1933 Act File No. 002-10638
1940 Act File No. 811-00005
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |
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Pre-Effective Amendment No. |
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Post-Effective Amendment No. 103 |
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and/or |
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |
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Amendment No. 103 |
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LORD ABBETT AFFILIATED FUND, INC. |
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(Exact Name of Registrant as Specified in Charter) |
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90 Hudson Street, Jersey City, New Jersey |
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07302-3973 |
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(Address of Principal Executive Office) |
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(Zip Code) |
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Registrants Telephone Number: |
(800) 201-6984 |
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Thomas R. Phillips, Esq. |
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Vice President and Assistant Secretary |
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90 Hudson Street, Jersey City, New Jersey 07302-3973 |
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(Name and Address of Agent for Service) |
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It is proposed that this filing will become effective (check appropriate box) |
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immediately upon filing pursuant to paragraph (b) |
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on March 1, 2012 pursuant to paragraph (b) |
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60 days after filing pursuant to paragraph (a) (1) |
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on (date) pursuant to paragraph (a) (1) |
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75 days after filing pursuant to paragraph (a) (2) |
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on (date) pursuant to paragraph (a) (2) of Rule 485 |
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If appropriate, check the following box: |
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this post-effective amendment designates a new effective date for a previously filed post-effective amendment |
Lord Abbett
Affiliated Fund
PROSPECTUS
MARCH 1, 2012
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CLASS |
TICKER |
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A |
LAFFX |
I |
LAFYX |
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B |
LAFBX |
P |
LAFPX |
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C |
LAFCX |
R2 |
LAFQX |
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F |
LAAFX |
R3 |
LAFRX |
The Securities and Exchange Commission has not approved or disapproved of these securities or determined whether this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.
INVESTMENT PRODUCTS: NOT FDIC INSUREDNO BANK GUARANTEEMAY LOSE VALUE
TABLE OF CONTENTS
WHAT YOU
2
2
3
4
5
7
8
8 Payments to Broker-Dealers and Other Financial Intermediaries
8
MORE
9
9
11
14
14
INFORMATION
FOR MANAGING
YOUR FUND
ACCOUNT
15
22
24
28
35
37
37
39
47
FINANCIAL
49
SHOULD KNOW
ABOUT
THE FUND
INFORMATION
ABOUT
THE FUND
INFORMATION
AFFILIATED FUND The Funds investment objective is long-term growth of capital and income without excessive fluctuations in market value. This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and certain members of your family invest, or agree to invest in the future, at least $50,000 in the Lord Abbett Family of Funds. More information about these and other
discounts is available from your financial professional and in Sales Charge Reductions and Waivers on page 24 of the prospectus and Purchases, Redemptions, Pricing, and Payments to Dealers on page 8-1 of the statement of additional information (SAI).
Shareholder Fees (Fees paid directly from your investment)
Class
A
B
C
F, I, P, R2, and R3
Maximum Sales Charge (Load) Imposed on Purchases
5.75%
None
None
None Maximum Deferred Sales Charge (Load) None(1)
5.00%
1.00%(2)
None
Annual Fund Operating Expenses
Class
A
B
C
F
I
P
R2
R3
Management Fees 0.31%
0.31%
0.31%
0.31%
0.31%
0.31%
0.31%
0.31%
Distribution and Service (12b-1) Fees 0.35%
1.00%
1.00%
0.10%
None
0.45%
0.60%
0.50%
Other Expenses 0.18%
0.18%
0.18%
0.18%
0.18%
0.18%
0.18%
0.18%
Total Annual Fund Operating Expenses 0.84%
1.49%
1.49%
0.59%
0.49%
0.94%(3)
1.09%
0.99%
(1) A contingent deferred sales charge (CDSC) of 1.00% may be assessed on certain Class A shares purchased or acquired without a sales charge if they are redeemed before the first day of the month of the one-year anniversary of the purchase. (2)
A CDSC of 1.00% may be assessed on Class C shares if they are redeemed before the first anniversary of their purchase. (3)
This amount has been updated from fiscal year amounts to reflect current fees and expenses. Example The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund at the maximum sales charge, if any, for the time periods indicated and then redeem all of your shares at the end of those PROSPECTUS AFFILIATED
FUND 2
(as a percentage of offering price)
(as a percentage of offering price or redemption proceeds, whichever is lower)
(Expenses that you pay each year as a percentage of the value of your investment)
periods. The example also assumes that your investment has a 5% return each year, that dividends and distributions are reinvested, and that the Funds operating expenses remain the same. The example assumes a deduction of the applicable contingent deferred sales charge (CDSC) for the one-year, three-year, and five-
year periods for Class B shares and for the one-year period for Class C shares. Class B shares automatically convert to Class A shares after approximately eight years. The expense example for Class B shares for the ten-year period reflects the conversion to Class A shares. The first example assumes that you redeem all of
your shares at the end of the periods. Although your actual costs may be higher or lower, based on these assumptions, your costs (including any applicable CDSC) would be as shown below. The second example assumes that you do not redeem and instead keep your shares.
Class
If Shares Are Redeemed
If Shares Are Not Redeemed
1 Year
3 Years
5 Years
10 Years
1 Year
3 Years
5 Years
10 Years
Class A Shares
$
656
$
828
$
1,014
$
1,553
$
656
$
828
$
1,014
$
1,553
Class B Shares
$
652
$
771
$
1,013
$
1,604
$
152
$
471
$
813
$
1,604
Class C Shares
$
252
$
471
$
813
$
1,779
$
152
$
471
$
813
$
1,779
Class F Shares
$
60
$
189
$
329
$
738
$
60
$
189
$
329
$
738
Class I Shares
$
50
$
157
$
274
$
616
$
50
$
157
$
274
$
616
Class P Shares
$
96
$
300
$
520
$
1,155
$
96
$
300
$
520
$
1,155
Class R2 Shares
$
111
$
347
$
601
$
1,329
$
111
$
347
$
601
$
1,329
Class R3 Shares
$
101
$
315
$
547
$
1,213
$
101
$
315
$
547
$
1,213 Portfolio Turnover. The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not
reflected in the annual fund operating expenses or in the example, affect the Funds performance. During the most recent fiscal year, the Funds portfolio turnover rate was 16.39% of the average value of its portfolio. PRINCIPAL INVESTMENT STRATEGIES To pursue its objective under normal market conditions, the Fund will invest at least 80% of its net assets in equity securities of large companies. The Fund invests principally in large, established U.S. and multinational companies that the portfolio manager believes are undervalued. The Fund may invest in U.S. and foreign (which may include emerging market) companies. Foreign companies may be traded on U.S. or non-U.S. securities exchanges and may include American Depositary Receipts (ADRs). The Funds investments primarily include the following types of securities and other financial
instruments: PROSPECTUS AFFILIATED
FUND 3
Equity securities, including common stocks, preferred stocks, and equity interests in trusts (including real estate investment trusts), partnerships, joint ventures, and limited liability companies. The Fund considers equity securities to include rights offerings and investments that convert into the equity securities
described above.
Large companies having a market capitalization at the time of purchase that falls within the market capitalization range of companies in the Russell 1000Ò Index. Value companies that portfolio management believes to be underpriced or undervalued according to certain financial measurements of intrinsic worth or business prospects and have the potential for capital appreciation. At its discretion and consistent with the Funds investment objective, the Fund selectively may use derivatives, including futures and options, to hedge against the decline in value of the Funds investments and for other risk management purposes, to efficiently gain targeted investment exposure, and to seek to increase the
Funds investment returns. The Fund generally will sell a security when the Fund believes the security is less likely to benefit from the current market and economic environment, shows signs of deteriorating fundamentals, or has reached its valuation target, among other reasons. The Fund seeks to remain fully invested in accordance with its
investment objective; however, in response to adverse economic, market or other unfavorable conditions, the Fund may invest its assets in a temporary defensive manner. As with any investment in a mutual fund, investing in the Fund involves risk, including the risk that you may receive little or no return on your investment. When you redeem your shares, they may be worth more or less than what you paid for them, which means that you may lose a portion or all of the money you
invested in the Fund. The Fund invests principally in stocks and other securities described above, which may experience significant volatility at times and may fall sharply in response to adverse events. Individual securities also may experience dramatic movements in price. If the Fund emphasizes a particular type of security, including an
investment in a single industry or sector, the Fund may experience greater losses due to adverse developments affecting that type of security. In addition to the risks of overall market movements, risks of events affecting a particular industry or sector, and risks that are specific to an individual security, the principal risks of
investing in the Fund, which could adversely affect its performance, include: PROSPECTUS AFFILIATED
FUND 4
Portfolio Management Risk: If the strategies used and securities selected by the Funds portfolio management fail to produce the intended result, the Fund may suffer losses or underperform other funds with the same investment objective or strategies, even in a rising market.
Large Company Risk: As compared to smaller successful companies, larger companies may be less able to respond quickly to certain market developments and may have slower rates of growth. Value Investing Risk: The prices of value stocks may lag the stock market for long periods of time if the market fails to recognize the companys intrinsic worth.
Foreign Company Risk: The Funds investment exposure to foreign (which may include emerging market) companies generally is subject to the risk that the value of securities issued by foreign companies may be adversely affected by political, economic and social volatility, lack of transparency or inadequate
regulatory and accounting standards, inadequate exchange control regulations, foreign taxes, higher transaction and other costs, and delays in settlement. Emerging market securities generally are more volatile than other foreign securities, and are subject to greater liquidity, regulatory, and political risks.
Derivatives Risk: Derivatives are subject to certain risks, including the risk that the value of the derivative may not correlate with the value of the underlying security, rate, or index in the manner anticipated by portfolio management. Derivatives may be more sensitive to changes in economic or market conditions and
may become illiquid. Derivatives are subject to leverage risk, which may increase the Funds volatility, and counterparty risk, which means that the counterparty may fail to perform its obligations under the derivative contract. An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. For more information on the principal risks of the Fund, please see the More Information About the Fund Principal Risks section in the prospectus. The bar chart and table below provide some indication of the risks of investing in the Fund by illustrating the variability of the Funds returns. Each assumes reinvestment of dividends and distributions. The Funds past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the
future. PROSPECTUS AFFILIATED
FUND 5
The bar chart shows changes in the performance of the Funds Class A shares from calendar year to calendar year. This chart does not reflect the sales charge applicable to Class A shares. If the sales charge were reflected, returns would be lower. Performance for the Funds other share classes will vary due to the different
expenses each class bears. Updated performance information is available at www.lordabbett.com or by calling 888-522-2388. Bar Chart (per calendar year) Class A Shares Best Quarter 2nd Q 09 +18.76% Worst Quarter 3rd Q 11 -20.73% The table below shows how the average annual total returns of the Funds Class A, B, C, F, I, P, R2, and R3 shares compare to those of three broad-based securities market indices. The Funds average annual total returns include applicable sales charges as follows: for Class A shares, the current maximum front-end sales
charge of 5.75%; for Class B shares, the current CDSC of 4.00% for the one-year period and 1.00% for the five-year period; and for Class C shares, the performance shown is at net asset value (NAV) because there is no CDSC for Class C shares for any period one year or greater. There are no sales charges for Class F,
I, P, R2, and R3 shares. Class B shares automatically convert to Class A shares at approximately eight years after purchase. All returns for Class B shares for periods greater than eight years reflect this conversion. The after-tax returns of Class A shares included in the table below are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. In some cases, the return after taxes on distributions and sale of Fund shares may exceed the return before taxes due
to a tax benefit resulting from realized losses on a sale of Fund shares at the end of the period that is used to offset other gains. Actual after-tax returns depend on an investors tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their Fund shares through PROSPECTUS AFFILIATED
FUND 6
tax-deferred arrangements such as 401(k) plans or Individual Retirement Accounts (IRAs). After-tax returns for other share classes are not shown in the table and will vary from those shown for Class A shares. Average Annual Total Returns
Class
1 Year
5 Years
10 Years
Life of Class
Inception
Class A Shares Before Taxes -13.16%
-5.03%
1.17%
After Taxes on Distributions -13.54%
-5.55%
0.44%
After Taxes on Distributions and Sale of Fund Shares -8.55%
-4.19%
0.94%
Class B Shares -12.13%
-4.69%
1.24%
Class C Shares -8.46%
-4.52%
1.13%
Class F Shares -7.68%
-5.94%
9/28/2007
Class I Shares -7.56%
-3.57%
2.13%
Class P Shares -7.90%
-3.98%
1.68%
Class R2 Shares -8.15%
-6.42%
9/28/2007
Class R3 Shares -8.04%
-6.31%
9/28/2007
Index
Russell 1000Ò Value Index 0.39%
-2.64%
3.89%
-4.40%
9/28/2007
S&P 500Ò Index 2.11%
-0.25%
2.92%
-2.32%
9/28/2007
S&P 500Ò Value Index -0.48%
-2.96%
2.87%
-5.16%
9/28/2007 MANAGEMENT Investment Adviser. The Funds investment adviser is Lord, Abbett & Co. LLC. Portfolio Manager. The portfolio manager primarily responsible for the day-to-day management of the Fund is:
Portfolio Manager/Title
Member of
Daniel H. Frascarelli, Partner and Director
2009 PROSPECTUS AFFILIATED
FUND 7
(for the periods ended December 31, 2011)
Date for
Performance
(reflects no deduction for fees, expenses, or taxes)
(reflects no deduction for fees, expenses, or taxes)
(reflects no deduction for fees, expenses, or taxes)
the Investment
Management
Team Since
PURCHASE AND SALE OF FUND SHARES The minimum initial and additional amounts shown below vary depending on the class of shares you buy and the type of account. Certain financial intermediaries may impose different restrictions than those described below. Class B shares no longer are available for purchase by new or existing investors and only will be
issued in connection with (i) an exchange of Class B shares from another Lord Abbett Fund or (ii) a reinvestment of a dividend and/or capital gain distribution. For Class I shares, the minimum investment shown below applies to certain types of institutional investors. Class P shares are closed to substantially all new
investors. See Choosing a Share Class Investment Minimums in the prospectus for more information. Investment Minimums Initial/Additional Investments Class A and C F, P, R2, and R3 I
General
$250/No minimum
No minimum $1 million minimum Retirement and Benefit Plans
No minimum
No minimum
No minimum
IRAs and Uniform Gifts or Transfers to Minor Accounts
$250/No minimum
N/A
N/A
SIMPLE IRAs
No minimum
N/A
N/A
Invest-A-Matic
$250/$50
N/A N/A You may sell (redeem) shares through your securities broker, financial professional or financial intermediary. If you have direct account access privileges, you may redeem your shares by contacting the Fund in writing at P.O. Box 219336, Kansas City, MO 64121, by calling 888-522-2388 or by accessing your account
online at www.lordabbett.com. The Funds distributions, if any, generally are taxable to you as ordinary income, capital gains or a combination of the two, and also may be subject to state and local taxes. Certain taxes on distributions may not apply to tax exempt investors or tax deferred accounts, such as a 401(k) plan or an IRA. PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES If you purchase Fund shares through a broker-dealer or other financial intermediary (such as a bank), the Fund and the Funds distributor or its affiliates may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other
financial intermediary and your individual financial professional to recommend the Fund over another investment. Ask your individual financial professional or visit your financial intermediarys website for more information. PROSPECTUS AFFILIATED
FUND 8
The Funds investment objective is long-term growth of capital and income without excessive fluctuations in market value. PRINCIPAL INVESTMENT STRATEGIES To pursue this objective, the Fund invests principally in equity securities of large, established, U.S. and multinational companies that the portfolio manager believes are undervalued. Under normal circumstances, the Fund will invest at least 80% of its net assets in equity securities of large companies. A large company is
defined as a company having a market capitalization at the time of purchase that falls within the market capitalization range of companies in the Russell 1000Ò Index, a widely-used benchmark for large-cap stock performance. The market capitalization range of the Russell 1000Ò Index as of June 30, 2011, following its most
recent annual reconstitution, was approximately $1.4 billion to $400.9 billion. This range varies daily. Equity securities in which the Fund may invest include common stocks; preferred stocks; equity interests in real estate investment trusts, privately offered trusts, partnerships, joint ventures, limited liability companies and vehicles with similar legal structures; and other instruments with similar economic characteristics. The
Fund considers equity securities to include rights offerings and investments that convert into the equity securities described above. The Fund attempts to invest in companies the portfolio manager believes have been undervalued by the market and are selling at reasonable prices in relation to our assessment of their potential or intrinsic value. A security may be undervalued by the market because of a lack of awareness of the companys intrinsic value
or a lack of recognition of the companys future potential. In addition, a company may be undervalued because it may be temporarily out of favor by the market. The Fund seeks to achieve gains by holding securities the prices of which the portfolio manager believes will increase when other investors recognize the
securities real or potential worth or when the company returns to its historical rates of growth and profitability. The Fund may invest in U.S. and foreign (which may include emerging market) companies. Foreign companies may include the following: companies that are incorporated outside of the U.S., but are headquartered within the U.S. and traded on a U.S. exchange; companies that are incorporated and headquartered outside
of the U.S., but are traded primarily on a U.S. exchange; and companies that are traded on a non-U.S. exchange and denominated in a foreign currency. The Fund may invest up to 10% of its net assets in securities of foreign companies that are traded on a non-U.S. exchange and denominated in a foreign currency. The
Fund may invest without limitation in other types of foreign companies, including ADRs. ADRs are traded on U.S. exchanges and typically PROSPECTUS AFFILIATED
FUND 9
are issued by a financial institution (often a U.S. bank) acting as a depositary and represent the depositarys holdings of a specified number of shares of a foreign company. An ADR entitles the holder to all dividends and capital gains earned by the underlying foreign securities. The Fund may use derivatives, which are financial instruments that derive their value from the value of an underlying asset, reference rate, or index. The Fund may use derivatives for hedging, including protecting the Funds unrealized gains by hedging against possible adverse fluctuations in the securities markets that may
reduce the market value of the Funds investment portfolio. The Fund also may use derivatives for non-hedging (sometimes referred to as speculative) purposes to enhance returns, efficiently invest excess cash, or quickly gain market exposure. To the extent that the Fund is obligated under a derivatives contract to make a future payment, the Fund will be required to segregate or earmark on its books cash or other liquid assets to cover the Funds future obligations under the contract. This setting aside of assets generally is referred to as cover. The Fund is not registered with the Commodity Futures Trading Commission (or subject to registration or regulation) as a commodity pool operator under the Commodity Exchange Act. Derivatives that the Fund may use include the following:
Options: An option is the right to buy or sell a security (or other financial instrument) at a predetermined price. There are two basic types of options: a call option is the right to buy a security at a specific price; and a put option is the right to sell a security at a specific price. The Fund may buy options or sell
(sometimes called write) options. The Fund may buy or sell standardized options, which typically are listed on an exchange, or buy or sell privately negotiated and customized options, which typically are traded over-the-counter. If the Fund is buying a call option, it has the right to buy the security from the seller of the option. If the Fund is buying a put option, it has the right to sell the security to the seller of the option. Conversely, if the Fund is selling a call option, it must sell the security if the buyer of the option exercises the call option.
If the Fund is selling a put option, it must buy the security from the buyer of the option if the buyer exercises the put option. The Funds use of options is subject to certain restrictions. The Fund may not buy a put option or sell a call option unless the Fund actually holds the security or underlying asset that is the subject of the options contract. The Fund will not buy an option if, as a result of such purchase, more than 10% of its net assets
would be invested in premiums for such options. The Fund only may sell put options to the extent that the cover for such options does PROSPECTUS AFFILIATED
FUND 10
not exceed 15% of its net assets. The Fund only may sell call options with respect to securities having an aggregate market value of less than 25% of its net assets at the time the Fund sells the option.
Futures: Futures and forwards are similar, but futures are traded on an exchange and the counterparty to a futures contract is the clearing corporation for the appropriate exchange. Futures usually are settled in cash, rather than requiring delivery of the instrument. The Fund may buy or write options on futures.
The Fund may sell a security if it no longer meets the Funds investment criteria or for a variety of other reasons, such as to secure gains, limit losses, redeploy assets into opportunities believed to be more promising, or satisfy redemption requests, among others. In considering whether to sell a security, the Fund may
evaluate factors including, but not limited to, the condition of the economy, changes in the issuers competitive position or financial condition, changes in the outlook for the issuers industry, and the Funds valuation target for the security. As with any investment in a mutual fund, investing in the Fund involves risk, including the risk that you may receive little or no return on your investment. When you redeem your shares, they may be worth more or less than what you paid for them, which means that you may lose a portion or all of the money you
invested in the Fund. Before you invest in the Fund, you should carefully evaluate the risks in light of your investment goals. An investment in the Fund held for longer periods over full market cycles typically provides the most favorable results. The Fund invests principally in common stocks and other equity securities. Stock markets may experience significant volatility at times and may fall sharply in response to adverse events. Different segments of the stock market may react differently than other segments and U.S. markets may react differently than foreign
markets. Individual securities also may experience dramatic movements in price. Factors that may affect the markets in general or individual securities include periods of slower growth or recessionary economic conditions, future expectations of poor economic conditions or lack of investor confidence. In addition,
individual securities may be adversely affected by factors such as reduced sales, increased costs or a negative outlook for the future performance of the company. Common stock represents ownership in a company. In claims for assets in a liquidation or bankruptcy and in claims for dividends, common stock has lower
priority than preferred stock and debt securities. Because convertible securities may be exchanged for common stock, they are subject to the risks affecting both equity and fixed income securities, including market, credit and interest rate risk. PROSPECTUS AFFILIATED
FUND 11
Although the Fund maintains a diversified portfolio, from time to time the Fund may favor investments in one or more particular industries or sectors. To the extent that the Fund emphasizes a particular industry or sector, the value of the relevant portion of the Funds investments may fluctuate in response to events
affecting that industry or sector (such as government regulations, resource availability or economic developments) to a greater degree than securities within other industries or sectors. In addition to the risks of overall market movements and risks that are specific to an individual security, the principal risks you assume when investing in the Fund are described below. The Fund attempts to manage these risks through careful security selection, portfolio diversification, and continual portfolio review and
analysis, but there can be no assurance or guarantee that these strategies will be successful in reducing risk. Please see the SAI for a further discussion of strategies employed by the Fund and the risks associated with an investment in the Fund.
Portfolio Management Risk: The strategies used and securities selected by the Funds portfolio management may fail to produce the intended result and the Fund may not achieve its objective. The securities selected for the Fund may not perform as well as other securities that were not selected for the Fund. As a
result, the Fund may suffer losses or underperform other funds with the same investment objective or strategies, even in a rising market.
Large Company Risk: Larger, more established companies may be unable to respond quickly to certain market developments. In addition, larger companies may have slower rates of growth as compared to successful, but less well-established, smaller companies, especially during market cycles corresponding to periods
of economic expansion. Value Investing Risk: The prices of value stocks may lag the stock market for long periods of time if the market fails to recognize the companys intrinsic worth.
Foreign Company Risk: The Funds investment exposure to foreign (which may include emerging market) companies generally is subject to the risk that the value of securities issued by foreign companies may be adversely affected by political, economic and social volatility, lack of transparency, or inadequate
regulatory and accounting standards, inadequate exchange control regulations, foreign taxes, higher transaction and other costs, and delays in settlement. A change in the value of a foreign currency relative to the U.S. dollar will change the value of securities held by the Fund that are denominated in that foreign
currency, including the value of any income distributions payable to the Fund as a holder of such securities. In addition, foreign company securities may be subject to less trading volume and liquidity, which may lead to greater price fluctuation. The Fund may invest PROSPECTUS AFFILIATED
FUND 12
in securities of issuers whose economic fortunes are linked to non-U.S. markets, but which principally are traded on a U.S. securities market or exchange and denominated in U.S. dollars. To the extent that the Fund invests in this manner, the percentage of the Funds assets that is exposed to the risks associated with
foreign companies may exceed the percentage of the Funds assets that is invested in foreign securities that principally are traded outside of the U.S. The Funds investments in companies tied to emerging markets generally are subject to more risks than investments in developed market companies because they tend to
have less liquidity, greater price volatility, smaller market capitalizations, less government regulation, and less extensive and frequent accounting, financial and other reporting requirements.
Derivatives Risk: Derivatives are subject to certain risks, including the risk that the value of the derivative may not correlate with the value of the underlying security, rate, or index in the manner anticipated by portfolio management. Derivatives may be more sensitive to changes in economic or market conditions and
may become illiquid. Derivatives are subject to leverage risk, which may increase the Funds volatility, and counterparty risk, which means that the counterparty may fail to perform its obligations under the derivative contract.
Because derivatives may involve a small amount of cash relative to the total amount of the transaction (known as leverage), the magnitude of losses from derivatives may be greater than the amount originally invested by the Fund in the derivative instrument. The Funds use of leverage may make the Fund more volatile.
The Fund will be required to identify and earmark permissible liquid assets to cover its obligations under these transactions. The Fund may have to liquidate positions before it is desirable to do so in order to fulfill its requirements to provide asset coverage for derivative transactions. The Funds use of derivatives may
affect the amount, timing and character of distributions, and may cause the Fund to realize more short-term capital gain and ordinary income than if the Fund did not use derivatives. There is no assurance that the Fund will be able to employ its derivatives strategy successfully. Whether the Funds use of derivatives is
successful will depend on, among other things, the Funds ability to correctly forecast market movements, company and industry valuation levels and trends, changes in foreign exchange rates, and other factors. If the Fund incorrectly forecasts these and other factors, the Funds performance could suffer. Although
hedging may reduce or eliminate losses, it may also reduce or eliminate gains.
Portfolio Turnover. The Fund may engage in active and frequent trading in seeking to achieve its investment objective, and may have a portfolio turnover rate of over 100% annually. Increased portfolio turnover may result in higher brokerage fees or other transaction costs. These costs are not reflected in the PROSPECTUS AFFILIATED
FUND 13
Funds annual operating expenses or in the expense example, but such costs can reduce the Funds investment performance. If the Fund realizes capital gains when it sells investments, it generally must pay those gains to shareholders, resulting in higher taxes when Fund shares are held in a taxable account. The Financial
Highlights table at the end of this prospectus shows the Funds portfolio turnover rate during past fiscal years. Temporary or Defensive Investments. The Fund seeks to remain fully invested in accordance with its investment objective. To respond to adverse economic, market, political or other conditions that are unfavorable for investors, however, the Fund may invest its assets in a temporary defensive manner by holding all or a
substantial portion of its assets in cash, cash equivalents or other high quality short-term investments, money market fund shares, and other money market instruments. The Fund also may invest in these types of securities or hold cash while looking for suitable investment opportunities or to maintain liquidity. When
investing in this manner, the Fund may be unable to achieve its investment objective. DISCLOSURE OF PORTFOLIO HOLDINGS A description of the Funds policies and procedures regarding the disclosure of the Funds portfolio holdings is available in the SAI and further information is available at www.lordabbett.com. MANAGEMENT AND ORGANIZATION OF THE FUND Board of Directors. The Board oversees the management of the business and affairs of the Fund. The Board meets regularly to review the Funds portfolio investments, performance, expenses, and operations. The Board appoints officers who are responsible for the day-to-day operations of the Fund and who execute
policies authorized by the Board. At least 75 percent of the Board members are independent of Lord Abbett. Each year in December the Board considers whether to approve the continuation of the existing management and administrative services agreements between the Fund and Lord Abbett. A discussion regarding the basis for the Boards approval is available in the Funds semiannual report to shareholders for the six-month
period ended April 30. Investment Adviser. The Funds investment adviser is Lord, Abbett & Co. LLC (Lord Abbett), which is located at 90 Hudson Street, Jersey City, NJ 07302-3973. Founded in 1929, Lord Abbett manages one of the nations oldest mutual fund complexes, and manages approximately $110.3 billion in assets across a full
range of mutual funds, institutional accounts and separately managed accounts, including $2.9 billion for which Lord Abbett provides investment models to managed account sponsors as of December 31, 2011. PROSPECTUS AFFILIATED
FUND 14
Portfolio Manager. The Fund is managed by an experienced portfolio manager responsible for investment decisions together with a team of investment professionals who provide issuer, industry, sector and macroeconomic research and analysis. The SAI contains additional information about portfolio manager
compensation, other accounts managed, and ownership of Fund shares. Daniel H. Frascarelli, Partner and Director, heads the team and is primarily responsible for the day-to-day management of the Fund. Mr. Frascarelli joined Lord Abbett in 1990 and has served as a portfolio manager for one or more investment strategies since 1993. Mr. Frascarelli has been the Funds portfolio manager
since 2009. Management Fee. Lord Abbett is entitled to a management fee based on the Funds average daily net assets. The management fee is accrued daily and payable monthly at the following annual rate: 0.50% on the first $200 million of average daily net assets; For the fiscal year ended October 31, 2011, the effective annual rate of the fee paid to Lord Abbett was 0.31%. In addition, Lord Abbett provides certain administrative services to the Fund pursuant to an Administrative Services Agreement in return for a fee at an annual rate of 0.04% of the Funds average daily net assets.
The Fund pays all of its expenses not expressly assumed by Lord Abbett. Each class of shares represents an investment in the same portfolio of securities, but each has different availability and eligibility criteria, sales charges, expenses, and dividends, allowing you to choose the available class that best meets your needs. You should read this section carefully to determine which class of shares is
best for you and discuss your selection with your financial intermediary. Factors you should consider in choosing a class of shares include:
the amount you plan to invest; the length of time you expect to hold your investment; the total costs associated with your investment, including any sales charges that you pay when you buy or sell your Fund shares and expenses that are paid out of Fund assets over time; whether you qualify for any reduction or waiver of sales charges; whether you plan to take any distributions in the near future; PROSPECTUS AFFILIATED
FUND 15
0.40% on the next $300 million of average daily net assets;
0.375% on the next $200 million of average daily net assets;
0.35% on the next $200 million of average daily net assets; and
0.30% on average daily net assets over $900 million.
the availability of the share class; the services that will be available to you depending on the share class you choose; and the amount of compensation that your financial intermediary will receive depending on the share class you choose. If you plan to invest a large amount and your investment horizon is five years or more, Class A shares may be more advantageous than Class C shares. The higher ongoing annual expenses of Class C shares may cost you more over the long term than the front-end sales charge you would pay on larger purchases of Class
A shares.
Retirement and Benefit Plans and Fee-Based Programs
The availability of share classes and certain features of share classes may depend on the type of financial intermediary through which you invest, including retirement and benefit plans and fee-based programs. As used in this prospectus, the term retirement and benefit plans refers to qualified and non-qualified retirement plans, deferred compensation plans and other employer-sponsored retirement, savings or benefit plans,
such as defined benefit plans, 401(k) plans, 457 plans, 403(b) plans, profit-sharing plans, and money purchase pension plans, but does not include Individual Retirement Accounts (IRAs), unless explicitly stated elsewhere in the prospectus. As used in this prospectus, the term fee-based programs refers to programs sponsored by financial intermediaries that provide fee-based investment advisory programs or services
(including mutual fund wrap programs) or a bundled suite of services, such as brokerage, investment advice, research, and account management, for which the client pays a fee based on the total asset value of the clients account for all or a specified number of transactions, including mutual fund purchases, in the account during a certain period. Key Features of Share Classes. The following table compares key features of each share class. You should review the fee table and example at the front of this prospectus carefully before choosing your share class. As a general matter, share classes with relatively lower expenses tend to have relatively higher dividends.
Your financial intermediary can help you decide which class meets your goals. Not all share classes may be available through your financial intermediary. Your financial intermediary may receive different compensation depending upon which class you choose. PROSPECTUS AFFILIATED
FUND 16
Class A Shares
Availability
Available through financial intermediaries to individual investors, certain retirement and benefit plans, and fee-based advisory programs
Front-End Sales Charge
Up to 5.75%; reduced or waived for large purchases and certain investors; eliminated for purchases of $1 million or more
CDSC
1.00% on redemptions made within one year following purchases of $1 million or more; waived under certain circumstances
Distribution and Service (12b-1) Fee(1)
0.35% of the Funds average daily net assets, comprised of:
Conversion
None
Exchange Privilege(2)
Class A shares of most Lord Abbett Funds
Class B Shares
Availability Class B shares no longer are available for purchase by new or existing investors and only will be issued in connection with (i) an exchange of Class B shares from another Lord Abbett Fund or (ii) a reinvestment of a dividend and/or capital gain distribution.
Front-End Sales Charge
None
CDSC
Up to 5.00% on redemptions; reduced over time and eliminated after sixth anniversary of purchase; waived under certain circumstances
Distribution and Service (12b-1) Fee(1)
1.00% of the Funds average daily net assets, comprised of:
Conversion
Automatic conversion to Class A shares after approximately the eighth anniversary of purchase(3)
Exchange Privilege(2)
Class B shares of most Lord Abbett Funds
Class C Shares
Availability
Available through financial intermediaries to individual investors and certain retirement and benefit plans; purchases generally must be under $500,000
Front-End Sales Charge
None
CDSC
1.00% on redemptions made before the first anniversary of purchase; waived under certain circumstances
Distribution and Service (12b-1) Fee(1)
1.00% of the Funds average daily net assets, comprised of:
Conversion
None
Exchange Privilege(2)
Class C shares of most Lord Abbett Funds PROSPECTUS AFFILIATED
FUND 17
Service Fee: 0.25%
Distribution Fee: 0.10%
Service Fee: 0.25%
Distribution Fee: 0.75%
Service Fee: 0.25%
Distribution Fee: 0.75%
Class F Shares
Availability Available only to eligible fee-based advisory programs and certain registered investment advisers
Front-End Sales Charge
None
CDSC
None
Distribution and Service (12b-1) Fee(1)
0.10% of the Funds average daily net assets, comprised of:
Conversion
None
Exchange Privilege(2)
Class F shares of most Lord Abbett Funds
Class I Shares
Availability
Available only to eligible investors
Front-End Sales Charge
None
CDSC
None
Distribution and Service (12b-1) Fee(1)
None
Conversion
None
Exchange Privilege(2)
Class I shares of most Lord Abbett Funds
Class P Shares
Availability
Available on a limited basis through certain financial intermediaries and retirement and benefit plans(4)
Front-End Sales Charge
None
CDSC
None
Distribution and Service (12b-1) Fee(1)
0.45% of the Funds average daily net assets, comprised of:
Conversion
None
Exchange Privilege(2)
Class P shares of most Lord Abbett Funds
Class R2 Shares
Availability
Available only to eligible retirement and benefit plans
Front-End Sales Charge
None
CDSC
None
Distribution and Service (12b-1) Fee(1)
0.60% of the Funds average daily net assets, comprised of:
Conversion
None
Exchange Privilege(2)
Class R2 shares of most Lord Abbett Funds PROSPECTUS AFFILIATED
FUND 18
Service Fee: None
Distribution Fee: 0.10%
Service Fee: 0.25%
Distribution Fee: 0.20%
Service Fee: 0.25%
Distribution Fee: 0.35%
Class R3 Shares
Availability
Available only to eligible retirement and benefit plans
Front-End Sales Charge
None
CDSC
None
Distribution and Service (12b-1) Fee(1)
0.50% of the Funds average daily net assets, comprised of:
Conversion
None
Exchange Privilege(2)
Class R3 shares of most Lord Abbett Funds
(1) The 12b-1 plan provides that the maximum payments that may be authorized by the Board are: for Class A shares, 0.50%; for Class P shares, 0.75%; and for Class B, C, F, R2, and R3 shares, 1.00%. The rates shown in the table above are the 12b-1 rates currently authorized by the Board for each share class and may be changed only upon authorization of the Board. The 12b-1 plan does not permit any payments for Class I shares. (2)
Ask your financial intermediary about the Lord Abbett Funds available for exchange.
(3)
Class B shares automatically will convert to Class A shares on the 25th day of the month (or, if the 25th is not a business day, the next business day thereafter) following the eighth anniversary of the day on which the purchase order was accepted.
(4)
Class P shares are closed to substantially all new investors. Investment Minimums. The minimum initial and additional amounts shown below vary depending on the class of shares you buy and the type of account. Certain financial intermediaries may impose different restrictions than those described below. Consult your financial intermediary for more information. Class B shares
no longer are available for purchase by new or existing investors and only will be issued in connection with (i) an exchange of Class B shares from another Lord Abbett Fund or (ii) a reinvestment of a dividend and/or capital gain distribution. For Class I shares, the minimum investment shown below applies to certain types
of institutional investors. Class P shares are closed to substantially all new investors. Investment Minimums Initial/Additional Investments Class A and C F, P, R2, and R3 I
General
$250/No minimum
No minimum See below Retirement and Benefit Plans
No minimum
No minimum
No minimum
IRAs and Uniform Gifts or Transfers to Minor Accounts
$250/No minimum
N/A
N/A
SIMPLE IRAs
No minimum
N/A
N/A
Invest-A-Matic
$250/$50
N/A N/A Class I Share Minimum Investment. Unless otherwise provided, the minimum amount of an initial investment in Class I shares is $1 million. There is no minimum initial investment for (i) purchases through or by registered investment advisers, bank trust departments, and other financial intermediaries otherwise eligible to
purchase Class I shares that charge a fee for services that include investment advisory or management services or (ii) purchases by retirement and PROSPECTUS AFFILIATED
FUND 19
Service Fee: 0.25%
Distribution Fee: 0.25%
benefit plans meeting the Class I eligibility requirements described below. These investment minimums may be suspended, changed, or withdrawn by Lord Abbett Distributor LLC (Lord Abbett Distributor). Additional Information About the Availability of Share Classes Class B Shares. The Fund no longer offers Class B shares for new or additional investments. Existing shareholders of Class B shares may reinvest dividends into Class B shares and exchange their Class B shares for Class B shares of other Lord Abbett Funds as permitted by the current exchange privileges. The 12b-1 fee,
CDSC, and conversion features will continue to apply to Class B shares held by shareholders. Any purchase requests for Class B shares will be deemed to be a purchase request for Class A shares and will be subject to any applicable sales charge. Class C Shares. The Fund will not accept purchases of Class C shares of $500,000 or more, or in any amount that, when combined with the value of all shares of Eligible Funds (as defined below) under the terms of rights of accumulation, would result in the investor holding more than $500,000 of shares of Eligible Funds
at the time of such purchase, unless an appropriate representative of the investors broker-dealer firm (or other financial intermediary, as applicable) provides written authorization for the transaction. Please contact Lord Abbett Distributor with any questions regarding eligibility to purchase Class C shares based on the
prior written authorization from the investors broker-dealer firm or other financial intermediary. With respect to qualified retirement plans, the Fund will not reject a purchase of Class C shares by such a plan in the event that a purchase amount, when combined with the value of all shares of Eligible Funds under the terms of rights of accumulation, would result in the plan holding more than $500,000 of shares of
Eligible Funds at the time of the purchase. Any subsequent purchase orders submitted by the plan, however, would be subject to the Class C share purchase limit policy described above. Such subsequent purchases would be considered purchase orders for Class R3 shares. Class F Shares. Class F shares generally are available to investors participating in fee-based advisory programs that have (or whose trading agents have) an agreement with Lord Abbett Distributor and to investors that are clients of certain registered investment advisers that have an agreement with Lord Abbett Distributor,
if it so deems appropriate. Class I Shares. Class I shares are available for purchase by the following entities:
Institutional investors, including companies, foundations, trusts and endowments, and other entities determined by Lord Abbett Distributor to be institutional investors, making an initial minimum investment of $1 million PROSPECTUS AFFILIATED
FUND 20
or more, provided that the shares are not purchased through a brokerage account, trading platform, or advisory program sponsored or maintained by a broker or dealer primarily engaged in the retail securities business; Retirement and benefit plans investing directly or through an intermediary, provided that in the case of an intermediary, the intermediary has entered into a special arrangement with the Fund and/or Lord Abbett Distributor specifically for such purchases;
Registered investment advisers investing on behalf of their advisory clients, provided that in the case of a registered investment adviser that is also a registered broker-dealer, the firm has not entered into any agreement or arrangement whereby Lord Abbett makes payments to the firm out of its own resources for
various services, such as marketing support, training and education activities, and other services for which Lord Abbett may make such revenue sharing payments to the firm; and Bank trust departments and trust companies purchasing shares for their clients, provided that the bank or trust company (and its trading agent, if any) has entered into a special arrangement with the Fund and/or Lord Abbett Distributor specifically for such purchases.
Class I shares also are available for purchase by each registered investment company within the Lord Abbett Family of Funds that operates as a fund of funds and, at the discretion of Lord Abbett Distributor, other registered investment companies that are not affiliated with Lord Abbett and operate as funds of funds. Shareholders who held Class I shares on July 9, 2010 may continue to hold, purchase, exchange, and redeem Class I shares, provided that there has been no change in the registration of the account since that date. Financial intermediaries should contact Lord Abbett Distributor to determine whether the financial intermediary may be eligible for such purchases. Class P Shares. Class P shares are closed to substantially all new investors. Existing shareholders holding Class P shares may continue to hold their Class P shares and make additional purchases, redemptions, and exchanges. Class P shares also are available for orders made by or on behalf of a financial intermediary for
clients participating in an IRA rollover program sponsored by the financial intermediary that operates the program in an omnibus recordkeeping environment and has entered into special arrangements with the Fund and/or Lord Abbett Distributor specifically for such orders. Class R2 and R3 (collectively referred to as Class R) Shares. Class R shares generally are available through: PROSPECTUS AFFILIATED
FUND 21
employer-sponsored retirement and benefit plans where the employer, administrator, recordkeeper, sponsor, related person, financial intermediary, or other appropriate party has entered into an agreement with the Fund or Lord Abbett Distributor to make Class R shares available to plan participants; or dealers that have entered into certain approved agreements with Lord Abbett Distributor. Class R shares also are available for orders made by or on behalf of a financial intermediary for clients participating in an IRA rollover program sponsored by the financial intermediary that operates the program in an omnibus recordkeeping environment and has entered into special arrangements with the Fund and/or
Lord Abbett Distributor specifically for such orders. Class R shares generally are not available to retail non-retirement accounts, traditional and Roth IRAs, Coverdell Education Savings Accounts, SEPs, SARSEPs, SIMPLE IRAs, individual 403(b) plans, or 529 college savings plans. As an investor in the Fund, you may pay one of two types of sales charges: a front-end sales charge that is deducted from your investment when you buy Fund shares or a CDSC that applies when you sell Fund shares. Class A Share Front-End Sales Charge. Front-end sales charges are applied only to Class A shares. You buy Class A shares at the offering price, which is the NAV plus a sales charge. You pay a lower rate as the size of your investment increases to certain levels called breakpoints. You do not pay a sales charge on the
Funds distributions or dividends you reinvest in additional Class A shares. The table below shows the rate of sales charge you pay (expressed as a percentage of the offering price and the net amount you invest), depending on the amount you purchase. PROSPECTUS AFFILIATED
FUND 22
Front-End Sales Charge Class A Shares
Your
Front-End Sales
Front-End Sales
To Compute Offering Maximum Dealers
Less than $50,000
5.75%
6.10%
.9425
5.00%
$50,000 to $99,999
4.75%
4.99%
.9525
4.00%
$100,000 to $249,999
3.95%
4.11%
.9605
3.25%
$250,000 to $499,999
2.75%
2.83%
.9725
2.25%
$500,000 to $999,999
1.95%
1.99%
.9805
1.75%
$1,000,000 and over
No Sales Charge No Sales Charge 1.0000
See Dealer Concessions on Class A Share Purchases Without a Front-End Sales Charge. CDSC. Regardless of share class, the CDSC is not charged on shares acquired through reinvestment of dividends or capital gains distributions and is charged on the original purchase cost or the current market value of the shares at the time they are redeemed, whichever is lower. In addition, repayment of loans under
certain retirement and benefit plans will constitute new sales for purposes of assessing the CDSC. To minimize the amount of any CDSC, the Fund redeems shares in the following order:
1.
shares acquired by reinvestment of dividends and capital gains (always free of a CDSC); 2. shares held for six years or more (Class B), or one year or more (Class A and Class C); and 3. shares held the longest before the sixth anniversary of their purchase (Class B), or before the first anniversary of their purchase (Class A and Class C). If you buy Class A shares of the Fund under certain purchases with a front-end sales charge waiver or if you acquire Class A shares of the Fund in exchange for Class A shares of another Lord Abbett Fund subject to a CDSC, and you redeem any of the Class A shares before the first day of the month in which the one-
year anniversary of your purchase falls, a CDSC of 1% normally will be collected. Class F, I, P, R2, and R3 shares are not subject to a CDSC. If you acquire Fund shares through an exchange from another Lord Abbett Fund that originally were purchased subject to a CDSC and you redeem before the applicable CDSC period has expired, you will be charged the CDSC. The CDSC will be remitted to the appropriate party. PROSPECTUS AFFILIATED
FUND 23
Investment
Charge as a % of
Offering Price
Charge as a % of Your
Investment
Price Divide NAV by
Concession as a % of
Offering Price
Note: The above percentages may vary for particular investors due to rounding.
Class B Share CDSC. The CDSC for Class B shares normally applies if you redeem your shares before the sixth anniversary of the day on which the purchase order was accepted. The CDSC will be remitted to Lord Abbett Distributor. The CDSC declines the longer you own your shares, according to the following
schedule:
CDSC Class B Shares
Anniversary of the Day on CDSC on Redemptions
Before the 1st
5.0%
On the 1st, before the 2nd
4.0%
On the 2nd, before the 3rd
3.0%
On the 3rd, before the 4th
3.0%
On the 4th, before the 5th
2.0%
On the 5th, before the 6th
1.0%
On or after the 6th anniversary(2)
None
(1) The anniversary is the same calendar day in each respective year after the date of purchase. For example, the anniversary for shares purchased on May 1st will be May 1st of each succeeding year. (2)
Class B shares automatically will convert to Class A shares on the 25th day of the month (or, if the 25th is not a business day, the next business day thereafter) following the eighth anniversary of the day on which the purchase order was accepted. Class C Share CDSC. The 1% CDSC for Class C shares normally applies if you redeem your shares before the first anniversary of your purchase. The CDSC will be remitted to Lord Abbett Distributor. SALES CHARGE REDUCTIONS AND WAIVERS Please inform the Fund or your financial intermediary at the time of your purchase of Fund shares if you believe you qualify for a reduced front-end sales charge. More information about sales charge reductions and waivers is available free of charge at www.lordabbett.com/flyers/breakpoints_info.pdf. This information
also may be reached at www.lordabbett.com by selecting the relevant Fund from the Fund Finder menu and clicking on the Performance & Pricing tab under the Mutual Fund Detail section, and then clicking on the More Information link next to the Price at Breakpoints table. Reducing Your Class A Share Front-End Sales Charge. You may purchase Class A shares at a discount if you qualify under the circumstances outlined below. To receive a reduced front-end sales charge, you must let the Fund or your financial intermediary know at the time of your purchase of Fund shares that you
believe you qualify for a discount. If you or a related party have holdings of Eligible Funds (as defined below) in other accounts with your PROSPECTUS AFFILIATED
FUND 24
Which the Purchase
Order was Accepted(1)
as a % of Amount
Subject to CDSC
financial intermediary or with other financial intermediaries that may be combined with your current purchases in determining the sales charge as described below, you must let the Fund or your financial intermediary know. You may be asked to provide supporting account statements or other information to allow us or
your financial intermediary to verify your eligibility for a discount. If you or your financial intermediary do not notify the Fund or provide the requested information, you may not receive the reduced sales charge for which you otherwise qualify. Class A shares may be purchased at a discount if you qualify under any of
the following conditions:
Larger Purchases You may reduce or eliminate your Class A front-end sales charge by purchasing Class A shares in greater quantities. The breakpoint discounts offered by the Fund are indicated in the table under Sales Charges Class A Share Front-End Sales Charge. Rights of Accumulation A Purchaser (as defined below) may combine the value of Class A, B, C, F, and P shares of any Eligible Fund currently owned with a new purchase of Class A shares of any Eligible Fund in order to reduce the sales charge on the new purchase. Class I, R2, and R3 share holdings may not be
combined for these purposes. To the extent that your financial intermediary is able to do so, the value of Class A, B, C, F, and P shares of Eligible Funds determined for the purpose of reducing the sales charge of a new purchase under the Rights of Accumulation will be calculated at the higher of: (1) the aggregate current maximum offering price of your
existing Class A, B, C, F, and P shares of Eligible Funds; or (2) the aggregate amount you invested in such shares (including dividend reinvestments but excluding capital appreciation) less any redemptions. You should retain any information and account records necessary to substantiate the historical amounts you and any
related Purchasers have invested in Eligible Funds. You must inform the Fund and/or your financial intermediary at the time of purchase if you believe your purchase qualifies for a reduced sales charge and you may be requested to provide documentation of your holdings in order to verify your eligibility. If you do not do
so, you may not receive all sales charge reductions for which you are eligible.
Letter of Intention In order to reduce your Class A front-end sales charge, a Purchaser may combine purchases of Class A, C, F, and P shares of any Eligible Fund the Purchaser intends to make over the next 13 months in determining the applicable sales charge. The 13-month Letter of Intention period commences
on the day that the Letter of Intention is received by the Fund, and the Purchaser must tell the Fund that later purchases are subject to the Letter of Intention. Purchases submitted prior to the date the Letter of Intention is received by the Fund are not counted toward the sales charge reduction. Current holdings under
Rights of Accumulation may be included in a Letter of Intention in order to reduce the sales charge for purchases PROSPECTUS AFFILIATED
FUND 25
during the 13-month period covered by the Letter of Intention. Shares purchased through reinvestment of dividends or distributions are not included. Class I, R2, and R3 share holdings may not be combined for these purposes. Class A shares valued at 5% of the amount of intended purchases are escrowed and may be
redeemed to cover the additional sales charges payable if the intended purchases under the Letter of Intention are not completed. The Letter of Intention is neither a binding obligation on you to buy, nor on the Fund to sell, any or all of the intended purchase amount.
Purchaser
A Purchaser includes: (1) an individual; (2) an individual, his or her spouse, and children under the age of 21; (3) retirement and benefit plans including a 401(k) plan, profit-sharing plan, money purchase plan, defined benefit plan, and 457(b) plan sponsored by a governmental entity, non-profit organization, school district or church to which employer contributions are made, as well as SIMPLE IRA plans and SEP-IRA plans; or (4) a
trustee or other fiduciary purchasing shares for a single trust, estate or single fiduciary account. An individual may include under item (1) his or her holdings in Eligible Funds as described above in IRAs, as a sole participant of a retirement and benefit plan sponsored by the individuals business, and as a participant in a 403(b) plan to which only pre-tax salary deferrals are made. An individual and his or her spouse may include
under item (2) their holdings in IRAs, and as the sole participants in retirement and benefit plans sponsored by a business owned by either or both of them. A retirement and benefit plan under item (3) includes all qualified retirement and benefit plans of a single employer and its consolidated subsidiaries, and all qualified retirement and benefit plans of multiple employers registered in the name of a single bank trustee.
Eligible Fund
An Eligible Fund is any Lord Abbett Fund except for (1) Lord Abbett Series Fund, Inc.; (2) Lord Abbett U.S. Government & Government Sponsored Enterprises Money Market Fund, Inc. (Money Market Fund) (except for holdings in Money Market Fund which are attributable to any shares exchanged from the Lord Abbett Funds); and (3) any other fund the shares of which are not available to the investor at the time of the
transaction due to a limitation on the offering of the funds shares. Front-End Sales Charge Waivers. Class A shares may be purchased without a front-end sales charge under any of the following conditions:
purchases of $1 million or more (may be subject to a CDSC); purchases by retirement and benefit plans with at least 100 eligible employees (may be subject to a CDSC); purchases for retirement and benefit plans made through financial intermediaries that perform participant recordkeeping or other administrative services for the plans and that have entered into special arrangements with the Fund and/or Lord Abbett Distributor specifically for such purchases (may be subject to a
CDSC); PROSPECTUS AFFILIATED
FUND 26
purchases made by or on behalf of financial intermediaries for clients that pay the financial intermediaries fees in connection with a fee-based advisory program, provided that the financial intermediaries or their trading agents have entered into special arrangements with the Fund and/or Lord Abbett Distributor
specifically for such purchases; purchases by insurance companies and/or their separate accounts to fund variable insurance contracts, provided that the insurance company provides recordkeeping and related administrative services to the contract owners and has entered into special arrangements with the Fund and/or Lord Abbett Distributor
specifically for such purchases; purchases made with dividends and distributions on Class A shares of another Eligible Fund; purchases representing repayment under the loan feature of the Lord Abbett prototype 403(b) plan for Class A shares; purchases by employees of any consenting securities dealer having a sales agreement with Lord Abbett Distributor; purchases by trustees or custodians of any pension or profit sharing plan, or payroll deduction IRA for the employees of any consenting securities dealer having a sales agreement with Lord Abbett Distributor; purchases involving the concurrent sale of Class B or C shares of the Fund related to the requirements of a settlement agreement that the broker-dealer entered into with a regulatory body relating to share class suitability. These sales transactions will be subject to the assessment of any applicable CDSCs (although the
broker-dealer may pay on behalf of the investor or reimburse the investor for any such CDSC), and any investor purchases subsequent to the original concurrent transactions will be at the applicable public offering price, which may include a sales charge; purchases by non-U.S. pension funds or insurance companies by or through local intermediaries, provided that Class A shares have been approved by and/or registered with a relevant local authority and that Lord Abbett Distributor has entered into special arrangements with a local financial intermediary in connection
with the distribution or placement of such shares; and certain other types of investors may qualify to purchase Class A shares without a front-end sales charge as described in the SAI. CDSC Waivers. The CDSC generally will not be assessed on Class A, B, or C shares under the circumstances listed in the table below. Certain other types of redemptions may qualify for a CDSC waiver. Documentation may be required and some limitations may apply. PROSPECTUS AFFILIATED
FUND 27
CDSC Waivers
Share Class(es)
Benefit payments under retirement and benefit plans in connection with loans, hardship withdrawals, death, disability, retirement, separation from service, or any excess distribution under retirement and benefit plans
A, B, C
Eligible mandatory distributions under the Internal Revenue Code of 1986
A, B, C
Redemptions by retirement and benefit plans made through financial intermediaries that have special arrangements with the Fund and/or Lord Abbett Distributor, provided the plan has not redeemed all, or substantially all, of its assets from the Lord Abbett Funds
A
Redemptions by retirement and benefit plans made through financial intermediaries that have special arrangements with the Fund and/or Lord Abbett Distributor that include the waiver of CDSCs and that initially were entered into prior to December 2002
A
Class A and Class C shares that are subject to a CDSC and held by certain 401(k) plans for which the Funds transfer agent provides plan administration and recordkeeping services and which offer Lord Abbett Funds as the only investment options to the plans participants no longer will be subject to the CDSC upon the 401(k) plans transition to a financial intermediary that: (1) provides recordkeeping services to the plan; (2) offers other mutual funds in addition to the Lord Abbett Funds as investment
options for the plans participants; and (3) has entered into a special arrangement with Lord Abbett to facilitate the 401(k) plans transition to the financial intermediary
A, C
Death of the shareholder
B, C
Redemptions under Div-Move and Systematic Withdrawal Plans (up to 12% per year)
B, C Concurrent Sales. A broker-dealer may pay on behalf of an investor or reimburse an investor for a CDSC otherwise applicable in the case of transactions involving purchases through such broker-dealer where the investor concurrently is selling his or her holdings in Class B or C shares of the Fund and buying Class A
shares of the Fund, provided that the purchases are related to the requirements of a settlement agreement that the broker-dealer entered into with a regulatory body relating to share class suitability. Reinvestment Privilege. If you redeem Class A or B shares of the Fund, you may reinvest some or all of the proceeds in the same class of any Eligible Fund on or before the 60th day after the redemption without a sales charge unless the reinvestment would be prohibited by the Funds frequent trading policy. Special tax
rules may apply. Please see the SAI for more information. If you paid a CDSC when you redeemed your shares, you will be credited with the amount of the CDSC. All accounts involved must have the same registration. This privilege does not apply to purchases made through Invest-A-Matic or other automatic
investment services. FINANCIAL INTERMEDIARY COMPENSATION As part of a plan for distributing shares, authorized financial intermediaries that sell the Funds shares and service its shareholder accounts receive sales and service compensation. Additionally, authorized financial intermediaries may charge a fee to effect transactions in Fund shares. PROSPECTUS AFFILIATED
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Sales compensation originates from sales charges that are paid directly by shareholders and 12b-1 distribution fees that are paid by the Fund out of share class assets. Service compensation originates from 12b-1 service fees. Because 12b-1 fees are paid on an ongoing basis, over time the payment of such fees will increase the
cost of an investment in the Fund, which may be more than the cost of other types of sales charges. The Fund accrues 12b-1 fees daily at annual rates shown in the Fees and Expenses table above based upon average daily net assets. The portion of the distribution and service (12b-1) fees that are paid to financial
intermediaries for each share class is as follows:
Class
Fee(1) A(2)
B(2)
C(2) F
I
P
R2
R3 Service 0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
Distribution
0.75%
0.20%
0.35%
0.25%
(1)
The Fund may designate a portion of the aggregate fee as attributable to service activities for purposes of calculating Financial Industry Regulatory Authority, Inc. sales charge limitations.
(2) For purchases of Class A shares without a front-end sales charge and for which Lord Abbett Distributor pays distribution-related compensation, and for all purchases of Class B and Class C shares, the 12b-1 payments shall commence 13 months after purchase. Lord Abbett Distributor may pay 12b-1 fees to authorized financial intermediaries or use the fees for other distribution purposes, including revenue sharing. The amounts paid by the Fund need not be directly related to expenses. If Lord Abbett Distributors actual expenses exceed the fee paid to it, the Fund will not have
to pay more than that fee. Conversely, if Lord Abbett Distributors expenses are less than the fee it receives, Lord Abbett Distributor will keep the excess amount of the fee. Sales Activities. The Fund may use 12b-1 distribution fees to pay authorized financial intermediaries to finance any activity that primarily is intended to result in the sale of shares. Lord Abbett Distributor uses its portion of the distribution fees attributable to the shares of a particular class for activities that primarily are
intended to result in the sale of shares of such class. These activities include, but are not limited to, printing of prospectuses and statements of additional information and reports for anyone other than existing shareholders, preparation and distribution of advertising and sales material, expenses of organizing and conducting
sales seminars, additional payments to authorized financial intermediaries, maintenance of shareholder accounts, the cost necessary to provide distribution-related services or personnel, travel, office expenses, equipment and other allocable overhead. PROSPECTUS AFFILIATED
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Service Activities. Lord Abbett Distributor may pay 12b-1 service fees to authorized financial intermediaries for any activity that primarily is intended to result in personal service and/or the maintenance of shareholder accounts or certain retirement and benefit plans. Any portion of the service fees paid to Lord Abbett
Distributor will be used to service and maintain shareholder accounts. Dealer Concessions on Class A Share Purchases With a Front-End Sales Charge. See Sales Charges Class A Share Front-End Sales Charge for more information. Dealer Concessions on Class A Share Purchases Without a Front-End Sales Charge. Except as otherwise set forth in the following paragraphs, Lord Abbett Distributor may pay Dealers distribution-related compensation (i.e., concessions) according to the schedule set forth below under the following circumstances:
purchases of $1 million or more; purchases by certain retirement and benefit plans with at least 100 eligible employees; or purchases for certain retirement and benefit plans made through financial intermediaries that perform participant recordkeeping or other administrative services for the plans in connection with multiple fund family recordkeeping platforms and have entered into special arrangements with the Fund and/or Lord Abbett
Distributor specifically for such purchases (Alliance Arrangements). Dealers receive concessions described below on purchases made within a 12-month period beginning with the first NAV purchase of Class A shares for the account. The concession rate resets on each anniversary date of the initial NAV purchase, provided that the account continues to qualify for treatment at NAV.
