LORD ABBETT
LARGE-CAP GROWTH FUND
PROSPECTUS
December 30, 1999
[LOGO]
LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of
this prospectus. Any representation to the contrary is a criminal offense.
Class P shares of the Fund are neither offered to the general public nor
are available in all states. Please call 800-821-5129 for further
information.
<PAGE>
Table of Contents
Page
The Fund
What you should know about the Fund
Goal/Principal Strategy 2
Main Risks 2
Performance 3
Fees and Expenses 3
Your Investment
Information for managing your Fund account
Purchases 4
Sales Compensation 6
Opening Your Account 7
Redemptions 8
Distributions and Taxes 8
Services For Fund Investors 9
Management 10
For More Information
How to learn more about the Fund
Other Investment Techniques 12
Glossary of Shaded Terms 13
Compensation For Your Dealer 15
How to learn more about the Fund
and other Lord Abbett funds
Back Cover
<PAGE>
The Fund
Goal / Principal Strategy
The Fund's investment objective is long-term capital growth.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in equity securities of large, established companies with market
capitalizations of at least $8 billion. To identify attractive companies
for investment, the Fund uses a "bottom up" investment research approach
that seeks to identify individual companies with expected earnings growth
potential and consistency that may not be recognized by the market at
large. This approach is based on the following steps:
o We identify large-capitalization companies with at least a 10%
consistent, sustainable growth rate;
o We focus on those companies demonstrating a positive historical
performance as well as favorable earnings prospects for the future;
o We focus on companies also demonstrating successful strategic business
plan selection, strategy and execution, reflecting strong management
leadership; and
o We focus on companies demonstrating leadership positions within their
industries.
The Fund maintains a long-term investment approach, generally expecting to
hold stocks for an average of over three years. This strategy supports our
style of reaping the rewards of successful, well-run companies and
investing in seasoned managements for the long term. The Fund may take a
temporary defensive position by investing some of its assets, most likely
not more than 30%, in short-term debt securities. This could reduce the
benefit from any upswing in the market and prevent the Fund from achieving
its investment objective.
Main Risks
The Fund is subject to the general risks and considerations associated with
equity investing, as well as the particular risks associated with growth
stocks. The value of your investment will fluctuate in response to
movements in the stock market in general and to the changing prospects of
individual companies in which the Fund invests. Growth stocks may grow
faster than other stocks and may be more volatile. In addition, if the
Fund's assessment of a company's potential for growth is wrong, the price
of the company's stock may decrease below the price at which the Fund
purchased the stock. An investment in the Fund is not a bank deposit and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. The Fund is not a complete investment program
and may not be appropriate for all investors. You could lose money by
investing in the Fund.
We or the Fund refers to the Lord Abbett Large-Cap Growth Fund.
About the Fund. The Fund is a professionally managed portfolio primarily holding
securities purchased with the pooled money of investors. It strives to reach its
stated goal, although as with all mutual funds, it cannot guarantee results.
Large companies are established companies that are considered "known
quantities." Large companies often have the resources to weather economic shifts
although they can be slower to innovate than small companies.
Bottom-up research looks for high-performing stocks of individual companies
before considering the impact of economic trends. Companies might be identified
from investment research analysis or personal knowledge of their products and
services. This approach considers that a company can do well even if it is part
of an industry that, as a whole, is not performing well.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describes the other investment strategies used by the Fund and
their risks.
2 The Fund
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Large-Cap Growth Fund Symbols: Class A -
Class B -
Class C -
Class P -
Performance
The Fund does not show any performance because it has not completed a full
calendar year of operations.
Fees and expenses
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
Fee Table
<TABLE>
<CAPTION>
Class A Class B Class C Class P
<S> <C> <C> <C> <C>
Shareholder Fees (Fees paid directly
from your investment)
- --------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
- --------------------------------------------------------------------------------
(as a % of offering price) 5.75% none none none
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Maximum Deferred Sales Charge 1.00%(1) 5.00%(2) 1.00% none
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Annual Fund Operating Expenses (Expenses
deducted from fund assets) (as a % of average
net assets)(3)
- --------------------------------------------------------------------------------
Management Fees (See "Management")0.75% 0.75% 0.75% 0.75%
Distribution (12b-1) and Service
Fees(4) 0.35% 1.00% 1.00% 0.45%
Other Expenses 0.35% 0.35% 0.35% 0.35%
Total Annual Fund Operating
Expenses 1.45% 2.10% 2.10% 1.55%
(1) A contingent deferred sales charge of 1.00% may be assessed on certain
redemptions of class A shares made within 24 months following any purchases
made without a sales charge.
(2) Class B shares will convert to class A shares on the eighth anniversary of
your original purchase of class B shares.
(3) The annual operating expenses are based on estimated expenses for the
current fiscal year.
(4) Because 12b-1 fees are paid out on an on-going basis, over time they will
increase the cost of your investment and may cost you more than paying
other types of sales charges.
</TABLE>
Example
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. This Example, like that in
other funds' prospectuses, assumes that you invest $10,000 in the Fund at
maximum sales charge, if any, for the time periods indicated and then redeem all
of your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs (including any applicable contingent deferred sales
charges) would be:
SHARE CLASS 1 YEAR 3 YEARS
Class A shares $714 $1,007
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Class B shares $713 $ 958
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Class C shares $313 $ 658
Class P shares $158 $ 490
You would pay the following expenses if you
did not redeem your shares:
Class A shares $714 $1,007
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Class B shares $213 $ 658
Class C shares $213 $ 658
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Class P shares $158 $ 490
Management fees are payable to Lord, Abbett & Co. ("Lord Abbett") for the Fund's
investment management.
12b-1 fees refer to fees incurred for activities that are primarily intended to
result in the sale of Fund shares and service fees for shareholder account
service and maintenance.
Other expenses include fees paid for miscellaneous items such as shareholder
service fees and professional fees.
The Fund 3
<PAGE>
Purchases
The Fund offers in this prospectus four classes of shares: classes A, B ,C,
and P, each with different expenses and dividends. You may purchase shares
at the net asset value ("NAV") per share determined after we receive
your purchase order submitted in proper form. A front-end sales
charge is added to the NAV in the case of the class A shares. There is no
front-end sales charge in the case of the class B and C shares although
there is a contingent deferred sales charge ("CDSC") as described below.
You should read this section carefully to determine which class of shares
represents the best investment option for your particular situation. It may
not be suitable for you to place a purchase order for class B shares of
$500,000 or more or a purchase order for class C shares of $1,000,000 or
more. You should discuss purchase options with your investment
professional.
For more information, see "Alternative Sales Arrangements" in the Statement
of Additional Information.
We reserve the right to withdraw all or any part of the offering made by
this prospectus or to reject any purchase order. We also reserve the right
to waive or change minimum investment requirements. All purchase orders are
subject to our acceptance and are not binding until confirmed or accepted
in writing.
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Share Classes
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Class A o Normally offered with a front-end sales charge
Class B o Normally no front-end sales charge, however, a CDSC is applied to
shares sold prior to the sixth anniversary of purchase
o higher annual expenses than class A shares
o automatically convert to class A shares after eight years
o asset-based sales charge of 1.00% - See "Sales Compensation"
Class C o no front-end sales charge, however, a CDSC is applied to shares
sold prior to the first anniversary of purchase
o higher annual expenses than class A
shares
o asset-based sales charge of 1.00% - See "Sales Compensation"
Class P o available to certain pension or retirement plans pursuant to
Mutual Fund Fee Based Program
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Front-End Sales Charges - Class A Shares
- --------------------------------------------------------------------------------
To Compute
As a % of As a % of Offering Price
Your Investment Offering Price Your Investment Divide NAV by
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% .9425
- --------------------------------------------------------------------------------
$50,000 to $99,999 4.75% 4.99% .9525
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$100,000 to $249,999 3.95% 4.11% .9605
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$250,000 to $499,999 2.75% 2.83% .9725
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$500,000 to $999,999 1.95% 1.99% .9805
- --------------------------------------------------------------------------------
$1,000,000 and over No Sales Charge 1.0000
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</TABLE>
NAV per share for each class of Fund shares is calculated each business day at
the close of regular trading on the New York Stock Exchange ("NYSE"), normally
4:00 p.m. Eastern time. Purchases and sales of Fund shares are executed at the
NAV next determined after the Fund receives your order in proper form. In
calculating NAV, securities for which market quotations are available are valued
at those quotations. Securities for which such quotations are not available are
valued at fair value under procedures approved by the Board.
4 Your Investment
<PAGE>
REDUCING YOUR CLASS A FRONT-END SALES CHARGES. Class A shares may be
purchased at a discount if you qualify under either of the following
conditions:
o Rights of Accumulation -- A Purchaser may apply the value of the
shares already owned to a new purchase of class A shares of any
Eligible Fund in order to reduce the sales charge.
o Statement of Intention -- A Purchaser of class A shares may purchase
additional shares of any Eligible Fund over a 13-month period and
receive the same sales charge as if all shares were purchased at once.
Shares purchased through reinvestment of dividends or distributions
are not included. A statement of intention can be backdated 90 days.
Current holdings under rights of accumulation may be included in a
statement of intention.
For more information on eligibility for these privileges, read the
applicable sections in the attached application.
Class A Share Purchases Without A Front-End Sales Charge. Class A shares
may be purchased without a front-end sales charge under any of the
following conditions:
o purchases of $1 million or more *
o purchases by Retirement Plans with at least 100 eligible employees *
o purchases under a Special Retirement Wrap Program *
o purchases made with dividends and distributions on class A shares of
another Eligible Fund
o purchases representing repayment under the loan feature of the Lord
Abbett-sponsored prototype 403(b) Plan for class A shares
o purchases by employees of any consenting securities dealer having a
sales agreement with Lord Abbett Distributor
o purchases under a Mutual Fund Fee Based Program
o purchases by trustees or custodians of any pension or profit sharing
plan, or payroll deduction IRA for employees of any consenting
securities dealer having a sales agreement with Lord Abbett
Distributor
See the Statement of Additional Information for a listing of other
categories of purchasers who qualify for class A share purchases without a
front-end sales charge.
* These categories may be subject to a CDSC.
CLASS A SHARE CDSC. If you buy class A shares under one of the starred (*)
categories listed above and you redeem any within 24 months after
the month in which you initially purchased them, the Fund normally will
collect a CDSC of 1%.
The class A share CDSC generally will be waived for the following
conditions:
o benefit payments under Retirement Plans in connection with loans,
hardship withdrawals, death, disability, retirement, separation from
service or any excess distribution under Retirement Plans
(documentation may be required)
o redemptions continuing as investments in another fund participating in
a Special Retirement Wrap Program
Retirement Plans include employer-sponsored retirement plans under the Internal
Revenue Code, excluding Individual Retirement Accounts.
Lord Abbett offers a variety of Retirement Plans. Call 800-253-7299 for
information about:
o Traditional, Rollover, Roth and Education IRAs
o Simple IRAs, SEP-IRAs, 401(k) and 403(b) accounts
o Defined Contribution Plans
Lord Abbett Distributor LLC ("Lord Abbett Distributor") acts as agent for the
Fund to work with investment professionals that buy and/or sell shares of the
Fund on behalf of their clients. Generally, Lord Abbett Distributor does not
sell Fund shares directly to investors.
Benefit Payment Documentation.
(class A CDSC only)
o under $50,000 - no documentation necessary
o Over $50,000 - reason for benefit payment must be received in writing. Use
the address indicated under "Opening your Account."
Your Investment 5
<PAGE>
CLASS B SHARE CDSC. The CDSC for class B shares normally applies if you
redeem your shares before the sixth anniversary of their initial purchase.
The CDSC declines the longer you own your shares, according to the
following schedule:
- --------------------------------------------------------------------------------
Contingent Deferred Sales Charges - Class B Shares
- --------------------------------------------------------------------------------
Anniversary(1) of the day on Contingent Deferred Sales Charge
which the purchase order on redemption (as % of amount
was accepted subject to charge)
On Before
- --------------------------------------------------------------------------------
1st 5.0%
1st 2nd 4.0%
2nd 3rd 3.0%
3rd 4th 3.0%
4th 5th 2.0%
5th 6th 1.0%
on or after the 6th(2) None
- --------------------------------------------------------------------------------
(1) The anniversary is the same calendar day in each respective year after the
date of purchase. For example, the anniversaries for shares purchased on
May 1 will be May 1 of each succeeding year.
(2) Class B shares will automatically convert to class A shares on the eighth
anniversary of the purchase of class B shares.
The class B share CDSC generally will be waived under the following
conditions:
o benefit payments under Retirement Plans such as loans, hardship
withdrawals, death, disability, retirement, separation from service or
any excess contribution or distribution under Retirement Plans
o Eligible Mandatory Distributions under 403(b) Plans and individual
retirement accounts
o death of the shareholder
o redemptions of shares in connection with Div-Move and Systematic
Withdrawal Plans (up to 12% per year)
See "Systematic Withdrawal Plan" under "Services For Fund Investors"
below for more information on CDSCs with respect to class B shares.
CLASS C SHARE CDSC. The 1% CDSC for class C shares normally applies if you
redeem your shares before the anniversary of the purchase of such shares.
CLASS P SHARES. Class P shares have lower annual expenses than class B and
class C shares, no front-end sales charge, and no CDSC. Class P shares are
currently sold and redeemed at NAV (a) pursuant to a Mutual Fund Fee Based
Program, or (b) to the trustees of, or employer-sponsors with respect to,
pension or retirement plans with at least 100 eligible employees (such as a
plan under Section 401(a), 401(k) or 457(b) of the Internal Revenue Code)
which engage an investment professional providing or participating in an
agreement to provide certain recordkeeping, administrative and/or
sub-transfer agency services to the Fund on behalf of the class P
shareholders.
Sales Compensation
As part of its plan for distributing shares, the Fund and Lord Abbett
Distributor pay sales and service compensation to Authorized Institutions
that sell the Fund's shares and service its shareholder accounts.
Sales compensation originates from two sources, as shown in the table "Fees
and Expenses": sales charges which are paid directly by shareholders; and
12b-1 distribution and service fees
CDSC, regardless of class, is not charged on shares acquired through
reinvestment of dividends or capital gains distributions and is charged on the
original purchase cost or the current market value of the shares at the time
they are being sold, which-ever is lower. In addition, repayment of loans under
Retirement Plans and 403(b) Plans will constitute new sales for purposes of
assessing the CDSC.
To minimize the amount of any CDSC, 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 C)
3. shares held the longest before the sixth anniversary of their purchase
(class B) or before the first anniversary of their purchase (class C)
6 Your Investment
<PAGE>
that are paid out of the Fund's assets. Service compensation originates
from 12b-1 service fees. The 12b-1 fees payable with respect to each share
class are .35% of class A shares, 1.00% of class B and C shares, and .45%
of class P shares. The amounts payable as compensation to Authorized
Institutions, such as your dealer, are shown in the chart at the end of
this prospectus. The portion of such compensation paid to Lord Abbett
Distributor is discussed under "Sales Activities" and "Service Activities."
Sometimes we do not pay compensation where tracking data is not available
for certain accounts or where the Authorized Institution waives part of the
compensation. In such cases, we may not require payment of any otherwise
applicable CDSC.
We may pay Additional Concessions to Authorized Institutions from time to
time.
SALES ACTIVITIES. We may use 12b-1 distribution fees to pay Authorized
Institutions to finance any activity which is primarily intended to result
in the sale of shares. Lord Abbett Distributor uses its portion of the
distribution fees attributable to a fund's class A and class C shares for
activities which are primarily intended to result in the sale of such class
A and class C shares, respectively. These activities include, but are not
limited to, printing of prospectuses and statements of additional
information and reports for other than existing shareholders, preparation
and distribution of advertising and sales material, expenses of organizing
and conducting sales seminars, Additional Concessions to Authorized
Institutions, the cost necessary to provide distribution-related services
or personnel, travel, office expenses, equipment and other allocable
overhead.
SERVICE ACTIVITIES. We may pay 12b-1 service fees to Authorized
Institutions for any activity which is primarily intended to result in
personal service and/or the maintenance of shareholder accounts. Any
portion of the service fees paid to Lord Abbett Distributor will be used to
service and maintain shareholder accounts.
OPENING YOUR ACCOUNT
MINIMUM INITIAL INVESTMENT
o Regular Account $1,000
o Individual Retirement Accounts and 403(b) Plans
under the Internal Revenue Code $250
o Uniform Gift to Minor Account $250
For Retirement Plans and Mutual Fund Fee Based Programs no minimum
investment is required, regardless of share class.
You may purchase shares through any independent securities dealer that has
a sales agreement with Lord Abbett Distributor or you can fill out the
attached application and send it to the Fund at the address stated below.
You should carefully read the paragraph below entitled "Proper Form" before
placing your order to ensure that your order will be accepted.
Lord Abbett Large-Cap Growth Fund
P.O. Box 419100
Kansas City, MO 64141
BY EXCHANGE. Telephone the Fund at 800-821-5129 to request an exchange from
any eligible Lord Abbett-sponsored fund.
PROPER FORM. An order submitted directly to the Fund must contain: (1) a
completed application, and (2) payment by check. When purchases are made by
check, redemption proceeds will not be paid until the Fund or transfer
agent is advised that the check has cleared, which may take up to 15
calendar days. For more information call the Fund at 800-821-5129.
12b-1 fees are payable regardless of expenses.The amounts payable by the Fund
need not be directly related to expenses. If Lord Abbett Distributor's actual
expenses exceed the fee payable to it, the Fund will not have to pay more than
that fee. If Lord Abbett Distributor's expenses are less than the fee it
receives, Lord Abbett Distributor will keep the full amount of the fee.
EXCHANGE LIMITATIONS. Exchanges should not be used to try to take advantage of
short-term swings in the market. Frequent exchanges create higher expenses for
the Fund. Accordingly, the Fund reserves the right to limit or terminate this
privilege for any shareholder making frequent exchanges or abusing the
privilege. The Fund also may revoke the privilege for all shareholders upon 60
days' written notice.
Your Investment 7
<PAGE>
REDEMPTIONS
BY BROKER. Call your investment professional for instructions on how to
redeem your shares.
BY TELEPHONE. To obtain the proceeds of a redemption of $50,000 or less
from your account, you or your representative should call the Fund at
800-821-5129.
BY MAIL. Submit a written redemption request indicating the name(s) in
which the account is registered, the Fund's name, the class of shares, your
account number, and the dollar value or number of shares you wish to sell.
Include all necessary signatures. If the signer has any Legal Capacity, the
signature and capacity must be guaranteed by an Eligible Guarantor. Certain
other legal documentation may be required. For more information regarding
proper documentation call 800-821-5129.
Normally a check will be mailed to the name(s) and address in which the
account is registered (or otherwise according to your instruction) within
three business days after receipt of your redemption request. Your account
balance must be sufficient to cover the amount being redeemed or your
redemption order will not be processed. Under unusual circumstances, the
Fund may suspend redemptions, or postpone payment for more than seven days,
as permitted by federal securities laws.
To determine if a CDSC applies to a redemption, see "Class A share CDSC,"
"Class B share CDSC" or "Class C share CDSC."
DISTRIBUTIONS AND TAXES
The Fund normally pays its shareholders dividends from its net investment
income and distributes its net capital gains (if any) as "capital gains
distributions" on an annual basis. Your distributions will be reinvested in
the Fund unless you instruct the Fund to pay them to you in cash. There are
no sales charges on reinvestments. The tax status of distributions is the
same for all shareholders regardless of how long they have owned Fund
shares or whether distributions are reinvested or paid in cash.
Except in tax-advantaged accounts, any sale, redemption or exchange of Fund
shares may be taxable to the shareholder.
Information on the tax treatment of distributions, including the source of
dividends and distributions of capital gains by the Fund, will be mailed to
shareholders each year. Because everyone's tax situation is unique, you
should consult your tax adviser regarding the treatment of distributions
under the federal, state and local tax rules that apply to you.
SMALL ACCOUNTS. Our Board may authorize closing any account in which there are
fewer than 25 shares if it is in the Fund's best interest to do so.
ELIGIBLE GUARANTOR is any broker or bank that is a member of the medallion stamp
program. Most major securities firms and banks are members of this program. A
notary public is not an eligible guarantor.
8 Your Investment
<PAGE>
SERVICES FOR FUND INVESTORS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described
below. With each service, you select a schedule and amount, subject to
certain restrictions. You may set up most of these services when filling
out your application or by calling 800-821-5129.
- --------------------------------------------------------------------------------
For investing
Invest-A-Matic You may make fixed, periodic investments ($50 minimum) into
(Dollar-cost your Fund account by means of automatic money transfers from
averaging) your bank checking account. See the attached application for
instructions.
Div-Move You may automatically reinvest the dividends and
distributions from your account into another account in any
Eligible Fund ($50 minimum).
For selling shares
Systematic You may make regular withdrawals from most Lord Abbett
Withdrawal funds. Automatic cash withdrawals will be paid to you from
Plan ("SWP") your account in fixed or variable amounts. To establish a
plan, the value of your shares must be at least $10,000,
except for Retirement Plans for which there is no minimum.
Class B shares The CDSC will be waived on redemptions of up to 12% of the
current net asset value of your account at the time of your
SWP request. For class B share redemptions over 12% per
year, the CDSC will apply to the entire redemption. Please
contact the Fund for assistance in minimizing the CDSC in
this situation.
