1933 Act File No. 2-62797
1940 Act File No. 811-2871
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 23 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Post-Effective Amendment No. 22 [X]
LORD ABBETT DEVELOPING GROWTH FUND, INC.
Exact Name of Registrant as Specified in Charter
767 FIFTH AVENUE, NEW YORK, N. Y. 10153-0203
Address of Principal Executive Office
REGISTRANT'S TELEPHONE NUMBER (212) 848-1800
Thomas F. Konop, Vice President
767 FIFTH AVENUE, NEW YORK, N. Y. 10153
Name and Address of Agent for Service
It is proposed that this filing will become effective (check appropriate box)
X immediately on filing pursuant to subparagraph (b)(1)(ix) of Rule 485
- ---------
on (date) pursuant to paragraph (b) of Rule 485
- ---------
60 days after filing pursuant to paragraph (a) (1) of Rule 485
- ---------
on (date) pursuant to paragraph (a) (1) of Rule 485
- ---------
75 days after filing pursuant to paragraph (a) (2) of rule 485
- ---------
on (date) pursuant to paragraph (a) (2) of rule 485
- ---------
If appropriate, check the following box:
- --------- This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
<PAGE>
LORD ABBETT DEVELOPING GROWTH FUND, INC.
FORM N-1A
Cross Reference Sheet
Post-Effective Amendment No. 23
Pursuant to Rule 481 (a)
Explanatory Note
This Post-Effective Amendment No. 23 (the "Amendment") to the Registrant's
Registration Statement relates only to Class Y shares of Lord Abbett Developing
Growth Fund, Inc.
The other classes of shares of the Registrant are listed below and are offered
by the Prospectus and Statement of Additional Information in Parts A and B,
respectively of the Post-Effective Amendment to the Registrant's Registration
Statement as identified. The following are separate classes of shares of the
Registrant. This Amendment does not relate to, amend or otherwise affect the
Prospectus and Statement of Additional Information contained in the prior
Post-Effective Amendment listed below, and pursuant to Rule 485(d) under the
Securities Act of 1933, does not affect the effectiveness of such Post-Effective
Amendment.
Post-Effective
AMENDMENT NO.
Class A, B and C 22
Form N-1A Location In Prospectus or
ITEM NO. STATEMENT OF ADDITIONAL INFORMATION
1 Cover Page
2 Fee Table
3 (a) Financial Highlights; Performance
3 (b) N/A
3 (c) Performance
3 (d) N/A
4 (a) (i) Cover Page
4 (a) (ii) Investment Objective; How We Invest
4 (b) (c) How We Invest
5 (a) Our Management
5 (b) Our Management; Back Cover Page
5 (c) Our Management
5 (d) N/A
5 (e) Back Cover Page
5 (f) Our Management
5 (g) N/A
5 A Performance
6 (a) Cover Page
6 (b) (c) (d) N/A
6 (e) Cover Page
6 (f) (g) Dividends, Capital Gains
Distributions and Taxes
6 (h) N/A
7 (a) Back Cover Page
7 (b) (c) (d)
(e) (f) Purchases
<PAGE>
Form N-1A Location In Prospectus or
ITEM NO. STATEMENT OF ADDITIONAL INFORMATION
8 Redemptions
9 N/A
10 Cover Page
11 Cover Page - Table of Contents
12 N/A
13 Investment Objective and Policies
14 Directors and Officers
15 (a) (b) N/A
15 (c) Directors and Officers
16 (a) (i) Investment Advisory and Other Services
16 (a) (ii) Directors and Officers
16 (a) (iii) Investment Advisory and Other Services
16 (b) Investment Advisory and Other Services
16 (c) (d) (e)
(g) N/A
16 (f) Purchases, Redemptions; Investment Advisory and
Other Services and Shareholder Services
16 (h) Investment Advisory and Other Services
16 (i) N/A
17 (a) Portfolio Transactions
17 (b) N/A
17 (c)(d) Portfolio Transactions
17 (e) N/A
18 (a) Cover Page
18 (b) N/A
19 (a) (b) Purchases, Redemptions
and Shareholder Services
19 (c) N/A
20 Taxes
21 (a) Purchases, Redemptions
and Shareholder Services
21 (b) (c) N/A
22 (a) N/A
22 (b) Past Performance
23 Financial Statements
<PAGE>
LORD ABBETT
DEVELOPING GROWTH FUND, INC.
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
800-426-1130
Lord Abbett Developing Growth Fund, Inc. ("we" or the "Fund"), is a mutual fund
with four classes of shares. These classes, called Class A, B, C and Y shares,
provide investors with different investment options in purchasing shares of the
Fund. Only Class Y shares of the Fund are offered by this Prospectus. See
"Purchases" for a description of this class.