Current holdings of Class B, C, and P shares of Eligible Funds will be included for purposes of calculating the breakpoints in the schedule below and the amount of the concessions payable with respect to the Class A share investment. Concessions may not be paid with respect to Alliance Arrangements unless Lord
Abbett Distributor can monitor the applicability of the CDSC. Financial intermediaries should contact Lord Abbett Distributor for more complete information on the commission structure. PROSPECTUS AFFILIATED
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Dealer Concession Schedule
The dealer concession received is based on the amount of the Class A share investment as follows:
Class A Investments
Front-End Sales Charge*
Dealers Concession
$1 million to $5 million
None
1.00%
Next $5 million above that
None
0.55%
Next $40 million above that
None
0.50%
Over $50 million
None
0.25%
* Class A shares purchased without a sales charge will be subject to a 1% CDSC if they are redeemed before the first day of the month in which the one-year anniversary of the purchase falls. For Alliance Arrangements involving financial intermediaries offering multiple fund families to retirement and benefit plans, the CDSC normally will be collected only when a plan effects a complete redemption of all or substantially all shares of all Lord Abbett Funds in which the plan is invested. Dealer Concessions on Class B Shares. The Fund no longer offers Class B shares for purchase by new or existing investors (other than through an exchange or reinvestment of a distribution). Accordingly, sales concessions on Class B shares no longer are available. Dealer Concessions on Class C Shares. Lord Abbett Distributor may pay financial intermediaries selling Class C shares a sales concession of up to 1.00% of the purchase price of the Class C shares and Lord Abbett Distributor will collect and retain any applicable CDSC. Dealer Concessions on Class F, I, P, R2, and R3 Shares. Class F, I, P, R2, and R3 shares are purchased at NAV with no front-end sales charge and no CDSC when redeemed. Accordingly, there are no dealer concessions on these shares. Revenue Sharing and Other Payments to Dealers and Financial Intermediaries. In addition to the various sales commissions, concessions and 12b-1 fees described above, Lord Abbett, Lord Abbett Distributor and the Fund may make other payments to dealers and other firms authorized to accept orders for Fund
shares (collectively, Dealers). When used in this subsection, the term Lord Abbett also refers to Lord Abbett Distributor unless the context requires otherwise. Lord Abbett makes payments to Dealers in its sole discretion, at its own expense, out of its own resources (including revenues from advisory fees and 12b-1 fees), and without additional cost to the Fund or the Funds shareholders. This compensation from Lord Abbett is not reflected in the Funds fees and expenses. The payments may be for activities including but not limited to the following:
marketing and/or distribution support for Dealers; the Dealers and their investment professionals shareholder servicing efforts; PROSPECTUS AFFILIATED
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Class A Shares for Certain Purchases Without a Front-End Sales Charge
training and education activities for the Dealers, their investment professionals and/or their clients or potential clients; certain information regarding Dealers and their investment professionals; sponsoring or otherwise bearing, in part or in whole, the costs for other meetings of Dealers investment professionals and/or their clients or potential clients; the purchase of products or services from the Dealers, such as investment research, software tools or data for investment analysis purposes; certain Dealers costs associated with orders relating to Fund shares (ticket charges); and/or
any other permissible activity that Lord Abbett, in its sole discretion, believes would facilitate sales of Fund shares.
Some of these payments sometimes are called revenue sharing payments. Most of these payments are intended to reimburse Dealers directly or indirectly for the costs they or their investment professionals incur in connection with educational seminars and training efforts about the Lord Abbett Funds to enable the
Dealers and their investment professionals to make recommendations and provide services that are suitable and useful in meeting shareholder needs, as well as to maintain the necessary infrastructure to make the Lord Abbett Funds available to shareholders. The costs and expenses related to these efforts may include travel,
lodging, entertainment and meals, among other things. In addition, Lord Abbett Distributor may, for specified periods of time, decide to forgo the portion of front-end sales charges to which it normally is entitled and allow Dealers to retain the full sales charge for sales of Fund shares. In some instances, these temporary
arrangements will be offered only to certain Dealers expected to sell significant amounts of Fund shares. Lord Abbett may benefit from revenue sharing if the Dealer features the Fund in its sales system (such as by placing the Fund on its preferred fund list or giving access on a preferential basis to members of the Dealers sales force or management). In addition, Lord Abbett Distributor may agree to participate in the Dealers
marketing efforts (such as by helping to facilitate or provide financial assistance for conferences, seminars or other programs at which Lord Abbett personnel may make presentations on the Fund to the Dealers sales force). To the extent the Dealers sell more shares of the Fund or retain shares of the Fund in their clients
accounts, Lord Abbett receives greater management and other fees due to the increase in the Funds assets. Although a Dealer may request additional compensation from Lord Abbett to offset costs incurred by the Dealer servicing its clients, the Dealer may earn a profit on these payments, if the amount of the payment
exceeds the Dealers costs. PROSPECTUS AFFILIATED
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Lord Abbett, in its sole discretion, determines the amounts of payments to Dealers, with the exception of purchases of products or services and certain expense reimbursements. Lord Abbett considers many factors in determining the amount of any additional payments to Dealers. These factors include, but are not limited
to, the Dealers sales, assets and redemption rates relating to the Lord Abbett Funds, penetration of Lord Abbett Fund sales among investment professionals within the Dealer, and the potential to expand Lord Abbetts relationship with the Dealer. Lord Abbett also may take into account other business relationships Lord
Abbett has with a Dealer, including other Lord Abbett financial products or advisory services sold by or provided to a Dealer or one or more of its affiliates. Based on its analysis of these factors, Lord Abbett groups most Dealers into tiers, each of which is associated with a particular maximum amount of revenue sharing
payments expressed as a percentage of assets of the Lord Abbett Funds attributable to that particular Dealer. The tiered payments generally range from 0.02% to 0.10% of Lord Abbett Fund assets attributable to the Dealer and/or its investment professionals. For certain relationships with Dealers selling the Lord Abbett
Funds in connection with variable insurance products, Lord Abbett may make payments up to 0.15% of the related Lord Abbett Funds assets and/or sales. However, Lord Abbett from time to time may pay revenue sharing in excess of these amounts to cultivate new relationships with Dealers it believes have the potential
to sell significant amounts of Fund shares. In such cases, Lord Abbett expects that over time, as these relationships grow, the amount of revenue sharing paid to such Dealers would conform to levels that fall within the ranges described above. The payments may not include payments for certain items, such as training and
education activities, other meetings, conferences, and the purchase of certain products and services from the Dealers. On occasion, Lord Abbett also may make payments to Dealers on a basis unrelated to its assessment of the prospects for a long-term distribution relationship. Not all Dealers receive revenue sharing
payments and the amount of revenue sharing may vary for different Dealers. Lord Abbett may choose not to make payments in relation to certain of the Lord Abbett Funds or certain classes of shares of any given Fund. In addition, Lord Abbetts method of calculating revenue sharing payments may be different from the
methods that the Dealers use. Please refer to the SAI for additional information relating to revenue sharing payments. Lord Abbett does not make payments directly to a Dealers investment professionals, but rather makes payments solely to the Dealer itself (with the exception of expense reimbursements related to the attendance of a Dealers investment professionals at training and education meetings and at other meetings involving the
Lord Abbett Funds). The Dealers receiving additional payments include those that may recommend that their clients consider or select the Fund or other Lord Abbett Funds for investment purposes, including those that may include one or more of the Lord Abbett Funds on a preferred or PROSPECTUS AFFILIATED
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recommended list of mutual funds. In some circumstances, the payments may create an incentive for a Dealer or its investment professionals to recommend or sell shares of the Lord Abbett Funds to a client over shares of other funds. For more specific information about any additional payments, including revenue
sharing, made to your Dealer, please contact your investment professional. The Funds portfolio transactions are not used to compensate Dealers that sell shares of the Lord Abbett Funds. Lord Abbett places the Funds portfolio transactions with broker-dealers based on their ability to provide the best net results from the transaction to the Fund. If Lord Abbett determines that a Dealer can
provide the Fund with the best net results, Lord Abbett may place the Funds portfolio transactions with the Dealer even though it sells or has sold shares of the Fund. In no event, however, does or will Lord Abbett give any consideration to a Dealers sales in deciding which Dealer to choose to execute the Funds
portfolio transactions. Lord Abbett maintains policies and procedures designed to ensure that it places portfolio transactions based on the Funds receipt of the best net results. These policies and procedures also permit Lord Abbett to give consideration to proprietary investment research a Dealer may provide to Lord
Abbett. Payments for Recordkeeping, Networking, and Other Services. In addition to the payments from Lord Abbett or Lord Abbett Distributor described above, from time to time, Lord Abbett and Lord Abbett Distributor may have other relationships with financial intermediaries relating to the provision of services to the
Fund, such as providing omnibus account services or executing portfolio transactions for the Fund. The Fund generally may pay recordkeeping fees for services provided to plans where the account is a plan-level or fund-level omnibus account and plan participants have the ability to determine their investments in
particular mutual funds. If your financial intermediary provides these services, Lord Abbett or the Fund may compensate the financial intermediary for these services. In addition, your financial intermediary may have other relationships with Lord Abbett or Lord Abbett Distributor that are not related to the Fund. For example, the Lord Abbett Funds may enter into arrangements with and pay fees to financial intermediaries that provide recordkeeping or other subadministrative services to certain groups of investors in the Lord Abbett Funds, including participants in retirement and benefit plans, investors in mutual fund advisory
programs, investors in variable insurance products and clients of financial intermediaries that operate in an omnibus environment (collectively, Investors). The recordkeeping services typically include: (a) establishing and maintaining Investor accounts and records; (b) recording Investor account balances and changes
thereto; (c) arranging for the wiring of funds; (d) providing statements to Investors; (e) furnishing proxy materials, periodic Lord Abbett Fund reports, prospectuses and other communications to Investors as required; PROSPECTUS AFFILIATED
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(f) transmitting Investor transaction information; and (g) providing information in order to assist the Lord Abbett Funds in their compliance with state securities laws. The fees that the Lord Abbett Funds pay are designed to compensate financial intermediaries for such services. The Lord Abbett Funds also may pay fees to broker-dealers for networking services. Networking services may include but are not limited to:
establishing and maintaining individual accounts and records; providing client account statements; and providing 1099 forms and other tax statements. The networking fees that the Lord Abbett Funds pay to broker-dealers normally result in reduced fees paid by the Fund to the transfer agent, which otherwise would provide these services. Financial intermediaries may charge additional fees or commissions other than those disclosed in this prospectus, such as a transaction based fee or other fee for its service, and may categorize and disclose these arrangements differently than described in the discussion above and in the SAI. You may ask your financial
intermediary about any payments it receives from Lord Abbett or the Fund, as well as about fees and/or commissions it charges. Initial Purchases. Lord Abbett Distributor acts as an agent for the Fund to work with financial intermediaries that buy and sell shares of the Fund on behalf of their clients. Generally, Lord Abbett Distributor does not sell Fund shares directly to investors. Initial purchases of Fund shares may be made through any
financial intermediary that has a sales agreement with Lord Abbett Distributor. Unless you are investing in the Fund through a retirement and benefit plan, fee-based program or other financial intermediary, you and your investment professional may fill out the application and send it to the Fund at the address below. To
open an account through a retirement and benefit plan, fee-based program or other type of financial intermediary, you should contact your financial intermediary for instructions on opening an account. Lord Abbett Affiliated Fund Please do not send account applications, purchase, exchange or redemption orders to Lord Abbetts offices in Jersey City, NJ. Additional Purchases. You may make additional purchases of Fund shares by contacting your investment professional or financial intermediary. If you have direct account privileges with the Fund, you may make additional purchases by: PROSPECTUS AFFILIATED
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P.O. Box 219336
Kansas City, MO 64121
Telephone. If you have established a bank account of record, you may purchase Fund shares by telephone. You or your investment professional should call the Fund at 888-522-2388. Online. If you have established a bank account of record, you may submit a request online to purchase Fund shares by accessing your account online. Please log onto www.lordabbett.com and enter your account information and personal identification data. Mail. You may submit a written request to purchase Fund shares by indicating the name(s) in which the account is registered, the Funds name, the class of shares, your account number, and the dollar amount you wish to purchase. Please include a check for the amount of the purchase, which may be subject to a sales
charge. If purchasing Fund shares by mail, your purchase order will not be accepted or processed until such orders are received by the Fund at P.O. Box 219336, Kansas City, MO 64121. Wire. You may purchase Fund shares via wire by sending your purchase amount to: UMB, N.A., Kansas City, routing number: 101000695, bank account number: 987800033-3, FBO: (your account name) and (your Lord Abbett account number). Specify the complete name of the Fund and the class of shares you wish
to purchase. Proper Form. An initial purchase order submitted directly to the Fund, or the Funds authorized agent (or the agents designee), must contain: (1) an application completed in good order with all applicable requested information; and (2) payment by check or instructions to debit your checking account along with a
canceled check containing account information. Additional purchase requests must include all required information and proper form of payment. See Account Services and Policies Procedures Required by the USA PATRIOT Act for more information. Initial and additional purchases of Fund shares are executed at the NAV next determined after the Fund or the Funds authorized agent receives your purchase order in proper form. The Fund reserves the right to modify, restrict or reject any purchase order (including exchanges). All purchase orders are subject to
acceptance by the Fund. Insufficient Funds. If you request a purchase and your bank account does not have sufficient funds to complete the transaction at the time it is presented to your bank, your requested transaction will be reversed and you will be subject to any and all losses, fees and expenses incurred by the Fund in connection with
processing the insufficient funds transaction. The Fund reserves the right to liquidate all or a portion of your Fund shares to cover such losses, fees and expenses. PROSPECTUS AFFILIATED
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You or your investment professional may instruct the Fund to exchange shares of any class for shares of the same class of any other Lord Abbett Fund, provided that the fund shares to be acquired in the exchange are available to new investors in such other fund. For investors investing through retirement and benefit
plans or fee-based programs, you should contact the financial intermediary that administers your plan or sponsors the fee-based program to request an exchange. If you have direct account privileges with the Fund, you may request an exchange transaction by:
Telephone. You or your investment professional should call the Fund at 888-522-2388. Online. You may submit a request online to exchange your Fund shares by accessing your account online. Please log onto www.lordabbett.com and enter your account information and personal identification data.
Mail. You may submit a written request to exchange your Fund shares by indicating the name(s) in which the account is registered, the Funds name, the class of shares, your account number, the dollar amount or number of shares you wish to exchange, and the name(s) of the Eligible Fund(s) into which you wish to
exchange your Fund shares. If submitting a written request to exchange Fund shares, your exchange request will not be processed until the Fund receives the request in good order at P.O. Box 219336, Kansas City, MO 64121.
The Fund may revoke the exchange privilege for all shareholders upon 60 days written notice. In addition, there are limitations on exchanging Fund shares for a different class of shares, and moving shares held in certain types of accounts to a different type of account or to a new account maintained by a financial
intermediary. Please speak with your financial intermediary if you have any questions. An exchange of Fund shares for shares of another Lord Abbett Fund will be treated as a sale of Fund shares and any gain on the transaction may be subject to federal income tax. You should read the current prospectus for any Lord Abbett Fund into which you are exchanging. You may redeem your Fund shares by contacting your investment professional or financial intermediary. For shareholders investing through retirement and benefit plans or fee-based programs, you should contact the financial intermediary that administers your plan or sponsors the fee-based program to PROSPECTUS AFFILIATED
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redeem your shares. If you are redeeming shares held through a retirement and benefit plan, you may be required to provide the Fund with certain documents completed in good order before your redemption request will be processed. If you have direct account privileges with the Fund, you may redeem your Fund shares by:
Telephone. You may redeem $100,000 or less from your account by telephone. You or your representative should call the Fund at 888-522-2388. Online. You may submit a request online to redeem your Fund shares by accessing your account online. Please log onto www.lordabbett.com and enter your account information and personal identification data. Mail. You may submit a written request to redeem your Fund shares by indicating the name(s) in which the account is registered, the Funds name, your account number, and the dollar amount or number of shares you wish to redeem. If submitting a written request to redeem your shares, your redemption will not be
processed until the Fund receives the request in good order at P.O. Box 219336, Kansas City, MO 64121. Insufficient Account Value. If you request a redemption transaction for a specific amount and your account value at the time the transaction is processed is less than the requested redemption amount, the Fund will deem your request as a request to liquidate your entire account. Redemption Payments. Redemptions of Fund shares are executed at the NAV next determined after the Fund receives your order in proper form. Normally, redemption proceeds are paid within three (but no more than seven) days after your redemption request is received in good order. If you redeem shares that were
recently purchased, the Fund may delay the payment of the redemption proceeds until your check, bank draft, electronic funds transfer or wire transfer has cleared, which may take several days. This process may take up to 15 calendar days for purchases by check to clear. Under unusual circumstances, the Fund may
postpone payment for more than seven days or suspend redemptions, to the extent permitted by law. If you have direct account access privileges, the redemption proceeds will be paid by electronic transfer via an automated clearing house deposit to your bank account on record with the Fund. If there is no bank account on record, your redemption proceeds normally will be paid by check payable to the registered account
owner(s) and mailed to the address to which the account is registered. You may request that your redemption proceeds of at least $1,000 be disbursed by wire to your bank account of record by contacting the Fund and requesting the redemption and wire transfer and providing the proper wiring instructions for your bank
account of record. PROSPECTUS AFFILIATED
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You may request that redemption proceeds be made payable and disbursed to a person or account other than the shareholder(s) of record, provided that you provide a signature guarantee by an eligible guarantor, including a broker or bank that is a member of the medallion stamp program. Please note that a notary public
is not an eligible guarantor. A guaranteed signature by an eligible guarantor is designed to protect you from fraud. The Fund will require a guaranteed signature by an eligible guarantor on requests for redemption that:
Are signed by you in your legal capacity to sign on behalf of another person or entity (i.e., on behalf of an estate or on behalf of a corporation); Request a redemption check to be payable to anyone other than the shareholder(s) of record; Request a redemption check to be mailed to an address other than the address of record; Request redemption proceeds to be payable to a bank other than the bank account of record; or Total more than $100,000. Redemptions in Kind. The Fund reserves the right to pay redemption proceeds in whole or in part by distributing liquid securities from the Funds portfolio. It is not expected that the Fund would pay redemptions by an in kind distribution except in unusual circumstances. If the Fund pays redemption proceeds by
distributing securities in kind, you could incur brokerage or other charges and tax liability, and you will bear market risks until the distributed securities are converted into cash. You should note that your purchase, exchange, and redemption requests may be subject to review and verification on an ongoing basis. Certain of the services and policies described below may not be available through certain financial intermediaries. Contact your financial intermediary for services and policies applicable to you. Account Services Automatic Services for Fund Investors. You may buy or sell shares automatically with the services described below. With each service, you select a schedule and amount, subject to certain restrictions. You may set up most of these services when filling out the application or by calling 888-522-2388. PROSPECTUS AFFILIATED
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For investing
Invest-A-Matic*
You can make fixed, periodic investments ($250 initial and $50 subsequent minimum) into your Fund account by means of automatic money transfers from your bank checking account. See the application for instructions.
Div-Move*
You may automatically reinvest the dividends and distributions from your account into another account in any Eligible Fund ($50 minimum).
*
In the case of financial intermediaries maintaining accounts in omnibus recordkeeping environments or in nominee name that aggregate the underlying accounts purchase orders for Fund shares, the minimum subsequent investment requirements described above will not apply to such underlying accounts.
For selling shares
Systematic Withdrawal Plan
You can make regular withdrawals from most Lord Abbett Funds. Automatic cash withdrawals will be paid to you from your account in fixed or variable amounts. To establish an SWP, the value of your shares for Class A or C must be at least $10,000, and for Class B the value of your shares must be at least $25,000, except in the case of an SWP established for certain retirement and benefit plans, for which there is no minimum. Your shares must be in non-certificate
form.
Class B and C Shares
The CDSC will be waived on redemptions of up to 12% of the current value of your account at the time of your SWP request. For SWP redemptions over 12% per year, the CDSC will apply to the entire redemption. Please contact the Fund for assistance in minimizing the CDSC in this situation. Redemption proceeds due to an SWP for Class B and C shares will be redeemed in the order described under CDSC under Sales Charges. Telephone and Online Purchases and Redemptions. Submitting transactions by telephone or online may be difficult during times of drastic economic or market changes or during other times when communications may be under unusual stress. When initiating a transaction by telephone or online, shareholders should be
aware of the following considerations:
Security. The Fund and its service providers employ verification and security measures for your protection. For your security, telephone and online transaction requests are recorded. You should note, however, that any person with access to your account and other personal information (including personal
identification number) may be able to submit instructions by telephone or online. The Fund will not be liable for relying on instructions submitted by telephone or online that the Fund reasonably believes to be genuine. Online Confirmation. The Fund is not responsible for online transaction requests that may have been sent but not received in good order. Requested transactions received by the Fund in good order are confirmed at the completion of the order and your requested transaction will not be processed unless you receive
the confirmation message. PROSPECTUS AFFILIATED
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(Dollar-cost averaging)
(SWP)
No Cancellations. You will be asked to verify the requested transaction and may cancel the request before it is submitted to the Fund. The Fund will not cancel a submitted transaction once it has been received (in good order) and is confirmed at the end of the telephonic or online transaction. Householding. We have adopted a policy that allows us to send only one copy of the prospectus, proxy material, annual report and semiannual report to certain shareholders residing at the same household. This reduces Fund expenses, which benefits you and other shareholders. If you need additional copies or do not
want your mailings to be householded, please call us at 888-522-2388 or send a written request with your name, the name of your fund or funds, and your account number or numbers to Lord Abbett Family of Funds, P.O. Box 219336, Kansas City, MO 64121. Account Statements. Every investor automatically receives quarterly account statements. Account Changes. For any changes you need to make to your account, consult your investment professional or call the Fund at 888-522-2388. Systematic Exchange. You or your investment professional can establish a schedule of exchanges between the same classes of any other Lord Abbett Fund, provided that the fund shares to be acquired in the exchange are available to new investors in such other fund. Account Policies Pricing of Fund Shares. Under normal circumstances, NAV per share is calculated each business day at the close of regular trading on the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Purchases and sales (including exchanges) of Fund shares are executed at the NAV (subject to any applicable
sales charges) next determined after the Fund or the Funds authorized agent receives your order in proper form. Purchase and sale orders must be placed by the close of trading on the NYSE in order to receive that days NAV; orders placed after the close of trading on the NYSE will receive the next business days NAV.
Fund shares will not be priced on holidays when the NYSE is closed for trading. In the case of purchase, redemption, or exchange orders placed through your financial intermediary, when acting as the Funds authorized agent (or the agents designee), the Fund will be deemed to have received the order when the agent or
designee receives the order in proper form. In calculating NAV, securities listed on any recognized U.S. or non-U.S. exchange (including NASDAQ) are valued at the market closing price on the exchange or system on which they are principally traded. Unlisted equity securities are valued at the last transaction price, or, if there were no transactions that day, at the
mean between the most recently quoted bid and asked prices. Unlisted fixed income securities (other than those with remaining maturities of PROSPECTUS AFFILIATED
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60 days or less) are valued at prices supplied by independent pricing services, which prices reflect broker/dealer-supplied valuations and electronic data processing techniques, and reflect the mean between the bid and asked prices. Unlisted fixed income securities (other than senior loans) having remaining maturities of 60
days or less are valued at their amortized cost. The principal markets for non-U.S. securities and U.S. fixed income securities also generally close prior to the close of the NYSE. Consequently, values of non-U.S. investments and U.S. fixed income securities will be determined as of the earlier closing of such exchanges and
markets unless the Fund prices such a security at its fair value. Securities for which prices or market quotations are not available, do not accurately reflect fair value in Lord Abbetts opinion, or have been materially affected by events occurring after the close of the market on which the security is principally traded but before 4:00 p.m. Eastern time are valued under fair value
procedures approved by and administered under the supervision of the Funds Board. These circumstances may arise, for instance, when trading in a security is suspended, the market on which a security is traded closes early, or demand for a security (as reflected by its trading volume) is insufficient and thus calls into
question the reliability of the quoted or computed price, or the security is relatively illiquid. The Fund may use fair value pricing more frequently for securities primarily traded on foreign exchanges. Because many foreign markets close hours before the Fund values its foreign portfolio holdings, significant events, including
broad market moves, may occur in the interim potentially affecting the values of foreign securities held by the Fund. The Fund determines fair value in a manner that fairly reflects the market value of the security on the valuation date based on consideration of any information or factors it deems appropriate. These may
include recent transactions in comparable securities, information relating to the specific security, developments in the markets and their performance, and current valuations of foreign or U.S. indices. The Funds use of fair value pricing may cause the NAV of Fund shares to differ from the NAV that would be calculated
using market quotations. Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security may be materially different from the value that could be realized upon the sale of that security. Certain securities that are traded primarily on foreign exchanges may trade on weekends or days when the NAV is not calculated. As a result, the value of securities may change on days when shareholders are not able to purchase or sell Fund shares. Excessive Trading and Market Timing. The Fund is designed for long-term investors and is not intended to serve as a vehicle for frequent trading in response to short-term swings in the market. Excessive, short-term or market timing trading practices (frequent trading) may disrupt management of the PROSPECTUS AFFILIATED
FUND 42
Fund, raise its expenses, and harm long-term shareholders in a variety of ways. For example, volatility resulting from frequent trading may cause the Fund difficulty in implementing long-term investment strategies because it cannot anticipate the amount of cash it will have to invest. The Fund may find it necessary to sell
portfolio securities at disadvantageous times to raise cash to meet the redemption demands resulting from such frequent trading. Each of these, in turn, could increase tax, administrative, and other costs, and reduce the Funds investment return. To the extent the Fund invests in foreign securities, the Fund may be particularly susceptible to frequent trading because many foreign markets close hours before the Fund values its portfolio holdings. This may allow significant events, including broad market moves that occur in the interim, to affect the values of foreign
securities held by the Fund. The time zone differences among foreign markets may allow a shareholder to exploit differences in the Funds share prices that are based on closing prices of foreign securities determined before the Fund calculates its NAV per share (known as time zone arbitrage). To the extent the Fund
invests in securities that are thinly traded or relatively illiquid, the Fund also may be particularly susceptible to frequent trading because the current market price for such securities may not accurately reflect current market values. A shareholder may attempt to engage in frequent trading to take advantage of these pricing
differences (known as price arbitrage). The Fund has adopted fair value procedures that allow the Fund to use values other than the closing market prices of these types of securities to reflect what the Fund reasonably believes to be their fair value at the time it calculates its NAV per share. The Fund expects that the use
of fair value pricing will reduce a shareholders ability to engage successfully in time zone arbitrage and price arbitrage to the detriment of other Fund shareholders, although there is no assurance that fair value pricing will do so. For more information about these procedures, see Pricing of Fund Shares above. The Funds Board has adopted additional policies and procedures that are designed to prevent or stop frequent trading. We recognize, however, that it may not be possible to identify and stop or avoid every instance of frequent trading in Fund shares. For this reason, the Funds policies and procedures are intended to
identify and stop frequent trading that we believe may be harmful to the Fund. For this purpose, we consider frequent trading to be harmful if, in general, it is likely to cause the Fund to incur additional expenses or to sell portfolio holdings for other than investment-strategy-related reasons. Toward this end, we have
procedures in place to monitor the purchase, sale and exchange activity in Fund shares by investors and financial intermediaries that place orders on behalf of their clients, which procedures are described below. The Fund may modify its frequent trading policy and monitoring procedures from time to time without notice
as and when deemed appropriate to enhance protection of the Fund and its shareholders. PROSPECTUS AFFILIATED
FUND 43
Frequent Trading Policy and Procedures. Under the frequent trading policy, any Lord Abbett Fund shareholder redeeming shares valued at $5,000 or more from a Lord Abbett Fund will be prohibited from investing in the same Lord Abbett Fund for 30 calendar days after the redemption date (the Policy). The Policy
applies to all redemptions and purchases for an account that are part of an exchange transaction or transfer of assets, but does not apply to the following types of transactions unless Lord Abbett Distributor determines in its sole discretion that the transaction may be harmful to the Fund: (1) systematic purchases and
redemptions, such as purchases made through reinvestment of dividends or other distributions, or certain automatic or systematic investment, exchange or withdrawal plans (such as payroll deduction plans, and the Funds Invest-A-Matic and Systematic Withdrawal Plans); (2) retirement and benefit plan payroll and/or
employer contributions, loans and distributions; (3) purchases or redemptions by a fund-of-funds or similar investment vehicle that Lord Abbett Distributor in its sole discretion has determined is not designed to and/or is not serving as a vehicle for frequent trading; (4) purchases by an account that is part of a fee-based
program or mutual fund separate account program; and (5) purchases involving certain transfers of assets, rollovers, Roth IRA conversions and IRA recharacterizations; provided that the financial intermediary maintaining the account is able to identify the transaction in its records as one of these transactions. The Policy
does not apply to the Money Market Fund, Lord Abbett Floating Rate Fund, Lord Abbett Short Duration Income Fund, Lord Abbett Intermediate Tax Free Fund, and Lord Abbett Short Duration Tax Free Fund, provided that your financial intermediary is able to implement such exclusions. In addition to the Policy, we have procedures in place designed to enable us to monitor the purchase, sale and exchange activity in Fund shares by investors and financial intermediaries that place orders on behalf of their clients in order to attempt to identify activity that is inconsistent with the Policy. If, based on these
monitoring procedures, we believe that an investor is engaging in, or has engaged in, frequent trading that may be harmful to the Fund, normally, we will notify the investor (and/or the investors financial professional) to cease all such activity in the account. If the activity occurs again, we will place a block on all further
purchases or exchanges of the Funds shares in the investors account and inform the investor (and/or the investors financial professional) to cease all such activity in the account. The investor then has the option of maintaining any existing investment in the Fund, exchanging Fund shares for shares of Money Market Fund,
or redeeming the account. Investors electing to exchange or redeem Fund shares under these circumstances should consider that the transaction may be subject to a CDSC or result in tax consequences. As stated above, although we generally notify the investor (and/or the investors financial professional) to cease all
activity indicative of frequent trading prior to placing a block on further purchases or exchanges, we reserve the right to immediately place a block on an PROSPECTUS AFFILIATED
FUND 44
account or take other action without prior notification when we deem such action appropriate in our sole discretion. While we attempt to apply the Policy and procedures uniformly to detect frequent trading practices, there can be no assurance that we will succeed in identifying all such practices or that some investors will
not employ tactics that evade our detection. We recognize that financial intermediaries that maintain accounts in omnibus recordkeeping environments or in nominee name may not be able reasonably to apply the Policy due to systems limitations or other reasons. In these instances, Lord Abbett Distributor may review the frequent trading policies and procedures
that an individual financial intermediary is able to put in place to determine whether its policies and procedures are consistent with the protection of the Fund and its investors, as described above. Lord Abbett Distributor also will seek the financial intermediarys agreement to cooperate with Lord Abbett Distributors
efforts to (1) monitor the financial intermediarys adherence to its policies and procedures and/or receive an amount and level of information regarding trading activity that Lord Abbett Distributor in its sole discretion deems adequate, and (2) stop any trading activity Lord Abbett Distributor identifies as frequent trading.
Nevertheless, these circumstances may result in a financial intermediarys application of policies and procedures that are less effective at detecting and preventing frequent trading than the policies and procedures adopted by Lord Abbett Distributor and by certain other financial intermediaries. If an investor would like
more information concerning the policies, procedures and restrictions that may be applicable to his or her account, the investor should contact the financial intermediary placing purchase orders on his or her behalf. A substantial portion of the Funds shares may be held by financial intermediaries through omnibus
accounts or in nominee name. With respect to monitoring of accounts maintained by a financial intermediary, to our knowledge, in an omnibus environment or in nominee name, Lord Abbett Distributor will seek to receive sufficient information from the financial intermediary to enable it to review the ratio of purchase versus redemption activity of
each underlying sub-account or, if such information is not readily obtainable, in the overall omnibus account(s) or nominee name account(s). If we identify activity that we believe may be indicative of frequent trading activity, we normally will notify the financial intermediary and request it to provide Lord Abbett
Distributor with additional transaction information so that Lord Abbett Distributor may determine if any investors appear to have engaged in frequent trading activity. Lord Abbett Distributors monitoring activity normally is limited to review of historic account activity. This may result in procedures that may be less
effective at detecting and preventing frequent trading than the procedures Lord Abbett Distributor uses in connection with accounts not maintained in an omnibus environment or in nominee name. PROSPECTUS AFFILIATED
FUND 45
If an investor related to an account maintained in an omnibus environment or in nominee name is identified as engaging in frequent trading activity, we normally will request that the financial intermediary take appropriate action to curtail the activity and will work with the relevant party to do so. Such action may include
actions similar to those that Lord Abbett Distributor would take, such as issuing warnings to cease frequent trading activity, placing blocks on accounts to prohibit future purchases and exchanges of Fund shares, or requiring that the investor place trades through the mail only, in each case either indefinitely or for a period
of time. Again, we reserve the right to immediately attempt to place a block on an account or take other action without prior notification when we deem such action appropriate in our sole discretion. If we determine that the financial intermediary has not demonstrated adequately that it has taken appropriate action to
curtail the frequent trading, we may consider seeking to prohibit the account or sub-account from investing in the Fund and/or also may terminate our relationship with the financial intermediary. As noted above, these efforts may be less effective at detecting and preventing frequent trading than the policies and
procedures Lord Abbett Distributor uses in connection with accounts not maintained in an omnibus environment or in nominee name. The nature of these relationships also may inhibit or prevent Lord Abbett Distributor or the Fund from assuring the uniform assessment of CDSCs on investors, even though financial
intermediaries operating in omnibus environments typically have agreed to assess the CDSCs or assist Lord Abbett Distributor or the Fund in assessing them. Procedures Required by the USA PATRIOT Act. To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions, including the Fund, to obtain, verify, and record information that identifies each person who opens an account. What this means for
youwhen you open an account, we will ask for your name, address, date and place of organization or date of birth, taxpayer identification number or Social Security number, and we may ask for other information that will allow us to identify you. We will ask for this information in the case of persons who will be signing
on behalf of certain entities that will own the account. We also may ask for copies of documents. If we are unable to obtain the required information within a short period of time after you try to open an account, we will return your purchase order or account application. Your monies will not be invested until we have all
required information. You also should know that we may verify your identity through the use of a database maintained by a third party or through other means. If we are unable to verify your identity, we may liquidate and close the account. This may result in adverse tax consequences. In addition, the Fund reserves the
right to reject purchase orders or account applications accompanied by cash, cashiers checks, money orders, bank drafts, travelers checks, and third party or double-endorsed checks, among others. PROSPECTUS AFFILIATED
FUND 46
The following discussion is general. Because everyones tax situation is unique, you should consult your tax advisor regarding the effect that an investment in the Fund may have on your particular tax situation, including the treatment of distributions under the federal, state, local, and foreign tax rules that apply to you, as
well as the tax consequences of gains or losses from the sale, redemption, or exchange of your shares. The Fund expects to pay dividends from its net investment income quarterly and to distribute any net capital gains annually. All distributions, including dividends from net investment income, will be reinvested in Fund shares unless you instruct the Fund to pay them to you in cash. Your election to receive distributions in
cash and payable by check will apply only to distributions totaling $10.00 or more. Accordingly, any distribution totaling less than $10.00 will be reinvested in Fund shares and will not be paid to you by check. This policy does not apply to you if you have elected to receive distributions that are directly deposited into
your account. Retirement and benefit plan accounts may not receive distributions in cash. There are no sales charges on reinvestments. For U.S. federal income tax purposes, the Funds distributions generally are taxable to shareholders, other than tax-exempt shareholders (including certain retirement and benefit plan shareholders, as discussed below), regardless of whether paid in cash or reinvested in additional Fund shares. Distributions of net investment
income and short-term capital gains are taxable as ordinary income; however, for taxable years beginning before January 1, 2013, certain qualified dividends that the Fund receives and distributes may be subject to a reduced tax rate if you meet holding period and certain other requirements. Distributions of net long-term
capital gains are taxable as long-term capital gains, regardless of how long you have owned Fund shares. Any sale, redemption, or exchange of Fund shares may be taxable. If you buy shares after the Fund has realized income or capital gains but prior to the record date for the distribution of such income or capital gains, you will be buying a dividend by paying the full price for shares and then receiving a portion of the price back in the form of a potentially taxable dividend. Shareholders that are exempt from U.S. federal income tax, such as retirement and benefit plans that are qualified under Section 401 of the Internal Revenue Code, generally are not subject to U.S. federal income tax on Fund dividends or distributions or on sales or exchanges of Fund shares. However, in the case of Fund
shares held through a nonqualified deferred compensation plan, Fund dividends and distributions received by the plan and sales and exchanges of Fund shares by the plan generally will be taxable to the employer sponsoring such plan in accordance with U.S. federal income tax laws governing deferred compensation plans. PROSPECTUS AFFILIATED
FUND 47
A plan participant whose retirement and benefit plan invests in the Fund generally is not taxed on Fund dividends or distributions received by the plan or on sales or exchanges of Fund shares by the plan for U.S. federal income tax purposes. However, distributions to plan participants from a retirement and benefit plan
generally are taxable to plan participants as ordinary income. You must provide your Social Security number or other taxpayer identification number to the Fund along with certifications required by the Internal Revenue Service when you open an account. If you do not or it is otherwise legally required to do so, the Fund will withhold 28% backup withholding tax from your
distributions, sale proceeds, and any other payments to you. Certain tax reporting information concerning the tax treatment of Fund distributions, including the source of dividends and distributions of capital gains by the Fund, will be provided to shareholders each year. Legislation passed by Congress in 2008 requires mutual funds to report to the Internal Revenue Service the cost basis of shares acquired by a shareholder on or after January 1, 2012 and that are subsequently redeemed. These requirements generally do not apply to investments through a tax-deferred arrangement or to
certain types of entities (such as C corporations). Also, if you hold Fund shares through a broker (or another nominee), please contact that broker (nominee) with respect to the reporting of cost basis and available elections for your account. If you are a direct shareholder, you may request your cost basis reported on Form 1099-B be calculated using any one of the alternative methods offered by the Fund. Please contact the Fund to make, revoke, or change your election. If you do not affirmatively elect a cost basis method then the Fund will use the average
cost basis method. Please note that you will continue to be responsible for calculating and reporting gains and losses on redemptions of shares purchased prior to January 1, 2012. You are encouraged to consult your tax advisor regarding the application of the new cost basis reporting rules and, in particular, which cost basis calculation
method you should elect. PROSPECTUS AFFILIATED
FUND 48
FINANCIAL INFORMATION These tables describe the Funds performance for the fiscal periods indicated. Total Return shows how much your investment in the Fund would have increased or decreased during each period without considering the effects of sales loads and assuming you had reinvested all dividends and distributions. These Financial
Highlights have been audited by Deloitte & Touche LLP, the Funds independent registered public accounting firm, in conjunction with their annual audits of the Funds financial statements. Financial statements and the Report of Independent Registered Public Accounting Firm thereon appear in the 2011 annual report to
shareholders and are incorporated by reference in the SAI, which is available upon request. Certain information reflects financial results for a single Fund share. PROSPECTUS AFFILIATED
FUND 49
AFFILIATED FUND Financial Highlights Class A Shares Year Ended 10/31
2011
2010
2009
2008
2007 Per Share Operating Performance Net asset value, beginning of year
$10.59
$9.61
$9.38
$16.55
$15.84 Investment operations: Net investment income(a)
.12
.09
.11
.18
.22 Net realized and unrealized gain (loss)
(.04
)
.97
.23
(5.53
)
1.69 Total from investment operations
.08
1.06
.34
(5.35
)
1.91 Distributions to shareholders from: Net investment income
(.12
)
(.08
)
(.10
)
(.21
)
(.20
) Net realized gain
(1.61
)
(1.00
) Return of capital
(.01
)
Total distributions
(.12
)
(.08
)
(.11
)
(1.82
)
(1.20
) Net asset value, end of year
$10.55
$10.59
$9.61
$9.38
$16.55 Total Return(b)
.73
%
11.07
%
3.94
%
(35.65
)%
12.96
% Ratios to Average Net Assets: Expenses, including expense reductions
.84
%
.85
%
.88
%
.82
%
.81
% Expenses, excluding expense reductions
.84
%
.85
%
.88
%
.82
%
.81
% Net investment income
1.09
%
.83
%
1.29
%
1.40
%
1.38
%
Supplemental Data: Net assets, end of year (000)
$5,777,045
$6,993,549
$7,708,503
$9,253,480
$16,793,740 Portfolio turnover rate
16.39
%
24.56
%
76.89
%
105.60
%
85.96
%
(a) Calculated using average shares outstanding during the year. (b) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.
PROSPECTUS AFFILIATED
FUND 50
AFFILIATED FUND Financial Highlights (continued) Class B Shares Year Ended 10/31
2011
2010
2009
2008
2007 Per Share Operating Performance Net asset value, beginning of year
$10.61
$9.63
$9.41
$16.60
$15.88 Investment operations: Net investment income(a)
.05
.02
.06
.09
.11 Net realized and unrealized gain (loss)
(.03
)
.98
.23
(5.56
)
1.71 Total from investment operations
.02
1.00
.29
(5.47
)
1.82 Distributions to shareholders from: Net investment income
(.04
)
(.02
)
(.06
)
(.11
)
(.10
) Net realized gain
(1.61
)
(1.00
) Return of capital
(.01
)
Total distributions
(.04
)
(.02
)
(.07
)
(1.72
)
(1.10
) Net asset value, end of year
$10.59
$10.61
$9.63
$9.41
$16.60 Total Return(b)
.18
%
10.34
%
3.26
%
(36.12
)%
12.24
% Ratios to Average Net Assets: Expenses, including expense reductions
1.49
%
1.50
%
1.53
%
1.48
%
1.46
% Expenses, excluding expense reductions
1.49
%
1.50
%
1.53
%
1.48
%
1.46
% Net investment income
.43
%
.18
%
.67
%
.74
%
.73
% Supplemental Data: Net assets, end of year (000)
$174,386
$288,531
$419,831
$611,888
$1,261,984 Portfolio turnover rate
16.39
%
24.56
%
76.89
%
105.60
%
85.96
%
(a) Calculated using average shares outstanding during the year. (b) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.
PROSPECTUS AFFILIATED
FUND 51
AFFILIATED FUND Financial Highlights (continued) Class C Shares Year Ended 10/31
2011
2010
2009
2008
2007 Per Share Operating Performance Net asset value, beginning of year
$10.58
$9.61
$9.39
$16.56
$15.85 Investment operations: Net investment income(a)
.05
.02
.05
.09
.11 Net realized and unrealized gain (loss)
(.03
)
.97
.24
(5.54
)
1.70 Total from investment operations
.02
.99
.29
(5.45
)
1.81 Distributions to shareholders from: Net investment income
(.05
)
(.02
)
(.06
)
(.11
)
(.10
) Net realized gain
(1.61
)
(1.00
) Return of capital
(.01
)
Total distributions
(.05
)
(.02
)
(.07
)
(1.72
)
(1.10
) Net asset value, end of year
$10.55
$10.58
$9.61
$9.39
$16.56 Total Return(b)
.14
%
10.28
%
3.28
%
(36.07
)%
12.22
% Ratios to Average Net Assets: Expenses, including expense reductions
1.48
%
1.50
%
1.53
%
1.48
%
1.46
% Expenses, excluding expense reductions
1.48
%
1.50
%
1.53
%
1.48
%
1.46
% Net investment income
.44
%
.18
%
.64
%
.74
%
.73
% Supplemental Data: Net assets, end of year (000)
$467,475
$595,084
$697,681
$870,934
$1,710,033 Portfolio turnover rate
16.39
%
24.56
%
76.89
%
105.60
%
85.96
%
(a) Calculated using average shares outstanding during the year. (b) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.
PROSPECTUS AFFILIATED
FUND 52
AFFILIATED FUND Financial Highlights (continued) Class F Shares Year Ended 10/31
9/28/2007(a)
2011
2010
2009
2008 Per Share Operating Performance Net asset value, beginning of period
$10.59
$9.61
$9.38
$16.56
$16.29 Investment operations: Net investment income(b)
.15
.11
.10
.21
.02 Net realized and unrealized gain (loss)
(.03
)
.97
.26
(5.54
)
.25 Total from investment operations
.12
1.08
.36
(5.33
)
.27 Distributions to shareholders from: Net investment income
(.15
)
(.10
)
(.12
)
(.24
)
Net realized gain
(1.61
)
Return of capital
(.01
)
Total distributions
(.15
)
(.10
)
(.13
)
(1.85
)
Net asset value, end of period
$10.56
$10.59
$9.61
$9.38
$16.56 Total Return(c)
1.08
%
11.33
%
4.18
%
(35.52
)%
1.66
%(d) Ratios to Average Net Assets: Expenses, including expense reductions
.59
%
.60
%
.62
%
.59
%
.05
%(d) Expenses, excluding expense reductions
.59
%
.60
%
.62
%
.59
%
.05
%(d) Net investment income
1.33
%
1.07
%
1.14
%
1.89
%
.14
%(d) Supplemental Data: Net assets, end of period (000)
$102,086
$86,360
$64,867
$16,844
$10 Portfolio turnover rate
16.39
%
24.56
%
76.89
%
105.60
%
85.96
%
(a) Commencement of operations was 9/28/2007, SEC effective date was 9/14/2007 and date shares first became available to the public was 10/1/2007. (b) Calculated using average shares outstanding during the period. (c) Total return assumes the reinvestment of all distributions. (d) Not annualized.
PROSPECTUS AFFILIATED
FUND 53
to
10/31/2007
AFFILIATED FUND Financial Highlights (continued) Class I Shares Year Ended 10/31
2011
2010
2009
2008
2007 Per Share Operating Performance Net asset value, beginning of year
$10.62
$9.64
$9.40
$16.60
$15.88 Investment operations: Net investment income(a)
.16
.12
.13
.22
.27 Net realized and unrealized gain (loss)
(.03
)
.97
.24
(5.55
)
1.71 Total from investment operations
.13
1.09
.37
(5.33
)
1.98 Distributions to shareholders from: Net investment income
(.16
)
(.11
)
(.12
)
(.26
)
(.26
) Net realized gain
(1.61
)
(1.00
) Return of capital
(.01
)
Total distributions
(.16
)
(.11
)
(.13
)
(1.87
)
(1.26
) Net asset value, end of year
$10.59
$10.62
$9.64
$9.40
$16.60 Total Return(b)
1.18
%
11.40
%
4.38
%
(35.50
)%
13.39
% Ratios to Average Net Assets: Expenses, including expense reductions
.49
%
.50
%
.53
%
.47
%
.46
% Expenses, excluding expense reductions
.49
%
.50
%
.53
%
.48
%
.46
% Net investment income
1.42
%
1.18
%
1.56
%
1.75
%
1.74
% Supplemental Data: Net assets, end of year (000)
$385,714
$435,609
$560,500
$504,923
$666,851 Portfolio turnover rate
16.39
%
24.56
%
76.89
%
105.60
%
85.96
%
(a) Calculated using average shares outstanding during the year. (b) Total return assumes the reinvestment of all distributions.
PROSPECTUS AFFILIATED
FUND 54
AFFILIATED FUND Financial Highlights (continued) Class P Shares Year Ended 10/31
2011
2010
2009
2008
2007 Per Share Operating Performance Net asset value, beginning of year
$10.57
$9.59
$9.36
$16.52
$15.82 Investment operations: Net investment income(a)
.12
.07
.10
.16
.20 Net realized and unrealized gain (loss)
(.05
)
.98
.23
(5.52
)
1.69 Total from investment operations
.07
1.05
.33
(5.36
)
1.89 Distributions to shareholders from: Net investment income
(.11
)
(.07
)
(.09
)
(.19
)
(.19
) Net realized gain
(1.61
)
(1.00
) Return of capital
(.01
)
Total distributions
(.11
)
(.07
)
(.10
)
(1.80
)
(1.19
) Net asset value, end of year
$10.53
$10.57
$9.59
$9.36
$16.52 Total Return(b)
.75
%
10.88
%
3.85
%
(35.73
)%
12.80
% Ratios to Average Net Assets: Expenses, including expense reductions
.90
%
.95
%
.98
%
.92
%
.91
% Expenses, excluding expense reductions
.90
%
.95
%
.98
%
.93
%
.91
% Net investment income
1.02
%
.73
%
1.19
%
1.30
%
1.27
% Supplemental Data: Net assets, end of year (000)
$113,935
$158,627
$212,223
$267,251
$433,828 Portfolio turnover rate
16.39
%
24.56
%
76.89
%
105.60
%
85.96
%
(a) Calculated using average shares outstanding during the year. (b) Total return assumes the reinvestment of all distributions.
PROSPECTUS AFFILIATED
FUND 55
AFFILIATED FUND Financial Highlights (continued) Class R2 Shares
Year Ended 10/31 9/28/2007(a)
2011
2010
2009
2008 Per Share Operating Performance Net asset value, beginning of period
$10.58
$9.61
$9.38
$16.55
$16.29 Investment operations: Net investment income(b)
.09
.06
.07
.14
.02 Net realized and unrealized gain (loss)
(.03
)
.97
.25
(5.53
)
.24 Total from investment operations
.06
1.03
.32
(5.39
)
.26 Distributions to shareholders from: Net investment income
(.10
)
(.06
)
(.08
)
(.17
)
Net realized gain
(1.61
)
Return of capital
(.01
)
Total distributions
(.10
)
(.06
)
(.09
)
(1.78
)
Net asset value, end of period
$10.54
$10.58
$9.61
$9.38
$16.55 Total Return(c)
.50
%
10.78
%
3.70
%
(35.83
)%
1.60
%(d) Ratios to Average Net Assets: Expenses, including expense reductions
1.09
%
1.09
%
1.11
%
1.07
%
.09
%(d) Expenses, excluding expense reductions
1.09
%
1.09
%
1.11
%
1.07
%
.09
%(d) Net investment income
.83
%
.57
%
.85
%
1.16
%
.10
%(d) Supplemental Data: Net assets, end of period (000)
$709
$419
$185
$85
$10 Portfolio turnover rate
16.39
%
24.56
%
76.89
%
105.60
%
85.96
%
(a) Commencement of operations was 9/28/2007, SEC effective date was 9/14/2007 and date shares first became available to the public was 10/1/2007. (b) Calculated using average shares outstanding during the period. (c) Total return assumes the reinvestment of all distributions. (d) Not annualized.
PROSPECTUS AFFILIATED
FUND 56
to
10/31/2007
AFFILIATED FUND Financial Highlights (concluded) Class R3 Shares Year Ended 10/31
9/28/2007(a)
2011
2010
2009
2008 Per Share Operating Performance Net asset value, beginning of period
$10.58
$9.61
$9.38
$16.56
$16.29 Investment operations: Net investment income(b)
.11
.07
.08
.16
.02 Net realized and unrealized gain (loss)
(.03
)
.97
.25
(5.54
)
.25 Total from investment operations
.08
1.04
.33
(5.38
)
.27 Distributions to shareholders from: Net investment income
(.11
)
(.07
)
(.09
)
(.19
)
Net realized gain
(1.61
)
Return of capital
(.01
)
Total distributions
(.11
)
(.07
)
(.10
)
(1.80
)
Net asset value, end of period
$10.55
$10.58
$9.61
$9.38
$16.56 Total Return(c)
.69
%
10.86
%
3.80
%
(35.79
)%
1.66
%(d) Ratios to Average Net Assets: Expenses, including expense reductions
.98
%
1.00
%
1.01
%
.98
%
.08
%(d) Expenses, excluding expense reductions
.98
%
1.00
%
1.01
%
.98
%
.08
%(d) Net investment income
.94
%
.67
%
.89
%
1.41
%
.11
%(d) Supplemental Data: Net assets, end of period (000)
$40,021
$32,915
$13,206
$4,275
$10 Portfolio turnover rate
16.39
%
24.56
%
76.89
%
105.60
%
85.96
%
(a) Commencement of operations was 9/28/2007, SEC effective date was 9/14/2007 and date shares first became available to the public was 10/1/2007. (b) Calculated using average shares outstanding during the period. (c) Total return assumes the reinvestment of all distributions. (d) Not annualized.
PROSPECTUS AFFILIATED
FUND 57
to
10/31/2007
To Obtain Information:
ADDITIONAL INFORMATION Lord Abbett Affiliated Fund, Inc.
Lord Abbett Mutual Fund shares are distributed by: LORD ABBETT DISTRIBUTOR LLC LAAF-1 Investment Company Act File Number: 811-00005 LORD ABBETT Statement of Additional Information March 1, 2012 LORD
ABBETT AFFILIATED FUND CLASS TICKER CLASS TICKER CLASS A LAFFX CLASS I LAFYX CLASS B LAFBX CLASS P LAFPX CLASS C LAFCX CLASS R2 LAFQX CLASS F LAAFX CLASS R3 LAFRX TABLE OF CONTENTS 1. 1-1 2. 2-1 3. 3-1 4. 4-1 5. 5-1 6. 6-1 7. 7-1 8. 8-1 9. 9-1 10. 10-1 11. 11-1 A-1 B-1 The Fund is a diversified open-end management investment company
registered under the Investment Company Act of 1940, as amended (the Act).
The Fund was organized in 1934 and was reincorporated under Maryland law on
November 26, 1975. The Fund has 4,900,000,000 shares of authorized capital
stock, par value $0.001 per share. The Fund consists of eight classes of
shares: Class A, B, C, F, I, P, R2, and R3 shares. The Funds Board of
Directors (the Board) will allocate the authorized shares of capital stock
among the classes from time to time. Effective September 28, 2007, Class Y
shares of the Fund were renamed Class I. 1-1 The Fund may not: (1) borrow money,
except that (i) the Fund may borrow from banks (as defined in the Act 2)
in amounts up to 33 1/3% of its total assets (including the amount borrowed),
(ii) the Fund may borrow up to an additional 5% of its total assets for
temporary purposes, (iii) the Fund may obtain such short-term credit as may
be necessary for the clearance of purchases and sales of portfolio securities
and (iv) the Fund may purchase securities on margin to the extent permitted
by applicable law; 3 (2) pledge its
assets (other than to secure borrowings, or to the extent permitted by the
Funds investment policies as permitted by applicable law);4 (3) engage in the
underwriting of securities, except pursuant to a merger or acquisition or to
the extent that, in connection with the disposition of its portfolio
securities, it may be deemed to be an underwriter under federal securities
laws; (4) make loans to
other persons, except that the acquisition of bonds, debentures or other
corporate debt securities and investment in government obligations,
commercial paper, pass-through instruments, certificates of deposit, bankers
acceptances, repurchase agreements or any similar instruments shall not be
subject to this limitation, and except further that the Fund may lend its
portfolio securities, provided that the lending of portfolio securities may
be made only in accordance with applicable law; (5) buy or sell real
estate (except that the Fund may invest in securities directly or indirectly
secured by real estate or interests therein or issued by companies which
invest in real estate or interests therein) or commodities or commodity
contracts (except to the extent the Fund may do so in accordance with
applicable law and without registering as a commodity pool operator under the
Commodity Exchange Act as, for example, with futures contracts); (6) with respect to
75% of the gross assets of the Fund, buy securities of one issuer
representing more than (i) 5% of the Funds gross assets, except securities
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or (ii) 10% of the voting securities of such issuer; (7) invest more than
25% of its assets, taken at market value, in the securities of issuers in any
particular industry (excluding securities of the U.S. Government, its
agencies and instrumentalities); or (8) issue senior
securities to the extent such issuance would violate applicable law.5 2
The term bank is defined in Section 2(a)(5) of the Act. 4
Current federal securities laws prohibit the Fund from pledging more than one-third
of its total assets (taken at current value) to secure borrowings made in
accordance with the investment restrictions above. For the purpose of this
restriction the deposit of assets in a segregated account with the Funds
custodian in connection with any of the Funds investment transactions is not
considered to be a pledge of the Funds assets. 2-1 Non-Fundamental
Investment Restrictions. In addition to the Funds investment
objective and the investment restrictions above that cannot be changed without
shareholder approval, the Fund also is subject to the following non-fundamental
investment restrictions that may be changed by the Board without shareholder
approval. The Fund may not: (1) make short sales
of securities or maintain a short position except to the extent permitted by
applicable law; (2) invest knowingly
more than 15% of its net assets (at the time of investment) in illiquid
securities, except for securities qualifying for resale under Rule 144A under
the Securities Act of 1933, as amended (Rule 144A), determined by Lord
Abbett to be liquid, subject to the oversight of the Board; (3) invest in
securities issued by other investment companies except to the extent
permitted by applicable law. The Fund may not, however, rely on Sections
12(d)(1)(F) and 12(d)(1)(G) of the Act; (4) invest in
warrants if, at the time of the acquisition, its investment in warrants,
valued at the lower of cost or market, would exceed 5% of the Funds total assets
(included within such limitation, but not to exceed 2% of the Funds total
assets, are warrants which are not listed on the New York Stock Exchange
(NYSE) or the American Stock Exchange or a major foreign exchange); (5) invest in real
estate limited partnership interests or interests in oil, gas or other
mineral leases, or exploration or other development programs, except that the
Fund may invest in securities issued by companies that engage in oil, gas or
other mineral exploration or other development activities; (6) write, purchase
or sell puts, calls, straddles, spreads or combinations thereof, except to
the extent permitted in the Funds prospectus and SAI, as they may be amended
from time to time; (7) buy from or sell
to any of the Funds officers, directors, employees, or its investment
adviser or any of the advisers officers, partners, or employees, any
securities other than the Funds shares; or (8) pledge, mortgage
or hypothecate its assets, however, this provision does not apply to the
grant of escrow receipts or the entry into other similar escrow arrangements
arising out of the writing of covered call options. Compliance with these non-fundamental investment restrictions will be
determined at the time of the purchase or sale of the security, except in the
case of the second and fourth non-fundamental investment restrictions, with
which the Fund must comply at the time of purchase. The Fund will not be
required to sell illiquid securities if it exceeds the 15% limit due to market
activity or the sale of liquid securities, however, in these situations the
Fund will take appropriate measures to reduce the percentage of its assets
invested in illiquid securities. Portfolio Turnover Rate. For each of
the fiscal years ended October 31, 2011 and 2010, the Funds portfolio turnover
rates were 16.39% and 24.56%, respectively. 2-2 Borrowing Money. The Fund may borrow
money for certain purposes as described above under Fundamental Investment
Restrictions. If the Fund borrows money and experiences a decline in its net
asset value (NAV), the borrowing will increase its losses. The Fund will not
purchase additional securities while outstanding borrowings exceed 5% of its
total assets. Convertible Securities. The Fund may
invest in convertible securities. Convertible securities are preferred stocks
or debt obligations that are convertible into common stock. Generally,
convertible securities offer lower interest or dividend yields than
non-convertible securities of similar quality and less potential for gains or
capital appreciation in a rising stock market than equity securities. They tend
to be more volatile than other fixed income securities, and the markets for convertible
securities may be less liquid than markets for common stocks or bonds.
Convertible securities have both equity and fixed income risk characteristics.