Class B and Redemption proceeds due to a SWP for class B and class C
C shares shares will be redeemed in the order described under "CDSC"
under "Purchases."
- --------------------------------------------------------------------------------
OTHER SERVICES
TELEPHONE INVESTING. After we have received the attached application
(selecting "yes" under Section 8C and completing Section 7), you may
instruct us by phone to have money transferred from your bank account to
purchase shares of the Fund for an existing account. The Fund will purchase
the requested shares when it receives the money from your bank.
EXCHANGES. You or your investment professional may instruct the Fund to
exchange shares of any class for shares of the same class of any Eligible
Fund. Instruction may be provided in writing or by telephone, with proper
identification, by calling 800-821-5129. The Fund must receive instructions
for the exchange before the close of the NYSE on the day of your call in
which case you will get the NAV per share of the Eligible Fund determined
on that day. Exchanges will be treated as a sale for federal tax purposes.
Be sure to read the current prospectus for any fund into which you are
exchanging.
REINVESTMENT PRIVILEGE. If you sell shares of the Fund, you have a one-time
right to reinvest some or all of the proceeds in the same class of any
Eligible Fund within 60 days without a sales charge. If you paid a CDSC
when you sold your shares, you will be credited with the amount of the
CDSC. All accounts involved must have the same registration.
ACCOUNT STATEMENTS. Every Lord Abbett investor automatically receives
quarterly account statements.
TELEPHONE TRANSACTIONS. You have this privilege unless you refuse it in writing.
For your security, telephone transaction requests are recorded. We will take
measures to verify the identity of the caller, such as asking for your name,
account number, social security or taxpayer identification number and other
relevant information. The Fund will not be liable for following instructions
communicated by telephone that it reasonably believes to be genuine.
Transactions by telephone may be difficult to implement in times of drastic
economic or market change.
Your Investment 9
<PAGE>
HOUSEHOLDING. Shareholders with the same last name and address will receive
a single copy of a prospectus and an annual or semi-annual report, unless
additional reports are specifically requested in writing to the Fund.
ACCOUNT CHANGES. For any changes you need to make to your account, consult
your investment professional or call the Fund at 800-821-5129.
SYSTEMATIC EXCHANGE. You or your investment professional can establish a
schedule of exchanges between the same classes of any Eligible Fund.
MANAGEMENT
The Fund's investment adviser is Lord, Abbett & Co., located at 767 Fifth
Avenue, New York, NY 10153-0203. On or about January 17, 2000, the new
address will be 90 Hudson St., Jersey City, NJ 07302-3973. Founded in 1929,
Lord Abbett manages one of the nation's oldest mutual fund complexes, with
approximately $33 billion in more than 40 mutual fund portfolios and other
advisory accounts. For more information about the services Lord Abbett
provides to the funds, see the Statement of Additional Information. The
Fund pays Lord Abbett a monthly fee of .75% based on average daily net
assets for each month. In addition, the Fund pays all expenses not
expressly assumed by Lord Abbett.
PORTFOLIO MANAGER. Stephen Humphrey serves as Executive Vice President and
Portfolio Manager of the Lord Abbett Large-Cap Growth Fund and is primarily
responsible for the day-to-day management of the Fund. Mr. Humphrey joined
Lord Abbett in 1999; prior to that he was a Vice President and Portfolio
Manager at Chase Manhattan Bank from 1976 - 1999, managing private accounts
from 1981 and pooled investment funds from 1985.
HISTORICAL PERFORMANCE OF PORTFOLIO MANAGER. From March 17, 1997
until August 17, 1999, Mr. Humphrey was primarily responsible for
the day-to-day management of the Chase Vista Select Large Cap Growth Fund,
a registered investment company. As the portfolio manager of this fund, Mr.
Humphrey had full discretionary authority over the selection of investments
for the fund. From the Fund's inception on January 1, 1997 until March 17,
1997, a team of investment professionals at Chase Manhattan Bank,
including Mr. Humphrey, was responsible for the management of the fund's
portfolio.
10 Your Investment
<PAGE>
The cumulative total return for the Chase Vista Select Large Cap Growth
Fund from March 17, 1997 through July 31, 1999 was 109.01%. At July 31,
1999, this Fund had $825.2 million in net assets. As shown in the table
below, average annual total returns for the one year period ended July 31,
1999 and for the period during which Mr. Humphrey managed that Fund,
compared with the performance of the Standard & Poor's 500(R) Composite
Stock Price Index ("S&P 500(R) Index") and the Lipper Large Cap Growth Fund
average, were:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Returns
- --------------------------------------------------------------------------------
Chase Vista Select Lipper Large Cap
Large-Cap Growth S&P 500 Growth Fund
Growth Fund(a) Index(b) Average
<S> <C> <C> <C>
One Year Ending July 31, 1999 32.58% 20.20% 24.02%
- --------------------------------------------------------------------------------
March 20, 1997
through July 31, 1999 36.59%(c) 27.05%(d) 29.41%(e)
- --------------------------------------------------------------------------------
(a) Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of Fund expenses.
(b) The S&P 500 Index is an unmanaged index of common stocks that is considered
to be generally representative of the United States stock market. The Index
is adjusted to reflect reinvestment of dividends.
(c) The average annual total return for the period from March 17, 1997
through July 31, 1999 was 35.52%.
(d) This percentage represents the average annual return of the S&P 500(R)
Index during the period from March 20, 1997 through July 31, 1999
that Mr. Humphrey managed the Chase Vista Select Large Cap Growth Fund.
(e) This percentage represents the average annual return of the Lipper Large
Cap Growth Fund average during the period from March 20, 1997 through
July 31, 1999 that Mr. Humphrey managed the
Chase Vista Select Large Cap Growth Fund.
Historical performance is not indicative of future performance. Although
the Lord Abbett Large-Cap Growth Fund and the Chase Vista Select Large Cap
Growth Fund have substantially similar investment objectives, policies and
strategies, the Chase Vista Select Large Cap Growth Fund is a separate Fund
and its historical performance is not indicative of the future performance
of the Lord Abbett Large-Cap Growth Fund. For the periods shown above, the
anticipated expenses of the Lord Abbett Large-Cap Growth Fund may have been
higher than the expenses of the Chase Vista Select Large Cap Growth Fund.
Higher expenses, of course, would reduce a fund's performance. The Chase
Vista Select Large Cap Growth Fund was the only investment vehicle that Mr.
Humphrey managed during the period he was employed at Chase Manhattan Bank
that has or had substantially similar investment objectives, policies and
strategies as those of the Lord Abbett Large-Cap Growth Fund. Share prices
and investment returns will fluctuate reflecting market conditions, as well
as changes in company-specific fundamentals of portfolio securities.
</TABLE>
Your Investment 11
FOR MORE INFORMATION
OTHER INVESTMENT TECHNIQUES
This section describes some of the investment techniques that might be used
by the Fund and their risks.
ADJUSTING INVESTMENT EXPOSURE. The Fund may, but is not required to, use
various strategies to change its investment exposure to adjust to changing
security prices, interest rates, currency exchange rates, commodity prices
and other factors. The Fund may use these transactions to change the risk
and return characteristics of the Fund's portfolio. If we judge market
conditions incorrectly or use a strategy that does not correlate well with
the Fund's investments, it could result in a loss, even if we intended to
lessen risk or enhance returns. These transactions may involve a small
investment of cash compared to the magnitude of the risk assumed and could
produce disproportionate gains or losses. Also, these strategies could
result in losses if the counterparty to a transaction does not perform as
promised.
DIVERSIFICATION. The Fund is a diversified fund, which generally means that
with respect to 75% of its total assets, it will not purchase a security
if, as a result, more than 5% of the fund's total assets would be invested
in securities of a single issuer or the fund would hold more than 10% of
the outstanding voting securities of the issuer. U.S. government securities
are not subject to these requirements.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The Fund may enter into
financial futures transactions. A financial futures transaction is the
purchase or sale of an exchange-traded contract to buy or sell a specified
financial instrument or index at a specific future date and price. The Fund
will not enter into any futures contracts, or options thereon, if the
aggregate market value of the securities covered by futures contracts plus
options on such financial futures exceeds 50% of its total assets.
OPTIONS TRANSACTIONS. The Fund may purchase and write put and call options
on equity securities or stock indices that are traded on national
securities exchanges.
A put option gives the buyer of the option the right to sell, and the
seller of the option the obligation to buy, the underlying instrument
during the option period. The Fund may write only covered put options to
the extent that cover for such options does not exceed 15% of the Fund's
net assets. The Fund will not purchase an option if, as a result of such
purchase, more than 10% of its total assets would be invested in premiums
for such options.
A call option gives the buyer of the option the right to buy, and the
writer (seller) of the option the obligation to sell, the underlying
instrument. The Fund may only sell (write) covered call options. This means
that the Fund may only sell call options on securities it owns. When the
Fund writes a call option, it gives up the potential for gain on the
underlying securities in excess of the exercise price of the option during
the period that the option is open.
RISKS OF FUTURES CONTRACTS AND OPTIONS TRANSACTIONS. The Fund's
transactions, if any, in futures, options on futures and other options
involve additional risk of loss. Loss may result from a lack of correlation
between changes in the value of these derivative instruments and the Fund's
assets being hedged, the potential illiquidity of the markets for
derivative instruments, or the risks arising from margin requirements and
related leverage factors associated with such transactions. The use of
these investment techniques
12 For More Information
<PAGE>
also involves the risk of loss if Lord Abbett is incorrect in its
expectation of fluctuations in securities prices. In addition, the loss
that may be incurred by the Fund in entering into futures contracts and in
writing call options on futures is potentially unlimited and may exceed the
amount of the premium received.
PORTFOLIO SECURITIES LENDING. The Fund may lend securities to
broker-dealers and financial institutions as a means of earning income.
This practice could result in a loss or delay in recovering the Fund's
securities if the borrower defaults. The Fund will limit its securities
loans to 5% of its total assets and all loans will be fully collateralized.
GLOSSARY OF SHADED TERMS
ADDITIONAL CONCESSIONS. Lord Abbett Distributor may, for specified periods,
allow dealers to retain the full sales charge for sales of shares or may
pay an additional concession to a dealer who sells a minimum dollar amount
of our shares and/or shares of other Lord Abbett-sponsored funds. In some
instances, such additional concessions will be offered only to certain
dealers expected to sell significant amounts of shares. Additional payments
may be paid from Lord Abbett Distributor's own resources or from
distribution fees received from a fund and will be made in the form of cash
or, if permitted, non-cash payments. The non-cash payments will include
business seminars at Lord Abbett's headquarters or other locations,
including meals and entertainment, or the receipt of merchandise. The cash
payments may include payment of various business expenses of the dealer.
In selecting dealers to execute portfolio transactions for a fund's
portfolio, if two or more dealers are considered capable of obtaining best
execution, we may prefer the dealer who has sold our shares and/or shares
of other Lord Abbett-sponsored funds.
AUTHORIZED INSTITUTIONS. Institutions and persons permitted by law to
receive service and/or distribution fees under a Rule 12b-1 Plan are
"Authorized Institutions." Lord Abbett Distributor is an Authorized
Institution.
ELIGIBLE FUND. An Eligible Fund is any Lord Abbett-sponsored fund except
for (1) certain tax-free, single-state funds where the exchanging
shareholder is a resident of a state in which such a fund is not offered
for sale; (2) Lord Abbett Equity Fund; (3) Lord Abbett Series Fund; (4)
Lord Abbett U.S. Government Securities Money Market Fund ("GSMMF") (except
for holdings in GSMMF which are attributable to any shares exchanged from
the Lord Abbett Family of funds). An Eligible Fund also is any Authorized
Institution's affiliated money market fund satisfying Lord Abbett
Distributor as to certain omnibus account and other criteria.
ELIGIBLE MANDATORY DISTRIBUTIONS. If class B shares represent a part of an
individual's total IRA or 403(b) investment, the CDSC will be waived only
for that part of a mandatory distribution which bears the same relation to
the entire mandatory distribution as the B share investment bears to the
total investment.
LEGAL CAPACITY. With respect to a redemption request, if (for example) the
request is on behalf of the estate of a deceased shareholder, John W. Doe,
by a person (Robert A. Doe) who has the legal capacity to act for the
estate of the deceased shareholder because he is the executor of the
estate, then the request must be executed as follows: Robert A.Doe,
Executor of the Estate of John W. Doe. That signature using that capacity
must be guaranteed by an Eligible Guarantor.
Similarly, if (for example) the redemption request is on behalf of the ABC
Corporation by a person (Mary B. Doe) that has the legal capacity to act on
behalf of this corporation, because she is the President of the
corporation, then the request must be executed as
GUARANTEED SIGNATURE. An acceptable form of guarantee would be as follows:
In the case of the estate --
Robert A. Doe
Executor of the Estate of
John W. Doe
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
John Doe
- --------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
In the case of the corporation --
ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
John Doe
- --------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
For More Information 13
<PAGE>
follows: ABC Corporation by Mary B.Doe, President. That signature using
that capacity must be guaranteed by an Eligible Guarantor (see example in
right column).
MUTUAL FUND FEE BASED PROGRAM. Certain unaffiliated authorized brokers,
dealers, registered investment advisers or other financial institutions
("entities") who either (1) have an arrangement with Lord Abbett
Distributor in accordance with certain standards approved by Lord Abbett
Distributor, providing specifically for the use of our shares (and
sometimes providing for acceptance of orders for such shares on our behalf)
in particular investment products made available for a fee to clients of
such entities, or (2) charge an advisory, consulting or other fee for their
services and buy shares for their own accounts or the accounts of their
clients.
PURCHASER. The term "purchaser" includes: (1) an individual, (2) an
individual and his or her spouse and children under the age of 21, and (3)
a trustee or other fiduciary purchasing shares for a single trust estate or
single fiduciary account (including a pension, profit-sharing, or other
employee benefit trust qualified under Section 401 of the Internal Revenue
Code - more than one qualified employee benefit trust of a single employer,
including its consolidated subsidiaries, may be considered a single trust,
as may qualified plans of multiple employers registered in the name of a
single bank trustee as one account), although more than one beneficiary is
involved.
SPECIAL RETIREMENT WRAP PROGRAM. A program sponsored by an Authorized
Institution showing one or more characteristics distinguishing it, in the
opinion of Lord Abbett Distributor, from a Mutual Fund Fee Based Program.
Such characteristics include, among other things, the fact that an
Authorized Institution does not charge its clients any fee of a consulting
or advisory nature that is economically equivalent to the distribution fee
under the class A 12b-1 Plan and the fact that the program relates to
participant-directed Retirement Plans.
YEAR 2000 ISSUES. The Fund could be adversely affected if the computers used by
the Fund and its service providers do not properly process and calculate
date-related information from and after January 1, 2000.
Lord Abbett is working to avoid such problems and has received assurances from
the Fund's service providers that they are taking similar steps. Of course, the
Year 2000 problem is unprecedented and, therefore, Lord Abbett cannot eliminate
altogether the possibility that it or the Fund will be affected.
In addition, companies in which the Fund invests may experience similar
difficulties. These problems could negatively affect the value of the issuer's
securities, which in turn could impact the Fund's performance.
14 For More Information
<PAGE>
COMPENSATION FOR YOUR DEALER
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FIRST YEAR COMPENSATION
Front-end
sales charge Dealer's
paid by investors concession Service fee(1) Total
(% of offering price) (% of offering (% of net Compensation(2)
price) investment) (% of offering
Class A investments price)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 5.75% 5.00% 0.25% 5.24%
$50,000 - $99,999 4.75% 4.00% 0.25% 4.24%
$100,000 - $249,999 3.95% 3.25% 0.25% 3.49%
$250,000 - $499,999 2.75% 2.25% 0.25% 2.49%
$500,000 - $999,999 1.95% 1.75% 0.25% 2.00%
- --------------------------------------------------------------------------------
$1 million or more(3) or Retirement
Plan - 100 or more eligible employees(3)
or Special Retirement Wrap Program(3)
- --------------------------------------------------------------------------------
First $5 million no front-end
sales charge 1.00% 0.25% 1.25%
Next $5 million
above that no front-end
sales charge 0.55% 0.25% 0.80%
Next $40 million
above that no front-end
sales charge 0.50% 0.25% 0.75%
Over $50 million no front-end
sales charge 0.25% 0.25% 0.50%
- --------------------------------------------------------------------------------
Class B investments(4) Paid at time of sale (% of net asset value)
All amounts no front-end
sales charge 3.75% 0.25% 4.00%
- --------------------------------------------------------------------------------
Class C investments(4)
All amounts no front-end
sales charge 0.75% 0.25% 1.00%
- --------------------------------------------------------------------------------
Class P investments Percentage of average net assets
All amounts no front-end
sales charge 0.25% 0.20% 0.45%
- --------------------------------------------------------------------------------
ANNUAL COMPENSATION AFTER FIRST YEAR
Class A investments
All amounts no front-end
sales charge none 0.25% 0.25%
- --------------------------------------------------------------------------------
Class B investments(4) Percentage of average net assets(5)
All amounts no front-end
sales charge none 0.25% 0.25%
- --------------------------------------------------------------------------------
Class C investments(4)
All amounts no front-end
sales charge 0.75% 0.25% 1.00%
- --------------------------------------------------------------------------------
Class P investments
All amounts no front-end
sales charge 0.25% 0.20% 0.45%
- --------------------------------------------------------------------------------
</TABLE>
(1) The service fee for class A and P shares is paid quarterly. The first
year's service fee on class B and C shares is paid at the time of sale.
(2) Reallowance/concession percentages and service fee percentages are
calculated from different amounts, and therefore may not equal total
compensation percentages if combined using simple addition. Additional
Concessions may be paid to Authorized Institutions, such as your dealer,
from time to time.
(3) Concessions are paid at the time of sale on all class A shares sold during
any 12-month period starting from the day of the first net asset value
sale. With respect to (a) class A share purchases at $1 million or more,
sales qualifying at such level under rights of accumulation and statement
of intention privileges are included and (b) for Special Retirement Wrap
Programs, only new sales are eligible and exchanges into the Fund are
excluded. Certain purchases of class A shares are subject to a CDSC.
(4) Class B and class C shares are subject to CDSCs.
(5) With respect to class B, C and P shares, 0.25%, 1.00% and 0.45%,
respectively, of the average annual net asset value of such shares
outstanding during the quarter (including distribution reinvestment shares
after the first anniversary of their issuance) is paid to Authorized
Institutions, such as your dealer. These fees are paid quarterly in
arrears.
Financial Information 15
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
More information on the Fund is or will be available free upon request,
including the following:
Annual/Semi-annual Report
Describes the Fund, lists portfolio holdings,and contains a letter from the
Fund's manager discussing recent market conditions and the Fund's
investment strategies.
Statement of Additional Information ("SAI")
Provides more details about the Fund and its policies. A current SAI is on
file with the Securities and Exchange Commission ("SEC") and is
incorporated by reference (is legally considered part of this prospectus).
Lord Abbett Large-Cap Growth Fund
767 Fifth Avenue New York, NY 10153-0203
On or about January 17, 2000, the new address will be:
90 Hudson Street Jersey City, NJ 07302-3973
- ------------------------------------------
SEC file number: 811-9597
To obtain information:
BY TELEPHONE. Call the Fund at: 800-426-1130
BY MAIL. Write to the Fund at: The Lord Abbett Family of Funds The General
Motors Building 767 Fifth Avenue New York, NY 10153-0203 On or about January 17,
2000, the new address will be: 90 Hudson Street Jersey City, NJ 07302-3973
VIA THE INTERNET.
LORD, ABBETT & CO.
www.lordabbett.com
Text only versions of Fund documents can be
viewed online or downloaded from:
SEC
www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 202-942-8090) or by sending your request and a duplicating
fee to the SEC's Public Reference Section, Washington, DC 20549-6009 or by
sending your request electronically to [email protected].
LALCG-1-1299 (12/99)
<PAGE>
LORD ABBETT
Statement of Additional Information December 30, 1999
LORD ABBETT
Large-Cap Growth Fund
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from your securities dealer or from Lord Abbett Distributor LLC
("Lord Abbett Distributor") at The General Motors Building, 767 Fifth Avenue,
New York, New York 10153-0203. On or about January 17, 2000, the new address
will be 90 Hudson St., Jersey City, NJ 07302-3973. This Statement of Additional
Information relates to, and should be read in conjunction with, the Prospectus
dated December 30, 1999.
Shareholder inquiries should be made by directly contacting the Fund or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
1. Investment Policies 2
2. Trustees and Officers 5
3. Investment Advisory and Other Services 9
4. Portfolio Transactions 9
5. Purchases, Redemptions
and Shareholder Services 11
6. Performance 18
7. Taxes 19
8. Information About The Company 20
9. Financial Statements 20
1
<PAGE>
1.
Investment Policies
The Lord Abbett Large-Cap Growth Fund (the "Company" or the "Fund") is a
diversified open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "Act").
FUNDAMENTAL INVESTMENT RESTRICTIONS. The Fund is subject to the following
fundamental investment restrictions, which cannot be changed without approval of
a majority of the Fund's outstanding shares.