Our investment objective is long-term growth of capital through a diversified
and actively-managed portfolio consisting of developing growth companies, many
of which are traded over the counter. In pursuing our objective we invest
primarily in the common stocks of companies with long-range growth potential,
particularly smaller companies considered to be in the developing growth phase.
There can be no assurance that our objective will be achieved. Volatile price
movement can be expected.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Additional information about
the Fund has been filed with the Securities and Exchange Commission and is
available upon request without charge. The Statement of Additional Information
is incorporated by reference into this Prospectus and may be obtained, without
charge, by writing to the Fund or by calling 800-874-3733. Ask for "Part B of
the Prospectus -- the Statement of Additional Information."
The date of this Prospectus and of the Statement of Additional Information is
November 17, 1997.
PROSPECTUS CLASS Y SHARES
Investors should read and retain this Prospectus. Shareholder inquiries should
be made in writing to the Fund or by calling 800-821-5129. You also can make
inquiries through your broker-dealer. Shares of the Fund are not deposits or
obligations of, or guaranteed or endorsed by, any bank, and the shares are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other agency. An investment in the Fund involves risks,
including the possible loss of principal.
CONTENTS PAGE
1 Investment Objective 2
2 Fee Table 2
3 How We Invest 3
4 Purchases 4
5 Shareholder Services 5
6 Our Management 5
7 Dividends, Capital Gains
Distributions and Taxes 6
8 Redemptions 7
9 Performance 8
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
1 INVESTMENT OBJECTIVE
Our investment objective is long-term growth of capital through a diversified
and actively-managed portfolio consisting of developing growth companies, many
of which are traded over the counter.
2 FEE TABLE
A summary of the Fund's expenses is set forth in the table below. The example is
not a representation of past or future expenses. Actual expenses may be greater
or less than those shown.
Class Y
Shares
Shareholder Transaction Expenses
(as a percentage of offering price)
Maximum Sales Load on Purchases
(See "Purchases") None
Deferred Sales Load (See "Purchases") None
Annual Fund Operating Expenses(1) (as a percentage of average net assets)
Management Fees (See "Our Management") 0.59% 12b-1 Fees (See "Purchases") None
Other Expenses (See "Our Management") 0.29% Total Operating Expenses 0.88%
Example: Assume an annual return of 5% and there is no change in the level of
expenses described above. For a $1,000 investment, with reinvestment of all
dividends and distributions, you would pay the following total expenses,
assuming redemption on the last day of each period indicated.
1 year 3 years
Class Y shares $ 9 $28
(1)The annual operating expenses shown in the summary have been restated from
January 31, 1997 fiscal year amounts to reflect current fees.
The foregoing is provided to give investors a better understanding of the
expenses that are incurred by an investment in the Fund.
Our present investment strategy, as developed by Lord, Abbett & Co. ("Lord
Abbett"), our investment manager, is based on the four phases of corporate
growth. As described below, only the second (or developing growth) phase is
characterized by a dramatic rate of growth. We look for companies in that phase
and, under normal circumstances, will invest at least 65% of our total assets in
securities of such companies. We also may invest in companies which are in their
formative phase. Developing growth companies are almost always small, usually
young and their shares are generally traded over the counter. Having, in
management's view, passed the pitfalls of the formative years, they are now in a
position to grow rapidly in their market.
The Four Phases of Business Growth
(as perceived by Lord Abbett)
Phase 1-- Formative: Phase 1 has high risk. It is a formative phase for
companies and the perils of infancy take a high toll during these years. Skill
of management and growth of revenues and earnings permit some companies to
survive and advance into the second phase.
Phase 2-- Developing Growth: Phase 2 usually is a period of swift development,
when growth occurs at a rate rarely equaled by established companies in their
mature years. We focus on companies which we believe are strongly positioned in
this phase. Of course, the actual growth of a company cannot be foreseen and it
may be difficult to determine in which phase a company is presently situated.
Phase 3-- Established Growth: Phase 3 is a time of established growth when
competitive forces, regulations and internal bureaucracy often begin to blunt
the sharp edge of success in the marketplace.
Phase 4-- Maturity: Phase 4 is a time of maturity when companies ease into a
growth pattern that roughly reflects the increase in Gross Domestic Product.
At any given time, there are many hundreds of publicly-traded corporations in
the developing growth phase. In choosing among them, we look for special
characteristics that will help their growth. These can include a unique product
or service for which we foresee a rising demand; a special area of technological
expertise; the ability to service a region that is growing faster than average;
a competitive advantage or new opportunities in foreign trade or arising from
shifts in government priorities and programs; or an ability to take advantage of
growth of consumers' discretionary income and demographic changes.
We also look for certain financial charac-teristics such as: at least five years
of higher-than-average growth of revenues and earnings per share;
higher-than-average returns on equity; the ability to finance growth in the form
of a lower-than-average ratio of long-term debt to capital and price/earnings
ratios that are below expected growth rates.