Like all fixed income securities, the value of convertible securities is
susceptible to the risk of market losses attributable to changes in interest
rates. The market value of convertible securities tends to decline as interest
rates increase. If, however, the market price of the common stock underlying a
convertible security approaches or exceeds the conversion price of the
convertible security, the convertible security tends to reflect the market
price of the underlying common stock. In such a case, a convertible security
may lose much or all of its value if the value of the underlying common stock then
falls below the conversion price of the security. As the market price of the
underlying common stock declines, the convertible security tends to trade
increasingly based on its fixed income characteristics, and thus, may not
necessarily decline in price as much as the underlying common stock. Foreign
Currency Transactions. In accordance with the Funds
investment objective and policies, the Fund may, engage in various types of
foreign currency exchange transactions to seek to hedge against the risk of
loss from changes in currency exchange rates. The Fund may employ a variety of
investments and techniques, including spot and forward foreign exchange
transactions, currency swaps, listed or over-the-counter (OTC) options on
currencies, and currency futures and options on currency futures (collectively,
Foreign Exchange). Forward foreign exchange transactions are OTC contracts to purchase or
sell a specified amount of a specified currency or multinational currency unit
at a price and future date set at the time of the contract. Spot foreign
exchange transactions are similar but require current, rather than future,
settlement. Currency futures are similar to forward foreign exchange
transactions except that futures are standardized, exchange-traded contracts.
Currency options are similar to options on securities, but in consideration for
an option premium the writer of a currency option is obligated to sell (in the
case of a call option) or purchase (in the case of a put option) a specified
amount of a specified currency on or before the expiration date for a specified
amount of another currency. The Fund may engage in transactions in options on
currencies either on exchanges or OTC markets. The Fund will not speculate in Foreign Exchange transactions.
Accordingly, the Fund will not hedge a currency in excess of the aggregate
market value of the securities that it owns (including receivables for
unsettled securities sales), or has committed to or anticipates purchasing,
which are denominated in such currency. The Fund may, however, hedge a currency
by entering into a Foreign Exchange transaction in a currency other than the
currency being hedged (a cross-hedge). The Fund will only enter into a
cross-hedge if Lord, Abbett & Co. LLC (Lord Abbett) believes that (i)
there is a high correlation between the currency in which the cross-hedge is
denominated and the currency being hedged, and (ii) executing a cross-hedge
through the currency in which the cross-hedge is denominated will be more
cost-effective or provide greater liquidity than executing a similar hedging
transaction in the currency being hedged. Foreign Exchange transactions involve substantial risks. Although the
Fund will
use Foreign Exchange transactions to hedge against adverse currency movements,
Foreign Exchange transactions involve the risk that anticipated currency
movements will not be accurately predicted and that the Funds hedging
strategies will be ineffective. To 2-3 the extent that the Fund hedges against anticipated currency movements
that do not occur, the Fund may realize losses. Foreign Exchange transactions
may subject the Fund to the risk that the counterparty will be unable to honor
its financial obligation to the Fund, and the risk that relatively small market
movements may result in large changes in the value of a Foreign Exchange
instrument. If the Fund cross-hedges, the Fund will face the risk that the
Foreign Exchange instrument purchased will not correlate as expected with the
position being hedged. Foreign
securities may be affected by changes in currency rates, changes in foreign
or U.S. laws or restrictions applicable to foreign securities and changes in
exchange control regulations (i.e., currency blockage). A decline in the exchange
rate of the foreign currency in which a portfolio security is quoted or
denominated relative to the U.S. dollar would reduce the value of the
portfolio security in U.S. dollars. Clearance and
settlement procedures may be different in foreign countries and, in certain
markets, such procedures may be unable to keep pace with the volume of
securities transactions, thus making it difficult to conduct such
transactions. Foreign issuers
generally are not subject to uniform accounting, auditing and financial
reporting standards comparable to those applicable to U.S. issuers. There may
be less publicly available information about a foreign issuer than about a
comparable U.S. issuer. Foreign
securities markets may have substantially less volume than U.S. securities
markets, and securities of many foreign issuers are less liquid and more
volatile than securities of comparable domestic issuers. Foreign
securities may trade on days when the Fund does not sell shares. As a result,
the value of the Funds portfolio securities may change on days an investor
may not be able to purchase or redeem Fund shares. With respect to
certain foreign countries, there is a possibility of nationalization, expropriation
or confiscatory taxation, imposition of withholding or other taxes on
dividend or interest payments (or, in some cases, capital gains), limitations
on the removal of funds or other assets of a Fund, and political or social
instability or diplomatic developments that could affect investments in those
countries. Futures
Contracts and Options on Futures Contracts. The
Fund may engage in futures and options on futures transactions in accordance
with its investment objective and policies. Futures contracts are standardized
contracts that provide for the sale or purchase of a specified financial
instrument at a future time at a specified price. An option on a futures
contract gives the purchaser the right (and the writer of the option the
obligation) to assume a position in a futures contract at a specified exercise
price within a specified period of time. In addition to incurring fees in
connection with futures and options, an investor is required to maintain margin
deposits. At the time of entering into a futures transaction or writing an
option, an investor is required to deposit a specified amount of cash or
eligible securities called initial margin. Subsequent payments, called
variation margin, are made on a daily basis as the market price of the
futures contract or option fluctuates. The Fund may purchase and sell futures contracts and purchase and write
call and put options on futures contracts for hedging purposes, including to
hedge against changes in interest rates, securities prices, or currency
exchange rates, or in order to gain efficient exposure to markets and minimize
transaction costs. The Fund also may enter into closing purchase and sale
transactions with respect to such contracts and options. Futures contracts and options on futures contracts present substantial
risks, including the following: 2-4 While the Fund
may benefit from the use of futures and related options, unanticipated market
events may result in poorer overall performance than if the Fund had not
entered into any futures or related options transactions. The loss that
the Fund may incur in entering into futures contracts and in writing call
options on futures is potentially unlimited and may exceed the amount of the
premium received. Futures markets
are highly volatile, and the use of futures may increase the volatility of
the Funds NAV. As a result of
the low margin deposits normally required in futures and options on futures
trading, a relatively small price movement in a contract may result in substantial
losses to the Fund. Futures
contracts and related options may be illiquid, and exchanges may limit
fluctuations in futures contract prices during a single day. The counterparty
to an OTC contract may fail to perform its obligations under the contract. Stock Index Futures.
The Fund may invest in stock index futures contracts. A stock index futures
contract is an agreement pursuant to which two parties agree, one to receive
and the other to pay, on a specified date an amount of cash equal to a
specified dollar amount established by an exchange or board of trade times
the difference between the value of the index at the close of the last trading
day of the contract and the price at which the futures contract is originally
written. The purchaser pays no consideration at the time the contract is
entered into; the purchaser only pays a good faith deposit. Illiquid Securities. The Fund may
invest up to 15% of its net assets in illiquid securities that cannot be
disposed of in seven days in the ordinary course of business at fair value.
Illiquid securities include: securities that
are not readily marketable; repurchase
agreements and time deposits with a notice or demand period of more than
seven days; and certain restricted
securities, unless Lord Abbett determines, subject to the oversight of the
Board, based upon a review of the trading markets for a specific restricted
security, that such restricted security is eligible for resale pursuant to
Rule 144A and is liquid (144A Securities). 144A Securities may be resold to a qualified
institutional buyer (QIB) without registration and without regard to whether
the seller originally purchased the security for investment. Investing in 144A
Securities may decrease the liquidity of the Funds portfolio to the extent
that QIBs become for a time uninterested in purchasing these 2-5 securities. The purchase price and subsequent valuation of restricted
and illiquid securities normally reflect a discount, which may be significant,
from the market price of comparable securities for which a liquid market
exists. Investments
in Other Investment Companies. Subject to the limitations
prescribed by the Act and the rules adopted by the SEC thereunder, the Fund may
invest in other investment companies, including money market funds,
exchange-traded funds (ETFs), and closed-end funds. (The Fund, however, may
not operate as a fund-of-funds in reliance on Sections 12(d)(1)(F) and (G) of
the Act.) These limitations include a prohibition on the Fund acquiring more
than 3% of the voting shares of any other investment company, and a prohibition
on the Fund investing more than 5% of its total assets in the securities of any
one investment company or more than 10% of its total assets in securities of
other investment companies. (Pursuant to certain SEC rules, these percentage
limitations may not apply to the Funds investments in money market funds.)
When the Fund invests in another investment company, the Funds shareholders
must bear not only their proportionate share of the Funds fees and expenses,
but they also must bear indirectly the fees and expenses of the other
investment company. The Fund may invest in ETFs, which typically are open-end funds or unit
investment trusts that are designed to accumulate and hold a portfolio of
securities intended to track the performance and dividend yield of a securities
index. The Fund may use ETFs for several reasons, including to facilitate the
handling of cash flows or trading or to reduce transaction costs. The price
movement of ETFs may not perfectly parallel the price movement of the
underlying index. Similar to common stock, ETFs are subject to market
volatility and selection risk. The Fund may invest in foreign countries through investment companies,
including closed-end funds. Some emerging market countries have laws and
regulations that currently preclude direct foreign investments in the
securities of their companies. However, indirect foreign investment in the securities
of such countries is permitted through investment companies that have been
specifically authorized. These investments are subject to the risks of
investing in foreign (including emerging market) securities. Options on Securities and Securities Indices.
The Fund may purchase call and put options and write (i.e., sell) covered call
and put option contracts in accordance with its investment objective and
policies. A call option gives the purchaser of the option the right to buy, and
obligates the writer to sell, the underlying security or securities at the
exercise price at any time during the option period, or at a specific date.
Conversely, a put option gives the purchaser of the option the right to sell,
and obligates the writer to buy, the underlying security or securities at the
exercise price at any time during the option period, or at a specific date. The
Fund also may enter into closing purchase transactions in order to terminate
its obligation to deliver the underlying security. This may result in a
short-term gain or loss. A closing purchase transaction is the purchase of a
call option (at a cost which may be more or less than the premium received for
writing the original call option) on the same security, with the same exercise
price and call period as the option previously written. If the Fund is unable
to enter into a closing purchase transaction, it may be required to hold a
security that it otherwise might have sold to protect against depreciation. A covered call option written by the Fund is a call option with respect
to which the Fund owns the underlying security or otherwise covers the
transaction such as by segregating permissible liquid assets. A put option
written by the Fund is covered when, among other things, the Fund segregates
permissible liquid assets having a value equal to or greater than the exercise
price of the option to fulfill the obligation undertaken or otherwise covers
the transaction. The principal reason for writing covered call and put options
is to realize, through the receipt of premiums, a greater return than would be
realized on the underlying securities alone. The Fund receives a premium 2-6 from writing covered call or put options which it retains whether or
not the option is exercised. There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any particular
option or at any particular time, and for some options no such secondary market
may exist. A liquid secondary market in an option may cease to exist for a
variety of reasons. In the past, for example, higher than anticipated trading
activity or order flow, or other unforeseen events, at times have rendered
certain of the clearing facilities inadequate and resulted in the institution
of special procedures, such as trading rotations, restrictions on certain types
of orders or trading halts or suspensions in one or more options. There can be
no assurance that similar events, or events that may otherwise interfere with
the timely execution of customers orders, will not recur. In such event, it
might not be possible to effect closing transactions in particular options. If,
as a covered call option writer, the Fund is unable to effect a closing
purchase transaction in a secondary market, it will not be able to sell the
underlying security until the option expires or it delivers the underlying
security upon exercise or it otherwise covers its position. Specific Options Transactions.
The Fund may purchase and sell call and put options in respect of specific
securities (or groups or baskets of specific securities), including U.S.
Government securities, mortgage-related securities, asset-backed securities,
foreign sovereign debt, corporate debt securities, equity securities (including
convertible securities) and Eurodollar instruments that are traded on U.S. or
foreign securities exchanges or in the OTC market, or securities indices,
currencies or futures. An option on an index is similar to an option in respect of specific
securities, except that settlement does not occur by delivery of the securities
comprising the index. Instead, the option holder receives an amount of cash if
the closing level of the 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. Thus, the effectiveness of purchasing or writing index options will
depend upon price movements in the level of the index rather than the price of
a particular security. The Fund may purchase and sell call and put options on foreign
currency. These options convey the right to buy or sell the underlying currency
at a price which is expected to be lower or higher than the spot price of the
currency at the time the option is exercised or expires. Successful use by the Fund of options and options on futures will be
subject to Lord Abbetts ability to predict correctly movements in the prices
of individual securities, the relevant securities market generally, foreign
currencies or interest rates. To the extent Lord Abbetts predictions are
incorrect, the Fund may incur losses. The use of options also can increase the
Funds transaction costs. The Fund will not purchase an option if, as a result of such purchase,
more than 10% of its net assets would be invested in premiums for such options.
The Fund may only sell (write) covered put options to the extent that cover for
such options does not exceed 15% of its net assets. The Fund may only sell
(write) covered call options with respect to securities having an aggregate
market value of less than 25% of its net assets at the time an option is
written. Over-the-Counter Options. The Fund may enter into OTC options contracts (OTC options). OTC
options differ from exchange-traded options in several respects. OTC options
are transacted directly with dealers and not with a clearing corporation and
there is a risk of nonperformance by the dealer as a result of the insolvency
of the dealer or otherwise, in which event the Fund may experience material
losses. However, in writing OTC options, the premium is paid in advance by the
dealer. OTC options are available for a greater variety of securities, and a
wider range of expiration dates and exercise prices, than are exchange-traded
options. Since there is no exchange, pricing normally is done by reference to
information from market makers, which information is carefully monitored by
Lord Abbett and verified in appropriate cases. A writer or purchaser of a put or call option can terminate it
voluntarily only by entering into a closing transaction. In the case of OTC
options, there can be no assurance that a continuous liquid secondary market
will exist for any particular option at any given time. Consequently, the Fund
may be able to realize the value of an OTC option it has purchased only by
exercising it or entering into a closing sale transaction with the dealer that
issued it. Similarly, when the Fund writes an OTC option, generally it can
close out that option prior to its expiration only by entering 2-7 into a closing purchase transaction with the dealer with whom the Fund
originally wrote it. If a covered call option writer cannot effect a closing
transaction, it cannot sell the underlying security until the option expires or
the option is exercised. Therefore, a covered call option writer of an OTC
option may not be able to sell an underlying security even though it might
otherwise be advantageous to do so. Likewise, a secured put writer of an OTC
option may be unable to sell the securities pledged to secure the put for other
investment purposes while it is obligated as a put writer. Similarly, a
purchaser of such put or call option also might find it difficult to terminate
its position on a timely basis in the absence of a secondary market. The Fund and Lord Abbett believe that such dealers present minimal
credit risks to the Fund and, therefore, should be able to enter into closing
transactions if necessary. The Fund currently will not engage in OTC options
transactions if the amount invested by the Fund in OTC options plus a
liquidity charge related to OTC options written by the Fund, plus the amount
invested by the Fund in illiquid securities, would exceed 10% of the Funds net
assets. The liquidity charge referred to above is computed as described
below. The Fund anticipates entering into agreements with dealers to which the
Fund sells OTC options. Under these agreements the Fund would have the absolute
right to repurchase the OTC options from the dealer at any time at a price no
greater than a price established under the agreements (the Repurchase Price).
The liquidity charge referred to above for a specific OTC option transaction
will be the Repurchase Price related to the OTC option less the intrinsic value
of the OTC option. The intrinsic value of an OTC call option for such purposes
will be the amount by which the current market value of the underlying security
exceeds the exercise price. In the case of an OTC put option, intrinsic value
will be the amount by which the exercise price exceeds the current market value
of the underlying security. If there is no such agreement requiring a dealer to
allow the Fund to repurchase a specific OTC option written by the Fund, the
liquidity charge will be the current market value of the assets serving as
cover for such OTC option. Preferred
Stock, Warrants, and Rights. The Fund may invest in preferred
stock, warrants, and rights. Preferred stocks are securities that represent an
ownership interest providing the holder with claims on the issuers earnings
and assets before common stockholders, but after bond holders and other
creditors. Unlike debt securities, the obligations of an issuer of preferred
stock, including dividend and other payment obligations, typically may not be
accelerated by the holders of such preferred stock on the occurrence of an
event of default or other non-compliance by the issuer of the preferred stock.
Investments in preferred stock present market and liquidity risks. The value of
a preferred stock may be highly sensitive to the economic condition of the
issuer, and markets for preferred stock may be less liquid than the market for
the issuers common stock. Warrants are options to buy a stated number of shares of common stock
at a specified price at any time during the life of the warrant. Rights
represent a privilege offered to holders of record of issued securities to
subscribe (usually on a pro rata basis) for additional securities of the same
class, of a different class or of a different issuer. The holders of warrants
and rights have no voting rights, receive no dividends and have no rights with
respect to the assets of the issuer. The value of a warrant or right may not
necessarily change with the value of the underlying securities. Warrants and
rights cease to have value if they are not exercised prior to their expiration
date. Investments in warrants and rights are thus speculative and may result in
a total loss of the money invested. Repurchase Agreements. The Fund may
enter into repurchase agreements with respect to securities. A repurchase
agreement is a transaction by which the purchaser acquires a security and
simultaneously commits to resell that security to the seller (a bank or
securities dealer) at an agreed-upon price on an agreed-upon date. The resale
price 2-8 reflects the purchase price plus an agreed-upon market rate of interest
that is unrelated to the coupon rate or date of maturity of the purchased
security. The Fund requires at all times that the repurchase agreement be
collateralized by cash or by securities of the U.S. Government, its agencies,
its instrumentalities, or U.S. Government sponsored enterprises (U.S.
Government Securities) having a value equal to, or in excess of, the value of
the repurchase agreement (including accrued interest). Such agreements permit
the Fund to keep all of its assets at work while retaining flexibility in
pursuit of investments of a longer term nature. The use of repurchase agreements involves certain risks. For example,
if the seller of the agreement defaults on its obligation to repurchase the
underlying securities at a time when the value of these securities has
declined, the Fund may incur a loss upon disposition of them. Even though the
repurchase agreements may have maturities of seven days or less, they may lack
liquidity, especially if the issuer encounters financial difficulties. The Fund
intends to limit repurchase agreements to transactions with dealers and
financial institutions believed by Lord Abbett, as the investment manager, to
present minimal credit risks. Lord Abbett will monitor the creditworthiness of
the repurchase agreement sellers on an ongoing basis. Reverse Repurchase Agreements. The
Fund may enter into reverse repurchase agreements. In a reverse repurchase
agreement, the Fund sells a security to a securities dealer or bank for cash
and also agrees to repurchase the same security later at a set price. Reverse
repurchase agreements expose the Fund to credit risk (that is, the risk that
the counterparty will fail to resell the security to the Fund). This risk is
greatly reduced because the Fund generally receives cash equal to 98% of the
price of the security sold. Engaging in reverse repurchase agreements also may
involve the use of leverage, in that the Fund may reinvest the cash it receives
in additional securities. The Fund will attempt to minimize this risk by
managing its duration. Securities Lending. Although the Fund has no current intention of
doing so, the Fund may lend
portfolio securities to registered broker-dealers. These loans may not exceed
30% of the Funds total assets. Securities loans will be collateralized by cash
or marketable securities issued or guaranteed by the U.S. Government or other
permissible means at least equal to 102% of the market value of the domestic
securities loaned and 105% in the case of foreign securities loaned. The Fund
may pay a part of the interest received with respect to the investment of
collateral to a borrower and/or a third party that is not affiliated with the
Fund and is acting as a placing broker. No fee will be paid to affiliated
persons of the Fund. By lending portfolio securities, the Fund can increase its income by
continuing to receive interest or dividends on the loaned securities as well as
by either investing the cash collateral in permissible investments, such as
U.S. Government Securities, or obtaining yield in the form of interest paid by
the borrower when U.S. Government Securities or other forms of non-cash
collateral are received. Securities lending involves the risk that the borrower
will fail to return the securities in a timely manner or at all. Lending
portfolio securities could result in a loss or delay in recovering the Funds
securities if the borrower defaults. When-Issued or Forward Transactions.
The Fund may purchase portfolio securities on a when-issued or forward basis.
When-issued or forward transactions involve a commitment by the Fund to
purchase securities, with payment and delivery (settlement) to take place in
the future, in order to secure what is considered to be an advantageous price
or yield at the time of entering into the transaction. The value of
fixed-income securities to be delivered in the future will fluctuate as
interest rates vary. During the period between purchase and settlement, the
value of the 2-9 securities will fluctuate and assets consisting of cash and/or
marketable securities (normally short-term U.S. Government Securities) marked
to market daily in an amount sufficient to make payment at settlement will be
segregated at the Funds custodian in order to pay for the commitment. There is
a risk that market yields available at settlement may be higher than yields
obtained on the purchase date, which could result in depreciation of the value
of fixed-income when-issued securities. At the time the Fund makes the
commitment to purchase a security on a when-issued basis, it will record the
transaction and reflect the liability for the purchase and the value of the
security in determining its NAV. The Fund
generally has the ability to close out a purchase obligation on or before the
settlement date rather than take delivery of the security. Under no
circumstances will settlement for such securities take place more than 120 days
after the purchase date. U.S. Government Securities. Commercial
paper. Commercial paper consists of unsecured promissory notes issued by
corporations to finance short-term credit needs. Commercial paper is issued
in bearer form with maturities generally not exceeding nine months.
Commercial paper obligations may include variable amount master demand notes. Bank
certificates of deposit and time deposits. Certificates of deposit are
certificates issued against funds deposited in a bank or a savings and loan.
They are issued for a definite period of time and earn a specified rate of
return. Bankers
acceptances. Bankers acceptances are short-term credit instruments
evidencing the obligation of a bank to pay a draft that has been drawn on it
by a customer. These instruments reflect the obligations both of the bank and
of the drawer to pay the face amount of the instrument upon maturity. They
primarily are used to finance the import, export, transfer or storage of
goods. They are accepted when a bank guarantees their payment at maturity. Repurchase agreements. Policies
and Procedures Governing Disclosure of Portfolio Holdings.
The Board has adopted policies and procedures that permit Lord Abbett to make
the Funds portfolio holdings available to the general public on an ongoing
basis and disclose such information to certain third parties on a selective
basis. Among other things, the policies and procedures are reasonably designed
to ensure that the disclosure is in the best interests of Fund shareholders and
to address potential conflicts of interest between the Fund on the one hand and
Lord Abbett and its affiliates or affiliates of the Fund on the other hand.
Except as noted below, Lord Abbett does not provide its portfolio holdings to
any third party until they are made available to the general public on Lord
Abbetts website at www.lordabbett.com or otherwise. The exceptions are as
follows: (1) Lord Abbett may
provide the Funds portfolio holdings to (a) third parties that render
services to the Fund relating to such holdings (i.e., pricing vendors,
ratings organizations, custodians, external administrators, independent
registered public accounting firms, counsel, etc.), as appropriate to the
service being provided to the Fund, on a daily, monthly, calendar quarterly
or annual basis, and (b) third party consultants on a monthly or calendar
quarterly basis for the sole purpose of performing their own analyses with
respect to the Fund one day following each calendar period-end. The Fund may
discuss or otherwise share portfolio holdings or related information with
counterparties that execute transactions on behalf of the Fund; (2) Lord Abbett may
provide portfolio commentaries or fact sheets containing, among other things,
a discussion of select portfolio holdings and a list of the largest portfolio
positions, and/or portfolio performance attribution information to certain
financial intermediaries one day following each period-end; and 2-10 (3) Lord Abbett may
provide the Funds portfolio holdings or related information under other
circumstances subject to the authorization of the Funds officers, in
compliance with policies and procedures adopted by the Board. Before providing schedules of its portfolio holdings to a third party
in advance of making them available to the general public, the Fund obtains
assurances through contractual obligations, certifications or other appropriate
means such as due diligence sessions and other meetings to the effect that: (i)
neither the receiving party nor any of its officers, employees or agents will
be permitted to take any holding-specific investment action based on the
portfolio holdings and (ii) the receiving party will not use or disclose the
information except as it relates to rendering services for the Fund related to
portfolio holdings, to perform certain internal analyses in connection with its
evaluation of the Fund and/or its investment strategies, or for similar
purposes. The sole exception relates to the agreement with SG Constellation,
LLC (SGC), the provider of financing for the distribution of the Funds Class
B shares. The fees payable to SGC are based in part on the value of the Funds
portfolio securities. In order to reduce the exposure of such fees to market
volatility, SGC aggregates the portfolio holdings information provided by all
of the mutual funds that participate in its Class B share financing program
(including the Fund) and may engage in certain hedging transactions based on
the information. However, SGC will not engage in transactions based solely on the
Funds portfolio holdings. Neither the Fund, Lord Abbett nor any other party receives any
compensation or other consideration in connection with any arrangement
described in this section, other than fees payable to a service provider
rendering services to the Fund related to the Funds portfolio holdings. For
these purposes, compensation does not include normal and customary fees that
Lord Abbett or an affiliate may receive as a result of investors making
investments in the Fund. Neither the Fund, Lord Abbett nor any of their
affiliates has entered into an agreement or other arrangement with any third
party recipient of portfolio-related information under which the third party
would maintain assets in the Fund or in other investment companies or accounts
managed by Lord Abbett or any of its affiliated persons as an inducement to
receive the Funds portfolio holdings. In addition to the foregoing, Lord Abbett provides investment advice to
clients other than the Fund that have investment objectives and requirements
that may be substantially similar to the Funds. Such clients also may have
portfolios consisting of holdings substantially similar to the Funds holdings.
Such clients periodically may receive portfolio holdings and other related
information relative to their investment advisory arrangement with Lord Abbett
in the regular course of such arrangement. It is possible that any such client
could trade ahead of or against the Fund based on the information such client
receives in connection with its investment advisory arrangement with Lord
Abbett. In addition, Lord Abbetts investment advice to any client may be
deemed to create a conflict of interest relative to other clients to the extent
that it is possible that any client could trade against the interests of other
clients based on Lord Abbetts investment advice. To address this potential
conflict, Lord Abbett has implemented procedures governing its provision of
impersonal advice that are designed to (i) avoid communication of Lord Abbetts
intent or recommendations with respect to discretionary advice clients, and
(ii) monitor the trading of impersonal advice clients to assess the likelihood
of any adverse effects on discretionary advice clients. The Board also reviews the Funds policies and procedures governing
these arrangements on an annual basis. These policies and procedures may be
modified at any time with the approval of the Board. Fund
Portfolio Information Recipients. Attached as Appendix A is a
list of the third parties that are eligible to receive portfolio holdings
information pursuant to ongoing arrangements under the circumstances described
above. 2-11 3. The Board is responsible for the management of the business and
affairs of the Fund in accordance with the laws of the State of Maryland. The
Board appoints officers who are responsible for the day-to-day operations of
the Fund and who execute policies authorized by the Board. As discussed in
the Funds semiannual report to shareholders, the Board also approves an
investment adviser to the Fund and continues to monitor the cost and quality
of the services the investment adviser provides, and annually considers
whether to renew the contract with the adviser. Generally, each Director
holds office until his/her successor is elected and qualified or until
his/her earlier resignation or removal, as provided in the Funds organizational
documents. Lord Abbett, a Delaware limited liability company, is the Funds
investment adviser. Designated Lord Abbett personnel are responsible for the
day-to-day management of the Fund. The Board currently has nine Directors, seven of whom are persons who
are not interested persons of the Fund, sometimes referred to as
independent directors/trustees or Independent Directors. Robert S. Dow,
Senior Partner of Lord Abbett, serves as the Chairman of the Board and E.
Thayer Bigelow serves as the Boards Lead Independent Director. The Lead
Independent Directors role is to serve as a liaison between the Independent
Directors and Lord Abbett and act as chairperson of meetings of the
Independent Directors and of the Nominating and Governance and Contract
Committees, among other things. The Lead Independent Director speaks
separately with the Chief Compliance Officer on a quarterly basis, or more
frequently as needed, to discuss compliance matters. The Lead Independent Director
also meets regularly with the Secretary of the Lord Abbett Funds to discuss,
review, and revise, as necessary the agenda for meetings of the Board and any
related matters. The Board has determined that its leadership structure is appropriate
in light of the composition of the Board and its committees and Mr. Dows
long tenure with Lord Abbett, familiarity with the Funds business and
affairs, and regular interactions with the Lead Independent Director. The
Board believes that its leadership structure promotes the efficient and
orderly flow of information from management to the Independent Directors and
otherwise enhances the effectiveness of the Boards oversight role. The Board generally meets eight times a year, and may hold additional
special meetings to address specific matters that arise between regularly
scheduled meetings. The Independent Directors also meet regularly without the
presence of management and are advised by independent legal counsel. As discussed more fully below, the Board has delegated certain
aspects of its oversight function to committees comprised of solely
Independent Directors. The committee structure facilitates the Boards timely
and efficient consideration of matters pertinent to the Funds business and affairs
and their associated risks. For simplicity, the following sections use
the term directors/trustees to refer to Directors of the Fund and the
directors/trustees of all other Lord Abbett-sponsored funds. Interested Directors 3-1 Name, Address and Current Position and Principal Occupation and Other Directorships Robert S. Dow Director
since 1995 and Chairman since 1996 Principal Occupation: Senior Partner of Lord
Abbett (since 2007) and was formerly Managing Partner (19962007) and Chief
Investment Officer (19952007), joined Lord Abbett in 1972. Daria L. Foster Director and
President since 2006 Principal
Occupation: Managing Partner of Lord Abbett (since 2007), and was formerly
Director of Marketing and Client Service, joined Lord Abbett in 1990. Independent Directors Name, Address and Current Position and Principal Occupation and Other Directorships E. Thayer Bigelow Director
since 1994 Principal Occupation: Managing General
Partner, Bigelow Media, LLC (since 2000); Senior Adviser, Time Warner Inc.
(19982000). Robert B. Calhoun, Jr. Director
since 1998 Principal Occupation: Senior Advisor of
Monitor Clipper Partners, a private equity investment fund (since 1997);
President of Clipper Asset Management Corp. (19912009). Evelyn E. Guernsey Director
since 2011 Principal Occupation: CEO, Americas of J.P.
Morgan Asset Management (20042010). 3-2 Name, Address and Current Position and Principal Occupation and Other Directorships Julie A. Hill Director
since 2004 Principal Occupation: Owner and CEO of The
Hill Company, a business consulting firm (since 1998). Franklin W. Hobbs Director
since 2000 Principal Occupation: Advisor of One Equity
Partners, a private equity firm (since 2004). Thomas J. Neff Director
since 1982 Principal Occupation: Chairman of Spencer
Stuart (U.S.), an executive search consulting firm (since 1996). James L.L. Tullis Director
since 2006 Principal Occupation: CEO of Tullis-Dickerson
and Co. Inc., a venture capital management firm (since 1990). Officers None of the officers listed below have received compensation from the
Fund. All of the officers of the Fund also may be officers of the other Lord
Abbett-sponsored funds and maintain offices at 90 Hudson Street, Jersey City,
NJ 07302. Unless otherwise indicated, the position(s) and title(s) listed
under the Principal Occupation During the Past Five Years column indicate
each officers position(s) and title(s) with Lord Abbett. 3-3 Name and Current Position with the Length of Service Principal Occupation Robert S. Dow Chief
Executive Officer and Chairman Elected in
1996 Senior
Partner of Lord Abbett (since 2007), and was formerly Managing Partner
(19962007) and Chief Investment Officer (19952007), joined Lord Abbett in
1972. Daria L. Foster President Elected in
2006 Managing
Partner of Lord Abbett (since 2007), and was formerly Director of Marketing
and Client Service, joined Lord Abbett in 1990. Robert P. Fetch Executive
Vice President Elected in
2009 Partner and
Director, joined Lord Abbett in 1995. Daniel H. Frascarelli Executive
Vice President Elected in
2009 Partner and
Director, joined Lord Abbett in 1990. Robert I. Gerber Executive
Vice President Elected in
2007 Partner and
Chief Investment Officer (since 2007), joined Lord Abbett in 1997 as Director
of Taxable Fixed Income Management. James W. Bernaiche Chief Compliance
Officer Elected in
2004 Partner and
Chief Compliance Officer, joined Lord Abbett in 2001. Joan A. Binstock Chief
Financial Officer and Vice President Elected in
1999 Partner and
Chief Operations Officer, joined Lord Abbett in 1999. John K. Forst Vice
President and Assistant Secretary Elected in
2005 Deputy
General Counsel, joined Lord Abbett in 2004. Lawrence H. Kaplan Vice
President and Secretary Elected in
1997 Partner and
General Counsel, joined Lord Abbett in 1997. A. Edward Oberhaus, III (1959) Vice
President Elected in
1996 Partner and
Director, joined Lord Abbett in 1983. 3-4 Name and Current Position with the Length of Service Principal Occupation Thomas R. Phillips Vice
President and Assistant Secretary Elected in
2008 Partner and
Deputy General Counsel, joined Lord Abbett in 2006. Randy M. Reynolds Vice
President Elected in
2010 Portfolio
Manager, joined Lord Abbett in 1999. Lawrence B. Stoller Vice
President and Assistant Secretary Elected in
2007 Partner and
Senior Deputy General Counsel, joined Lord Abbett in 2007 and was formerly an
Executive Vice President and the General Counsel at Cohen & Steers
Capital Management, Inc. (19992007). Francis T. Timons Vice
President Elected in
2010 Portfolio
Manager, joined Lord Abbett in 2007 and was formerly a Research Analyst at
Robert W. Baird & Co. (2004 2007). Bernard J. Grzelak Treasurer Elected in
2003 Partner and
Director of Fund Administration, joined Lord Abbett in 2003. Qualifications of Directors/Trustees The individual qualifications for each of the directors/trustees and
related biographical information are noted below. These qualifications led to
the conclusion that each should serve as a director/trustee for the Fund, in
light of the Funds business and structure. In addition to individual
qualifications, the following characteristics are among those qualifications
applicable to each of the existing directors/trustees and are among the
qualifications that the Nominating and Governance Committee will consider for
any future nominees: Irreproachable reputation for integrity, honesty and the highest
ethical standards; Outstanding skills in disciplines deemed by the Nominating and
Governance Committee to be particularly relevant to the role of Independent
Director, including business acumen, experience relevant to the financial
services industry generally and the investment industry particularly, and
ability to exercise sound judgment in matters relating to the current and
long-term objectives of the Fund; Understanding and appreciation of the important role occupied by an
Independent Director in the regulatory structure governing registered
investment companies; Willingness and ability to contribute positively to the decision
making process for the Fund, including appropriate interpersonal skills to
work effectively with other Independent Directors; Desire and availability to serve as an Independent Director for a
substantial period of time; Absence of conflicts that would interfere with qualifying as an
Independent Director; and Diversity of background. Interested Directors/Trustees: 3-5 Robert S. Dow. Board
tenure with the Lord Abbett Family of Funds (since 1989), chief investment
officer experience, financial services industry experience, chief executive
officer experience, corporate governance experience, service on the
Investment Company Institutes executive committee and board of governors,
and civic/community involvement. Daria L. Foster.
Board tenure with the Lord Abbett Family of Funds (since 2006), financial
services industry experience, leadership experience, corporate governance
experience, and civic/community involvement. Independent Directors/Trustees: E. Thayer Bigelow.
Board tenure with the Lord Abbett Family of Funds (since 1994), media
investment and consulting experience, chief executive officer experience,
entrepreneurial background, corporate governance experience, financial
expertise, service in academia, and civic/community involvement. Robert B. Calhoun, Jr.
Board tenure with the Lord Abbett Family of Funds (since 1998), financial
services industry experience, leadership experience, corporate governance
experience, financial expertise, service in academia, and civic/community
involvement. Evelyn E. Guernsey.
Board tenure with the Lord Abbett Family of Funds (since 2011), financial
services industry experience, chief executive officer experience, marketing
experience, corporate governance experience, and civic/community involvement. Julie A. Hill.
Board tenure with the Lord Abbett Family of Funds (since 2004), business
management and marketing experience, chief executive officer experience,
entrepreneurial background, corporate governance experience, service in
academia, and civic/community involvement. Franklin W. Hobbs.
Board tenure with the Lord Abbett Family of Funds (since 2000), financial
services industry experience, chief executive officer experience, corporate
governance experience, financial expertise, service in academia, and
civic/community involvement. Thomas J. Neff.
Board tenure with the Lord Abbett Family of Funds (since 1982), executive
recruiting and consulting experience, chief executive officer experience,
corporate governance experience, service in academia, and civic/community
involvement. James L.L. Tullis.
Board tenure with the Lord Abbett Family of Funds (since 2006), financial
services industry experience, chief executive officer experience, corporate
governance experience, financial expertise, and civic/community involvement. Committees The standing committees of the Board are the Audit Committee, the
Proxy Committee, the Nominating and Governance Committee, and the Contract
Committee. The table below provides information about each such committees
composition, functions, and responsibilities. 3-6 Committee Committee Members Number of Description Audit
Committee E. Thayer
Bigelow 4 The Audit
Committee comprises solely directors/trustees who are not interested
persons of the Fund. The Audit Committee provides assistance to the Board in
fulfilling its responsibilities relating to accounting matters, the reporting
practices of the Fund, and the quality and integrity of the Funds financial
reports. Among other things, the Audit Committee is responsible for reviewing
and evaluating the performance and independence of the Funds independent
registered public accounting firm and considering violations of the Funds
Code of Ethics to determine what action should be taken. The Audit Committee
meets at least quarterly. Proxy
Committee Julie A.
Hill 3 The Proxy
Committee comprises at least two directors/trustees who are not interested
persons of the Fund, and also may include one or more directors/trustees who
are partners or employees of Lord Abbett. Currently, the Proxy Committee
comprises solely Independent Directors. The Proxy Committee shall (i) monitor
the actions of Lord Abbett in voting securities owned by the Fund; (ii)
evaluate the policies of Lord Abbett in voting securities; and (iii) meet with
Lord Abbett to review the policies in voting securities, the sources of
information used in determining how to vote on particular matters, and the
procedures used to determine the votes in any situation where there may be a
conflict of interest. Nominating
and Governance Committee E. Thayer
Bigelow 3 The
Nominating and Governance Committee comprises all directors/trustees who are
not interested persons of the Fund. Among other things, the Nominating and
Governance Committee is responsible for (i) evaluating and nominating
individuals to serve as Independent Directors and as committee members; and
(ii) periodically reviewing director/trustee compensation. The Nominating and
Governance Committee has adopted policies for its consideration of any
individual recommended by the Funds shareholders to serve as an Independent
Director. A shareholder who would like to recommend a candidate may write to
the Fund. 3-7 Committee Committee Members Number of Description Contract
Committee E. Thayer
Bigelow 4 The Contract
Committee comprises all directors/trustees who are not interested persons
of the Fund. The Contract Committee conducts much of the factual inquiry
undertaken by the directors/trustees in connection with the Boards annual
consideration of whether to renew the management and other contracts with
Lord Abbett and Lord Abbett Distributor. During the year, the Committee meets
with Lord Abbett management and portfolio management to monitor ongoing developments
involving Lord Abbett and the Funds portfolio. Board Oversight of Risk Management Managing the investment portfolio and the operations of the Fund,
like all mutual funds, involves certain risks. Lord Abbett (and other Fund
service providers, subject to oversight by Lord Abbett) is responsible for
day-to-day risk management for the Fund. The Board oversees the Funds risk
management as part of its general management oversight function. The Board,
either directly or through committees, regularly receives and reviews reports
from Lord Abbett about the elements of risk that affect or may affect the
Fund, including investment risk, operational risk, compliance risk, and legal
risk, among other elements of risk related to the operations of the Fund and
Lord Abbett, and the steps Lord Abbett takes to mitigate those risks. The
Board has appointed a Chief Compliance Officer, who oversees the
implementation and testing of the Funds compliance program and reports to
the Board at least quarterly regarding compliance matters for the Fund, Lord
Abbett, and the Funds service providers. The Board also has appointed a
Chief Legal Officer, who is responsible for overseeing internal reporting
requirements imposed under rules adopted by the SEC pursuant to the
Sarbanes-Oxley Act of 2002, which are designed to ensure that credible
indications of material violations of federal securities laws or breaches of
fiduciary duty are investigated and are adequately and appropriately
resolved. In addition to the Boards direct oversight, the Audit Committee and
the Contract Committee play important roles in overseeing risk management on
behalf of the Fund. The Audit Committee oversees the risk management efforts
for financial reporting, pricing and valuation, and liquidity risk and meets
regularly with the Funds Chief Financial Officer and independent auditors,
as well as with members of management, to discuss financial reporting and
audit issues, including risks related to financial controls. The Contract
Committee regularly meets with the Funds portfolio managers and Lord
Abbetts Chief Investment Officer to discuss investment performance achieved
by the Fund and the investment risks assumed by the Fund to achieve that
performance. While Lord Abbett (and the Funds service providers) has implemented
a number of measures intended to mitigate risk effectively to the extent
practicable, it is not possible to eliminate all of the risks that are
inherent in the operations of the Fund. Some risks are beyond the control of
Lord Abbett and not all risks that may affect the Fund can be identified
before the risk arises or before Lord Abbett develops processes and controls
to eliminate the occurrence or mitigate the effects of such risks. Compensation Disclosure The following table summarizes the compensation paid to each of the
independent directors/trustees. 3-8 Name of Director/Trustee For the Fiscal Year Ended For the Year Ended December 31, 2011 E. Thayer
Bigelow $30,784 $278,000 Robert B.
Calhoun, Jr. $30,369 $272,000 Evelyn E.
Guernsey $24,078 $253,000 Julie A.
Hill $27,199 $244,000 Franklin W.
Hobbs $27,433 $247,000 Thomas J.
Neff $27,775 $248,000 James L.L.
Tullis $27,397 $249,000 1 Independent
directors/trustees fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on the net
assets of each fund. A portion of the fees payable by each fund to its
independent directors/trustees may be deferred at the option of a
director/trustee under an equity-based plan (the equity-based plan) that
deems the deferred amounts to be invested in shares of a fund for later
distribution to the directors/trustees. In addition, $25,000 of each
directors/trustees retainer must be deferred and is deemed invested in shares
of the Fund and other Lord Abbett-sponsored funds under the equity-based plan.
Of the amounts shown in the second column, the total deferred amounts for Mr.
Bigelow, Mr. Calhoun, Ms. Guernsey, Ms. Hill, Mr. Hobbs, Mr. Neff, and Mr.
Tullis are $2,864 $30,369, $2,080, $8,286, $27,433, $2,864, and $2,864,
respectively. 2 The third
column shows aggregate compensation, including the types of compensation
described in the second column, accrued by all Lord Abbett-sponsored funds
during the year ended December 31, 2011, including fees independent
directors/trustees have chosen to defer. Name of Director/Trustee Dollar
Range of Equity Aggregate
Dollar Range of Interested Directors/Trustees: Robert S.
Dow Over $100,000 Over $100,000 Daria L.
Foster Over $100,000 Over $100,000 Independent Directors/Trustees: E. Thayer
Bigelow $50,001-$100,000 Over $100,000 Robert B.
Calhoun, Jr. $50,001-$100,000 Over $100,000 Evelyn E.
Guernsey1 $1-$10,000 $10,001-$50,000 Julie A.
Hill Over $100,000 Over $100,000 Franklin W.
Hobbs Over $100,000 Over $100,000 Thomas J.
Neff Over $100,000 Over $100,000 James L.L.
Tullis $10,001-$50,000 Over $100,000 Code of Ethics The directors, trustees and officers of Lord Abbett-sponsored funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment accounts. In
engaging in personal securities transactions, however, such persons are
subject to requirements and restrictions contained in the Funds Code of
Ethics which complies, in substance, with Rule 17j-1 under the Act and each
of the recommendations of the Investment Company Institutes Advisory Group
on Personal Investing (the Advisory Group). Among other things, the Code of
Ethics requires, with limited exceptions, that Lord Abbett partners and
employees obtain advance approval before buying or selling securities, submit
confirmations and quarterly transaction reports, and obtain approval before
becoming a director of any company; and it prohibits such persons from (1)
investing in a security seven days before or after any Lord Abbett-sponsored
fund or Lord Abbett-managed account considers a trade or trades in such
security, (2) transacting in a security that the person covers as an analyst
or with respect to which the person has participated in a non-public investor
meeting with company management within the six months preceding the requested
transaction, (3) profiting on trades of the same security within 60 days, (4)
trading on material and non-public information, and (5) engaging in market
timing activities with respect to the Lord Abbett-sponsored funds. The Code
of Ethics imposes certain similar requirements and restrictions on the
independent directors/trustees of each Lord Abbett-sponsored fund to the
extent contemplated by the Act and recommendations of the Advisory Group. 3-9 Proxy Voting The Fund has delegated proxy voting responsibilities to the Funds
investment adviser, Lord Abbett, subject to the Proxy Committees general
oversight. Lord Abbett has adopted its own proxy voting policies and
procedures for this purpose. A copy of Lord Abbetts proxy voting policies
and procedures is attached as Appendix B. In addition, the Fund is required to file Form N-PX, with its
complete proxy voting record for the twelve months ended June 30th,
no later than August 31st of each year. The Funds Form N-PX
filing is available on the SECs website at www.sec.gov. The Fund also has
made this information available, without charge, on Lord Abbetts website at
www.lordabbett.com. 3-10 4. Edward Jones & Co. 34.11% 201 Progress Pkwy Maryland Hts, MO 63043-3009 Edward Jones & Co. Class A: 32.77% 201 Progress Pkwy Class B: 32.11% Maryland Hts, MO 63043-3009 Class C: 5.74% MLPF & S Class B: 5.14% for the Sole Benefit of its Customers Class C: 29.64% 4800 Deer Lake Drive E. Fl. 3 Class F: 26.09% Jacksonville, FL 32246-6484 Class I: 5.34% Class R2: 13.93% Wells Fargo Advisors LLC Class B: 5.96% Special Custody Account Class C: 10.54% 2801 Market Street Class F: 32.54% Saint Louis, MO 63103-2523 Morgan Stanley Smith Barney Class C: 9.85% House Account Class F: 15.98% 700 Red Brook Blvd Owings Mills, MD 21117 Morgan Stanley Smith Barney Class F: 15.98% Mutual Fund Operations Harborside Financial Center Plaza II 3rd Floor Jersey City, NJ 07311 Raymond James Class F: 8.41% Omnibus for Mutual Funds House Account 880 Carillon Pkwy St. Petersburg, FL 33716 Citigroup Global Markets Inc. Class P: 55.83% 333 West 34th Street 3rd Floor New York, NY 10001-2402 Lord Abbett Balanced Strategy Fund Class I: 57.05% 90 Hudson Street Jersey City, NJ 07302 4-1 Lord Abbett Growth & Income Strategy Fund Class I: 13.08% 90 Hudson Street Jersey City, NJ 07302 Lord Abbett Diversified Equity Fund Class I: 6.56% 90 Hudson Street Jersey City, New Jersey 07302 Hartford Life Separate Account 401(k) Plan Class P: 29.28% P.O. Box 2999 Class R3: 42.16% Hartford, CT 06104-2999 MG Trust Co. (FBO Aries Capital Inc). Class R2: 14.15% 700 17th Street STE 300 Denver, CO 80202-3531 Michael Fullaway FBO Class R2: 28.84% Calaveras Lumber Co Inc 401(k) Plan 806 S. Wheatley St. Ste 600 Ridgeland, MS 39157 Frontier Trust Co. FBO Axiom Class R2: 39.52% Medical Consulting LLC P.O. Box 10758 Fargo, ND 58106 ING Life Insurance & Annuity Co. Class R3: 7.64% (Separate Account) P.O. Box 90065 Hartford, CT 06199-0065 UBS Financial Services Inc. Class C: 7.64% Omnibus for Mutual Funds House Acct 499 Washington Blvd 9th Floor Jersey City, NJ 07310 4-2 5. Investment Adviser As described
under Management and Organization of the Fund in the prospectus, Lord
Abbett is the Funds investment adviser. Lord Abbett is a privately held
investment manager. The address of Lord Abbett is 90 Hudson Street, Jersey
City, NJ 07302-3973. Under the Management Agreement between Lord Abbett and
the Fund, Lord Abbett is entitled to an annual management fee based on the
Funds average daily net assets. The management fee is allocated to each class
of shares based upon the relative proportion of the Funds net assets
represented by that class. The management fee is accrued daily and payable
monthly at the following annual rate: 0.50% on the first $200 million of average daily net
assets; 0.40% on the next $300 million of average daily net
assets; 0.375% on the next $200 million of average daily net
assets; 0.35% on the next $200 million of average daily net
assets; and 0.30% on the Funds average daily net assets over
$900 million. The management fees paid to Lord Abbett by the Fund for the last three
fiscal years ended October 31st were as follows: 2011 2010 2009 $26,095,385 $29,033,417 $29,282,265 The Fund pays all expenses attributable to its operations not expressly
assumed by Lord Abbett, including, without limitation, 12b-1 expenses,
independent directors/trustees fees and expenses, association membership
dues, legal and auditing fees, taxes, transfer and dividend disbursing agent
fees, shareholder servicing costs, expenses relating to shareholder meetings,
expenses of registering its shares under federal and state securities laws,
expenses of preparing, printing and mailing prospectuses and shareholder
reports to existing shareholders, insurance premiums, and other expenses
connected with executing portfolio transactions. Administrative Services Pursuant to an
Administrative Services Agreement with the Fund, Lord Abbett provides certain
administrative services not involving the provision of investment advice to
the Fund. Under the Agreement, the Fund pays Lord Abbett a monthly fee, based
on average daily net assets for each month, at an annual rate of 0.04%. The
administrative services fee is allocated to each class of shares based upon
the relative proportion of the Funds net assets represented by that class. The administrative services fees paid to Lord Abbett
by the Fund for the last three fiscal years ended October 31st were:
2011 2010 2009 $3,352,718 $3,744,455 $3,777,635 Portfolio Managers As stated in the
prospectus, the Fund is managed by an experienced portfolio manager
responsible for investment decisions together with a team of investment
professionals who provide issuer, industry, sector and macroeconomic research
and analysis. Daniel H. Frascarelli heads the team and is primarily responsible for
the day-to-day management of the Fund. 5-1 Other Accounts Managed/Total Net Assets (in millions) Fund Name Registered
Investment Other
Pooled Other Accounts Affiliated Fund Daniel H. Frascarelli 10/$2,685 1/$6 7,037/$2,085* Conflicts of Interest Conflicts of
interest may arise in connection with the portfolio managers management of
the investments of the Fund and the investments of the other accounts
included in the table above. Such conflicts may arise with respect to the
allocation of investment opportunities among the Fund and other accounts with
similar investment objectives and policies. A portfolio manager potentially
could use information concerning the Funds transactions to the advantage of
other accounts and to the detriment of the Fund. To address these potential
conflicts of interest, Lord Abbett has adopted and implemented a number of
policies and procedures. Lord Abbett has adopted Policies and Procedures
Relating to Client Brokerage and Soft Dollars, as well as Evaluations of
Proprietary Research and Procedures. The objective of these policies and
procedures is to ensure the fair and equitable treatment of transactions and
allocation of investment opportunities on behalf of all accounts managed by
Lord Abbett. In addition, Lord Abbetts Code of Ethics sets forth general
principles for the conduct of employee personal securities transactions in a
manner that avoids any actual or potential conflicts of interest with the
interests of Lord Abbetts clients including the Fund. Moreover, Lord
Abbetts Insider Trading and Receipt of Material Non-Public Information
Policy and Procedure sets forth procedures for personnel to follow when they
have inside information. Lord Abbett is not affiliated with a full service
broker-dealer and therefore does not execute any portfolio transactions
through such an entity, a structure that could give rise to additional
conflicts. Lord Abbett does not conduct any investment bank functions and
does not manage any hedge funds. Lord Abbett does not believe that any
material conflicts of interest exist in connection with the portfolio
managers management of the investments of the Fund and the investments of
the other accounts referenced in the table above. Compensation of Portfolio Managers When used in
this section, the term fund refers to the Fund, as well as any other
registered investment companies, pooled investment vehicles and accounts
managed by a portfolio manager. Each portfolio manager receives compensation
from Lord Abbett consisting of salary, bonus and profit sharing plan
contributions. The level of base compensation takes into account the
portfolio managers experience, reputation and competitive market rates. Fiscal year-end bonuses, which can be a substantial percentage of
overall compensation, are determined after an evaluation of various factors.
These factors include the portfolio managers investment results and style
consistency, the dispersion among funds with similar objectives, the risk taken
to achieve the fund returns and similar factors. In considering the portfolio
managers investment results, Lord Abbetts senior management may evaluate the
Funds performance against one or more benchmarks from among the Funds primary
benchmark and any supplemental benchmarks as disclosed in the prospectus,
indexes disclosed as performance benchmarks by the portfolio managers other accounts, and other indexes within the one or
more of the Funds peer groups maintained 5-2 by rating agencies, as well as the
Funds peer group. In particular, investment results are evaluated based on an
assessment of the portfolio managers three- and five-year investment returns
on a pre-tax basis versus both the benchmark and the peer groups. Finally,
there is a component of the bonus that reflects leadership and management of
the investment team. The evaluation does not follow a formulaic approach, but
rather is reached following a review of these factors. No part of the bonus
payment is based on the portfolio managers assets under management, the
revenues generated by those assets, or the profitability of the portfolio
managers team. Lord Abbett does not manage hedge funds. In addition, Lord
Abbett may designate a bonus payment of a manager for participation in the
firms senior incentive compensation plan, which provides for a deferred payout
over a five-year period. The plans earnings are based on the overall asset
growth of the firm as a whole. Lord Abbett believes this incentive focuses
portfolio managers on the impact their funds performance has on the overall
reputation of the firm as a whole and encourages exchanges of investment ideas
among investment professionals managing different mandates. Lord Abbett provides a 401(k) profit-sharing plan for all eligible
employees. Contributions to a portfolio managers profit-sharing account are
based on a percentage of the portfolio managers total base and bonus paid
during the fiscal year, subject to a specified maximum amount. The assets of
this profit-sharing plan are entirely invested in Lord Abbett-sponsored funds. Dollar
Range of Shares in the Fund Fund Name None $1- $10,001- $50,001- $100,001- $500,001- Over Affiliated Fund Daniel H. Frascarelli X Principal Underwriter Lord Abbett
Distributor, a New York limited liability company and a subsidiary of Lord
Abbett, 90 Hudson Street, Jersey City, NJ 07302-3973, serves as the principal
underwriter for the Fund. Custodian and Accounting Agent State Street
Bank and Trust Company, One Lincoln Street, Boston, MA 02111-2900, is the
Funds custodian. The custodian pays for and collects proceeds of securities
bought and sold by the Fund and attends to the collection of principal and
income. The custodian may appoint domestic and foreign subcustodians from
time to time to hold certain securities purchased by the Fund in foreign
countries and to hold cash and currencies for the Fund. In accordance with
the requirements of Rule 17f-5 under the Act, the Board has approved
arrangements permitting the Funds foreign assets not held by the custodian
or its foreign branches to be held by certain qualified foreign banks and
depositories. In addition, State Street Bank and Trust Company performs
certain accounting and recordkeeping functions relating to portfolio
transactions and calculates the Funds NAV. Transfer Agent DST Systems,
Inc., 210 West 10th St., Kansas City, MO 64105, serves as the Funds
transfer agent and dividend disbursing agent pursuant to a Transfer Agency
Agreement. Independent
Registered Public Accounting Firm Deloitte &
Touche LLP, Two World Financial Center, New York, NY 10281, is the
independent registered public accounting firm of the Fund and must be
approved at least annually by the Board to continue in such capacity.
Deloitte & Touche LLP performs audit services for the Fund, including the
examination of financial statements included in the Funds annual report to
shareholders. 5-3 6. Portfolio
Transactions and Brokerage Allocations Investment and Brokerage Discretion.
The Funds Management Agreement authorizes Lord Abbett to place orders for the
purchase and sale of portfolio securities. In doing so, Lord Abbett seeks to
obtain best execution on all portfolio transactions. This means that Lord
Abbett seeks to have purchases and sales of portfolio securities executed at
the most favorable prices, considering all costs of the transaction, including
brokerage commissions, and taking into account the full range and quality of
the broker-dealers services. To the extent consistent with obtaining best
execution, the Fund may pay a higher commission than some broker-dealers might
charge on the same transaction. Lord Abbett is not obligated to obtain the
lowest commission rate available for a portfolio transaction exclusive of
price, service and qualitative considerations. Selection of Brokers and Dealers.
The policy on best execution governs the selection of broker-dealers and
selection of the market and/or trading venue in which to execute the
transaction. Normally, traders who are employees of Lord Abbett make the selection
of broker-dealers. These traders are responsible for seeking best execution.
They also conduct trading for the accounts of other Lord Abbett investment
management clients, including investment companies, institutions and
individuals. To the extent permitted by law, the Fund, if Lord Abbett considers
it advantageous, may make a purchase from or sale to another Lord
Abbett-sponsored fund or client without the intervention of any broker-dealer. Fixed Income Securities. To the
extent the Fund purchases or sells fixed income securities, the Fund generally
will deal directly with the issuer or through a primary market-maker acting as
principal on a net basis. When dealing with a broker-dealer serving as a
primary market-maker, the Fund pays no brokerage commission but the price,
which reflects the spread between the bid and ask prices of the security,
usually includes undisclosed compensation and may involve the designation of
selling concessions. The Fund also may purchase fixed income securities from underwriters
at prices that include underwriting fees. Equity Securities. Transactions on
stock exchanges involve the payment of brokerage commissions. In transactions
on stock exchanges in the U.S., these commissions are negotiated.
