund are,
and at the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable. All of the issued and outstanding shares of the
Acquired Fund will, at the time of Closing, be held of record by the persons and
in the amounts set forth in the records of the transfer agent as provided in
paragraph 3.4. The Acquired Fund does not have outstanding any options, warrants
or other rights to subscribe for or purchase any shares of the Acquired Fund,
nor is there outstanding any security convertible into any shares of the
Acquired Fund.
(l) At the Closing Date, the Acquired Fund will have good and
marketable title to its assets to be transferred to the Acquiring Fund pursuant
to paragraph 1.1 and full right, power and authority to sell, assign, transfer
and deliver such assets hereunder and, upon delivery and payment for such
assets, the Acquiring Fund will acquire good and marketable title thereto,
subject to no restrictions on the full transfer thereof, including such
restrictions as might arise under the Securities Act, other than as disclosed to
the Acquiring Fund before the date hereof.
(m) The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action on the part of Acquired Fund's
Trustees, and subject to the due approval of the Acquired Fund's shareholders,
this Agreement, assuming due authorization, execution and delivery by the
Acquiring Fund, constitutes a valid and binding obligation of the Acquired Fund
on behalf of the Acquired Fund, enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, reorganization, moratorium
and other laws relating to or affecting creditors' rights and to general equity
principles. The Acquired Fund's Board of Trustees has called a meeting of the
Acquired Fund's shareholders at which the shareholders of the Acquired Fund are
to consider and act upon this Agreement.
(n) The information furnished and to be furnished by the Acquired
Fund for use in registration statements, proxy materials and other documents
that may be necessary in connection with the transactions contemplated hereby
shall be accurate and complete in all material respects and shall comply in all
material respects with federal securities and other laws and regulations
thereunder applicable thereto.
(o) The combined prospectus and proxy statement (the "N-14
prospectus and proxy statement") and the related statement of additional
information included in the Registration Statement on Form N-14 of the Acquiring
Fund (the "N-14 Registration Statement") did not on the effective date of the
N-14 Registration Statement contain any untrue statement of a material fact
relating to the Acquired Fund or the meeting of the Acquired Fund shareholders
referred to therein or omit to state a material fact required to be stated
therein or necessary to make the statements therein relating to the Acquired
Fund or such special meeting, in light of the circumstances under which such
statements were made, not materially misleading.
(p) The Acquiring Fund Class A Shares to be issued to the
Acquired Fund hereunder are not being acquired for the purpose of making any
distribution thereof other than in accordance with the terms of this Agreement.
4.2. The Acquiring Fund represents and warrants to the Acquired Fund
as follows:
(a) The Acquiring Fund is a registered investment company
classified as a management company of the open-end type, and its registration
with the Commission as an investment company under the Investment Company Act is
in full force and effect.
(b) The Acquiring Fund is duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the power to own
all of its properties and assets and to carry out this Agreement.
(c) The current prospectus and statement of additional
information of the Acquiring Fund conform (and any prospectus or statement of
additional information of the Acquiring Fund issued before the Closing Date will
conform) in all material respects to the applicable requirements of the
Securities Act and the Investment Company Act and the rules and regulations of
the Commission thereunder and do not (and will not) include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were (or will be) made, not materially
misleading.
(d) The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement will not result in, a material violation of its
Declaration and Agreement of Trust or By-laws or of any agreement, instrument,
contract or other undertaking to which the Acquiring Fund is a party or by which
it is bound.
(e) The Acquiring Fund has no material contracts or other
commitments that will be terminated with liability to the Acquiring Fund on,
before or after the Closing Date.
(f) Except as otherwise disclosed in writing to and accepted by
the Acquired Fund, no litigation or administrative proceeding or investigation
before any court or governmental body is presently pending or to its knowledge
threatened against the Acquiring Fund or any of the Acquiring Fund's properties
or assets that, if adversely determined, would materially and adversely affect
its financial condition or the conduct of its business. The Acquiring Fund knows
of no facts that might form the basis of the institution of such a proceeding
and is not party to or subject to the provisions of any order, decree or
judgment of any court or governmental body that materially and adversely affects
its business or its ability to consummate the transactions contemplated herein.
(g) True and correct copies of the Acquiring Fund's Statement
of Net Assets as at December 14, 1999 including the accompanying notes, have
been furnished to the Acquired Fund. Such Statement of Net Assets(and the
accompanying notes) have been audited by Deloitte & Touche LLP, independent
certified public accountants. Such statements have been prepared in accordance
with generally accepted accounting principles consistently applied, and such
statements fairly reflect the financial condition and the operations and changes
in net assets of the Acquiring Fund as of such date and for such period,
respectively. There are no known contingent liabilities of the Acquiring Fund as
of such date required to be reflected or disclosed in such Statements of Net
Assets or notes in accordance with generally accepted accounting principles that
are not so reflected or disclosed.
(h) Since December 14, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquired Fund.
(i) At the Closing Date, all federal and other tax returns and
reports of the Acquiring Fund required by law to have been filed before the
Closing Date shall have been filed, and all federal and other taxes shown as due
on such returns and reports shall have been paid, or provision shall have been
made for the payment thereof, and to the best of the Acquiring Fund's knowledge,
no such return is currently under audit and no assessment has been asserted with
respect to such returns.
(j) The Acquiring Fund intends to meet the requirements of
Subchapter M of the Code for qualification and treatment as a regulated
investment company.
(k) All issued and outstanding shares of the Acquiring Fund are,
and at the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable, with no personal liability attaching to the ownership
thereof. The Acquiring Fund does not have outstanding any options, warrants or
other rights to subscribe for or purchase any shares of the Acquiring Fund, nor
is there outstanding any security convertible into shares of the Acquiring Fund.
(l) At the Closing Date, the Acquiring Fund will have good and
marketable title to the Acquiring Fund's assets.
(m) The execution, delivery and performance of this Agreement
has been duly authorized by all necessary action on the part of the Acquiring
Fund's Board of Trustees, and assuming due authorization, execution and delivery
by the Acquired Fund, this Agreement constitutes a valid and binding obligation
of the Acquiring Fund, enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights and to general equity principles.
(n) The N-14 Registration Statement (except insofar as it relates
to the Acquired Fund or the special meeting of its shareholders referred to
therein) did not on the effective date of the N-14 Registration Statement
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not materially
misleading.
(o) The Acquiring Fund Class A Shares to be issued and delivered
to the Acquired Fund pursuant to the terms of this Agreement have been duly
authorized by the Board of Trustees of the Acquiring Fund, and, when issued and
delivered at the Closing in accordance with this Agreement, will be duly and
validly issued Acquiring Fund Class A Shares and will be fully paid and
non-assessable with no personal liability attaching to the ownership thereof.