The Fund may not:
(1) borrow money, issue senior securities or mortgage, pledge or
hypothecate its assets except to the extent permitted under the Act;
(2) engage in the underwriting of securities, except to the extent that,
in connection with the disposition of its portfolio securities or as
otherwise permitted under applicable law, it may be deemed to be an
underwriter under federal securities laws;
(3) invest more than 25% of the value of its total assets in the
securities of issuers in any particular industry (excluding
obligations issued or guaranteed by the U.S. Government, any state,
territory or possession of the United States, the District of Columbia
or any of their authorities, agencies, instrumentalities or political
subdivisions);
(4) 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);
(5) make loans, except that the acquisition of or investment in debt
securities, repurchase agreements or similar instruments shall not be
subject to this restriction, 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; and
(6) with respect to 75% of the value of the total assets of the Fund, (i)
buy securities of any one issuer representing more than 5% of the
value of its total assets, except securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities or (ii) own
more than 10% of the voting securities of such issuer.
Compliance with the investment restrictions in this section 1 will be determined
at the time of the purchase or sale of the portfolio investments.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. In addition to policies in the
Prospectus and the investment restrictions above which cannot be changed without
shareholder approval, the Fund is also subject to the following non-fundamental
investment policies which may be changed by the Board of Trustees 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 of the Securities Act of 1933 ("Rule 144A")
deemed to be liquid by the Board of Trustees;
2
<PAGE>
(3) invest in the securities of other investment companies as defined in
the Act, except as permitted by applicable law;
(4) write, purchase or sell puts, calls, straddles, spreads or
combinations thereof, except to the extent permitted in the Fund's
Prospectus and statement of additional information, as they may be
amended from time to time; and
(5) buy from or sell to any of the Fund's officers, trustees, employees,
or its investment adviser any securities other than shares of the
Fund.
Rights And Warrants. The Fund may invest in rights and warrants to purchase
securities, including warrants which are not listed on the NYSE or American
Stock Exchange in an amount not to exceed 5% of the value of the Fund's gross
assets.
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, as the case may be.
Warrants represent the privilege to purchase securities at a stipulated price
and are usually valid for several years. Rights and warrants generally do not
entitle a holder to dividends or voting rights with respect to the underlying
securities nor do they represent any rights in the assets of the issuing
company.
Also, the value of a right or warrant may not necessarily change with the value
of the underlying securities and rights and warrants cease to have value if they
are not exercised prior to their expiration date.
OPTIONS AND FINANCIAL FUTURES TRANSACTIONS. The Fund may engage in options and
financial futures transactions in accordance with its investment objective and
policies. Although the Fund is not currently employing such options and
financial futures transactions, it may engage in such transactions in the future
if it appears advantageous to us to do so, in order to cushion the effects of
fluctuating interest rates and adverse market conditions. The use of options and
financial futures, and possible benefits and attendant risks, are discussed
below, along with information concerning certain other investment policies and
techniques.
FINANCIAL FUTURES CONTRACTS. The Fund may enter into contracts for the future
delivery of a financial instrument, such as a security or the cash value of a
securities index. This investment technique is designed primarily to hedge
(i.e., protect) against anticipated future changes in interest rates or market
conditions which otherwise might adversely affect the value of securities which
the Fund holds or intends to purchase. A "sale" of a futures contract means the
undertaking of a contractual obligation to deliver the securities or the cash
value of an index called for by the contract at a specified price during a
specified delivery period. A "purchase" of a futures contract means the
undertaking of a contractual obligation to acquire the securities or cash value
of an index at a specified price during a specified delivery period. At the time
of delivery pursuant to the contract, adjustments are made to recognize
differences in value arising from the delivery of securities which differ from
those specified in the contract. In some cases, securities called for by a
futures contract may not have been issued at the time the contract was written.
The Fund will not enter into any futures contracts or options on futures
contracts if the aggregate of the market value of the securities covered by such
outstanding contracts and options would exceed 50% of its total assets.
Although some financial futures contracts by their terms call for the actual
delivery or acquisition of securities, in most cases, a party will close out the
contractual commitment before delivery without having to make or take delivery
of the security by purchasing (or selling, as the case may be) on a commodities
exchange an identical futures contract calling for delivery in the same month.
Such a transaction, if effected through a member of an exchange, cancels the
obligation to make or take delivery of the securities. All transactions in the
futures market are made, offset or fulfilled through a clearing house associated
with the exchange on which the contracts are traded. The Fund will incur
brokerage fees when it purchases or sells contracts and will be required to
maintain margin deposits. At the time it enters into a futures contract, it is
required to deposit with the custodian, on behalf of the broker, a specified
amount of cash or eligible securities called "initial margin." The initial
margin required for a futures contract is set by the exchange on which the
contract is traded. Subsequent payments, called "variation margin," to and from
the broker are made on a daily basis as the market price of the futures contract
fluctuates. The costs incurred in connection with futures transactions could
3
<PAGE>
reduce our return. Futures contracts entail risks. If the investment adviser's
judgment about the general direction of interest rates or markets is wrong, the
overall performance may be poorer than if no such contracts had been entered
into.
There may be an imperfect correlation between movements in prices of futures
contracts and portfolio securities being hedged. The degree of difference in
price movements between futures contracts and the securities (or securities
indices) being hedged depends upon such things as variations in demand for
futures contracts and securities underlying the contracts and differences
between the liquidity of the markets for such contracts and the securities
underlying them. In addition, the market prices of futures contracts may be
affected by certain factors not directly related to the underlying securities.
At any given time, the availability of futures contracts, and hence their
prices, are influenced by credit conditions and margin requirements. Due to the
possibility of price distortions in the futures market and because of the
imperfect correlation between movements in the prices of securities and
movements in the prices of futures contracts, a correct forecast of market
trends by the investment adviser may not result in a successful hedging
transaction.
CALL OPTIONS ON STOCK. The Fund may, from time to time, write call options on
its portfolio securities. The Fund may write only call options which are
"covered," meaning that the Fund either owns the underlying security or has an
absolute and immediate right to acquire that security, without additional cash
consideration, upon conversion or exchange of other securities currently held in
its portfolio. In addition, the Fund will not permit the call to become
uncovered prior to the expiration of the option or termination through a closing
purchase transaction as described below. If the Fund writes a call option, the
purchaser of the option has the right to buy (and the Fund has the obligation to
sell) the underlying security at the exercise price throughout the term of the
option. The amount paid to the Fund by the purchaser of the option is the
"premium." The Fund's obligation to deliver the underlying security against
payment of the exercise price would terminate either upon expiration of the
option or earlier if the Fund were to effect a "closing purchase transaction"
through the purchase of an equivalent option on an exchange. There can be no
assurance that a closing purchase transaction can be effected. The Fund does not
intend to write covered call options with respect to securities with an
aggregate market value of more than 5% of its gross assets at the time an option
is written.
The Fund will not be able to effect a closing purchase transaction after it
receives notice of exercise. In order to write a call option, the Fund is
required to comply with the rules of The Options Clearing Corporation and the
various exchanges with respect to collateral requirements. The Fund may not
purchase call options except in connection with a closing purchase transaction.
It is possible that the cost of effecting a closing purchase transaction may be
greater than the premium received by the Fund for writing the option.
Generally, the Fund intends to write listed covered call options during periods
when it anticipates declines in the market values of portfolio securities
because the premiums received may offset to some extent the decline in the
Fund's net asset value occasioned by such declines in market value. Except as
part of the "sell discipline" described below, the Fund will generally not write
listed covered call options when it anticipates that the market values of its
portfolio securities will increase.
One reason for the Fund to write call options is as part of a "sell discipline."
If the Fund decides that a portfolio security would be overvalued and should be
sold at a certain price higher than the current price, it could write an option
on the stock at the higher price. Should the stock subsequently reach that price
and the option be exercised, the Fund would, in effect, have increased the
selling price of that stock, which it would have sold at that price in any
event, by the amount of the premium. In the event the market price of the stock
declined and the option were not exercised, the premium would offset all or some
portion of the decline. It is possible that the price of the stock could
increase beyond the exercise price; in that event, the Fund would forego the
opportunity to sell the stock at that higher price.
In addition, call options may be used as part of a different strategy in
connection with sales of portfolio securities. If, in the judgment of the Fund
Management, the market price of a stock is overvalued and it should be sold, the
Fund may elect to write a call option with an exercise price substantially below
the current market price. As long as the value of the underlying security
remains above the exercise price during the term of the option, the option will,
in all probability, be exercised, in which case the Fund will be required to
sell the stock at the exercise price. If the sum of the premium and the exercise
price exceeds the market price of the stock at the time the call option is
written, the Fund would,
4
<PAGE>
in effect, have increased the selling price of the stock. The Fund would not
write a call option in these circumstances if the sum of the premium and the
exercise price were less than the current market price of the stock.
PUT OPTIONS ON STOCK. The Fund may also write listed put options. If the Fund
writes a put option, it is obligated to purchase a given security at a specified
price at any time during the term of the option.
Writing listed put options is a useful portfolio investment strategy when the
Fund has cash or other reserves available for investment as a result of sales of
Fund shares or, more importantly, because Fund Management believes a more
defensive and less fully invested position is desirable in light of market
conditions. If the Fund Management wishes to invest its cash or reserves in a
particular security at a price lower than current market value, it may write a
put option on that security at an exercise price which reflects the lower price
it is willing to pay. The buyer of the put option generally will not exercise
the option unless the market price of the underlying security declines to a
price near or below the exercise price. If the Fund writes a listed put, the
price of the underlying stock declines and the option is exercised, the premium,
net of transaction charges, will reduce the purchase price paid by the Fund for
the stock. The price of the stock may decline by an amount in excess of the
premium, in which event the Fund would have foregone an opportunity to purchase
the stock at a lower price.
If, prior to the exercise of a put option, the Fund determines that it no longer
wishes to invest in the stock on which the put option had been written, the Fund
may be able to effect a closing purchase transaction on an exchange by
purchasing a put option of the same series as the one which it has previously
written. The cost of effecting a closing purchase transaction may be greater
than the premium received on writing the put option and there is no guarantee
that a closing purchase transaction can be effected.
The Fund may only write covered put options to the extent that cover for such
options does not exceed 15% of its net assets. The Fund will not purchase an
option if, as a result of such purchase, more than 10% of its total assets would
be invested in premiums for such options.
Unless the Fund has other liquid assets that are sufficient to satisfy the
exercise of a call, the Fund would be required to liquidate portfolio securities
in order to satisfy the exercise. Because an exercise must be settled within
hours after receiving the notice of exercise, if the Fund fails to anticipate an
exercise, it may have to borrow (in amounts not exceeding 20% of the Fund's
total assets) pending settlement of the sale of securities in its portfolio and
would incur interest charges thereon.
When the Fund has written a call, there is also a risk that the market may
decline between the time the call is written and the time the Fund is able to
sell stocks in its portfolio. As with stock options, the Fund will not learn
that an index option has been exercised until the day following the exercise
date but, unlike a call on stock where the Fund would be able to deliver the
underlying securities in settlement, the Fund may have to sell part of its stock
portfolio in order to make settlement in cash, and the price of such stocks
might decline before they can be sold. This timing risk makes certain strategies
involving more than one option substantially more risky with index options than
with stock options. For example, even if an index call which the Fund has
written is "covered" by an index call held by the Fund with the same strike
price, the Fund will bear the risk that the level of the index may decline
between the close of trading on the date the exercise notice is filed with the
clearing corporation and the close of trading on the date the Fund exercises the
call it holds or the time the Fund sells the call which in either case would
occur no earlier than the day following the day the exercise notice was filed.
2.
Trustees And Officers
The Board of Trustees of the Fund is responsible for the management of the
business and affairs of the Fund.
The following trustee is a partner of Lord, Abbett & Co. ("Lord Abbett"), The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. He has
been associated with Lord Abbett for over five years and is also an officer,
director, or trustee of thirteen other Lord Abbett-sponsored funds.
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<PAGE>
*Robert S. Dow, age 54, Chairman and President
*Mr. Dow is an "interested person" as defined in the Act.
The following outside trustees are also directors or trustees of thirteen other
Lord Abbett-sponsored funds referred to above.
E. Thayer Bigelow, Trustee
Time Warner Inc.
1271 Avenue of the Americas
New York, New York
Senior Adviser, Time Warner Inc. (since 1998). Formerly, Acting Chief Executive
Officer of Courtroom Television Network (1997 - 1998). Formerly, President and
Chief Executive Officer of Time Warner Cable Programming, Inc. (1991 - 1997).
Prior to that, President and Chief Operating Officer of Home Box Office, Inc.
Age 58.
William H.T. Bush, Trustee
Bush-O'Donnell & Co., Inc.
101 South Hanley Road, Suite 1025
St. Louis, Missouri
Co-founder and Chairman of the Board of financial advisory firm of
Bush-O'Donnell & Company (since 1986). Age 61.
Robert B. Calhoun, Jr., Trustee
Monitor Clipper Partners
650 Madison Avenue, 9th Floor
New York, New York
Managing Director of Monitor Clipper Partners (since 1997) and President of The
Clipper Group L.P., both private equity investment funds (since 1990). Age 57.
Stewart S. Dixon, Trustee
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon (since 1990). Age 68.
John C. Jansing, Trustee
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 73.
C. Alan MacDonald, Trustee
Directorship Inc.
8 Sound Shore Drive
Greenwich, Connecticut
Currently involved in golf development management on a consultancy basis (since
1999). Formerly, Managing Director of The Directorship Inc., a consultancy in
board management and corporate governance (1997-1999). Prior to that, General
Partner of The Marketing Partnership, Inc., a full service marketing consulting
firm (1994-1997). Prior to that, Chairman and Chief Executive Officer of Lincoln
Snacks, Inc., manufacturer of branded snack foods (1992-1994). His
6
<PAGE>
career spans 36 years at Stouffers and Nestle with 18 of the years as Chief
Executive Officer. Currently serves as Director of DenAmerica Corp., J. B.
Williams Company, Inc., Fountainhead Water Company and Exigent Diagnostics. Age
66.
Hansel B. Millican, Jr., Trustee
Rochester Button Company
1328 Broadway (Suite 816)
New York, New York
President and Chief Executive Officer of Rochester Button Company (since 1991).
Age 71.
Thomas J. Neff, Trustee
Spencer Stuart
277 Park Avenue
New York, New York
Chairman of Spencer Stuart, an executive search consulting firm (since 1976).
Currently serves as a Director of Ace, Ltd. (NYSE). Age 62.
The second column of the following table sets forth the compensation accrued for
outside trustees. The third column sets forth information with respect to the
pension or retirement benefits accrued for outside directors/trustees maintained
by the Lord Abbett-sponsored funds. No director/trustee of the funds associated
with Lord Abbett and no officer of the funds received any compensation from the
funds for acting as a director/trustee or officer.
For the Fiscal Year July 31, 1998
---------------------------------
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Pension or For Year Ended
Retirement Benefits December 31, 1998
Accrued by the Total Compensation
Aggregate Company and Paid by the Company and
Compensation Thirteen Other Lord Thirteen Other Lord
Accrued by Abbett-sponsored Abbett-sponsored
Name of the Company(1) Companies(2) Companies(3)
Trustee
<S> <C> <C> <C>
E. Thayer Bigelow None $17,622 $57,400
William H.T. Bush* None $15,846 $27,500
Robert B. Calhoun, Jr.** None $12,276 $33,500
Stewart S. Dixon None $32,420 $56,500
John C. Jansing None $41,108(4) $55,500
C. Alan MacDonald None $26,763 $55,000
Hansel B. Millican, Jr. None $37,822 $55,500
Thomas J. Neff None $20,313 $56,500
*Elected as of August 13, 1998
**Elected as of June 17, 1998
</TABLE>
1. Outside directors/trustees' fees, including attendance fees for board and
committee meetings, are allocated among all Lord Abbett-sponsored companies
based on the net assets of each fund. A portion of the fees payable by the
Company to its outside trustees is being deferred under a plan ("equity
based plan") that deems the deferred amounts to be invested in shares of
the Company for later distribution to the trustees. Since the Lord Abbett
Large-Cap Growth Fund is new, no compensation has yet been paid to its
trustees.
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<PAGE>
2. The amounts in Column 3 were accrued by the Lord Abbett-sponsored Funds for
the 12 months ended October 31, 1999 with respect to the equity based plan
established for independent directors/trustees in 1996. This plan
supercedes a previously approved retirement plan for all future
directors/trustees. Current directors had the option to convert their
accrued benefits under the retirement plan. All of the outside directors
except one made such an election. Each plan also provides for a
pre-retirement death benefit and actuarially reduced joint-and-survivor
spousal benefits.
3. This column shows aggregate compensation, including directors/trustees'
fees and attendance fees for board and committee meetings, of a nature
referred to in footnote one, paid by the Lord Abbett-sponsored funds during
the year ended December 31, 1998 but does not include amounts accrued under
the equity based plan and shown in Column 3.
4. Mr. Jansing chose to continue to receive benefits under the retirement
plan, which provides that outside directors/ trustees may receive annual
retirement benefits for life equal to their final annual retainer following
retirement at or after age 72 with at least ten years of service. Thus, if
Mr. Jansing were to retire and the annual retainer payable by the funds
were the same as it is today, he would receive annual retirement benefits
of $50,000.
Except where indicated, the following executive officers of the Company have
been associated with Lord Abbett for over five years. Messrs. Carper, Hilstad,
and Morris are partners of Lord Abbett; the others are employees. None have
received compensation from the Fund.
Executive Vice President:
Stephen Humphrey, age 55 (with Lord Abbett since 1999, formerly Vice President
and Portfolio Manager at Chase Manhattan Bank from 1976 - 1999)
Vice Presidents:
Joan A. Binstock, age 45 (with Lord Abbett since 1999, formerly Chief Operating
Officer of Morgan Grenfell from 1996 to 1999, prior thereto Principal of Ernst &
Young LLP)
Daniel E. Carper, age 47
Paul A. Hilstad, age 56, Vice President and Secretary (with Lord Abbett since
1995; formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.)
Lawrence H. Kaplan, age 42 (with Lord Abbett since 1997 - formerly Vice
President and Chief Counsel of Salomon Brothers Asset Management Inc. from 1995
to 1997, prior thereto Senior Vice President, Director and General Counsel of
Kidder Peabody Asset Management, Inc.)
Robert G. Morris, age 54
A. Edward Oberhaus, age 39
Tracie E. Richter, age 31 (with Lord Abbett since 1999, formerly Vice President
- - Head of Fund Administration of Morgan Grenfell from 1998 to 1999, Vice
President of Bankers Trust from 1996 to 1998, prior thereto Tax Associate of
Goldman Sachs).
Treasurer:
Donna M. McManus, age 38 (with Lord Abbett since 1996, formerly a Senior Manager
at Deloitte & Touche LLP).
As of the date hereof, our officers and trustees, as a group, owned less than 1%
of the Fund's outstanding shares and there were no record holders of 5% or more
of the Fund's outstanding shares, other than Lord Abbett Distributor.
8
<PAGE>
3.
Investment Advisory And Other Services
The services performed by Lord Abbett are described under "Management" in the
Prospectus. Under the Management Agreement, we are obligated to pay Lord Abbett
a monthly fee, based on average daily net assets for each month at an annual
rate of .75 of 1% for the Lord Abbett Large-Cap Growth Fund. This fee is
allocated among the classes of the Fund based on the Fund's average daily net
assets.
The Fund pays all expenses not expressly assumed by Lord Abbett, including,
without limitation, 12b-1 expenses, outside 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 preparing, printing and mailing stock
certificates and shareholder reports, expenses of registering our shares under
federal and state securities laws, expenses of preparing, printing and mailing
prospectuses to existing shareholders, insurance premiums, brokerage and other
expenses connected with executing portfolio transactions.
Although not obligated to do so, Lord Abbett may waive all or a part of its
management fees and or may assume other expenses of the Fund.
Lord Abbett Distributor LLC, General Motors Building, 767 Fifth Avenue, The
General Motors Building, New York, New York 10153-0203, serves as the principal
underwriter for the Company.
The Bank of New York ("BNY"), 48 Wall Street, New York, New York, is the
Company's custodian. In accordance with the requirements of Rule 17f-5, the
Company's Board of Trustees have approved arrangements permitting the Fund's
foreign assets not held by BNY or its foreign branches to be held by certain
qualified foreign banks and depositories.
Deloitte & Touche LLP, Two World Financial Center, New York, New York, are the
independent auditors of the Company and must be approved at least annually by
our Board of Trustees to continue in such capacity. Deloitte & Touche LLP
perform audit services for the Fund, including the examination of financial
statements included in the Fund's Annual Report to Shareholders.
United Missouri Bank of Kansas City, N.A., Tenth and Grand, Kansas City,
Missouri, acts as the transfer agent and dividend disbursing agent for the
Company.
4.
Portfolio Transactions
The Company's policy is to obtain best execution on all our portfolio
transactions, which means that it 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 dealer markups and markdowns and
taking into account the full range and quality of the brokers' services.
Consistent with obtaining best execution, we generally pay, as described below,
a higher commission than some brokers might charge on the same transaction. Our
policy with respect to best execution governs the selection of brokers or
dealers and the market in which the transaction is executed. To the extent
permitted by law, we may, if considered advantageous, make a purchase from or
sale to another Lord Abbett-sponsored fund without the intervention of any
broker-dealer.