Traditionally, commission rates have not been negotiated on stock markets
outside the U.S. While an increasing number of overseas stock markets have
adopted a system of negotiated rates or ranges of rates, however, a small
number of markets continue to be subject to a non-negotiable schedule of
minimum commission rates. To the extent the Fund invests in equity securities,
it ordinarily will purchase such securities in their primary trading markets,
whether such securities are traded OTC or listed on a stock exchange, and
purchase listed securities in the OTC market if such market is deemed the
primary market. The Fund may purchase newly issued securities from underwriters
and the price of such transaction usually will include a concession paid to the
underwriter by the issuer. When purchasing from dealers serving as market
makers, the purchase price paid by the Fund may include the spread between the
bid and ask prices of the security. Evaluating the Reasonableness of Brokerage Commissions
Paid. The Fund pays a commission rate that Lord Abbett
believes is appropriate under the circumstances. While Lord Abbett seeks to pay
competitive commission rates, the Fund will not necessarily be paying the
lowest possible commissions on particular trades if Lord Abbett believes that
the Fund has obtained best execution and the commission rates paid by the Fund
are reasonable in relation to the value of the services received. Such services
include, but are not limited to, showing the Fund trading opportunities, a
willingness and ability to take principal positions in securities, knowledge of
a particular security or market-proven ability to handle a particular type of
trade, providing and/or facilitating Lord Abbetts use of proprietary and third
party research, confidential treatment, promptness and reliability. Lord Abbett
may view the value of these services in terms of either a particular
transaction or multiple transactions on behalf of one or more accounts that it
manages. On a continuing basis, Lord Abbett seeks to determine what levels of
commission rates are reasonable in the marketplace for transactions executed on
behalf of the Fund and its other clients. In evaluating the reasonableness of
commission rates, Lord Abbett may consider any or all of the following: (a)
rates quoted by broker-dealers; (b) the size of a particular transaction, in
terms of the number of shares, dollar amount, and number of clients involved; 6-1 (c) the complexity of a particular transaction in terms of both
execution and settlement; (d) the level and type of business done with a
particular firm over a period of time; (e) the extent to which the
broker-dealer has capital at risk in the transaction; (f) historical commission
rates; (g) the value of any research products and services that may be made
available to Lord Abbett based on its placement of transactions with the
broker-dealer; and (h) rates paid by other institutional investors based on
available public information. At times, Lord Abbett is not able to batch purchases and sales for all
accounts or products it is managing, such as when an individually-managed
account client directs it to use a particular broker for a trade (sometimes
referred to herein as directed accounts) or when a client restricts Lord
Abbett from selecting certain brokers to execute trades for such account
(sometimes referred to herein as restricted accounts). When it does not batch
purchases and sales among products, Lord Abbett usually uses a rotation process
for placing equity transactions on behalf of the different groups of accounts
or products with respect to which equity transactions are communicated to the
trading desk at or about the same time. When transactions for all products using a particular investment
strategy are communicated to the trading desk at or about the same time, Lord
Abbett generally will place trades first for transactions on behalf of the Lord
Abbett 6-2 funds and non-directed, unrestricted individually managed institutional
accounts; second for restricted accounts; third managed account (MA), dual
contract managed account (Dual Contract), and certain model portfolio managed
account (Model-Based) programs (collectively, MA, Dual Contract, Model-Based
and similarly named programs are referred to herein as a Program or
Programs) by Program; and finally for directed accounts. However, Lord Abbett
may determine in its sole discretion to place transactions for one group of
accounts (e.g., directed accounts, restricted accounts or MA Programs, Dual
Contract Programs or Model Based Programs) before or after the remaining
accounts based on a variety of factors, including size of overall trade, the
broker-dealers commitment of capital, liquidity or other conditions of the
market, or confidentiality. Most often, however, transactions are communicated
to the trading desk first for the Lord Abbett funds and institutional accounts
and then for relevant Programs. In those instances, Lord Abbett normally will
place transactions first, for the Lord Abbett funds and non-directed,
unrestricted institutional accounts, next for restricted accounts, third for MA
Programs, Dual Contract Programs and certain Model-Based Programs by Program
and then for directed accounts. If Lord Abbett has received trade instructions from multiple
institutional clients, Lord Abbett will rotate the order in which it places
equity transactions among the accounts or groups of accounts. Lord Abbett
normally will use a rotation methodology designed to treat similarly situated
groups of accounts equitably over time. In instances in which the same equity
securities are used in more than one investment strategy, Lord Abbett normally
will place transactions and, if applicable, use its rotation policies, first on
behalf of the strategy that it views as the primary strategy. For example, Lord
Abbett typically will place transactions/use its rotation for large capitalization
equity accounts before those for balanced strategy accounts that use large
capitalization securities. In some cases, Lord Abbetts batching, allocation and rotation
procedures may have an adverse effect on the size of the position purchased or
sold by a particular account or the price paid or received by certain accounts.
From time to time, these policies may adversely affect the performance of
accounts subject to the rotation process. Lord Abbetts trading practices are
intended to avoid systematically favoring one product or group of accounts over
another and to provide fair and equitable treatment over time for all products
and clients. Lord Abbett has entered into Client Commission Arrangements with a
number of broker-dealers that are involved from time to time in executing,
clearing or settling securities transactions on behalf of clients (Executing
Brokers). Such Client Commission Arrangements provide for the Executing
Brokers to pay a portion of the commissions paid by eligible client accounts
for securities transactions to providers of Research Services (Research
Providers). Such Research Providers shall produce and/or provide Research
Services for the benefit of Lord Abbett. If a Research Provider plays no role
in executing client securities transactions, any Research Services prepared by
such Research Provider may constitute third party research. Research Services
that are proprietary to the Executing Broker or are otherwise produced by the
Executing Broker or its affiliates are referred to herein as proprietary
Research Services. Lord Abbett may initiate a significant percentage, including
perhaps all, of a clients equity transactions with Executing Brokers pursuant
to Client Commission Arrangements. Executing Brokers may provide Research Services to Lord Abbett in
written form or through direct contact with individuals, including telephone
contacts and meetings with securities analysts and/or management
representatives from portfolio companies, and may include information as to
particular companies and securities as well as market, economic, or other
information that assists in the evaluation of investments. Examples of Research
Services that Executing Brokers may provide to Lord Abbett include research
reports and other information on the economy, industries, groups of securities,
individual companies, statistical information, political developments,
technical market action, pricing and appraisal services, credit analysis, risk
measurement analysis, performance and other analysis. Broker-dealers typically
make proprietary research available to investment managers on the basis of
their placement of transactions with the broker-dealer. Some broker-dealers
will not sell their proprietary research to investment managers on a hard
dollar (or unbundled) basis. Executing Brokers may provide Lord Abbett with
proprietary Research Services, at least some of which are useful to Lord Abbett
in its overall responsibilities with respect to client accounts Lord Abbett
manages. In addition, Lord Abbett may purchase third party research with its
own resources. 6-3 In some cases, Lord Abbett may receive a product or service from a
broker-dealer that has both a research and a non-research use. When this
occurs, Lord Abbett makes a good faith allocation between the research and
non-research uses of the product or service. The percentage of the product or
service Lord Abbett uses for research purposes may be paid for with client
commissions, while Lord Abbett will use its own funds to pay for the percentage
of the product or service that it uses for non-research purposes. In making
this good faith allocation, Lord Abbett faces a potential conflict of interest,
but Lord Abbett believes that its allocation procedures are reasonably designed
to ensure that it appropriately allocates the anticipated use of such products
or services to their research and non-research uses. Lord Abbett periodically assesses the contributions of the equity
brokerage and Research Services provided by broker-dealers and creates a
ranking of broker-dealers reflecting these assessments. Investment managers and
research analysts each evaluate the proprietary Research Services they receive
from broker-dealers and make judgments as to the value and quality of such
services. These assessments may affect the extent to which Lord Abbett trades
with a broker-dealer, although the actual amount of transactions placed with a
particular broker-dealer may not directly reflect its ranking in the voting
process. Assuming identical execution quality, however, there should be a
correlation between the level of trading activity with a broker-dealer and the
ranking of that broker-dealers brokerage and proprietary Research Services.
All portfolio transactions placed with such broker-dealers will be effected in
accordance with Lord Abbetts obligation to seek best execution for its client
accounts. Lord Abbett periodically monitors the allocation of equity trading
among broker-dealers. From time to time, Lord Abbett prepares a list of Research Providers
that it considers to provide valuable Research Services (Research Firms) as
determined by Lord Abbetts investment staff (Research 6-4 Evaluation). Lord Abbett uses the Research Evaluation as a guide for
allocating payments for Research Services to Research Firms, including
Executing Brokers that may provide proprietary Research Services to Lord
Abbett. Lord Abbett may make payments for proprietary Research Services
provided by an Executing Broker through the use of commissions paid on trades
executed by such Executing Broker pursuant to a Client Commission Arrangement
(Research Commissions). Lord Abbett also uses the Research Evaluation as a
guide for allocating Research Commissions and cash payments from its own
resources to Research Firms that are not Executing Brokers. From time to time, Lord
Abbett may allocate Research Commissions to pay for a significant portion of
the Research Services that it receives. Lord Abbett also reserves the right to
pay cash to a Research Firm from its own resources in an amount it determines
in its discretion. Lord Abbett may select broker-dealers that provide Research Services in
order to ensure the continued receipt of such Research Services which Lord
Abbett believes are useful in its investment decision-making process. Further,
Lord Abbett may have an incentive to execute trades through certain of such
broker-dealers with which it has negotiated more favorable arrangements for
Lord Abbett to receive Research Services. To the extent that Lord Abbett uses
brokerage commissions paid in connection with client portfolio transactions to
obtain Research Services, the brokerage commissions paid by such clients might
exceed those that might otherwise be paid for execution only. In order to
manage these conflicts of interest, Lord Abbett has adopted internal procedures
that are designed to ensure that its primary objective in the selection of a
broker-dealer is to seek best execution for the portfolio transaction. 2011 2010 2009 $2,109,430 $3,655,097 $12,345,318 6-5 Regular Broker or Dealer Value
of the Funds Aggregate Holdings of the Wells Fargo Securities LLC $214,442,897 Goldman Sachs & Co. $154,627,086 T. Rowe Price Investment Services $44,998,016 Merrill Lynch, Pierce, Fenner and Smith Incorporated $41,634,109 6-6 The Fund offers investors different classes of shares. The different
classes of shares represent investments in the same portfolio of securities but
are subject to different expenses and will likely have different share prices.
Investors should read this section carefully to determine which class
represents the best investment option for their particular situation. All classes of shares have equal noncumulative voting rights and equal
rights with respect to dividends, assets and liquidation, except for certain
class-specific expenses. They are fully paid and nonassessable when issued and
have no preemptive or conversion rights. Additional classes, series, or funds
may be added in the future. The Act requires that where more than one class,
series, or fund exists, each class, series, or fund must be preferred over all
other classes, series, or funds in respect of assets specifically allocated to
such class, series, or fund. The Funds By-Laws provide that the Fund shall not hold an annual
meeting of its shareholders in any year unless the election of directors is
required to be acted on by shareholders under the Act, or unless called by a
majority of the Board or by shareholders holding at least one quarter of the
stock of the Fund outstanding and entitled to vote at the meeting. A special
meeting may be held if called by the Chairman of the Board or President, by a
majority of the Board, or by shareholders holding at least one quarter of the
stock of the Fund outstanding and entitled to vote at the meeting. Class B Shares. If you buy Class B
shares, you pay no sales charge at the time of purchase, but if you redeem your
shares before the sixth anniversary of buying them, you normally will pay a
CDSC to Lord Abbett Distributor. That CDSC varies depending on how long you own
shares. Class B shares are subject to service and distribution fees at an
annual rate of 1% of the average daily NAV of the Class B shares. Other
potential fees and expenses related to Class B shares are described in the
prospectus and below. Conversions of Class B Shares. The
conversion of Class B shares after approximately the eighth anniversary of
their purchase is subject to the continuing availability of a private letter
ruling from the Internal Revenue Service, or an opinion of counsel or tax
advisor, to the effect that the conversion of Class B shares does not
constitute a taxable event for the holder under federal income tax law. If such
a revenue ruling or opinion is no longer available, the automatic conversion
feature may be suspended, in which event no further conversions of Class B
shares would occur while such suspension remained in effect. Although Class B
shares could then be exchanged for Class A shares on the basis of relative NAV
of the two classes, without the imposition of a sales charge or fee, such
exchange could constitute a taxable event for the holder. 7-1 Class F Shares. If you buy Class F
shares, you pay no sales charge at the time of purchase, and if you redeem your
shares you pay no CDSC. Class F shares are subject to service and distribution
fees at an annual rate of 0.10 % of the average daily net assets of the Class F
shares. Class F shares generally are available to investors participating in
fee-based programs that have (or whose trading agents have) an agreement with
Lord Abbett Distributor and to certain investors that are clients of certain
registered investment advisors that have an agreement with Lord Abbett
Distributor, if it so deems appropriate. Other potential fees and expenses
related to Class F shares are described in the prospectus and below. Class I Shares. If you buy Class I
shares, you pay no sales charges or 12b-1 service or distribution fees. Class P Shares. If you buy Class P
shares, you pay no sales charge at the time of purchase, and if you redeem your
shares you pay no CDSC. Class P shares are subject to service and distribution
fees at an annual rate of 0.45% of the average daily NAV of the Class P shares.
Class P shares are offered only on a limited basis through certain financial
intermediaries and retirement and benefit plans. Class P shares are closed to
substantially all new investors. However, shareholders that held Class P shares
as of October 1, 2007 may continue to hold their Class P shares and may make
additional purchases. Class P shares may be redeemed at NAV by existing
shareholders, or may be exchanged for shares of another class provided
applicable eligibility requirements and sales charges for the other share class
are satisfied. Class P shares also are available for orders made by or on
behalf of a financial intermediary for clients participating in an IRA rollover
program sponsored by the financial intermediary that operates the program in an
omnibus recordkeeping environment and has entered into special arrangements
with the Fund and/or Lord Abbett Distributor specifically for such orders. Class R2 and R3 Shares. If you buy
Class R2 or R3 shares, you pay no sales charge at the time of purchase and if
you redeem your shares you pay no CDSC. Class R2 and R3 shares are subject to
service and distribution fees at annual rates of 0.60% and 0.50% of the
average daily NAV of the Class R2 and R3 shares, respectively. Class R2 and R3
generally are available only through certain employer-sponsored retirement and
benefit plans if the financial intermediary has entered into an arrangement to
make available Class R2 or R3 shares to plan participants and other dealers
that have entered into agreements with Lord Abbett Distributor. Class R2 and R3
shares generally are available only to retirement and benefit plans where
plan-level or omnibus accounts are held on the books of the Fund. They
generally are not available to retail non-retirement accounts, traditional and
Roth IRAs, Coverdell Education Savings Accounts, SEPs, SARSEPs, SIMPLE IRAs,
individual 403(b) plans, and 529 college savings plans. Other potential fees and
expenses related to Class R2 and R3 shares are described in the prospectus and
below. 7-2 The Plan provides that the maximum payments that may be authorized by
the Board for Class A shares are 0.50%; for Class P shares, 0.75%; and Class B,
Class C, Class F, Class R2, and Class R3 shares, 1.00%; however, the Board has
approved payments of 0.35% for Class A shares, 1.00% for Class B shares, 1.00%
for Class C shares, 0.10% for Class F shares, 0.45% for Class P shares, 0.60%
for Class R2 shares, and 0.50% for Class R3 shares. The Fund may not pay
compensation where tracking data is not available for certain accounts or where
the authorized institution waives part of the compensation. In such cases, the
Fund will not require payment of any otherwise applicable CDSC. Class
A Class
B Class
C Class
F Class
P Class
R2 Class
R3 $23,539,833 $2,467,584 $5,605,655 $121,601 $594,567 $4,233 $194,726 Payments made pursuant to the Plan are subject to any applicable
limitations imposed by rules of the Financial Industry Regulatory Authority,
Inc. The Plan terminates automatically if it is assigned. In addition, the Plan
may be terminated with respect to a class at any time by vote of a majority of
the Outside Directors/Trustees or by vote of a majority of the outstanding
voting securities of the applicable class. CDSC. A CDSC applies upon early
redemption of shares for certain classes, and (i) will be assessed on the
lesser of the NAV of the shares at the time of the redemption or the NAV when
the shares originally were purchased; and (ii) will not be imposed on the
amount of your account value represented by the increase in NAV over the
initial purchase price (including increases due to the reinvestment of dividends
and capital gains distributions) and upon early redemption of shares. In the
case of Class A shares, this increase is represented by shares having an
aggregate dollar value in your account. In the case of Class B and C shares,
this increase is represented by that percentage of each share redeemed where
the NAV exceeded the initial purchase price. 7-3 Class B Shares. As stated in the
prospectus, subject to certain exceptions, if Class B shares of the Fund (or
Class B shares of another Lord Abbett-sponsored fund or series acquired through
exchange of such shares) are redeemed out of the Lord Abbett-sponsored funds
for cash before the sixth anniversary of their purchase, a CDSC will be
deducted from the redemption proceeds. The Class B CDSC is paid to Lord Abbett
Distributor to reimburse its expenses, in whole or in part, for providing
distribution-related services to the Fund in connection with the sale of Class
B shares. To minimize the effects of the CDSC or to determine whether the CDSC
applies to a redemption, the Fund redeems Class B shares in the following
order: (1) shares acquired by reinvestment of dividends and capital gains
distributions, (2) shares held on or after the sixth anniversary of their
purchase, and (3) shares held the longest before such sixth anniversary. The amount of the CDSC will depend on the number of years since you
invested and the dollar amount being redeemed, according to the following
schedule: Anniversary
of the Day on CDSC
on Redemptions Before the 1st 5.0% On the 1st, before the 2nd 4.0% On the 2nd, before the 3rd 3.0% On the 3rd, before the 4th 3.0% On the 4th, before the 5th 2.0% On the 5th, before the 6th 1.0% On or after the 6th anniversary None Eligible Mandatory Distributions. If
Class A, B, or C shares represent a part of an individuals total IRA or 403(b)
investment, the CDSC for the applicable share class will be waived only for
that part of a mandatory distribution that bears the same relation to the
entire mandatory distribution as the investment in that class bears to the
total investment. There is no CDSC charged on Class F, I, P, R2, or R3 shares; however,
financial intermediaries may charge additional fees or commissions other than
those disclosed in the prospectus and SAI, such as a transaction based fee or
other fee for its service, and may categorize and disclose these arrangements
differently than the discussion here or in the prospectus. You may ask your
financial intermediary about any payments it receives from Lord Abbett or the
Fund, as well as about fees and/or commissions it charges. 7-4 With respect to Class A shares, a CDSC will not be assessed at the time
of certain transactions, including redemptions by participants or beneficiaries
from certain retirement and benefit plans and benefit payments under retirement
and benefit plans in connection with plan loans, hardship withdrawals, death,
retirement or separation from service and for returns of excess contributions
to retirement plan sponsors. With respect to Class A share purchases by
retirement and benefit plans made through financial intermediaries that have
special arrangements with the Fund and/or Lord Abbett Distributor, no CDSC will
be assessed at the time of redemptions that continue as investments in another
fund participating in the program provided the Plan has not redeemed all, or
substantially all, of its assets from the Lord Abbett-sponsored funds. With
respect to Class B shares, no CDSC is payable for redemptions (i) in connection
with Systematic Withdrawal Plan and Div-Move services as described below under
those headings, (ii) in connection with a mandatory distribution under 403(b)
plans and IRAs and (iii) in connection with the death of the shareholder. In
the case of Class A shares, the CDSC is received by Lord Abbett Distributor and
is intended to reimburse all or a portion of the amount paid by Lord Abbett
Distributor if the shares are redeemed before the Fund has had an opportunity
to realize the anticipated benefits of having a long-term shareholder account
in the Fund. In the case of Class B and C shares, the CDSC is received by Lord
Abbett Distributor and is intended to reimburse its expenses of providing
distribution-related services to the Fund (including recoupment of the
commission payments made) in connection with the sale of Class B and C shares
before Lord Abbett Distributor has had an opportunity to realize its
anticipated reimbursement by having such a long-term shareholder account
subject to the Class B or C distribution fee. In no event will the amount of the CDSC exceed the Applicable
Percentage of the lesser of (i) the NAV of the shares redeemed or (ii) the
original cost of such shares (or of the exchanged shares for which such shares
were acquired). No CDSC will be imposed when the investor redeems (i) shares
representing an aggregate dollar amount of his or her account, in the case of
Class A shares, (ii) that percentage of each share redeemed, in the case of
Class B and C shares, derived from increases in the value of the shares above
the total cost of shares being redeemed due to increases in NAV, (iii) shares
with respect to which no Lord Abbett-sponsored fund paid a 12b-1 fee and, in
the case of Class B shares, Lord Abbett Distributor paid no sales charge or
service fee (including shares acquired through reinvestment of dividend income
and capital gains distributions), or (iv) shares that, together with exchanged
shares, have been held continuously (a) until the first day of the month in
which the one-year anniversary of the original purchase falls (in the case of
Class A shares), (b) for six years or more (in the case of Class B shares), and
(c) for one year or more (in the case of Class C shares). In determining
whether a CDSC is payable, (i) shares not subject to the CDSC will be redeemed
before shares subject to the CDSC and (ii) of the shares subject to a CDSC,
those held the longest will be the first to be redeemed. Which Class of Shares Should You Choose?
Once you decide that the Fund is an appropriate investment for you, the
decision as to which class of shares is better suited to your needs depends on
a number of factors that you should discuss with your financial advisor. The
Funds class-specific expenses and the effect of the different types of sales
charges on your investment will affect your investment results over time. The
most important factors are how much you plan to invest and how long you plan to
hold your investment. If your goals and objectives change over time and you
plan to purchase additional shares, you should re-evaluate those factors to see
if you should consider another class of shares. In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the sales
charge rates that generally apply to Class A, B, and C, and considered the
effect of the higher distribution fees on Class B and C expenses (which will
affect your investment return). Of course, the actual performance of your
investment cannot be predicted and will vary based on the Funds actual
investment returns, the operating expenses borne by each class of shares, and
the class of shares you purchase. The factors briefly discussed below are not
intended to be investment advice, guidelines or recommendations, because each
investors financial considerations are different. The discussion below of the
factors to consider in purchasing a particular class of shares assumes that you
will purchase only one class of shares and not a combination of shares of
different classes. If you are considering an investment through a retirement
and benefit plan (available through certain financial intermediaries as Class
A, I, P, R2, or R3 share investments), or a fee-based program (available
through certain financial intermediaries as Class A, F, I, or P share
investments), you should discuss with your financial intermediary which class
of shares is available to you and makes the most sense as an appropriate
investment. 7-5 How Long Do You Expect to Hold Your Investment?
While future financial needs cannot be predicted with certainty, knowing how
long you expect to hold your investment will assist you in selecting the
appropriate class of shares. For example, over time, the reduced sales charges
available for larger purchases of Class A shares may offset the effect of
paying an initial sales charge on your investment, compared to the effect over
time of higher class-specific expenses on Class C shares for which no initial
sales charge is paid. Because of the effect of class-based expenses, your
choice also should depend on how much you plan to invest. Investing for the Short Term. Class
C shares might be the appropriate choice (especially for investments of less
than $50,000), because there is no initial sales charge on Class C shares, and
the CDSC does not apply to amounts you redeem after holding them one year. However, if you plan to invest more than $50,000 for the short term,
then the more you invest and the more your investment horizon increases toward
six years, the more attractive the Class A share option may become. This is
because the annual distribution fee on Class C shares will have a greater
impact on your account over the longer term than the reduced front-end sales
charge available for larger purchases of Class A shares. In addition, it may not be suitable for you to place an order for Class
C shares for retirement and benefit plans with at least 100 eligible employees
or for retirement and benefit plans made through financial intermediaries that
perform participant recordkeeping or other administrative services for the
plans and that have entered into special arrangements with the Fund and/or Lord
Abbett Distributor specifically for such purchases. You should discuss this
with your financial advisor. Investing for the Longer Term. If
you plan to invest more than $50,000 over the long term, Class A shares will
likely be more advantageous than Class C shares, as discussed above, because of
the effect of the expected lower expenses for Class A shares and the reduced
initial sales charges available for larger investments in Class A shares under
the Funds Rights of Accumulation. Of course, these examples are based on approximations of the effect of
current sales charges and expenses on a hypothetical investment over time, and
should not be relied on as rigid guidelines. Are There Differences in Account Features That Matter
to You? Some account features may be available in whole or in
part to Class A, B, and C shareholders, but not to Class F, I, P, R2, or R3
shareholders. Other features (such as Systematic Withdrawal Plans) might not be
advisable in non-retirement and benefit plan accounts for Class B shareholders
(because of the effect of the CDSC on the entire amount of a withdrawal if it
exceeds 12% annually) and in any account for Class C shareholders during the
first year of share ownership (due to the CDSC on withdrawals during that
year). See Systematic Withdrawal Plan under Account Services and Policies
in the prospectus for more information about the 12% annual waiver of the CDSC
for Class B and C shares. You should carefully review how you plan to use your
investment account before deciding which class of shares you buy. For example,
the dividends payable to Class B and C shareholders will be reduced by the
expenses borne solely by each of these classes, such as the higher distribution
fee to which Class B and C shares are subject. 7-6 7-7 8. Pricing of Fund Shares.
Information concerning how we value Fund shares is contained in the
prospectus under Account Services and Policies Pricing of Fund Shares. Under normal circumstances, we calculate the NAV per share for each
class of the Fund as of the close of the NYSE on each day that the NYSE is open
for trading by dividing the total net assets of the class by the number of
shares of the class outstanding at the time of calculation. The NYSE is closed
on Saturdays and Sundays and on days when it observes the following holidays --
New Years Day, Martin Luther King, Jr. Day, Presidents Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The NYSE may change its holiday schedule or hours of operation at any time. Portfolio securities are valued at market value as of the close of the
NYSE. Market value will be determined as follows: securities listed or admitted
to trading privileges on any national or foreign securities exchange, or on the
NASDAQ National Market System are valued at the last sale price, or if there is
no sale on that day, at the last bid or, in the case of bonds, in the OTC
market if that market more accurately reflects the market value of the bonds.
Unlisted equity securities are valued at the last transaction price, or if
there were no transactions that day, at the mean between the last bid and asked
prices. OTC fixed income securities are valued at prices supplied by
independent pricing services, which reflect broker-dealer-supplied valuations
and electronic data processing techniques reflecting the mean between the bid
and asked prices. The principal markets for non-U.S. securities and U.S. fixed
income securities also generally close prior to the close of the NYSE.
Consequently, values of non-U.S. investments and U.S. fixed income securities
will be determined as of the earlier closing of such exchanges and markets
unless the Fund prices such a security at its fair value. Securities for which
market quotations are not available are valued at fair market value under
procedures approved by the Board, as described in the prospectus. All assets and liabilities expressed in foreign currencies will be
converted into U.S. dollars at the exchange rates of such currencies against
U.S. dollars provided by an independent pricing service as of the close of
regular trading on the NYSE. If such exchange rates are not available, the rate
of exchange will be determined in accordance with policies established by the
Board. NAV Purchases of Class A Shares.
Our Class A shares may be purchased at NAV under the following circumstances: (a) purchases of $1 million or more; (b) purchases by retirement and benefit plans with at least 100
eligible employees; (c) purchases for retirement and benefit plans made through financial
intermediaries that perform participant recordkeeping or other administrative
services for the plans and that have entered into special arrangements with
the Fund and/or Lord Abbett Distributor specifically for such purchases; (d) purchases by insurance companies and/or their separate accounts
to fund variable insurance contracts, provided that the insurance company
provides recordkeeping and related administrative services to the contract
owners and has entered into special arrangements with the Fund and/or Lord
Abbett Distributor specifically for such purchases; (e) purchases made with dividends and distributions on Class A shares
of another Eligible Fund (as defined in the prospectus); (f) purchases representing repayment under the loan feature of the
Lord Abbett-sponsored prototype 403(b) Plan for Class A shares; (g) purchases by employees of any consenting securities dealer having
a sales agreement with Lord Abbett Distributor; 8-1 (h) purchases made by or on behalf of financial intermediaries for
clients that pay the financial intermediaries fees in connection with
fee-based programs provided that the financial intermediaries or their
trading agents have entered into special arrangements with the Fund and/or
Lord Abbett Distributor specifically for such purchases; (i) purchases by trustees or custodians of any pension or profit
sharing plan, or payroll deduction IRA for the employees of any consenting
securities dealer having a sales agreement with Lord Abbett Distributor; (j) purchases by each Lord Abbett-sponsored funds
directors/trustees, officers of each Lord Abbett-sponsored fund, employees
and partners of Lord Abbett (including retired persons who formerly held such
positions and family members of such purchasers); (k) purchases involving the concurrent sale of Class B or C shares of
the Fund related to the requirements of a settlement agreement that the
broker-dealer entered into with a regulatory body relating to share class
suitability. These sales transactions will be subject to the assessment of
any applicable CDSCs (although the broker-dealer may pay on behalf of the
investor or reimburse the investor for any such CDSC), and any investor
purchases subsequent to the original concurrent transactions will be at the
applicable public offering price, which may include a sales charge; or (l) purchases by non-U.S. pension funds or insurance companies by or
through local intermediaries, provided that the Class A shares have been
approved by and/or registered with a relevant local authority and that Lord
Abbett Distributor has entered into special arrangements with a local
financial intermediary in connection with the distribution or placement of
such shares. Class A shares also may be purchased at NAV (i) by employees,
partners and owners of unaffiliated consultants and advisors to Lord Abbett,
Lord Abbett Distributor, or Lord Abbett-sponsored funds who consent to such
purchase if such persons provide service to Lord Abbett, Lord Abbett
Distributor, or such funds on a continuing basis and are familiar with such
funds, (ii) in connection with a merger, acquisition or other reorganization,
(iii) by employees of our shareholder servicing agent, or (iv) by the
trustees or custodians under any pension or profit-sharing plan or payroll
deduction IRA established for the benefit of the directors/trustees,
employees of Lord Abbett, or employees of our shareholder service agents.
Shares are offered at NAV to these investors for the purpose of promoting
goodwill with employees and others with whom Lord Abbett Distributor and/or
the Fund has a business relationship. In addition, Class A shares may be acquired without a front-end sales
charge in certain exchange transactions. Please see Exchanges below. Exchanges. To the
extent offers and sales may be made in your state, you may exchange some or all
of your shares of any class of the Fund for: (i) Lord Abbett-sponsored funds
currently offered to the public with a sales charge (front-end, back-end or
level); or (ii) Lord Abbett U.S. Government & Government Sponsored
Enterprises Money Market Fund, Inc. (Money Market Fund). The exchange
privilege will not be available with respect to any fund, the shares of which
at the time are not available to new investors of the type requesting the
exchange. Shareholders in other Lord Abbett-sponsored mutual funds generally
have the same right to exchange their shares for the corresponding class of the
Funds shares. In addition, shareholders who own any class of shares of an Eligible
Fund may exchange such shares for a different class of shares of the same
Eligible Fund without any sales charge (or CDSC), provided that (i) such shares
are not subject to a CDSC and (ii) such exchange is necessary to facilitate the
shareholders participation in a fee-based program sponsored by the financial
intermediary that is the broker of record on the shareholders account that
holds the shares to be relinquished as part of the exchange transaction.
Likewise, shareholders who participate in a fee-based program sponsored by a
financial intermediary and own (directly or beneficially) Class A shares that
were purchased with or without a sales charge, Class F shares, or Class P
shares may exchange such shares acquired through the shareholders
participation in such fee-based program for Class A shares of the same Eligible
Fund without incurring a sales charge (or a CDSC), provided that (i) such
shares are not subject to a CDSC and (ii) the financial intermediary sponsoring
the fee-based program is the broker of record on the shareholders account that
will hold the Class A shares of the Eligible Fund received as a result of the
exchange. 8-2 The Fund is designed for long-term investors and is not designed to
serve as a vehicle for frequent trading in response to short-term swings in the
market. The Fund reserves the right to modify, restrict, or reject any purchase
order or exchange request if the Fund or Lord Abbett Distributor determines
that it is in the best interest of the Fund and its shareholders. In addition,
the Fund may revoke or modify the privilege for all shareholders upon 60 days
written notice. You should read the prospectus of the other fund before exchanging. In
establishing a new account by exchange, shares of the fund being exchanged must
have a value equal to at least the minimum initial investment required for the
other fund into which the exchange is made. An exchange transaction is based on the relative NAV of the shares
being exchanged. The NAV, which normally is calculated each business day at the
close of regular trading on the NYSE (typically 4:00 p.m. Eastern time each
business day), will be determined after the Fund or its authorized agent
receives your exchange order in proper form. Exchanges of Fund shares for
shares of another fund generally will be treated as a sale of Fund shares and
any gain on the transaction may be subject to federal income tax. In the case
of an exchange of shares that have been held for 90 days or less where no sales
charge is payable on the exchange, the original sales charge incurred with
respect to the exchanged shares will be taken into account in determining gain
or loss on the exchange only to the extent such charge exceeds the sales charge
that would have been payable on the acquired shares had they been acquired for
cash rather than by exchange. The portion of the original sales charge not so taken
into account will increase the basis of the acquired shares. No sales charges are imposed on exchanges, except in the case of
exchanges out of Money Market Fund. Exchanges of Money Market Fund shares for
shares of any Lord Abbett-sponsored fund (not including shares described under
Div-Move below) are subject to a sales charge in accordance with the
prospectus of that fund unless a sales charge (front-end, back-end or level)
was paid on the initial investment in shares of a Lord Abbett-sponsored fund
and those shares subsequently were exchanged for shares of Money Market Fund
that are currently being exchanged. No CDSC will be charged on an exchange of
shares of the same class between Lord Abbett-sponsored funds. Upon redemption
of shares out of the Lord Abbett-sponsored funds, the applicable CDSC will be
charged. Thus, if shares of a Lord Abbett-sponsored fund are tendered in
exchange (Exchanged Shares) for shares of the same class of another fund and
the Exchanged Shares are subject to a CDSC, the CDSC will carry over to the
shares being acquired (including shares of Money Market Fund) (Acquired
Shares). Any CDSC that is carried over to Acquired Shares is calculated as if
the holder of the Acquired Shares had held those shares from the date on which
he or she became the holder of the Exchanged Shares. Acquired Shares held in
Money Market Fund that are subject to a CDSC will be credited with the time
such shares are held in Money Market Fund. Rights of Accumulation.
As stated in the prospectus, Purchasers (as defined in the prospectus) may
aggregate their investments in Class A, B, C, F, and P shares of any Eligible
Fund so that the Purchasers current investment in such shares, plus the
Purchasers new purchase of Class A shares of any Eligible Fund, may reach a
level eligible for a discounted sales charge for such shares. Class I, R2, and
R3 shares are not eligible to be combined with other share classes for purposes
of calculating the applicable sales charge on Class A share purchases. To the extent your financial intermediary is able to do so, the value
of Class A, B, C, F, and P shares of Eligible Funds determined for the purpose
of reducing the sales charge of a new purchase under the Rights of Accumulation
will be calculated at the higher of: (1) the aggregate current maximum offering
price of your existing Class A, B, C, F, and P shares of Eligible Funds
(Market Value) determined as of the time your new purchase order is
processed; or (2) the aggregate amount you invested in such shares (including
reinvestments of dividend and capital gain distributions but excluding capital
appreciation) less any withdrawals (Investment Value). Depending on the way
in which the registration information is recorded for the account in which your
shares are held, the value of your holdings in that account may not be eligible
for calculation at the Investment Value. For example, shares held in accounts
maintained by financial intermediaries in nominee or street name may not be
eligible for calculation at Investment Value. In such circumstances, the value
of the shares may be calculated at Market Value for purposes of Rights of
Accumulation. You should retain any information and account records necessary to
substantiate the historical amounts you and any related Purchasers have
invested in Eligible Funds. In certain circumstances, unless you provide
documentation (or your financial intermediary maintains records) that
substantiates a different Investment Value, your shares will be assigned an
initial Investment Value for purposes of Rights of Accumulation. Specifically,
Class A, B, C, F, and P 8-3 shares of Eligible Funds acquired in calendar year 2007 or earlier will
be assigned an initial Investment Value equal to the Market Value of those
holdings as of the last business day of December 31, 2007. Similarly, Class A,
B, C, F, and P shares of Eligible Funds transferred to an account with another
financial intermediary will be assigned an initial Investment Value equal to
the Market Value of such shares on the transfer date. Thereafter, the
Investment Value of such shares will increase or decrease according your actual
investments, reinvestments and withdrawals. You must contact your financial
intermediary or the Fund if you have additional information that is relevant to
the calculation of the Investment Value of your holdings for purposes of
reducing sales charges pursuant to the Rights of Accumulation. Redemptions. A
redemption order is in proper form when it contains all of the information and
documentation required by the order form or otherwise by Lord Abbett
Distributor or the Fund to carry out the order. If you have direct account
privileges with the Fund, the Fund will require a guaranteed signature by an
eligible guarantor on requests for redemption that exceed $100,000 (formerly
$50,000). Accordingly, redemption requests may be submitted by telephone or
online without signature guarantee for redemptions up to and including
$100,000. Redemptions may be suspended or payment postponed during any period in
which any of the following conditions exist: the NYSE is closed or trading on
the NYSE is restricted; an emergency exists as a result of which disposal by
the Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund to fairly determine the value of the net
assets of its portfolio; or the SEC, by order, so permits. Redemptions, even
when followed by repurchases, are taxable transactions for shareholders that
are subject to U.S. federal income tax. The Board may authorize redemption of all of the shares in any account
in which there are fewer than 25 shares. Before authorizing such redemption,
the Board must determine that it is in our economic best interest or necessary
to reduce disproportionately burdensome expenses in servicing shareholder
accounts. At least 60 days prior written notice will be given before any such
redemption, during which time shareholders may avoid redemption by bringing
their accounts up to the minimum set by the Board. Div-Move. Under the
Div-Move service described in the prospectus, you can invest the dividends paid
on your account of any class into an existing account of the same class in any
other Eligible Fund. The account must either be your account, a joint account
for you and your spouse, a single account for your spouse, or a custodial
account for your minor child under the age of 21. You should read the
prospectus of the other fund before investing. Invest-A-Matic. The
Invest-A-Matic method of investing in the Fund and/or any other Eligible Fund
is described in the prospectus. To avail yourself of this method you must
complete the application form, selecting the time and amount of your bank
checking account withdrawals and the funds for investment, include a voided,
unsigned check and complete the bank authorization. Systematic Withdrawal Plan (SWP).
The SWP also is described in the prospectus. You may establish an SWP if you
own or purchase uncertificated shares having a current offering price value of
at least $10,000 in the case of Class A or C shares and $25,000 in the case of
Class B shares, except in the case of an SWP established for certain retirement
and benefit plans, for which there is no minimum. Lord Abbett prototype
retirement plans have no such minimum. With respect to Class B and C shares,
the CDSC will be waived on redemptions of up to 12% per year of the current
value of your account at the time the SWP is established. For Class B share
redemptions over 12% per year, the CDSC will apply to the entire redemption. Therefore,
please contact the Fund for assistance in minimizing the CDSC in this
situation. With respect to Class C shares, the CDSC will be waived on and after
the first anniversary of their purchase. The SWP involves the planned
redemption of shares on a periodic basis by receiving either fixed or variable
amounts at periodic intervals. Because the value of shares redeemed may be more
or less than their cost, gain or loss may be recognized for income tax purposes
on each periodic payment. Normally, you may not make regular investments at the
same time you are receiving systematic withdrawal payments because it is not in
your interest to pay a sales charge on new investments when, in effect, a
portion of that new investment is soon withdrawn. The minimum investment
accepted while a withdrawal plan is in effect is $1,000. The SWP may be
terminated by you or by us at any time by written notice. 8-4 Retirement Plans.
The prospectus indicates the types of retirement plans for which Lord Abbett
provides forms and explanations. Lord Abbett makes available the retirement
plan forms including 401(k) plans and custodial agreements for IRAs (Individual
Retirement Accounts, including Traditional, Education, Roth and SIMPLE IRAs and
Simplified Employee Pensions), 403(b) plans and qualified pension and
profit-sharing plans. The forms name State Street Bank and Trust Company as
custodian and contain specific information about the plans excluding 401(k)
plans. Explanations of the eligibility requirements, annual custodial fees and
allowable tax advantages and penalties are set forth in the relevant plan
documents. Adoption of any of these plans should be on the advice of your legal
counsel or qualified tax advisor. Purchases through Financial Intermediaries.
The Fund and/or Lord Abbett Distributor have authorized one or more agents to
receive on its behalf purchase and redemption orders. Such agents are
authorized to designate other intermediaries to receive purchase and redemption
orders on behalf of the Fund or Lord Abbett Distributor. The Fund will be
deemed to have received a purchase or redemption order when an authorized agent
or, if applicable, an agents authorized designee, receives the order. The
order will be priced at the Funds NAV next computed after it is received by
the Funds authorized agent, or if applicable, the agents authorized designee.
A financial intermediary may charge transaction fees on the purchase and/or
sale of Fund shares. Revenue Sharing and Other Payments to Dealers
and Financial Intermediaries. As described in the
prospectus, Lord Abbett or Lord Abbett Distributor, in its sole discretion, at
its own expense and without cost to the Fund or shareholders, also may make
payments to dealers and other firms authorized to accept orders for Fund shares
(collectively, Dealers) in connection with marketing and/or distribution
support for Dealers, shareholder servicing, entertainment, training and
education activities for the Dealers, their investment professionals and/or
their clients or potential clients, and/or the purchase of products or services
from such Dealers. Some of these payments may be referred to as revenue sharing
payments. As of the date of this SAI, the Dealers to whom Lord Abbett or Lord
Abbett Distributor has agreed to make revenue sharing payments (not including
payments for entertainment, and training and education activities for the
Dealers, their investment professionals and/or their clients or potential
clients) with respect to the Fund and/or other Lord Abbett Funds were as follows:
Allstate
Life Insurance Company Morgan
Stanley Smith Barney, LLC Allstate
Life Insurance Company of New York Multi-Financial
Securities Corporation Ameriprise
Financial Services, Inc. National
Planning Holdings, Inc. Ascensus,
Inc. Nationwide
Investment Services Corporation AXA
Equitable Life Insurance Company Pacific Life
& Annuity Company B.C. Ziegler
and Company Pacific Life
Insurance Company Banc of
America Pershing,
LLC Business
Mens Assurance Company of America/ PHL Variable
Insurance Company RBC
Insurance Phoenix Life
and Annuity Company Bodell
Overcash Anderson & Co., Inc. Phoenix Life
Insurance Company Cadaret,
Grant & Co., Inc. Primevest
Financial Services, Inc. Cambridge
Investment Research, Inc. Principal
Life Insurance Company Charles
Schwab & Co., Inc. Protective
Life Insurance Company Citigroup
Global Markets, Inc. RBC Capital
Markets Corporation (formerly RBC Dain Rauscher) Commonwealth
Financial Network RBC
Insurance d/b/a Liberty Life Insurance CRI
Securities, LLC Raymond
James & Associates, Inc. Edward D.
Jones & Co., L.P. Raymond
James Financial Services, Inc. Family
Investors Company Securian
Financial Services, Inc. Fidelity
Brokerage Services, LLC Securities
America, Inc. Financial
Network Investment Corporation Security
Benefit Life Insurance Company First
Security Benefit Life Insurance and Annuity Company SunAmerica
Annuity Life Assurance Company First
SunAmerica Life Insurance Company Sun Life
Assurance Company of Canada First Allied
Securities, Inc. Sun Life
Insurance and Annuity Company of New York Genworth
Life & Annuity Insurance Company TIAA-CREF
Individual & Institutional Services, LLC Genworth
Life Insurance Company of New York TFS
Securities, Inc. Hartford
Life and Annuity Insurance Company Transamerica
Advisors Life Insurance Company Hartford
Life Insurance Company Transamerica
Advisors Life Insurance Company of New York James I.
Black & Co. UBS
Financial Services Inc. 8-5 Janney
Montgomery Scott LLC U.S. Bancorp
Investments, Inc. Legg Mason
Walker Wood Incorporated Wells Fargo
Advisors Lincoln Life
& Annuity Company of New York Wells Fargo
Investments LLC Lincoln
National Life Insurance Company Woodbury
Financial Services, Inc. Linsco/Private
Ledger Corp. MassMutual
Life Investors Services, Inc. Merrill
Lynch Life Insurance Company/ML Life Insurance
Company of New York (n/k/a Transamerica Advisors) Merrill
Lynch, Pierce, Fenner & Smith Incorporated
(and/or certain of its affiliates) MetLife
Securities, Inc. For more specific information about any revenue sharing payments made
to your Dealer, you should contact your investment professional. See Financial
Intermediary Compensation in the prospectus for further information. The Lord Abbett Funds understand that, in accordance with guidance from
the U.S. Department of Labor, retirement and benefit plans, sponsors of
qualified retirement plans and/or recordkeepers may be required to use the fees
they (or, in the case of recordkeepers, their affiliates) receive for the
benefit of the retirement and benefit plans or the investors. This may take the
form of recordkeepers passing the fees through to their clients or reducing the
clients charges by the amount of fees the recordkeeper receives from mutual
funds. Evelyn E. Guernsey, an Outside Director/Trustee of the Fund, owns
outstanding shares of various financial services companies, including certain
subsidiaries of J.P. Morgan Chase & Co. that may receive recordkeeping
payments from the Fund and/or other Lord Abbett Funds. Redemptions in Kind.
Under circumstances in which it is deemed detrimental to the best interests of
the Funds shareholders to make redemption payments wholly in cash, the Fund
may pay any portion of a redemption in excess of the lesser of $250,000 or 1%
of the Funds net assets by a distribution in kind of readily marketable
securities in lieu of cash. 8-6 The Fund has
elected, has qualified, and intends to continue to qualify for
the special tax treatment afforded regulated investment companies under the
Internal Revenue Code of 1986, as amended (the Code). If the Fund continues
to qualify for such tax treatment, the Fund will not be liable for U.S. federal
income taxes on income and capital gains that the Fund timely distributes to
its shareholders. If in any taxable year the Fund fails to so qualify, but is
eligible for statutory relief, the Fund may be required to pay penalty taxes
(or interest charges in the nature of a penalty) and/or to dispose of certain
assets in order to continue to qualify for such tax treatment. If the Fund is
not so eligible or if the Fund does not choose to avail itself of such relief,
all of the Funds taxable income will be taxed to the Fund at regular corporate
rates and when such income is distributed, such distributions will be further
taxed at the shareholder level. Assuming the Fund continues to qualify for the
favorable tax treatment afforded to a regulated investment company, it will be
subject to a 4% non-deductible excise tax on certain amounts that are not
distributed or treated as having been distributed on a timely basis each
calendar year. The Fund intends to distribute to its shareholders each year an
amount adequate to avoid the imposition of this excise tax. The Fund intends to declare and pay as dividends each year
substantially all of its net income from investments. Dividends paid by the
Fund from its ordinary income or net realized short-term capital gains are
taxable to you as ordinary income; however, certain qualified dividend income
that the Fund receives and distributes to an individual shareholder may be
subject to a reduced tax rate of 15% (0% for certain shareholders in the 10% or
15% income tax brackets) if the shareholder meets certain holding period and
other requirements. A dividend that is
attributable to qualified dividend income of the Fund that is paid by the Fund
to an individual shareholder will not be taxable as qualified dividend income
to such shareholder (1) if the dividend is received with respect to any share
of the Fund held for fewer than 61 days during the 121-day period beginning 60
days before the date such shares became ex-dividend with respect to the
dividend income, (2) if the shareholder elects to have the dividend income
treated as investment income for purposes of the limitation on deductibility of
investment interest, or (3) to the extent that the shareholder is under an
obligation (whether pursuant to a short sale or otherwise) to make related
payments with respect to positions in substantially similar or related
property. Distributions
paid by the Fund from its net realized long-term capital gains that are
reported to you by the Fund as capital gain dividends are taxable to you as
long-term capital gains, regardless of the length of time you have owned Fund
shares. The maximum federal income tax rates applicable to net
capital gains recognized by individuals and other non-corporate taxpayers are
(i) the same as ordinary income tax rates for capital assets held for one
year or less, and (ii) 15% (0% for certain taxpayers in the 10% or 15% tax
brackets) for capital assets held for more than one year. You also should be
aware that the benefits of the long-term capital gains and qualified dividend
income rates may be reduced if you are subject to the alternative minimum
tax. Under current law, the reduced federal income tax rates on qualified
dividend income and long-term capital gains will cease to apply to taxable
years beginning after December 31, 2012. Capital gains recognized by
corporate shareholders are subject to tax at the ordinary income tax rates
applicable to corporations. All
dividends are taxable regardless of whether they are received in cash or
reinvested in Fund shares. While the Funds net capital losses for any year cannot be passed
through to you, any such losses incurred by the Fund in a taxable year of the
Fund commencing prior to December 23, 2010 can be carried forward for a
period of up to eight years to offset the Funds capital gains in those years
and any such losses incurred by the Fund in taxable years commencing on or
after such date may be carried forward indefinitely to offset future capital
gains of the Fund. Pursuant to a new ordering rule, however, net capital
losses incurred in taxable years of the Fund beginning before December 23,
2010 may not be used to offset the Funds future capital gains until all net
capital losses incurred in taxable years of the Fund beginning after December
22, 2010 have been utilized. As a result of the application of this rule,
certain net capital losses incurred in taxable years of the Fund beginning
before December 23, 2010 may expire unutilized. To the extent capital gains
are offset by such losses, they do not result in tax liability to the Fund
and are not expected to be distributed to you as capital gain dividends. Dividends paid by
the Fund to corporate shareholders may qualify for the dividends-received
deduction to the extent they are derived from dividends paid to the Fund by
domestic corporations. If you are a corporation, you must have held your Fund
shares for more than 45 days to qualify for the dividends-received deduction.
The dividends- 9-1 received deduction
may be limited if you incur indebtedness to acquire Fund shares, and
may result in a reduction to the basis of your shares in the Fund if the
dividend constitutes an extraordinary dividend at the Fund level. Recently enacted legislation imposes a new 3.8% Medicare tax on the net
investment income of certain U.S. individuals, estates and trusts for taxable
years beginning after December 31, 2012. For this purpose, net investment
income generally includes taxable dividends and redemption proceeds from
investments in mutual funds, such as the Fund. Distributions paid
by the Fund that do not constitute dividends because they exceed the Funds
current and accumulated earnings and profits will be treated as a return of
capital and reduce the tax basis of your Fund shares. To the extent that such
distributions exceed the tax basis of your Fund shares, the excess amounts will
be treated as gain from the sale of the shares. Ordinarily, you are
required to take distributions by the Fund into account in the year in which
they are made. However, a distribution declared as of a record date in October,
November, or December of any year and paid during the following January is
treated as received by shareholders on December 31 of the year in which it is
declared. The Fund will send you annual information concerning the tax
treatment of dividends and other distributions paid to you by the Fund. At the time of your purchase of Fund shares, a portion of the purchase
price may be attributable to realized or unrealized appreciation in the Funds
portfolio or to undistributed taxable income of the Fund. Consequently,
subsequent distributions by the Fund with respect to these shares from such
appreciation or income may be taxable to you even if the NAV of your shares is,
as a result of the distributions, reduced below your cost for such shares and
the distributions economically represent a return of a portion of your
investment. Redemptions and exchanges of Fund shares for shares of another fund
generally are taxable events for shareholders that are subject to tax. In
general, if Fund shares are sold, you will recognize gain or loss equal to
the difference between the amount realized on the sale and your adjusted
basis in the shares. Such gain or loss generally will be treated as long-term
capital gain or loss if the shares were held for more than one year and
otherwise generally will be treated as short-term capital gain or loss. If your holding period in your
Fund shares is six months or less, any capital loss realized from a sale,
exchange, or redemption of such shares must be treated as long-term capital
loss to the extent of any capital gain dividends received with respect to
such shares. In addition, commencing in 2013, capital gains recognized
from redemptions of Fund shares generally will be included in the calculation
of net investment income for purposes of the 3.8% Medicare tax applicable
to certain U.S. individuals, estates and trusts. Losses on the sale
of Fund shares may be disallowed to the extent that, within a period beginning
30 days before the date of the sale and ending 30 days after the date of the
sale, you acquire other shares in the Fund (including pursuant to reinvestment
of dividends and/or capital gain distributions). In addition, if
shares in the Fund that have been held for less than 91 days are redeemed and
the proceeds are reinvested on or before January 31 of the calendar year
following the year of the redemption in shares of the Fund or another fund
pursuant to the Reinvestment Privilege, or if shares in the Fund that have been
held for less than 91 days are exchanged for the same class of shares in
another fund at NAV pursuant to the exchange privilege, all or a portion of any
sales charge paid on the shares that are redeemed or exchanged will not be
included in the tax basis of such shares under the Code to the extent that a
sales charge that would otherwise apply to the shares received is reduced. If your Fund shares
are redeemed by a distribution of securities, you will be taxed as if you had
received cash equal to the fair market value of the securities. Consequently,
you will have a fair market value basis in the securities. Shareholders that are exempt from U.S. federal income tax, such as
retirement plans that are qualified under Section 401 of the Code, generally
are not subject to U.S. federal income tax on Fund dividends or distributions
or on sales or exchanges of Fund shares. However, a tax-exempt shareholder may
recognize unrelated business taxable income if (1) the acquisition of Fund
shares was debt financed or (2) the Fund recognizes certain excess inclusion
income derived from direct or indirect investments (including from an
investment in a REIT) in (a) residual interests in a real estate mortgage
investment conduit or (b) equity interests in a taxable mortgage pool if the
amount of such income that is recognized by the Fund exceeds the Funds
investment company taxable income (after taking into account the deductions for
dividends paid by the Fund). Furthermore, if Fund shares are held through a
non- 9-2 qualified deferred compensation plan, Fund dividends and distributions
received by the plan and sales and exchanges of Fund shares by the plan
generally are taxable to the employer sponsoring such plan in accordance with
the U.S. federal income tax laws governing deferred compensation plans. A plan participant whose retirement plan invests in the Fund, whether
such plan is qualified or not, generally is not taxed on Fund dividends or
distributions received by the plan or on sales or exchanges of Fund shares by
the plan for U.S. federal income tax purposes. However, distributions to plan
participants from a retirement plan account generally are taxable as ordinary
income and different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders and plan participants
should consult their tax advisors for more information. Under Treasury regulations, if you are an individual and recognize a
loss with respect to Fund shares of $2 million or more (if you are a
corporation, $10 million or more) in any single taxable year (or greater
amounts over a combination of years), you may be required to file a disclosure
statement with the Internal Revenue Service. A shareholder who fails to make
the required disclosure may be subject to substantial penalties. Foreign exchange gains and losses realized by the Fund in connection
with certain transactions involving foreign currency-denominated debt
securities, certain options and futures contracts relating to foreign currency,
foreign currency forward contracts, foreign currencies or payables or
receivables denominated in a foreign currency are subject to Section 988 of the
Code, which generally causes such gains and losses to be treated as ordinary
income and losses and may affect the amount, timing and character of
distributions to shareholders. U.S. Treasury regulations authorized by the Code
to be promulgated in the future may limit the future ability of the Fund to
engage in such transactions if they are not directly related to the Funds
investment in securities. Options written or purchased by the Fund and futures contracts
purchased on certain securities, indices and foreign currencies, as well as
certain forward foreign currency contracts, may cause the Fund to recognize
gains or losses from marking-to-market even though such options may not have
lapsed, been closed out, or exercised, or such futures or forward contracts
may not have been performed or closed out. The tax rules applicable to these
contracts may affect the characterization of some capital gains and losses
recognized by the Fund as long-term or short-term. Additionally, the Fund may
be required to recognize gain if an option, futures contract, short sale, or
other transaction that is not subject to the mark-to-market rules is treated
as a constructive sale of an appreciated financial position held by the
Fund under Section 1259 of the Code. Any net mark-to market gains and/or
gains from constructive sales also may have to be distributed to satisfy the
distribution requirements referred to above even though the Fund may receive
no corresponding cash amounts, possibly requiring the Fund to dispose of
portfolio securities or to borrow to obtain the necessary cash. Losses on certain options, futures and/or offsetting positions
(portfolio securities or other positions with respect to which the Funds
risk of loss is substantially diminished by one or more options or futures
contracts) may also be deferred under the tax straddle rules of the Code,
which also may affect the characterization of capital gains or losses from
straddle positions and certain successor positions as long-term or
short-term. Certain tax elections may be available that would enable the Fund
to ameliorate some adverse effects of the tax rules described in this paragraph.
The tax rules applicable to options, futures contracts, forward contracts,
short sales, swaps, structured securities, foreign currencies and straddles
may affect the amount, timing and character of the Funds income and gains or
losses and hence of its distributions to shareholders. The Fund may in
some cases be subject to foreign withholding taxes, which would reduce the
yield on its investments. Tax conventions between certain countries and the
U.S. may reduce or eliminate such taxes in some cases. It is generally
expected that the Fund will not be eligible to pass through to you the
ability to claim a federal income tax credit or deduction for foreign income
taxes paid by the Fund. 9-3 If the Fund acquires any equity interest (under proposed Treasury
regulations, generally including not only stock but also an option to acquire
stock such as is inherent in a convertible bond) in certain foreign
corporations that receive at least 75% of their annual gross income from
passive sources (such as interest, dividends, certain rents and royalties, or
capital gains) or that hold at least 50% of their assets in investments
producing such passive income (passive foreign investment companies), the
Fund could be subject to U.S. federal income tax and additional interest
charges on excess distributions received from such companies or on gain
from the sale of stock in such companies, even if all income or gain actually
received by the Fund is timely distributed to its shareholders. The Fund
would not be able to pass through to its shareholders any credit or deduction
for such a tax. Elections generally may be available that would ameliorate
these adverse tax consequences, but such elections could require the Fund to
recognize taxable income or gain (subject to tax distribution requirements)
without the concurrent receipt of cash. These investments also could result
in the treatment of capital gains from the sale of stock of passive foreign
investment companies as ordinary income. The Fund may limit and/or manage its
holdings in passive foreign investment companies to limit its tax liability
or maximize its return from these investments. You may be subject to a 28% withholding tax on reportable dividends,
capital gain distributions, and redemptions (backup withholding). Generally,
you will be subject to backup withholding if the Fund does not have your Social
Security number or other certified taxpayer identification number on file, or,
to the Funds knowledge, the number that you have provided is incorrect or
backup withholding is applicable as a result of your previous underreporting of
interest or dividend income. When establishing an account, you must certify
under penalties of perjury that your Social Security number or other taxpayer
identification number is correct and that you are not otherwise subject to
backup withholding. The 28% backup withholding rate currently applies to
amounts paid by the Fund through December 31, 2012 and is scheduled to rise to
31% for amounts paid by the Fund after such date. The foregoing
discussion addresses only the U.S. federal income tax consequences applicable
to shareholders who are subject to U.S. federal income tax,
hold their shares as capital assets, and are U.S. persons (generally, U.S. citizens or
residents (including certain former citizens and former long-term residents),
domestic corporations or domestic entities taxed as corporations for U.S. tax
purposes, estates the income of which is subject to U.S. federal income
taxation regardless of its source, and trusts if a court within the U.S. is
able to exercise primary supervision over their administration and at least
one U.S. person has the authority to control all substantial decisions of the
trusts). The treatment of the owner of an interest in an entity that is a
pass-through entity for U.S. tax purposes (e.g., partnerships and disregarded
entities) and that owns Fund shares generally will depend upon the status of
the owner and the activities of the pass-through entity. Except as
otherwise provided, this description does not address the special tax rules
that may be applicable to particular types of investors, such as financial
institutions, insurance companies, securities dealers, or tax-exempt or
tax-deferred plans, accounts or entities. If you are not a U.S. person or are the owner of an
interest in a pass-through entity that owns Fund shares, you should consult
your tax advisor regarding the U.S. and foreign tax consequences of the
ownership of Fund shares, including the applicable rate of U.S. withholding
tax on amounts treated as ordinary dividends from the Fund (other than
certain dividends derived from short-term capital gains and qualified
interest income of the Fund for certain taxable years of the Fund commencing
prior to January 1, 2012, provided that the Fund chooses to report such
dividends in a manner qualifying for such favorable tax treatment) and the applicability of
U.S. gift and estate taxes. While the Fund does not expect its shares will constitute U.S. real
property interests, if the Funds direct and indirect investments in U.S. real
property (which includes investments in REITs and certain other regulated
investment companies that invest in U.S. real property) were to exceed certain
levels, a portion of the Funds distributions may be attributable to gain from
the sale or exchange of U.S. real property interests. In such case, if a
non-U.S. shareholder were to own more than 5% of a class of the Funds shares
within a one-year period prior to such a distribution, the non-U.S. shareholder
would be (1) subject to a 35% U.S. federal withholding tax on the portion of
the Funds distributions attributable to such gain, (2) required to file a U.S.
federal income tax return to report such gain, and (3) subject to certain wash
sale rules if the shareholder disposes of Fund shares just prior to a
distribution and reacquires Fund shares shortly thereafter. If a non-U.S.
shareholder were to own 5% or less of each class of the Funds shares at all
times within such one-year period, any such distribution by the Fund would not
be subject to these requirements, but if the distribution might otherwise have
been reported as a capital gain dividend or short-term capital gain dividend to
such shareholder, the distribution would be re-characterized as an ordinary
dividend and would be subject to the applicable rate of non-resident alien U.S.
withholding tax. Recently enacted legislation will impose a 30% withholding tax on
dividends paid by the Fund after December 31, 9-4 2013 and on gross redemption proceeds paid by the Fund after December
31, 2014 to (i) certain foreign financial institutions unless they agree to
collect and disclose to the IRS information regarding their direct and
indirect U.S. account holders and (ii) certain other foreign entities unless
they certify certain information regarding their direct and indirect U.S.
owners. Under certain circumstances, a foreign shareholder may be eligible
for refunds or credits of such taxes. Non U.S. shareholders should consult
their own tax advisors on these matters. Because everyones
tax situation is unique, you should consult your tax advisor regarding the
treatment of distributions under the federal, state, local, and foreign tax
rules that apply to you, as well as the tax consequences of gains or losses
from the sale, exchange, or redemption of your Fund shares. 9-5 Lord Abbett Distributor, a New York limited liability company and
subsidiary of Lord Abbett, 90 Hudson Street, Jersey City, NJ 07302-3973, serves
as the principal underwriter for the Fund. The Fund has entered into a
distribution agreement with Lord Abbett Distributor, under which Lord Abbett
Distributor is obligated to use its best efforts to find purchasers for the
shares of the Fund, and to make reasonable efforts to sell Fund shares on a
continuous basis, so long as, in Lord Abbett Distributors judgment, a
substantial distribution can be obtained by reasonable efforts. For the last three fiscal years, Lord Abbett Distributor, as the Funds
principal underwriter, received net commissions after allowance of a portion of
the sales charge to independent dealers with respect to Class A shares of the
Fund as follows: Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended Gross sales
charge $5,555,960 $7,399,893 $10,754,981 Amount
allowed to dealers $4,697,392 $6,254,089 $9,097,531 Net
commissions received by Lord Abbett Distributor $858,568 $1,145,804 $1,657,450 In addition, Lord Abbett Distributor, as the Funds principal
underwriter, received the following compensation for the fiscal year ended
October 31, 2011: Compensation on Brokerage Commissions in Other Compensation Class A $0 $0 $7,669,090.47 Class B $0 $0 $2,364* Class C $0* $0 $19,322.59* Class F $0 $0 $121,600.68 Class P $0 $0 $17.88 Class R2 $0 $0 $48.22 Class R3 $0 $0 $69.75 10-1 The financial statements incorporated herein by reference from the
Funds 2011 annual report to shareholders have been audited by Deloitte &
Touche LLP, an independent registered public accounting firm, as stated in
their report, which is incorporated herein by reference, and has been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing. 11-1 FUND PORTFOLIO INFORMATION RECIPIENTS The following is a list of the third parties that are eligible to
receive portfolio holdings or related information pursuant to ongoing
arrangements under the circumstances described above under Investment Policies
Policies and Procedures Governing Disclosure of Portfolio Holdings: Abel/Noser
Corp. Monthly Base-Two
Investment Systems, Inc. Daily Becker,
Burke Associates Monthly Berthel
Schutter Monthly Bloomberg
L.P. Daily BNY
Convergex Execution Solutions LLC Upon Request Callan
Associates Inc. Monthly Cambridge
Associates LLC Monthly Cardinal
Investment Advisors LLC Upon Request Citigroup/The
Yield Book, Inc. Daily CJS
Securities, Inc. Daily CL King
& Associates Monthly Concord
Advisory Group Ltd. Monthly Credit
Suisse Transition Management Upon Request CTV
globemedia f/k/a Bell GlobeMedia Publishing Co. Monthly Curcio Webb Monthly Deloitte
& Touche LLP Annually DeMarche
Associates, Inc. Upon Request Edward D.