(p) The Board of Trustees of the Acquiring Fund has duly adopted
a resolution (a copy of which has been furnished to the Acquired Fund)
authorizing the issuance of Acquiring Fund Class A Shares pursuant to this
Agreement.
5. COVENANTS
5.1. The Acquiring Fund and the Acquired Fund each will operate its
business in the ordinary course between the date hereof and the Closing Date. It
is understood that such ordinary course of business will include the declaration
and payment of customary dividends and distributions and any other dividends and
distributions deemed advisable.
5.2. The parties intend that the Reorganization contemplated by this
Agreement qualify as a reorganization pursuant to section 368(a)(1)(C) of the
Code, and will comply with the recordkeeping and reporting requirements set
forth in section 1.368-3 of the Treasury Regulations.
5.3. At or after the Closing, the Acquired Fund will deliver or
otherwise make available to the Acquiring Fund a statement of the Acquired
Fund's assets and liabilities, together with a list of the Acquired Fund's
portfolio securities showing the tax costs of such securities to it and the
holding periods of such securities, as of the Closing Date.
5.4. The Acquired Fund will assist the Acquiring Fund in obtaining
such information as the Acquiring Fund reasonably requests concerning the
beneficial ownership of the Acquired Fund's shares.
5.5. Subject to the provisions of this Agreement, the Acquired Fund
and the Acquiring Fund each will take, or cause to be taken, all action, and do
or cause to be done all things, reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.6. Before the Closing Date, the Board of Trustees of the Acquired
Fund will declare such dividends and distributions, payable no later than the
earlier to occur of (a) [90] days after the Closing Date, or (b) the date the
first regular dividend payment is made by the Acquiring Fund after the Closing
Date, to shareholders of record of the Acquired Fund as of the Closing Date,
which, together with all such previous dividends and distributions, shall have
the effect of distributing to the shareholders of the Acquired Fund all of the
investment company taxable income of the Acquired Fund for all taxable years
ending on or before the Closing Date. The dividends and distributions declared
by the Acquired Fund shall also include all of the Acquired Fund's net capital
gain realized in all taxable years ending on or before the Closing Date (after
reduction for any capital loss carry forward). Such dividends and distributions
declared before the Closing Date shall be paid by the Acquiring Fund no later
than [90] days after the Closing Date.
5.7. As promptly as practicable, but in any case within sixty days
after the Closing Date, the Acquired Fund shall furnish the Acquiring Fund, in
such form as is reasonably satisfactory to the Acquiring Fund, a statement of
the earnings and profits of the Acquired Fund for federal income tax purposes
that will be carried over to the Acquiring Fund as a result of Section 381 of
the Code.
5.8. The Acquired Fund will provide the Acquiring Fund with any
additional information reasonably necessary for any revision of the N-14
prospectus and proxy statement referred to in paragraph 4.1(o), all to be
included in any amendment to the N-14 Registration Statement, in compliance with
the Securities Act, the Securities Exchange Act of 1934, as amended, and the
Investment Company Act in connection with the meeting of the Acquired Fund's
shareholders to consider approval of this Agreement and the Reorganization.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund in all material respects of all of the obligations to be
performed by it hereunder on or before the Closing Date and, in addition
thereto, the following further conditions:
6.1. All representations and warranties of the Acquiring Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
6.2. The Acquiring Fund shall have delivered to the Acquired Fund a
certificate executed in its name by its Chairman, President or a Vice President
and its Treasurer or an Assistant Treasurer, in form reasonably satisfactory to
the Acquired Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquiring Fund made in this Agreement are
true and correct at and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund in all material respects of all the obligations to be performed by
it hereunder on or before the Closing Date and, in addition thereto, the
following further conditions:
7.1. All representations and warranties of the Acquired Fund contained
in this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date with the same force and effect as if
made on and as of the Closing Date.
7.2. The Acquired Fund shall have delivered to the Acquiring Fund on
the Closing Date a certificate executed in its name by its Chairman, President
or a Vice President and its Treasurer or an Assistant Treasurer, in form and
substance satisfactory to the Acquiring Fund and dated as of the Closing Date,
to the effect that the representations and warranties of the Acquired Fund made
in this Agreement are true and correct at and as of the Closing Date, except as
they may be affected by the transactions contemplated by this Agreement.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND AND
THE ACQUIRING FUND
If any of the conditions set forth below do not exist on the Closing
Date with respect to the Acquiring Fund or the Acquired Fund, either party to
this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1. This Agreement and the transactions contemplated herein shall
have been approved by the requisite vote of the holders of the outstanding
shares of the Acquired Fund in accordance with the provisions of the Acquired
Fund's Declaration and Agreement of Trust and By-laws. Notwithstanding anything
herein to the contrary, neither the Acquiring Fund nor the Acquired Fund may
waive the conditions set forth in this paragraph 8.1.
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
8.3. All consents of other parties and all other consents, orders,
rulings and permits of federal, state and local regulatory authorities
(including those of the Commission, the Internal Revenue Service and state Blue
Sky and securities authorities) deemed necessary by the Acquiring Fund or the
Acquired Fund to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where failure
to obtain any such consent, order, ruling or permit would not involve a risk of
a material adverse effect on the assets or properties of the Acquiring Fund or
the Acquired Fund.
8.4. The N-14 Registration Statement shall have become effective under
the Securities Act and no stop orders suspending the effectiveness thereof shall
have been issued and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the Securities Act.
8.5. The parties shall have received a favorable opinion of Wilmer,
Cutler & Pickering, addressed to the Acquiring Fund and the Acquired Fund and
satisfactory to the Secretary of each such party, substantially to the effect
that for federal income tax purposes:
(a) The acquisition by the Large-Cap Growth Fund of substantially all the
assets of the Equity Fund in exchange for voting Class A shares of the
Large-Cap Growth Fund and the Large-Cap Growth Fund's assumption of the
Equity Fund's liabilities, followed by the distribution by the Equity Fund
to its shareholders of the Large-Cap Growth Fund shares, in complete
liquidation, will constitute a reorganization within the meaning of section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the "Code");
(b) No gain or loss will be recognized by the Equity Fund upon the transfer
of substantially all of its assets to the Large-Cap Growth Fund solely in
exchange for Class A shares of the Large-Cap Growth Fund and the Large-Cap
Growth Fund's assumption of the Equity Funds liabilities or upon the
distribution of such Large-Cap Growth Fund shares to the Equity Fund
shareholders;
(c) The Large-Cap Growth Fund will recognize no gain or loss upon the
receipt of substantially all of the assets of the Equity Fund in exchange
solely for voting Class A shares of the Large-Cap Growth Fund and the
assumption of the Equity Fund's liabilities;
(d) The shareholders of the Equity Fund will recognize no gain or loss on
the receipt of Class A shares of the Large-Cap Growth Fund (including any
fractional share interests to which they may be entitled) solely in
exchange for their Equity Fund shares;
(e) The basis of the assets of the Equity Fund in the hands of the
Large-Cap Growth Fund will be the same as the basis of such assets in the
hands of the Equity Fund immediately prior to the transfer;
(f) The holding period of the assets of the Equity Fund in the hands of the
Large-Cap Growth Fund will include the period during which those assets
were held by the Equity Fund;
(g) The basis of the Large-Cap Growth Fund shares received by each Equity
Fund shareholder will be the same as the basis of the Equity Fund shares
surrendered in exchange therefor; and
(h) The holding period of the Class A shares of the Large-Cap Growth Fund
received by each Equity Fund shareholder in exchange for Equity Fund shares
(including fractional shares to which such a shareholder may be entitled)
will include the period that the shareholder held the Equity Fund shares
exchanged therefor, provided that the shareholder held such shares as a
capital asset on the date of the exchange.