We also look for certain characteristics of management in addition to those that
are implied by the financial data. We look for management that is well-seasoned
and diverse in its talent and that is aggressive enough to seize the
opportunities we perceive in each company's future. Finally, we look for
management that has demonstrated an ability to manage through a full economic
cycle. We do not, however, invest in order to control management.
Securities we consider for our portfolio are analyzed solely on traditional
investment fundamentals. We do not select securities based on trends indicated
by chartists' technical analyses. In addition to the financial data already
mentioned, we evaluate the market for each company's products or services, the
strengths and weaknesses of competitors, the availability of raw materials,
diversity of product mix, etc. Finally, in assembling our portfolio, we try to
diversify our investments. Within the bounds of other criteria, we try to invest
in many securities and industries in order to minimize risk.
Up to 10% of our net assets (at the time of investment) may be invested in
foreign securities (of the type described above) primarily traded in foreign
countries.
Although we have no present plans to change our policies, if we determine that
our investment objective can best be achieved by a change in investment policies
or strategy, we reserve the right to make such a change without shareholder
approval, provided it is not prohibited by our investment restrictions or
applicable law. Any material change will first be disclosed in a current
prospectus.
There may be times when management believes that economic conditions or general
levels of common stock prices are such that it would be advisable, for defensive
reasons, to curtail investments in common stocks. During such periods, we may
invest a substantial portion of our portfolio in cash or cash equivalents
(short-term obligations of banks, corporations or the U.S. Government).
We will not change our investment objective without shareholder approval.
Risk Factors. An investment in the Fund is not intended as a complete investment
program. The Fund will not provide significant income. Moreover, because stocks
of developing growth companies entail more risk and have more volatile prices
than those of mature companies, the Fund's net asset value per share is likely
to experience above-average fluctuations.
Securities markets of foreign countries in which the Fund may invest generally
are not subject to the same degree of regulation as the U.S. markets and may be
more volatile and less liquid than the major U.S. markets. Lack of liquidity may
affect the Fund's ability to purchase or sell large blocks of securities and
thus obtain the best price. There may be less publicly-available information on
publicly-traded companies, banks and governments in foreign countries than is
generally the case for such entities in the United States. The lack of uniform
accounting standards and practices among countries impairs the validity of
direct com-parisons of valuation measures (such as price/earnings ratios) for
securities in different countries. Other considerations include political and
social instability, expropriation, higher transaction costs, foreign government
controls, currency fluctuations, withholding taxes that cannot be passed through
as a tax credit or deduction to shareholders and different securities settlement
practices. Settlement periods for foreign securities, which are sometimes longer
than those for securities of U.S. issuers, may affect portfolio liquidity. These
different settlement practices may cause missed purchasing opportunities and/or
the loss of interest on money market and debt investments pending further equity
or long-term debt investments. In addition, foreign securities held by the Fund
may be traded on days that the Fund does not value its portfolio securities,
such as Saturdays and customary business holidays, and, accordingly, the Fund's
net asset value may be significantly affected on days when shareholders do not
have access to the Fund.
Portfolio Turnover. The portfolio turnover rate for the fiscal year ended
January 31, 1997 was 42.35%, compared to 50.12% for the prior fiscal year.
4 PURCHASES
Class Y shares. Class Y shares are purchased at net asset value with no sales
charge of any kind. The net asset value of our shares is calculated every
business day as of the close of the New York Stock Exchange ("NYSE") by dividing
net assets by the number of shares outstanding. Securities are valued at their
market value as more fully described in the Statement of Additional Information.
Who May Invest? Eligible purchasers of Class Y shares include (i) 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 Class Y shares in particular investment products
made available for a fee to clients of such brokers, dealers, registered
investment advisers or other financial institutions ("mutual fund wrap fee
programs"), (ii) the trustee or custodian under any deferred compensation or
pension or profit-sharing plan or payroll deduction IRA established for the
benefit of the employees of any company with an account(s) in excess of $10
million managed by Lord Abbett or its sub-advisors on a private-advisory-account
basis, and (iii) institutional investors, including 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.
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 it
to the Lord Abbett Developing Growth Fund (P.O. Box 419100, Kansas City,
Missouri 64141). The minimum initial investment is $1 million except for mutual
fund wrap fee 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 net asset value 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 net asset
value 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 1-800 821-5129 to set up your
account and to arrange a wire transaction. Wire to: United Missouri Bank of
Kansas City, N.A., Routing number - 101000695, Account Number: 9878002611, FBO:
(account name) and (account number). Specify the complete name of the
fund/series of your choice, note Class Y shares and include your new account
number and your name. To add to an existing account, wire to: United Missouri
Bank of Kansas City, N.A. , routing number - 101000695, account number:
9878002611, FBO: (account name) and (account number). Specify the complete name
of the fund/series of your choice, note Class Y shares and include your account
number and your name.