Jones & Co., L.P. Monthly Evaluation
Associates, LLC Monthly FactSet
Research Systems, Inc. Daily Financial
Model Co. (FMC) Daily Flow of
Capital, Inc. Upon Request Frank
Russell Company Upon Request Fund
Evaluation Group, LLC Quarterly Hartland
& Co. Monthly Inforlago IT
Ltd. Upon Request ING Life
Insurance and Annuity Company / ING Insurance Company of America Upon Request Institutional
Shareholder Services, Inc. (ISS) Daily Investment
Technology Group (ITG) Daily Investortools
Inc. Upon Request Ipreo Upon Request Jeffrey
Slocum & Associates, Inc. Monthly John Hancock
Financial Services Upon Request JP Morgan
Securities, Inc. Monthly Kirkpatrick
& Lockhart Preston Gates Ellis LLP (counsel to Lord, Abbett & Co.
LLC) Upon Request A-1 LCG
Associates, Inc. Upon Request Lipper Inc.,
a Reuters Company (tech) Monthly Longbow
Research Monthly Louise
Yamada Technical Research Advisors, LLC Upon Request Marquette
Associates Upon Request Merrill
Lynch, Pierce, Fenner & Smith, Inc. Monthly Morningstar
Associates, Inc., Morningstar, Inc. Daily MSCI Barra Daily Muzea
Insider Consulting Services Weekly Natixis
Bleichroeder, Inc. Upon Request Nock, Inc. Daily Northern
Trust Investments, N.A. Upon Request Pierce Park
Group Monthly Prime
Buchholz & Associates, Inc. Upon Request Princeton
Financial Systems Upon Request Rabil Stock
Research, LLC Upon Request RBC Capital
Markets Corporation Upon Request Reuters
America LLC Daily Robert W.
Baird & Co. Incorporated Upon Request Rocaton
Investment Advisors, LLC Monthly Rogerscasey Monthly Russell
Implementation Services Inc. Upon Request R.V. Kuhns & Associates, Inc. Upon Request SG
Constellation LLC Daily Sidoti &
Company, LLC Upon Request State Street
Corporation Daily Stifel,
Nicholaus & Co. Inc. Quarterly Stratford
Advisory Group. Inc. Upon Request Sungard
Expert Solutions, Inc. Daily The Marco
Consulting Group Monthly Towers
Watson Investment Services, Inc. f/k/a Watson Wyatt Worldwide Monthly Wall Street
Source Daily Watershed
Investment Consultants Quarterly Wilmer
Cutler Pickering Hale and Dorr LLP Upon Request *The
Fund may provide its portfolio holdings to (a) third parties that render services
to the Fund relating to such holdings (i.e., pricing vendors,
ratings organizations, custodians, external administrators, independent
registered public accounting firms, counsel, etc.) as appropriate
to the service being provided to the Fund, on a daily, monthly, calendar
quarterly or annual basis, and (b) third party consultants on a daily,
monthly or calendar quarterly basis for the purpose of performing their own
analyses with respect to the Fund within one day following each
calendar period end. A-2 LORD, ABBETT & CO. LLC PROXY VOTING POLICIES AND PROCEDURES Introduction Under the Investment Advisers Act of 1940, as amended, Lord, Abbett
& Co. LLC (Lord Abbett or we) acts as a fiduciary that owes each of its
clients duties of care and loyalty with respect to all services undertaken on
the clients behalf, including proxy voting. This means that Lord Abbett is
required to vote proxies in the manner we believe is in the best interests of
each client, including the Lord Abbett Funds (the Funds) and their
shareholders. We take a long-term perspective in investing our clients assets
and employ the same perspective in voting proxies on their behalf. Accordingly,
we tend to support proxy proposals that we believe are likely to maximize
shareholder value over time, whether such proposals were initiated by a company
or its shareholders. Proxy Voting Process Overview Lord Abbett has a Proxy Group within its Operations Department (the
Proxy Group) that oversees proxy voting mechanics on a day-to-day basis and
provides Lord Abbetts Proxy Policy Committee (the Proxy Policy Committee)
and Investment Department personnel with information regarding proxy voting.
The Proxy Policy Committee consists of Lord Abbetts Chief Investment
Officer, Director of Domestic Equity Portfolio Management, Director of
International Equity, Director of Research, and General Counsel. Voting
decisions are made by the Investment Department in accordance with these
policies and procedures and are carried out by the Proxy Group. Lord Abbett has retained an independent third party service provider
(the Proxy Advisor) to analyze proxy issues and recommend how to vote on
those issues, and to provide assistance in the administration of the proxy process,
including maintaining complete proxy voting records.1 While Lord
Abbett takes into consideration the information and recommendations of the
Proxy Advisor, Lord Abbett votes all proxies based on its own proxy voting
policies, including Lord Abbetts conclusions regarding the best interests of
the Funds, their shareholders, and other advisory clients, rather than basing
decisions solely on the Proxy Advisors recommendations. Lord Abbett has implemented a three-pronged approach to the proxy
voting process, which is described more fully below: In cases where we deem any clients position in a company to be
material,2 the relevant investment team is responsible for
determining how to vote the security. Once a voting decision has been made,
the investment team provides instructions to the Proxy Group, which is
responsible for submitting Lord Abbetts vote. In cases where we deem all clients positions in a company to be
non-material, the Chief Administrative Officer for the Investment Department
is responsible for determining how to vote the security. The Chief
Administrative Officer may seek guidance from the relevant investment team,
the Proxy Policy Committee or any of its members, the Proxy Advisor, or other
sources to determine how to vote. Once a voting decision has been made, the
Chief Administrative Officer provides instructions to the Proxy Group, which
is responsible for submitting Lord Abbetts vote. Lord Abbett has identified certain types of proxy proposals that it considers
purely administrative in nature and as to which it always will vote in the
same manner. The Proxy Group is authorized to vote on such proposals without
receiving instructions from the Investment Department, regardless of the
materiality of any clients position. Lord Abbett presently considers the
following specific types of proposals to fall within this category: 2 We
presently consider a position in a particular company to be material if: (1)
it represents more than 1% of any clients portfolio holdings and
all clients positions in the company together represent more than 1% of the
companys outstanding shares; or (2) all clients positions in the
company together represent more than 5% of the companys outstanding shares.
For purposes of determining materiality, we exclude shares held by clients
with respect to which Lord Abbett does not have authority to vote proxies. We
also exclude shares with respect to which Lord Abbetts vote is restricted or
limited due to super-voting share structures (where one class of shares has
super-voting rights that effectively disenfranchise other classes of shares),
vote limitation policies, and other similar measures. This definition of
materiality is subject to change at our discretion. B-1 (1) proposals to change a companys name, as to which Lord Abbett
always votes in favor; (2) proposals regarding formalities of shareholder
meetings (namely, changes to a meetings date, time, or location), as to
which Lord Abbett always votes in favor; and (3) proposals to allow
shareholders to transact other business at a meeting, as to which Lord Abbett
always votes against. When multiple investment teams manage one or more portfolios that hold
the same voting security, the investment team that manages the largest number
of shares of the security will be considered to have the dominant position and
Lord Abbett will vote all shares on behalf of all clients that hold the
security in accordance with the vote determined by the investment team with the
dominant position. Conflicts of Interest Lord Abbett is an independent, privately held firm with a singular focus
on the management of money. Although Lord Abbett does not face the conflicts of
interest inherent in being part of a larger financial institution, conflicts of
interest nevertheless may arise in the proxy voting process. Such a conflict
may exist, for example, when a clients account holds shares of a company that
also is a client of Lord Abbett. We have adopted safeguards designed to ensure
that conflicts of interests are identified and resolved in our clients best
interests rather than our own. Generally, when a potential conflict of interest
arises, Lord Abbett adheres to its voting guidelines on the issue or, if the
guidelines do not address the particular issue, we would follow the Proxy
Advisors recommendation. Lord Abbett maintains a list of all publicly held companies for which
one of the Funds independent directors/trustees also serves on the board of
directors or is a nominee for election to the board of directors. If a Fund
owns stock in such a company and if Lord Abbett decides not to follow the Proxy
Advisors recommendation concerning a proxy proposal involving the company,
Lord Abbett will notify the related Funds Proxy Committee3 and seek
voting instructions from the Committee. In these instances, if applicable, the
independent director/trustee will abstain from any discussions by the Funds
Proxy Committee regarding the company. Lord Abbett also maintains a list of all publicly held companies
(including any subsidiaries of such companies) that have a significant business
relationship with Lord Abbett. A significant business relationship for this
purpose means: (1) a broker dealer firm that is responsible for one percent or
more of the Funds total dollar amount of shares sold for the last 12 months;
(2) a firm that is a sponsor firm with respect to Lord Abbetts separately
managed account business; (3) an institutional account client that has an
investment management agreement with Lord Abbett; (4) an institutional investor
that, to Lord Abbetts knowledge, holds at least $5 million in shares of the
Funds; and (5) a retirement plan client that, to Lord Abbetts knowledge, has
at least $5 million invested in the Funds. For proxy proposals involving such
companies, Lord Abbett will notify the Funds Proxy Committees and seek voting
instructions from the Committees only in those situations where Lord Abbett
proposes not to follow the Proxy Advisors recommendations. Proxy Voting Guidelines A general summary of the guidelines that we normally follow in voting
proxies appears below. These voting guidelines reflect our general views. We
reserve the flexibility to vote in a manner contrary to our general views on
particular issues if we believe doing so is in the best interests of our
clients, including the Funds and their shareholders. Many different specific
types of proposals may arise under the broad categories discussed below, and it
is not possible to contemplate every issue on which we may be asked to vote.
Accordingly, we will vote on proposals concerning issues not expressly covered
by these guidelines based on the specific factors that we believe are relevant. A. Auditors Auditors are responsible for
examining, correcting, and verifying the accuracy of a companys financial
statements. Lord Abbett believes that companies normally are in the best
position to select their auditors and, therefore, we generally support
managements recommendations concerning the ratification of the selection of
auditors. However, we may evaluate such proposals on a case-by-case basis due
to concerns B-2 about impaired independence, accounting irregularities, or failure of
the auditors to act in shareholders best economic interests, among other
factors we may deem relevant. B. Directors 1. Election of directors
The board of directors of a company oversees all aspects of the companys
business. Companies and, under certain circumstances, their shareholders, may
nominate directors for election by shareholders. Lord Abbett believes that
the independent directors currently serving on a companys board of directors
(or a nominating committee comprised of such independent directors) generally
are in the best position to identify qualified director nominees.
Accordingly, we normally vote in accordance with managements recommendations
on the election of directors. In evaluating a director nominees candidacy,
however, Lord Abbett may consider the following factors, among others: (1)
the nominees experience, qualifications, attributes, and skills, as
disclosed in the companys proxy statement; (2) the composition of the board
and its committees; (3) whether the nominee is independent of company
management; (4) the nominees board meeting attendance; (5) the nominees
history of representing shareholder interests on the companys board or other
boards; (6) the nominees investment in the company; (7) the companys
long-term performance relative to a market index; and (8) takeover activity.
In evaluating a compensation committee nominees candidacy, Lord Abbett may
consider additional factors including the nominees record on various
compensation issues such as tax gross-ups, severance payments, options
repricing, and pay for performance, although the nominees record as to any
single compensation issue alone will not necessarily be determinative. Lord
Abbett may withhold votes for some or all of a companys director nominees on
a case-by-case basis. 2. Majority voting
Under a majority voting standard, director nominees must be elected by an
affirmative majority of the votes cast at a meeting. Majority voting
establishes a higher threshold for director election than plurality voting,
in which nominees who receive the most votes are elected, regardless of how
small the number of votes received is relative to the total number of shares
voted. Lord Abbett generally supports proposals that seek to adopt a majority
voting standard. 3. Board classification
A classified or staggered board is a structure in which only a portion
of a companys board of directors (typically one-third) is elected each year.
A company may employ such a structure to promote continuity of leadership and
thwart takeover attempts. Lord Abbett generally votes against proposals to
classify a board, absent special circumstances indicating that shareholder
interests would be better served by such a structure. In evaluating a
classified board proposal, Lord Abbett may consider the following factors,
among others: (1) the companys long-term strategic plan; (2) the extent to
which continuity of leadership is necessary to advance that plan; and (3) the
need to guard against takeover attempts. 4. Independent board and committee members
An independent director is one who serves on a companys board but is not
employed by the company or affiliated with it in any other capacity. While
company boards may apply different standards in assessing director
independence, including any applicable standards prescribed by stock
exchanges and the federal securities laws, a director generally is determined
to qualify as independent if the director does not have any material
relationship with the company (either directly or indirectly) based on all
relevant facts and circumstances. Material relationships can include
employment, business, and familial relationships, among others. Lord Abbett
believes that independent board and committee membership often helps to
mitigate the inherent conflicts of interest that arise when a companys
executive officers also serve on its board and committees. Therefore, we
generally support the election of board or committee nominees if such
election would cause a majority of a companys board or committee members to
be independent. However, a nominees effect on the independent composition of
the board or any committee is one of many factors Lord Abbett considers in
voting on the nominee and will not necessarily be dispositive. B-3 5. Independent board chairman
Proponents of proposals to require independent board chairmen (formerly
often referred to as separation of chairman and chief executive officer
proposals) seek to enhance board accountability and mitigate a companys
risk-taking behavior by requiring that the role of the chairman of the
companys board of directors be filled by an independent director. We
generally vote with management on proposals that call for independent board
chairmen. We may vote in favor of such proposals on a case-by-case basis,
despite management opposition, if we believe that a companys governance
structure does not promote independent oversight through other means, such as
a lead director, a board composed of a majority of independent directors,
and/or independent board committees. In evaluating independent chairman
proposals, we will focus in particular on the presence of a lead director,
which is an independent director designated by a board with a non-independent
chairman to serve as the primary liaison between company management and the
independent directors and act as the independent directors spokesperson. C. Compensation and Benefits 1. General In the
wake of recent corporate scandals and market volatility, shareholders
increasingly have scrutinized the nature and amount of compensation paid by a
company to its executive officers and other employees. Lord Abbett believes
that because a company has exclusive knowledge of material information not
available to shareholders regarding its business, financial condition, and
prospects, the company itself usually is in the best position to make
decisions about compensation and benefits. Accordingly, we generally vote
with management on such matters. However, we may oppose management on a
case-by-case basis if we deem a companys compensation to be excessive or
inconsistent with its peer companies compensation, we believe a companys
compensation measures do not foster a long-term focus among its executive
officers and other employees, or we believe a company has not met performance
expectations, among other reasons. Discussed below are some specific types of
compensation-related proposals that we may encounter. 2. Incentive compensation plans
An incentive compensation plan rewards an executives performance through a
combination of cash compensation and stock awards. Incentive compensation
plans are designed to align an executives compensation with a companys
long-term performance. As noted above, Lord Abbett believes that management
generally is in the best position to assess executive compensation levels
and, therefore, generally votes with management on proposals relating to
incentive compensation plans. In evaluating such a proposal, however, Lord
Abbett may consider the following factors, among others: (1) the executives
expertise and the value he or she brings to the company; (2) the companys
performance, particularly during the executives tenure; (3) the percentage
of overall compensation that consists of stock; (4) whether and/or to what
extent the incentive compensation plan has any potential to dilute the voting
power or economic interests of other shareholders; (5) the features of the
plan and costs associated with it; (6) whether the plan provides for
repricing or replacement of underwater stock options; and (7) quantitative
data from the Proxy Advisor regarding compensation ranges by industry and
company size. We also scrutinize very closely the proposed repricing or
replacement of underwater stock options, taking into consideration the
stocks volatility, managements rationale for the repricing or replacement,
the new exercise price, and any other factors we deem relevant. 3. Say on pay Say
on pay proposals give shareholders a nonbinding vote on executive
compensation. These proposals are designed to serve as a means of conveying
to company management shareholder concerns, if any, about executive
compensation. Lord Abbett believes that management generally is in the best
position to assess executive compensation. Thus, we generally vote with
management on say on pay proposals unless we believe that compensation has
been excessive or direct feedback to management about compensation has not
resulted in any changes. We also generally vote with management on proposals
regarding the frequency of say on pay votes. However, any particular vote
will be based on the specific facts and circumstances we deem relevant. 4. Pay for performance
Pay for performance proposals are shareholder proposals that seek to
achieve greater alignment between executive compensation and company
performance. Shareholders initiating these proposals tend to focus on board
compensation committees accountability, the use of independent compensation
consultants, enhanced disclosure of compensation packages, and perquisites
given to executives. Because Lord Abbett believes that management generally
is in the best position to assess B-4 executive compensation, we generally follow managements voting
recommendations regarding pay for performance proposals. However, we may
evaluate such proposals on a case-by-case basis if we believe a companys
long-term interests and its executives financial incentives are not properly
aligned or if we question the methodology a company followed in setting
executive compensation, among other reasons. 5. Clawback provisions
A clawback provision allows a company to recoup or claw back incentive
compensation paid to an executive if the company later determines that the
executive did not actually meet applicable performance goals. For example,
such provisions might be used when a company calculated an executives
compensation based on materially inaccurate or fraudulent financial
statements. Some clawback provisions are triggered only if the misalignment
between compensation and performance is attributable to improper conduct on
the part of the executive. Shareholder proponents of clawback proposals
believe that they encourage executive accountability and mitigate a companys
risk-taking behavior. Because Lord Abbett believes that management generally
is in the best position to assess executive compensation, we generally vote
with management on clawback proposals. We may, however, evaluate such a
proposal on a case-by-case basis due to concerns about the amount of
compensation paid to the executive, the executives or the companys
performance, or accounting irregularities, among other factors we may deem
relevant. 6. Anti-gross-up policies
Tax gross-ups are payments by a company to an executive intended to
reimburse some or all of the executives tax liability with respect to
compensation, perquisites, and other benefits. Because the gross-up payment
also is taxable, it typically is inflated to cover the amount of the tax
liability and the gross-up payment itself. Critics of such payments argue
that they often are not transparent to shareholders and can substantially
enhance an executives overall compensation. Thus, shareholders increasingly
are urging companies to establish policies prohibiting tax gross-ups. Lord
Abbett generally favors adoption of anti-tax gross-up policies themselves,
but will not automatically vote against a compensation committee nominee
solely because the nominee approved a gross-up. 7. Severance agreements and executive death
benefits Severance or so-called golden parachute
payments sometimes are made to departing executives after termination or upon
a companys change in control. Similarly, companies sometimes make executive
death benefit or so-called golden coffin payments to an executives estate.
Both practices increasingly are coming under shareholder scrutiny. While we
generally vote with management on compensation matters and acknowledge that
companies may have contractual obligations to pay severance or executive
death benefits, we scrutinize cases in which such benefits are especially
lucrative or are granted despite the executives or the companys poor
performance, and may vote against management on a case-by-case basis as we
deem appropriate. We also generally support proposals to require that
companies submit severance agreements and executive death benefits for
shareholder ratification. 8. Executive pay limits
Lord Abbett believes that a companys flexibility with regard to its
compensation practices is critical to its ability to recruit, retain, and
motivate key talent. Accordingly, we generally vote with management on
shareholder proposals that seek to impose limits on executive compensation. 9. Employee stock purchase plans
Employee stock purchase plans permit employees to purchase company stock at
discounted prices and, under certain circumstances, receive favorable tax
treatment when they sell the stock. Lord Abbett generally follows
managements voting recommendation concerning employee stock purchase plans,
although we generally do not support plans that are dilutive. D. Corporate Matters 1. Charter amendments
A companys charter documents, which may consist of articles of incorporation
or a declaration of trust and bylaws, govern the companys organizational
matters and affairs. Lord Abbett believes that management normally is in the
best position to determine appropriate amendments to a companys governing
documents. Some charter amendment proposals involve routine matters, such as
changing a companys name or procedures relating to the conduct of
shareholder meetings. Lord Abbett believes that such routine matters do not
materially affect shareholder interests and, therefore, we vote with
management with respect to them in all cases. Other types of charter
amendments, however, are more substantive in nature and may impact
shareholder interests. We consider such proposals on a case-by-case basis to
the extent they are not explicitly covered by these guidelines. B-5 2. Changes to capital structure
A company may propose amendments to its charter documents to change the
number of authorized shares or create new classes of stock. We generally
support proposals to increase a companys number of authorized shares when
the company has articulated a clear and reasonable purpose for the increase
(for example, to facilitate a stock split, merger, acquisition, or
restructuring). However, we generally oppose share capital increases that
would have a dilutive effect. We also generally oppose proposals to create a
new class of stock with superior voting rights. 3. Reincorporation
We generally follow managements recommendation regarding proposals to change
a companys state of incorporation, although we consider the rationale for
the reincorporation and the financial, legal, and corporate governance
implications of the reincorporation. We will vote against reincorporation
proposals that we believe contravene shareholders interests. 4. Mergers, acquisitions, and restructurings
A merger or acquisition involves combining two distinct companies into a
single corporate entity. A restructuring involves a significant change in a
companys legal, operational, or structural features. After these kinds of
transactions are completed, shareholders typically will own stock in a
company that differs from the company whose shares they initially purchased.
Thus, Lord Abbett views the decision to approve or reject a potential merger,
acquisition, or restructuring as being equivalent to an investment decision.
In evaluating such a proposal, Lord Abbett may consider the following
factors, among others: (1) the anticipated financial and operating benefits;
(2) the offer price; (3) the prospects of the resulting company; and (4) any
expected changes in corporate governance and their impact on shareholder
rights. We generally vote against management proposals to require a
supermajority shareholder vote to approve mergers or other significant
business combinations. We generally vote for shareholder proposals to lower
supermajority vote requirements for mergers and acquisitions. We also
generally vote against charter amendments that attempt to eliminate
shareholder approval for acquisitions involving the issuance of more than 10%
of a companys voting stock. E. Anti-Takeover Issues and Shareholder Rights 1. Proxy access
Proxy access proposals advocate permitting shareholders to have their
nominees for election to a companys board of directors included in the
companys proxy statement in opposition to the companys own nominees.
Recently adopted amendments to the U.S. Securities and Exchange Commissions
(the SEC) proxy rules allow shareholders or groups of shareholders
satisfying certain stock ownership and other eligibility requirements to
include their director nominees on a companys proxy ballot under certain
limited circumstances. Proxy access initiatives enable shareholders to
nominate their own directors without incurring the often substantial cost of
preparing and mailing a proxy statement, making it less expensive and easier
for shareholders to challenge incumbent directors. Lord Abbett supports such
measures so long as they comport with the requirements set forth in the SECs
proxy rules. However, we generally will vote with management on proposals
that seek to allow proxy access subject to less stringent requirements. 2. Shareholder rights plans
Shareholder rights plans or poison pills are a mechanism of defending a
company against takeover efforts. Poison pills allow current shareholders to
purchase stock at discounted prices or redeem shares at a premium after a
takeover, effectively making the company more expensive and less attractive
to potential acquirers. Companies may employ other defensive tactics in
combination with poison pills, such as golden parachutes that take effect
upon a companys change in control and therefore increase the cost of a
takeover. Because poison pills can serve to entrench management and
discourage takeover offers that may be attractive to shareholders, we
generally vote in favor of proposals to eliminate poison pills and proposals to
require that companies submit poison pills for shareholder ratification. In
evaluating a poison pill proposal, however, Lord Abbett may consider the
following factors, among others: (1) the duration of the poison pill; (2)
whether we believe the poison pill facilitates a legitimate business strategy
that is likely to enhance shareholder value; (3) our level of confidence in
management; (4) whether we believe the poison pill will be used to force
potential acquirers to negotiate with management and assure a degree of
stability that will support good long-range corporate goals; and (5) the need
to guard against takeover attempts. 3. Chewable pill provisions
A chewable pill is a variant of the poison pill that mandates a shareholder
vote in certain situations, preventing management from automatically
discouraging takeover offers that B-6 may be attractive to shareholders. We generally support chewable pill
provisions that balance managements and shareholders interests by
including: (1) a redemption clause allowing the board to rescind a pill after
a potential acquirers holdings exceed the applicable ownership threshold;
(2) no dead-hand or no-hand pills, which would allow the incumbent board and
their approved successors to control the pill even after they have been voted
out of office; (3) sunset provisions that allow shareholders to review and
reaffirm or redeem a pill after a predetermined time frame; and (4) a
qualifying offer clause, which gives shareholders the ability to redeem a poison
pill when faced with a bona fide takeover offer. 4. Anti-greenmail provisions
An anti-greenmail provision is a special charter provision that prohibits a
companys management from buying back shares at above market prices from
potential acquirers without shareholder approval. We generally support such
provisions, provided that they are not bundled with other measures that serve
to entrench management or discourage attractive takeover offers. 5. Fair price provisions
A fair price provision is a special charter provision that requires that all
selling shareholders receive the same price from a buyer. Fair price
provisions are designed to protect shareholders from inequitable two-tier
stock acquisition offers in which some shareholders may be bought out on
disadvantageous terms. We generally support such provisions, provided that
they are not bundled with other measures that serve to entrench management or
discourage attractive takeover offers. 6. Rights to call special shareholder meetings
Proposals regarding rights to call special
shareholder meetings normally seek approval of amendments to a companys
charter documents. Lord Abbett generally votes with management on proposals
concerning rights to call special shareholder meetings. In evaluating such a
proposal, Lord Abbett may consider the following factors, among others: (1)
the stock ownership threshold required to call a special meeting; (2) the
purposes for which shareholders may call a special meeting; (3) whether the
companys annual meetings offer an adequate forum in which shareholders may
raise their concerns; and (4) the anticipated economic impact on the company
of having to hold additional shareholder meetings. 7. Supermajority vote requirements
A proposal that is subject to a supermajority vote must receive the support
of more than a simple majority in order to pass. Supermajority vote
requirements can have the effect of entrenching management by making it more
difficult to effect change regarding a company and its corporate governance
practices. Lord Abbett normally supports shareholders ability to approve or
reject proposals based on a simple majority vote. Thus, we generally vote for
proposals to remove supermajority vote requirements and against proposals to
add them. 8. Cumulative voting
Under cumulative or proportional voting, each shareholder is allotted a
number of votes equal to the number of shares owned multiplied by the number
of directors to be elected. This voting regime strengthens the voting power
of minority shareholders because it enables shareholders to cast multiple
votes for a single nominee. Lord Abbett believes that a shareholder or group
of shareholders using this technique to elect a director may seek to have the
director represent a narrow special interest rather than the interests of the
broader shareholder population. Accordingly, we generally vote against
cumulative voting proposals. 9. Confidential voting
In a confidential voting system, all proxies, ballots, and voting tabulations
that identify individual shareholders are kept confidential. An open voting
system, by contrast, gives management the ability to identify shareholders
who oppose its proposals. Lord Abbett believes that confidential voting
allows shareholders to vote without fear of retribution or coercion based on
their views. Thus, we generally support proposals that seek to preserve
shareholders anonymity. 10. Reimbursing proxy solicitation expenses -
Lord Abbett generally votes with management on shareholder proposals to
require a company to reimburse reasonable expenses incurred by one or more
shareholders in a successful proxy contest, and may consider factors
including whether the board has a plurality or majority vote standard for the
election of directors, the percentage of directors to be elected in the
contest, and shareholders ability to cumulate their votes for the directors. B-7 11. Transacting other business
Lord Abbett believes that proposals to allow shareholders to transact other
business at a meeting deprive other shareholders of sufficient time and
information to carefully evaluate the relevant business issues and determine
how to vote with respect to them. Therefore, Lord Abbett always votes against
such proposals. F. Social, Political, and Environmental Issues
Proposals relating to social, political, or
environmental issues typically are initiated by shareholders and urge a
company to disclose certain information or change certain business practices.
Lord Abbett evaluates such proposals based on their effect on shareholder
value rather than on their ideological merits. We generally follow
managements recommendation on social, political, and environmental proposals
and tend to vote against proposals that are unduly burdensome or impose
substantial costs on a company with no countervailing economic benefits to
the companys shareholders. Nonetheless, we pay particular attention to
highly controversial issues, as well as instances where management has failed
repeatedly to take corrective actions with respect to an issue. G. Share Blocking
Certain foreign countries impose share blocking restrictions that would
prohibit Lord Abbett from trading a companys stock during a specified period
before the companys shareholder meeting. Lord Abbett believes that in these
situations, the benefit of maintaining liquidity during the share blocking
period outweighs the benefit of exercising our right to vote. Therefore, it
is Lord Abbetts general policy to not vote securities in cases where share
blocking restrictions apply. Amended: March 10, 2011 LAAF-13 B-8 LORD ABBETT AFFILIATED FUND, INC. PART C Item 28. Exhibits. (a) (i) Articles
of Incorporation, Articles of Amendment and Articles Supplementary to the
Articles of Incorporation. Incorporated by reference to Exhibit 99(b)(1)
to Post-Effective Amendment No. 73 filed on March 2, 1998. (ii) Articles
Supplementary to Articles of Incorporation, dated January 27, 1998.
Incorporated by reference to Exhibit 99(a)(ii) to Post-Effective Amendment
No. 89 filed on February 28, 2002. (iii) Articles
Supplementary to Articles of Incorporation, dated June 20, 2002.
Incorporated by reference to Exhibit 23(a)(iii) to Post-Effective Amendment
No. 90 filed on February 27, 2003. (iv) Articles
Supplementary to Articles of Incorporation, dated December 21, 2006.
Incorporated by reference to Exhibit 99(a)(iv) to Post-Effective Amendment
No. 95 filed on February 28, 2007. (v) Articles
Supplementary to Articles of Incorporation, dated July 31, 2007 and
effective August 10, 2007. Incorporated by reference to Exhibit 99(a)(v) to
Post-Effective Amendment No. 96 filed on September 12, 2007. (vi) Articles
of Amendment to Articles of Incorporation, dated August 30, 2007 and
effective September 28, 2007. Incorporated by reference to Exhibit 99(a)(vi)
to Post-Effective Amendment No. 96 filed on September 12, 2007. (b) By-Laws, as amended April 20, 2004.
Incorporated by reference to Exhibit 99(b) to Post-Effective Amendment
No. 92 filed on December 29, 2004. (c) Instruments Defining Rights of Security
Holders. Not applicable. (d) Investment Advisory Contracts.
Management Agreement incorporated by reference to Exhibit 99(d) to
Post-Effective Amendment No. 101 filed on February 24, 2011. (e) Underwriting Contract.
Distribution Agreement incorporated by reference to Exhibit 99(e) to
Post-Effective Amendment No. 89 filed on February 28, 2002. (f) Bonus or Profit Sharing Contracts.
Incorporated by reference to Exhibit 99(f) to Post-Effective Amendment No. 88
filed on February 28, 2001. (g) Custodian
Agreements. (i) Custodian Agreement dated November 1, 2001 (including updated
Exhibit A dated as of December 15, 2011). Filed herein. (h) Other Material Contracts. (i) Agency Agreement dated April 30, 2010
(including amended Schedule A dated as of December 15, 2011). Filed herein. (ii) Amendment to Agency Agreement dated
April 30, 2010 (amended March 15, 2011). Filed herein. (iii) Agency Agreement dated as of April 30, 2010 (including amended
Schedule A dated as of November 19, 2010) incorporated by reference to
Exhibit 99 (i) to Post-Effective Amendment No. 101 filed on February 24,
2011. (iv) Administrative Services Agreement (including amendments #1-13)
incorporated by reference to Exhibit 99 (ii) Post-Effective Amendment No. 98
filed on February 26, 2009. (v) Amendment #14 to the Administrative Services Agreement dated May
1, 2010 incorporated by reference to Exhibit 99 (iii) to Post-Effective
Amendment No. 101 filed on February 24, 2011. (vi) Amendment #15 to the Administrative Services Agreement dated
October 26, 2010. incorporated by reference to Exhibit 99 (iv) to
Post-Effective Amendment No. 101 filed on February 24, 2011. (vii) Amendment #16 to the Administrative Services Agreement dated as
of November 19, 2010. incorporated by reference to Exhibit 99 (v) to
Post-Effective Amendment No. 101 filed on February 24, 2011. (viii) Amendment #17 to Administrative
Services Agreement dated as of April 20, 2011. Filed herein. (ix) Amendment #18 to Administrative
Services Agreement dated as of June 15, 2011. Filed herein. (x) Amendment #19 to Administrative
Services Agreement dated as of December 15, 2011. Filed herein. (i) Legal Opinion. Opinion of Wilmer Cutler Pickering
Hale and Dorr LLP. Filed herein. (j) Other Opinion. Consent of Deloitte &
Touche LLP. Filed herein. (k) Omitted
Financial Statements. Not applicable. (l) Initial
Capital Agreements. Not applicable. (m) Rule 12b-1 Plan.
Amended and Restated Joint Rule 12b-1 Distribution Plan and Agreement for
Lord Abbett Family of Funds dated August 10, 2007 with updated Schedule A
dated December 15, 2011 and Schedule B dated November 19, 2010. Filed herein. (n) Rule 18f-3 Plans.
Amended and Restated Rule 18f-3 Plan with Schedule A as of July 1, 2008
pursuant to Rule 18f-3(d) under the Investment Company Act of 1940 with
updated Schedule A dated December 15, 2011. Filed herein. (o) Reserved. (p) Code of Ethics dated January 26, 2012. Filed
herein. Item 29. Persons Controlled by or Under Common
Control with the Fund. None. Item 30. Indemnification. The Registrant is incorporated under the laws of the State of
Maryland and is subject to Section 2-418 of the Corporations and Associations
Article of the Annotated Code of the State of Maryland controlling the
indemnification of directors and officers. The general effect of these statutes is to protect officers,
directors and employees of the Registrant against legal liability and
expenses incurred by reason of their positions with the Registrant. The
statutes provide for indemnification for liability for proceedings not
brought on behalf of the corporation and for those brought on behalf of the
corporation, and in each case place conditions under which indemnification
will be permitted, including requirements that the officer, director or
employee acted in good faith. Under certain conditions, payment of expenses
in advance of final disposition may be permitted. The By-laws of the
Registrant, without limiting the authority of the Registrant to indemnify any
of its officers, employees or agents to the extent consistent with applicable
law, make the indemnification of its directors mandatory subject only to the
conditions and limitations imposed by the above- mentioned Section 2-418 of
Maryland law and by the provisions of Section 17(h) of the Investment Company
Act of 1940 as interpreted and required to be implemented by SEC Release No.
IC-11330 of September 4, 1980. In referring in its By-laws to, and making indemnification of
directors subject to the conditions and limitations of, both Section 2-418 of
the Maryland law and Section 17(h) of the Investment Company Act of 1940, the
Registrant intends that conditions and limitations on the extent of the
indemnification of directors imposed by the provisions of either Section
2-418 or Section 17(h) shall apply and that any inconsistency between the two
will be resolved by applying the provisions of said Section 17(h) if the condition
or limitation imposed by Section 17(h) is the more stringent. In referring in
its By-laws to SEC Release No. IC-11330 as the source for interpretation and
implementation of said Section 17(h), the Registrant understands that it
would be required under its By-laws to use reasonable and fair means in
determining whether indemnification of a director should be made and
undertakes to use either (1) a final decision on the merits by a court or
other body before whom the proceeding was brought that the person to be
indemnified (indemnitee) was not liable to the Registrant or to its
security holders by reason of willful malfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
his office (disabling conduct) or (2) in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that the
indemnitee was not liable by reason of such disabling conduct, by (a) the
vote of a majority of a quorum of directors who are neither interested
persons (as defined in the 1940 Act) of the Registrant nor parties to the
proceeding, or (b) an independent legal counsel in a written opinion. Also,
the Registrant will make advances of attorneys fees or other expenses
incurred by a director in his defense only if (in addition to his undertaking
to repay the advance if he is not ultimately entitled to indemnification) (1)
the indemnitee provides a security for his undertaking, (2) the Registrant
shall be insured against losses arising by reason of any lawful advances, or
(3) a majority of a quorum of the non-interested, non-party directors of the
Registrant, or an independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts, that there is reason
to believe that the indemnitee ultimately will be found entitled to
indemnification. Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, 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 director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, 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. In addition, the Registrant maintains a directors and officers
errors and omissions liability insurance policy protecting directors and
officers against liability for breach of duty, negligent act, error or
omission committed in their capacity as directors or officers. The policy
contains certain exclusions, among which is exclusion from coverage for
active or deliberate dishonest or fraudulent acts and exclusion for fines or
penalties imposed by law or other matters deemed uninsurable. Item 31. Business and Other Connections
of the Investment Adviser. Adviser Lord, Abbett & Co. LLC Lord, Abbett & Co. LLC is the investment adviser of the
Registrant and provides investment management services to the Lord Abbett
Family of Funds and to various pension plans, institutions and individuals. Set forth below is information relating to the business, profession,
vocation or employment of a substantial nature that each partner of the
adviser, is or has been engaged in within the last two fiscal years for
his/her own account in the capacity of director, officer, employee, partner
or trustee of Lord Abbett. The principal business address of the each partner
is c/o Lord, Abbett & Co. LLC, 90 Hudson Street, Jersey City, NJ
07302-3973. None. Item 32. Principal
Underwriters. (a) Lord Abbett Distributor LLC serves as principal underwriter for the
Registrant. Lord Abbett Distributor LLC also serves as principal underwriter
for the registered opened investment companies sponsored by Lord, Abbett
& Co. LLC Lord Abbett Bond-Debenture Fund, Inc. Lord Abbett Developing Growth Fund, Inc. Lord Abbett Equity Trust Lord Abbett Global Fund, Inc. Lord Abbett Investment Trust Lord Abbett Mid-Cap Value Fund, Inc. Lord Abbett Municipal Income Fund, Inc. Lord Abbett Research Fund, Inc. Lord Abbett Securities Trust Lord Abbett Series Fund, Inc. Lord Abbett Stock Appreciation Fund Lord Abbett U.S. Government & Government Sponsored Enterprises
Money Market Fund, Inc. (b) Lord Abbett Distributor LLC is a wholly-owned subsidiary of Lord,
Abbett & Co. LLC. The principal officers of Lord Abbett Distributor LLC
are: Name and
Principal Positions
and Offices with Positions
and Offices Robert S.
Dow Chief Executive
Officer Chairman and
CEO Lawrence H.
Kaplan General
Counsel Vice
President and Secretary Lynn M.
Gargano Chief
Financial Officer None James W.
Bernaiche Chief
Compliance Officer Chief
Compliance Officer * Each Officer
has a principal business address of: 90 Hudson Street, Jersey City, New
Jersey 07302 (c) Not
applicable. Item 33. Location of Accounts and Records. Registrant
maintains the records required by Rules 31a-1(a) and (b) and 31a-2(a) under
the Investment Company Act of 1940, as amended (the 1940 Act), at its main
office. Lord, Abbett
& Co. LLC maintains the records required by Rules 31a-1(f) and 31a-2(e)
under the 1940 Act at its main office. Certain
records such as cancelled stock certificates and correspondence may be
physically maintained at the main office of Registrants Transfer Agent,
Custodian, or Shareholder Servicing Agent within the requirements of Rule
31a-3 under the 1940 Act. Item 34. Management Services. None. Item 35. Undertakings. None. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant certifies
that it meets all of the requirements for effectiveness of this Registration
Statement under Rule 485(b) under the Securities Act and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, duly
authorized, in the City of Jersey City, and State of New Jersey as of the 27th
day of February, 2012. LORD ABBETT AFFILIATED FUND, INC. BY: /s/ Thomas
R. Phillips Thomas R.
Phillips Vice
President and Assistant Secretary BY: /s/ Joan A.
Binstock Joan A.
Binstock Vice
President and Chief Financial Officer Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated. Signatures Title Date Robert S. Dow* Chairman,
Chief Executive Officer February 27,
2012 Robert S.
Dow Daria L.
Foster* President
and Director February 27,
2012 Daria L.
Foster E. Thayer
Bigelow* Director February 27,
2012 E. Thayer
Bigelow Robert B.
Calhoun, Jr.* Director February 27,
2012 Robert B.
Calhoun, Jr. Evelyn E.
Guernsey* Director February 27,
2012 Evelyn E.
Guernsey Julie A.
Hill* Director February 27,
2012 Julie A.
Hill Franklin W.
Hobbs* Director February 27,
2012 Franklin W.
Hobbs Thomas J.
Neff* Director February 27,
2012 Thomas J.
Neff James L.L.
Tullis* Director February 27,
2012 James L.L.
Tullis By: /s/ Thomas
R. Phillips Thomas R.
Phillips Attorney
in Fact* POWER OF ATTORNEY Each person
whose signature appears below on this Registration Statement hereby constitutes
and appoints Lawrence H. Kaplan, Lawrence B. Stoller, John K. Forst, and Thomas
R. Phillips, each of them, with full power to act without the other, his or her
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities (until revoked in writing) to sign any and all Registration
Statements of each Fund enumerated on Exhibit A hereto for which such person
serves as a Director/Trustee (including Registration Statements on Forms N-1A
and N-14 and any amendments thereto), and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and
thing ratifying and confirming all that said attorneys-in-fact and agents or
any of them, or their or his or her substitute or substitutes, may lawfully do
or cause to be done by virtue hereof. Pursuant to
the requirements of the Securities Act of 1933, this Registration Statement has
been signed below by the following persons in the capacities and on the dates
indicated. Signatures Title Date Chairman,
CEO /s/ Robert
S. Dow and
Director/Trustee January 26,
2012 Robert S.
Dow President
and /s/ Daria L.
Foster Director/Trustee January 26,
2012 Daria L.
Foster /s/ E.
Thayer Bigelow Director/Trustee January 26,
2012 E. Thayer
Bigelow /s/ Robert
B. Calhoun, Jr. Director/Trustee January 26,
2012 Robert B.
Calhoun, Jr. /s/ Evelyn
E. Guernsey Director/Trustee January 26,
2012 Evelyn E.
Guernsey /s/ Julie A.
Hill Director/Trustee January 26,
2012 Julie A.
Hill /s/ Franklin
W. Hobbs Director/Trustee January 26,
2012 Franklin W.
Hobbs /s/ Thomas
J. Neff Director/Trustee January 26,
2012 Thomas J.
Neff /s/ James
L.L. Tullis Director/Trustee January 26,
2012 James L.L.
Tullis EXHIBIT A Lord Abbett Affiliated Fund, Inc. Lord Abbett Bond-Debenture Fund, Inc. Lord Abbett Developing Growth Fund, Inc. Lord Abbett Equity Trust Lord Abbett Global Fund, Inc. Lord Abbett Investment Trust Lord Abbett Mid-Cap Value Fund, Inc. Lord Abbett Municipal Income Fund, Inc. Lord Abbett Research Fund, Inc. Lord Abbett Securities Trust Lord Abbett Series Fund, Inc. Lord Abbett Stock Appreciation Fund Lord Abbett U.S. Government & Government
Sponsored Enterprises Money Market Fund, Inc.
By telephone. For shareholder account inquiries and for literature requests call the Fund at: 888-522-2388.
By mail. Write to the Fund at:
The Lord Abbett Family of Funds
90 Hudson Street
Jersey City, NJ 07302-3973
Via the Internet. Lord, Abbett & Co. LLC www.lordabbett.com
Text only versions of Fund documents can be viewed online or downloaded from the SEC: http://www.sec.gov.
You can also obtain copies by visiting the SECs Public Reference Room in Washington, DC (phone 202-551-8090) or by sending your request and a duplicating fee to the SECs Public Reference Section, Washington, DC 20549-1520 or by sending your request electronically to publicinfo@sec.gov.
More information on the Fund is available free upon request, including
the following:
ANNUAL/SEMIANNUAL REPORTS
The Funds annual and semiannual reports contain more information
about the Funds investments and performance. The annual report also
includes details about the market conditions and investment strategies
that had a significant effect on the Funds performance during the last
fiscal year. The reports are available free of charge at
www.lordabbett.com, and through other means, as indicated on the left.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI provides more details about the Fund and its policies. A
current SAI is on file with the SEC and is incorporated by reference (is
legally considered part of this prospectus). The SAI is available free of
charge at www.lordabbett.com, and through other means, as indicated
on the left.
(02/12)
This statement
of additional information (SAI) is not a prospectus. A prospectus may be
obtained from your securities dealer or from Lord Abbett Distributor LLC
(Lord Abbett Distributor) at 90 Hudson Street, Jersey City, NJ 07302-3973.
This SAI relates to, and should be read in conjunction with, the prospectus
for Lord Abbett Affiliated Fund, Inc. (the Affiliated Fund or the Fund),
dated March 1, 2012. Certain capitalized terms used throughout this SAI are
defined in the prospectus.
Shareholder
account inquiries should be made by directly contacting the Fund or by
calling 888-522-2388. The Funds audited financial statements are incorporated into
this Statement of Additional Information by reference to the Funds 2011 Annual Report.
The Funds annual and semiannual reports to shareholders are available without charge, upon request by calling
888-522-2388. In addition, you can make inquiries through your dealer.
Fundamental
Investment Restrictions. The Funds investment objective
cannot be changed without the approval of a majority of the Funds outstanding
shares.1
The Fund also is subject to the following fundamental investment restrictions
that cannot be changed without the approval of a majority of the Funds outstanding
shares.
1
A majority of a Funds outstanding shares means the vote of the lesser of
(1) 67% or more of the voting securities present at a shareholder meeting,
provided that 50% of the outstanding voting securities of the Fund are
present at the meeting or represented by proxy, or (2) more than 50% of the
outstanding voting securities of the Fund regardless of whether such
shareholders are present at the meeting (or represented by proxy).
3
U.S. Securities and Exchange Commission (SEC) staff guidance currently
prohibits a Fund from purchasing any security on margin, except such
short-term credits as are necessary for the clearance of transactions.
5 Current
federal securities laws prohibit the Fund from issuing senior securities
(which generally are defined as securities representing indebtedness), except
that the Fund may borrow money from banks in amounts of up to 33 1/3% of its
total assets (including the amount borrowed).
Compliance with these fundamental investment restrictions will be
determined at the time of the purchase or sale of the security, except in the
case of the first fundamental investment restriction, with which the Fund must
comply on a continuous basis.
Depositary Receipts. The Fund may
invest in American Depositary Receipts (ADRs) and similar depositary
receipts. ADRs, typically issued by a financial institution (a depositary),
evidence ownership interests in a security or a pool of securities issued by a
foreign company and deposited with the depositary. Prices of ADRs are quoted in
U.S. dollars, and ADRs are traded in the U.S. Ownership of ADRs entails similar
investment risks to direct ownership of foreign securities traded outside the U.S., including
increased market, liquidity, currency, political, information, and other risks.
Although the Fund may not invest more than 10% of its assets in foreign
securities, ADRs are not subject to this limitation.
Foreign
Securities. The Fund may invest up to 10% of its net assets
in foreign securities that primarily are traded outside the U.S. This
limitation does not include ADRs. Foreign securities may involve special risks
that typically are not associated with U.S. dollar denominated or quoted
securities of U.S. issuers, including the following:
Brokerage
commissions, custodial services, and other costs relating to investment in
foreign securities markets generally are more expensive than in the U.S.
There generally
is less government regulation of foreign markets, companies and securities
dealers than in the U.S.
Because perfect
correlation between a futures position and a portfolio position that the Fund
intends to hedge is impossible to achieve, a hedge may not work as intended,
and the Fund thus may be exposed to additional risk of loss.
The market value of a stock index futures contract is based primarily
on the value of the underlying index. Changes in the value of the index will
cause roughly corresponding changes in the market price of the futures
contract. If a stock index is established that is made up of securities whose
market characteristics closely parallel the market characteristics of the
securities in the Funds portfolio, then the market value of the futures
contract on that index should fluctuate in a way closely resembling the market
fluctuation of the portfolio. Thus, if the Fund sells futures contracts, a
decline in the market value of the portfolio will be offset by an increase in
the value of the short futures position to the extent of the hedge (i.e., the
size of the futures position). Conversely, when the Fund has cash available
(for example, through substantial sales of shares) and wishes to invest the
cash in anticipation of a rising market, the Fund could rapidly hedge against
the expected market increase by buying futures contracts to offset the cash
position and thus cushion the adverse effect of attempting to buy individual
securities in a rising market. Stock index futures contracts are subject to the
same risks as other futures contracts discussed above.
Initial Public Offerings
(IPOs). The Fund may invest in IPOs, which are new issues
of equity securities, including newly issued secondary offerings. IPOs have
many of the same risks as small company stocks. IPOs do not have trading
history, and information about the company may be available only for recent
periods. IPO prices may be highly volatile or may drop shortly after the IPO.
IPOs may generate substantial gains for the Fund, but investors should not rely
on any past gains that may have been produced by IPOs as an indication of the
Funds future performance, since there is no guarantee that the Fund will have
access to profitable IPOs in the future. The Fund may be limited in the
quantity of IPO shares that it may buy at the offering price, or the Fund may
not be able to buy any shares of an IPO at the offering price. If the size of
the Fund increases, the impact of IPOs on the Funds performance generally
would decrease; conversely, if the size of the Fund decreases, the impact of
IPOs on the Funds performance generally would increase.
Real Estate Investment Trusts (REIT). The Fund may invest in REITs, which are
pooled investment vehicles that invest primarily in either real estate or real
estate related loans. The value of a REIT is affected by changes in the value
of the properties owned by the REIT or securing mortgage loans held by the
REIT. REITs are dependent upon the ability of the REITs managers, and are
subject to heavy cash flow dependency, default by borrowers and the
qualification of the REITs under applicable regulatory requirements for
favorable income tax treatment. REITs also are subject to risks generally
associated with investments in real estate including possible declines in the
value of real estate, general and local economic conditions, environmental
problems and changes in interest rates. To the extent that assets underlying a
REIT are concentrated geographically, by property type or in certain other
respects, these risks may be heightened. The Fund will indirectly bear its
proportionate share of any expenses, including management fees, paid by a REIT
in which it invests.
Repurchase agreements are considered a form of lending under the Act. A
repurchasing agreement with more than seven days to maturity is considered an
illiquid security and is subject to the Funds investment restriction on
illiquid securities.
Reverse repurchase agreements are considered a form of borrowing under
the Act. The Funds reverse repurchase agreements will not exceed 20% of the
Funds net assets.
Short Sales. The Fund may make short
sales of securities or maintain a short position if, at all times when a short
position is open, the Fund owns an equal amount of such securities (or
securities convertible into or exchangeable into an equal amount of such
securities) without payment of any further consideration. This is commonly
referred to as a short sale against the box. The Fund may not engage in any
other type of short selling and does not intend to have more than 5% of its net
assets (determined at the time of the short sale) subject to short sales.
Lord Abbetts Compliance Department periodically reviews and evaluates
Lord Abbetts adherence to the above policies and procedures, including the
existence of any conflicts of interest between the Fund on the one hand and
Lord Abbett and its affiliates or affiliates of the Fund and/or other Lord
Abbett clients on the other hand. The Compliance Department reports to the
Board at least annually regarding its assessment of compliance with these
policies and procedures.
Board Leadership Structure
Year of Birth
Length of Service with
the Fund
During the Past Five Years
Lord, Abbett & Co. LLC
90 Hudson Street
Jersey City, NJ 07302
(1945)
Other Directorships: None.
Lord, Abbett & Co. LLC
90 Hudson Street
Jersey City, NJ 07302
(1954)
Other Directorships: None.
Year of Birth
Length of Service with
the Fund
During the Past Five Years
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1941)
Other Directorships: Currently
serves as director of Crane Co. (since 1984) and Huttig Building Products
Inc. (since 1998). Previously served as a director of R.H. Donnelley Inc.
(20092010) and Adelphia Communications Inc. (20032007).
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1942)
Other Directorships: Previously
served as a director of Interstate Bakeries Corp. (19912008).
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1955)
Other Directorships: None.
Year of Birth
Length of Service with
the Fund
During the Past Five Years
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1946)
Other Directorships: Currently
serves as director of WellPoint, Inc., a health benefits company (since
1994). Previously served as a director of Resources Connection, Inc., a
consulting firm (20042007).
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1947)
Other Directorships: Currently serves as a director and Chairman
of the Board of Ally Financial Inc., a financial services firm (since 2009)
and as a director of Molson Coors Brewing Company (since 2002).
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1937)
Other Directorships: Currently
serves as director of Ace, Ltd. (since 1997). Previously served as a director
of Hewitt Associates, Inc. (20042010).
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1947)
Other Directorships: Currently
serves as director of Crane Co. (since 1998). Previously served as a director
of ViaCell, Inc. (20032007).
Year of Birth
Fund
of Current Position
During the Past Five
Years
(1945)
(1954)
(1953)
(1954)
(1954)
(1956)
(1954)
(1960)
(1957)
Year of Birth
Fund
of Current Position
During the Past Five Years
(1960)
(1972)
(1963)
(1969)
(1971)
Meetings Held
During 2011
Fiscal Year
Robert B. Calhoun, Jr.
Evelyn E.
Guernsey
James L.L. Tullis
Franklin W. Hobbs
Thomas J. Neff
Robert B. Calhoun, Jr.
Evelyn E. Guernsey
Julie A. Hill
Franklin W.
Hobbs
Thomas J. Neff
James L.L. Tullis
Meetings Held
During 2011
Fiscal Year
Robert B. Calhoun, Jr.
Evelyn E. Guernsey
Julie A. Hill
Franklin W.
Hobbs
Thomas J. Neff
James L.L. Tullis
October 31, 2011 Aggregate
Compensation
Accrued by the Fund1
Total Compensation Paid by the Fund
and Twelve Other
Lord Abbett-Sponsored Funds2
Securities in the Fund
Equity-Securities in
Lord Abbett- Sponsored Funds
Control Persons and Principal Holders of Securities
Investment Advisory and Other Services
Companies
Investment
Vehicles
$10,000
$50,000
$100,000
$500,000
$1,000,000
$1,000,000
Brokerage Allocations and Other Practices
Regular Brokers or Dealers or Parents Securities
As of October 31, 2011
Which the Purchase Order was Accepted
(As a % of Amount Subject to Charge)
benefit plan participants may be charged fees for
these and other services and fee-based program participants generally pay an
overall fee that, among other things, covers the cost of these services. These
fees and expenses are in addition to those paid by the Fund, and could reduce
your ultimate investment return in Fund shares. For questions about such
accounts, contact your sponsor, employee benefits office, plan administrator,
or other appropriate organization.
Purchases, Redemptions, Pricing, and Payments to Dealers
October 31, 2011
October 31, 2010
October 31, 2009
Redemption and
Repurchase
Connection with Fund
Transactions
*
Excludes 12b-1 payments and CDSC fees received during the first year of the
associated investment as repayment of fees advanced by Lord Abbett
Distributor to broker/dealers at the time of sale.
Portfolio Holdings*
Portfolio Holdings*
1 Lord
Abbett currently retains Institutional Shareholder Services Inc. as the Proxy
Advisor.
3 The
Boards of Directors and Trustees of the Funds have delegated oversight of
proxy voting to separate Proxy Committees comprised solely of independent
directors and/or trustees, as the case may be. Each Proxy Committee is responsible
for, among other things: (1) monitoring Lord Abbetts actions in voting
securities owned by the related Fund; (2) evaluating Lord Abbetts policies
in voting securities; and (3) meeting with Lord Abbett to review the policies
in voting securities, the sources of information used in determining how to
vote on particular matters, and the procedures used to determine the votes in
any situation where there may be a conflict of interest.