8.6. The Acquiring Fund and the Acquired Fund (i) shall not be
affiliated persons of each other, or affiliated persons of such persons, except
by virtue of having a common investment adviser or common officers and trustees,
or (ii) shall have received an order of the Commission under Section 17(b) of
the Investment Company Act exempting the Reorganization from Section 17(a).
9. BROKERAGE FEES AND EXPENSES
9.1. The Acquiring Fund represents and warrants to the Acquired Fund,
and the Acquired Fund represents and warrants to the Acquiring Fund, that there
are no brokers or finders entitled to receive any payments in connection with
the transactions provided for herein.
9.2. Except as may be otherwise provided herein, the Acquiring Fund
and the Acquired Fund each shall pay, or provide for the payment of, the
expenses incurred by it in connection with entering into and carrying out the
provisions of this Agreement.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. The parties hereto agree that no party has made any
representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties.
10.2. None of the representations and warranties included or provided
for herein shall survive the consummation of the transactions contemplated
hereby.
11. TERMINATION
11.1. This Agreement may be terminated at any time before the Closing
Date:
(1) by the mutual agreement of the Acquiring Fund and the
Acquired Fund;
(2) by the Acquiring Fund in the event that the Acquired Fund
shall, or by the Acquired Fund in the event that the Acquiring Fund shall,
commit a material breach of any representation or warranty contained herein or
any agreement contained herein and to be performed at or before the Closing
Date; or
by either party if a condition herein expressed to be
precedent to the obligations of the terminating party has not been met and it
reasonably appears that it will not or cannot be met.
11.2. In the event of any such termination, there shall be no liability
for damages on the part of either the Acquired Fund or the Acquiring Fund or
their respective Trustees or officers to the other party, but the Acquiring Fund
and the Acquired Fund shall each bear, or provide for the payment of, the
expenses incurred by it incidental to the preparation and carrying out of this
Agreement as provided in paragraph 9.2.
12. AMENDMENTS; WAIVERS
12.1. This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers of
the Acquiring Fund and the Acquired Fund; provided, however, that following the
approval of the Acquired Fund shareholders referred to in paragraph 8.1, no such
amendment may have the effect of changing the provisions for determining the
number of the Acquiring Fund Class A Shares to be issued to the Acquired Fund's
shareholders under this Agreement to the detriment of such shareholders without
their further approval.
12.2. At or at any time before the Closing either party hereto may by
written instrument signed by it (i) waive any inaccuracies in the
representations and warranties made to it contained herein and (ii) waive
compliance with any of the covenants or conditions made for its benefit
contained herein.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by personal
delivery addressed to the Acquired Fund, 90 Hudson Street, Jersey City, New
Jersey 07302-3972, Attention: Office of the Secretary; or to the Acquiring Fund,
90 Hudson Street, Jersey City, New Jersey 07302-3972, Attention: Office of the
Secretary.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF
LIABILITY
14.1. The article and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
14.3. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
14.4. (a) This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm, corporation or other entity, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
(b) The Acquiring Fund is hereby expressly put on notice of
the limitation of liability as set forth in Article IV of the Declaration and
Agreement of Trust of the Acquired Fund and agrees that the obligations assumed
by the Acquired Fund pursuant to this Agreement shall be limited in any case to
the Acquired Fund and its assets and the Acquiring Fund shall not seek
satisfaction of any such obligation from the shareholders of the Acquired Fund,
the trustees, officers, employees or agents of the Acquired Fund or any of them
or from any other assets of the Acquired Fund.
(c) The Acquired Fund is hereby expressly put on notice of the
limitation of liability as set forth in Article IV of the Declaration and
Agreement of Trust of the Acquiring Fund and agrees that the obligations assumed
by the Acquiring Fund pursuant to this Agreement shall be limited in any case to
the Acquiring Fund and its assets and the Acquired Fund shall not seek
satisfaction of any such obligation from the shareholders of the Acquiring Fund,
the trustees, officers, employees or agents of the Acquiring Fund or any of them
or from any other assets of the Acquiring Fund.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by its Chairman of the Board, President or Vice President and attested
by its Secretary or Assistant Secretary.
Attest: Lord Abbett Large-Cap Growth Fund
Name: ___________________ By: ___________________________
Title: Secretary Name:
Title:
Attest: Lord Abbett Equity Fund
Name: ___________________ By: ___________________________
Title: Secretary Name:
Title:
STATEMENT OF ADDITIONAL INFORMATION DATED MARCH __, 2000
ACQUISITION OF THE ASSETS OF
Lord Abbett Equity Fund
90 Hudson Street
Jersey City, NJ 07302-3972
Telephone No. (800) 426-1130
BY AND IN EXCHANGE FOR CLASS A SHARES OF
Lord Abbett Large-Cap Growth Fund
90 Hudson Street
Jersey City, NJ 07302-3972
Telephone No. (800) 426-1130
This Statement of Additional Information, relating specifically to the proposed
transfer of the assets of the Lord Abbett Equity Fund (the Equity Fund) to the
Lord Abbett Large-Cap Growth Fund (the Large-Cap Growth Fund) in exchange for
Class A shares of the Large-Cap Growth Fund and the assumption by the Large-Cap
Growth Fund of the liabilities of the Equity Fund, consists of (i) this cover
page and (ii) the following described documents, each of which accompanies this
Statement of Additional Information and is incorporated herein by reference:
1. Statement of Additional Information of the Equity Fund dated October 1, 1999.
2. Statement of Additional Information of the Large-Cap Growth Fund dated
December 30, 1999.