5 SHAREHOLDER SERVICES
We offer the following shareholder services:
Telephone Exchange Privilege: Class Y shares may be exchanged without a service
charge for shares of the same class of any other Lord Abbett-sponsored fund.
You or your representative with proper identification can instruct your Fund to
exchange uncertificated shares of a class (held by the transfer agent) by
telephone. Shareholders have this privilege unless they refuse it in writing. A
Fund will not be liable for following instructions communicated by telephone
that it reasonably believes to be genuine and will employ reasonable procedures
to confirm that instructions received are genuine, including requesting proper
identification and recording all telephone exchanges. Instructions must be
received by a Fund in Kansas City (800-821-5129) prior to the close of the NYSE
to obtain a Fund's net asset value per class share on that day. Expedited
exchanges by telephone may be difficult to implement in times of drastic
economic or market change. The exchange privilege should not be used to take
advantage of short-term swings in the market. Each Fund reserves the right to
terminate or limit the privilege of any shareholder who makes frequent
exchanges. Each Fund can revoke the privilege for all shareholders upon 60 days'
prior written notice. A prospectus for the other Lord Abbett-sponsored fund
selected by you should be obtained and read before an exchange. Exercise of the
Exchange Privilege will be treated as a sale for federal income tax purposes
and, depending on the circumstances, a capital gain or loss may be recognized.
All correspondence should be directed to the Lord Abbett Developing Growth Fund
(P.O. Box 419100, Kansas City, Missouri 64141; 800-821-5129).
6 MANAGEMENT
Our business is managed by our officers on a day-to-day basis under the overall
direction of our Board of Directors with the advice of Lord Abbett. We employ
Lord Abbett as investment manager pursuant to a Management Agreement. Lord
Abbett has been an investment manager for over 68 years and currently manages
approximately $25 billion in a family of mutual funds and other advisory
accounts. Under the Management Agreement, Lord Abbett provides us with
investment management services and executive and other personnel, pays the
remuneration of our officers and our directors affiliated with Lord Abbett,
provides us with office space and pays for ordinary and necessary office and
clerical expenses relating to research, statistical work and supervision of our
portfolio and certain other costs. Lord Abbett provides similar services to
twelve other Lord Abbett-sponsored funds having various investment objectives
and also advises other investment clients. Stephen J. McGruder, Executive Vice
President of the Fund, serves as portfolio manager for the Fund and has done so
since he joined Lord Abbett in May 1995. Prior to joining Lord Abbett, Mr.
McGruder had served as Vice President of Wafra Investment Advisory Group, a
private investment company, since October 1988. Mr. McGruder has over 28 years
of experience in the investment business.
Under the Management Agreement, we pay Lord Abbett a monthly fee based on
average daily net assets for each month. For the fiscal year ended January 31,
1997, the effective fee paid to Lord Abbett as a percentage of average daily net
assets was at the annual rate of 0.64%. In addition, we pay all expenses not
expressly assumed by Lord Abbett.
The Fund. The Fund is a diversified open-end management investment company
incorporated under Maryland law on August 28, 1978. Our predecessor corporation
was organized on July 11, 1973. Its Class A, B, C and Y shares have equal rights
as to voting, dividends, assets and liquidation except for differences resulting
from certain class-specific expenses. Class Y shares are sold to institutions
exclusively with no front-end or contingent deferred sales charge and no Rule
12b-1 charges. Class A, B and C shares sold to the retail public are subject to
Rule 12b-1 charges. With certain exceptions, Class A shares are sold with a
front-end sales charge at the time of purchase and are not subject to a
contingent deferred sales charge when they are redeemed. Class B shares are sold
without a sales charge at the time of purchase, but are subject to a contingent
deferred sales charge if they are redeemed before the sixth anniversary of their
purchase. Class B shares will automatically convert to Class A shares on the
eighth anniversary of your purchase. Class C shares are sold with no front-end
sales charge but have no conversion feature and are subject to a 1% contingent
deferred sales charge on redemptions before the first anniversary of their
purchase. Due to the class-specific expenses, dividends of Class B and Class C
shares are likely to be lower than for Class A shares, and are likely to be
higher for Class Y shares than for any other class of shares. For more
information regarding the Class A, B and C shares, please call 1-800-874-3733 to
request a prospectus for those shares. There is a possibility that one fund
might become liable for any misstatement, inaccuracy, or incomplete disclosure
in the prospectus concerning the other fund.
7 DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
Dividends from net investment income may be taken in cash or reinvested in
additional shares at net asset value without a sales charge.
If you elect a cash payment (i) a check will be mailed to you as soon as
possible after the monthly reinvestment date or (ii) if you arrange for direct
deposit, your payment will be wired directly to your bank account within one day
after the date on which the dividend is paid.
A long-term capital gains distribution is made when we have net profits during
the year from sales of securities which we have held more than one year. If we
realize net short-term capital gains, they also will be distributed. Any capital
gains distribution will be paid in November and/or February. You may take them
in cash or reinvest them in additional shares at net asset value without a sales
charge.