OTHER INFORMATION
Business Address *
Lord Abbett Distributor LLC
with Registrant
and Director
I),3?\";DXYZVL+PQJEKXDT>WUA+%8',CL@?#LC!L$AL=>*Z3[;=?\_,
MW_?PT`045/\`;;K_`)^9O^_AH^VW7_/S-_W\-`$%%3_;;K_GYF_[^&C[;=?\
M_,W_`'\-`$%%3_;;K_GYF_[^&C[;=?\`/S-_W\-`$%%3_;;K_GYF_P"_AH^V
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M+JB) @OM3DLDM[F,CS?+FD"[)?*<1R;<,3\K$#Y@,]LBLO7)[M3;:;J(EN+6XD:
M2XELM.F91"NW$1"[_F8GD\`J&&`<&H]#BG7Q"J/:W,8MO[1\QY(65#YUTDD>
MUB,-E03\I..^#0!/XN_Y<_\`@?\`[+7S[\9H99;S2/+C=\1RYVJ3CE:^A?%<
MK1BU"A#NWYW(&_N^HXK@M3NY!%%)9W<0$=W%%,J@.3ND52N?X>&/;/TH`^9O
MLES_`,^\O_?!H^R7/_/O+_WP:^D=,O;NYU*6.2=S'FX!!10%VR[4V''S?+G/
M7!QTZ5GW>IWMK<7CG4)19PK*$=HD.Z2-%.TD+T)9AZ_N^#SR`&KU&N@.,]:`"P\4V>HW5NEO;W1MKEBEO>%%$4K!-Y4?-NZ!N2H'R
MGFMRN*T6&Y2Y\.VTEI?176GVPM[I98V-N$6(@.C?<+EMH!4YVE@>E=K0`444
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M@8*,*NS>"_.1D`XX/(/I3?$#M!-I%YY,\L5M>F2400M*RJ8)4!VJ"Q^9U'`[
MUS>E:1K=G=^&Y)[.%XD^SQLWFMO@1+.12K*$('[QWYW[U6TO(I%A8Q>7'Y&\L^-JD>2_!.3D8ZT`;>FZO_:-U=6SV
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M1#^)K7H`****`.?D\6VD
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Exhibit 28(g)(i) |
Custodian Agreement dated November 1, 2001 (including updated Exhibit A dated as of December 15, 2011) |
CUSTODIAN AND INVESTMENT ACCOUNTING AGREEMENT
This Agreement between EACH LEGAL ENTITY LISTED ON EXHIBIT A HERETO, each a business trust or corporation organized and existing under the laws of the jurisdiction indicated on Exhibit A (each a Fund), and STATE STREET BANK and TRUST COMPANY, a Massachusetts trust company (State Street),
WITNESSETH:
WHEREAS, each Fund is authorized to issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets; and
WHEREAS, each Fund intends that this Agreement be applicable to each of its series existing on the date hereof (such series together with all other series subsequently established by the Fund and made subject to this Agreement in accordance with Section 17, be referred to herein as the Portfolio(s));
NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows:
SECTION 1. APPOINTMENT OF STATE STREET AS CUSTODIAN AND RECORDKEEPER. Each Fund hereby appoints State Street as the custodian of the assets of the Portfolios of the Fund, including securities which the Fund, on behalf of the applicable Portfolio, desires to be held in places within the United States (domestic securities) and securities it desires to be held outside the United States (foreign securities). The Fund, on behalf of the Portfolio(s), agrees to deliver to State Street all securities and cash of the Portfolios, and all payments of income, payments of principal or capital distributions received by it with respect to all securities owned by the Portfolio(s) from time to time, and the cash consideration received by it for such new or treasury shares of beneficial interest of the Fund representing interests in the Portfolios (Shares) as may be issued or sold from time to time. State Street shall not be responsible for any property of a Portfolio held or received by the Portfolio and not delivered to State Street.
Upon receipt of Proper Instructions (as such term is defined in Section 6 hereof), State Street shall on behalf of the applicable Portfolio(s) from time to time appoint one or more sub-custodians located in the United States, but only in accordance with an applicable vote by the Board of Trustees or Directors of the Fund (the Board) on behalf of the applicable Portfolio(s). State Street may appoint as sub-custodian for the Funds foreign securities on behalf of the applicable Portfolio(s) the foreign banking institutions and foreign securities depositories designated in Schedules A and B hereto, but only in accordance with the applicable provisions of Sections 3 and 4 of this Agreement. State Street shall use all reasonable efforts to include in each agreement whereby State Street appoints any such sub-custodian a provision to the effect that the sub-custodian will be liable to State Street for losses and liabilities caused by the negligence, misfeasance, or willful misconduct of the sub-custodian. State Street shall have no more or less responsibility or liability to the Fund on account of any actions or omissions of any sub-custodian so appointed than any such sub-custodian has to State Street.
The Fund hereby constitutes and appoints State Street to perform certain accounting and recordkeeping functions relating to portfolio transactions required of a duly registered investment company under Section 31(a) of the Investment Company Act of 1940, as amended (the 1940 Act) and to calculate the net asset value of the Portfolios.
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SECTION 2. |
DUTIES OF STATE STREET WITH RESPECT TO PROPERTY OF EACH FUND HELD BY STATE STREET IN THE UNITED STATES |
SECTION 2.1 HOLDING SECURITIES. State Street shall hold and physically segregate for the account of each Portfolio all non-cash property, to be held by it in the United States, including all domestic securities owned by such Portfolio other than securities which are maintained pursuant to Section 2.8 in a clearing agency registered with the SEC and which acts as a securities depository or in a book-entry system authorized by the U.S. Department of the Treasury (each, a U.S. Securities System).
SECTION 2.2 DELIVERY OF SECURITIES. State Street shall release and deliver domestic securities owned by a Portfolio held by State Street or in a U.S. Securities System account of State Street only upon receipt of Proper Instructions on behalf of the applicable Portfolio, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases:
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Upon sale of such securities for the account of the Portfolio and receipt of payment therefor; |
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2) |
Upon the receipt of payment in connection with any repurchase agreement related to such securities entered into by the Portfolio; |
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3) |
In the case of a sale effected through a U.S. Securities System, in accordance with the provisions of Section 2.8 hereof; |
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To the depository agent in connection with tender or other similar offers for securities of the Portfolio; |
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To the issuer thereof or its agent when such securities are called, redeemed, retired or otherwise become payable; provided that, in any such case, the cash or other consideration is to be delivered to State Street; |
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To the issuer thereof, or its agent, for transfer into the name of the Portfolio or into the name of any nominee or nominees of State Street or into the name or nominee name of any agent appointed pursuant to Section 2.7 or into the name or nominee name of any sub-custodian appointed pursuant to Section 1; or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new securities are to be delivered to State Street; |
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Upon the sale of such securities for the account of the Portfolio, to the broker or its clearing agent, against a receipt, for examination in accordance with street delivery custom; provided that in any such case, State Street shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from State Streets own negligence or willful misconduct; |
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For exchange or conversion pursuant to any corporate action, including without limitation, any calls for redemption, tender or exchange offers, declarations, record and payment dates and amounts of any dividends or income, plan of merger, consolidation, recapitalization, reorganization, readjustment, split-up of shares, changes of par value, or conversion (Corporate Action) of the securities of the |
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issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; provided that, in any such case, the new securities and cash, if any, are to be delivered to State Street; |
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In the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; provided that, in any such case, the new securities and cash, if any, are to be delivered to State Street; |
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For delivery in connection with any loans of securities made by the Portfolio, but only against receipt of adequate collateral as agreed upon from time to time by State Street and the Fund on behalf of the Portfolio, which may be in the form of cash or obligations issued by the United States government, its agencies or instrumentalities, except that in connection with any loans for which collateral is to be credited to State Streets account in the book-entry system authorized by the U.S. Department of the Treasury, State Street will not be held liable or responsible for the delivery of securities owned by the Portfolio prior to the receipt of such collateral except as may arise from State Streets own negligence or willful misconduct; |
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For delivery as security in connection with any borrowing by the Fund on behalf of the Portfolio requiring a pledge of assets by the Fund on behalf of the Portfolio, but only against receipt of amounts borrowed; |
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12) |
For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, State Street and a broker-dealer registered under the Securities Exchange Act of 1934 (the Exchange Act) and a member of The National Association of Securities Dealers, Inc. (NASD), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange, or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Portfolio of the Fund; |
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For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, State Street, and a futures commission merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures Trading Commission (CFTC) and/or any contract market, or any similar organization or organizations, regarding account deposits in connection with transactions by the Portfolio of the Fund; |
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Upon receipt of instructions from the transfer agent for the Fund (the Transfer Agent) for delivery to such Transfer Agent or to the holders of Shares in connection with distributions in kind, as may be described from time to time in the currently effective prospectus and statement of additional information of the Fund related to the Portfolio (the Prospectus), in satisfaction of requests by holders of Shares for repurchase or redemption; and |
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For any other proper corporate purpose, but only upon receipt of Proper Instructions from the Fund on behalf of the applicable Portfolio specifying the securities of the Portfolio to be delivered and naming the person or persons to whom delivery of such securities shall be made. |
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SECTION 2.3 REGISTRATION OF SECURITIES. Domestic securities held by State Street (other than bearer securities) shall be registered in the name of a Portfolio or in the name of any nominee of a Fund on behalf of a Portfolio or of any nominee of State Street which nominee shall be assigned exclusively to the Portfolio, unless the applicable Fund has authorized in writing the appointment of a nominee to be used in common with other registered investment companies having the same investment advisor as the Portfolio, or in the name or nominee name of any agent appointed pursuant to Section 2.7 or in the name or nominee name of any sub-custodian appointed pursuant to Section 1. All securities accepted by State Street on behalf of a Portfolio under the terms of this Agreement shall be in street name or other good delivery form. If, however, a Fund directs State Street to maintain securities in street name, State Street shall utilize all reasonable efforts to timely collect income due the Fund on such securities and to notify the Fund using all reasonable efforts of relevant information regarding securities such as maturities and pendency of calls and Corporate Actions.
SECTION 2.4 BANK ACCOUNTS. State Street shall open and maintain a separate bank account or accounts in the United States in the name of each Portfolio of each Fund, subject only to draft or order by State Street acting pursuant to the terms of this Agreement, and shall hold in such account or accounts, subject to the provisions hereof, all cash received by it from or for the account of the Portfolio, other than cash maintained by the Portfolio in a bank account established and used in accordance with Rule 17f-3 under the 1940 Act. Funds held by State Street for a Portfolio may be deposited by it to its credit as Custodian in the banking department of State Street or in such other banks or trust companies as it may in its discretion deem necessary or desirable; provided, however, that every such bank or trust company shall be qualified to act as a custodian under the 1940 Act and that each such bank or trust company and the funds to be deposited with each such bank or trust company shall on behalf of each applicable Portfolio be approved by vote of a majority of the Board. Such funds shall be deposited by State Street in its capacity as Custodian and shall be withdrawable by State Street only in that capacity.
SECTION 2.5 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, State Street shall collect on a timely basis all income and other payments with respect to registered domestic securities held hereunder to which each Portfolio shall be entitled either by law or pursuant to custom in the securities business, and shall collect on a timely basis all income and other payments with respect to bearer domestic securities if, on the date of payment by the issuer, such securities are held by State Street or its agent thereof and shall credit such income, as collected, to such Portfolios custodian account. Without limiting the generality of the foregoing, State Street shall detach and present for payment all coupons and other income items requiring presentation as and when they become due and shall collect interest when due on securities held hereunder. Income due each Portfolio on securities loaned pursuant to the provisions of Section 2.2 (10) shall be the responsibility of the Fund. State Street will have no duty or responsibility in connection therewith, other than to provide the Fund with such information or data as may be necessary to assist the Fund in arranging for the timely delivery to State Street of the income to which the Portfolio is properly entitled.
SECTION 2.6 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions on behalf of the applicable Portfolio, which may be continuing instructions when deemed appropriate by the parties, State Street shall pay out monies of a Portfolio in the following cases only:
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Upon the purchase of domestic securities, options, futures contracts or options on futures contracts for the account of the Portfolio but only (a) against the delivery of such securities or evidence of title to such options, futures contracts or options on futures contracts to State Street (or any bank, banking firm or trust company doing business in the United States or abroad which is qualified under the 1940 Act to act as a custodian and has been designated by State Street as its agent for this purpose) |
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registered in the name of the Portfolio or in the name of a nominee of State Street referred to in Section 2.3 hereof or in proper form for transfer; (b) in the case of a purchase effected through a U.S. Securities System, in accordance with the conditions set forth in Section 2.8 hereof; (c) in the case of repurchase agreements entered into between the Fund on behalf of the Portfolio and State Street, or another bank, or a broker-dealer which is a member of NASD, (i) against delivery of the securities either in certificate form or through an entry crediting State Streets account at the Federal Reserve Bank with such securities or (ii) against delivery of the receipt evidencing purchase by the Portfolio of securities owned by State Street along with written evidence of the agreement by State Street to repurchase such securities from the Portfolio; or (d) for transfer to a time deposit account of the Fund in any bank, whether domestic or foreign; such transfer may be effected prior to receipt of a confirmation from a broker and/or the applicable bank pursuant to Proper Instructions from the Fund as defined herein; |
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2) |
In connection with conversion, exchange or surrender of securities owned by the Portfolio as set forth in Section 2.2 hereof; |
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For the redemption or repurchase of Shares issued as set forth in Section 5 hereof; |
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4) |
For the payment of any expense or liability incurred by the Portfolio, including but not limited to the following payments for the account of the Portfolio: interest, taxes, management, accounting, transfer agent and legal fees, and operating expenses of the Fund whether or not such expenses are to be in whole or part capitalized or treated as deferred expenses; |
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For the payment of any dividends on Shares declared pursuant to the governing documents of the Fund; |
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For payment of the amount of dividends received in respect of securities sold short; and |
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For any proper corporate other purpose, but only upon receipt of Proper Instructions from the Fund on behalf of the Portfolio specifying the amount of such payment and naming the person or persons to whom such payment is to be made. |
SECTION 2.7 APPOINTMENT OF AGENTS. State Street may at any time or times in its discretion appoint (and may at any time remove) any other bank or trust company which is itself qualified under the 1940 Act to act as a custodian, as its agent to carry out such of the provisions of this Section 2 as State Street may from time to time direct; provided, however, that State Street shall notify the applicable Fund of the appointment of any agent and that such appointment shall not relieve State Street of its responsibilities or liabilities hereunder.
SECTION 2.8 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. State Street may deposit and/or maintain securities owned by a Portfolio in a U.S. Securities System subject to the following provisions:
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State Street may keep securities of the Portfolio in a U.S. Securities System provided that such securities are represented in an account of State Street in the U.S. Securities System (the U.S. Securities System Account) which account shall not include any |
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assets of State Street other than assets held as a fiduciary, custodian or otherwise for customers; |
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2) |
The records of State Street with respect to securities of the Portfolio which are maintained in a U.S. Securities System shall identify by book-entry those securities belonging to the Portfolio; |
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3) |
State Street shall pay for securities purchased for the account of the Portfolio upon (i) receipt of advice from the U.S. Securities System that such securities have been transferred to the U.S. Securities System Account, and (ii) the making of an entry on the records of State Street to reflect such payment and transfer for the account of the Portfolio. State Street shall transfer securities sold for the account of the Portfolio upon (i) receipt of advice from the U.S. Securities System that payment for such securities has been transferred to the U.S. Securities System Account, and (ii) the making of an entry on the records of State Street to reflect such transfer and payment for the account of the Portfolio. Copies of all advices from the U.S. Securities System of transfers of securities for the account of the Portfolio shall identify the Portfolio, be maintained for the Portfolio by State Street and be provided to the Fund at its request. Upon request, State Street shall furnish the Fund on behalf of the Portfolio confirmation of each transfer to or from the account of the Portfolio in the form of a written advice or notice and shall furnish to the Fund on behalf of the Portfolio copies of daily transaction sheets reflecting each days transactions in the U.S. Securities System for the account of the Portfolio; |
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State Street shall provide the Fund with any report obtained by State Street on the U.S. Securities Systems accounting system, internal accounting control and procedures for safeguarding securities deposited in the U.S. Securities System; |
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Anything to the contrary in this Agreement notwithstanding, State Street shall be liable to the Fund for the benefit of the Portfolio for any loss or damage to the Portfolio resulting from use of the U.S. Securities System by reason of any negligence, misfeasance or misconduct of State Street or any of its agents or of any of its or their employees or from failure of State Street or any such agent to enforce effectively such rights as it may have against the U.S. Securities System; at the election of the Fund, it shall be entitled to be subrogated to the rights of State Street with respect to any claim against the U.S. Securities System or any other person which State Street may have as a consequence of any such loss or damage if and to the extent that the Portfolio has not been made whole for any such loss or damage. |
SECTION 2.9 SEGREGATED ACCOUNT. State Street shall upon receipt of Proper Instructions on behalf of each applicable Portfolio establish and maintain a segregated account or accounts for and on behalf of each such Portfolio, into which account or accounts may be transferred cash and/or securities, including securities maintained in an account by State Street pursuant to Section 2.8 hereof, (i) in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, State Street and a broker-dealer registered under the Exchange Act and a member of the NASD (or any futures commission merchant registered under the Commodity Exchange Act), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange (or the CFTC or any registered contract market), or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Portfolio, (ii) for purposes of segregating cash or government securities in connection with options purchased, sold or written by the Portfolio or commodity futures contracts or
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options thereon purchased or sold by the Portfolio, (iii) for the purposes of compliance by the Portfolio with the procedures required by Investment Company Act Release No. 10666, or any subsequent release of the U.S. Securities and Exchange Commission (the SEC), or interpretative opinion of the staff of the SEC, relating to the maintenance of segregated accounts by registered investment companies, and (iv) for any other proper corporate purpose upon receipt of Proper Instructions from the Fund on behalf of the applicable Portfolio.
SECTION 2.10 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. State Street shall execute ownership and other certificates and affidavits for all federal and state tax purposes in connection with receipt of income or other payments with respect to domestic securities of each Portfolio held by it and in connection with transfers of securities.
SECTION 2.11 PROXIES. State Street shall, with respect to the domestic securities held hereunder, cause to be promptly executed by the registered holder of such securities, if the securities are registered otherwise than in the name of the Portfolio or a nominee of the Portfolio, all proxies, without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Portfolio such proxies, all proxy soliciting materials and all notices relating to such securities.
SECTION 2.12 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to the provisions of Section 2.3, State Street shall transmit promptly to each Fund for each Portfolio all written information received by State Street from issuers of securities being held for the Portfolio with respect to Corporate Actions, notices of exercise of call and put options written by the Fund on behalf of the Portfolio and the maturity of futures contracts purchased or sold by the Portfolio. With respect to tender or exchange offers, State Street shall transmit promptly to the Portfolio all written information received by State Street from issuers of the securities whose tender or exchange is sought and from the party (or its agents) making the tender or exchange offer. If the Portfolio desires to take action with respect to any Corporate Action, the Portfolio shall notify State Street at least three business days prior to the date on which State Street is to take such action.
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SECTION 3. |
PROVISIONS RELATING TO RULES 17F-5 AND 17F-7 |
SECTION 3.1. DEFINITIONS. As used throughout this Agreement, the capitalized terms set forth below shall have the indicated meanings:
Country Risk means all factors reasonably related to the systemic risk of holding Foreign Assets in a particular country including, but not limited to, such countrys political environment, economic and financial infrastructure (including any Eligible Securities Depository operating in the country), prevailing or developing custody and settlement practices, and laws and regulations applicable to the safekeeping and recovery of Foreign Assets held in custody in that country; however, Country Risk does not include the custody or settlement practices and procedures of an Eligible Foreign Custodian appointed by the Foreign Custody Manager.
Eligible Foreign Custodian has the meaning set forth in section (a)(1) of Rule 17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as defined in Rule 17f-5), a bank holding company meeting the requirements of an Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate action of the SEC, or a foreign branch of a Bank (as defined in Section 2(a)(5) of the 1940 Act) meeting the requirements of a custodian under Section 17(f) of the 1940 Act; the term does not include any Eligible Securities Depository.
Eligible Securities Depository has the meaning set forth in section (b)(1) of Rule 17f-7.
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Foreign Assets means any of the Portfolios investments (including foreign currencies) for which the primary market is outside the United States and such cash and cash equivalents as are reasonably necessary to effect the Portfolios transactions in such investments.
Foreign Custody Manager has the meaning set forth in section (a)(3) of Rule 17f-5.
Rule 17f-5 means Rule 17f-5 promulgated under the 1940 Act.
Rule 17f-7 means Rule 17f-7 promulgated under the 1940 Act.
SECTION 3.2. STATE STREET AS FOREIGN CUSTODY MANAGER.
3.2.1 DELEGATION TO STATE STREET AS FOREIGN CUSTODY MANAGER. Each Fund, by resolution adopted by its Board, hereby delegates to State Street, subject to Section (b) of Rule 17f-5, the responsibilities set forth in this Section 3.2 with respect to Foreign Assets of the Portfolios held outside the United States, and State Street hereby accepts such delegation as Foreign Custody Manager with respect to the Portfolios.
3.2.2 COUNTRIES COVERED. The Foreign Custody Manager shall be responsible for performing the delegated responsibilities defined below only with respect to the countries and custody arrangements for each such country listed on Schedule A to this Agreement, which list of countries may be amended from time to time by a Fund with the agreement of the Foreign Custody Manager. The Foreign Custody Manager shall list on Schedule A the Eligible Foreign Custodians selected by the Foreign Custody Manager to maintain the assets of the Portfolios, which list of Eligible Foreign Custodians may be amended from time to time in the sole discretion of the Foreign Custody Manager. The Foreign Custody Manager will provide amended versions of Schedule A in accordance with Section 3.2.5 hereof.
Upon the receipt by the Foreign Custody Manager of Proper Instructions to open an account or to place or maintain Foreign Assets in a country listed on Schedule A, and the fulfillment by the Fund, on behalf of the Portfolios, of the applicable account opening requirements for such country, the Foreign Custody Manager shall be deemed to have been delegated by the Board on behalf of the Portfolios responsibility as Foreign Custody Manager with respect to that country and to have accepted such delegation. Execution of this Agreement by the Fund shall be deemed to be a Proper Instruction to open an account, or to place or maintain Foreign Assets, in each country listed on Schedule A in which State Street has previously placed or currently maintains Foreign Assets pursuant to the terms of the contract governing the custody arrangement. Following the receipt of Proper Instructions directing the Foreign Custody Manager to close the account of a Portfolio with the Eligible Foreign Custodian selected by the Foreign Custody Manager in a designated country, the delegation by the Board on behalf of the Portfolios to State Street as Foreign Custody Manager for that country shall be deemed to have been withdrawn and State Street shall immediately cease to be the Foreign Custody Manager of the Portfolios with respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated responsibilities with respect to a designated country upon written notice to the Fund. Thirty days (or such longer period to which the parties agree in writing) after receipt of any such notice by the Fund, State Street shall have no further responsibility in its capacity as Foreign Custody Manager to the Fund with respect to the country as to which State Streets acceptance of delegation is withdrawn.
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3.2.3 SCOPE OF DELEGATED RESPONSIBILITIES:
(a) SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. Subject to the provisions of this Section 3.2, the Foreign Custody Manager may place and maintain the Foreign Assets in the care of the Eligible Foreign Custodian selected by the Foreign Custody Manager in each country listed on Schedule A, as amended from time to time. In performing its delegated responsibilities as Foreign Custody Manager to place or maintain Foreign Assets with an Eligible Foreign Custodian, the Foreign Custody Manager shall determine that the Foreign Assets will be subject to reasonable care, based on the standards applicable to custodians in the relevant market, after considering all factors relevant to the safekeeping of such assets, including, without limitation the factors specified in Rule 17f-5(c)(1).
(b) CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS. The Foreign Custody Manager shall determine that the contract governing the foreign custody arrangements with each Eligible Foreign Custodian selected by the Foreign Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).
(c) MONITORING. In each case in which the Foreign Custody Manager maintains Foreign Assets with an Eligible Foreign Custodian selected by the Foreign Custody Manager, the Foreign Custody Manager shall establish a system to monitor (i) the appropriateness of maintaining the Foreign Assets with such Eligible Foreign Custodian and (ii) the contract governing the custody arrangements established by the Foreign Custody Manager with the Eligible Foreign Custodian. In the event the Foreign Custody Manager determines that the custody arrangements with an Eligible Foreign Custodian it has selected are no longer appropriate or no longer meet the requirements of Rule 17f-5, the Foreign Custody Manager shall promptly notify the Board in accordance with Section 3.2.5 hereunder.
3.2.4 GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For purposes of this Section 3.2, the Board of the applicable Fund, or the Funds investment adviser, shall be deemed to have considered and determined to accept such Country Risk as is incurred by placing and maintaining the Foreign Assets in each country for which State Street is serving as Foreign Custody Manager of the Portfolios.
3.2.5 REPORTING REQUIREMENTS. The Foreign Custody Manager shall report the withdrawal of the Foreign Assets from an Eligible Foreign Custodian and the placement of such Foreign Assets with another Eligible Foreign Custodian by providing to the Board an amended Schedule A at the end of the calendar quarter in which an amendment to such Schedule has occurred. The Foreign Custody Manager shall make written reports notifying the Board of any other material change in the foreign custody arrangements of the Portfolios described in this Section 3.2 after the occurrence of the material change.
3.2.6 STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF A PORTFOLIO. In performing the responsibilities delegated to it, the Foreign Custody Manager agrees to exercise reasonable care, prudence and diligence such as a person having responsibility for the safekeeping of assets of management investment companies registered under the 1940 Act would exercise.
3.2.7 REPRESENTATIONS WITH RESPECT TO RULE 17F-5. The Foreign Custody Manager represents that it is a U.S. Bank as defined in section (a)(7) of Rule 17f-5. Each Fund represents to State Street that its Board has determined that it is reasonable for the Board to rely on State Street to perform the responsibilities delegated pursuant to this Agreement to State Street as the Foreign Custody Manager of the Portfolios.
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3.2.8 EFFECTIVE DATE AND TERMINATION OF STATE STREET AS FOREIGN CUSTODY MANAGER. The Boards delegation to State Street as Foreign Custody Manager of the Portfolios shall be effective as of the date hereof and shall remain in effect until terminated at any time, without penalty, by written notice from the terminating party to the non-terminating party. Termination will become effective thirty (30) days after receipt by the non-terminating party of such notice. The provisions of Section 3.2.2 hereof shall govern the delegation to and termination of State Street as Foreign Custody Manager of the Portfolios with respect to designated countries.
SECTION 3.3 ELIGIBLE SECURITIES DEPOSITORIES.
3.3.1 ANALYSIS AND MONITORING. State Street shall (a) provide each Fund (or its duly-authorized investment manager or investment advisor) with an analysis of the custody risks associated with maintaining assets with the Eligible Securities Depositories set forth on Schedule B hereto in accordance with section (a)(1)(i)(A) of Rule 17f-7, and (b) monitor such risks on a continuing basis, and promptly notify a Fund (or its duly-authorized investment manager or investment advisor) of any material change in such risks, in accordance with section (a)(1)(i)(B) of Rule 17f-7.
3.3.2 STANDARD OF CARE. State Street agrees to exercise reasonable care, prudence and diligence in performing the duties set forth in Section 3.3.1.
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SECTION 4. |
DUTIES OF STATE STREET WITH RESPECT TO PROPERTY OF THE PORTFOLIOS HELD OUTSIDE THE UNITED STATES |
SECTION 4.1 DEFINITIONS. As used throughout this Agreement, the capitalized terms set forth below shall have the indicated meanings:
Foreign Securities System means an Eligible Securities Depository listed on Schedule B hereto.
Foreign Sub-Custodian means a foreign banking institution serving as an Eligible Foreign Custodian.
SECTION 4.2. HOLDING SECURITIES. State Street shall identify on its books as belonging to the Portfolios the foreign securities held by each Foreign Sub-Custodian or Foreign Securities System. State Street may hold foreign securities for all of its customers, including the Portfolios, with any Foreign Sub-Custodian in an account that is identified as belonging to State Street for the benefit of its customers, provided however, that (i) the records of State Street with respect to foreign securities of the Portfolios which are maintained in such account shall identify those securities as belonging to the Portfolios and (ii), to the extent permitted and customary in the market in which the account is maintained, State Street shall require that securities so held by the Foreign Sub-Custodian be held separately from any assets of such Foreign Sub-Custodian or of other customers of such Foreign Sub-Custodian.
SECTION 4.3. FOREIGN SECURITIES SYSTEMS. Foreign securities shall be maintained in a Foreign Securities System in a designated country through arrangements implemented by State Street or a Foreign Sub-Custodian, as applicable, in such country.
SECTION 4.4. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.4.1. DELIVERY OF FOREIGN ASSETS. State Street or a Foreign Sub-Custodian shall release and deliver foreign securities of the Portfolios held by State Street or such Foreign Sub-Custodian, or in a Foreign Securities System account, only upon receipt of Proper Instructions, which
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may be continuing instructions when deemed appropriate by the parties, and only in the following cases:
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(i) |
upon the sale of such foreign securities for the Portfolio in accordance with commercially reasonable market practice in the country where such foreign securities are held or traded, including, without limitation: (A) delivery against expectation of receiving later payment; or (B) in the case of a sale effected through a Foreign Securities System, in accordance with the rules governing the operation of the Foreign Securities System; |
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(ii) |
in connection with any repurchase agreement related to foreign securities; |
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(iii) |
to the depository agent in connection with tender or other similar offers for foreign securities of the Portfolios; |
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(iv) |
to the issuer thereof or its agent when such foreign securities are called, redeemed, retired or otherwise become payable; |
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(v) |
to the issuer thereof, or its agent, for transfer into the name of State Street (or the name of the respective Foreign Sub-Custodian or of any nominee of State Street or such Foreign Sub-Custodian) or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; |
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(vi) |
to brokers, clearing banks or other clearing agents for examination or trade execution in accordance with market custom; provided that in any such case the Foreign Sub-Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Foreign Sub-Custodians own negligence or willful misconduct; |
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(vii) |
for exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; |
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(viii) |
in the case of warrants, rights or similar foreign securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; |
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(ix) |
for delivery as security in connection with any borrowing by the Portfolios requiring a pledge of assets by the Portfolios; |
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(x) |
in connection with trading in options and futures contracts, including delivery as original margin and variation margin; |
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(xi) |
in connection with the lending of foreign securities; and |
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(xii) |
for any other proper corporate purpose, but only upon receipt of Proper Instructions specifying the foreign securities to be delivered and naming the person or persons to whom delivery of such securities shall be made. |
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4.4.2. PAYMENT OF PORTFOLIO MONIES. Upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, State Street shall pay out, or direct the respective Foreign Sub-Custodian or the respective Foreign Securities System to pay out, monies of a Portfolio in the following cases only:
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upon the purchase of foreign securities for the Portfolio, unless otherwise directed by Proper Instructions, by (A) delivering money to the seller thereof or to a dealer therefor (or an agent for such seller or dealer) against expectation of receiving later delivery of such foreign securities; or (B) in the case of a purchase effected through a Foreign Securities System, in accordance with the rules governing the operation of such Foreign Securities System; |
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in connection with the conversion, exchange or surrender of foreign securities of the Portfolio; |
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for the payment of any expense or liability of the Portfolio, including but not limited to the following payments: interest, taxes, investment advisory fees, transfer agency fees, fees under this Agreement, legal fees, accounting fees, and other operating expenses; |
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for the purchase or sale of foreign exchange or foreign exchange contracts for the Portfolio, including transactions executed with or through State Street or its Foreign Sub-Custodians; |
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in connection with trading in options and futures contracts, including delivery as original margin and variation margin; |
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for payment of part or all of the dividends received in respect of securities sold short; |
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in connection with the borrowing or lending of foreign securities; and |
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for any other proper corporate purpose, but only upon receipt of Proper Instructions specifying the amount of such payment and naming the person or persons to whom such payment is to be made. |
4.4.3. MARKET CONDITIONS. Notwithstanding any provision of this Agreement to the contrary, settlement and payment for Foreign Assets received for the account of the Portfolios and delivery of Foreign Assets maintained for the account of the Portfolios may be effected in accordance with the customary established securities trading or processing practices and procedures in the country or market in which the transaction occurs, including, without limitation, delivering Foreign Assets to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) with the expectation of receiving later payment for such Foreign Assets from such purchaser or dealer.
State Street shall provide to the Board the information with respect to custody and settlement practices in countries in which State Street appoints a Foreign Sub-Custodian described on Schedule C hereto at the time or times set forth on such Schedule. State Street may revise Schedule C from time to time, provided that no such revision shall result in the Board being provided with substantively less information than had been previously provided hereunder.
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SECTION 4.5. REGISTRATION OF FOREIGN SECURITIES. The foreign securities maintained in the custody of a Foreign Sub-Custodian (other than bearer securities) shall be registered in the name of the applicable Portfolio or in the name of State Street or in the name of any Foreign Sub-Custodian or in the name of any nominee of the foregoing, and the applicable Fund on behalf of such Portfolio agrees to hold any such nominee harmless from any liability as a holder of record of such foreign securities. State Street or a Foreign Sub-Custodian shall not be obligated to accept securities on behalf of a Portfolio under the terms of this Agreement unless the form of such securities and the manner in which they are delivered are in accordance with reasonable market practice.
SECTION 4.6 BANK ACCOUNTS. State Street shall identify on its books as belonging to each Fund cash (including cash denominated in foreign currencies) deposited with State Street. Where State Street is unable to maintain, or market practice does not facilitate the maintenance of, cash on the books of State Street, a bank account or bank accounts shall be opened and maintained outside the United States on behalf of a Portfolio with a Foreign Sub-Custodian. All accounts referred to in this Section shall be subject only to draft or order by State Street (or, if applicable, such Foreign Sub-Custodian) acting pursuant to the terms of this Agreement to hold cash received by or from or for the account of the Portfolio. Cash maintained on the books of State Street (including its branches, subsidiaries and affiliates), regardless of currency denomination, is maintained in bank accounts established under, and subject to the laws of, The Commonwealth of Massachusetts.
SECTION 4.7. COLLECTION OF INCOME. State Street shall use reasonable commercial efforts to collect all income and other payments with respect to the Foreign Assets held hereunder to which the Portfolios shall be entitled and shall credit such income, as collected, to the applicable Portfolio. In the event that extraordinary measures are required to collect such income, the Fund and State Street shall consult as to such measures and as to the compensation and expenses of State Street relating to such measures.
SECTION 4.8 SHAREHOLDER RIGHTS. With respect to the foreign securities held pursuant to this Section 4, State Street will use reasonable commercial efforts to facilitate the exercise of voting and other shareholder rights, subject always to the laws, regulations and practical constraints that may exist in the country where such securities are issued. The Fund acknowledges that local conditions, including lack of regulation, onerous procedural obligations, lack of notice and other factors may have the effect of severely limiting the ability of the Fund to exercise shareholder rights.
SECTION 4.9. COMMUNICATIONS RELATING TO FOREIGN SECURITIES. State Street shall transmit promptly to each Fund written information with respect to Corporate Actions received by State Street via the Foreign Sub-Custodians from issuers of the foreign securities being held for the account of the Portfolios. With respect to tender or exchange offers, State Street shall transmit promptly to a Fund written information with respect to materials so received by State Street from issuers of the foreign securities whose tender or exchange is sought or from the party (or its agents) making the tender or exchange offer. Absent State Streets negligence, misfeasance, or misconduct, State Street shall not be liable for any untimely exercise of any action, right or power in connection with a Corporate Action unless (i) State Street or the respective Foreign Sub-Custodian is in actual possession of such foreign securities or property and (ii) State Street receives Proper Instructions with regard to the Corporate Action, and both (i) and (ii) occur at least three business days prior to the date on which State Street is to take action to exercise such right or power.
SECTION 4.10. LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which State Street appoints a Foreign Sub-Custodian shall, to the extent possible, require the Foreign Sub-Custodian to exercise reasonable care in the performance of its duties, and to indemnify, and hold harmless, State Street from and against any loss, damage, cost, expense, liability or claim arising out
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of or in connection with the Foreign Sub-Custodians performance of such obligations. At the Funds election, the Portfolios shall be entitled to be subrogated to the rights of State Street with respect to any claims against a Foreign Sub-Custodian as a consequence of any such loss, damage, cost, expense, liability or claim if and to the extent that the Portfolios have not been made whole for any such loss, damage, cost, expense, liability or claim.
SECTION 4.11 TAX LAW. State Street shall have no responsibility or liability for any obligations now or hereafter imposed on a Fund, the Portfolios or State Street as custodian of the Portfolios by the tax law of the United States or of any state or political subdivision thereof. It shall be the responsibility of each Fund to notify State Street of the obligations imposed on the Fund with respect to the Portfolios or State Street as custodian of the Portfolios by the tax law of countries other than those mentioned in the above sentence, including responsibility for withholding and other taxes, assessments or other governmental charges, certifications and governmental reporting. The sole responsibility of State Street with regard to such tax law shall be to use reasonable efforts to assist a Fund with respect to any claim for exemption or refund under the tax law of countries for which the Fund has provided such information.
SECTION 4.12. LIABILITY OF CUSTODIAN. State Street shall be liable for the acts or omissions of a Foreign Sub-Custodian to the same extent as set forth with respect to sub-custodians generally in this Agreement and, regardless of whether assets are maintained in the custody of a Foreign Sub-Custodian or a Foreign Securities System, State Street shall not be liable for any loss, damage, cost, expense, liability or claim resulting from nationalization, expropriation, currency restrictions, or acts of war or terrorism, or any other loss where the Sub-Custodian has otherwise acted with reasonable care.
SECTION 5. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES. State Street shall receive from the distributor for the Shares or from the Transfer Agent and deposit into the account of the appropriate Portfolio such payments as are received for Shares thereof issued or sold from time to time by the Fund. State Street will provide timely notification to the Fund on behalf of each such Portfolio and the Transfer Agent of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose, State Street shall, upon receipt of instructions from the Transfer Agent, make funds available for payment to holders of Shares who have delivered to the Transfer Agent a request for redemption or repurchase of their Shares. In connection with the redemption or repurchase of Shares, State Street is authorized upon receipt of instructions from the Transfer Agent to wire funds to or through a commercial bank designated by the redeeming shareholders. In connection with the redemption or repurchase of Shares, State Street shall honor checks drawn on State Street by a holder of Shares, which checks have been furnished by the Fund to the holder of Shares, when presented to State Street in accordance with such procedures and controls as are mutually agreed upon from time to time between the Fund and State Street.
SECTION 6. PROPER INSTRUCTIONS. Proper Instructions as used throughout this Agreement means a writing signed or initialed by one or more person or persons as the Board shall have from time to time authorized. Each such writing shall set forth the specific transaction or type of transaction involved, including a specific statement of the purpose for which such action is requested. Each Fund shall provide State Street with a list of persons authorized to give oral instructions. Oral instructions will be considered Proper Instructions if State Street reasonably believes them to have been given by a person authorized to give such instructions with respect to the transaction involved. State Street shall give a Fund prompt notice of the receipt of an oral instruction and the Fund shall cause all oral instructions to be confirmed in writing. Proper Instructions may include
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communications effected directly between electro-mechanical or electronic devices provided that each Fund and State Street agree to security procedures, including but not limited to, the security procedures selected by a Fund in the Funds Transfer Addendum attached hereto. For purposes of this Section, Proper Instructions shall include instructions received by State Street pursuant to any three-party agreement which requires a segregated asset account in accordance with Section 2.10.
SECTION 7. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. State Street may in its discretion, without express authority from a Fund on behalf of each applicable Portfolio: 1) make payments to itself or others for minor expenses of handling securities or other similar items relating to its duties under this Agreement, provided that all such payments shall be accounted for to a Fund on behalf of the Portfolio; 2) surrender securities in temporary form for securities in definitive form; 3) endorse for collection, in the name of the Portfolio, checks, drafts and other negotiable instruments; and 4) in general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Portfolio except as otherwise directed by the Board.
SECTION 8. EVIDENCE OF AUTHORITY State Street shall be protected in acting upon any instructions, notice, request, consent, certificate or other instrument or paper reasonably believed by it to be genuine and to have been properly executed by or on behalf of a Fund. State Street may receive and accept a copy of a resolution certified by the Secretary or an Assistant Secretary of a Fund (Certified Resolution) as conclusive evidence (a) of the authority of any person to act in accordance with such resolution or (b) of any determination or of any action by the Board as described in such resolution, and such resolution may be considered as in full force and effect until receipt by State Street of written notice to the contrary.
SECTION 9. DUTIES OF STATE STREET WITH RESPECT TO THE BOOKS OF ACCOUNT AND CALCULATION OF NET ASSET VALUE AND NET INCOME
SECTION 9.1 DELIVERY OF ACCOUNTS AND RECORDS. Fund will turn over or cause to be turned over to State Street all accounts and records needed by State Street to perform its duties and responsibilities hereunder fully and properly. State Street may rely conclusively on the completeness and correctness of such accounts and records.
SECTION 9.2 ACCOUNTS AND RECORDS. State Street will prepare and maintain, under the direction of and as interpreted by each Fund, each Funds or Portfolios accountants and/or other advisors, in complete, accurate and current form such accounts and records: (1) required to be maintained by a Fund with respect to portfolio transactions under Section 31(a) of the 1940 Act and the rules and regulations from time to time adopted thereunder; (2) required as a basis for calculation of each Portfolios net asset value; and (3) as otherwise agreed upon by the parties. Fund will advise State Street in writing of all applicable record retention requirements, other than those set forth in the 1940 Act. State Street will preserve such accounts and records in the manner and for the periods prescribed in the 1940 Act or for such longer period as is agreed upon by the parties. Each Fund will furnish, in writing or its electronic or digital equivalent, accurate and timely information needed by State Street to complete such accounts and records when such information is not readily available from generally accepted securities industry services or publications. Upon notification from State Street, a Fund will prepare and maintain the books and records as set forth above on a back-up basis from the date hereof until completion of the conversion period in the event that State Street is unable to do so as a result of events or circumstances beyond the reasonable control of State Street, including, without limitation, power or other mechanical or technological failures or interruptions, computer viruses or communications disruptions, work stoppages, natural disasters, or other similar events or acts.
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SECTION 9.3 ACCOUNTS AND RECORDS PROPERTY OF EACH FUND. State Street acknowledges that all of the accounts and records maintained by State Street pursuant hereto are the property of a Fund, and will be made available to that Fund for inspection or reproduction within a reasonable period of time, upon demand. State Street will assist a Funds independent auditors, or upon the prior written approval of a Fund, or upon demand, any regulatory body, in any requested review of that Funds accounts and records but the Fund will reimburse State Street for all expenses and employee time invested in any such review outside of routine and normal periodic reviews. Upon receipt from a Fund of the necessary information or instructions, State Street will supply information from the books and records it maintains for the Fund that the Fund may reasonably request for tax returns, questionnaires, periodic reports to shareholders and such other reports and information requests as the Fund and State Street may agree upon from time to time.
SECTION 9.4 ADOPTION OF PROCEDURES. State Street and each Fund may from time to time adopt such procedures as they agree upon, and State Street may conclusively assume that no procedure approved or directed by a Fund, a Funds or Portfolios accountants or other advisors conflicts with or violates any requirements of the prospectus, articles of incorporation, bylaws, declaration of trust, any applicable law, rule or regulation, or any order, decree or agreement by which the Fund may be bound. Each Fund will be responsible for notifying State Street of any changes in statutes, regulations, rules, requirements or policies which may impact State Street responsibilities or procedures under this Agreement.
SECTION 9.5 VALUATION OF ASSETS. State Street will value the assets of each Portfolio in accordance with a Funds Instructions utilizing the pricing sources designated by that Fund (Pricing Sources) on the Price Source and Methodology Authorization Matrix, incorporated herein by this reference.
SECTION 10. RECORDS State Street shall with respect to each Portfolio create and maintain all records relating to its activities and obligations under this Agreement in such manner as will meet the obligations of a Fund under the 1940 Act, with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund and shall at all times during the regular business hours of State Street be open for inspection by duly authorized officers, employees or agents of the Fund and employees and agents of the SEC. State Street shall, at a Funds request, supply the Fund with a tabulation of securities owned by each Portfolio and held by State Street and shall, when requested to do so by the Fund and for such compensation as shall be agreed upon between the Fund and State Street, include certificate numbers in such tabulations.
SECTION 11. OPINION OF FUNDS INDEPENDENT ACCOUNTANT State Street shall take all reasonable action, as a Fund on behalf of each applicable Portfolio may from time to time request, to obtain from year to year favorable opinions from the Funds independent accountants with respect to its activities hereunder in connection with the preparation of the Funds Form N-1A, and Form N-SAR or other annual reports to the SEC and with respect to any other requirements thereof.
SECTION 12. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS State Street shall provide each Fund, on behalf of each of the applicable Portfolios at such times as the Fund may reasonably require, with reports by independent public accountants on the accounting system, internal accounting control and procedures for safeguarding securities, futures contracts and options on futures contracts, including securities deposited and/or maintained in a U.S. Securities System or a Foreign Securities System, relating to the services provided by State Street under this Agreement; such reports, shall be of sufficient scope and in sufficient detail, as may reasonably be required by a
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Fund to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, the reports shall so state.
SECTION 13. COMPENSATION OF STATE STREET State Street shall be entitled to reasonable compensation for its services and expenses as custodian and recordkeeper, as agreed upon from time to time between each Fund on behalf of each applicable Portfolio and State Street. The initial Fee Schedule is attached hereto as Exhibit B.
SECTION 14. RESPONSIBILITY OF CUSTODIAN So long as and to the extent that it is in the exercise of reasonable care, State Street shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Agreement and shall be held harmless in acting upon any notice, request, consent, certificate or other instrument reasonably believed by it to be genuine and to be signed by the proper party or parties, including any futures commission merchant acting pursuant to the terms of a three-party futures or options agreement. State Street shall be held to the exercise of reasonable care in carrying out the provisions of this Agreement, but shall be kept indemnified by and shall be without liability to a Fund for any action taken or omitted by it in good faith without negligence, including, without limitation, acting in accordance with any Proper Instruction. It shall be entitled to rely on and may act upon advice of counsel (who may be counsel for the Fund) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. State Street shall be without liability to a Fund and the applicable Portfolios for any loss, liability, claim or expense resulting from or caused by anything which is part of Country Risk (as defined in Section 3 hereof), including without limitation nationalization, expropriation, currency restrictions, or acts of war, revolution, riots or terrorism.
Except as may arise from State Streets own negligence or willful misconduct or the negligence or willful misconduct of a sub-custodian or agent, State Street shall be without liability to a Fund for any loss, liability, claim or expense resulting from or caused by; (i) events or circumstances beyond the reasonable control of State Street or any sub-custodian or Securities System or any agent or nominee of any of the foregoing, including, without limitation, the interruption, suspension or restriction of trading on or the closure of any securities market, power or other mechanical or technological failures or interruptions, computer viruses or communications disruptions, work stoppages, natural disasters, or other similar events or acts; (ii) errors by the Fund or its duly-authorized investment manager or investment advisor in their instructions to State Street provided such instructions have been in accordance with this Agreement; (iii) the insolvency of or acts or omissions by a Securities System; (iv) any delay or failure of any broker, agent or intermediary, central bank or other commercially prevalent payment or clearing system to deliver to State Streets sub-custodian or agent securities purchased or in the remittance or payment made in connection with securities sold; (v) any delay or failure of any company, corporation, or other body in charge of registering or transferring securities in the name of State Street, the Fund, State Streets sub-custodians, nominees or agents or any consequential losses arising out of such delay or failure to transfer such securities including non-receipt of bonus, dividends and rights and other accretions or benefits; (vi) delays or inability to perform its duties due to any disorder in market infrastructure with respect to any particular security or Securities System; and (vii) any provision of any present or future law or regulation or order of the United States of America, or any state thereof, or any other country, or political subdivision thereof or of any court of competent jurisdiction.
State Street shall be liable for the acts or omissions of a Foreign Sub-Custodian (as defined in Section 4 hereof) to the same extent as set forth with respect to sub-custodians generally in this Agreement.
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If a Fund on behalf of a Portfolio requires State Street to take any action with respect to securities, which action involves the payment of money or which action may, in the opinion of State Street, result in State Street or its nominee assigned to the Fund or the Portfolio being liable for the payment of money or incurring liability of some other form, the Fund on behalf of the Portfolio, as a prerequisite to requiring State Street to take such action, shall provide indemnity to State Street in an amount and form satisfactory to it.
If a Fund requires State Street, its affiliates, subsidiaries or agents, to advance cash or securities for any purpose (including but not limited to securities settlements, foreign exchange contracts and assumed settlement) or in the event that State Street or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Agreement, except such as may arise from its or its nominees own negligent action, negligent failure to act or willful misconduct, any property at any time held for the account of the applicable Portfolio shall be security therefor and should the Fund fail to repay State Street promptly, State Street shall be entitled to utilize available cash and to dispose of such Portfolios assets to the extent necessary to obtain reimbursement.
State Street is not responsible or liable for, and each Fund will indemnify and hold State Street harmless from and against, any and all costs, expenses, losses, damages, charges, counsel fees (including, without limitation, disbursements and the allocable cost of in-house counsel), payments and liabilities which may be asserted against or incurred by State Street or for which State Street may be held to be liable, arising out of or attributable to any error, omission, inaccuracy or other deficiency in any Portfolios accounts and records or other information provided to State Street by or on behalf of a Portfolio, including the accuracy of the prices quoted by the Pricing Sources or for the information supplied by that Fund to value the assets, or the failure of that Fund to provide, or provide in a timely manner, any accounts, records, or information needed by State Street to perform its duties hereunder.
State Street shall only be liable for direct damages that are the result of State Streets action or failure to act.
State Street agrees to maintain commercially reasonable back-up and disaster recovery procedures and plans designed to minimize any loss of data or service interruption. Such procedures and plans include each Funds provision of certain services as set forth more specifically in Section 9.2 above.
SECTION 15. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT This Agreement shall become effective as of its execution, shall continue in full force and effect until terminated as hereinafter provided, may be amended at any time by mutual agreement of the parties hereto and may be terminated by either party by an instrument in writing delivered or mailed, postage prepaid to the other party, such termination to take effect not sooner than sixty (60) days after the date of such delivery or mailing; provided, however, that the Fund shall not amend or terminate this Agreement in contravention of any applicable federal or state regulations, or any provision of the Funds Declaration of Trust, Articles of Incorporation, or other governing documents, and further provided, that a Fund on behalf of one or more of the Portfolios may at any time by action of its Board (i) substitute another bank or trust company for State Street by giving notice as described above to State Street, or (ii) immediately terminate this Agreement in the event of the appointment of a conservator or receiver for State Street by the Comptroller of the Currency or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction. Upon termination of the Agreement:
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each Fund on behalf of each applicable Portfolio shall (a) pay to State Street such compensation as may be due as of the date of such termination and shall likewise reimburse State Street for its reasonable costs, expenses and disbursements, (b) designate a successor recordkeeper (which may be the Fund) by Proper Instructions; and (c) designate a successor custodian by Proper Instruction. |
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Upon payment of all sums due to it from a Fund, State Street shall (a) deliver all accounts and records to the successor recordkeeper (or, if none, to that Fund) at the office of State Street, and (b) deliver to such successor custodian at the office of State Street, duly endorsed and in the form for transfer, all securities of each applicable Portfolio then held by it hereunder and shall transfer to an account of the successor custodian all of the securities of each such Portfolio held in a Securities System. |
If no such successor custodian shall be appointed, State Street shall, in like manner, upon receipt of a Certified Resolution, deliver at the office of State Street and transfer such securities, funds and other properties in accordance with such resolution.
In the event that no written order designating a successor custodian or Certified Resolution shall have been delivered to State Street on or before the date when such termination shall become effective, then State Street shall have the right to deliver to a bank or trust company, which is a bank as defined in the 1940 Act, doing business in Boston, Massachusetts, or New York, New York, of its own selection, having an aggregate capital, surplus, and undivided profits, as shown by its last published report, of not less than $25,000,000, all securities, funds and other properties held by State Street on behalf of each applicable Portfolio and all instruments held by State Street relative thereto and all other property held by it under this Agreement on behalf of each applicable Portfolio, and to transfer to an account of such successor custodian all of the securities of each such Portfolio held in any Securities System. Thereafter, such bank or trust company shall be the successor of State Street under this Agreement.
In the event that accounts, records, securities, funds and other properties remain in the possession of State Street after the date of termination hereof owing to failure of a Fund to procure the Certified Resolution to appoint a successor custodian, State Street shall be entitled to fair compensation for its services during such period as State Street retains possession of such accounts, records, securities, funds and other properties and the provisions of this Agreement relating to the duties and obligations of State Street shall remain in full force and effect.
SECTION 16. INTERPRETIVE AND ADDITIONAL PROVISIONS. In connection with the operation of this Agreement, State Street and each Fund, on behalf of each of the applicable Portfolios, may from time to time agree on such provisions interpretive of or in addition to the provisions of this Agreement as may in their joint opinion be consistent with the general tenor of this Agreement. Any such interpretive or additional provisions shall be in a writing signed by both parties and shall be annexed hereto, provided that no such interpretive or additional provisions shall contravene any applicable federal or state regulations or any provision of the Funds Declaration of Trust, Articles of Incorporation, or other governing documents. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Agreement.
SECTION 17. ADDITIONAL FUNDS. In the event that a Fund establishes one or more series with respect to which it desires to have State Street render services as custodian and recordkeeper under the terms hereof, it shall so notify State Street in writing, and if State Street agrees in writing to provide such services, such series of Shares shall become a Portfolio hereunder.
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SECTION 18. MASSACHUSETTS LAW TO APPLY. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with laws of The Commonwealth of Massachusetts.
SECTION 19. PRIOR AGREEMENTS. This Agreement supersedes and terminates, as of the date hereof, all prior Agreements between each Fund on behalf of each of the Portfolios and State Street relating to the custody or recordkeeper of a Funds assets.
SECTION 20. NOTICES. Any notice, instruction or other instrument required to be given hereunder may be delivered in person to the offices of the parties as set forth herein during normal business hours or delivered prepaid registered mail or by telex, cable or telecopy to the parties at the following addresses or such other addresses as may be notified by any party from time to time.
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To a Fund: |
FUND NAME |
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90 Hudson Street |
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Jersey City, NY 07302-3972 |
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Attention: Tracie Richter |
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Telephone: 201 395-2118 |
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Telecopy: 201-395-3118 |
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To State Street: |
STATE STREET BANK AND TRUST COMPANY |
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801 Pennsylvania Avenue |
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Kansas City, MO 64105 |
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Attention: Vice President, Custody |
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Telephone: 816-871-9478 |
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Telecopy: 816-871-9648 |
Such notice, instruction or other instrument shall be deemed to have been served in the case of a registered letter at the expiration of five business days after posting, in the case of cable twenty-four hours after dispatch and, in the case of telex, immediately on dispatch and if delivered outside normal business hours it shall be deemed to have been received at the next time after delivery when normal business hours commence and in the case of cable, telex or telecopy on the business day after the receipt thereof. Evidence that the notice was properly addressed, stamped and put into the post shall be conclusive evidence of posting.
SECTION 21. REPRODUCTION OF DOCUMENTS. This Agreement and all schedules, addenda, exhibits, attachments and amendments hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto all/each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.
SECTION 22. REMOTE ACCESS SERVICES ADDENDUM. State Street and each Fund agree to be bound by the terms of the Remote Access Services Letter, incorporated herein by this reference.
SECTION 23. NO ASSIGNMENT. Neither a Fund nor State Street shall assign any rights or obligations under this Agreement to any other party without the written consent to such assignment signed by both the Fund and State Street. State Street further agrees that its Kansas City location will
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be primarily responsible for the performance of the services rendered hereunder unless the Fund agrees otherwise.
SECTION 24. TRUST NOTICE. If a Fund is a Trust, notice is hereby given that this Agreement has been executed on behalf of Fund by the undersigned duly authorized representative of Fund in his/her capacity as such and not individually; and that the obligations of this Agreement are binding only upon the assets and property of Fund and not upon any trustee, officer of shareholder of Fund individually, and, if the Fund is a Massachusetts business trust, that a copy of Funds Trust Agreement and all amendments thereto is on file with the Secretary of State of Massachusetts.
SECTION 25. SHAREHOLDER COMMUNICATIONS ELECTION. SEC Rule 14b-2 requires banks which hold securities for the account of customers to respond to requests by issuers of securities for the names, addresses and holdings of beneficial owners of securities of that issuer held by the bank unless the beneficial owner has expressly objected to disclosure of this information. In order to comply with the rule, State Street needs the Fund to indicate whether it authorizes State Street to provide the Funds name, address, and share position to requesting companies whose securities the Fund owns. If a Fund tells State Street no, State Street will not provide this information to requesting companies. If a Fund tells State Street yes or does not check either yes or no below, State Street is required by the rule to treat the Fund as consenting to disclosure of this information for all securities owned by the Fund or any funds or accounts established by the Fund. For each Funds protection, the Rule prohibits the requesting company from using the Funds name and address for any purpose other than corporate communications. Please indicate below whether each Fund consents or objects by checking one of the alternatives below.
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State Street is authorized to release the Funds name, address, and share positions. |
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State Street is not authorized to release the Funds name, address, and share positions. |
SECTION 26. LIABILITY OF PORTFOLIOS SEVERAL AND NOT JOINT. The obligations of a Portfolio under this Agreement are enforceable solely against that Portfolio and its assets
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed as of November 1, 2001.