Broker-dealers are selected on the basis of their professional capability and
the value and quality of their brokerage and research services. Normally, the
selection is made by traders who are officers of each Lord Abbett-sponsored fund
and also are employees of Lord Abbett. These traders do the trading as well for
other accounts -- investment companies (of which they are also officers) and
other investment clients -- managed by Lord Abbett. They are responsible for
obtaining best execution.
9
<PAGE>
We pay a commission rate that we believe is appropriate to give maximum
assurance that our brokers will provide us, on a continuing basis, the highest
level of brokerage services available. While we do not always seek the lowest
possible commissions on particular trades, we believe that our commission rates
are in line with the rates that many other institutions pay. Our traders are
authorized to pay brokerage commissions in excess of those that other brokers
might accept on the same transactions in recognition of the value of the
services performed by the executing brokers, viewed in terms of either the
particular transaction or the overall responsibilities of Lord Abbett with
respect to us and the other accounts they manage. Such services include showing
us trading opportunities including blocks, a willingness and ability to take
positions in securities, knowledge of a particular security or market proven
ability to handle a particular type of trade, confidential treatment, promptness
and reliability.
Some of these brokers also provide research services at least some of which are
useful to Lord Abbett in their overall responsibilities with respect to us and
the other accounts they manage. Research includes the furnishing of analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts and trading equipment and
computer software packages, acquired from third-party suppliers, that enable
Lord Abbett to access various information bases. Such services may be used by
Lord Abbett in servicing all their accounts, and not all of such services will
necessarily be used by Lord Abbett in connection with their management of the
Fund; conversely, such services furnished in connection with brokerage on other
accounts managed by Lord Abbett may be used in connection with their management
of the Fund, and not all of such services will necessarily be used by Lord
Abbett in connection with their advisory services to such other accounts. We
have been advised by Lord Abbett that research services received from brokers
cannot be allocated to any particular account, are not a substitute for Lord
Abbett's services but are supplemental to their own research effort and, when
utilized, are subject to internal analysis before being incorporated by Lord
Abbett into their investment process. As a practical matter, it would not be
possible for Lord Abbett to generate all of the information presently provided
by brokers. While receipt of research services from brokerage firms has not
reduced Lord Abbett's normal research activities, the expenses of Lord Abbett
could be materially increased if it attempted to generate such additional
information through its own staff and purchased such equipment and software
packages directly from the suppliers.
No commitments are made regarding the allocation of brokerage business to or
among brokers, and trades are executed only when they are dictated by investment
decisions of the Lord Abbett-sponsored funds to purchase or sell portfolio
securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold the Lord
Abbett-sponsored funds' shares and/or shares of other Lord Abbett-sponsored
funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as a Lord Abbett-sponsored fund does, transactions will, to the extent
practicable, be allocated among all participating accounts in proportion to the
amount of each order and will be executed daily until filled so that each
account shares the average price and commission cost of each day. Other clients
who direct that their brokerage business be placed with specific brokers or who
invest through wrap accounts introduced to Lord Abbett by certain brokers may
not participate with a Lord Abbett-sponsored fund in the buying and selling of
the same securities as described above. If these clients wish to buy or sell the
same security as a Lord Abbett-sponsored fund does, they may have their
transactions executed at times different from our transactions and thus may not
receive the same price or incur the same commission cost as a Lord
Abbett-sponsored fund does.
The Lord Abbett-sponsored funds will not seek "reciprocal" dealer business (for
the purpose of applying commissions in whole or in part for their benefit or
otherwise) from dealers as consideration for the direction to them of portfolio
business.
10
<PAGE>
5.
Purchases, Redemptions
And Shareholder Services
Information concerning how we value our shares for the purchase and redemption
of our shares is contained in the Prospectus under "Purchases" and
"Redemptions," respectively.
As disclosed in the Prospectus, we calculate our net asset value as of the close
of the New York Stock Exchange ("NYSE") on each day that the NYSE is open for
trading by dividing our total net assets by the number of shares outstanding at
the time of calculation. The NYSE is closed on Saturdays and Sundays and the
following holidays -- New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
The Company values its portfolio securities at market value as of the close of
the NYSE. Market value will be determined as follows: securities listed or
admitted to trading privileges on the NYSE or American Stock Exchange or on the
NASDAQ National Market System are valued at the last sales price, or, if there
is no sale on that day, at the mean between the last bid and asked prices, or,
in the case of bonds, in the over-the-counter market if, in the judgment of the
Fund's officers, that market more accurately reflects the market value of the
bonds. Over-the-counter securities not traded on the NASDAQ National Market
System are valued at the mean between the last bid and asked prices. Securities
for which market quotations are not available are valued at fair market value
under procedures approved by the Board of Trustees.
For each class of shares, the net asset value will be determined by taking the
net assets and dividing by the number of shares outstanding.
The Fund has entered into a distribution agreement with Lord Abbett Distributor
LLC, a New York limited liability company ("Lord Abbett Distributor") and
subsidiary of Lord Abbett under which Lord Abbett Distributor is obligated to
use its best efforts to find purchasers for the shares of the Fund, and to make
reasonable efforts to sell Fund shares so long as, in Lord Abbett Distributor's
judgment, a substantial distribution can be obtained by reasonable efforts. the
CONVERSION OF CLASS B SHARES. The conversion of Class B shares on the eighth
anniversary of their purchase is subject to the continuing availability of a
private letter ruling from the Internal Revenue Service, or an opinion of
counsel or tax adviser, to the effect that the conversion of Class B shares does
not constitute a taxable event for the holder under Federal income tax law. If
such a revenue ruling or opinion is no longer available, the automatic
conversion feature may be suspended, in which event no further conversions of
Class B shares would occur while such suspension remained in effect. Although
Class B shares could then be exchanged for Class A shares on the basis of
relative net asset value of the two classes, without the imposition of a sales
charge or fee, such exchange could constitute a taxable event for the holder.
ALTERNATIVE SALES ARRANGEMENTS
CLASSES OF SHARES. The Fund offers investors four different classes of shares in
this Statement of Additional Information. 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.
CLASS A SHARES. If you buy Class A shares, you pay an initial sales charge on
investments of less than $1 million (or on investments for employer-sponsored
retirement plans under the Internal Revenue Code (hereinafter referred to as
"Retirement Plans") with less than 100 eligible employees or on investments that
do not qualify to be under a "special retirement wrap program" as a program
sponsored by an authorized institution showing one or more characteristics
distinguishing it, in the opinion of Lord Abbett Distributor from a mutual fund
wrap fee program). If you purchase Class A shares as part of an investment of at
least $1 million (or for Retirement Plans with at least 100 eligible employees
or under a special retirement wrap program) in shares of one or more Lord
Abbett-sponsored funds, you will not pay
11
<PAGE>
an initial sales charge, but if you redeem any of those shares within 24 months
after the month in which you buy them, you may pay to the Fund a contingent
deferred sales charge ("CDSC") of 1% except for redemptions under a special
retirement wrap program. Class A shares are subject to service and distribution
fees that are currently estimated to total annually approximately .35 of 1% of
the annual net asset value of the Class A shares. The initial sales charge
rates, the CDSC and the Rule 12b-1 plan applicable to the Class A shares are
described in "Buying Class A Shares" below.
CLASS B SHARES. If you buy Class B shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the sixth anniversary of
buying them, you will normally pay a CDSC to Lord Abbett Distributor LLC ("Lord
Abbett Distributor"). That CDSC varies depending on how long you own shares.
Class B shares are subject to service and distribution fees at an annual rate of
1% of the annual net asset value of the Class B shares. The CDSC and the Rule
12b-1 plan applicable to the Class B shares are described in "Buying Class B
Shares" below.
CLASS C SHARES. If you buy Class C shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the first anniversary of
buying them, you will normally pay the Fund a CDSC of 1%. Class C shares are
subject to service and distribution fees at an annual rate of 1% of the annual
net asset value of the Class C shares. The CDSC and the Rule 12b-1 plan
applicable to the C shares are described in "Buying Class C Shares" below.
CLASS P SHARES. If you buy Class P shares, you pay no sales charge at the time
of purchase, and if you redeem your shares you pay no CDSC. Class P shares are
subject to service and distribution fees at an annual rate of .45 of 1% of the
average daily net asset value of the Class P shares. The Rule 12b-1 plan
applicable to the Class P shares is described in the "Class P Rule 12b-1 Plan."
Class P shares are available to a limited number of investors.
Which Class of Shares Should You Choose? Once you decide that 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 which you should
discuss with your financial adviser. The Fund's class-specific expenses and the
effect of the different types of sales charges on your investment will affect
your investment results over time. The most important factors are how much you
plan to invest and how long you plan to hold your investment. If your goals and
objectives change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider another class of
shares.
In the following discussion, to help provide you and your financial adviser with
a framework in which to choose a class, we have made some assumptions using a
hypothetical investment in the Fund. We used the sales charge rates that apply
to Class A, Class B, and Class C, and considered the effect of the higher
distribution fees on Class B and Class C expenses (which will affect your
investment return). Of course, the actual performance of your investment cannot
be predicted and will vary, based on the Fund's actual investment returns, the
operating expenses borne by each class of shares, and the class of shares you
purchase. The factors briefly discussed below are not intended to be investment
advice, guidelines or recommendations, because each investor's financial
considerations are different. The discussion below of the factors to consider in
purchasing a particular class of shares assumes that you will purchase only one
class of shares and not a combination of shares of different classes.
HOW LONG DO YOU EXPECT TO HOLD YOUR INVESTMENT? While future financial needs
cannot be predicted with certainty, knowing how long you expect to hold your
investment will assist you in selecting the appropriate class of shares. For
example, over time, the reduced sales charges available for larger purchases of
Class A shares may offset the effect of paying an initial sales charge on your
investment, compared to the effect over time of higher class-specific expenses
on Class B or Class C shares for which no initial sales charge is paid. Because
of the effect of class-based expenses, your choice should also depend on how
much you plan to invest.
INVESTING FOR THE SHORT TERM. If you have a short-term investment horizon (that
is, you plan to hold your shares for not more than six years), you should
probably consider purchasing Class A or Class C shares rather than Class B
shares. This is because of the effect of the Class B CDSC if you redeem before
the sixth anniversary of your purchase, as well as the effect of the Class B
distribution fee on the investment return for that class in the short term.
Class C shares might be the appropriate choice (especially for investments of
less than $100,000), because there is no initial sales charge on Class C shares,
and the CDSC does not apply to amounts you redeem after holding them one year.
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<PAGE>
However, if you plan to invest more than $100,000 for the short term, then the
more you invest and the more your investment horizon increases toward six years,
the more attractive the Class A share option may become. This is because the
annual distribution fee on Class C shares will have a greater impact on your
account over the longer term than the reduced front-end sales charge available
for larger purchases of Class A shares. For example, Class A might be more
appropriate than Class C for investments of more than $100,000 expected to be
held for 5 or 6 years (or more). For investments over $250,000 expected to be
held 4 to 6 years (or more), Class A shares may become more appropriate than
Class C. If you are investing $500,000 or more, Class A may become more
desirable as your investment horizon approaches 3 years or more.
For most investors who invest $1 million or more or for Retirement Plans with at
least 100 eligible employees or for investments pursuant to a special retirement
wrap program, in most cases Class A shares will be the most advantageous choice,
no matter how long you intend to hold your shares. For that reason, it may not
be suitable for you to place a purchase order for Class B shares of $500,000 or
more or a purchase order for Class C shares of $1,000,000 or more. In addition,
it may not be suitable for you to place an order for Class B or C shares for a
Retirement Plan with at least 100 eligible employees or for a special retirement
wrap program. You should discuss this with your financial advisor.
INVESTING FOR THE LONGER TERM. If you are investing for the longer term (for
example, to provide for future college expenses for your child) and do not
expect to need access to your money for seven years or more, Class B shares may
be an appropriate investment option, if you plan to invest less than $100,000.
If you plan to invest more than $100,000 over the long term, Class A shares will
likely be more advantageous than Class B shares or Class C shares, as discussed
above, because of the effect of the expected lower expenses for Class A shares
and the reduced initial sales charges available for larger investments in Class
A shares under the Fund's Rights of Accumulation.
Of course, these examples are based on approximations of the effect of current
sales charges and expenses on a hypothetical investment over time, and should
not be relied on as rigid guidelines.
ARE THERE DIFFERENCES IN ACCOUNT FEATURES THAT MATTER TO YOU? Some account
features are available in whole or in part to Class A, Class B and Class C
shareholders. Other features (such as Systematic Withdrawal Plans) might not be
advisable in non-Retirement Plan accounts for Class B shareholders (because of
the effect of the CDSC on the entire amount of a withdrawal if it exceeds 12%
annually) and in any account for Class C shareholders during the first year of
share ownership (due to the CDSC on withdrawals during that year). See
"Systematic Withdrawal Plan" under "Shareholder Services" in the Prospectus for
more information about the 12% annual waiver of the CDSC. You should carefully
review how you plan to use your investment account before deciding which class
of shares you buy. For example, the dividends payable to Class B and Class C
shareholders will be reduced by the expenses borne solely by each of these
classes, such as the higher distribution fee to which Class B and Class C shares
are subject, as described below.
HOW DOES IT AFFECT PAYMENTS TO MY BROKER? A salesperson, such as a broker, or
any other person who is entitled to receive compensation for selling Fund shares
may receive different compensation for selling one class than for selling
another class. As discussed in more detail below, such compensation is primarily
paid at the time of sale in the case of Class A and B shares and is paid over
time, so long as shares remain outstanding, in the case of Class C shares. It is
important that investors understand that the primary purpose of the CDSC for the
Class B shares and the distribution fee for Class B and Class C shares is the
same as the purpose of the front-end sales charge on sales of Class A shares: to
compensate brokers and other persons selling such shares. The CDSC, if payable,
supplements the Class B distribution fee and reduces the Class C distribution
fee expenses for the Fund and Class C shareholders.
Class A, B, C and P Rule 12b-1 Plans. As described in the Prospectus, the Fund
has adopted a Distribution Plan and Agreement pursuant to Rule 12b-1 of the Act
for four Fund Classes: the "A Plan," the "B Plan," the "C Plan," and the "P
Plan," respectively. In adopting each Plan and in approving its continuance, the
Board of Trustees has concluded that there is a reasonable likelihood that each
Plan will benefit its respective Class and such Class' shareholders. The
expected benefits include greater sales and lower redemptions of Class shares,
which should allow each Class to maintain a consistent cash flow, and a higher
quality of service to shareholders by authorized institutions than would
otherwise be the case. Lord Abbett uses amounts received under each Plan as
described in the Prospectus and for payments to dealers for (i) providing
continuous services to shareholders, such as answering shareholder inquiries,
13
<PAGE>
maintaining records, and assisting shareholders in making redemptions,
transfers, additional purchases and exchanges and (ii) their assistance in
distributing shares of the Fund.
Each Plan requires the trustees to review, on a quarterly basis, written reports
of all amounts expended pursuant to the Plan and the purposes for which such
expenditures were made. Each Plan shall continue in effect only if its
continuance is specifically approved at least annually by vote of the trustees,
including a majority of the trustees who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related to the Plan ("outside trustees"), cast in
person at a meeting called for the purpose of voting on the Plan. No Plan may be
amended to increase materially above the limits set forth therein the amount
spent for distribution expenses thereunder without approval by a majority of the
outstanding voting securities of the applicable class and the approval of a
majority of the trustees, including a majority of the outside trustees. Each
Plan may be terminated at any time by vote of a majority of the outside trustees
or by vote of a majority of its Class's outstanding voting securities.
CONTINGENT DEFERRED SALES CHARGES. A Contingent Deferred Sales Charge ("CDSC")
(i) applies regardless of class, (ii) will not apply to shares purchased by the
reinvestment of dividends or capital gains distributions; (iii) will be assessed
on the lesser of the net asset value of the shares at the time of redemption or
the original purchase price and (iv) will not be imposed on the amount of your
account value represented by the increase in net asset value over the initial
purchase price (including increases due to the reinvestment of dividends and
capital gains distributions) 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 net asset
value exceeded the initial purchase price.
CLASS A SHARES. As stated in the Prospectus, subject to certain exceptions, a
CDSC of 1% is imposed with respect to those Class A shares (or Class A shares of
another Lord Abbett-sponsored fund or series acquired through exchange of such
shares) on which the Fund has paid the one-time distribution fee of 1% if such
shares are redeemed out of the Lord Abbett-sponsored family of funds within a
period of 24 months from the end of the month in which the original sale
occurred.
CLASS B SHARES. As stated in the Prospectus, subject to certain exceptions, if
Class B shares (or Class B shares of another Lord Abbett-sponsored fund or
series acquired through exchange of such shares) are redeemed out of the Lord
Abbett-sponsored family of funds for cash before the sixth anniversary of their
purchase, a CDSC will be deducted from the redemption proceeds. The Class B CDSC
is paid to Lord Abbett Distributor to reimburse its expenses, in whole or in
part, for providing distribution-related service to the Fund in connection with
the sale of Class B shares.
To determine whether the CDSC applies to a redemption, the Fund redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held on or after the sixth anniversary
of their purchase, and (3) shares held the longest before such sixth
anniversary.
The amount of the contingent deferred sales charge will depend on the number of
years since you invested and the dollar amount being redeemed, according to the
following schedule:
Anniversary of the Day on Contingent Deferred Sales Charge
Which the Purchase Order Was Accepted on Redemptions (As % of Amount
Subject to Charge)
Before the 1st 5.0%
On the 1st, before the 2nd 4.0%
On the 2nd, before the 3rd 3.0%
On the 3rd, before the 4th 3.0%
On the 4th, before the 5th 2.0%
On the 5th, before the 6th 1.0%
On or after the 6th anniversary None
In the table, an "anniversary" is the 365th day subsequent to the acceptance of
a purchase order or a prior anniversary. All purchases are considered to have
been made on the business day on which the purchase order was accepted.
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CLASS C SHARES. As stated in the Prospectus, subject to certain exceptions if
Class C shares are redeemed for cash before the first anniversary of their
purchase, the redeeming shareholder normally will be required to pay to the Fund
on behalf of Class C shares a CDSC of 1% of the lower of cost or the then net
asset value of Class C shares redeemed. If such shares are exchanged into the
same class of another Lord Abbett-sponsored fund and subsequently redeemed
before the first anniversary of their original purchase, the charge will be
collected by the other fund on behalf of this Fund's Class C shares.
GENERAL. The percentage (1% in the case of Class A and C shares and 5% through
1% in the case of Class B shares) used to calculate CDSCs described above for
the Class A, Class B and Class C shares is sometimes hereinafter referred to as
the "Applicable Percentage."
With respect to Class A and Class B shares, no CDSC is payable on redemptions by
participants or beneficiaries from employer-sponsored retirement plans under the
Internal Revenue Code for benefit payments due to plan loans, hardship
withdrawals, death, retirement or separation from service and for returns of
excess contributions to retirement plan sponsors. With respect to Class A shares
purchased pursuant to a special retirement wrap program, no CDSC is payable on
redemptions which continue as investments in another fund participating in the
program. 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 mandatory distribution under
403(b) plans and IRAs and (iii) in connection with death of the shareholder. In
the case of Class A and Class C shares, the CDSC is received by the Fund and is
intended to reimburse all or a portion of the amount paid by the Fund if the
shares are redeemed before the Fund has had an opportunity to realize the
anticipated benefits of having a long-term shareholder account in the Fund. In
the case of Class B shares, the CDSC is received by Lord Abbett Distributor and
is intended to reimburse its expenses of providing distribution-related service
to the Fund (including recoupment of the commission payments made) in connection
with the sale of Class B shares before Lord Abbett Distributor has had an
opportunity to realize its anticipated reimbursement by having such a long-term
shareholder account subject to the B Plan distribution fee.
The other funds and series which participate in the Telephone Exchange Privilege
(except (a) Lord Abbett U.S. Government Securities Money Market Fund, Inc.
("GSMMF"), (b) certain series of Lord Abbett Tax-Free Income Fund and Lord
Abbett Tax-Free Income Trust for which a Rule 12b-1 Plan is not yet in effect,
and (c) any authorized institution's affiliated money market fund satisfying
Lord Abbett Distributor as to certain omnibus account and other criteria,
hereinafter referred to as an "authorized money market fund" or "AMMF"
(collectively, the "Non-12b-1 Funds")) have instituted a CDSC for each class on
the same terms and conditions. No CDSC will be charged on an exchange of shares
of the same class between Lord Abbett funds or between such funds and AMMF. Upon
redemption of shares out of the Lord Abbett family of funds or out of AMMF, the
CDSC will be charged on behalf of and paid: (i) to the fund in which the
original purchase (subject to a CDSC) occurred, in the case of the Class A and
Class C shares and (ii) to Lord Abbett Distributor if the original purchase was
subject to a CDSC, in the case of the Class B shares. Thus, if shares of a Lord
Abbett fund are exchanged for shares of the same class of another such fund and
the shares of the same class tendered ("Exchanged Shares") are subject to a
CDSC, the CDSC will carry over to the shares of the same class being acquired,
including GSMMF and AMMF ("Acquired Shares"). Any CDSC that is carried over to
Acquired Shares is calculated as if the holder of the Acquired Shares had held
those shares from the date on which he or she became the holder of the Exchanged
Shares. Although the Non-12b-1 Funds will not pay a distribution fee on their
own shares, and will, therefore, not impose their own CDSC, the Non-12b-1 Funds
will collect the CDSC (a) on behalf of other Lord Abbett funds, in the case of
the Class A and Class C shares and (b) on behalf of Lord Abbett Distributor, in
the case of the Class B shares. Acquired Shares held in GSMMF and AMMF which are
subject to a CDSC will be credited with the time such shares are held in GSMMF
but will not be credited with the time such shares are held in AMMF. Therefore,
if your Acquired Shares held in AMMF qualified for no CDSC or a lower Applicable
Percentage at the time of exchange into AMMF, that Applicable Percentage will
apply to redemptions for cash from AMMF, regardless of the time you have held
Acquired Shares in AMMF.