Dividends and distributions may be paid in December and/or February. Dividends
and distributions declared in October, November or December of any year to
shareholders of record as of a date in such a month will be treated for federal
income tax purposes as having been received by shareholders in that year if they
are paid before February 1 of the following year.
We intend to continue to meet the requirements of Subchapter M of the Internal
Revenue Code. We will try to distribute to shareholders all our net investment
income and net realized capital gains, so as to avoid the necessity of the Fund
paying federal income tax. Shareholders, however, must report dividends and
capital gains distributions as taxable income. Dividends derived from the Fund's
ordinary income and net short-term capital gains are taxable to Shareholders at
ordinary income rates. Under recently enacted legislation, the maximum tax rate
on long-term capital gains for a U.S. individual, estate or trust is reduced to
20% and the "holding period" for long-term capital gains treatment is increased
from one-year to eighteen months. (If the taxpayer is in the 15% tax bracket,
the rate is 10%.) An individual, estate or trust with a holding period greater
than one year but less than 18 months has "mid-term" gains taxed at a maximum
rate of 28% (15% if the taxpayer is in the 15% tax bracket). Although it has not
yet done so, Treasury has the authority to amend the tax law governing taxation
of shareholders of a regulated investment company to reflect these changes.
Although the Fund does not know when and what regulations will be promulgated,
it believes that the regulations should provide that whether received in cash or
shares, regardless of how long a taxpayer has held the shares of the Fund,
distributions derived from net long-term or mid-term capital gains will be
taxable to shareholders as long-term or mid-term capital gains, respectively.
Shareholders may be subject to a $50 penalty under the Internal Revenue Code and
we may be required to withhold and remit to the U.S. Treasury a portion (31%) of
any redemption proceeds (including the value of shares exchanged into another
Lord Abbett-sponsored fund), and of any dividend or distribution on any account,
where the payee (shareholder) failed to provide a correct taxpayer
identification number or to make certain required certifications.
We will inform shareholders of the federal tax status of each dividend and
distribution after the end of each calendar year. Shareholders should consult
their tax advisers concerning applicable state and local taxes as well as the
tax consequences of gains or losses from the redemption or exchange of our
shares.
8 REDEMPTIONS
To obtain the proceeds of an expedited redemption of $50,000 or less, you can
telephone the Fund. The Fund will not be liable for following instructions
communicated by telephone that it reasonably believes to be genuine and will
employ reasonable procedures to confirm that instructions received are genuine,
including requesting proper identification, recording all telephone redemptions
and mailing the proceeds only to the named shareholder at the address appearing
on the account registration.
Send your written redemption request to Lord Abbett Developing Growth Fund, Inc.
(P.O. Box 419100, Kansas City, Missouri 64141) with signature(s) and any legal
capacity of the signer(s) guaranteed by an eligible guarantor, accom-panied by
any certificates for shares to be redeemed and other required documentation. We
will make payment of the net asset value of the shares on the date the
redemption order was received in proper form. Payment will be made within three
days. The Fund may suspend the right to redeem shares for not more than seven
days (or longer under unusual circumstances as permitted by Federal law). If you
have purchased Fund shares by check and subsequently submit a redemption
request, redemption proceeds will be paid upon clearance of your purchase check,
which may take up to 15 days. To avoid delays you may arrange for the bank upon
which a check was drawn to communicate to the Fund that the check has cleared.
Wire. You must sign up for the wire feature before using it. To verify that it
is in place, call 1-800-821-5129. 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.
Tax-qualified Plans: For redemptions of $50,000 or less, follow normal
redemption procedures. Redemptions over $50,000 must be in writing from the
employer, broker or plan administrator stating the reason for the redemption.
The reason for the redemption must be received by the Fund prior to, or
concurrent with, the redemption request.
9 PERFORMANCE
The Fund completed its fiscal year on January 31, 1997 with net asset values of
$12.80 per share for the Class A shares and $12.75 per share for both the Class
B and Class C shares, respectively.
While the stock market as a whole performed well over the year, the strong
performance that the Fund posted over the past 12 months can be attributed to
careful stock selection within the small-cap arena. In particular, the Fund
benefited from its exposure to select companies in the technology, service, and
energy sectors, as well as industrial machinery companies.
The Fund continued to focus on niche companies. Many of these companies, whose
expertise in specialty products or services precludes much competition, enjoy a
large market share within their industries. Additionally, niche companies are
less vulnerable to economic or marketplace trends. As such, companies in the
Fund enjoyed steady earnings throughout the year. The Fund seeks to temper the
volatility inherent in the small-cap arena through diversity. At the close of
the fiscal year, the Fund owned over 120 companies covering 17 different
industries.