3. Annual Report to Shareholders of the Equity Fund dated August 7, 1999.
4. Semi-Annual Report to Shareholders of the Equity Fund dated February 7, 2000.
Financial statements for the Funds are contained in the Statements of Additional
Information referred to above, and are incorporated herein in reliance upon the
authority of Deloitte & Touche LLP as experts in auditing and accounting.
This Statement of Additional Information is not a prospectus. A Combined P
rospectus/Proxy Statement dated the date hereof relating to this matter may be
obtained without charge by calling or writing the Large-Cap Growth Fund at the
telephone number or address set forth above. This Statement of Additional
Information should be read in conjunction with such Combined Prospectus/Proxy
Statement.
PRO-FORMA COMBINED PORTFOLIO OF INVESTMENTS
JANUARY 31, 2000
Shares
- --------------------------------------------
Large-Cap Pro-Forma
Growth Equity Combined
Fund Fund Total
- ------------------------------------------------------------------------------------------------------------------------------------
Investments in Common Stocks 82.25%
- ------------------------------------------------------------------------------------------------------------------------------------
50 - 50 Advertising .01% DoubleClick Inc.
- 18,000 18,000 Aerospace 3.25% Boeing Co.
225 20,000 20,225 Honeywell International Inc.
Total
- 12,000 12,000 Aluminum 1.54% Alcoa Inc.
Auto Parts: Original
- 3,500 3,500 Equipment .46% Eaton Corp.
- 13,500 13,500 Automobiles 2.00% General Motors Corp.
50 - 50 Banks: Money Center Bank of New York
100 9,500 9,600 1.45% Chase Manhattan Corp.
260 - 260 Citigroup
Total
- 22,000 22,000 Banks: Regional 5.82% First Security Corp.
- 19,000 19,000 First Tennessee National Corp.
- 33,000 33,000 Mellon Financial Corp.
100 24,000 24,100 Wells Fargo Co.
25 - 25 Zions Bancorp.
Total
515 - 515 Beverages .05% Coca Cola Co. Inc.
75 - 75 Broadcasting .01% Clear Channel Communications
50 - 50 Brokers .01% Lehman Brothers Holding
10 - 10 Business Services .00% Ariba Inc.
- 10,500 10,500 Cable Services 1.56% MediaOne Group Inc.
165 - 165 Time Warner Inc.
Total
- 10,000 10,000 Chemicals 3.85% Dow Chemical Co.
- 22,000 22,000 Rohm & Haas Co.
Total
375 - 375 Communications Services .07% America Online Inc.
50 - 50 Yahoo Inc.
Total
365 - 365 Communications Corning Inc.
- 10,000 10,000 Technology .50% Loral Space & Communications
250 - 250 Lucent Technologies Inc.
45 - 45 QUALCOMM Inc.
Total
100 29,000 29,100 Computer Services 3.65% Ceridian Corp.
100 5,000 5,100 Computer Sciences Corp.
- 33,000 33,000 Unisys Corp.
Total
220 26,500 26,720 Computer: Hardware 1.59% Compaq Computer Corp.
450 - 450 EMC Corp.
100 - 100 Hewlett-Packard Co.
350 - 350 Intel Corp.
245 - 245 International Business Machines Corp.
10 - 10 JDS Uniphase Corp.
100 - 100 Solectron Corp.
Total
50 - 50 Computer: Software 2.83% Automatic Data Processing
- 15,000 15,000 Cadence Design Systems Inc.
100 10,000 10,100 Computer Associates International, Inc
25 - 25 Comverse Tech
75 - 75 Electronic Data Systems Corp.
485 - 485 Microsoft Corp.
200 - 200 Novell Inc.
400 9,000 9,400 Oracle Corp.
Total
480 - 480 Computer Technology .18% Cisco Systems Inc.
795 - 795 Dell Computer Corp.
65 - 65 Seagate Technology Inc.
135 - 135 Sun Microsystems Inc.
Total
60 10,000 10,060 Conglomerates 1.73% Minnesota Mining & Manufacturing Co.
- 11,000 11,000 Copper 1.18% Phelps Dodge Corp.
230 - 230 Cosmetics & Toiletries .04% Procter & Gamble
60 18,000 18,060 Data Processing Equipment &
Components 1.63% First Data Corp.
- 775 Diversified: Manufacturing .06% Tyco International Ltd.
- 17,000 17,000 Drugs 3.99% American Home Products Corp.
215 - 215 Amgen Inc.
210 6,500 6,710 Bristol-Myers Squibb Co.
160 - 160 Johnson & Johnson
185 - 185 Merck & Co. Inc.
400 - 400 Pfizer Inc.
- 18,000 18,000 Pharmacia & Upjohn Inc.
240 - 240 Warner-Lambert Co.
Total
- 10,000 10,000 Electric Power 9.90% Carolina Power & Light Co.
- 20,000 20,000 Dominion Resources Inc.
- 25,000 25,000 Duke Energy Corp.
- 17,500 17,500 FPL Group
- 75,000 75,000 SCANA Corp.
Total
- 14,000 14,000 Electrical Equipment 1.37% Emerson Electric Co.
85 - 85 Electronics: Semiconductor Applied Materials Inc.
20 - 20 .04% Conexant Systems
100 - 100 Texas Instruments Inc.
Total
- 20,000 20,000 Energy Equipment & Services .91% Baker Hughes
90 - 90 Entertainment .01% The Walt Disney Co.
75 - 75 Financial Services .07% American Express Co.
110 - 110 Morgan Stanley Dean Witter & Co.
440 - 440 Schwab (Charles) Corp.
Total
50 - 50 Financial: Miscellaneous .01% Fannie Mae
50 - 50 Freddie Mac
Total
- 30,000 30,000 Food 2.74% Heinz H.J. Co.
100 - 100 Safeway Inc.
- 20,000 20,000 Sara Lee Corp.
60 - 60 Sysco Corp.
Total
- 6,500 6,500 Health Care Management Services 1.66% Cigna Corp.
- 16,000 16,000 Columbia HCA Healthcare Corp.
Total
50 - 50 Health Care Products .01% Guidant Corp.
- 32,000 32,000 Insurance 5.60% ACE Ltd.
- 37,000 37,000 AON Corp.
- 15,000 15,000 American General Corp.
260 - 260 American International Group Inc.
- 19,000 19,000 St. Paul Co. Inc.
Total
300 - 300 Leisure .02% Carnival Corp.
- 15,000 15,000 Machinery: Agriculture 1.21% Deere & Co.
- 20,000 20,000 Metals & Minerals .75% Newmont Mining Corp.