In no event will the amount of the CDSC exceed the Applicable Percentage of the
lesser of (i) the net asset value of the shares redeemed or (ii) the original
cost of such shares (or of the Exchanged Shares for which such shares were
acquired). No CDSC will be imposed when the investor redeems (i) shares
representing an aggregate dollar amount of your 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
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in net asset value, (iii) shares with respect to which no Lord Abbett 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 which, together
with Exchanged Shares, have been held continuously for 24 months from the end of
the month in which the original sale occurred (in the case of Class A shares);
for six years or more (in the case of Class B shares) and for one year or more
(in the case of Class C shares). In determining whether a CDSC is payable, (a)
shares not subject to the CDSC will be redeemed before shares subject to the
CDSC and (b) of the shares subject to a CDSC, those held the longest will be the
first to be redeemed.
EXCHANGES. The Prospectus briefly describes the Telephone Exchange Privilege.
You may exchange some or all of your shares of any class for those in the same
class of: (i) Lord Abbett-sponsored funds currently offered to the public with a
sales charge (front-end, back-end or level ), (ii) GSMMF or (iii) AMMF, to the
extent offers and sales may be made in your state. You should read the
prospectus of the other fund before exchanging. In establishing a new account by
exchange, shares of the 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.
Shareholders in other Lord Abbett-sponsored funds and AMMF have the same right
to exchange their shares for the corresponding class of the Fund's shares.
Exchanges are based on relative net asset values on the day instructions are
received by the Fund in Kansas City if the instructions are received prior to
the close of the NYSE in proper form. No sales charges are imposed except in the
case of exchanges out of GSMMF or AMMF (unless a sales charge (front-end,
back-end or level) was paid on the initial investment in a Lord Abbett-sponsored
fund). Exercise of the exchange privilege will be treated as a sale for federal
income tax purposes, and, depending on the circumstances, a gain or loss may be
recognized. In the case of an exchange of shares that have been held for 90 days
or less where no sales charge is payable on the exchange, the original sales
charge incurred with respect to the exchanged shares will be taken into account
in determining gain or loss on the exchange only to the extent such charge
exceeds the sales charge that would have been payable on the acquired shares had
they been acquired for cash rather than by exchange. The portion of the original
sales charge not so taken into account will increase the basis of the acquired
shares.
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as a means for taking advantage of
short-term swings in the market, and we reserve the right to terminate or limit
the privilege of any shareholder who makes frequent exchanges. We can revoke or
modify the privilege for all shareholders upon 60 days' prior notice. "Eligible
Funds" are AMMF and other Lord Abbett-sponsored funds which are eligible for the
exchange privilege, except Lord Abbett Series Fund ("LASF") which offers its
shares only in connection with certain variable annuity contracts and Lord
Abbett Equity Fund ("LAEF") which is not issuing shares.
STATEMENT OF INTENTION. Under the terms of the Statement of Intention as
described in the Prospectus you may invest $100,000 or more over a 13-month
period in shares of a Lord Abbett-sponsored fund (other than shares of LAEF,
LASF, LARF, GSMMF and AMMF, unless holdings in GSMMF and AMMF are attributable
to shares exchanged from a Lord Abbett-sponsored fund offered with a front-end,
back-end or level sales charge). Shares currently owned by you are credited as
purchases (at their current offering prices on the date the Statement is signed)
toward achieving the stated investment and reduced initial sales charge for
Class A shares. Class A shares valued at 5% of the amount of intended purchases
are escrowed and may be redeemed to cover the additional sales charge payable if
the Statement of Intention is not completed. The Statement of Intention is
neither a binding obligation on you to buy, nor on the Fund to sell, the full
amount indicated.
RIGHTS OF ACCUMULATION. As stated in the Prospectus, purchasers (as defined in
the Prospectus) may accumulate their investment in Lord Abbett-sponsored funds
(other than LAEF, LARF, LASF, GSMMF, and AMMF unless holdings in GSMMF or AMMF
are attributable to shares exchanged from a Lord Abbett-sponsored fund offered
with a front-end, back-end or level sales charge) so that a current investment,
plus the purchaser's holdings valued at the current maximum offering price,
reach a level eligible for a discounted sales charge for Class A shares.
NET ASSET VALUE PURCHASES OF CLASS A SHARES. As stated in the Prospectus, our
Class A shares may be purchased at net asset value by our trustees, employees of
Lord Abbett, employees of our shareholder servicing agent and employees of any
securities dealer having a sales agreement with Lord Abbett who consents to such
purchases or by the director or custodian under any pension or profit-sharing
plan or Payroll Deduction IRA established for the benefit of such
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persons or for the benefit of employees of any national securities trade
organization to which Lord Abbett belongs or any company with an account(s) in
excess of $10 million managed by Lord Abbett on a private-advisory-account
basis. For purposes of this paragraph, the terms "directors" and "employees"
include a director's or employee's spouse (including the surviving spouse of a
deceased director or employee). The terms "our directors" and "employees of Lord
Abbett" also include retired directors and employees and other family members
thereof.
Our Class A shares also may be purchased at net asset value (a) at $1 million or
more, (b) with dividends and distributions from Class A shares of other Lord
Abbett-sponsored funds, except for LARF, LAEF and LASF, (c) under the loan
feature of the Lord Abbett-sponsored prototype 403(b) plan for share purchases
representing the repayment of principal and interest, (d) by certain authorized
brokers, dealers, registered investment advisers or other financial institutions
who have entered into an agreement with Lord Abbett Distributor in accordance
with certain standards approved by Lord Abbett Distributor, providing
specifically for the use of our shares in particular investment products made
available for a fee to clients of such brokers, dealers, registered investment
advisers and other financial institutions, ("mutual fund wrap fee program"), (e)
by employees, partners and owners of unaffiliated consultants and advisors to
Lord Abbett, Lord Abbett Distributor or Lord Abbett-sponsored funds who consent
to such purchase if such persons provide service to Lord Abbett, Lord Abbett
Distributor or such funds on a continuing basis and are familiar with such
funds, (f) through Retirement Plans with at least 100 eligible employees, (g) in
connection with a merger, acquisition or other reorganization (h) through a
"special retirement wrap program" sponsored by an authorized institution having
one or more characteristics distinguishing it, in the opinion of Lord Abbett
Distributor, from a mutual fund wrap program. Such characteristics include,
among other things, the fact that an authorized institution does not charge its
clients any fee of a consulting or advisory nature that is economically
equivalent to the distribution fee under Class A 12b-1 Plan and the fact that
the program relates to participant-directed Retirement Plan. Shares are offered
at net asset value to these investors for the purpose of promoting goodwill with
employees and others with whom Lord Abbett Distributor and/or the Fund has
business relationships.
REDEMPTIONS. A redemption order is in proper form when it contains all of the
information and documentation required by the order form or supplementally by
Lord Abbett Distributor or the Fund to carry out the order. The signature(s) and
any legal capacity of the signer(s) must be guaranteed by an eligible guarantor.
See the Prospectus for expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Trustees may authorize redemption of all of the shares in any
account in which there are fewer than 25 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least 6 months' 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 be either your account,
a joint account for you and your spouse, a single account for your spouse, or a
custodial account for your minor child under the age of 21. You should read the
prospectus of the other fund before investing.
INVEST-A-MATIC. The Invest-A-Matic method of investing in the Fund and/or any
other Eligible Fund is described in the Prospectus. To avail yourself of this
method you must complete the application form, selecting the time and amount of
your bank checking account withdrawals and the funds for investment, include a
voided, unsigned check and complete the bank authorization.
SYSTEMATIC WITHDRAWAL PLANS. The Systematic Withdrawal Plan ("SWP") also is
described in the Prospectus. You may establish a SWP if you own or purchase
uncertificated shares having a current offering price value of at least $10,000.
Lord Abbett prototype retirement plans have no such minimum. With respect to
Class B shares the CDSC will be waived on redemptions of up to 12% per year of
the current net asset value of your account at the time the SWP is
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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. Since the
value of shares redeemed may be more or less than their cost, gain or loss may
be recognized for income tax purposes on each periodic payment. Normally, you
may not make regular investments at the same time you are receiving systematic
withdrawal payments because it is not in your interest to pay a sales charge on
new investments when in effect a portion of that new investment is soon
withdrawn. The minimum investment accepted while a withdrawal plan is in effect
is $1,000. The SWP may be terminated by you or by us at any time by written
notice.
RETIREMENT PLANS. The Prospectus indicates the types of retirement plans for
which Lord Abbett provides forms and explanations. Lord Abbett makes available
the retirement plan forms 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 Investors Fiduciary 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 adviser.
6.
Performance
The Fund computes the average annual compounded rate of total return for each
class during specified periods that would equate the initial amount invested to
the ending redeemable value of such investment by adding one to the computed
average annual total return, raising the sum to a power equal to the number of
years covered by the computation and multiplying the result by one thousand
dollars which represents a hypothetical initial investment. The calculation
assumes deduction of the maximum sales charge (as described in the next
paragraph) from the amount invested and reinvestment of all income dividends and
capital gains distributions on the reinvestment dates at prices calculated as
stated in the Prospectus. The ending redeemable value is determined by assuming
a complete redemption at the end of the period covered by the average annual
total return computation.
In calculating total returns for Class A shares, the current maximum sales
charge of 5.75% (as a percentage of the offering price) is deducted from the
initial investment (unless the return is shown at net asset value). For Class B
shares, the payment of the applicable CDSC (5.0% prior to the first anniversary
of purchase, 4.0% prior to the second anniversary of purchase, 3.0% prior to the
third and fourth anniversaries of purchase, 2.0% prior to the fifth anniversary
of purchase, 1.0% prior to the sixth anniversary of purchase and no CDSC on and
after the sixth anniversary of purchase) is applied to the Fund's investment
result for that class for the time period shown (unless the total return is
shown at net asset value). For Class C shares, the 1.0% CDSC is applied to the
Fund's investment result for that class for the time period shown prior to the
first anniversary of purchase (unless the total return is shown at net asset
value). Total returns also assume that all dividends and capital gains
distributions during the period are reinvested at net asset value per share, and
that the investment is redeemed at the end of the period.
Yield quotation for each Class is based on a 30-day period ended on a specified
date, computed by dividing our net investment income per share earned during the
period by the maximum offering price per share of such Class on the last day of
the period. This is determined by finding the following quotient: take the
Class' dividends and interest earned during the period minus its expenses
accrued for the period and divide by the product of (i) the average daily number
of shares of such Class outstanding during the period that were entitled to
receive dividends and (ii) the maximum offering price per share of such Class on
the last day of the period. To this quotient add one. This sum is multiplied by
itself five times. Then one is subtracted from the product of this
multiplication and the remainder is multiplied by two. Yield for the Class A
shares reflects the deduction of the maximum initial sales charge, but may also
be shown based on the Fund's net asset value per share. Yields for Class B and C
shares do not reflect the deduction of the CDSC.
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7.
Taxes
The Fund intends to elect and to qualify for special tax treatment afforded
regulated investment companies under the Internal Revenue Code of 1986 (the
"Code"). If it so qualifies, the Fund (but not its shareholders) will be
relieved of federal income taxes on the amount it distributes to shareholders.
If in any taxable year the Fund does not qualify as a regulated investment
company, all of its taxable income will be taxed to the Fund at regular
corporate rates.
The Fund contemplates declaring as dividends substantially all of its net
investment income. Dividends paid by the Fund from its investment income and
distributions of its net realized short-term capital gains are taxable to
shareholders as ordinary income or capital gain, whether received in cash or
reinvested in additional shares of the Fund. The Fund will send each shareholder
annual information concerning the tax treatment of dividends and other
distributions.
Upon sale, exchange or redemption of shares of the Fund, a shareholder will
recognize short- or long-term capital gain or loss, depending upon the
shareholder's holding period in the Fund's shares. However, if a shareholder's
holding period in his shares is six months or less, any capital loss realized
from a sale or exchange of such shares must be treated as long-term capital loss
to the extent of dividends classified as "capital gains dividends" received with
respect to such shares. The maximum tax rates applicable to net capital gains
recognized by individuals and other non-corporate taxpayers are (i) the same as
ordinary income rates for capital assets held for one year or less and (ii) 20%
for capital assets held for more than one year. Capital gains or losses
recognized by corporate shareholders are subject to tax at the ordinary income
tax rates applicable to corporations.
Losses on the sale of shares are not deductible if, within a period beginning 30
days before the date of the sale and ending 30 days after the date of the sale,
the taxpayer acquires shares that are substantially identical.
Some shareholders may be subject to a 31% withholding tax on reportable
dividends, capital gains distributions and redemption payments ("backup
withholding"). Generally, shareholders subject to backup withholding will be
those for whom a certified taxpayer identification number is not on file with
the Fund or who, to the Fund's knowledge, have furnished an incorrect number.
When establishing an account, an investor must certify under penalties of
perjury that such number is correct and that he is not otherwise subject to
backup withholding.
The writing of call options and other investment techniques and practices which
the Fund may utilize may affect the character and timing of the recognition of
gains and losses. Such transactions may increase the amount of short-term
capital gain realized by the Fund, which is taxed as ordinary income when
distributed to shareholders.
The Fund may be subject to foreign withholding taxes, which would reduce the
yield on its investments. It is generally expected that Fund shareholders who
are subject to U.S. federal income tax will not be entitled to claim a federal
income tax credit or deduction for foreign income taxes paid by the Fund.
The Fund will also be subject to a 4% non-deductible excise tax on certain
amounts not distributed or treated as having been distributed on a timely basis
each calendar year. The Fund intends to distribute to shareholders each year an
amount adequate to avoid the imposition of such excise tax.
Dividends paid by the Fund will qualify for the dividends-received deduction for
corporations to the extent they are derived from dividends paid by domestic
corporations. Corporate shareholders must have held their shares in the Fund for
more than 45 days to qualify for the deduction on dividends paid by the Fund.
Gain and loss realized by the Fund on certain transactions, including sales of
foreign debt securities and certain transactions involving foreign currency,
will be treated as ordinary income or loss for federal income tax purposes to
the extent, if any, that such gain or loss is attributable to changes in
exchange rates for foreign currencies. Accordingly, distributions taxable as
ordinary income will include the net amount, if any, of such foreign exchange
gain and will be reduced by the net amount, if any, of such foreign exchange
loss.
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If the Fund purchases shares in certain foreign investment entities called
"passive foreign investment companies," the Fund may be subject to U.S. federal
income tax on a portion of any "excess distribution" or gain from the
disposition of such shares, even if such income is distributed as a taxable
dividend by the Fund to its shareholders. Additional charges in the nature of
interest may be imposed on either the Fund or its shareholders in respect of
deferred taxes arising from such distributions or gains. If the Fund were to
make a "qualified electing fund" election with respect to its investment in a
passive foreign investment company, in lieu of the foregoing requirements, the
Fund might be required to include in income each year a portion of the ordinary
earnings and net capital gains of the qualified electing fund, even if such
amount were not distributed to the Fund.
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to U.S. persons (U.S. citizens or residents and United States
domestic corporations, partnerships, trusts and estates). Each shareholder who
is not a U.S. person should consult his tax adviser regarding the U.S. and
foreign tax consequences of the ownership of shares of a Fund, including the
applicable rate of U.S. withholding tax on dividends representing ordinary
income and net short-term capital gains, and the applicability of U.S. gift and
estate taxes.
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8.
Information About the Company
The Company was formed as a business trust under Delaware law on September 29,
1999. The Company offers five classes of shares: Class A, Class B, Class C,
Class P, and Class Y. Only the Fund's Classes A, B, C and P are offered in this
Statement of Additional Information. All shares have equal noncumulative voting
rights and equal rights with respect to dividends, assets and liquidation,
except for certain class-specific expenses. They are fully paid and
nonassessable when issued and have no preemptive or conversion rights.
Additional classes or funds may be added in the future. The Act requires that
where more than one class or fund exists, each class or fund must be preferred
over all other classes or funds in respect of assets specifically allocated to
such class or fund.
Rule 18f-2 under the Act provides that any matter required to be submitted, by
the provisions of the Act or applicable state law, or otherwise, to the holders
of the outstanding voting securities of an investment company such as the
Company shall not be deemed to have been effectively acted upon unless approved
by the holders of a majority of the outstanding shares of each class affected by
such matter. Rule 18f-2 further provides that a class shall be deemed to be
affected by a matter unless the interests of each class or fund in the matter
are substantially identical or the matter does not affect any interest of such
class or fund. However, the Rule exempts the selection of independent public
accountants, the approval of a contract with a principal underwriter and the
election of trustees from the separate voting requirements.
The Company does not hold annual meetings of shareholders unless one or more
matters are required to be acted on by shareholders under the Act. Under the
Company's Declaration of Trust, shareholder meetings may be called at any time
by certain officers of the Company or by a majority of the trustees (i) for the
purpose of taking action upon any matter requiring the vote or authority of the
Company's shareholders or upon other matters deemed to be necessary or desirable
or (ii) upon the written request of the holders of at least one-quarter of the
shares of the Company's outstanding and entitled to vote at the meeting.
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment accounts. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Fund's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security 7 days
before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account
considers a trade or trades in such security, prohibiting profiting on trades of
the same security within 60 days and trading on material and non-public
information. The Code imposes certain similar requirements and restrictions on
the independent directors and trustees of each Lord Abbett-sponsored mutual fund
to the extent contemplated by the recommendations of such Advisory Group.
9.
Financial Statements
The Statement of Net Assets at December 14, 1999 and the report of Deloitte &
Touche LLP, independent auditors, on such statements are attached hereto.
21
<PAGE>
LORD ABBETT LARGE-CAP GROWTH FUND
STATEMENT OF NET ASSETS
December 14, 1999
<TABLE>
<CAPTION>
Assets:
<S> <C>
Cash $ 100,000
Prepaid offering costs (3).............................................................. 3,000
-------
Total Assets............................................................................$ 103,000
=======
Liabilities:
Liabilities and accrued expenses 3,000
-------
Net Assets:.............................................................................$ 100,000
Net Assets Consist of:
Class A Shares of beneficial interest, $0.00 par value,
100,000,000 shares authorized........................................................$ 0.00
Class B Shares of beneficial interest, $0.00 par value,
100,000,000 shares authorized........................................................ 0.00
Class C Shares of beneficial interest, $0.00 par value,
100,000,000 shares authorized........................................................ 0.00
Class P Shares of beneficial interest, $0.00 par value,
100,000,000 shares authorized........................................................ 0.00
Class Y Shares of beneficial interest, $0.00 par value,
100,000,000 shares authorized........................................................ 0.00
Paid-in Capital in excess of par........................................................ 100,000
-------
Net Assets:.............................................................................$ 100,000
=======
Net Asset Value:
Class A - Based on net assets of $ 96,000 and 9,600 shares outstanding $ 10.00
=====
Class B - Based on net assets of $ 1,000 and 100 shares outstanding.....................$ 10.00
=====
Class C - Based on net assets of $ 1,000 and 100 shares outstanding.....................$ 10.00
=====
Class P - Based on net assets of $ 1,000 and 100 shares outstanding.....................$ 10.00
=====
Class Y - Based on net assets of $ 1,000 and 100 shares outstanding.....................$ 10.00
=====
</TABLE>
Notes to Financial Statements
(1) Lord Abbett Large-Cap Growth Fund (the "Fund") was organized as a Delaware
business trust on September 29, 1999 and is registered under the Investment
Company Act of 1940. To date, the Fund
22
<PAGE>
has not had any transactions other than those relating to organizational
matters and the sale of Class A, Class B, Class C, Class P and Class Y
shares to Lord, Abbett & Co. ("LA").
(2) The Fund has entered into an investment advisory agreement with LA and a
distribution agreement with Lord, Abbett Distributor, LLC (the
"Distributor"). (See "Management of the Funds - Management and Advisory
Arrangements" in the Statement of Additional Information.)
(3) Prepaid offering cost consist of legal fees related to preparing the
initial registration statement, and will be amortized over a 12 month
period beginning with the commencement of operations of the Fund. The
Investment Adviser has agreed to bear all the costs of organizing the Fund,
estimated to be $13,200.
<PAGE>
LORD ABBETT
LARGE-CAP GROWTH FUND
CLASS Y SHARES
PROSPECTUS
December 30, 1999
[LOGO]
LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of
this prospectus. Any representation to the contrary is a criminal offense.
Class Y shares of the Fund are neither offered to the general public nor
are available in all states. Please call 800-821-5129 for further
information.