Total Return. Total return for the one-, five- and ten-year periods represents
the average annual compounded rate of return on an investment of $1,000 in the
Fund at the net asset value. When total return is quoted for Class Y shares, it
is shown at net asset value without the deduction of any sales charge.
Quotations of yield or total return for any period when an expense limitation is
in effect will be greater than if the limitation had not been in effect. See
"Past Performance" in the Statement of Additional Information for a more
detailed description.
See "Performance" in the Statement of Additional Information for a more detailed
discussion concerning the computation of the Fund's total return.
This Prospectus does not constitute an offering in any jurisdiction in which
such offer is not authorized or in which the person making such offer is not
qualified to do so or to anyone to whom it is unlawful to make such offer.
No person is authorized to give any information or to make any representations
not contained in this Prospectus or in supplemental sales material authorized by
the Fund and no person is entitled to rely upon any information or
representation not contained herein or therein.
The performance of the Class A shares which is shown in the comparison below
will be greater than or less than that for Class B, C and Y shares based on the
differences in sales charges and fees paid by shareholders investing in the
different classes. Comparison of change in value of a $10,000 investment in
Class A shares of the Fund, assuming reinvestment of all dividends and
distributions, to such an investment in the unmanaged Russell 2000 Index.
(1) Performance numbers for the unmanaged Russell 2000 Index do not reflect
transaction costs or management fees. An investor cannot invest directly in this
unmanaged index.
(2) Total return is the percent change in net asset value with all dividends and
distributions reinvested for the periods shown using the SEC-required uniform
method to compute such return. The Class A share total return reflects the
deduction of 12b-1 expenses which the Class Y shares do not have.
Investment Manager and Underwriter
Lord, Abbett & Co. and Lord Abbett Distributor LLC
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
212-848-1800
Custodian
The Bank of New York
48 Wall Street
New York, New York 10286
Transfer Agent and Dividend
Disbursing Agent
United Missouri Bank of Kansas City, N.A.
Tenth and Grand
Kansas City, Missouri 64141
Shareholder Servicing Agent
DST Systems, Inc.
P.O. Box 419100
Kansas City, Missouri 64141 800-821-5129 Auditors Deloitte & Touche LLP Counsel
Debevoise & Plimpton Printed in the U.S.A.
LADG-1-697
(6/97)
Prospectus '97
November 17, 1997
Lord Abbett
Developing
Growth Fund
CLASS Y SHARES
<PAGE>
LORD ABBETT
STATEMENT OF ADDITIONAL INFORMATION November 17, 1997
LORD ABBETT DEVELOPING GROWTH FUND, INC.
This Statement of Additional Information is not a Prospectus. A Prospectus for
the Class Y shares of Lord Abbett Developing Growth Fund, Inc. (sometimes
referred to as "we" or the "Fund") 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. This Statement
relates to, and should be read in conjunction with, the Prospectus dated
November 17, 1997.
The Fund was incorporated under Maryland law on August 21, 1978 and its
predecessor corporation was organized on July 11, 1973. Our authorized capital
stock consists of four classes (A, B, C and Y), $0.01 par value. The Board of
Directors will allocate these authorized shares of capital stock among the
classes from time to time. 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. Although no present plans
exist to do so, further classes may be added in the future. The Investment
Company Act of 1940, as amended (the "Act"), requires that where more than one
class exists, each class must be preferred over all other classes in respect of
assets specifically allocated to such class.
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 Fund
shall not be deemed to have been effectively acted upon unless approved by the
holders of a majority of the outstanding shares of each class or series affected
by such matter. Rule 18f-2 further provides that a class or series shall be
deemed to be affected by a matter unless the interests of each class or series
in the matter are substantially identical or the matter does not affect any
interest of such class or series. However, the Rule exempts the selection of
independent public accountants, the approval of a contract with a principal
underwriter and the election of directors from its separate voting requirements.
Shareholder inquiries should be made by writing directly to the Fund or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
TABLE OF CONTENTS Page
1. Investment Objective and Policies 2
2. Directors and Officers 5
3. Investment Advisory and Other Services 7
4. Portfolio Transactions 8
5. Purchases, Redemptions and Shareholder Services 9
6. Past Performance 10
7. Taxes 11
8. Information About the Fund 12
9. Financial Statements 12
<PAGE>
1.
