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Lord Abbett will shift the Balanced Strategy Fund and the Diversified Income Strategy Fund from a fixed-rate dividend distribution to a floating dividend distribution in which all income earned in the previous month will be paid. This transition will align the dividend-payment policies of the Balanced Strategy and Diversified Income Strategy Funds with the firm’s other mutual funds and provide more transparency to shareholders as they receive dividend rates that are reflective of the current market environment.
By floating the dividends, net distributable income will be paid to the shareholders who were invested in the Fund during the period of income generation. In general, a shareholder that owns the Fund during the entire year will receive approximately the same amount of total dividends, regardless of the Fund’s dividend policy (a fixed-rate or floating dividend) during the year. Assuming there is no return of capital, the only difference with a floating dividend policy is that the per-share amount of the dividend payment will vary from month to month, depending on the income earned the previous month.
Consequently, the first floating-rate payments for the Balanced Strategy and Diversified Income Strategy will occur on January 28, 2011 to shareholders of record on January 27, 2011, and will continue to be paid at the end of each month thereafter. The dividend calendar, which can be found on the “Mutual Funds” tab under the category Tax Center, incorporates all changes to the timing of dividend payments.
Looking forward, we will also be transitioning the Global Allocation and Growth & Income Strategy Fund to a variable quarterly dividend on March 31, 2011. Since these Funds already pay a quarterly dividend, the change will be less evident than a monthly floating rate distribution but equally as beneficial to shareholders.
If you have any questions with regard to this issue or any other investment question or concern, we encourage you to contact your financial advisor, or call us at 888-522-2388.