<PAGE>
TABLE OF CONTENTS
The Fund
What you should know about the Fund
Goal/Principal Strategy 2
Main Risks 2
Performance 3
Fees and Expenses
Your Investment
Information for managing your Fund account
Purchases 4
Redemptions 5
Distributions and Taxes 5
Services For Fund Investors 6
Management 6
For More Information
How to learn more about the Fund
Other Investment Techniques 8
Glossary of Shaded Terms 9
How to learn more about the Fund
and other Lord Abbett funds
Back Cover
<PAGE>
The Fund
GOAL/PRINCIPAL STRATEGY
The Fund's investment objective is long-term capital growth.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in equity securities of large, established companies with market
capitalizations of at least $8 billion. To identify attractive companies
for investment, the Fund uses a "bottom up" investment research approach
that seeks to identify individual companies with expected earnings growth
potential and consistency that may not be recognized by the market at
large. This approach is based on the following steps:
o We identify large-capitalization companies with at least a 10%
consistent, sustainable growth rate;
o We focus on those companies demonstrating a positive historical
performance as well as favorable earnings prospects for the future;
o We focus on companies also demonstrating successful strategic business
plan selection, strategy and execution, reflecting strong management
leadership; and
o We focus on companies demonstrating leadership positions within their
industries.
The fund maintains a long-term investment approach, generally expecting to
hold stocks for an average of over three years. This strategy supports our
style of reaping the rewards of successful, well-run companies and
investing in seasoned managements for the long term. The Fund may take a
temporary defensive position by investing some of its assets, most likely
not more than 30%, in short-term debt securities. This could reduce the
benefit from any upswing in the market and prevent the Fund from achieving
its investment objective.
MAIN RISKS
The Fund is subject to the general risks and considerations associated with
equity investing, as well as the particular risks associated with growth
stocks. The value of your investment will fluctuate in response to
movements in the stock market in general and to the changing prospects of
individual companies in which the Fund invests. Growth stocks may grow
faster than other stocks and may be more volatile. In addition, if the
Fund's assessment of a company's potential for growth is wrong, the price
of the company's stock may decrease below the price at which the Fund
purchased the stock. An investment in the Fund is not a bank deposit and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. The Fund is not a complete investment program
and may not be appropriate for all investors. You could lose money by
investing in the Fund.
WE OR THE FUND refers to the Lord Abbett Large-Cap Growth Fund.
About the Fund. The Fund is a professionally managed portfolio primarily holding
securities purchased with the pooled money of investors. It strives to reach its
stated goal, although as with all mutual funds, it cannot guarantee results.
LARGE COMPANIES are established companies that are considered "known
quantities." Large companies often have the resources to weather economic shifts
although they can be slower to innovate than small companies. Bottom-up research
looks for high-performing stocks of individual companies before considering the
impact of economic trends. Companies might be identified from investment
research analysis or personal knowledge of their products and services. This
approach considers that a company can do well even if it is part of an industry
that, as a whole, is not performing well.
BOTTOM-UP RESEARCH looks for high-performing stocks of individual companies
before considering the impact of economic trends. Companies might be
identified from investment research analysis or personal knowledge of their
products and services. This approach considers that a company can do well
even if it is part of an industry that, as a whole, is not performing well.
You should read this entire prospectus, including "Other Investment
Techniques," which concisely describes the other investment strategies used by
the Fund and their risks.
2 The Fund
<PAGE>
PERFORMANCE
The Fund does not show any performance because it has not completed a full
calendar year of operations.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
- --------------------------------------------------------------------------------
Fee Table
- --------------------------------------------------------------------------------
Class Y
Shareholder Fees (Fees paid directly from your investment)
Maximum Sales Charge on Purchases (as a % of offering price) none
Maximum Deferred Sales Charge none
Annual Fund Operating Expenses (Expenses deducted from Fund assets)
(as a % of average net assets)(1)
Management Fees (See "Management") 0.75%
Other Expenses 0.35%
Total Annual Fund Operating Expenses 1.10%
(1) The annual operating expenses are based on estimated expenses for the
current fiscal year.
- --------------------------------------------------------------------------------
Example
- --------------------------------------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. This Example, like that in
other funds' prospectuses, assumes that you invest $10,000 in the Fund for the
time periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
SHARE CLASS 1 YEAR 3 YEARS
Class Y shares $112 $350
- --------------------------------------------------------------------------------
Management fees are payable to Lord, Abbett & Co. ("Lord Abbett") for the Fund's
investment management.
Other expenses include fees paid for miscellaneous items such as shareholder
service fees and professional fees.
The Fund 3
<PAGE>
Your Investment
PURCHASES
CLASS Y SHARES. You may purchase Class Y shares at the net asset value
("NAV") per share next determined after we receive and accept your purchase
order submitted in proper form. No sales charges apply.
We reserve the right to withdraw all or part of the offering made by this
prospectus or to reject any purchase order. We also reserve the right to
waive or change minimum investment requirements. All purchase orders are
subject to our acceptance and are binding until confirmed or accepted in
writing.
WHO MAY INVEST? Eligible purchasers of class Y shares include: (1) certain
authorized brokers, dealers, registered investment advisers or other
financial institutions ("entities") who either (a) have an arrangement with
Lord Abbett Distributor in accordance with certain standards approved by
Lord Abbett Distributor, providing specifically for the use of our class Y
shares in particular investment products made available for a fee to
clients of such entities, or (b) charge an advisory, consulting or other
fee for their services and buy shares for their own accounts or the
accounts of their clients ("Mutual Fund Fee Based Programs"); (2) the
trustee or custodian under any deferred compensation or pension or
profit-sharing plan or payroll deduction IRA established for the benefit of
the employees of any company with an account(s) in excess of $10 million
managed by Lord Abbett or its sub-advisors on a private-advisory-account
basis; (3) institutional investors, such as retirement plans, companies,
foundations, trusts, endowments and other entities where the total amount
of potential investable assets exceeds $50 million that were not introduced
to Lord Abbett by persons associated with a broker or dealer primarily
involved in the retail security business. Additional payments may be made
by Lord Abbett out of its own resources with respect to certain of these
sales.
HOW MUCH MUST YOU INVEST? You may buy our shares through any independent
securities dealer having a sales agreement with Lord Abbett Distributor,
our exclusive selling agent. Place your order with your investment dealer
or send the money to the Fund (P.O. Box 419100, Kansas City, Missouri
64141). The minimum initial investment is $1 million except for Mutual Fund
Fee Based Programs, which have no minimum. This offering may be suspended,
changed or withdrawn by Lord Abbett Distributor which reserves the right to
reject any order.
BUYING SHARES THROUGH YOUR DEALER. Orders for shares received by the Fund
prior to the close of the NYSE, or received by dealers prior to such close
and received by Lord Abbett Distributor prior to the close of its business
day, will be confirmed at NAV effective at such NYSE close. Orders received
by dealers after the NYSE closes and received by Lord Abbett Distributor in
proper form prior to the close of its next business day are executed at the
NAV effective as of the close of the NYSE on that next business day. The
dealer is responsible for the timely transmission of orders to Lord Abbett
Distributor. A business day is a day on which the NYSE is open for trading.
BUYING SHARES BY WIRE. To open an account, call 800-821-5129 Ext. 34028,
Institutional Trade Dept., to set up your account and to arrange a wire
transaction. Wire to: United Missouri Bank of Kansas City, N.A., Routing
number - 101000695, bank account number: 9878002611, FBO: (account name)
and (your Lord Abbett account number). Specify the complete name of the
Fund, note Class Y shares and include your new account number
NAV per share for each class of Fund shares is calculated each business day at
the close of regular trading on the New York Stock Exchange ("NYSE"), normally
4:00 p.m. Eastern time. Purchases and sales of Fund shares are executed at the
NAV next determined after the Fund receives your order in proper form.In
calculating NAV, securities for which market quotations are available are valued
at those quotations. Securities for which such quotations are not available are
valued at fair value under procedures approved by the Board.
LORD ABBETT DISTRIBUTOR LLC ("Lord Abbett Distributor") acts as agent for the
Fund to work with investment professionals that buy and/or sell shares of the
Fund on behalf of their clients. Generally, Lord Abbett Distributor does not
sell Fund shares directly to investors.
4 Your Investment
<PAGE>
and your name. To add to an existing account, wire to: United Missouri Bank
of Kansas City, N.A., routing number - 101000695, bank account number:
9878002611, FBO: (account name) and (your Lord Abbett account number).
Specify the complete name of the Fund, note Class Y shares and include your
account number and your name.
EXCHANGE LIMITATIONS. Exchanges should not be used to try to take
advantage of short-term swings in the market. Frequent exchanges create
higher expenses for the Fund. Accordingly, the Fund reserves the right to
limit or terminate this privilege for any shareholder making frequent
exchanges or abusing the privilege. The Fund also may revoke the privilege
for all shareholders upon 60 days' written notice.
REDEMPTIONS
BY BROKER. Call your investment professional for directions on how to
redeem your shares.
BY TELEPHONE. To obtain the proceeds of a redemption of $50,000 or less
from your account, you or your representative can call the Fund at
800-821-5129.
BY MAIL. Submit a written redemption request indicating, the name(s) in
which the account is registered, the Fund's name, the class of shares, your
account number, and the dollar value or number of shares you wish to sell.
Include all necessary signatures. If the signer has any Legal Capacity, the
signature and capacity must be guaranteed by an Eligible Guarantor. Certain
other legal documentation may be required. For more information regarding
proper documentation call 800-821-5129.
Normally a check will be mailed to the name and address in which the
account is registered (or otherwise according to your instruction) within
three business days after receipt of your redemption request. Your account
balance must be sufficient to cover the amount being redeemed or your
redemption order will not be processed. Under unusual circumstances, the
fund may suspend redemptions, or postpone payment for more than seven days,
as permitted by federal securities laws.
BY WIRE. In order to receive funds by wire, our servicing agent must have
the wiring instructions on file. To verify that this feature is in place,
call 800-821-5129 Ext. 34028, Institutional Trading Dept. minimum wire:
$1,000. Your wire redemption request must be received by the Fund before
the close of the NYSE for money to be wired on the next business day.
DISTRIBUTIONS AND TAXES
The Fund normally pays its shareholders dividends from its net investment
income and distributes its net capital gains (if any) as "capital gains
distributions" on an annual basis. Your distributions will be reinvested in
the Fund unless you instruct the Fund to pay them to you in cash. The tax
status of distributions is the same for all shareholders regardless of how
long they have owned fund shares or whether distributions are reinvested or
paid in cash.
Except in tax-advantaged accounts, any sale, redemption or exchange of Fund
shares may be taxable to the shareholder.
Information on the tax treatment of distributions, including the source of
dividends and distributions of capital gains by the Fund, will be mailed to
shareholders each year. Because everyone's tax situation is unique, you
should consult your tax adviser regarding the treatment of distributions
under the federal, state and local tax rules that apply to you.
ELIGIBLE GUARANTOR is any broker or bank that is a member of the medallion stamp
program. Most major securities firms and banks are members of this program. A
NOTARY PUBLIC IS NOT AN ELIGIBLE GUARANTOR.
Your Investment 5
<PAGE>
SERVICES FOR FUND INVESTORS
AUTOMATIC SERVICES
We offer the following shareholder services:
TELEPHONE EXCHANGE PRIVILEGE. Class Y shares may be exchanged without a
service charge for Class Y shares of any Eligible Fund among the Lord
Abbett-sponsored funds.
ACCOUNT STATEMENTS. Every Lord Abbett investor automatically receives
quarterly account statements.
HOUSEHOLDING. Shareholders with the same last name and address will receive
a single copy of a prospectus and an annual or semi-annual report, unless
additional reports are specifically requested in writing to the Fund.
ACCOUNT CHANGES. For any changes you need to make to your account, consult
your investment professional or call the Fund at 800-821-5129.
SYSTEMATIC EXCHANGE. You or your investment professional can establish a
schedule of exchanges between the same classes of any Eligible Fund.
TELEPHONE TRANSACTIONS. You have this privilege unless you refuse it in writing.
For your security, telephone transaction requests are recorded. We will take
measures to verify the identity of the caller, such as asking for your name,
account number, social security or taxpayer identification number and other
relevant information. The Fund will not be liable for following instructions
communicated by telephone that it reasonably believes to be genuine.
Transactions by telephone may be difficult to implement in times of drastic
economic or market change.
MANAGEMENT
The Fund's investment adviser is Lord, Abbett & Co., located at 767 Fifth
Avenue, New York, NY 10153-0203. On or about January 17, 2000, the new
address will be 90 Hudson St., Jersey City, NJ 07302-3973. Founded in 1929,
Lord Abbett manages one of the nation's oldest mutual fund complexes, with
approximately $33 billion in more than 40 mutual fund portfolios and other
advisory accounts. For more information about the services Lord Abbett
provides to the fund, see the Statement of Additional Information.
The Fund pays Lord Abbett a monthly fee of .75% based on average daily net
assets for each month. In addition, the Fund pays all expenses not
expressly assumed by Lord Abbett.
PORTFOLIO MANAGER. Stephen Humphrey serves as Executive Vice President and
Portfolio Manager of the Lord Abbett Large-Cap Growth Fund and is primarily
responsible for the day-to-day management of the Fund. Mr. Humphrey joined
Lord Abbett in 1999; prior to that he was a Vice President and Portfolio
Manager at Chase Manhattan Bank from 1976 - 1999, managing private accounts
from 1981 and pooled investment funds from 1985.
HISTORICAL PERFORMANCE OF THE PORTFOLIO MANAGER. From March 17, 1997
until August 17, 1999, Mr. Humphrey was primarily
responsible for the day-to-day management of the Chase Vista Select Large
Cap Growth Fund, a separate series of the Mutual Fund Select Group, a registered
investment company. As the portfolio manager of this fund, Mr. Humphrey had full
discretionary authority over the selection of investments for the fund. From the
fund's inception on January 1, 1997 until March 17, 1997, a team of investment
professionals at Chase Manhattan Bank, including Mr. Humphrey, was responsible
for the management of the fund's portfolio.
6 Your Investment
<PAGE>
The cumulative total return for the Chase Vista Select Large Cap Growth
fund from March 17, 1997 through July 31, 1999 was 109.01%. At July 31,
1999, this fund had $825.2 million in net assets. As shown in the table
below, average annual total returns for the one year period ended July 31,
1999 and for the period during which Mr. Humphrey managed that fund,
compared with the performance of the Standard & Poor's 500(R) Composite
Stock Price Index ("S&P 500(R) Index") and the Lipper Large Cap Growth Fund
average, were:
<TABLE>
<CAPTION>
<S>
- ---------------------------------------------------------------------------------------------
Average Annual Total Returns
- ---------------------------------------------------------------------------------------------
Chase Vista Select Lipper Large Cap
Large Cap Growth Fund(a) S&P 500(R) Index(b) Growth Fund Average
<C> <C> <C>
One Year Ending July 31, 1999 32.58% 20.20% 24.02%
March 20, 1997
through July 31, 1999 36.59%(c) 27.05%(d) 29.41%(e)
</TABLE>
(a) Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.
(b) The S&P 500 Index is an unmanaged index of common stocks that is considered
to be generally representative of the United States stock market. The Index
is adjusted to reflect reinvestment of dividends.
(c) The average annual total return for the period from March 17, 1997
through July 31, 1999 was 35.52%.
(d) This percentage represents the average annual return of the S&P 500(R)
Index during the period from March 20, 1997 through July 31, 1999 that
Mr. Humphrey managed the Chase Vista Select Large Cap Growth Fund.
(e) This percentage represents the average annual return of the Lipper Large
Cap Growth Fund average during the period from March 20, 1997
through July 31, 1999 that Mr. Humphrey managed the Chase Vista Select
Large Cap Growth Fund.
Historical performance is not indicative of future performance. Although
the Lord Abbett Large-Cap Growth Fund and the Chase Vista Select Large Cap
Growth Fund have substantially similar investment objectives, policies and
strategies, the Chase Vista Select Large Cap Growth Fund is a separate fund
and its historical performance is not indicative of the future performance
of the Lord Abbett Large-Cap Growth Fund. For the periods shown above, the
anticipated expenses of the Lord Abbett Large-Cap Growth Fund may have been
higher than the expenses of the Chase Vista Select Large Cap Growth Fund.
Higher expenses, of course, would reduce a fund's performance. The Chase
Vista Select Large Cap Growth Fund was the only investment vehicle that Mr.
Humphrey managed during the period he was employed at Chase Manhattan Bank
that has or had substantially similar investment objectives, policies and
strategies as those of the Lord Abbett Large-Cap Growth Fund. Share prices
and investment returns will fluctuate reflecting market conditions, as well
as changes in company-specific fundamentals of portfolio securities.
Your Investment 7
<PAGE>
For More Information
OTHER INVESTMENT TECHNIQUES
This section describes some of the investment techniques that might be used
by the Fund and their risks.
ADJUSTING INVESTMENT EXPOSURE. The Fund may, but is not required to, use
various strategies to change its investment exposure to adjust to changing
security prices, interest rates, currency exchange rates, commodity prices
and other factors. The Fund may use these transactions to change the risk
and return characteristics of the Fund's portfolio. If we judge market
conditions incorrectly or use a strategy that does not correlate well with
the fund's investments, it could result in a loss, even if we intended to
lessen risk or enhance returns. These transactions may involve a small
investment of cash compared to the magnitude of the risk assumed and could
produce disproportionate gains or losses. Also, these strategies could
result in losses if the counterparty to a transaction does not perform as
promised.
DIVERSIFICATION. The Fund is a diversified fund, which generally means that
with respect to 75% of its total assets, it will not purchase a security
if, as a result, more than 5% of the fund's total assets would be invested
in securities of a single issuer or the fund would hold more than 10% of
the outstanding voting securities of the issuer. U.S. government securities
are not subject to these requirements.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The Fund may enter into
financial futures transactions. A financial futures transaction is the
purchase or sale of an exchange-traded contract to buy or sell a specified
financial instrument or index at a specific future date and price. The Fund
will not enter into any futures contracts, or options thereon, if the
aggregate market value of the securities covered by futures contracts plus
options on such financial futures exceeds 50% of its total assets.
OPTIONS TRANSACTIONS. The Fund may purchase and write put and call options
on equity securities or stock indices that are traded on national
securities exchanges.
A put option gives the buyer of the option the right to sell, and the
seller of the option the obligation to buy, the underlying instrument
during the option period. The Fund may write only covered put options to
the extent that cover for such options does not exceed 15% of the Fund's
net assets. The Fund will not purchase an option if, as a result of such
purchase, more than 10% of its total assets would be invested in premiums
for such options.
A call option gives the buyer of the option the right to buy, and the
writer (seller) of the option the obligation to sell, the underlying
instrument. The Fund may only sell (write) covered call options. This means
that the Fund may only sell call options on securities it owns. When the
Fund writes a call option, it gives up the potential for gain on the
underlying securities in excess of the exercise price of the option during
the period that the option is open.
RISKS OF FUTURES CONTRACTS AND OPTIONS TRANSACTIONS. The Fund's
transactions, if any, in futures, options on futures and other options
involve additional risk of loss. Loss may result from a lack of correlation
between changes in the value of these derivative instruments and the Fund's
assets being hedged, the potential illiquidity of the markets for
derivative instruments, or the risks arising from margin requirements and
related leverage factors associated with such transactions. The use of
these investment techniques also involves the risk of loss if Lord Abbett
is incorrect in its expectation of fluctuations
8 For More Information
<PAGE>
in securities prices. In addition, the loss that may be incurred by the
Fund in entering into futures contracts and in writing call options on
futures is potentially unlimited and may exceed the amount of the premium
received.
PORTFOLIO SECURITIES LENDING. The Fund may lend securities to
broker-dealers and financial institutions as a means of earning income.
This practice could result in a loss or delay in recovering the Fund's
securities, if the borrower defaults. The Fund will limit its securities
loans to 5% of its total assets and all loans will be fully collateralized.
GLOSSARY OF SHADED TERMS
ELIGIBLE FUND. An Eligible Fund is any Lord Abbett-sponsored fund offering
class Y shares.
LEGAL CAPACITY. This term refers to the authority of an individual to act
on behalf of an entity or other person(s). For example, if a redemption
request were to be made on behalf of the estate of a deceased shareholder,
John W. Doe, by a person (Robert A. Doe) who has the legal capacity to act
for the estate of the deceased shareholder because he is the executor of
the estate, then the request must be executed as follows: Robert A. Doe,
Executor of the Estate of John W. Doe. That signature using that capacity
must be by an Eligible Guarantor.
To give another example, if a redemption request were to be made on behalf
of the ABC Corporation by a person (Mary B. Doe) who has the legal capacity
to act on behalf of the Corporation, because she is the president of the
corporation, the request must be executed as follows: ABC Corporation by
Mary B. Doe, President. That signature using that capacity must be
guaranteed by an Eligible Guarantor (see example in right column).
MUTUAL FUND FEE BASED PROGRAM. Certain unaffiliated authorized brokers,
dealers, registered investment advisers or other financial institutions
("entities") who either (1) have an arrangement with Lord Abbett
Distributor in accordance with certain standards approved by Lord Abbett
Distributor, providing specifically for the use of our shares (and
sometimes providing for acceptance of orders for such shares on our behalf)
in particular investment products made available for a fee to clients of
such entities, or (2) charge an advisory, consulting or other fee for their
services and buy shares for their own accounts or the accounts of their
clients.