Investment Objective and Policies
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Fund may not: (1) borrow money, except that (i) the Fund may borrow from
banks (as defined in the Investment Company Act of 1940 ("the Act")) in amounts
up to 33 1/3% of its total assets (including the amount borrowed), (ii) the Fund
may borrow up to an additional 5% of its total assets for temporary purposes,
(iii) the Fund may obtain such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio securities and (iv) the Fund may
purchase securities on margin to the extent permitted by applicable law; (2)
pledge its assets (other than to secure such borrowings, or to the extent
permitted by the Fund's investment policies, as permitted by applicable law; (3)
engage in the underwriting of securities, except pursuant to a merger or
acquisition or to the extent that, in connection with the disposition of its
portfolio securities, it may be deemed to be an underwriter under federal
securities laws; (4) make loans to other persons, except that the acquisition of
bonds, debentures or other corporate debt securities and investment in
government obligations, commercial paper, pass-through instruments, certificates
of deposit, bankers acceptances, repurchase agreements or any similar
instruments shall not be subject to this limitation and except further that the
Fund may lend its portfolio securities, provided that the lending of portfolio
securities may be made only in accordance with applicable law; (5) buy or sell
real estate (except that the Fund may invest in securities directly or
indirectly secured by real estate or interests therein or issued by companies
which invest in real estate or interests therein) commodities or commodity
contracts (except to the extent the Fund may do so in accordance with applicable
law and without registering as a commodity pool operator under the Commodity
Exchange Act as, for example, with futures contracts); (6) with respect to 75%
of the gross assets of the Fund, buy securities of one issuer representing more
than (i) 5% of the Fund's gross assets, except securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities or (ii) 10% of the
voting securities of such issuer; (7) invest more than 25% of its assets, taken
at market value, in the securities of issuers in any particular industry
(excluding securities of the U.S. Government, its agencies and
instrumentalities); or (8) issue senior securities to the extent such issuance
would violate applicable law.
With respect to the restrictions mentioned herein, compliance therewith will not
be affected by change in the market value of portfolio securities but will be
determined at the time of purchase or sale of such securities.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. In addition to the investment
restrictions above which cannot be changed without shareholder approval, we also
are subject to the following non-fundamental investment policies which may be
changed by the Board of Directors without shareholder approval. The Fund may
not: (1) borrow in excess of 5% of its gross assets taken at cost or market
value, whichever is lower at the time of borrowing, and then only as a temporary
measure for extraordinary or emergency purposes; (2) make short sales of
securities or maintain a short position except to the extent permitted by
applicable law; (3) invest knowingly more than 15% of its net assets (at the
time of investment) in illiquid securities, except for securities qualifying for
resale under Rule 144A of the Securities Act of 1933, deemed to be liquid by the
Board of Directors; (4) invest in securities of other investment companies as
defined in the Act, except as permitted by applicable law; (5) invest in
securities of issuers which, with their predecessors, have a record of less than
three years of continuous operation, if more than 5% of the Fund's total assets
would be invested in such securities (this restriction shall not apply to
mortgaged-backed securities, asset-backed securities or obligations issued or
guaranteed by the U. S. Government, its agencies or instrumentalities); (6) hold
securities of any issuer when more than 1/2 of 1% of the securities of such
issuer are owned beneficially by one or more of the Fund's officers or directors
or by one or more partners of the Fund's underwriter or investment adviser if
these owners in the aggregate own beneficially more than 5% of such securities
of such issuer; (7) invest in warrants if, at the time of acquisition, its
investment in warrants, valued at the lower of cost or market, would exceed 5%
of the Fund's total assets (included within such limitation, but not to exceed
2% of the Funds total assets, are warrants which are not listed on the New York
or American Stock Exchange or a major foreign exchange); (8) invest in real
estate limited partnership interests or interests in oil, gas or other mineral
leases, or exploration or development programs, except that the Fund may invest
in securities issued by companies that engage in oil, gas or other mineral
exploration or development activities; (9) write, purchase or sell puts, calls,
<PAGE>
straddles, spreads or combinations thereof, except to the extent permitted in
the Fund's prospectus and statement of additional information, as they may be
amended from time to time; or (10) buy from or sell to any of its officers,
directors, employees, or its investment adviser or any of its officers,
directors, partners or employees, any securities other than shares of the Fund's
common stock.
Although it has no current intention to do so, the Fund may invest in financial
futures and options on financial futures.
A repurchase agreement is the purchase and simultaneous commitment to resell a
security at a specified time and price. The underlying security is collateral
under the agreement. As a matter of operating policy, we will not invest more
than 10% of the value of our assets in repurchase agreements maturing in more
than seven days.
We did not invest in repurchase agreements or lend portfolio securities during
our last fiscal year and have no present intent to do so.
PORTFOLIO TURNOVER RATE. For the fiscal year ended January 31, 1997, our
portfolio turnover rate was 42.35% versus 50.12% for the prior fiscal year.
STOCK INDEX FUTURES CONTRACTS. The Fund believes it can reduce the volatility
inherent in its portfolio through the use of stock index futures contracts. (A
stock index futures contract is an agreement pursuant to which two parties
agree, one to receive and the other to pay, on a specified date an amount of
cash equal to a specified dollar amount -- established by an exchange or board
of trade -- times the difference between the value of the index at the close of
the last trading day of the contract and the price at which the futures contract
is originally written. No consideration is paid or received at the time the
contract is entered into, only the good faith deposit described herein.) When
Lord Abbett, our investment manager, anticipates a general decline in the sector
of the stock market which includes our portfolio assets, we can reduce risk by
hedging the effect of such decline on our ability to sell assets at best price
or otherwise hedge a decision to delay the sale of portfolio securities. Such
hedging would be possible if there were an established, regularly-quoted stock
index for equities of the character in which we invest and if an active public
market were to develop on a stock exchange or board of trade in futures
contracts based on such index.