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ON BEHALF OF EACH OF THE LEGAL ENTITIES LISTED ON EXHIBIT A, ATTACHED HERETO |
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SIGNATURE ATTESTED TO BY: |
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By: |
/s/ Joan A. Binstock |
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By: |
/s/ Tracie E. Richter |
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Name: |
Joan A. Binstock |
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Name: |
Tracie E. Richter |
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Title: |
Vice President |
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Title: |
Vice President |
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STATE STREET BANK AND TRUST COMPANY |
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SIGNATURE ATTESTED TO BY: |
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By: |
/s/ W. Andrew Fry |
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By: |
/s/ Stephen Hilliard |
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Name: |
W. Andrew Fry |
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Name: |
Stephen Hilliard |
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Title: |
Senior Vice President |
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Title: |
Senior Vice President |
A-21
SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
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|
Country |
Subcustodian |
Non-Mandatory Depositories |
Argentina |
Citibank, N.A. |
|
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|
Australia |
Westpac Banking Corporation |
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|
Austria |
Erste Bank der Öesterreichischen |
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|
Sparkassen AG |
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|
Bahrain |
British Bank of the Middle East |
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(as delegate of The Hongkong and |
|
|
Shanghai Banking Corporation Limited) |
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|
Bangladesh |
Standard Chartered Bank |
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|
Belgium |
Générale de Banque |
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|
Bermuda |
The Bank of Bermuda Limited |
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|
Bolivia |
Banco Boliviano Americano S.A. |
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|
Botswana |
Barclays Bank of Botswana Limited |
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|
Brazil |
Citibank, N.A. |
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|
Bulgaria |
ING Bank N.V. |
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|
Canada |
State Street Trust Company Canada |
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|
Chile |
Citibank, N.A. |
Depósito Central de Valores S.A. |
|
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|
Peoples Republic |
The Hongkong and Shanghai |
|
of China |
Banking Corporation Limited, |
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Shanghai and Shenzhen branches |
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|
Colombia |
Cititrust Colombia S.A. |
|
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Sociedad Fiduciaria |
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|
Costa Rica |
Banco BCT S.A. |
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|
Croatia |
Privredna Banka Zagreb d.d |
|
|
|
|
Cyprus |
The Cyprus Popular Bank Ltd. |
|
|
|
|
Czech Republic |
Ceskoslovenská Obchodni |
|
|
Banka, A.S. |
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|
|
|
Denmark |
Den Danske Bank |
|
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|
Ecuador |
Citibank, N.A. |
|
|
|
|
Egypt |
National Bank of Egypt |
|
|
|
|
Estonia |
Hansabank |
|
|
|
|
Finland |
Merita Bank Limited |
|
|
|
|
France |
Banque Paribas |
|
|
|
|
Germany |
Dresdner Bank AG |
|
|
|
|
Ghana |
Barclays Bank of Ghana Limited |
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|
|
|
Greece |
National Bank of Greece S.A. |
The Bank of Greece, |
|
|
System for Monitoring Transactions in Securities in Book-Entry Form |
|
|
|
Hong Kong |
Standard Chartered Bank |
|
|
|
|
Hungary |
Citibank Budapest Rt. |
|
|
|
|
Iceland |
Icebank Ltd. |
|
|
|
|
India |
Deutsche Bank AG |
|
|
|
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|
The Hongkong and Shanghai |
|
|
Banking Corporation Limited |
|
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|
Indonesia |
Standard Chartered Bank |
|
|
|
|
Ireland |
Bank of Ireland |
|
|
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|
Israel |
Bank Hapoalim B.M. |
|
|
|
|
Italy |
Banque Paribas |
|
|
|
|
Ivory Coast |
Société Générale de Banques |
|
|
en Côte dIvoire |
|
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|
|
Jamaica |
Scotiabank Jamaica Trust and Merchant |
|
|
Bank Ltd. |
|
|
|
|
Japan |
The Fuji Bank, Limited |
Japan Securities Depository |
|
|
Center |
|
Sumitomo Bank, Ltd. |
|
|
|
|
Jordan |
British Bank of the Middle East |
|
|
(as delegate of The Hongkong and |
|
|
Shanghai Banking Corporation Limited) |
|
|
|
|
Kenya |
Barclays Bank of Kenya Limited |
|
|
|
|
Republic of Korea |
The Hongkong and Shanghai Banking |
|
|
Corporation Limited |
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|
|
|
Latvia |
JSC Hansabank-Latvija |
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|
|
|
Lebanon |
British Bank of the Middle East |
|
|
(as delegate of The Hongkong and |
|
|
Shanghai Banking Corporation Limited) |
|
|
|
|
Lithuania |
Vilniaus Bankas AB |
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|
|
Malaysia |
Standard Chartered Bank |
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|
Malaysia Berhad |
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|
Mauritius |
The Hongkong and Shanghai |
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Banking Corporation Limited |
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|
Mexico |
Citibank Mexico, S.A. |
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Morocco |
Banque Commerciale du Maroc |
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Namibia |
(via) Standard Bank of South Africa |
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The Netherlands |
MeesPierson N.V. |
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New Zealand |
ANZ Banking Group |
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(New Zealand) Limited |
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Norway |
Christiania Bank og |
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Kreditkasse |
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Oman |
British Bank of the Middle East |
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(as delegate of The Hongkong and |
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Shanghai Banking Corporation Limited) |
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Pakistan |
Deutsche Bank AG |
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Peru |
Citibank, N.A. |
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Philippines |
Standard Chartered Bank |
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Poland |
Citibank (Poland) S.A. |
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Bank Polska Kasa Opieki S.A. |
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|
Portugal |
Banco Comercial Português |
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|
Romania |
ING Bank N.V. |
|
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|
Russia |
Credit Suisse First Boston AO, Moscow |
|
|
(as delegate of Credit Suisse |
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|
First Boston, Zurich) |
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|
Singapore |
The Development Bank |
|
|
of Singapore Limited |
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|
|
|
Slovak Republic |
Ceskoslovenská Obchodní Banka, A.S. |
|
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Slovenia |
Bank Austria d.d. Ljubljana |
|
|
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|
South Africa |
Standard Bank of South Africa Limited |
|
|
|
|
Spain |
Banco Santander, S.A. |
|
|
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Sri Lanka |
The Hongkong and Shanghai |
|
|
Banking Corporation Limited |
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|
|
Swaziland |
Standard Bank Swaziland Limited |
|
|
|
|
Sweden |
Skandinaviska Enskilda Banken |
|
|
|
|
Switzerland |
UBS AG |
|
|
|
|
Taiwan - R.O.C. |
Central Trust of China |
|
|
|
|
Thailand |
Standard Chartered Bank |
|
|
|
|
Trinidad & Tobago |
Republic Bank Limited |
|
|
|
|
Tunisia |
Banque Internationale Arabe de Tunisie |
|
|
|
|
Turkey |
Citibank, N.A. |
|
|
Ottoman Bank |
|
|
|
|
Ukraine |
ING Bank, Ukraine |
|
|
|
|
United Kingdom |
State Street Bank and Trust Company, |
|
|
London Branch |
|
|
|
|
Uruguay |
Citibank, N.A. |
|
|
|
|
Venezuela |
Citibank, N.A. |
|
|
|
|
Zambia |
Barclays Bank of Zambia Limited |
|
|
|
|
Zimbabwe |
Barclays Bank of Zimbabwe Limited |
|
Euroclear (The Euroclear System)/State Street London Limited
Cedel, S.A. (Cedel Bank, société anonyme)/State Street London Limited
INTERSETTLE (for EASDAQ Securities)
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
|
|
Country |
Mandatory Depositories |
Argentina |
Caja de Valores S.A. |
|
|
Australia |
Austraclear Limited |
|
|
|
Reserve Bank Information and |
|
Transfer System |
|
|
Austria |
Öesterreichische Kontrollbank AG |
|
(Wertpapiersammelbank Division) |
|
|
Belgium |
Caisse Interprofessionnelle de Dépôt et |
|
de Virement de Titres S.A. |
|
|
|
Banque Nationale de Belgique |
|
|
Brazil |
Companhia Brasileira de Liquidaçao e |
|
Custodia (CBLC) |
|
|
|
Bolsa de Valores de Rio de Janeiro |
|
All SSB clients presently use CBLC |
|
|
|
Central de Custodia e de Liquidação Financeira |
|
de Titulos |
|
|
Bulgaria |
Central Depository AD |
|
|
|
Bulgarian National Bank |
|
|
Canada |
The Canadian Depository |
|
for Securities Limited |
|
|
Peoples Republic |
Shanghai Securities Central Clearing and |
of China |
Registration Corporation |
|
|
|
Shenzhen Securities Central Clearing Co., Ltd. |
|
|
Costa Rica |
Central de Valores S.A. (CEVAL) |
|
|
Croatia |
Ministry of Finance |
|
|
|
National Bank of Croatia |
|
|
Czech Republic |
Stredisko cenných papírů |
|
|
|
Czech National Bank |
|
|
Denmark |
Værdipapircentralen (the Danish |
|
Securities Center) |
|
|
Egypt |
Misr Company for Clearing, Settlement, |
|
and Central Depository |
|
|
Estonia |
Eesti Väärtpaberite Keskdepositoorium |
|
|
Finland |
The Finnish Central Securities |
|
Depository |
|
|
France |
Société Interprofessionnelle |
|
pour la Compensation des |
|
Valeurs Mobilières (SICOVAM) |
|
|
Germany |
Deutsche Börse Clearing AG |
|
|
Greece |
The Central Securities Depository |
|
(Apothetirion Titlon AE) |
|
|
Hong Kong |
The Central Clearing and |
|
Settlement System |
|
|
|
Central Money Markets Unit |
|
|
Hungary |
The Central Depository and Clearing |
|
House (Budapest) Ltd. (KELER) |
|
[Mandatory for Govt Bonds only; |
|
SSB does not use for other securities] |
|
|
India |
The National Securities Depository Limited |
|
|
Indonesia |
Bank Indonesia |
|
|
Ireland |
Central Bank of Ireland |
|
Securities Settlement Office |
|
|
Israel |
The Tel Aviv Stock Exchange Clearing |
|
House Ltd. |
|
|
|
Bank of Israel |
|
|
Italy |
Monte Titoli S.p.A. |
|
|
|
Banca dItalia |
|
|
Ivory Coast |
Depositaire Central Banque de Règlement |
|
|
Jamaica |
The Jamaican Central Securities Depository |
|
|
Japan |
Bank of Japan Net System |
|
|
Kenya |
Central Bank of Kenya |
|
|
Republic of Korea |
Korea Securities Depository Corporation |
|
|
Latvia |
The Latvian Central Depository |
|
|
Lebanon |
The Custodian and Clearing Center of |
|
Financial Instruments for Lebanon |
|
and the Middle East (MIDCLEAR) S.A.L. |
|
|
|
The Central Bank of Lebanon |
|
|
Lithuania |
The Central Securities Depository of Lithuania |
|
|
Malaysia |
The Malaysian Central Depository Sdn. Bhd. |
|
|
|
Bank Negara Malaysia, |
|
Scripless Securities Trading and Safekeeping System |
|
|
Mauritius |
The Central Depository & Settlement |
|
Co. Ltd. |
|
|
Mexico |
S.D. INDEVAL, S.A. de C.V. |
|
(Instituto para el Depósito de |
|
Valores) |
|
|
Morocco |
Maroclear |
|
|
The Netherlands |
Nederlands Centraal Instituut voor |
|
Giraal Effectenverkeer B.V. (NECIGEF) |
|
|
|
De Nederlandsche Bank N.V. |
|
|
New Zealand |
New Zealand Central Securities |
|
Depository Limited |
|
|
Norway |
Verdipapirsentralen (the Norwegian |
|
Registry of Securities) |
|
|
Oman |
Muscat Securities Market |
|
|
Pakistan |
Central Depository Company of Pakistan Limited |
|
|
Peru |
Caja de Valores y Liquidaciones S.A. |
|
(CAVALI) |
|
|
Philippines |
The Philippines Central Depository, Inc. |
|
|
|
The Registry of Scripless Securities |
|
(ROSS) of the Bureau of the Treasury |
|
|
Poland |
The National Depository of Securities |
|
(Krajowy Depozyt Papierów Wartościowych) |
|
|
|
Central Treasury Bills Registrar |
|
|
Portugal |
Central de Valores Mobiliários (Central) |
|
|
Romania |
National Securities Clearing, Settlement and |
|
Depository Co. |
|
|
|
Bucharest Stock Exchange Registry Division |
|
|
Singapore |
The Central Depository (Pte) |
|
Limited |
|
|
|
Monetary Authority of Singapore |
|
|
Slovak Republic |
Stredisko Cenných Papierov |
|
|
|
National Bank of Slovakia |
|
|
Slovenia |
Klirinsko Depotna Druzba d.d. |
|
|
South Africa |
The Central Depository Limited |
|
|
Spain |
Servicio de Compensación y |
|
Liquidación de Valores, S.A. |
|
|
|
Banco de España, |
|
Central de Anotaciones en Cuenta |
|
|
Sri Lanka |
Central Depository System |
|
(Pvt) Limited |
|
|
Sweden |
Värdepapperscentralen AB |
|
(the Swedish Central Securities Depository) |
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|
Switzerland |
Schweizerische Effekten - Giro AG |
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Taiwan - R.O.C. |
The Taiwan Securities Central |
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Depository Co., Ltd. |
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Thailand |
Thailand Securities Depository |
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Company Limited |
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Tunisia |
Société Tunisienne Interprofessionelle de |
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Compensation et de Dépôt de |
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Valeurs Mobilières |
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Central Bank of Tunisia |
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Tunisian Treasury |
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Turkey |
Takas ve Saklama Bankasi A.S. |
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(TAKASBANK) |
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Central Bank of Turkey |
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Ukraine |
The National Bank of Ukraine |
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United Kingdom |
The Bank of England, |
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The Central Gilts Office and |
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The Central Moneymarkets Office |
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Uruguay |
Central Bank of Uruguay |
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Venezuela |
Central Bank of Venezuela |
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Zambia |
Lusaka Central Depository Limited |
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Bank of Zambia |
SCHEDULE C
MARKET INFORMATION
|
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Publication/Type of Information |
|
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Brief Description |
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(Frequency) |
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The Guide to Custody in World Markets |
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An overview of safekeeping and settlement practices and procedures in each market in which State Street Bank and Trust Company offers custodial services. |
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Global Custody Network Review |
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Information relating to the operating history and structure of depositories and subcustodians located in the markets in which State Street Bank and Trust Company offers custodial services, including transnational depositories. |
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Global Legal Survey |
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With respect to each market in which State Street Bank and Trust Company offers custodial services, opinions relating to whether local law restricts (i) access of a funds independent public accountants to books and records of a Foreign Sub-Custodian or Foreign Securities System, (ii) the Funds ability to recover in the event of bankruptcy or insolvency of a Foreign Sub-Custodian or Foreign Securities System, (iii) the Funds ability to recover in the event of a loss by a Foreign Sub-Custodian or Foreign Securities System, and (iv) the ability of a foreign investor to convert cash and cash equivalents to U.S. dollars. |
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Subcustodian Agreements |
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Copies of the subcustodian contracts State Street Bank and Trust Company has entered into with each subcustodian in the markets in which State Street Bank and Trust Company offers subcustody services to its US mutual fund clients. |
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Network Bulletins (weekly): |
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Developments of interest to investors in the markets in which State Street Bank and Trust Company offers custodial services. |
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Foreign
Custody Advisories (as |
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With respect to markets in which State Street Bank and Trust Company offers custodial services which exhibit special custody risks, developments which may impact State Streets ability to deliver expected levels of service. |
EXHIBIT A
(Amended as of December 15, 2011) 1
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ENTITY AND SERIES |
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TYPE OF |
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JURISDICTION |
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Lord Abbett Affiliated Fund, Inc. |
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Corporation |
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Maryland |
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Lord Abbett Bond-Debenture Fund, Inc. |
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Corporation |
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Maryland |
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Lord Abbett Developing Growth Fund, Inc. |
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Corporation |
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Maryland |
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Lord Abbett Equity Trust |
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Statutory Trust |
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Delaware |
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Lord Abbett Calibrated Large Cap Value Fund |
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Lord Abbett Calibrated Mid Cap Fund Value Fund |
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Lord Abbett Small-Cap Blend Fund |
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Lord Abbett Global Fund, Inc. |
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Corporation |
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Maryland |
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Lord Abbett Emerging Markets Currency Fund |
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Lord Abbett Global Allocation Fund |
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Lord Abbett Investment Trust |
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Statutory Trust |
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Delaware |
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Lord Abbett Balanced Strategy Fund |
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Lord Abbett Convertible Fund |
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Lord Abbett Core Fixed Income Fund |
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Lord Abbett Diversified Equity Strategy Fund |
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Lord Abbett Diversified Income Strategy Fund |
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Lord Abbett Floating Rate Fund |
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Lord Abbett Growth & Income Strategy Fund |
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Lord Abbett High Yield Fund |
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Lord Abbett Income Fund |
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Lord Abbett Inflation Focused Fund |
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Lord Abbett Short Duration Income Fund |
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Lord Abbett Total Return Fund |
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|
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Lord Abbett Mid-Cap Value Fund, Inc. |
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Corporation |
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Maryland |
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Lord Abbett Municipal Income Fund, Inc. |
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Corporation |
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Maryland |
|
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Lord Abbett AMT Free Municipal Bond Fund |
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Lord Abbett California Tax-Free Income Fund |
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Lord Abbett High Yield Municipal Bond Fund |
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Lord Abbett Intermediate Tax-Free Fund |
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Lord Abbett National Tax-Free Income Fund |
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Lord Abbett New Jersey Tax-Free Income Fund |
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Lord Abbett New York Tax-Free Income Fund |
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Lord Abbett Short Duration Tax Free Fund |
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Lord Abbett Research Fund, Inc. |
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Corporation |
|
Maryland |
|
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Lord Abbett Capital Structure Fund |
|
|
|
|
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Lord Abbett Classic Stock Fund |
|
|
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Lord Abbett Growth Opportunities Fund |
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|
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|
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Small-Cap Value Series |
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|
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|
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|
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Lord Abbett Securities Trust |
|
Statutory Trust |
|
Delaware |
|
|
Lord Abbett Alpha Strategy Fund |
|
|
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Lord Abbett Fundamental Equity Fund |
|
|
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Lord Abbett Growth Leaders Fund |
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Lord Abbett International Core Equity Fund |
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Lord Abbett International Dividend Income Fund |
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Lord Abbett International Opportunities Fund |
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Lord Abbett Large-Cap Value Fund |
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Lord Abbett Micro-Cap Growth Fund |
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Lord Abbett Micro-Cap Value Fund |
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Lord Abbett Value Opportunities Fund |
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Lord Abbett Series Fund, Inc. |
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Corporation |
|
Maryland |
|
|
Bond-Debenture Portfolio |
|
|
|
|
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Capital Structure Portfolio |
|
|
|
|
|
Classic Stock Portfolio |
|
|
|
|
|
Developing Growth Portfolio |
|
|
|
|
|
Fundamental Equity Portfolio |
|
|
|
|
|
Growth and Income Portfolio |
|
|
|
|
|
Growth Opportunities Portfolio |
|
|
|
|
|
International Core Equity Portfolio |
|
|
|
|
|
International Opportunities Portfolio |
|
|
|
|
|
Mid-Cap Value Portfolio |
|
|
|
|
|
Total Return Portfolio |
|
|
|
|
|
Value Opportunities Portfolio |
|
|
|
|
|
|
|
|
|
|
Lord Abbett Stock Appreciation Fund |
|
Statutory Trust |
|
Delaware |
|
|
|
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Lord Abbett U.S. Government & Government Sponsored Enterprises Money Market Fund, Inc. |
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Corporation |
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Maryland |
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Exhibit 28(h)(i) |
Agency Agreement dated April 30, 2010 (including amended Schedule A dated as of December 15, 2011) |
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (Agreement) is made as of December 12, 2002 by and among each of the investment companies in the Lord Abbett Family of Funds, as set forth on Exhibit 1 hereto, and each new Lord Abbett Fund added as a party to this Agreement pursuant to section 9, (each, a Fund or collectively, the Funds) and Lord, Abbett & Co. LLC, a Delaware limited liability company (Lord Abbett).
RECITALS
A. WHEREAS, Lord Abbett has entered into a Management Agreement with each Fund whereby Lord Abbett provides investment management services to each Fund.
B. WHEREAS, each Fund desires to retain Lord Abbett to provide certain administrative services and Lord Abbett is willing to provide, or arrange to have provided, such services upon the terms and conditions as hereinafter provided.
NOW THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed as follows:
1. Agreement to Perform Administrative Services. Each Fund hereby employs Lord Abbett under the terms and conditions of this Agreement, and Lord Abbett hereby accepts such employment and agrees to perform the administrative services described below. It is understood that the persons employed by Lord Abbett to assist in the performance of its duties hereunder will not devote their full time to such services, and may in fact devote a substantial portion of their time to the performance of duties relating to Lord Abbetts provision of services to other clients, and nothing herein shall be deemed to limit or restrict the right of Lord Abbett, its affiliates, and their respective employees, to engage in and devote time and attention to other business or to render services of whatever kind or nature to Lord Abbetts other clients.
2. Lord Abbett Services and Duties. Lord Abbett will provide, or arrange to have provided in accordance with section 3 below, for each Fund those facilities, equipment, and personnel to carry out the administrative services which are described in Exhibit 2 hereto (Administrative Services). Lord Abbett represents that it has sufficient personnel and experience to perform the Administrative Services, and agrees to perform such Administrative Services in accordance with industry standards for mutual fund administrators.
In performing its duties under this Agreement, Lord Abbett agrees that it shall observe and be bound by all of the provisions of (1) each Funds Articles of Incorporation/Declaration and Agreement of Trust and By-laws (including any amendments thereto) which in any way limit or restrict or prohibit or otherwise regulate any action by Lord Abbett, (2) each Funds registration statement, and (3) the instructions and directions of the Boards of Directors/Trustees of each Fund. In addition, Lord Abbett agrees and warrants that it will use its best efforts to conform to and comply with the requirements of the Investment Company Act of 1940, as amended (1940 Act) and all other applicable federal and state laws and regulations.
3. Lord Abbett Subcontractors. It is understood that Lord Abbett may from time to time employ or associate with such person or persons (Subcontractors) as Lord Abbett may believe to be particularly fitted to assist in its performance of this Agreement; provided, however, that the compensation of such Subcontractors shall be paid by Lord Abbett and that Lord Abbett shall be as fully responsible to each Fund for the acts and omissions of any Subcontractor as it is for its own acts and omissions. Lord Abbett shall use its best efforts to ensure that any Subcontractor complies with the provisions of section 2 above.
4. Expenses Assumed. Except as otherwise set forth in this section 4 or as otherwise approved by the Funds Boards of Directors/Trustees, Lord Abbett shall pay all expenses incurred by it in performing the Administrative Services, including the cost of providing office facilities, equipment and personnel related to such services. Each Fund will pay its own fees, costs, expenses or charges relating to its assets and operations, including without limitation: fees and expenses under the Management Agreement; fees and expenses of Directors/Trustees not affiliated with Lord Abbett; governmental fees; interest charges; taxes; association membership dues; fees and charges for legal and auditing services; fees and expenses of any custodians or trustees with respect to custody of its assets; fees, charges and expenses of dividend disbursing agents, registrars and transfer agents (including the cost of keeping all necessary shareholder records and accounts, and of handling any problems relating thereto and the expense of furnishing to all shareholders statements of their accounts after every transaction, including the expense of mailing); costs and expenses of repurchase and redemption of its shares; costs and expenses of preparing, printing and mailing to shareholders ownership certificates, proxy statements and materials, prospectuses, reports and notices; costs of preparing reports to governmental agencies; brokerage fees and commissions of every kind and expenses in connection with the execution of portfolio security transactions (including the cost of any service or agency designed to facilitate the purchase and sale of portfolio securities); and all postage, insurance premiums, and any other fee, cost, expense or charge of any kind incurred by and on behalf of the Trust and not expressly assumed by Lord Abbett under this Agreement or the Management Agreement.
5. Compensation. For the services rendered, facilities furnished and expenses assumed by Lord Abbett under this Agreement, each Fund will pay to Lord Abbett an annual administrative services fee, computed and payable monthly, at the annual rate of .04% of the value of the Funds average daily net assets. Such value shall be calculated in the same manner as provided in each Funds Management Agreement. It is specifically understood and agreed that any fees for fund accounting services payable by the Funds to State Street Bank and Trust Company pursuant to that separate Custodian and Investment Accounting Agreement dated November 1, 2001 shall be paid directly by Lord Abbett on behalf of the Funds. It is further understood and agreed that should the Funds regulatory environment change so that the costs to Lord Abbett of providing Administrative Services increase or decrease significantly, then Lord Abbett and the Funds Boards of Directors/Trustees will consider whether it would be appropriate to adjust the compensation under this Agreement.
6. Standard of Care. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, Lord Abbett assumes no responsibility under this Agreement and, having so acted, Lord Abbett shall not be held liable or accountable for any mistakes of law or fact, or for any error or omission of its officers, directors, members or employees, or for any loss or damage arising or resulting therefrom suffered by a Fund or any of its shareholders, creditors, Directors/Trustees or officers; provided however, that nothing herein shall be deemed to protect Lord Abbett against any liability to the Fund or its shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder.
7. Conflicts of Interest. Neither this Agreement nor any other transaction between the parties hereto pursuant to this Agreement shall be invalidated or in any way affected by the fact that any of the Directors/Trustees, officers, shareholders, or other representatives of a Fund are or may be an interested person of Lord Abbett, or any successor or assignee thereof, or that any or all of the officers, members, or other representatives of Lord Abbett are or may be an interested person of the Fund, except as otherwise may be provided in the 1940 Act. Lord Abbett in acting hereunder shall be an independent contractor and not an agent of the Funds.
8. Effective Date and Termination. This Agreement shall become effective with respect to a Fund on January 1, 2003, or at such other date as may be set by the Funds Board of Directors/Trustees by resolution, and shall continue in force for two years from the date hereof, and is renewable annually thereafter by specific approval of the Directors/Trustees of the Fund or by vote of a majority of the outstanding voting securities of the Fund; any such renewal shall be approved by the vote of a majority of the Directors/Trustees who are not parties to this Agreement or interested persons of Lord Abbett or of the Fund, cast in person at a meeting called for the purpose of voting on such renewal.
This Agreement may be terminated without penalty at any time by the Directors/Trustees of a Fund or by Lord Abbett on 60 days written notice. This Agreement shall automatically terminate in the event of its assignment. The terms interested persons, assignment and vote of a majority of the outstanding voting securities shall have the same meaning as those terms are defined in the 1940 Act.
9. Addition of New Funds to Agreement. In the event that a new fund is created in the Lord Abbett Family of Funds and such fund wishes to engage Lord Abbett to perform Administrative Services under this Ageement, such fund shall be entitled to do so by executing and delivering to Lord Abbett a document accepting this Agreement. The employment of Lord Abbett on behalf of any new fund shall become effective upon Lord Abbetts receipt of such counterpart executed by such new fund.
10. Individual Liability. The obligations of each Company/Trust, including those imposed hereby, are not personally binding upon, nor shall resort be had to the private property of, any of the Directors/Trustees, shareholders, officers, employees or agents of the Company/Trust individually, but are binding only upon the assets and property of the Company/Trust. Any and all personal liability, either at common law or in equity, or by statute or constitution, of every such Director/Trustee, shareholder, officer, employee or agent for any breach by the Company/Trust of any agreement, representation or warranty hereunder is hereby expressly waived as a condition of and in consideration for the execution of this Agreement by the Company/Trust.
11. Liability of Funds Several and not Joint. The obligations of a Fund under this Agreement are enforceable solely against that Fund and its assets.
12. Delaware Law. This Agreement shall be construed and the provisions interpreted under and in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed in its name and on its behalf by its duly authorized representative.
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On Behalf of each of the Lord Abbett Funds
listed on |
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By: |
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/s/Joan A. Binstock |
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Joan A. Binstock |
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Chief Financial Officer |
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Attested: |
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/s/Christina T. Simmons |
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Christina T. Simmons |
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Assistant Secretary |
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LORD, ABBETT & CO. LLC |
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By: |
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/s/Robert S. Dow |
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Robert S. Dow |
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Managing Member |
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Attested: |
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/s/Paul A. Hilstad |
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Paul A. Hilstad |
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Member, General Counsel |
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EXHIBIT 1
TO
ADMINISTRATIVE SERVICES AGREEMENT
The following funds comprise the Lord Abbett Family of Funds:
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Lord Abbett Affiliated Fund, Inc. |
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Lord Abbett Blend Trust |
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Lord Abbett Small-Cap Blend Fund |
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Lord Abbett Bond-Debenture Fund, Inc. |
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Lord Abbett Developing Growth Fund, Inc. |
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Lord Abbett Global Fund, Inc. |
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Equity Series |
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Income Series |
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Lord Abbett Investment Trust |
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Balanced Series |
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Core Fixed Income Fund |
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Lord Abbett High Yield Fund |
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Limited Duration U.S. Government Securities Series |
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Lord Abbett Total Return Fund |
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U.S. Government Securities Series |
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Lord Abbett Large-Cap Growth Fund |
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Lord Abbett Mid-Cap Value Fund, Inc. |
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Lord Abbett Research Fund, Inc. |
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Lord Abbett Growth Opportunities Fund |
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Large-Cap Series |
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Small-Cap Value Series |
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Lord Abbett Securities Trust |
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Alpha Series |
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Lord Abbett All Value Fund |
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International Series |
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Lord Abbett Micro-Cap Growth Fund |
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Lord Abbett Micro-Cap Value Fund |
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Lord Abbett Series Fund, Inc. |
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Bond-Debenture Portfolio |
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Growth and Income Portfolio |
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International Portfolio |
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Mid-Cap Value Portfolio |
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Lord Abbett Tax-Free Income Fund, Inc. |
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Lord Abbett Tax-Free Income Trust |
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Lord Abbett U.S. Government Securities Money Market Fund, Inc. |
EXHIBIT 2
TO
ADMINISTRATIVE SERVICES AGREEMENT
In accordance with section 2 of the Agreement, Lord Abbett will provide, or arrange to have provided, the following Administrative Services for each Fund:
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(a) |
Fund Accounting, Financial Reporting, Shareholder Servicing and Technology |
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(1) |
Perform Fund accounting services which include, but are not limited to, daily NAV calculation and dissemination, and maintenance of books and records as required by Rule 31 (a) of the1940 Act. |
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(2) |
Perform the functions of a mutual funds chief financial officer and treasurer. |
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(3) |
Perform Fund budgeting and accounts payable functions. |
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(4) |
Perform Financial Reporting, including reports to the Board of Directors/Trustees, and preparation of financial statements, NSARs and registration statements. |
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(5) |
Coordinate regulatory examinations. |
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(6) |
Calculate and facilitate payment of dividends. |
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(7) |
Oversee the preparation and ensure the filing of all Federal/State Tax Returns. |
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(8) |
Monitor the Funds compliance with IRS regulations. |
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(9) |
Monitor compliance with Fund policies on valuing (pricing) all Fund assets. |
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(10) |
Monitor Transfer Agent to ensure shareholder accounts are being processed in compliance with the appropriate regulations and are reflected appropriately in the Funds records. Ensure 12b-1 payments being paid by the Fund are accurate and in accordance with the 12b-1 plans. |
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(11) |
Maintain the technology platforms and market data feeds necessary for the daily accounting and reporting functions set forth in this Agreement. |
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(b) |
Legal, Compliance and Blue Sky Functions |
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(1) |
Prepare and maintain files of all Board and shareholder meeting materials, including minutes. |
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(2) |
Monitor compliance by each Fund with various conditions imposed by exemptive orders and/or regulatory requirements relating to multiple classes of shares, and fund of funds. |
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(3) |
Prepare and review periodic Prospectus/Statement of Additional Information compliance reports. |
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(4) |
Prepare, update and file with the SEC the Funds registration statements, including pre-effective and post-effective amendments, Prospectuses, SAIs, and supplements. |
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(5) |
Prepare and/or review and file proxy materials with the SEC. |
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(6) |
Review annual and semi-annual reports of the Funds. |
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(7) |
Negotiate D&O/E&O insurance matters and annual renewals on behalf of the Funds. |
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(8) |
Monitor fidelity bond coverage for the Funds. |
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(9) |
Review Rule 24f-2 notices relating to registration fees and file with the SEC. |
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(10) |
Coordinate regulatory examinations of the Funds. |
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(11) |
Assist in preparation of Board members questionnaires. |
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(12) |
Register Fund shares with appropriate state blue sky authorities. |
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(13) |
Obtain and renew all sales permits required by relevant state authorities in order to permit the sale of shares in the state. |
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(14) |
Monitor the sale of shares in individual states. |
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(15) |
Respond to all blue sky audit and examination issues. |
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Exhibit 28(h)(ii) |
Amendment to Agency Agreement dated April 30, 2010 (amended March 15, 2011) |
AMENDMENT TO AGENCY AGREEMENT
THIS AMENDMENT(Amendment), effective as of March 15, 2011, is attached to, and made a part of, that certain Agency Agreement dated as of April 30, 2010 (Effective Date), as amended, modified and supplemented from time to time (the Agency Agreement), by and among each of the Funds (as such term and other capitalized terms used herein are defined in the Agency Agreement) and DST Systems, Inc. (DST).
WHEREAS, the Funds and DST have entered into the Agency Agreement; and
WHEREAS, the parties now intend to amend the Agency Agreement pursuant to the terms set forth herein.
NOW, THEREFORE, the parties agree as follows:
1. The initial Term of the Agency Agreement will be extended for a period on one year. Accordingly, the first sentence of Paragraph A of Section 20 of the Agency Agreement is hereby replaced in its entirety with the following:
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This Agreement shall be in effect for an initial period of six (6) years (the Initial Term) from the Effective Date and thereafter may be terminated by either party as of the last day of the then current term by the giving to the other party of at least one (1) years prior written notice, provided, however, that the effective date of any termination shall not occur during the period from December 15 through March 30 of any year to avoid adversely impacting year end. |
2. The Amended and Restated Fee Schedule (Schedule F), as attached hereto, replaces Schedule F in its entirety.
3. Except as amended herein, all other terms and conditions of the Agency Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, THE PARTIES HAVE CAUSED THIS AMENDMENT TO BE EXECUTED IN THEIR NAMES AND ON THEIR BEHALF BY AND THROUGH THEIR DULY AUTHORIZED OFFICERS AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN:
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DST SYSTEMS, INC. |
ON BEHALF OF EACH OF THE LORD ABBETT FUNDS LISTED IN ADDENDUM 1 ATTACHED TO THE AGENCY AGREEMENT |
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By: |
/s/Thomas J. Schmidt |
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By: |
/s/Lawrence H. Kaplan |
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Name: |
Thomas J. Schmidt |
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Lawrence H. Kaplan |
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Title: |
Vice President |
Title: |
Vice President, Secretary |
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Exhibit 28(h)(viii) |
Amendment #17 to Administrative Services Agreement dated as of April 20, 2011 |
AMENDMENT 17
to the
ADMINISTRATIVE SERVICES AGREEMENT
among
The Investment Companies comprising the Lord Abbett Family of Funds
(each, a Fund or collectively, the Funds) as set forth on Exhibit 1
and
Lord, Abbett & Co. LLC (Lord Abbett)
WHEREAS, the Investment Companies named on Exhibit 1 and Lord Abbett entered into an Administrative Services Agreement dated December 12, 2002, as may be amended from time to time (the Agreement);
WHEREAS, Section 9 of the Agreement provides for the addition to the Agreement of new funds created in the Lord Abbett Family of Funds where such funds wish to engage Lord Abbett to perform Administrative Services under the Agreement; and
WHEREAS, the Funds and Lord Abbett desire to further amend the Agreement to include additional funds;
NOW THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, the parties mutually agree to amend the Agreement in the following respects:
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1. |
The Agreement is hereby amended to add the following funds to Exhibit 1 of the Agreement: |
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Lord Abbett Investment Trust |
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-Lord Abbett Inflation Focused Fund |
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2. |
The Agreement shall remain the same in all other respects. |
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3. |
The Amendment is effective as of the 20th day of April, 2011. |
IN WITNESS WHEREOF, each of the parties has caused this Amendment to the Agreement to be executed in its name and on its behalf by its duly authorized representative.
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On behalf of each of the Lord Abbett Funds listed on Exhibit 1 Attached hereto |
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By: |
/s/Joan A. Binstock |
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Joan A. Binstock |
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Chief Financial Officer |
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Attested: |
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/s/Thomas R. Phillips |
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Thomas R. Phillips |
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Vice President & Assistant Secretary |
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LORD, ABBETT & CO. LLC |
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By: |
/s/Robert S. Dow |
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Robert S. Dow |
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Managing Member |
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Attested: |
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/s/Lawrence H. Kaplan |
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Lawrence H. Kaplan |
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Member, General Counsel |
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EXHIBIT 1 (AMENDED AS OF APRIL 20, 2011) 1
TO
ADMINISTRATIVE SERVICES AGREEMENT
The following funds comprise the Lord Abbett Family of Funds:
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Lord Abbett Affiliated Fund, Inc. |
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Lord Abbett Blend Trust |
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Lord Abbett Small-Cap Blend Fund |
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Lord Abbett Bond-Debenture Fund, Inc. |
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Lord Abbett Developing Growth Fund, Inc. |
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Lord Abbett Global Fund, Inc. |
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Lord Abbett Emerging Markets Currency Fund |
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Lord Abbett Global Allocation Fund |
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Lord Abbett Investment Trust |
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Lord Abbett Balanced Strategy Fund |
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Lord Abbett Convertible Fund |
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Lord Abbett Core Fixed Income Fund |
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Lord Abbett Diversified Equity Strategy Fund |
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Lord Abbett Diversified Income Strategy Fund |
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Lord Abbett Floating Rate Fund |
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Lord Abbett Growth & Income Strategy Fund |
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Lord Abbett High Yield Fund |
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Lord Abbett Income Fund |
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Lord Abbett Inflation Focused Fund |
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Lord Abbett Short Duration Income Fund |
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Lord Abbett Total Return Fund |
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Lord Abbett Mid-Cap Value Fund, Inc. |
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Lord Abbett Municipal Income Fund, Inc. |
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Lord Abbett AMT Free Municipal Bond Fund |
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Lord Abbett California Tax-Free Income Fund |
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Lord Abbett High Yield Municipal Bond Fund |
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Lord Abbett Intermediate Tax Free Fund |
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Lord Abbett National Tax-Free Income Fund |
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Lord Abbett New Jersey Tax-Free Income Fund |
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Lord Abbett New York Tax-Free Income Fund |
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Lord Abbett Short Duration Tax Free Fund |
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1 As amended on April 20, 2011 to reflect (1) the addition of Lord Abbett Investment Trust, Inc. Lord Abbett Inflation Focused Fund; and (2) the name change of Lord Abbett Global Fund, Inc. Lord Abbett Emerging Markets Currency Fund (formerly, Lord Abbett Developing Local Markets Fund). |
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Lord Abbett Research Fund, Inc. |
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Lord Abbett Capital Structure Fund |
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Lord Abbett Classic Stock Fund |
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Lord Abbett Growth Opportunities Fund |
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Small-Cap Value Series |
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Lord Abbett Securities Trust |
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Lord Abbett Alpha Strategy Fund |
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Lord Abbett Fundamental Equity Fund |
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Lord Abbett International Core Equity Fund |
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Lord Abbett International Dividend Income Fund |
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Lord Abbett International Opportunities Fund |
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Lord Abbett Large-Cap Value Fund |
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Lord Abbett Micro-Cap Growth Fund |
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Lord Abbett Micro-Cap Value Fund |
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Lord Abbett Value Opportunities Fund |
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Lord Abbett Series Fund, Inc. |
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Bond-Debenture Portfolio |
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Capital Structure Portfolio |
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Classic Stock Portfolio |
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Developing Growth Portfolio |
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Fundamental Equity Portfolio |
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Growth and Income Portfolio |
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Growth Opportunities Portfolio |
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International Core Equity Portfolio |
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International Opportunities Portfolio |
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Mid-Cap Value Portfolio |
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Total Return Portfolio |
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Value Opportunities Portfolio |
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Lord Abbett Stock Appreciation Fund |
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Lord Abbett U.S. Government & Government Sponsored Enterprises Money Market Fund, Inc. |
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Exhibit 28(h)(ix) |
Amendment #18 to Administrative Services Agreement dated as of June 15, 2011 |
AMENDMENT 18
to the
ADMINISTRATIVE SERVICES AGREEMENT
among
The Investment Companies comprising the Lord Abbett Family of Funds
(each, a Fund or collectively, the Funds) as set forth on Exhibit 1
and
Lord, Abbett & Co. LLC (Lord Abbett)
WHEREAS, the Funds and Lord Abbett entered into an Administrative Services Agreement dated December 12, 2002, as may be amended from time to time (the Agreement);
WHEREAS, Section 9 of the Agreement provides for the addition to the Agreement of new funds created in the Lord Abbett Family of Funds where such funds wish to engage Lord Abbett to perform Administrative Services under the Agreement; and
WHEREAS, the Funds and Lord Abbett desire to further amend the Agreement to include such additional funds;
NOW THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, the parties mutually agree to amend the Agreement in the following respects:
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1. |
The Agreement is hereby amended to add the following fund to Exhibit 1 of the Agreement: |
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Lord Abbett Securities Trust |
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-Lord Abbett Growth Leaders Fund |
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2. |
The Agreement shall remain the same in all other respects. |
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3. |
The Amendment is effective as of the 15th day of June 2011. |
IN WITNESS WHEREOF, each of the parties has caused this Amendment to the Agreement to be executed in its name and on its behalf by its duly authorized representative.
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On behalf of each of the Lord Abbett Funds listed on Exhibit 1 Attached hereto |
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By: |
/s/ Joan A. Binstock |
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Joan A. Binstock |
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Chief Financial Officer |
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Attested: |
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/s/ Thomas R. Phillips |
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Thomas R. Phillips |
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Vice President & Assistant Secretary |
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LORD, ABBETT & CO. LLC |
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By: |
/s/ Robert S. Dow |
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Robert S. Dow |
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Managing Member |
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Attested: |
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/s/ Lawrence H. Kaplan |
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Lawrence H. Kaplan |
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Member, General Counsel |
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EXHIBIT 1 (AMENDED AS OF JUNE 15, 2011) 1
TO
ADMINISTRATIVE SERVICES AGREEMENT
The following funds comprise the Lord Abbett Family of Funds:
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Lord Abbett Affiliated Fund, Inc. |
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Lord Abbett Blend Trust |
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Lord Abbett Small-Cap Blend Fund |
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Lord Abbett Bond-Debenture Fund, Inc. |
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Lord Abbett Developing Growth Fund, Inc. |
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Lord Abbett Global Fund, Inc. |
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Lord Abbett Emerging Markets Currency Fund |
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Lord Abbett Global Allocation Fund |
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Lord Abbett Investment Trust |
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Lord Abbett Balanced Strategy Fund |
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Lord Abbett Convertible Fund |
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Lord Abbett Core Fixed Income Fund |
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Lord Abbett Diversified Equity Strategy Fund |
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Lord Abbett Diversified Income Strategy Fund |
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Lord Abbett Floating Rate Fund |
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Lord Abbett Growth & Income Strategy Fund |
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Lord Abbett High Yield Fund |
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Lord Abbett Income Fund |
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Lord Abbett Inflation Focused Fund |
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Lord Abbett Short Duration Income Fund |
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Lord Abbett Total Return Fund |
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Lord Abbett Mid-Cap Value Fund, Inc. |
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Lord Abbett Municipal Income Fund, Inc. |
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Lord Abbett AMT Free Municipal Bond Fund |
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Lord Abbett California Tax-Free Income Fund |
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Lord Abbett High Yield Municipal Bond Fund |
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Lord Abbett Intermediate Tax Free Fund |
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Lord Abbett National Tax-Free Income Fund |
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Lord Abbett New Jersey Tax-Free Income Fund |
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Lord Abbett New York Tax-Free Income Fund |
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Lord Abbett Short Duration Tax Free Fund |
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1 As amended on June 15, 2011 to reflect the addition of Lord Abbett Securities Trust Lord Abbett Growth Leaders Fund. |
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Lord Abbett Research Fund, Inc. |
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Lord Abbett Capital Structure Fund |
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Lord Abbett Classic Stock Fund |
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Lord Abbett Growth Opportunities Fund |
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Small-Cap Value Series |
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Lord Abbett Securities Trust |
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Lord Abbett Alpha Strategy Fund |
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Lord Abbett Fundamental Equity Fund |
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Lord Abbett Growth Leaders Fund |
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Lord Abbett International Core Equity Fund |
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Lord Abbett International Dividend Income Fund |
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Lord Abbett International Opportunities Fund |
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Lord Abbett Large-Cap Value Fund |
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Lord Abbett Micro-Cap Growth Fund |
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Lord Abbett Micro-Cap Value Fund |
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Lord Abbett Value Opportunities Fund |
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Lord Abbett Series Fund, Inc. |
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Bond-Debenture Portfolio |
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Capital Structure Portfolio |
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Classic Stock Portfolio |
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Developing Growth Portfolio |
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Fundamental Equity Portfolio |
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Growth and Income Portfolio |
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Growth Opportunities Portfolio |
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International Core Equity Portfolio |
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International Opportunities Portfolio |
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Mid-Cap Value Portfolio |
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Total Return Portfolio |
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Value Opportunities Portfolio |
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Lord Abbett Stock Appreciation Fund |
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Lord Abbett U.S. Government & Government Sponsored Enterprises Money Market Fund, Inc. |
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Exhibit 28(h)(x) |
Amendment #19 to Administrative Services Agreement dated as of December 15, 2011 |
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AMENDMENT 19 |
to the |
ADMINISTRATIVE SERVICES AGREEMENT |
among |
The Investment Companies comprising the Lord Abbett Family of Funds |
(each, a Fund or collectively, the Funds) as set forth on Exhibit 1 |
and |
Lord, Abbett & Co. LLC (Lord Abbett) |
WHEREAS, the Funds and Lord Abbett entered into an Administrative Services Agreement dated December 12, 2002, as may be amended from time to time (the Agreement);
WHEREAS, Section 9 of the Agreement provides for the addition to the Agreement of new funds created in the Lord Abbett Family of Funds where such funds wish to engage Lord Abbett to perform Administrative Services under the Agreement; and
WHEREAS, the Funds and Lord Abbett desire to further amend the Agreement to include such additional funds;
NOW, THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, the parties mutually agree to amend the Agreement in the following respects:
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1. |
The Agreement is hereby amended to add the following funds to Exhibit 1 of the Agreement: |
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Lord Abbett Equity Trust1 |
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-Lord Abbett Calibrated Large Cap Value Fund |
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-Lord Abbett Calibrated Mid Cap Value Fund |
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2. |
The Agreement shall remain the same in all other respects. |
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3. |
The Amendment is effective as of the 15th day of December 2011. |
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1 Effective August 1, 2011, Lord Abbett Blend Trust changed its name to Lord Abbett Equity Trust. |
IN WITNESS WHEREOF, each of the parties has caused this Amendment to the Agreement to be executed in its name and on its behalf by its duly authorized representative.
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On behalf of each of the Lord Abbett Funds listed on Exhibit 1 Attached hereto |
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By: |
/s/Joan A. Binstock |
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Joan A. Binstock |
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Chief Financial Officer |
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Attested: |
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/s/Thomas R. Phillips |
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Thomas R. Phillips |
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Vice President & Assistant Secretary |
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LORD, ABBETT & CO. LLC |
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By: |
/s/Robert S. Dow |
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Robert S. Dow |
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Managing Member |
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Attested: |
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/s/Lawrence H. Kaplan |
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Lawrence H. Kaplan |
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Member, General Counsel |
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EXHIBIT 1 (AMENDED AS OF December 15, 2011) 2
TO
ADMINISTRATIVE SERVICES AGREEMENT
The following funds comprise the Lord Abbett Family of Funds:
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Lord Abbett Affiliated Fund, Inc. |
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Lord Abbett Calibrated Large Cap Value Fund |
Lord Abbett Calibrated Mid Cap Value Fund |
Lord Abbett Small-Cap Blend Fund |
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Lord Abbett Emerging Markets Currency Fund |
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Lord Abbett Balanced Strategy Fund |
Lord Abbett Convertible Fund |
Lord Abbett Core Fixed Income Fund |
Lord Abbett Diversified Equity Strategy Fund |
Lord Abbett Diversified Income Strategy Fund |
Lord Abbett Floating Rate Fund |
Lord Abbett Growth & Income Strategy Fund |
Lord Abbett High Yield Fund |
Lord Abbett Income Fund |
Lord Abbett Inflation Focused Fund |
Lord Abbett Short Duration Income Fund |
Lord Abbett Total Return Fund |
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Lord Abbett AMT Free Municipal Bond Fund |
Lord Abbett California Tax-Free Income Fund |
Lord Abbett High Yield Municipal Bond Fund |
Lord Abbett Intermediate Tax Free Fund |
Lord Abbett National Tax-Free Income Fund |
Lord Abbett New Jersey Tax-Free Income Fund |
Lord Abbett New York Tax-Free Income Fund |
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2 As amended to reflect: (1) effective August 1, 2011, Lord Abbett Blend Trust changed its name to Lord Abbett Equity Trust; and (2) the addition of Lord Abbett Calibrated Large Cap Value Fund and Lord Abbett Calibrated Mid Cap Value Fund, each a series of Lord Abbett Equity Trust, as of December 15, 2011. |
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Lord Abbett Short Duration Tax Free Fund |
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Lord Abbett Capital Structure Fund |
Lord Abbett Classic Stock Fund |
Lord Abbett Growth Opportunities Fund |
Small-Cap Value Series |
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Lord Abbett Alpha Strategy Fund |
Lord Abbett Fundamental Equity Fund |
Lord Abbett Growth Leaders Fund |
Lord Abbett International Core Equity Fund |
Lord Abbett International Dividend Income Fund |
Lord Abbett International Opportunities Fund |
Lord Abbett Large-Cap Value Fund |
Lord Abbett Micro-Cap Growth Fund |
Lord Abbett Micro-Cap Value Fund |
Lord Abbett Value Opportunities Fund |
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Bond-Debenture Portfolio |
Capital Structure Portfolio |
Classic Stock Portfolio |
Developing Growth Portfolio |
Fundamental Equity Portfolio |
Growth and Income Portfolio |
Growth Opportunities Portfolio |
International Core Equity Portfolio |
International Opportunities Portfolio |
Mid-Cap Value Portfolio |
Total Return Portfolio |
Value Opportunities Portfolio |
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Ex-99.28(I)
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Matthew A. Chambers |
February 23, 2012 |
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+1 202 663 6591 (t) |
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+1 202 663 6363 (f) |
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matthew.chambers@wilmerhale.com |
Lord Abbett
Affiliated Fund, Inc.
90 Hudson Street
Jersey City, NJ 07302-3972
Dear Sirs:
You have requested our opinion in connection with your filing of Post-Effective Amendment No. 103 to the Registration Statement on Form N-1A (the Amendment) under the Securities Act of 1933, as amended (Amendment No. 103 under the Investment Company Act of 1940, as amended), of Lord Abbett Affiliated Fund, Inc., a Maryland corporation (the Company), and in connection therewith your registration of Class A, B, C, F, I, P, R2, and R3 shares of capital stock, with a par value of $.001 each, of the Company (collectively, the Shares).
We have examined and relied upon originals, or copies certified to our satisfaction, of such company records, documents, certificates, and other instruments as in our judgment are necessary or appropriate to enable us to render the opinion set forth below.
We are of the opinion that the Shares issued in the continuous offering have been duly authorized and, assuming the issuance of the Shares for cash at net asset value and receipt by the Company of the consideration therefor as set forth in the Amendment and that the number of shares issued does not exceed the number authorized, the Shares will be validly issued, fully paid, and nonassessable.
We express no opinion as to matters governed by any laws other than Title 2 of the Maryland Code: Corporations and Associations. We consent to the filing of this opinion solely in connection with the Amendment. In giving such consent, we do not hereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder.
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Very truly yours, |
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WILMER CUTLER PICKERING |
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HALE AND DORR LLP |
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By: |
/s/ Matthew A. Chambers |
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Matthew A. Chambers, a partner |
Wilmer Cutler
Pickering Hale and Dorr LLP, 1875 Pennsylvania Avenue NW, Washington, DC 20006
Baltimore Beijing Berlin Boston Brussels London New
York Oxford Palo
Alto Waltham Washington
Ex-99.28(J)
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in this Post-Effective Amendment No. 103 to Registration Statement No. 002-10638 on Form N-1A of our report dated December 21, 2011, relating specifically to the financial statements and financial highlights of Lord Affiliated Fund, Inc. (the Fund), appearing in the Annual Report on Form N-CSR of the Fund for the year ended October 31, 2011.
We also consent to the references to us under the headings Financial Highlights in the Prospectus and Independent Registered Public Accounting Firm, Financial Statements and Fund Portfolio Information Recipients in the Statement of Additional Information, which are part of such Registration Statement.
/s/DELOITTE & TOUCHE LLP
New York, New York
February 24, 2012
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Exhibit 28(m) |
Amended and Restated Joint Rule 12b-1 Distribution Plan and Agreement for Lord Abbett Family of Funds dated August 10, 2007 with updated Schedule A dated December 15, 2011 and Schedule B dated November 19, 2010 |
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The Lord Abbett Family of Funds |
Amended and Restated Joint Rule 12b-1 Distribution Plan and Agreement as |
of August 10, 2007 |
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AMENDED AND RESTATED RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of August 10, 2007 by and between each of the registered, open-end management investment companies acting individually in respect of their constituent series listed on Schedule A hereto (each a Fund) and Lord Abbett Distributor LLC, a New York limited liability company (the Distributor). This Amended and Restated Joint Rule 12b-1 Distribution Plan and Agreement dated as of August 10, 2007 supersedes the Amended and Restated Joint Rule 12b-1 Distribution Plan and Agreement dated as of March 23, 2006.
WHEREAS, each Fund is an open-end management investment company or a series thereof registered under the Investment Company Act of 1940, as amended (the Act), and the Distributor is the exclusive selling agent of the Funds shares of beneficial interest or common stock, as the case may be (Shares), pursuant to the Distribution Agreement between the Fund and the Distributor.
WHEREAS, each Fund desires to amend and restate its Distribution Plan and Agreement by adopting and entering into this instrument on a several but not joint basis with each other Fund (as amended and restated, the Plan) with the Distributor, as permitted by Rule 12b-1 under the Act, pursuant to which the Fund may make certain payments to the Distributor to be used by the Distributor or paid to institutions and persons permitted by applicable law and/or rules to receive such payments (Authorized Institutions) in connection with sales of Shares and/or servicing of accounts of shareholders holding Shares, with which the Distributor has entered into a dealer or similar agreement (the Agreements).
WHEREAS, the Funds Board of Directors or Trustees, as the case may be (Board), has determined that there is a reasonable likelihood that the Plan will benefit the Fund and the holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed as follows:
1. The Fund has entered into a Distribution Agreement with the Distributor, under which the Distributor uses reasonable efforts, consistent with its other business, to secure purchasers of the Funds Shares. These efforts may include, but neither are required to include nor are limited to, the following: (a) making payments to Authorized Institutions in connection with sales of Shares and/or servicing of accounts of shareholders holding Shares; (b) providing continuing information and investment services to shareholder accounts not serviced by Authorized Institutions receiving a service fee from the Distributor hereunder and otherwise to encourage shareholder accounts to remain invested in the Shares; and (c) otherwise rendering service to the Fund, including paying and financing the payment of sales commissions, service fees and other costs of distributing and selling Shares as provided in paragraph 2 of this Plan.
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2. (a) Class A Fees. |
(i) In consideration for the services provided and the expenses incurred by the Distributor pursuant to the Distribution Agreement and paragraph 1 hereof, the Fund shall pay to the Distributor an aggregate fee at the annual rate of 0.50% of the average daily net asset value of Class A Shares outstanding, subject to paragraph 3 hereof and any reduction specified on Schedule B hereto. Payments by holders of Class A Shares of contingent deferred reimbursement charges relating to distribution fees paid by the Fund hereunder shall reduce the amount of distribution fees for purposes of the annual 0.50% limit in those instances where the Fund is entitled to retain these charges. Notwithstanding the foregoing, the Lord Abbett U.S. Government & Government Sponsored Enterprises Money Market Fund shall pay to the Distributor an aggregate fee at the annual rate of 0.15% of the average daily net asset value of Class A Shares outstanding, subject to paragraph 3 hereof. The Distributor may use all or any portion of the distribution fee received pursuant to this paragraph to compensate Authorized Institutions that have engaged in the sale of Class A Shares or in service activities with respect to Class A Shares pursuant to the Agreements, or to pay any of the expenses associated with other activities authorized under paragraph 1 hereof.
(ii) Subject to the aggregate fee amounts set forth in paragraph 2(a)(i) hereof, the Fund may attribute a portion of the distribution fee to service activities, which portion shall not exceed 0.25% of the average daily net asset value of Class A Shares outstanding, subject to any reduction specified on Schedule B hereto. The Distributor may use all or a portion of these service fees to compensate Authorized Institutions for service activities as defined in paragraph 5 below.
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(b) Class B Fees. |
(i) In consideration for the services provided and the expenses incurred by the Distributor pursuant to the Distribution Agreement and paragraph 1 hereof, the Fund shall pay to the Distributor an aggregate fee at the annual rate of 1.00% of the average daily net asset value of Class B Shares outstanding, subject to paragraph 3 hereof. Notwithstanding the foregoing, the Lord Abbett U.S. Government & Government Sponsored Enterprises Money Market Fund shall pay to the Distributor an aggregate fee at the annual rate of .75% of the average daily net asset value of Class B Shares outstanding, subject to paragraph 3 hereof. The Distributor may use all or any portion of the distribution fee received pursuant to this paragraph to compensate Authorized Institutions that have engaged in the sale of Class B Shares or in service activities with respect to the Class B Shares pursuant to the Agreements, or to pay any of the expenses associated with other activities authorized under paragraph 1 hereof.
(ii) Subject to the aggregate fee amounts set forth in paragraph 2(b)(i) hereof, the Fund may attribute a portion of the distribution fee to service activities, which portion shall not exceed .25% of the average daily net asset value of Class B Shares outstanding. The Distributor may use all or a portion of these service fees to compensate Authorized Institutions for service activities as defined in paragraph 5 below.
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(c) Class C Fees. |
(i) In consideration for the services provided and the expenses incurred by the Distributor pursuant to the Distribution Agreement and paragraph 1 hereof, the Fund shall pay to the Distributor an aggregate fee at the annual rate of 1.00% of the average daily net asset value of Class C Shares outstanding, subject to paragraph 3 hereof. The Distributor may use all or any portion of the distribution fee received pursuant to this paragraph to compensate Authorized Institutions that have engaged in the sale of Class C Shares or in service activities with respect to the Class C Shares pursuant to the Agreements, or to pay any of the expenses associated with other activities authorized under paragraph 1 hereof.
(ii) Subject to the aggregate fee amounts set forth in paragraph 2(c)(i) hereof, the Fund may attribute a portion of the distribution fee to service activities, which portion shall not exceed .25% of the average daily net asset value of Class C Shares outstanding. The Distributor may use all or a portion of these service fees to compensate Authorized Institutions for service activities as defined in paragraph 5 below.
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(d) Class F Fees. |
(i) In consideration for the services provided and the expenses incurred by the Distributor pursuant to the Distribution Agreement and paragraph 1 hereof, the Fund shall pay to the Distributor an aggregate fee at the annual rate of 1.00% of the average daily net asset value of Class F Shares outstanding, subject to paragraph 3 hereof. The Distributor may use all or any portion of the distribution fee received pursuant to this paragraph to compensate Authorized Institutions that have engaged in the sale of Class F Shares or in service activities with respect to Class F Shares pursuant to the Agreements, or to pay any of the expenses associated with other activities authorized under paragraph 1 hereof.
(ii) Subject to the aggregate fee amounts set forth in paragraph 2(d)(i) hereof, the Fund may attribute a portion of the distribution fee to service activities, which portion shall not exceed .25% of the average daily net asset value of Class F Shares outstanding. The Distributor may use all or a portion of these service fees to compensate Authorized Institutions for service activities as defined in paragraph 5 below.
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(e) Class P Fees. |
(i) In consideration for the services provided and the expenses incurred by the Distributor pursuant to the Distribution Agreement and paragraph 1 hereof, the Fund shall pay to the Distributor an aggregate fee at the annual rate of .75% of the average daily net asset value of Class P Shares outstanding, subject to paragraph 3 hereof. The Distributor may use all or any portion of the distribution fee received pursuant to this paragraph to compensate Authorized Institutions that have engaged in the sale of Class P Shares or in service activities with respect to Class P Shares pursuant to the Agreements, or to pay any of the expenses associated with other activities authorized under paragraph 1 hereof.
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(ii) Subject to the aggregate fee amounts set forth in paragraph 2(e)(i) hereof, the Fund may attribute a portion of the distribution fee to service activities, which portion shall not exceed .25% of the average daily net asset value of Class P Shares outstanding. The Distributor may use all or a portion of these service fees to compensate Authorized Institutions for service activities as defined in paragraph 5 below.
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(f) Class R2 Fees. |
(i) In consideration for the services provided and the expenses incurred by the Distributor pursuant to the Distribution Agreement and paragraph 1 hereof, the Fund shall pay to the Distributor an aggregate fee at the annual rate of 1.00% of the average daily net asset value of Class R2 Shares outstanding, subject to paragraph 3 hereof. The Distributor may use all or any portion of the distribution fee received pursuant to this paragraph to compensate Authorized Institutions that have engaged in the sale of Class R2 Shares or in service activities with respect to Class R2 Shares pursuant to the Agreements, or to pay any of the expenses associated with other activities authorized under paragraph 1 hereof.
(ii) Subject to the aggregate fee amounts set forth in paragraph 2(f)(i) hereof, the Fund may attribute a portion of the distribution fee to service activities, which portion shall not exceed .25% of the average daily net asset value Class R2 Shares outstanding. The Distributor may use all or a portion of these service fees to compensate Authorized Institutions for service activities as defined in paragraph 5 below.