GUARANTEED SIGNATURE. An acceptable form of guarantee would be as follows:
In the case of the estate --
Robert A. Doe
Executor of the Estate of
John W. Doe
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
John Doe
- --------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM
In the case of the corporation --
ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
John Doe
- --------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM
YEAR 2000 ISSUES. The Fund could be adversely affected if the computers used by
the Fund and its service providers do not properly process and calculate
date-related information from and after January 1, 2000.
Lord Abbett is working to avoid such problems and has received assurances from
the Fund's service providers that they are taking similar steps. Of course, the
Year 2000 problem is unprecedented and, therefore, Lord Abbett cannot eliminate
altogether the possibility that it or the Fund will be affected.
In addition, companies in which the Fund invests may experience similar
difficulties. These problems could negatively affect the value of the issuer's
securities, which in turn could impact the Fund's performance.
For More Information 9
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
More information on this Fund is available free upon request, including the
following:
ANNUAL/SEMI-ANNUAL REPORT
Describes the Fund, lists portfolio holdings, and contains a letter from the
Fund's manager discussing recent market conditions and the Fund's
investment strategies.
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
Provides more details about the Fund and its policies. A current SAI is on
file with the Securities and Exchange Commission ("SEC") and is
incorporated by reference (is legally considered part of this prospectus).
Lord Abbett Large-Cap Growth Fund
767 Fifth Avenue New York, NY 10153-0203
On or about January 17, 2000, the new address will be:
90 Hudson Street
Jersey City, NJ 07302-3973
- --------------------------
SEC file number: 811-9597
To obtain information:
BY TELEPHONE. Call the Fund at: 800-426-1130
BY MAIL. Write to the Fund at:
The Lord Abbett Family of Funds
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
On or about January 17, 2000, the
new address will be:
90 Hudson Street
Jersey City, NJ 07302-3973
VIA THE INTERNET.
LORD, ABBETT & CO.
www.lordabbett.com
Text only versions of Fund documents can be viewed online or downloaded from:
SEC
www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 202-942-8090) or by sending your request and a duplicating
fee to the SEC's Public Reference Section, Washington, DC 20549-6009 or by
sending your request electronically to [email protected].
laLcg-Y-1-1299
(12/99)
<PAGE>
LORD ABBETT
STATEMENT OF ADDITIONAL INFORMATION DECEMBER 30, 1999
LORD ABBETT LARGE-CAP GROWTH FUND
Y SHARES
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from your securities dealer or from Lord Abbett Distributor LLC
("Lord Abbett Distributor") at The General Motors Building, 767 Fifth Avenue,
New York, New York 10153-0203. On or about January 17, 2000, the new address
will be 90 Hudson St., Jersey City, NJ 07302-3973. This Statement of Additional
Information relates to, and should be read in conjunction with, the Prospectus
dated December 30, 1999.
Shareholder inquiries should be made by directly contacting the Fund or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
TABLE OF CONTENTS PAGE
1. Investment Policies 2
2. Trustees and Officers 5
3. Investment Advisory and Other Services 9
4. Portfolio Transactions 9
5. Purchases, Redemptions
and Shareholder Services 10
6. Performance 12
7. Taxes 12
8. Information About The Company 13
9. Financial Statements 14
1
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1.
INVESTMENT POLICIES
The Lord Abbett Large-Cap Growth Fund (the "Company" or the "Fund") is a
diversified open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "Act").
FUNDAMENTAL INVESTMENT RESTRICTIONS. The Fund is subject to the follo7ing
fundamental investment restrictions, which cannot be changed without approval of
a majority of the Fund's outstanding shares.
The Fund may not:
(1) borrow money, issue senior securities or mortgage, pledge or
hypothecate its assets except to the extent permitted under the Act;
(2) engage in the underwriting of securities, except to the extent that,
in connection with the disposition of its portfolio securities or as
otherwise permitted under applicable law, it may be deemed to be an
underwriter under federal securities laws;
(3) invest more than 25% of the value of its total assets in the
securities of issuers in any particular industry (excluding
obligations issued or guaranteed by the U.S. Government, any state,
territory or possession of the United States, the District of Columbia
or any of their authorities, agencies, instrumentalities or political
subdivisions);
(4) 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);
(5) make loans, except that the acquisition of or investment in debt
securities, repurchase agreements or similar instruments shall not be
subject to this restriction, 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; and
(6) with respect to 75% of the value of the total assets of the Fund, (i)
buy securities of any one issuer representing more than 5% of the
value of its total assets, except securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities or (ii) own
more than 10% of the voting securities of such issuer.
Compliance with the investment restrictions in this section 1 will be determined
at the time of the purchase or sale of the portfolio investments.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. In addition to policies in the
Prospectus and the investment restrictions above which cannot be changed without
shareholder approval, the Fund is also subject to the following non-fundamental
investment policies which may be changed by the Board of Trustees 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;
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(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 of the Securities Act of 1933 ("Rule 144A")
deemed to be liquid by the Board of Trustees;
(3) invest in the securities of other investment companies as defined in
the Act, except as permitted by applicable law;
(4) write, purchase or sell puts, calls, straddles, spreads or
combinations thereof, except to the extent permitted in the Fund's
Prospectus and statement of additional information, as they may be
amended from time to time; and
(5) buy from or sell to any of the Fund's officers, trustees, employees,
or its investment adviser any securities other than shares of the
Fund.
RIGHTS AND WARRANTS. The Fund may invest in rights and warrants to purchase
securities, including warrants which are not listed on the NYSE or American
Stock Exchange in an amount not to exceed 5% of the value of the Fund's gross
assets.
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, as the case may be.
Warrants represent the privilege to purchase securities at a stipulated price
and are usually valid for several years. Rights and warrants generally do not
entitle a holder to dividends or voting rights with respect to the underlying
securities nor do they represent any rights in the assets of the issuing
company.
Also, the value of a right or warrant may not necessarily change with the value
of the underlying securities and rights and warrants cease to have value if they
are not exercised prior to their expiration date.
OPTIONS AND FINANCIAL FUTURES TRANSACTIONS. The Fund may engage in options and
financial futures transactions in accordance with its investment objective and
policies. Although the Fund is not currently employing such options and
financial futures transactions, it may engage in such transactions in the future
if it appears advantageous to us to do so, in order to cushion the effects of
fluctuating interest rates and adverse market conditions. The use of options and
financial futures, and possible benefits and attendant risks, are discussed
below, along with information concerning certain other investment policies and
techniques.
FINANCIAL FUTURES CONTRACTS. The Fund may enter into contracts for the future
delivery of a financial instrument, such as a security or the cash value of a
securities index. This investment technique is designed primarily to hedge
(i.e., protect) against anticipated future changes in interest rates or market
conditions which otherwise might adversely affect the value of securities which
the Fund holds or intends to purchase. A "sale" of a futures contract means the
undertaking of a contractual obligation to deliver the securities or the cash
value of an index called for by the contract at a specified price during a
specified delivery period. A "purchase" of a futures contract means the
undertaking of a contractual obligation to acquire the securities or cash value
of an index at a specified price during a specified delivery period. At the time
of delivery pursuant to the contract, adjustments are made to recognize
differences in value arising from the delivery of securities which differ from
those specified in the contract. In some cases, securities called for by a
futures contract may not have been issued at the time the contract was written.
The Fund will not enter into any futures contracts or options on futures
contracts if the aggregate of the market value of the securities covered by such
outstanding contracts and options would exceed 50% of its total assets.
Although some financial futures contracts by their terms call for the actual
delivery or acquisition of securities, in most cases, a party will close out the
contractual commitment before delivery without having to make or take delivery
of the security by purchasing (or selling, as the case may be) on a commodities
exchange an identical futures contract calling for delivery in the same month.
Such a transaction, if effected through a member of an exchange, cancels the
obligation to make or take delivery of the securities. All transactions in the
futures market are made, offset or fulfilled through a clearing house associated
with the exchange on which the contracts are traded. The Fund will incur
brokerage fees when it purchases or sells contracts and will be required to
maintain margin deposits. At the time it enters into a futures contract, it is
required to deposit with the custodian, on behalf of the broker, a specified
amount of cash or eligible securities called "initial margin." The initial
margin required for a futures contract is set by the exchange on which the
3
<PAGE>
contract is traded. Subsequent payments, called "variation margin," to and from
the broker are made on a daily basis as the market price of the futures contract
fluctuates. The costs incurred in connection with futures transactions could
reduce our return. Futures contracts entail risks. If the investment adviser's
judgment about the general direction of interest rates or markets is wrong, the
overall performance may be poorer than if no such contracts had been entered
into.
There may be an imperfect correlation between movements in prices of futures
contracts and portfolio securities being hedged. The degree of difference in
price movements between futures contracts and the securities (or securities
indices) being hedged depends upon such things as variations in demand for
futures contracts and securities underlying the contracts and differences
between the liquidity of the markets for such contracts and the securities
underlying them. In addition, the market prices of futures contracts may be
affected by certain factors not directly related to the underlying securities.
At any given time, the availability of futures contracts, and hence their
prices, are influenced by credit conditions and margin requirements. Due to the
possibility of price distortions in the futures market and because of the
imperfect correlation between movements in the prices of securities and
movements in the prices of futures contracts, a correct forecast of market
trends by the investment adviser may not result in a successful hedging
transaction.
CALL OPTIONS ON STOCK. The Fund may, from time to time, write call options on
its portfolio securities. The Fund may write only call options which are
"covered," meaning that the Fund either owns the underlying security or has an
absolute and immediate right to acquire that security, without additional cash
consideration, upon conversion or exchange of other securities currently held in
its portfolio. In addition, the Fund will not permit the call to become
uncovered prior to the expiration of the option or termination through a closing
purchase transaction as described below. If the Fund writes a call option, the
purchaser of the option has the right to buy (and the Fund has the obligation to
sell) the underlying security at the exercise price throughout the term of the
option. The amount paid to the Fund by the purchaser of the option is the
"premium." The Fund's obligation to deliver the underlying security against
payment of the exercise price would terminate either upon expiration of the
option or earlier if the Fund were to effect a "closing purchase transaction"
through the purchase of an equivalent option on an exchange. There can be no
assurance that a closing purchase transaction can be effected. The Fund does not
intend to write covered call options with respect to securities with an
aggregate market value of more than 5% of its gross assets at the time an option
is written.
The Fund will not be able to effect a closing purchase transaction after it
receives notice of exercise. In order to write a call option, the Fund is
required to comply with the rules of The Options Clearing Corporation and the
various exchanges with respect to collateral requirements. The Fund may not
purchase call options except in connection with a closing purchase transaction.
It is possible that the cost of effecting a closing purchase transaction may be
greater than the premium received by the Fund for writing the option.
Generally, the Fund intends to write listed covered call options during periods
when it anticipates declines in the market values of portfolio securities
because the premiums received may offset to some extent the decline in the
Fund's net asset value occasioned by such declines in market value. Except as
part of the "sell discipline" described below, the Fund will generally not write
listed covered call options when it anticipates that the market values of its
portfolio securities will increase.
One reason for the Fund to write call options is as part of a "sell discipline."
If the Fund decides that a portfolio security would be overvalued and should be
sold at a certain price higher than the current price, it could write an option
on the stock at the higher price. Should the stock subsequently reach that price
and the option be exercised, the Fund would, in effect, have increased the
selling price of that stock, which it would have sold at that price in any
event, by the amount of the premium. In the event the market price of the stock
declined and the option were not exercised, the premium would offset all or some
portion of the decline. It is possible that the price of the stock could
increase beyond the exercise price; in that event, the Fund would forego the
opportunity to sell the stock at that higher price.
In addition, call options may be used as part of a different strategy in
connection with sales of portfolio securities. If, in the judgment of the Fund
Management, the market price of a stock is overvalued and it should be sold, the
Fund may elect to write a call option with an exercise price substantially below
the current market price. As long as the value of the underlying security
remains above the exercise price during the term of the option, the option will,
in all probability,
4
<PAGE>
be exercised, in which case the Fund will be required to sell the stock at the
exercise price. If the sum of the premium and the exercise price exceeds the
market price of the stock at the time the call option is written, the Fund
would, in effect, have increased the selling price of the stock. The Fund would
not write a call option in these circumstances if the sum of the premium and the
exercise price were less than the current market price of the stock.
PUT OPTIONS ON STOCK. The Fund may also write listed put options. If the Fund
writes a put option, it is obligated to purchase a given security at a specified
price at any time during the term of the option.
Writing listed put options is a useful portfolio investment strategy when the
Fund has cash or other reserves available for investment as a result of sales of
Fund shares or, more importantly, because Fund Management believes a more
defensive and less fully invested position is desirable in light of market
conditions. If the Fund Management wishes to invest its cash or reserves in a
particular security at a price lower than current market value, it may write a
put option on that security at an exercise price which reflects the lower price
it is willing to pay. The buyer of the put option generally will not exercise
the option unless the market price of the underlying security declines to a
price near or below the exercise price. If the Fund writes a listed put, the
price of the underlying stock declines and the option is exercised, the premium,
net of transaction charges, will reduce the purchase price paid by the Fund for
the stock. The price of the stock may decline by an amount in excess of the
premium, in which event the Fund would have foregone an opportunity to purchase
the stock at a lower price.
If, prior to the exercise of a put option, the Fund determines that it no longer
wishes to invest in the stock on which the put option had been written, the Fund
may be able to effect a closing purchase transaction on an exchange by
purchasing a put option of the same series as the one which it has previously
written. The cost of effecting a closing purchase transaction may be greater
than the premium received on writing the put option and there is no guarantee
that a closing purchase transaction can be effected.
The Fund may only write covered put options to the extent that cover for such
options does not exceed 15% of its net assets. The Fund will not purchase an
option if, as a result of such purchase, more than 10% of its total assets would
be invested in premiums for such options.
Unless the Fund has other liquid assets that are sufficient to satisfy the
exercise of a call, the Fund would be required to liquidate portfolio securities
in order to satisfy the exercise. Because an exercise must be settled within
hours after receiving the notice of exercise, if the Fund fails to anticipate an
exercise, it may have to borrow (in amounts not exceeding 20% of the Fund's
total assets) pending settlement of the sale of securities in its portfolio and
would incur interest charges thereon.
When the Fund has written a call, there is also a risk that the market may
decline between the time the call is written and the time the Fund is able to
sell stocks in its portfolio. As with stock options, the Fund will not learn
that an index option has been exercised until the day following the exercise
date but, unlike a call on stock where the Fund would be able to deliver the
underlying securities in settlement, the Fund may have to sell part of its stock
portfolio in order to make settlement in cash, and the price of such stocks
might decline before they can be sold. This timing risk makes certain strategies
involving more than one option substantially more risky with index options than
with stock options. For example, even if an index call which the Fund has
written is "covered" by an index call held by the Fund with the same strike
price, the Fund will bear the risk that the level of the index may decline
between the close of trading on the date the exercise notice is filed with the
clearing corporation and the close of trading on the date the Fund exercises the
call it holds or the time the Fund sells the call which in either case would
occur no earlier than the day following the day the exercise notice was filed.
2.
TRUSTEES AND OFFICERS
The Board of Trustees of the Fund is responsible for the management of the
business and affairs of the Fund.
5
<PAGE>
The following trustee is a partner of Lord, Abbett & Co. ("Lord Abbett"), The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. He has
been associated with Lord Abbett for over five years and is also an officer,
director, or trustee of thirteen other Lord Abbett-sponsored funds.
*Robert S. Dow, age 54, Chairman and President
*Mr. Dow is an "interested person" as defined in the Act.
The following outside trustees are also directors or trustees of thirteen other
Lord Abbett-sponsored funds referred to above.
E. THAYER BIGELOW, TRUSTEE
Time Warner Inc.
1271 Avenue of the Americas
New York, New York
Senior Adviser, Time Warner Inc. (since 1998). Formerly, Acting Chief Executive
Officer of Courtroom Television Network (1997 - 1998). Formerly, President and
Chief Executive Officer of Time Warner Cable Programming, Inc. (1991 - 1997).
Prior to that, President and Chief Operating Officer of Home Box Office, Inc.
Age 58.
WILLIAM H.T. BUSH, TRUSTEE
Bush-O'Donnell & Co., Inc.
101 South Hanley Road, Suite 1025
St. Louis, Missouri
Co-founder and Chairman of the Board of financial advisory firm of
Bush-O'Donnell & Company (since 1986). Age 61.
ROBERT B. CALHOUN, JR., TRUSTEE
Monitor Clipper Partners
650 MADISON AVENUE, 9TH Floor
New York, New York
Managing Director of Monitor Clipper Partners (since 1977) and President of The
Clipper Group L.P., both private equity investment funds (since 1990). Age 57.
STEWART S. DIXON, TRUSTEE
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon (since 1990). Age 68.
JOHN C. JANSING, TRUSTEE
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 73.
C. ALAN MACDONALD, TRUSTEE
Directorship Inc.
8 Sound Shore Drive
Greenwich, Connecticut
6
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Currently involved in golf development management on a consultancy basis (since
1999). Formerly, Managing Director of The Directorship Inc., a consultancy in
board management and corporate governance (1997-1999). Prior to that, General
Partner of The Marketing Partnership, Inc., a full service marketing consulting
firm (1994-1997). Prior to that, Chairman and Chief Executive Officer of Lincoln
Snacks, Inc., manufacturer of branded snack foods (1992-1994). His career spans
36 years at Stouffers and Nestle with 18 of the years as Chief Executive
Officer. Currently serves as Director of DenAmerica Corp., J. B. Williams
Company, Inc., Fountainhead Water Company and Exigent Diagnostics. Age 66.
HANSEL B. MILLICAN, JR., TRUSTEE
Rochester Button Company
1328 Broadway (Suite 816)
New York, New York
President and Chief Executive Officer of Rochester Button Company (since 1991).
Age 71.
THOMAS J. NEFF, TRUSTEE
Spencer Stuart
277 Park Avenue
New York, New York
Chairman of Spencer Stuart, an executive search consulting firm (since 1976).
Currently serves as a Director of Ace, Ltd. (NYSE). Age 62.
The second column of the following table sets forth the compensation accrued for
outside trustees. The third column sets forth information with respect to the
pension or retirement benefits accrued for outside directors/trustees maintained
by the Lord Abbett-sponsored funds. No director/trustee of the funds associated
with Lord Abbett and no officer of the funds received any compensation from the
funds for acting as a director/trustee or officer.
FOR THE FISCAL YEAR ENDED JULY 31, 1998
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Pension or For Year Ended
Retirement Benefits December 31, 1998
Accrued by the Total Compensation
Aggregate Company and Accrued by the Company
Compensation Twelve Other Lord and Thirteen Other
Accrued by Abbett-sponsored Lord Abbett-sponsored
Name of Director the Company(1) Companies(2) Companies (3)
- ---------------- -------------- ------------ ------------
<S> <C> <C> <C>
E. Thayer Bigelow None $17,622 $ 57,400
William H.T. Bush* None $15,846 $ 27,500
Robert B. Calhoun, Jr.** None $12,276 $ 33,500
Stewart S. Dixon None $32,420 $ 56,500
John C. Jansing None $41,108(4) $ 55,500
C. Alan MacDonald None $26,763 $ 55,000
Hansel B. Millican, Jr. None $37,822 $ 55,500
Thomas J. Neff None $20,313 $ 56,500
</TABLE>
*Elected as of August 13, 1998
**Elected as of June 17, 1998
1. Outside directors/trustees' fees, including attendance fees for board and
committee meetings, are allocated among
7
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all Lord Abbett-sponsored funds based on the net assets of each fund. A
portion of the fees payable by the Fund to its outside trustees is being
deferred under a plan ("equity based plan") that deems the deferred amounts
to be invested in shares of the Fund for later distribution to the
directors/trustees.
2. The amounts in Column 3 were accrued by the Lord Abbett-sponsored Funds for
the 12 months ended October 31, 1999 with respect to the equity based plan
established for independent directors/trustees in 1996. This plan
supercedes a previously approved retirement plan for all future
directors/trustees. Current directors had the option to convert their
accrued benefits under the retirement plan. All of the outside directors
except one made such an election. Each plan also provides for a
pre-retirement death benefit and actuarially reduced joint-and-survivor
spousal benefits.
3. This column shows aggregate compensation, including directors/trustees'
fees and attendance fees for board and committee meetings, of a nature
referred to in footnote one, paid by the Lord Abbett-sponsored funds during
the year ended December 31, 1998 but does not include amounts accrued under
the equity based plan and shown in Column 3.
4. Mr. Jansing chose to continue to receive benefits under the retirement
plan, which provides that outside directors/ trustees may receive annual
retirement benefits for life equal to their final annual retainer following
retirement at or after age 72 with at least ten years of service. Thus, if
Mr. Jansing were to retire and the annual retainer payable by the funds
were the same as it is today, he would receive annual retirement benefits
of $50,000.
Except where indicated, the following executive officers of the Company have
been associated with Lord Abbett for over five years. Of the following, Messrs.