100 - 100 Miscellaneous: Business & Consumer .01% Viacom Inc.
325 - 325 Multi-Sector Co. .08% General Electric Co.
50 - 50 Office Supplies .02% Avery Dennison Corp.
100 - 100 Lexmark International Group
10 - 10 Staples Inc.
Total
50 6,000 6,050 Oil: Integrated International 7.69% Chevron Corp.
250 33,000 33,250 Exxon Mobil Corp.
- 17,000 17,000 Texaco Inc.
Total
55 - 55 Oil: Pipelines .01% Enron Corp.
- 15,000 15,000 Paper and Forest Products Champion International Corp.
- 15,000 15,000 2.93% International Paper Co.
Total
- 12,000 12,000 Publishing 3.07% Dow Jones & Co. Inc.
200 5,000 5,200 Gannett Co. Inc.
285 13,000 13,285 Tribune Co.
Total
60 - 60 Restaurants .00% Starbucks Corp.
75 - 75 Retail 1.54% Best Buy Co. Inc.
- 20,000 20,000 Consolidated Stores Corp.
- 12,500 12,500 Federated Department Store Inc.
415 - 415 Wal Mart Stores Inc.
175 - 175 Walgreen Co.
Total
50 - 50 Retail: Specialty .07% Ebay Inc.
525 - 525 Home Depot Inc.
Total
25 - 25 Technology .01% Exodus Communications
350 - 350 Telecommunications Equipment .04% Vodafone Airtouch plc ADR
100 - 100 Telecommunications 2.23% 3Com. Corp.
- 7,500 7,500 Alltel Corp.
- 10,500 10,500 Bell Atlantic Corp.
35 - 35 Comcast Corp.
75 - 75 Motorola Inc.
50 - 50 Network Appliance Inc.
150 - 150 Nokia Corp. ADR
100 - 100 Nortel Network
100 - 100 SBC Communications Inc.
Total
200 25,000 25,200 Telephone: Long Distance 2.47% AT&T Corp.
325 - 325 MCI WorldCom Inc.
Total
- 2,500 2,500 Transportation: Miscellaneous .27% United Parcel Service Inc. Class B
Total Investments in Common Stocks
(Cost $ 41,870,668)
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Government and Agency Issues 19.91%
- ------------------------------------------------------------------------------------------------------------------------------------
- 11,000,000 11,000,000 U.S. Treasury Strip due 5/15/2000
(Cost $10,723,126)
Total Long-Term Investments 102.16%
(Cost $52,593,794)
- -----------------------------------------------------------------------------------------------------------------------------------
Short-Term Investments 1.14%
- -----------------------------------------------------------------------------------------------------------------------------------
20,000 - 20,000 FC Discount (5.72% due 2/1/2000)
- 600,000 600,000 FHLMC Discount (5 3/4% due 2/1/2000)
Total Short-Term Investments
(Cost $620,000)
Total Investments 103.30%
(Cost $53,213,794)
Other Assets and Liabilities 3.30%
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Investments in Common Stocks 82.25%
- ----------------------------------------------------------------------------------------------------------------------------------
Investments Fund Fund Total
Advertising .01% DoubleClick Inc. 4,941 - $ 4,941
Aerospace 3.25% Boeing Co. - 797,625 797,625
Honeywell International Inc. 10,800 960,000 970,800
Total 10,800 1,757,625 1,768,425
Aluminum 1.54% Alcoa Inc. - 836,250 836,250
Auto Parts: Original
Equipment .46% Eaton Corp. - 250,031 250,031
Automobiles 2.00% General Motors Corp. - 1,085,906 1,085,906
Banks: Money Center Bank of New York 2,031 - 2,031
1.45% Chase Manhattan Corp. 8,044 764,156 772,200
Citigroup 14,934 - 14,934
Total 25,009 764,156 789,165
Banks: Regional 5.82% First Security Corp. - 569,250 569,250
First Tennessee National Corp. - 496,375 496,375
Mellon Financial Corp. - 1,132,312 1,132,312
Wells Fargo Co. 4,000 960,000 964,000
Zions Bancorp. 1,478 - 1,478
Total 5,478 3,157,937 3,163,415
Beverages .05% Coca Cola Co. Inc. 29,580 - 29,580
Broadcasting .01% Clear Channel Communications 6,478 - 6,478
Brokers .01% Lehman Brothers Holding 3,575 - 3,575
Business Services .00% Ariba Inc. 1,626 - 1,626
Cable Services 1.56% MediaOne Group Inc. - 834,750 834,750
Time Warner Inc. 13,190 - 13,190
Total 13,190 834,750 847,940
Chemicals 3.85% Dow Chemical Co. - 1,165,000 1,165,000
Rohm & Haas Co. - 929,500 929,500
Total - 2,094,500 2,094,500
Communications Services .07% America Online Inc. 21,352 - 21,352
Yahoo Inc. 16,103 - 16,103
Total 37,455 - 37,455
Communications Corning Inc. 56,301 - 56,301
Technology .50% Loral Space & Communications - 196,250 196,250
Lucent Technologies Inc. 13,812 - 13,812
QUALCOMM Inc. 5,715 - 5,715
Total 75,828 196,250 272,078
Computer Services 3.65% Ceridian Corp. 1,600 464,000 465,600
Computer Sciences Corp. 9,187 459,375 468,562
Unisys Corp. - 1,051,875 1,051,875
Total 10,787 1,975,250 1,986,037
Computer: Hardware 1.59% Compaq Computer Corp. 6,022 725,438 731,460
EMC Corp. 47,925 - 47,925
Hewlett-Packard Co. 10,825 - 10,825
Intel Corp. 34,628 - 34,628
International Business Machines Corp. 27,486 - 27,486
JDS Uniphase Corp. 1,936 - 1,936
Solectron Corp. 7,263 - 7,263
Total 136,085 725,438 861,523
Computer: Software 2.83% Automatic Data Processing 2,372 - 2,372
Cadence Design Systems Inc. - 309,375 309,375
Computer Associates International,
Inc. 6,869 686,875 693,744
Comverse Tech 3,584 - 3,584
Electronic Data Systems Corp. 5,072 - 5,072
Microsoft Corp. 47,469 - 47,469
Novell Inc. 6,675 6,675
Oracle Corp. 19,981 449,578 469,559
Total 92,022 1,445,828 1,537,850
Computer Technology .18% Cisco Systems Inc. 52,560 - 52,560
Dell Computer Corp. 30,558 - 30,558
Seagate Technology Inc. 2,604 - 2,604
Sun Microsystems Inc. 10,606 - 10,606
Total 96,328 - 96,328
Conglomerates 1.73% Minnesota Mining & Manufacturing Co. 5,617 936,250 941,867
Copper 1.18% Phelps Dodge Corp. - 639,375 639,375