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(g) Class R3 Fees. |
(i) In consideration for the services provided and the expenses incurred by the Distributor pursuant to the Distribution Agreement and paragraph 1 hereof, the Fund shall pay to the Distributor an aggregate fee at the annual rate of 1.00% of the average daily net asset value of Class R3 Shares outstanding, subject to paragraph 3 hereof. The Distributor may use all or any portion of the distribution fee received pursuant to this paragraph to compensate Authorized Institutions that have engaged in the sale of Class R3 Shares or in service activities with respect to Class R3 Shares pursuant to the Agreements, or to pay any of the expenses associated with other activities authorized under paragraph 1 hereof.
(ii) Subject to the aggregate fee amounts set forth in paragraph 2(g)(i) hereof, the Fund may attribute a portion of the distribution fee to service activities, which portion shall not exceed .25% of the average daily net asset value of Class R3 Shares outstanding. The Distributor may use all or a portion of these service fees to compensate Authorized Institutions for service activities as defined in paragraph 5 below.
3. The Board shall from time to time determine the amounts, within the foregoing maximum amounts described in paragraph 2, that the Fund may pay the Distributor hereunder. These determinations and approvals of nonmaterial amendments to this Plan by the Board shall be made and given by votes of the kind referred to in paragraph 9.
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4. The net asset value of the Shares shall be determined as provided in the Prospectus and Statement of Additional Information of the Fund. Any fees payable hereunder, which may be waived by the Distributor or Authorized Institutions in whole or in part, may be calculated and paid at least quarterly. If the Distributor waives all or a portion of the fees that are to be paid by the Fund hereunder, the Distributor shall not be deemed to have waived its rights under this Plan to have the Fund pay fees in the future. Nothing herein shall prohibit the Distributor from collecting Distribution Fees in any given year, as provided hereunder, in excess of expenditures made in that year for activities authorized under paragraph 1 hereof. The Distributor in its sole discretion may assign its right to receive fees hereunder.
5. The Distributor shall provide to the Funds Board, and the Board shall review at least quarterly, a written report of the amounts expended pursuant to this Plan and the purposes for which the expenditures were made, including amounts expended for distribution activities and/or service activities. For purposes of this Plan, distribution activities shall mean any activities that are not deemed service activities. Service activities shall mean activities in connection with the provision of personal, continuing services to shareholder accounts in the Shares; provided, however, that if the National Association of Securities Dealers, Inc. (NASD) adopts a definition of service fee for purposes of Section 2830(b)(9) of the NASD Conduct Rules or any successor provision that differs from the definition of service activities hereunder, or if the NASD adopts a related interpretive position intended to define the same concept, the definition of service activities in this paragraph shall be automatically amended, without further action of the parties, to conform to the then effective NASD definition. Overhead and other expenses related to distribution activities or service activities, including telephone and other communications expenses, may be included in the information regarding amounts expended for these activities.
6. The Distributor shall give the Fund the benefit of the Distributors reasonable judgment and good faith efforts in rendering services under this Plan. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, the Distributor assumes no responsibility under this Plan and, having so acted, the Distributor shall not be held liable or held accountable for any mistake of law or fact, or for any loss or damage arising or resulting therefrom suffered by the Fund, or any of its shareholders, creditors, Board Members, or officers of the Fund; provided however, that nothing herein shall be deemed to protect the Distributor against any liability to the Fund or its shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder.
7. This Plan shall become effective upon the date hereof, and shall continue in effect from year to year so long as the Plan, together with any related agreements, is specifically approved at least annually by votes of a majority of both (a) the Board and (b) those Board Members who are not interested persons of the Fund and have no direct or indirect financial interest in the operation of this Plan or any agreements related thereto (Independent Board Members), cast in person at a meeting called for the purpose of voting on this approval. If a Fund is a series of a registered investment company, references to the Board, Board Members and Independent Board Members shall be to that or those of the company of which the Fund is a series.
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8. This Plan may not be amended to increase materially the amount to be spent by the Fund hereunder above the maximum amounts referred to in paragraph 2 without a vote of a majority of the outstanding voting securities of the Fund in compliance with Rule 12b-1 and Rule 18f-3 under the Act or any successor statutes, rules or regulations as in effect at that time, and each material amendment must be approved in the manner provided for by paragraph 7. Because this amendment and restatement of the Plan does not increase the fees payable under the Plan as previously in effect, approval in the manner specified in paragraph 7 shall be sufficient for its adoption.
9. Amendments to this Plan other than material amendments of the kind referred to in paragraph 8 may be adopted by a majority of both (a) the Board Members and (b) the Independent Board Members. The Board may, by such a vote, interpret this Plan and make all determinations necessary or advisable for its administration.
10. This Plan may be terminated at any time without the payment of any penalty by the vote of a majority of the Independent Board Members, or by a vote of a majority of the outstanding voting securities of the Fund in compliance with Rule 12b-1 and Rule 18f-3 under the Act or any successor statute, rule or regulation as in effect at that time. This Plan shall automatically terminate in the event of its assignment.
11. So long as this Plan shall remain in effect, the selection and nomination of those Board Members of the Fund who are not interested persons of the Fund are committed to the discretion of the incumbent disinterested Board Members. The terms interested persons, assignment and vote of a majority of the outstanding voting securities shall have the same meanings as those terms are defined in the Act.
12. The Funds are adopting and entering into this Plan on a common basis for administrative convenience and not for the reason of creating or incurring any right, privilege, obligation or liability with respect to each other. Without limiting the generality of the foregoing, the obligations of the Funds under this Plan are several and not joint, and no Fund or class of Shares shall have any liability to pay any fee for any other Fund or class of Shares. This Plan shall be severable as to any Fund at the election of the Independent Board Members of that Fund. Additional Funds or classes of Shares may be added and existing Funds or classes of Shares may be removed from the operation of this Plan without action by any other Fund or class of Shares.
13. The obligations of the Fund, including those imposed hereby, are not personally binding upon, nor shall resort be had to the private property of, any of the Board Members, shareholders, officers, employees or agents of the Fund individually, but are binding only upon the assets and property of the Fund. Any and all personal liability, either at common law or in equity, or by statute or constitution, of every Board Member, shareholder, officer, employee or agent for any breach of the Fund of any agreement, representation or warranty hereunder is hereby expressly waived as a condition of and in consideration for the execution of this Agreement by the Fund.
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IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date first above written.
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EACH OF THE FUNDS LISTED ON SCHEDULE A HERETO |
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By: |
/s/ Lawrence H. Kaplan |
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Lawrence H. Kaplan |
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Vice President & Secretary |
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ATTEST: |
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/s/ Lawrence B. Stoller |
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Lawrence B. Stoller |
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Vice President & Assistant Secretary |
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LORD ABBETT DISTRIBUTOR LLC |
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By: |
LORD, ABBETT & CO. LLC |
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Managing Member |
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By: |
/s/ Lawrence H. Kaplan |
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Lawrence H. Kaplan |
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A Member |
7
SCHEDULE A
The Lord Abbett Family of Funds
Amended and Restated Joint Rule 12b-1 Distribution Plan and Agreement
As of December 15, 20111
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FUNDS |
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CLASSES |
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Lord Abbett Affiliated Fund, Inc. |
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A, B, C, F, P, R2, R3 |
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Lord Abbett Bond-Debenture Fund, Inc. |
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A, B, C, F, P, R2, R3 |
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Lord Abbett Developing Growth Fund, Inc. |
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A, B, C, F, P, R2, R3 |
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Lord Abbett Equity Trust |
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Lord Abbett Calibrated Large Cap Value Fund |
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A, C, F, R2, R3 |
Lord Abbett Calibrated Mid Cap Value Fund |
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A, C, F, R2, R3 |
Lord Abbett Small-Cap Blend Fund |
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A, B, C, F, P, R2, R3 |
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Lord Abbett Global Fund, Inc. |
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Lord Abbett Emerging Markets Currency Fund |
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A, B, C, F, P, R2, R3 |
Lord Abbett Global Allocation Fund |
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A, B, C, F, P, R2, R3 |
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Lord Abbett Investment Trust |
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Lord Abbett Balanced Strategy Fund |
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A, B, C, F, P, R2, R3 |
Lord Abbett Convertible Fund |
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A, B, C, F, P, R2, R3 |
Lord Abbett Core Fixed Income Fund |
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A, B, C, F, P, R2, R3 |
Lord Abbett Diversified Equity Strategy Fund |
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A, B, C, F, P, R2, R3 |
Lord Abbett Diversified Income Strategy Fund |
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A, B, C, F, P, R2, R3 |
Lord Abbett Floating Rate Fund |
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A, B, C, F, R2, R3 |
Lord Abbett Growth & Income Strategy Fund |
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A, B, C, F, P, R2, R3 |
Lord Abbett High Yield Fund |
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A, B, C, F, P, R2, R3 |
Lord Abbett Income Fund |
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A, B, C, F, P, R2, R3 |
Lord Abbett Inflation Focused Fund |
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A, C, F, R2, R3 |
Lord Abbett Short Duration Income Fund |
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A, B, C, F, P, R2, R3 |
Lord Abbett Total Return Fund |
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A, B, C, F, P, R2, R3 |
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Lord Abbett Mid-Cap Value Fund, Inc. |
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A, B, C, F, P, R2, R3 |
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Lord Abbett Municipal Income Fund, Inc. |
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Lord Abbett AMT Free Municipal Bond Fund |
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A, C, F |
Lord Abbett California Tax-Free Income Fund |
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A, C, F, P |
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1 As amended to reflect: (1) effective August 1, 2011, Lord Abbett Blend Trust changed its name to Lord Abbett Equity Trust; and (2) the addition of Lord Abbett Calibrated Large Cap Value Fund and Lord Abbett Calibrated Mid Cap Value Fund, each a series of Lord Abbett Equity Trust, as of December 15, 2011. |
A-1
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Lord Abbett High Yield Municipal Bond Fund |
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A, B, C, F, P |
Lord Abbett Intermediate Tax-Free Fund |
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A, B, C, F, P |
Lord Abbett National Tax-Free Income Fund |
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A, B, C, F, P |
Lord Abbett New Jersey Tax-Free Income Fund |
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A, F, P |
Lord Abbett New York Tax-Free Income Fund |
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A, C, F, P |
Lord Abbett Short Duration Tax Free Fund |
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A, B, C, F |
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Lord Abbett Research Fund, Inc. |
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Lord Abbett Capital Structure Fund |
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A, B, C, F, P, R2, R3 |
Lord Abbett Classic Stock Fund |
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A, B, C, F, P, R2, R3 |
Lord Abbett Growth Opportunities Fund |
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A, B, C, F, P, R2, R3 |
Small-Cap Value Series |
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A, B, C, F, P, R2, R3 |
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Lord Abbett Securities Trust |
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Lord Abbett Alpha Strategy Fund |
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A, B, C, F, P, R2, R3 |
Lord Abbett Fundamental Equity Fund |
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A, B, C, F, P, R2, R3 |
Lord Abbett Growth Leaders Fund |
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A, C, F, R2, R3 |
Lord Abbett International Core Equity Fund |
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A, B, C, F, P, R2, R3 |
Lord Abbett International Dividend Income Fund |
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A, B, C, F, R2, R3 |
Lord Abbett International Opportunities Fund |
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A, B, C, F, P, R2, R3 |
Lord Abbett Large-Cap Value Fund |
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A, B, C, F, P, R2, R3 |
Lord Abbett Micro-Cap Growth Fund |
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A |
Lord Abbett Micro-Cap Value Fund |
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A |
Lord Abbett Value Opportunities Fund |
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A, B, C, F, P, R2, R3 |
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Lord Abbett Stock Appreciation Fund |
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A, B, C, F, P, R2, R3 |
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Lord Abbett U.S. Government & Government |
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Sponsored Enterprises Money Market Fund, Inc. |
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A, B, C |
A-2
SCHEDULE B
The Lord Abbett Family of Funds Class A
Amended and Restated Joint Rule 12b-1 Distribution Plan and Agreement
As of November 19, 20101
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Entity / Fund |
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Service
fees payable with respect to Class A |
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Lord Abbett Investment Trust |
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9/1/85 - .15 of 1% |
Lord Abbett Income Fund |
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Lord Abbett Affiliated Fund |
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6/1/90 - .15 of 1% |
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Lord Abbett Bond-Debenture Fund |
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6/1/90 - .15 of 1% |
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Lord Abbett Developing Growth Fund |
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6/1/90 - .15 of 1% |
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Lord Abbett Mid-Cap Value Fund |
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6/1/90 - .15 of 1% |
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Lord Abbett Municipal Income Fund |
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6/1/90 - .15 of 1% |
Lord Abbett National Tax-Free Income Fund |
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Lord Abbett Municipal Income Fund |
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6/1/90 - .15 of 1% |
Lord Abbett New York Tax-Free Income Fund |
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Lord Abbett Municipal Income Fund |
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7/1/92 - .15 of 1% |
Lord Abbett New Jersey Tax-Free Income Fund |
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1 As amended on November 19, 2010 to reflect (1) the Reorganization of each of Lord Abbett Connecticut Tax-Free Income Fund, Georgia Series, Lord Abbett Hawaii Tax-Free Income Fund, Lord Abbett Missouri Tax-Free Income Fund, and Pennsylvania Series into Lord Abbett National Tax-Free Income Fund; and (2) the Redomestication of each of Lord Abbett High Yield Municipal Bond Fund, Lord Abbett Intermediate Tax-Free Fund, and Lord Abbett Short Duration Tax Free Fund, as a series of Lord Abbett Municipal Income Fund, Inc. |
B-1
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Exhibit 28(n) |
Amended and Restated Rule 18f-3 Plan with Schedule A as of July 1, 2008 pursuant to Rule 18f-3(d) under the Investment Company Act of 1940 with updated Schedule A dated December 15, 2011 |
The Lord Abbett Family of Funds
Amended and Restated Plan as of July 1, 2008
Pursuant to Rule 18f-3(d)
under the Investment Company Act of 1940
(Originally adopted August 15, 1996)
Rule 18f-3 (the Rule) under the Investment Company Act of 1940, as amended (the 1940 Act), requires that the Board of Directors or Trustees of an investment company desiring to offer multiple classes pursuant to the Rule adopt a plan setting forth the separate arrangement and expense allocation of each class, and any related conversion features or exchange privileges. This document constitutes an amended and restated plan (the Plan) of each of the investment companies, or series thereof, listed on Schedule A attached hereto (each, a Fund). The Plan of any Fund is subject to amendment by action of the Board of Directors or Trustees (the Board) of such Fund and without the approval of shareholders of any class, to the extent permitted by law and by the governing documents of such Fund.
The Board, including a majority of the non-interested Board members, has determined that the following separate arrangement and expense allocation, and the related conversion features, if any, and exchange privileges, of each class of each Fund are in the best interest of each class of each Fund individually and each Fund as a whole.
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1. |
CLASS DESIGNATION. |
Shares of all Funds except Lord Abbett Series Fund, Inc. shall be divided into Class A, Class B, Class C, Class F, Class P, Class R2, Class R3, and Class I shares as indicated for each Fund on Schedule A attached hereto. In the case of the Lord Abbett Series Fund, Inc., shares of the Growth and Income Portfolio shall be divided into Variable Contract Class shares (Class VC shares) and Class P shares and shares of all other Portfolios shall be comprised of one class of shares as indicated on Schedule A, each of which shall also be known as Class VC shares of the respective Portfolio.
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2. |
SALES CHARGES AND DISTRIBUTION AND SERVICE FEES. |
(a) Initial Sales Charge. Class A shares will be traditional front-end sales charge shares, offered at their net asset value (NAV) plus a sales charge in the case of each Fund as described in such Funds prospectus as from time to time in effect.
Class B shares, Class C shares, Class F shares, Class P shares, Class R2 shares, Class R3 shares, Class I shares, and Class VC shares will be offered at their NAV without an initial sales charge.
(b) Service and Distribution Fees. As to the shares of Class A, Class B, Class C, Class F, Class P, Class R2, and Class R3, each Fund will pay service and/or distribution fees
under the Plan from time to time in effect adopted for such classes pursuant to Rule 12b-1 under the 1940 Act (the Joint 12b-1 Plan), at such rates as are set by its Board.
Pursuant to the Joint 12b-1 Plan as to the Class A shares, if effective, each Fund will generally pay distribution fees at an aggregate fee at the annual rate of 0.35% of the average daily NAV of the Class A share accounts, or such other rate as set by the Board from time to time. The Board has the authority to increase the total fees payable under the Joint 12b-1 Plan by a vote of the Board, including a majority of the independent members thereof, up to an aggregate fee at the annual rate of 0.50% of the average daily NAV of the Class A shares. The effective dates of the Joint 12b-1 Plan for the Class A shares are based on achievement by the Funds of specified total net assets for the Class A shares of such Funds.
Pursuant to the Joint 12b-1 Plan as to the Class B shares, if effective, each Fund will generally pay an aggregate fee at the annual rate of up to 1.00% of the average daily NAV of such shares then outstanding, or such other rate as set by the Board from time to time.
Pursuant to the Joint 12b-1 Plan as to the Class C shares, if effective, each Fund will generally pay an aggregate fee at an annual rate of up to 1.00% of the average daily NAV of such shares then outstanding, or such other rate as set by the Board from time to time.
Pursuant to the Joint 12b-1 Plan as to the Class F shares, if effective, each Fund will generally pay an aggregate fee at an annual rate of up to 0.10% of the average daily NAV of such shares then outstanding, or such other rate as set by the Board from time to time. The Board has the authority to increase the distribution fees payable under such 12b-1 Plan by a vote of the Board, including a majority of the independent members thereof, up to an aggregate fee at the annual rate of 1.00% of the average daily NAV of the Class F shares.
Pursuant to the Joint 12b-1 plan as to the Class P shares, if operational, each Fund will generally pay an aggregate fee at an annual rate of up to 0.45% of the average daily NAV of such shares then outstanding, or such other rate as set by the Board from time to time. The Board has the authority to increase the distribution fees payable under such 12b-1 Plan by a vote of the Board, including a majority of the independent members thereof, up to an annual rate of 0.75% of the average daily NAV of the Class P shares.
Pursuant to the Joint 12b-1 Plan as to the Class R2 shares, if effective, each Fund will generally pay an aggregate fee at an annual rate of up to 0.60% of the average daily NAV of such shares then outstanding, or such other rate as set by the Board from time to time. The Board has the authority to increase the distribution fees payable under such 12b-1 Plan by a vote of the Board, including a majority of the independent members thereof, up to an annual rate of 1.00% of the average daily NAV of the Class R2 shares.
Pursuant to the Joint 12b-1 Plan as to the Class R3 shares, if effective, each Fund will generally pay an aggregate fee at an annual rate of up to 0.50% of the average daily NAV of such shares then outstanding, or such other rate as set by the Board from time to time. The Board has the authority to increase the distribution fees payable under such 12b-1 Plan by a vote of the
-2-
Board, including a majority of the independent members thereof, up to an annual rate of 1.00% of the average daily NAV of the Class R3 shares.
The Class VC shares do not have a Rule 12b-1 Plan. However, pursuant to a separate Services Agreement for the Class VC shares, each Fund will generally pay an aggregate fee at an annual rate of up to 0.25% of the average daily NAV of such shares then outstanding to certain insurance companies for the service and maintenance of shareholder accounts, or such other rate as set by the Board from time to time.
The Class I shares do not have a Rule 12b-1 Plan.
(c) Contingent Deferred Sales Charges (CDSC). Subject to some waiver exceptions, Class A shares purchased in amounts of $1 million or more will be subject to a CDSC equal to 1.00% of the lower of the cost or the NAV of such shares if the shares are redeemed for cash on or before the first day of the month in which the one-year anniversary of the original purchase falls.
Class B shares will be subject to a CDSC ranging from 5.00% to 1.00% of the lower of the cost or the NAV of the shares, if the shares are redeemed for cash before the sixth anniversary of their purchase. The CDSC for the Class B shares may be waived for certain transactions. Class C shares will be subject to a CDSC equal to 1.00% of the lower of the cost or the NAV of the shares if the shares are redeemed for cash before the first anniversary of their purchase.
The Class F, Class P, Class R2, Class R3, and Class I shares will not be subject to a CDSC.
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3. |
CLASS-SPECIFIC EXPENSES. |
The following expenses shall be allocated, to the extent such expenses can reasonably be identified as relating to a particular class and consistent with Revenue Procedure 96-47, on a class-specific basis: (a) fees under the Joint 12b-1 Plan applicable to a specific class (net of any CDSC paid with respect to shares of such class and retained by the Fund) and any other costs relating to implementing or amending such Plan, including obtaining shareholder approval of such Plan or any amendment thereto; (b) transfer and shareholder servicing agent fees and shareholder servicing costs identifiable as being attributable to the particular provisions of a specific class; (c) stationery, printing, postage and delivery expenses related to preparing and distributing materials such as shareholder reports, prospectuses and proxy statements to current share holders of a specific class; (d) Securities and Exchange Commission registration fees incurred by a specific class; (e) Board fees or expenses identifiable as being attributable to a specific class; (f) fees for outside accountants and related expenses relating solely to a specific class; (g) litigation expenses and legal fees and expense relating solely to a specific class; (h) expenses incurred in connection with shareholders meetings as a result of issues relating solely to a specific class and (i) other expenses relating solely to a specific class, provided, that advisory fees and other expenses related to the management of a Funds assets (including custodial fees and tax-return preparation fees) shall be allocated to all shares of such Fund on the basis of NAV, regardless of whether they can be specifically attributed to a particular class. All common expenses shall be allocated to shares of each class at the same time they are allocated to the
-3-
shares of all other classes. All such expenses incurred by a class of shares will be charged directly to the net assets of the particular class and thus will be borne on a pro rata basis by the outstanding shares of such class. For all Funds, with the exception of Series Fund, each Funds Blue Sky expenses will be treated as common expenses. In the case of Series Fund, Blue Sky expenses will be allocated entirely to Class P, as the Class VC of Series Fund has no Blue Sky expenses.
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4. |
INCOME AND EXPENSE ALLOCATIONS. |
Income, realized and unrealized capital gains and losses and expenses not allocated to a class as provided above shall be allocated to each class on the basis of the net assets of that class in relation to the net assets of the Fund, except that, in the case of each daily dividend Fund, income and expenses shall be allocated on the basis of relative net assets (settled shares).
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5. |
DIVIDENDS AND DISTRIBUTIONS. |
Dividends and distributions paid by a Fund on each class of its shares, to the extent paid, will be calculated in the same manner, will be paid at the same time, and will be in the same amount, except that the amount of the dividends declared and paid by a particular class may be different from that paid by another class because of expenses borne exclusively by that class.
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6. |
NET ASSET VALUES. |
The NAV of each share of a class of a Fund shall be determined in accordance with the Articles of Incorporation or Declaration of Trust of such Fund with appropriate adjustments to reflect the allocations of expenses, income and realized and unrealized capital gains and losses of such Fund between or among its classes as provided above.
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7. |
CONVERSION FEATURES. |
The Class B shares will automatically convert to Class A shares 8 years after the date of purchase. Such conversion will occur at the relative NAV per share of each Class without the imposition of any sales charge, fee or other charge. When Class B shares convert, any other Class B shares that were acquired by the shareholder by the reinvestment of dividends and distributions will also convert to Class A shares on a pro rata basis. The conversion of Class B shares to Class A shares after 8 years is subject to the continuing availability of a private letter ruling from the Internal Revenue Service or an opinion of counsel to the effect that the conversion does not constitute a taxable event for the Class B shareholder under Federal income tax law. If such a revenue ruling or opinion is no longer available, the automatic conversion feature may be suspended, in which event no further conversions of Class B shares would occur while such suspension remained in effect.
Subject to amendment by the Board, none of the other classes of shares shall be subject to any automatic conversion feature.
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8. |
EXCHANGE PRIVILEGES. |
Except as set forth in a Funds prospectus as from time to time in effect, shares of any class of such Fund may be exchanged, at the holders option, for shares of the same class of another Fund, or other Lord Abbett-sponsored fund or series thereof, without the imposition of any sales charge, fee or other charge. In addition, shares of Classes F, P, R2, and R3 may be exchanged for Class A shares, but such an exchange will be subject to the imposition of a sales charge to the same extent as any purchase of Class A shares for cash.
* * *
This Plan is qualified by and subject to the terms of the then current prospectus for the applicable Fund; provided, however, that none of the terms set forth in any such prospectus shall be inconsistent with the terms contained herein. The prospectus for each Fund contains additional information about that Funds classes and its multiple-class structure.
This Plan has been adopted for each Fund with the approval of, and all material amendments thereto must be approved by, a majority of the members of the Board of such Fund, including a majority of the Board members who are not interested persons of the Fund.
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SCHEDULE A
As of December 15, 20111
The Lord Abbett Family of Funds
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FUNDS |
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CLASSES |
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Lord Abbett Affiliated Fund, Inc. |
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A, B, C, F, I, P, R2, R3 |
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Lord Abbett Bond-Debenture Fund, Inc. |
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A, B, C, F, I, P, R2, R3 |
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Lord Abbett Developing Growth Fund, Inc. |
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A, B, C, F, I, P, R2, R3 |
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Lord Abbett Equity Trust |
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Lord Abbett Calibrated Large Cap Value Fund |
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A, C, F, I, R2, R3 |
Lord Abbett Calibrated Mid Cap Value Fund |
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A, C, F, I, R2, R3 |
Lord Abbett Small-Cap Blend Fund |
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A, B, C, F, I, P, R2, R3 |
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Lord Abbett Global Fund, Inc. |
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Lord Abbett Emerging Markets Currency Fund |
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A, B, C, F, I, P, R2, R3 |
Lord Abbett Global Allocation Fund |
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A, B, C, F, I, P, R2, R3 |
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Lord Abbett Investment Trust |
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Lord Abbett Balanced Strategy Fund |
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A, B, C, F, I, P, R2, R3 |
Lord Abbett Convertible Fund |
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A, B, C, F, I, P, R2, R3 |
Lord Abbett Core Fixed Income Fund |
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A, B, C, F, I, P, R2, R3 |
Lord Abbett Diversified Equity Strategy Fund |
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A, B, C, F, I, P, R2, R3 |
Lord Abbett Diversified Income Strategy Fund |
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A, B, C, F, I, P, R2, R3 |
Lord Abbett Floating Rate Fund |
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A, B, C, F, I, R2, R3 |
Lord Abbett Growth & Income Strategy Fund |
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A, B, C, F, I, P, R2, R3 |
Lord Abbett High Yield Fund |
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A, B, C, F, I, P, R2, R3 |
Lord Abbett Income Fund |
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A, B, C, F, I, P, R2, R3 |
Lord Abbett Inflation Focused Fund |
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A, C, F, I, R2, R3 |
Lord Abbett Short Duration Income Fund |
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A, B, C, F, I, P, R2, R3 |
Lord Abbett Total Return Fund |
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A, B, C, F, I, P, R2, R3 |
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Lord Abbett Mid-Cap Value Fund, Inc. |
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A, B, C, F, I, P, R2, R3 |
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Lord Abbett Municipal Income Fund, Inc. |
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Lord Abbett AMT Free Municipal Bond Fund |
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A, C, F, I |
Lord Abbett California Tax-Free Income Fund |
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A, C, F, I, P |
Lord Abbett High Yield Municipal Bond Fund |
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A, B, C, F, I, P |
Lord Abbett Intermediate Tax Free Fund |
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A, B, C, F, I, P |
Lord Abbett National Tax-Free Income Fund |
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A, B, C, F, I, P |
Lord Abbett New Jersey Tax-Free Income Fund |
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A, F, I, P |
Lord Abbett New York Tax-Free Income Fund |
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A, C, F, I, P |
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1 As amended to reelect: (1) effective August 1, 2011, Lord Abbett Blend Trust changed its name to Lord Abbett Equity Trust; and (2) the addition of Lord Abbett Calibrated Large Cap Value Fund and Lord Abbett Calibrated Mid Cap Value Fund, each a series of Lord Abbett Equity Trust, as December 15, 2011. |
A-1
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Lord Abbett Short Duration Tax Free Fund |
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A, B, C, F, I |
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Lord Abbett Research Fund, Inc. |
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Lord Abbett Capital Structure Fund |
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A, B, C, F, I, P, R2, R3 |
Lord Abbett Classic Stock Fund |
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A, B, C, F, I, P, R2, R3 |
Lord Abbett Growth Opportunities Fund |
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A, B, C, F, I, P, R2, R3 |
Small-Cap Value Series |
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A, B, C, F, I, P, R2, R3 |
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Lord Abbett Securities Trust |
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Lord Abbett Alpha Strategy Fund |
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A, B, C, F, I, P, R2, R3 |
Lord Abbett Fundamental Equity Fund |
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A, B, C, F, I, P, R2, R3 |
Lord Abbett Growth Leaders Fund |
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A, C, F, I, R2, R3 |
Lord Abbett International Core Equity Fund |
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A, B, C, F, I, P, R2, R3 |
Lord Abbett International Dividend Income Fund |
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A, B, C, F, I, R2, R3 |
Lord Abbett International Opportunities Fund |
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A, B, C, F, I, P, R2, R3 |
Lord Abbett Large-Cap Value Fund |
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A, B, C, F, I, P, R2, R3 |
Lord Abbett Micro-Cap Growth Fund |
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A, I |
Lord Abbett Micro-Cap Value Fund |
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A, I |
Lord Abbett Value Opportunities Fund |
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A, B, C, F, I, P, R2, R3 |
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Lord Abbett Series Fund, Inc. |
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Bond-Debenture Portfolio |
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VC |
Capital Structure Portfolio |
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VC |
Classic Stock Portfolio |
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VC |
Developing Growth Portfolio |
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VC |
Fundamental Equity Portfolio |
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VC |
Growth and Income Portfolio |
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VC, P |
Growth Opportunities Portfolio |
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VC |
International Core Equity Portfolio |
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VC |
International Opportunities Portfolio |
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VC |
Mid-Cap Value Portfolio |
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VC |
Total Return Portfolio |
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VC |
Value Opportunities Portfolio |
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VC |
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Lord Abbett Stock Appreciation Fund |
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A, B, C, F, I, P, R2, R3 |
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Lord Abbett U.S. Government & Government |
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A, B, C, I |
Sponsored Enterprises Money Market Fund, Inc. |
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A-2
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Exhibit 28(p) |
Code of Ethics dated January 26, 2012 |
LORD, ABBETT & CO. LLC
LORD ABBETT DISTRIBUTOR LLC
(together, Lord Abbett)
AND
LORD ABBETT FAMILY OF FUNDS (the Funds)
CODE OF ETHICS
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I. |
Standards of Business Conduct and Ethical Principles |
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Lord Abbetts focus on honesty and integrity has been a critical part of its culture since the firms founding in 1929. Lord Abbett is a fiduciary to the Funds and to its other clients. In recognition of these fiduciary obligations, the personal investment activities of any officer, director, trustee or employee of the Funds, any partner or employee of Lord Abbett, and, in certain circumstances set forth below, non-Lord-Abbett employees and consultants to Lord Abbett will be governed by the following general principles: (1) Covered Persons1 have a duty at all times to place first the interests of Fund shareholders and, in the case of employees and partners of Lord Abbett, beneficiaries of managed accounts; (2) all securities transactions by Covered Persons shall be conducted consistent with this Code and in such a manner as to avoid any actual or potential conflict of interest or any abuse of an individuals position of trust and responsibility; (3) Covered Persons should not take inappropriate advantage of their positions with Lord Abbett or the Funds; (4) Covered Persons must comply with the Federal Securities Laws; and (5) Covered Persons are required to maintain all internally distributed and/or proprietary information as confidential; this information should not be disclosed or discussed with people outside Lord Abbett. |
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II. |
Specific Requirements, Prohibitions and Limits |
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Except as set forth below, no Covered Person shall purchase or sell a security, except an Excepted Security, if there has been a determination to purchase or sell such security for a Fund (or, in the case of any employee or partner of Lord Abbett, for another client of Lord Abbett), or if such a purchase or sale is under consideration for a Fund (or, in the case of an employee or partner of Lord Abbett, for another client of Lord Abbett). Also, no Covered Person may have any dealing in any such security in any account in which the Covered Person has Beneficial Ownership, nor may a Covered Person disclose the information to anyone on other than a need-to-know basis, until such purchase, sale or contemplated action has either been completed or abandoned. Lord Abbett partners and employees that participate in non-public investor meetings (i.e., earnings meetings / calls, analysts group meetings, and the like)2 with the |
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1 See Definitions in Section IX |
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2 Participation in web events and other broad forums for company management open to buy- and sell-side firms will not be treated as a non-public investor meeting with company management for purposes of this restriction. |
Lord, Abbett & Co. LLC Code of Ethics
Approved January 26, 2012
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management of an issuer or that otherwise cover or follow an issuer in their role as a Lord Abbett partner or employee are prohibited from requesting approval to purchase or sell the issuers securities for a period of six (6) months following the later of the most recent investor meeting and/or termination of coverage of that issuer. |
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Except as set forth below, no Covered Person shall submit more than 20 requests to purchase or sell a security (typically, by utilizing Personal Trade Assistant (PTA) - PreClearance Entry, an automated application for employee personal trading compliance accessed through Lord Abbetts intranet) in any single calendar year, nor shall any such person cause the execution of more than 10 covered transactions during any one calendar year.3 |
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Temporary employees and consultants must comply with the reporting and personal securities transaction requirements of the Code if they work at Lord Abbett for more than six (6) months; they must comply with the requirements related to permitted brokerage firms if they work at Lord Abbett for more than 12 months. For purposes of calculating the relevant time period for these requirements, any period of service following a break in service of six (6) months or more will be treated as the only relevant service period. |
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III. |
Obtaining Advance Approval |
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Except as provided in Sections V and VI of this Code, all proposed transactions in securities (privately or publicly held and/or traded) by Covered Persons, or with respect to which a Covered Person is a Beneficial Owner, except transactions in Excepted Securities and Excepted Transactions, should be approved consistent with the provisions of this Code. Except as directed otherwise, in order to obtain approval, the Covered Person must electronically submit their request to the Compliance Group within the Legal Department (Compliance) utilizing PTA. After approval has been obtained, the Covered Person may act on it within the two business days following the date of approval, unless he sooner learns of a contemplated action by Lord Abbett. After the two business days, or upon hearing of such contemplated action, a new approval must be obtained. |
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Furthermore, in addition to the above requirements, partners and employees directly involved must disclose information they may have concerning securities they may want to purchase or sell to any portfolio manager who might be interested in the securities for the portfolios they manage. |
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Lord Abbett will suspend the ability of all Covered Persons to engage in proposed investment transactions that require pre-approval during any business interruption that makes it impracticable for the Compliance Group to follow its normal practices in seeking Investment Department approvals for such transactions. |
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3 As set forth below, Transactions in Excepted Securities, Fully Discretionary Accounts, and Excepted Transactions do not require pre-approval and do not count against the maximum annual request and transaction allowances. The 20 request limit applies to the cumulative total of all transaction requests for all of an employees covered accounts. |
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Lord, Abbett & Co. LLC Code of Ethics |
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Approved January 26, 2012 |
2 |
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IV. |
Reporting and Certification Requirements; Brokerage Confirmations |
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(1) |
Except as provided in Sections V and VI of this Code, within 30 days following the end of each calendar quarter each Covered Person must electronically file with Compliance a Personal Securities Transaction Reporting Form utilizing PTA. The form must be submitted whether or not any security transaction has been effected. If any transaction has been effected during the quarter for the Covered Persons account or for any account in which he has a direct or indirect Beneficial Ownership, it must be reported. Excepted from this reporting requirement are transactions effected in any accounts over which the Covered Person has no direct or indirect influence or control (a Fully Discretionary Account, as defined in Section VI) and transactions in Excepted Securities. Securities acquired in an Excepted Transaction should be reported, except that securities acquired through an automatic investment plan do not need to be reported, unless any transaction is outside the pre-set schedule or a pre-existing allocation. Lord Abbetts Chief Compliance Officer (CCO) and/or persons under his direction are responsible for reviewing these transactions and must bring any apparent violation to the attention of Lord Abbetts General Counsel (GC). The Personal Securities Transaction Reporting Form of the CCO shall be reviewed by the GC. |
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(2) |
Each employee and partner of Lord Abbett will upon commencement of employment (within 10 business days) (the Initial Report) and annually thereafter (the Annual Report) disclose all personal securities holdings and annually certify that: (i) they have read and understand this Code and recognize they are subject hereto; and (ii) they have complied with the requirements of this Code and disclosed or reported all securities transactions required to be disclosed or reported pursuant to the requirements of this Code. Security holdings information for the Initial Report and the Annual Report must be current as of a date not more than 45 days prior to the date of that Report. Securities holdings of Lord Abbett Mutual Funds purchased directly from the Fund or purchased through the Lord Abbett 401(k) Retirement Plan are not required to be disclosed. Lord Abbett employees and partners must disclose holdings of Lord Abbett Mutual Funds purchased through a broker/dealer other than Lord Abbett Distributor LLC. |
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(3) |
Each employee, partner, and any temporary employee or consultant that works at Lord Abbett for more than 12 months must maintain all securities brokerage accounts of which they are a beneficial owner only at brokerage firms that appear on a list of approved brokerage firms available from Compliance. |
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(4) |
Each employee and partner of Lord Abbett will direct his brokerage firms to send copies or electronic transmissions of all trade confirmations and all monthly and/or quarterly statements directly to Compliance. |
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(5) |
Each employee and partner of Lord Abbett who has a Fully-Discretionary Account shall disclose all pertinent facts regarding such Account to Lord Abbetts CCO upon commencement of employment. Each such employee or partner shall thereafter annually certify on the prescribed form that he or she has not and will not exercise any |
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Lord, Abbett & Co. LLC Code of Ethics |
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Approved January 26, 2012 |
3 |
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direct or indirect influence or control over such Account, and has not discussed any potential investment decisions with such independent fiduciary in advance of any such transactions. Such independent fiduciary shall confirm initially, and annually thereafter, the accuracy of the facts as stated by the Lord Abbett employee or partner. |
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V. |
Special Provisions Applicable to Outside Directors and Trustees of the Funds |
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The primary function of the Outside Directors and Trustees of the Funds is to set policy and monitor the management performance of the Funds officers and employees and the partners and employees of Lord Abbett involved in the management of the Funds. Although they receive information after the fact as to portfolio transactions by the Funds, Outside Directors and Trustees are not given advance information as to the Funds contemplated investment transactions. |
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An Outside Director or Trustee wishing to purchase or sell any security will therefore generally not be required to obtain advance approval of his security transactions. If, however, during discussions at Board meetings or otherwise an Outside Director or Trustee should learn in advance of the Funds current or contemplated investment transactions, then advance approval of transactions in the securities of such company(ies) shall be required for a period of 30 days from the date of such Board meeting. In addition, an Outside Director or Trustee can voluntarily obtain advance approval of any security transaction or transactions at any time. |
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No report described in Section IV (1) will be required of an Outside Director or Trustee unless he knew, or in the ordinary course of fulfilling his official duties as a director or trustee should have known, at the time of his transaction, that during the 15-day period immediately before or after the date of the transaction (i.e., a total of 30 days) by the Outside Director or Trustee such security was or was to be purchased or sold by any of the Funds or such a purchase or sale was or was to be considered by a Fund. If he makes any transaction requiring such a report, he must report all securities transactions effected during the quarter for his account or for any account in which he has a direct or indirect Beneficial Ownership interest and over which he has any direct or indirect influence or control. Each Outside Director and Trustee will direct his brokerage firm to send copies of all confirmations of securities transactions to Compliance, and annually make the certification required under Section IV(2)(i) and (ii). Outside Directors and Trustees transactions in Excepted Securities are excepted from the provisions of this Code. |
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It shall be prohibited for an Outside Director or Trustee to trade on material non-public information. Prior to accepting an appointment as a director of any public company, an Outside Director or Trustee will advise Lord Abbett and discuss with Lord Abbetts Senior Partner whether accepting such appointment creates any conflict of interest or other issues. |
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If an Outside Director or Trustee, who is a director or an employee of, or consultant to, a company, receives a grant of options to purchase securities in that company (or an affiliate), neither the receipt of such options, nor the exercise of those options and the receipt of the |
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Lord, Abbett & Co. LLC Code of Ethics |
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Approved January 26, 2012 |
4 |
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underlying security, requires advance approval from Lord Abbett. Further, neither the receipt nor the exercise of such options and receipt of the underlying security is reportable by such Outside Director or Trustee. |
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Lord, Abbett & Co. LLC Code of Ethics |
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Approved January 26, 2012 |
5 |
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VI. |
Additional Requirements and Exceptions relating to Partners and Employees of Lord Abbett |
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A. It shall be prohibited for any partner or employee of Lord Abbett: |
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(1) |
To obtain or accept favors or preferential treatment of any kind or gift or other thing (other than an occasional meal or ticket to a sporting event or theatre, or comparable entertainment, which is neither so frequent nor so extensive as to raise any question of propriety) having a value of more than $100 from any person or entity that does business with or on behalf of the Funds; provided, however, that a partner or employee, acting on behalf of Lord Abbett, may give one or more gifts individually or collectively valued at more than $100 to an investment advisory client or intermediary not subject to regulation as a broker-dealer in the U.S. (but in no event to an investor in shares of the Funds), if such gift(s) are approved by Lord Abbetts Managing Partner or the partner responsible for the Institutional Marketing Department and by Lord Abbetts GC. For additional information on gifts and entertainment, please refer to Lord Abbetts Gifts and Entertainment Policy and Procedures; |
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(2) |
to trade on material non-public information or otherwise fail to comply with the Firms Insider Trading and Receipt of Material Non Public Information Policy and Procedure (Insider Trading policy) adopted pursuant to Section 15(f) of the Securities Exchange Act of 1934 and Section 204A of the Investment Advisers Act of 1940. For additional information regarding these policies and procedures, please refer to Lord Abbetts Insider Trading policy; |
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(3) |
to trade in options, for other than a Lord Abbett - managed account, with respect to securities covered under this Code; |
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(4) |
to profit in the purchase and sale, or sale and purchase, of the same (or equivalent) securities, for other than a Lord Abbett - managed account, within 60 calendar days (holding periods will be calculated based on a first-in, first-out methodology) (any profits realized on such short-term trades shall be disgorged to the appropriate Fund or as otherwise determined); |
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(5) |
to trade in futures or options on commodities, currencies or other financial instruments, although the Firm reserves the right to make rare exceptions in unusual circumstances which have been approved by the Firm in advance; |
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(6) |
to engage in short sales or purchase securities on margin; |
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(7) |
to buy or sell any security within seven business days before or after any Fund (or other Lord Abbett client) trades in that security (any profits realized on trades within the proscribed periods shall be disgorged to the Fund (or the other client) or as otherwise determined.) The GC or CCO has the authority to exempt a transaction or series of transactions from this requirement if they do not appear to present a conflict of interest based on the facts provided; |
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(8) |
to subscribe to new or secondary public offerings, for other than a Lord Abbett-managed account, even though the offering is not one in which the Funds or Lord Abbetts advisory accounts are interested; |
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Lord, Abbett & Co. LLC Code of Ethics |
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Approved January 26, 2012 |
6 |
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(9) |
to become a director of any company without Lord Abbetts prior consent and implementation of appropriate safeguards against conflicts of interest; |
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(10) |
to engage in market timing activities with respect to the Funds; |
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(11) |
to purchase any security of a company that has a market capitalization at the time of purchase below $3 billion, for other than a Lord Abbett-managed account4; |
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(12) |
to participate in an outside business activity without Lord Abbetts prior consent; |
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(13) |
to purchase interests issued in a private placement (i.e., a security that has not been registered with the SEC or other relevant regulatory agency) (other than (a) interests in any employees stock bonus, pension, or profit sharing trust which meets the requirements for qualification under section 401 of the Internal Revenue Code of 1986, (b) any government plan, (c) any collective trust fund consisting solely of retirement assets, or (d) privately placed interests purchased through a Fully Discretionary Account) including, but not limited to privately offered funds that are commonly referred to as hedge funds; or |
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(14) |
to own 5% or more of the outstanding shares of an open-end, registered investment company other than one or more Lord Abbett Funds5. |
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B. Required Minimum Holding Periods Lord Abbett Funds: |
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Any purchase of a Fund (other than Lord Abbett U.S. Government & Government Sponsored Enterprises Money Market Fund) by a partner or employee of Lord Abbett (whether with respect to the Lord Abbett 401(k) Retirement Plan or in any other account) must be held for a minimum of 30 days, except as provided herein6. This 30-day minimum holding period also applies to any other mutual fund advised or sub-advised by Lord Abbett. Holding periods will be calculated based on a first-in, first-out methodology. Notwithstanding the foregoing, for a period of up to 90 calendar days beginning on (and counting) the first business day on which a newly-offered Fund accepts investments from Lord Abbett partners and/or employees, no minimum holding period applies to exchanges of Fund shares for shares of the newly offered Fund. Any request for an exception to this requirement must be approved in writing in advance by Lord Abbetts Senior Partner or Managing Partner and by its GC or CCO (or by their respective designees). Lord Abbett shall promptly report to the Funds Boards any approved exception request to this minimum holding period. |
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4 Purchases of exchange traded funds (ETF) or closed-end funds are not subject to the $3 billion market capitalization requirement. |
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5 Ownership of 5% or more of the outstanding shares of an open-end registered investment company will not result in a penalty as set forth in Section VII of this Code, provided that the employee reduces his/her ownership of such fund below 5% within 60 days from the date the employee knows or should have known that his/her ownership of such fund was equal to or exceeded 5%. |
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6 The sale or re-allocation of shares of the Lord Abbett Fund that is the default investment for automatically enrolled participants in Lord Abbetts retirement plan held less than 30 days will not be considered a violation of this policy. |
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Lord, Abbett & Co. LLC Code of Ethics |
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Approved January 26, 2012 |
7 |
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C. Exceptions: |
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(1) Exception - Private Placements: |
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Investments in private placements will be permitted only in Fully Discretionary Accounts, in certain employees retirement plan securities, and by exception approved by the GC or CCO, in each case as more fully described elsewhere in this Code. Privately placed securities that are prohibited under the Code, but were owned by a covered person prior to employment by Lord Abbett, or that may be received through an inheritance or other gift, may be retained provided that no further discretionary investments may be made into such private placement. |
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(2) Exception Spouses Receipt of Certain Options: |
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If a spouse of a partner or employee of Lord Abbett who is a director or an employee of, or a consultant to, a company, receives a grant of options to purchase securities in that company (or an affiliate), neither the receipt nor the exercise of those options requires advance approval from Lord Abbett or reporting. Any subsequent sale of the security acquired by the option exercise by that spouse would require advance approval and is a reportable transaction. |
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(3) Exception - Fully Discretionary Accounts: |
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Advance approval is not required for transactions in any account of a Covered Person if the Covered Person has no direct or indirect influence or control with respect to transactions in the account (a Fully-Discretionary Account). A Covered Person will be deemed to have no direct or indirect influence or control over an account only if: (i) investment discretion for the account has been delegated to an independent fiduciary and such investment discretion is not shared with the employee; (ii) the Covered Person certifies in writing that he or she has not and will not discuss any potential investment decisions with such independent fiduciary before any transaction; (iii) the independent fiduciary confirms in writing the representations by the Covered Person regarding the Covered Persons having no direct or indirect influence or control over the account;7 and (iv) the CCO of Lord Abbett has determined that the account satisfies these requirements. Annually thereafter, the Covered Person and the independent fiduciary shall certify in writing that the representations of subparagraphs (ii) and (iii) of this paragraph remain correct. Transactions in Fully-Discretionary Accounts by an employee or partner of Lord Abbett are not subject to the post-trade reporting requirements of this Code. |
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(4) Exception New Employees Liquidation of Securities: |
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Within 30 calendar days of the first day of employment with Lord Abbett, newly-hired Partners and/or Employees8 may seek an exemption from the limit on the number of executed trades allowable in each calendar year to permit the sale (but not the purchase) of securities owned by |
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7 Certain accounts managed by third parties that are registered investment advisers, such as separately managed accounts in programs sponsored by broker-dealers (SMAs), will not be subject to the requirement of a written verification by the independent fiduciary. For such accounts, the Covered Person will continue to be required to certify annually in writing that he or she has not and will not discuss potential investment decisions with the independent fiduciary. |
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8 Temporary employees and consultants that become subject to the personal securities transaction requirements of this Code also may request such an exemption. |
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Lord, Abbett & Co. LLC Code of Ethics |
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Approved January 26, 2012 |
8 |
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the Partner / Employee. Any such exemption must be written and approved by the GC or the CCO. The Partner / Employee must comply with any conditions set forth in the exemption. |
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VII. |
Enforcement and Reporting of Violations |
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The GC for Lord Abbett and Lord Abbetts CCO are charged with the responsibility of enforcing this Code, and may appoint one or more employees to aid them in carrying out their enforcement responsibilities. The CCO shall implement a procedure to monitor compliance with this Code through an ongoing review of personal trading records provided under this Code against transactions in the Funds and managed portfolios. Any violation of this Code of Ethics must be reported promptly to Lord Abbetts CCO, or, in his absence, to Lord Abbetts GC. The CCO shall bring to the attention of the Funds Audit Committees any apparent violations of this Code, and the action which has been taken by Lord Abbett as a result of such violation, and the Funds Audit Committees shall consider what additional action, if any, is appropriate. The record of any violation of this Code and any action taken as a result thereof, which may include suspension or removal of the violator from his position, shall be made a part of the permanent records of the Audit Committees of the Funds. Lord Abbett shall provide each employee and partner with a copy of this Code, and of any amendments to the Code, and each employee and partner shall acknowledge, in writing, his or her receipt of the Code and any amendment, which may be provided electronically. Lord Abbetts GC shall prepare an Annual Issues and Certification Report to the directors or trustees of the Funds that (a) summarizes Lord Abbetts procedures concerning personal investing, including the procedures followed by Lord Abbett in determining whether to give approvals under Section III and the procedures followed by Compliance in determining whether any Funds have determined to purchase or sell a security or are considering such a purchase or sale, and any changes in those procedures during the past year, and certifies to the directors or trustees that the procedures are reasonably necessary to prevent violations, and (b) identifies any recommended changes in the restrictions imposed by this Code or in such procedures with respect to the Code and any changes to the Code based upon experience with the Code, evolving industry practices or developments in the regulatory environment, and (c) summarizes any apparent violations of this Code over the past year and any sanctions imposed by Lord Abbett in response to those violations, including any additional action taken by the Audit Committee of each of the Funds with respect to any such violation. |
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The Audit Committee of each of the Funds, or Lord Abbetts Senior Partner, Managing Partner, GC or CCO may determine in particular cases that a proposed transaction or proposed series of transactions does not conflict with the policy of this Code and exempt such transaction or series of transactions from one or more provisions of this Code. |
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VIII. |
Whistleblower Policy and Procedures |
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Lord Abbett expects its employees to report complaints or concerns regarding corporate fraud, internal controls, violations of law or unethical business conduct. More information concerning this policy and the related procedures is contained in Lord Abbetts Whistleblower Policy and Procedures. |
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Lord, Abbett & Co. LLC Code of Ethics |
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Approved January 26, 2012 |
9 |
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IX. |
Definitions |
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Covered Person means any officer, trustee, director or employee of any of the Funds and any partner or employee of Lord Abbett. (See also definition of Beneficial Ownership.) |
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Excepted Securities are bankers acceptances, bank certificates of deposit, commercial paper, and other high quality short-term debt instruments, including repurchase agreements, shares of money market funds, shares of other U.S. registered open-end investment companies (other than the Lord Abbett Funds or other funds for which Lord Abbett acts as the investment adviser or sub-adviser) and direct obligations of the U.S. Government. Transactions in Excepted Securities do not require prior approval or reporting. Please note that shares of closed-end investment companies, exchange traded unit-investment trusts (UITs) and exchange traded funds (ETFs) are all treated as common stock under the Code. Also please note that the exception for other mutual funds includes only open-end funds registered in the U.S., and that transactions and holdings in offshore funds are reportable. In addition, equity securities issued by U.S. Government agencies, authorities or instrumentalities are not considered Excepted Securities. |
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Excepted Transactions means transactions in the shares of the Lord Abbett Funds or other mutual funds for which Lord Abbett acts as the investment adviser or sub-adviser; transactions in debt securities issued by U.S. Government agencies, authorities or instrumentalities; securities acquired through tender offers or spin-offs; securities received due to a merger or acquisition; the sale of 300 shares or less of a S&P 500 stock; and any securities purchased through an automatic investment plan, such as Dividend Reinvestment Programs (DRIPs) and/or Employee Stock Ownership Plans (ESOPs). Please note that any sales made from DRIPs and/or ESOPs require pre-approval as described in Section III of this Code.9 |
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Outside Directors and Trustees are directors and trustees who are not interested persons as defined in the Investment Company Act of 1940, as amended. |
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Security means any stock, bond, debenture or in general any instrument commonly known as a security and includes a warrant or right to subscribe to or purchase any of the foregoing and also includes the writing of an option on any of the foregoing. |
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Beneficial Ownership is interpreted in the same manner as it would be under Section 16 of the Securities Exchange Act of 1934 and Rule 16a-1 thereunder. Accordingly, Beneficial Owner includes any Covered Person who, directly or indirectly, through any contract, arrangement, |
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9 Excepted Transactions do not require prior approval, but all Excepted Transactions are subject to the reporting requirements of Section IV and VI. No report, however, is required with respect to transactions effected pursuant to an automatic investment plan, such as DRIPs and ESOPs, except that any transaction that overrides the pre-set schedule or a pre-existing allocation of the automatic investment plan must be included in the next Personal Securities Transaction Reporting Form filed following that transaction. |
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Lord, Abbett & Co. LLC Code of Ethics |
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Approved January 26, 2012 |
10 |
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understanding, relationship or otherwise, has or shares a direct or indirect pecuniary interest (i.e., the ability to share in profits derived from such security) in any equity security, including: |
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(i) |
securities held by a persons immediate family sharing the same house (with certain exceptions); |
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(ii) |
a general partners interest in portfolio securities held by a general or limited partnership; |
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(iii) |
a persons interest in securities held in trust as trustee, beneficiary or settlor, as provided in Rule 16a-8(b); and |
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(iv) |
a persons right to acquire securities through options, rights or other derivative securities. |
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Federal Securities Laws include the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, the Investment Company Act of 1940, the Investment Advisers Act of 1940, Title V of the Gramm-Leach Bliley Act, and any rules adopted by the SEC under any of those statutes, the Bank Secrecy Act as it applies to mutual funds and investment advisers, and any rules adopted thereunder by the SEC or the Department of the Treasury. A brief summary of the requirements of those laws as they apply to mutual funds and investment advisers is attached to this Code as Exhibit 1. |
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Gender/Number whenever the masculine gender is used in this Code, it includes the feminine gender as well, and the singular includes the plural and the plural includes the singular, unless in each case the context clearly indicates otherwise. |
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Lord, Abbett & Co. LLC Code of Ethics |
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Approved January 26, 2012 |
11 |
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Exhibit 1 |
To Code of Ethics |
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The Code of Ethics requires that all Covered Persons must comply with the Federal Securities Laws. Brief summaries of these laws are set forth below.
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I. |
The Securities Act of 1933 (1933 Act) |
The 1933 Act governs the public offering of securities of mutual funds and other issuers, and establishes civil liability for false or misleading activities during such offerings. This law was enacted to provide full and fair disclosure of the character of securities sold in interstate and foreign commerce and to prevent related frauds. Thus, the 1933 Act requires mutual funds and other public issuers to register their securities with the SEC. This process requires disclosures to the SEC and investors of information relating to the issuer, the securities and other matters. The 1933 Act provides a specific civil remedy for purchasers of securities offered by a materially false or misleading registration statement. A registration statement is false or misleading if it contains an untrue statement of material fact or omit[s] to state a material fact required to be stated therein, or necessary to make the statements therein not misleading. |
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II. |
The Securities Exchange Act of 1934 (1934 Act) |
The 1934 Act regulates various organizations involved in the offer, sale and trading of securities. It regulates, among others, broker-dealers such as Lord Abbett Distributor. The 1934 Act accomplishes its goals in large part by requiring that these regulated organizations register with the SEC and subjects them to regular reporting requirements and examinations by the SEC. The 1934 Act includes anti-fraud provisions that make it unlawful for any person, among other actions, to directly or indirectly: (1) employ any device, scheme, or artifice to defraud; (2) make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (3) engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security. |
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III. |
The Investment Company Act of 1940 (1940 Act) |
The 1940 Act regulates mutual funds as well as their investment advisers and principal underwriters. The 1940 Act was designed to mitigate and, so far as is feasible, to eliminate various abuses involving mutual funds, including: (1) inadequate, inaccurate or unclear disclosure with respect to a mutual fund and its securities; (2) self-dealing by insiders; (3) the issuance of securities with inequitable terms that fail to protect the privileges and preferences of outstanding security holders; (4) inequitable methods of control and irresponsible management; and (5) unsound or misleading accounting methods. The 1940 Act seeks to accomplish the foregoing goals by, among other things: (1) establishing registration and reporting requirements; (2) prohibiting various affiliated transactions; (3) regulating the sale and redemption of mutual fund shares; (4) establishing special corporate governance standards relating to the composition and activities of mutual fund boards of directors; and (5) providing the SEC with extensive inspection and enforcement powers. |
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Lord, Abbett & Co. LLC Code of Ethics |
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Approved January 26, 2012 |
12 |
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IV. |
The Investment Advisers Act of 1940 (Advisers Act) |
The Advisers Act regulates investment advisers. Lord Abbett is registered as an investment adviser. Among other matters, the Advisers Act regulates the fee arrangements and certain other contract terms of an investment advisory agreement. The Act also prohibits advisers from engaging in any conduct that would defraud their clients. Lord Abbett has a fiduciary duty to act in the best interests of its clients. The SEC has construed this fiduciary duty broadly and applies the Acts anti-fraud prohibition aggressively to protect clients. |
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V. |
The Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act) |
The Sarbanes-Oxley Act implemented new corporate disclosure and financial reporting requirements by, among other actions, creating a new oversight board for the accounting profession, mandating new measures to promote auditor independence, adding new disclosure requirements for investment companies and other public companies, and strengthening criminal penalties for securities fraud. This statute was adopted in direct response to widespread corporate scandals at public corporations that manifested a lack of adequate internal controls and oversight. |
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VI. |
The Gramm-Leach-Bliley Act (the Act) |
In relevant part, the Act requires financial institutions to comply with certain privacy requirements regarding personal information relating to their customers. The Act requires the SEC to establish for financial institutions (including investment companies, investment advisers and broker-dealers) appropriate standards to protect customer information. The Act and the SECs privacy rules have three primary purposes: (1) to require financial institutions to notify consumers of their privacy policies and practices; (2) to describe the circumstances under which financial institutions may disclose non-public personal information regarding customers to unaffiliated third parties; and (3) to provide a method for customers to opt out of such disclosures, subject to certain exceptions. Lord Abbett has implemented policies, procedures and training to protect the integrity and privacy of its clients information. |
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VII. |
The Bank Secrecy Act |
The USA PATRIOT Act of 2001 (the Act) amended the Bank Secrecy Act to include mutual funds among the types of financial institutions that are required to establish anti-money laundering compliance programs. The Act requires all such institutions to develop and institute anti-money laundering programs that, at a minimum: (1) include internal policies, procedures, and controls; (2) designate a compliance officer to administer and oversee the program; (3) provide for ongoing employee training; and (4) include an independent audit function to test the program. The Lord Abbett Funds and Lord Abbett have adopted an anti-money laundering compliance program designed to meet these requirements. |
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Lord, Abbett & Co. LLC Code of Ethics |
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Approved January 26, 2012 |
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