Carper, Hilstad and Morris are partners of Lord Abbett; the others are
employees:
EXECUTIVE VICE PRESIDENT:
Stephen Humphrey, age 55, (with Lord Abbett since 1999, formerly Vice President
& Portfolio Manager at Chase Manhattan Bank from 1976-1999)
VICE PRESIDENTS:
Joan Binstock, age 45, (with Lord Abbett since 1999, formerly Chief Operating
Officer of Morgan Grenfell from 1996 to 1999, prior thereto Principal of Ernst &
Young LLP)
Daniel E. Carper, age 47
Paul A. Hilstad, age 56, Vice President and Secretary (with Lord Abbett since
1995; formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.)
Lawrence H. Kaplan, age 42 (with Lord Abbett since 1997 - formerly Vice
President and Chief Counsel of Salomon Brothers Asset Management Inc. from 1995
to 1997, prior thereto Senior Vice President, Director and General Counsel of
Kidder Peabody Asset Management, Inc.)
Robert G. Morris, age 54
A. Edward Oberhaus, III, age 39
Tracie Richter, age 31, (with Lord Abbett since 1999, formerly Vice President -
Head of Fund Administration of Morgan Grenfell from 1998 to 1999, Vice President
of Bankers Trust from 1996 to 1998, prior thereto Tax Associate of Goldman
Sachs).
TREASURER:
Donna M. McManus, age 38 (with Lord Abbett since 1996, formerly a Senior Manager
at Deloitte & Touche LLP).
8
<PAGE>
As of the date hereof, our officers and directors, as a group, owned less than
1% of the Fund's outstanding shares and there were no record holders of 5% or
more of the Fund's outstanding shares, other than Lord Abbett Distributor.
3.
INVESTMENT ADVISORY AND OTHER SERVICES
The services performed by Lord Abbett are described under "Management" in the
Prospectus. Under the Management Agreement, we are obligated to pay Lord Abbett
a monthly fee, based on average daily net assets for each month at an annual
rate of .75 of 1% for Large-Cap Growth Fund. These fees are allocated among the
classes of the fund based on the classes' proportionate share of the fund's
average daily net assets.
The Fund pays all expenses not expressly assumed by Lord Abbett, including,
without limitation, 12b-1 expenses, outside directors' 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 preparing, printing and mailing stock
certificates and shareholder reports, expenses of registering our shares under
federal and state securities laws, expenses of preparing, printing and mailing
prospectuses to existing shareholders, insurance premiums, brokerage and other
expenses connected with executing portfolio transactions.
Lord Abbett Distributor LLC serves as the principal underwriter for the Company.
The Bank of New York ("BNY"), 48 Wall Street, New York, New York, is the
Company's custodian. In accordance with the requirements of Rule 17f-5, the
Company's directors have approved arrangements permitting the Funds' foreign
assets not held by BNY or its foreign branches to be held by certain qualified
foreign banks and depositories.
Deloitte & Touche LLP, Two World Financial Center, New York, New York, are the
independent auditors of the Company and must be approved at least annually by
our Board of Trustees to continue in such capacity. Deloitte & Touche LLP
perform audit services for each Fund, including the examination of financial
statements included in our Annual Report to Shareholders.
United Missouri Bank of Kansas City, N.A., Tenth and Grand, Kansas City,
Missouri, acts as the transfer agent and dividend disbursing agent for the
Funds.
4.
PORTFOLIO TRANSACTIONS
The Company's policy is to obtain best execution on all our portfolio
transactions, which means that it 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 dealer markups and markdowns and
taking into account the full range and quality of the brokers' services.
Consistent with obtaining best execution, we generally pay, as described below,
a higher commission than some brokers might charge on the same transaction. Our
policy with respect to best execution governs the selection of brokers or
dealers and the market in which the transaction is executed. To the extent
permitted by law, we may, if considered advantageous, make a purchase from or
sale to another Lord Abbett-sponsored fund without the intervention of any
broker-dealer.
Broker-dealers are selected on the basis of their professional capability and
the value and quality of their brokerage and research services. Normally, the
selection is made by traders who are officers of each Lord Abbett-sponsored fund
and also are employees of Lord Abbett. These traders do the trading as well for
other accounts -- investment companies (of which they are also officers) and
other investment clients -- managed by Lord Abbett. They are responsible for
obtaining best execution.
We pay a commission rate that we believe is appropriate to give maximum
assurance that our brokers will provide us, on a continuing basis, the highest
level of brokerage services available. While we do not always seek the lowest
possible commissions on particular trades, we believe that our commission rates
are in line with the rates that many other institutions pay. Our traders are
authorized to pay brokerage commissions in excess of those that other brokers
might
9
<PAGE>
accept on the same transactions in recognition of the value of the services
performed by the executing brokers, viewed in terms of either the particular
transaction or the overall responsibilities of Lord Abbett with respect to us
and the other accounts they manage. Such services include showing us trading
opportunities including blocks, a willingness and ability to take positions in
securities, knowledge of a particular security or market proven ability to
handle a particular type of trade, confidential treatment, promptness and
reliability.
Some of these brokers also provide research services at least some of which are
useful to Lord Abbett in their overall responsibilities with respect to us and
the other accounts they manage. Research includes the furnishing of analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts and trading equipment and
computer software packages, acquired from third-party suppliers, that enable
Lord Abbett to access various information bases. Such services may be used by
Lord Abbett in servicing all their accounts, and not all of such services will
necessarily be used by Lord Abbett in connection with their management of the
Fund; conversely, such services furnished in connection with brokerage on other
accounts managed by Lord Abbett may be used in connection with their management
of the Fund, and not all of such services will necessarily be used by Lord
Abbett in connection with their advisory services to such other accounts. We
have been advised by Lord Abbett that research services received from brokers
cannot be allocated to any particular account, are not a substitute for Lord
Abbett's services but are supplemental to their own research effort and, when
utilized, are subject to internal analysis before being incorporated by Lord
Abbett into their investment process. As a practical matter, it would not be
possible for Lord Abbett to generate all of the information presently provided
by brokers. While receipt of research services from brokerage firms has not
reduced Lord Abbett's normal research activities, the expenses of Lord Abbett
could be materially increased if it attempted to generate such additional
information through its own staff and purchased such equipment and software
packages directly from the suppliers.
No commitments are made regarding the allocation of brokerage business to or
among brokers, and trades are executed only when they are dictated by investment
decisions of the Lord Abbett-sponsored funds to purchase or sell portfolio
securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold the Lord
Abbett-sponsored funds' shares and/or shares of other Lord Abbett-sponsored
funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as a Lord Abbett-sponsored fund does, transactions will, to the extent
practicable, be allocated among all participating accounts in proportion to the
amount of each order and will be executed daily until filled so that each
account shares the average price and commission cost of each day. Other clients
who direct that their brokerage business be placed with specific brokers or who
invest through wrap accounts introduced to Lord Abbett by certain brokers may
not participate with a Lord Abbett-sponsored fund in the buying and selling of
the same securities as described above. If these clients wish to buy or sell the
same security as a Lord Abbett-sponsored fund does, they may have their
transactions executed at times different from our transactions and thus may not
receive the same price or incur the same commission cost as a Lord
Abbett-sponsored fund does.
The Lord Abbett-sponsored funds will not seek "reciprocal" dealer business (for
the purpose of applying commissions in whole or in part for their benefit or
otherwise) from dealers as consideration for the direction to them of portfolio
business.
5.
PURCHASES, REDEMPTIONS
AND SHAREHOLDER SERVICES
Information concerning how we value our shares for the purchase and redemption
of our shares is contained in the Prospectus under "Purchases".
As disclosed in the Prospectus, we calculate our net asset value as of the close
of the New York Stock Exchange ("NYSE") on each day that the NYSE is open for
trading by dividing our total net assets by the number of shares outstanding at
the time of calculation. The NYSE is closed on Saturdays and Sundays and the
following holidays --
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New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
The Company values its portfolio securities at market value as of the close of
the NYSE. Market value will be determined as follows: securities listed or
admitted to trading privileges on the New York or American Stock Exchange or on
the NASDAQ National Market System are valued at the last sales price, or, if
there is no sale on that day, at the mean between the last bid and asked prices,
or, in the case of bonds, in the over-the-counter market if, in the judgment of
the Funds' officers, that market more accurately reflects the market value of
the bonds. Over-the-counter securities not traded on the NASDAQ National Market
System are valued at the mean between the last bid and asked prices. Securities
for which market quotations are not available are valued at fair market value
under procedures approved by the Board of Directors.
The net asset value per share for the Class Y shares will be determined by
taking Class Y shares net assets and dividing by shares outstanding. Our Class Y
shares will be offered at net asset value.
The Fund has entered into a distribution agreement with Lord Abbett Distributor
LLC, a New York limited liability company ("Lord Abbett Distributor") and
subsidiary of Lord Abbett under which Lord Abbett Distributor is obligated to
use its best efforts to find purchasers for the shares of each Fund, and to make
reasonable efforts to sell Fund shares so long as, in Lord Abbett Distributor's
judgment, a substantial distribution can be obtained by reasonable efforts.
CLASS Y SHARE EXCHANGES. The Prospectus describes the Telephone Exchange
Privilege. You may exchange some or all of your Y shares for Y shares of any
Lord Abbett-sponsored funds currently offering Class Y shares to the public.
Currently those other funds consist of Lord Abbett Affiliated Fund, Lord Abbett
Investment Trust - High Yield Fund, Core Fixed Income Fund, Strategic Core Fixed
Income Fund, Bond-Debenture Fund, Developing Growth Fund, and Mid-Cap Value
Fund, Growth Opportunities Fund, International Fund, Small-Cap Value Fund, Lord
Abbett Securities Trust - Micro-Cap Growth Fund and Micro-Cap Value Fund.
REDEMPTIONS. A redemption order is in proper form when it contains all of the
information and documentation required by the order form or supplementally by
Lord Abbett Distributor or the Fund to carry out the order. The signature(s) and
any legal capacity of the signer(s) must be guaranteed by an eligible guarantor.
See the Prospectus for expedited redemption procedures.
The right to redeem and receive payment, as described in each Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Trustees may authorize redemption of all of the shares in any
account in which there are fewer than 25 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least 6 months' prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
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<PAGE>
6.
PERFORMANCE
The Fund computes the average annual compounded rate of total return for Class Y
shares during specified periods that would equate the initial amount invested to
the ending redeemable value of such investment by adding one to the computed
average annual total return, raising the sum to a power equal to the number of
years covered by the computation and multiplying the result by one thousand
dollars, which represents a hypothetical initial investment. The calculation
assumes deduction of no sales charge from the initial amount invested and
reinvestment of all income dividends and capital gains distributions on the
reinvestment dates at prices calculated as stated in the Prospectus. The ending
redeemable value is determined by assuming a complete redemption at the end of
the period(s) covered by the annual total return computation.
In calculating total returns for Class Y shares no sales charge is deducted from
the initial investment and the return is shown at net asset value. Total returns
also assume that all dividends and capital gains distributions during the period
are reinvested at net asset value per share, and that the investment is redeemed
at the end of the period.
Our yield quotation for Class Y shares is based on a 30-day period ended on a
specified date, computed by dividing the net investment income per share earned
during the period by the net asset value per share of such class on the last day
of the period. This is determined by finding the following quotient: take the
dividends and interest earned during the period for the class minus its expenses
accrued for the period and divide by the product of (i) the average daily number
of Class shares outstanding during the period that were entitled to receive
dividends and (ii) the net asset value per share of such class on the last day
of the period. To this quotient add one. This sum is multiplied by itself five
times. Then one is subtracted from the product of this multiplication and the
remainder is multiplied by two. Yields for Class Y shares do not reflect the
deduction of any sales charge.
These figures represent past performance, and an investor should be aware that
the investment return and principal value of a Fund's investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost.
Therefore, there is no assurance that this performance will be repeated in the
future.
7.
TAXES
The Fund intends to elect and to qualify for special tax treatment afforded
regulated investment companies under the Internal Revenue Code of 1986 (the
"Code"). If it so qualifies, the Fund (but not its shareholders) will be
relieved of federal income taxes on the amount it distributes to shareholders.
If in any taxable year the Fund does not qualify as a regulated investment
company, all of its taxable income will be taxed to the Fund at regular
corporate rates.
The Fund contemplates declaring as dividends substantially all of its net
investment income. Dividends paid by the Fund from its investment income and
distributions of its net realized short-term capital gains are taxable to
shareholders as ordinary income or capital gain, whether received in cash or
reinvested in additional shares of the Fund. The Fund will send each shareholder
annual information concerning the tax treatment of dividends and other
distributions.
Upon sale, exchange or redemption of shares of the Fund, a shareholder will
recognize short- or long-term capital gain or loss, depending upon the
shareholder's holding period in the Fund's shares. However, if a shareholder's
holding period in his shares is six months or less, any capital loss realized
from a sale or exchange of such shares must be treated as long-term capital loss
to the extent of dividends classified as "capital gains dividends" received with
respect to such shares. The maximum tax rates applicable to net capital gains
recognized by individuals and other non-corporate taxpayers are (i) the same as
ordinary income rates for capital assets held for one year or less and (ii) 20%
for capital assets held for more than one year. Capital gains or losses
recognized by corporate shareholders are subject to tax at the ordinary income
tax rates applicable to corporations.
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<PAGE>
Losses on the sale of shares are not deductible if, within a period beginning 30
days before the date of the sale and ending 30 days after the date of the sale,
the taxpayer acquires shares that are substantially identical.
Some shareholders may be subject to a 31% withholding tax on reportable
dividends, capital gains distributions and redemption payments ("backup
withholding"). Generally, shareholders subject to backup withholding will be
those for whom a certified taxpayer identification number is not on file with
the Fund or who, to the Fund's knowledge, have furnished an incorrect number.
When establishing an account, an investor must certify under penalties of
perjury that such number is correct and that he is not otherwise subject to
backup withholding.
The writing of call options and other investment techniques and practices which
the Fund may utilize may affect the character and timing of the recognition of
gains and losses. Such transactions may increase the amount of short-term
capital gain realized by the Fund, which is taxed as ordinary income when
distributed to shareholders.
The Fund may be subject to foreign withholding taxes, which would reduce the
yield on its investments. It is generally expected that Fund shareholders who
are subject to U.S. federal income tax will not be entitled to claim a federal
income tax credit or deduction for foreign income taxes paid by the Fund.
The Fund will also be subject to a 4% non-deductible excise tax on certain
amounts not distributed or treated as having been distributed on a timely basis
each calendar year. The Fund intends to distribute to shareholders each year an
amount adequate to avoid the imposition of such excise tax.
Dividends paid by the Fund will qualify for the dividends-received deduction for
corporations to the extent they are derived from dividends paid by domestic
corporations. Corporate shareholders must have held their shares in the Fund for
more than 45 days to qualify for the deduction on dividends paid by the Fund.
Gain and loss realized by the Fund on certain transactions, including sales of
foreign debt securities and certain transactions involving foreign currency,
will be treated as ordinary income or loss for federal income tax purposes to
the extent, if any, that such gain or loss is attributable to changes in
exchange rates for foreign currencies. Accordingly, distributions taxable as
ordinary income will include the net amount, if any, of such foreign exchange
gain and will be reduced by the net amount, if any, of such foreign exchange
loss.
If the Fund purchases shares in certain foreign investment entities called
"passive foreign investment companies," the Fund may be subject to U.S. federal
income tax on a portion of any "excess distribution" or gain from the
disposition of such shares, even if such income is distributed as a taxable
dividend by the Fund to its shareholders. Additional charges in the nature of
interest may be imposed on either the Fund or its shareholders in respect of
deferred taxes arising from such distributions or gains. If the Fund were to
make a "qualified electing fund" election with respect to its investment in a
passive foreign investment company, in lieu of the foregoing requirements, the
Fund might be required to include in income each year a portion of the ordinary
earnings and net capital gains of the qualified electing fund, even if such
amount were not distributed to the Fund.
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to U.S. persons (U.S. citizens or residents and United States
domestic corporations, partnerships, trusts and estates). Each shareholder who
is not a U.S. person should consult his tax adviser regarding the U.S. and
foreign tax consequences of the ownership of shares of a Fund, including the
applicable rate of U.S. withholding tax on dividends representing ordinary
income and net short-term capital gains, and the applicability of U.S. gift and
estate taxes.
8.
INFORMATION ABOUT THE COMPANY
The Company was formed as a business trust under Delaware law on September 29,
1999. The Company offers five classes of shares: Class A, Class B, Class C,
Class P, and Class Y. Only the Fund's Class Y shares are offered in this
Statement of Additional Information. All shares have equal noncumulative voting
rights and equal rights with respect to dividends, assets and liquidation,
except for certain class-specific expenses. They are fully paid and
nonassessable
13
<PAGE>
when issued and have no preemptive or conversion rights. Additional classes or
funds may be added in the future. The Act requires that where more than one
class or fund exists, each class or fund must be preferred over all other
classes or funds in respect of assets specifically allocated to such class or
fund.
Rule 18f-2 under the Act provides that any matter required to be submitted, by
the provisions of the Act or applicable state law, or otherwise, to the holders
of the outstanding voting securities of an investment company such as the
Company shall not be deemed to have been effectively acted upon unless approved
by the holders of a majority of the outstanding shares of each class affected by
such matter. Rule 18f-2 further provides that a class shall be deemed to be
affected by a matter unless the interests of each class or fund in the matter
are substantially identical or the matter does not affect any interest of such
class or fund. However, the Rule exempts the selection of independent public
accountants, the approval of a contract with a principal underwriter and the
election of trustees from the separate voting requirements.
The Company does not hold annual meetings of shareholders unless one or more
matters are required to be acted on by shareholders under the Act. Under the
Company's Declaration of Trust, shareholder meetings may be called at any time
by certain officers of the Company or by a majority of the trustees (i) for the
purpose of taking action upon any matter requiring the vote or authority of the
Company's shareholders or upon other matters deemed to be necessary or desirable
or (ii) upon the written request of the holders of at least one-quarter of the
shares of the Company's outstanding and entitled to vote at the meeting.
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment accounts. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Fund's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security 7 days
before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account
considers a trade or trades in such security, prohibiting profiting on trades of
the same security within 60 days and trading on material and non-public
information. The Code imposes certain similar requirements and restrictions on
the independent directors and trustees of each Lord Abbett-sponsored mutual fund
to the extent contemplated by the recommendations of such Advisory Group.
9.
FINANCIAL STATEMENTS
The Statement of Net Assets at December 14, 1999 and the report of Deloitte &
Touche LLP, independent auditors, on such statements are attached hereto.
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<PAGE>
LORD ABBETT LARGE-CAP GROWTH FUND
STATEMENT OF NET ASSETS
DECEMBER 14, 1999
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Cash $ 100,000
PREPAID OFFERING COSTS (3).............................................................. 3,000
-------
TOTAL ASSETS............................................................................$ 103,000
=======
LIABILITIES:
LIABILITIES AND ACCRUED EXPENSES 3,000
-------
NET ASSETS:.............................................................................$ 100,000
=======
NET ASSETS CONSIST OF:
Class A Shares of beneficial interest, $0.00 par value,
100,000,000 shares authorized........................................................$ 0.00
Class B Shares of beneficial interest, $0.00 par value,
100,000,000 shares authorized........................................................ 0.00
Class C Shares of beneficial interest, $0.00 par value,
100,000,000 shares authorized........................................................ 0.00
Class P Shares of beneficial interest, $0.00 par value,
100,000,000 shares authorized........................................................ 0.00
Class Y Shares of beneficial interest, $0.00 par value,
100,000,000 shares authorized........................................................ 0.00
PAID-IN CAPITAL IN EXCESS OF PAR........................................................ 100,000
-------
NET ASSETS:.............................................................................$ 100,000
=======
NET ASSET VALUE:
CLASS A - BASED ON NET ASSETS OF $ 96,000 AND 9,600 SHARES OUTSTANDING..................$ 10.00
=====
CLASS B - BASED ON NET ASSETS OF $ 1,000 AND 100 SHARES OUTSTANDING.....................$ 10.00
=====
CLASS C - BASED ON NET ASSETS OF $ 1,000 AND 100 SHARES OUTSTANDING.....................$ 10.00
=====
CLASS P - BASED ON NET ASSETS OF $ 1,000 AND 100 SHARES OUTSTANDING.....................$ 10.00
=====
CLASS Y - BASED ON NET ASSETS OF $ 1,000 AND 100 SHARES OUTSTANDING.....................$ 10.00
=====
</TABLE>
Notes to Financial Statements
(1) Lord Abbett Large-Cap Growth Fund (the "Fund") was organized as a Delaware
business trust on September 29, 1999 and is registered under the Investment
Company Act of 1940. To date, the Fund
22
<PAGE>
has not had any transactions other than those relating to organizational
matters and the sale of Class A, Class B, Class C, Class P and Class Y
shares to Lord, Abbett & Co. ("LA").
(2) The Fund has entered into an investment advisory agreement with LA and a
distribution agreement with Lord, Abbett Distributor, LLC (the
"Distributor"). (See "Management of the Funds - Management and Advisory
Arrangements" in the Statement of Additional Information.)
(3) Prepaid offering cost consist of legal fees related to preparing the
initial registration statement, and will be amortized over a 12 month
period beginning with the commencement of operations of the Fund. The
Investment Adviser has agreed to bear all the costs of organizing the Fund,
estimated to be $13,200.
15