Cosmetics & Toiletries .04% Procter & Gamble 23,201 - 23,201
Data Processing Equipment & Components 1.63% First Data Corp. 2,944 883,125 886,069
Diversified: Manufacturing .06% Tyco International Ltd. 33,131 - 33,131
Drugs 3.99% American Home Products Corp. - 800,063 800,063
Amgen Inc. 13,693 - 13,693
Bristol-Myers Squibb Co. 13,860 429,000 442,860
Johnson & Johnson 13,770 13,770
Merck & Co. Inc. 14,580 - 14,580
Pfizer Inc. 14,550 - 14,550
Pharmacia & Upjohn Inc. - 846,000 846,000
Warner-Lambert Co. 22,785 - 22,785
Total 93,238 2,075,063 2,168,301
Electric Power 9.90% Carolina Power & Light Co. - 322,500 322,500
Dominion Resources Inc. - 835,000 835,000
Duke Energy Corp. - 1,443,750 1,443,750
FPL Group - 738,281 738,281
SCANA Corp. - 2,039,063 2,039,063
Total - 5,378,594 5,378,594
Electrical Equipment 1.42% Emerson Electric Co. - 770,875 770,875
Electronics: Semiconductor Applied Materials Inc. 11,666 - 11,666
.04% Conexant Systems 1,690 - 1,690
Texas Instruments Inc. 10,788 - 10,788
Total 24,144 - 24,144
Energy Equipment & Services .91% Baker Hughes - 492,500 492,500
Entertainment .01% The Walt Disney Co. 3,268 - 3,268
Financial Services .07% American Express Co. 12,361 - 12,361
Morgan Stanley Dean Witter & Co. 7,288 - 7,288
Schwab (Charles) Corp. 15,868 - 15,868
Total 35,517 - 35,517
Financial: Miscellaneous .01% Fannie Mae 2,997 - 2,997
Freddie Mac 2,509 - 2,509
Total 5,506 - 5,506
Food 2.74% Heinz H.J. Co. - 1,115,625 1,115,625
Safeway Inc. 3,819 - 3,819
Sara Lee Corp. - 368,750 368,750
Sysco Corp. 2,134 - 2,134
Total 5,953 1,484,375 1,490,328
Health Care Management Services 1.66% Cigna Corp. - 466,375 466,375
Columbia HCA Healthcare Corp. - 437,000 437,000
Total - 903,375 903,375
Health Care Products .01% Guidant Corp. 2,631 - 2,631
Insurance 5.60% ACE Ltd. - 566,000 566,000
AON Corp. - 957,375 957,375
American General Corp. - 921,563 921,563
American International Group Inc. 27,073 - 27,073
St. Paul Co. Inc. - 573,562 573,562
Total 27,073 3,018,500 3,045,573
Leisure .02% Carnival Corp. 13,519 - 13,519
Machinery: Agriculture 1.21% Deere & Co. - 655,312 655,312
Metals & Minerals .75% Newmont Mining Corp. - 407,500 407,500
Miscellaneous: Business & Consumer .01% Viacom Inc. 5,538 - 5,538
Multi-Sector Co. .08% General Electric Co. 43,347 - 43,347
Office Supplies .02% Avery Dennison Corp. 3,388 - 3,388
Lexmark International Group 9,425 - 9,425
Staples Inc. 238 - 238
Total 13,051 - 13,051
Oil: Integrated International 7.69% Chevron Corp. 4,178 501,375 505,553
Exxon Mobil Corp. 20,875 2,755,500 2,776,375
Texaco Inc. - 898,875 898,875
Total 25,053 4,155,750 4,180,803
Oil: Pipelines .01% Enron Corp. 3,709 - 3,709
Paper and Forest Products Champion International Corp. - 877,500 877,500
2.93% International Paper Co. - 714,375 714,375
Total - 1,591,875 1,591,875
Publishing 3.07% Dow Jones & Co. Inc. - 744,000 744,000
Gannett Co. Inc. 13,900 347,500 361,400
Tribune Co. 12,023 548,438 560,461
Total 25,923 1,639,938 1,665,861
Restaurants .00% Starbucks Corp. 1,920 - 1,920
Retail 1.54% Best Buy Co. Inc. 3,581 - 3,581
Consolidated Stores Corp. - 285,000 285,000
Federated Department Store Inc. - 520,313 520,313
Wal Mart Stores Inc. 22,721 - 22,721
Walgreen Co. 4,834 - 4,834
Total 31,136 805,313 836,449
Retail: Specialty .07% Ebay Inc. 7,503 - 7,503
Home Depot Inc. 29,728 - 29,728
Total 37,231 - 37,231
Technology .01% Exodus Communications 2,872 - 2,872
Telecommunications Equipment .04% Vodafone Airtouch plc ADR 19,600 - 19,600
Telecommunications 2.23% 3Com. Corp. 5,075 - 5,075
Alltel Corp. - 500,625 500,625
Bell Atlantic Corp. - 650,344 650,344
Comcast Corp. 1,610 - 1,610
Motorola Inc. 10,256 - 10,256
Network Appliance Inc. 5,019 - 5,019
Nokia Corp. ADR 27,450 - 27,450
Nortel Network 9,563 - 9,563
SBC Communications Inc. 4,313 - 4,313
Total 63,286 1,150,969 1,214,255
Telephone: Long Distance 2.47% AT&T Corp. 10,550 1,318,750 1,329,300
MCI WorldCom Inc. 14,930 - 14,930
Total 25,480 1,318,750 1,344,230
Transportation: Miscellaneous .27% United Parcel Service Inc. Class B - 148,750 148,750
Total Investments in Common Stocks
(Cost $ 41,870,668) 1,123,070 43,580,110 44,703,180
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Government and Agency Issues 19.91%
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Strip due 5/15/2000 - 10,823,010 10,823,010
(Cost $10,723,126)
Total Long-Term Investments 102.16%
(Cost $52,593,794) 1,123,070 54,003,120 54,403,120
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Short-Term Investments 1.14%
- -----------------------------------------------------------------------------------------------------------------------------------
FC Discount (5.72% due 2/1/2000) 20,000 - 20,000
FHLMC Discount (5 3/4% due 2/1/2000) - 600,000 600,000
Total Short-Term Investments 20,000 600,000 620,000
Total Investments 103.30%
(Cost $53,213,794) 1,143,070 55,003,120 56,146,190
- -----------------------------------------------------------------------------------------------------------------------------------
Other Assets and Liabilities 3.30% (16,058) 420,635 277,658
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00% 1,127,012 55,423,755 56,423,848
- -----------------------------------------------------------------------------------------------------------------------------------
ADR American Deposito+A23ry Receipt
See Notes to Pro-Forma Financial Statements.
PRO-FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 2000
(UNAUDITED)
Large-Cap Growth Equity Pro-Forma Pro-Forma
Fund* Fund Adjustments Combined
ASSETS
Investments, at value* $ 1,143,070 $ 55,003,120 $ 56,146,190
Cash 11,107 100,544 111,651
Receivable for Capital Shares Sold 21,000 - 21,000
Dividends Receivable 282 42,180 42,462
Receivable for Securities Sold 8 2,974,638 2,974,646
Prepaid costs 56,000 - 56,000
Total Assets $ 1,231,467 $ 58,120,482 $ 59,351,949
LIABILITIES
Payable to Manager $ 46,100 $ 31,891 $ 77,991
Payable for Securities Purchased 48,455 2,209,984 2,258,439
Payable for Capital Shares Repurchased - 308,172 308,172
Trustees Fees Payable - 35,141 35,141
Other 9,900 111,539 55,000 (1) 176,439
Dividends Payable - - 2,144,568 (2)
Total Liabilities $ 104,455 $ 2,696,727 $ 2,199,568 5,000,750
NET ASSETS
Paid in Capital $ 1,096,099 $ 50,377,334 $ (55,000)(1) $ 51,418,433
Accumulated Net Realized Gain (Loss) (312) 2,096,446 (2,096,446) (2) (312)
Undistributed net investment income 682 528,692 (71,919)(2) 457,455
Net Unrealized Appreciation of Investments 30,543 2,901,853 2,932,396
Net Assets, January 31, 2000 $ 1,127,012 $ 55,423,755 $(2,199,568) 54,351,199
Class A - Net Asset Value $10.32 $27.71 $10.31
Maximum Sales Charge 5.75% 5.50% 5.75%
Maximum Offering Price $10.95 $29.32 $10.94
Shares Outstanding 108,725 1,999,974 5,271,221
Class B - Net Asset Value $10.32 $10.32
Shares Outstanding 113 113
Class C - Net Asset Value $10.32 $10.32
Shares Outstanding 113 113
Class P - Net Asset Value $10.32 $10.32
Shares Outstanding 113 113
Class Y - Net Asset Value $10.32 $10.32
Shares Outstanding 113 113
*Cost $ 1,112,527 $ 52,101,267 $ 53,213,794
(1) Reflects the charge for estimated Reorganization expenses of $55,000
(2) See explanation of adjustments on the Combined Pro-Forma Statement of Operations
See Combined Notes to Financial Statements
PRO-FORMA COMBINED STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED JANUARY 31, 2000
(UNAUDITED)
Large-Cap Growth Equity Pro-Forma Pro-Forma
Fund* Fund Adjustments ** Combined
Investment Income
Dividends $ 682 $ 946,393 $ 947,075
Interest 0 989,465 989,465
Total Income 682 1,935,858 1,936,540
Expense
Management fee 1,043 401,456 61,762 (1) 464,261
Management fee waived (1,043) 0 1,043 (2) 0
Registration 0 0 56,000 (3) 56,000
Shareholder servicing 100 93,939 94,039
12b-1 distribution plan - Class A 0 154,406 61,762 (4) 216,168
Professional 5,200 35,994 41,194
Insurance 0 118,148 (118,148) (5) 0
Reports to shareholders 3,200 20,354 23,554
Other 1,400 4,460 (400) (6) 5,460
Total Expenses before reimbursements 9,900 828,757 62,019 900,676
Expenses reimbursed by Lord Abbett (9,900) 0 9,900 (7) 0
Net Expenses 0 828,757 71,919 900,676
Net Investment Income (Loss) 682 1,107,101 (71,919) 1,035,864
Realized & Unrealized Gain(Loss) on Investments
Net realized gain (loss) from investment transactions (312) 10,417,621 10,417,309
Net change in unrealized appreciation/depreciation of investments 30,543 (10,733,231) (10,702,688)
Net realized and unrealized gain (loss) on investments 30,231 (315,610) (285,379)
Net Increase in Net Assets Resulting from Operations $ 30,913 $ 791,491 $ (71,919) $ 750,485
* For the Period from December 15, 1999 (commencement of operations) to January 31, 2000
** This Pro Forma Combined Statement of Operations excludes non-recurring estimated Reorganization expenses of $55,000.
(1) Adjustment to reflect increase in management fee on Equity Fund from .65% to .75% of average net assets.
(2) Adjustment to reflect elimination of voluntary management fee waiver.
(3) Adjustment to reflect increase in registration fees.
(4) Adjustment to reflect increase in 12b-1 fees from .25% to .35% of Class A average net assets.
(5) Adjustment to reflect elimination of insurance expense.
(6) Adjustment to reflect elimination of duplicative expenses.
(7) Adjustment to reflect elimination of voluntary expense reimbursements by Lord Abbett.
See Combined Notes to Financial Statements
Combined Notes to Financial Statements
1. Significant Accounting Policies. The accompanying financial statements
represent the pro-forma combined financial statements of Lord Abbett Large-Cap
Growth Fund (the Fund, which term as used herein shall refer to the Large-Cap
Growth Fund after giving effect to the Reorganization) and the Lord Abbett
Equity Fund. The Fund, organized as a Delaware business trust on September 29,
1999, is registered under the Investment Company Act of 1940 as a diversified,
open-end management investment company. These unaudited financial statements
reflect all adjustments that are, in the opinion of management, necessary to a
fair statement of the results for the interim period presented. The financial
statements have been prepared in conformity with generally accepted accounting
principles, which require management to make certain estimates and assumptions
at the date of the financial statements. The following is a summary of the
significant accounting policies followed by the Fund: (a) Security valuation is
determined as follows: Portfolio 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 Funds 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 last bid and asked prices, except that
securities admitted to trading on the NASDAQ National Market System are valued
at the last sales price if it is determined that such price more accurately
reflects the value of such securities. Short-term securities are valued at
amortized cost (which approximates market value) if the maturity is 60 days or
less at the time of purchase, or market value if the maturity is greater than 60
days. Securities for which market quotations are not available are valued at
fair value under procedures approved by the Board of Trustees; ( b ) It is the
policy of the Fund to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
taxable income. Therefore, no federal income tax provision is required; (c)
Security transactions are accounted for on the date that the securities are
purchased or sold (trade date). Realized gains and losses from investment
transactions are calculated on the identified cost basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Interest
income is recorded on the accrual basis. Net investment income (other than
distribution and service fees) and realized and unrealized gains or losses are
allocated to each class of shares based upon the relative proportion of net
assets at the beginning of the day.
2. Management Fee and Other Transactions with Affiliates. The Fund has a
management agreement with Lord, Abbett & Co. (Lord Abbett) pursuant to which
Lord Abbett supplies the Fund with investment management services and executive
and other personnel, pays the remuneration of officers, provides office space
and pays for ordinary and necessary office and clerical expenses relating to
research, statistical work and the supervision of the Fund's investment
portfolio. The management fee is based on average daily net assets for each
month at the annual rate of 0.75% of average daily net assets. The Fund has Rule
12b-1 plans and agreements (the Class A , Class B, Class C and Class P Plans)
with Lord Abbett Distributor LLC ( Distributor ), an affiliate of Lord Abbett.
The Fund makes payments to Distributor which uses or passes on such payments to
authorized institutions. Pursuant to the Class A Plan, the Fund pays Distributor
(1) an annual service fee of 0.25% of average daily net assets, (2) a one-time
distribution fee of up to 1% on certain qualifying purchases and (3) an annual
distribution fee of 0.10% of the average daily net asset value of Class A
shares. Pursuant to the Class B and Class C Plans, the Fund pays Distributor an
annual service and distribution fee of 0.25% and 0.75%, respectively, of the
average daily net asset value of the Class B shares. Pursuant to the Class P
Plan, the Fund pays Distributor an annual service and distribution fee of 0.20%
and 0.25 % , respectively, of the average daily net asset value of the Class P
shares. Class Y does not have a Plan. Certain of the Funds officers and trustees
have an interest in Lord Abbett.
3. Trustees Remuneration. The Trustees of the Fund associated with Lord Abbett
and all officers of the Fund receive no compensation from the Fund for acting as
such. Outside Trustees fees and retirement costs are allocated among all funds
in the Lord Abbett group based on the net assets of each fund. Trustees fees
payable at January 31, 2000, under a deferred compensation plan, were $33,000.
- --------------------------------------------------------------------------------
PART C OTHER INFORMATION
- --------------------------------------------------------------------------------
Item 15 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.
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 16 Exhibits
(1) Declaration of Trust is incorporated by reference to the Initial
Registration Statement on Form N-1A filed on September 30, 1999.
(2) By-Laws are incorporated by reference to the Initial Registration
Statement on Form N-1A filed on September 30, 1999.
(3) Not applicable.
(4) Reorganization Agreement (filed as Appendix to Prospectus/Proxy
Statement).
(5) Instruments Defining Rights of Security Holders not applicable.
(6) Management Agreement is incorporated by reference to the
Initial Registration Statement on Form N-1A filed on
September 30, 1999.
(7) Distribution Agreement is incorporated by reference to the
Initial Registration Statement on Form N-1A filed on
September 30, 1999.
(8) To be filed by amendment.
(9) Custodian Agreement is incorporated by reference to Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A filed
on December 28, 1999.
(10) Rule 18f-3 Plan is incorporated by reference to the Initial
Registration Statement on Form N-1A filed on September 30, 1999.
Rule 12b-1 Plans are incorporated by reference to the Initial
Registration Statement on Form N-1A filed on September 30, 1999.
(11) Tax opinion (to be filed by amendment).
(12) Consent of Deloitte & Touche LLP filed herewith (opinions filed
as part of annual reports of Funds).
(13) Not applicable.
(14) Not applicable.
(15) Not applicable.
(16) Not applicable.
(17) (a) Initial Capital Agreement is incorporated by reference to
Pre-Effective Amendment No. 1 to the Registration Statement
on Form N-1A filed on December 28, 1999.
(b) Financial Data Schedule not applicable.
(c) Financial Statements are incorporated by reference to
Pre-Effective Amendment No. 1 to the Registration Statement
on Form N-1A filed on December 28, 1999, to the Annual Report
to shareholders of the Equity Fund dated August 17, 1999 and
to the Semi-Annual Report to shareholders of the Equity Fund
dated February 7, 2000.
(d) Transfer Agency Agreement is incorporated by reference to
Pre-Effective Amendment No. 1 to the Registration Statement
on Form N-1A filed on December 28,1999.
(e) Proxy Card
(f) Lord Abbett Large-Cap Growth Fund Prospectus dated December
30, 1999
(g) 1999 Semi-Annual Report for the six-months ending November 30,
1999
(h) Lord Abbett Equity Fund 1999 Annual Report
Item 17 Undertakings
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a
prospectus which is a part of this registration statement by
any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c) of the Securities Act, the
reoffering prospectus will contain the information called for
by the applicable registration form for the reofferings by
persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable
form.
(2) The undersigned Registrant agrees that every prospectus that
is filed under paragraph (1) above will be filed as a part
of an amendment to the registration statement and will not
be used until the amendment is effective, and that, in
determining any liability under the 1933 Act, each
post-effective amendment shall be deemed to be a new
registration statement for the initial bona fide offering of
them.
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement
on behalf of the registrant in Jersey City, New Jersey, on the 25th day of
February, 2000
LORD ABBETT LARGE-CAP GROWTH FUND
/s/ Lawrence H. Kaplan
---------------------------
By: Lawrence H. Kaplan
Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
- --------------------------------------------------------------------------------
SIGNATURE TITLE DATE
/s/ Robert S. Dow Chairman, President February 25, 2000
- ------------------ ------------------- -----------------
Robert S. Dow
/s/ E. Thayer Bigelow Director/Trustee February 25, 2000
- --------------------- ---------------- -----------------
E. Thayer Bigelow
/s/ William H. T. Bush Director/Trustee February 25, 2000
- ---------------------- ---------------- -----------------
William H. T. Bush
/s/ Robert B. Calhoun, Jr. Director/Trustee February 25, 2000
- ------------------------- ---------------- -----------------
Robert B. Calhoun, Jr.
/s/ Stewart S. Dixon Director/Trustee February 25, 2000
- -------------------- ---------------- -----------------
Stewart S. Dixon
/s/ John C. Jansing Director/Trustee February 25, 2000
- ------------------- ---------------- -----------------
John C. Jansing
/s/ C. Alan MacDonald Director/Trustee February 25, 2000
- ---------------------- ---------------- -----------------
C. Alan MacDonald
/s/ Hansel B. Millican, Jr. Director/Trustee February 25, 2000
- -------------------------- ---------------- -----------------
Hansel B. Millican, Jr.
/s/ Thomas J. Neff Director/Trustee February 25, 2000
- ------------------ ---------------- -----------------
Thomas J. Neff
/s/ Donna M. McManus Chief Financial Officer February 25, 2000
- -------------------- ----------------------- -----------------
Donna M. McManus