The market value of a futures contract is based primarily on the value of the
underlying index. Changes in the value of the index will cause roughly
corresponding changes in the market price of the futures contract, except as
otherwise described below. If a stock index is established which is made up of
securities whose market characteristics closely parallel the market
characteristics of the securities in our portfolio, then the market value of a
futures contract on that index should fluctuate in a way closely resembling the
market fluctuation of our portfolio. Thus, if we should sell futures contracts,
a decline in the market value of the portfolio will be offset by an increase in
the value of the short futures position to the extent of the hedge (i.e., the
percentage of the portfolio value represented by the value of the futures
position). Conversely, when we are in a strong cash position (for example,
through substantial sales of our shares) and wish to invest the cash in
anticipation of a rising market, we could rapidly hedge against the expected
market increase by buying futures contracts to offset the cash position and thus
cushion the adverse effect of attempting to buy individual securities in a
rising market.
The public markets for existing stock index futures contracts, such as those
using the Standard & Poor's 100 Index and 500 Index traded on the Chicago
Mercantile Exchange or those using the New York Stock Exchange Composite Index
traded on the New York Stock Exchange ("NYSE"), are active and have developed
substantial liquidity and we expect a similar market to develop for stock index
futures on a representative group of over-the-counter stocks. The existence of
an active market would permit us to close out our position in futures contracts
by purchasing an equal and opposite position in the public market. Under futures
contracts currently in use, the purchaser would be required to segregate in a
separate account, as a good faith deposit, cash or Treasury bills in an amount
set by a board of trade or exchange (currently approximately 5% of the contract
value). Each day during the contract period we would either pay or receive an
amount of cash equal to the daily change in the total value of the contracts.
The amount which we may segregate upon entering into a futures contract may not
exceed, together with the amounts on deposit under all outstanding contracts, 5%
<PAGE>
of the value of our total assets, nor may we enter into additional futures
contracts if, as a result, the aggregate amount committed under all our open
futures contracts would exceed more than one-third of the value of such assets.
There are several risks in connection with the use of futures contracts as a
hedging device. One risk is the imperfect correlation between the composition of
our portfolio securities and the applicable stock index. If the value of the
futures contract moves more than the value of the stock being hedged, we would
experience either a loss or a gain on the futures contract which would not be
completely offset by movements in the value of the securities which are the
subject of the hedge. Another risk is that the value of futures contracts may
not correlate perfectly with movement in the stock index due to certain market
distortions. Although we will enter into futures contracts strictly to hedge our
portfolio or cash positions, other investors use these investment vehicles for
other, sometimes more speculative, purposes. At times, excess speculation in the
futures market can distort the normal market relationship between the price of
the futures contract and the value of the index. If we decide to enter into or
close out our futures position during a period of such excess speculation, the
hedging strategy will be more or less successful, depending on the direction and
amount of this distortion, than otherwise would be the case. Due to the
possibility of price distortion in the futures market and because of the
imperfect correlation between movements in the stock index and movements in the
price of stock index futures contracts, a correct forecast of general market
trends by Lord Abbett may still not result in a successful hedging transaction.
It is possible that, when we sell futures contracts to hedge our portfolio
against a decline in the market, the market, as measured by the stock index, may
advance while the value of securities held in our portfolio may decline. If this
occurs, we will lose money on the futures contracts and also experience a
decline in value in our portfolio securities. However, Lord Abbett believes that
over time the value of a diversified portfolio will tend to move in the same
direction as the market index upon which the futures contracts are based.
Where futures contracts are purchased to hedge against a possible increase in
the price of stock before we are able to invest our cash position in stock in an
orderly fashion, it is possible that the market may decline instead and we would
realize a loss; if we then decide not to invest in stock at that time because of
concern as to possible further market decline or for other reasons, we would
realize a loss on the futures contract that would be offset, to the extent the
cash position had not been invested in stocks being hedged.
Positions in futures contracts may be closed out only on an exchange or board of
trade which provides a market for such contracts. Although we intend to purchase
or sell futures contracts only if an active market has developed and is
continuing, there is no assurance that a liquid market on an exchange or board
of trade will exist for any particular contract or at any particular time. In
such event, it may not be possible to close out a futures position, and in the
event of adverse price movements, we would continue to be required to make daily
cash payments marking our position to market. However, since futures contracts
would have been used to hedge portfolio securities and such securities would not
be sold until the futures contracts had been terminated, an increase in the
price of the securities, if any, may partially or completely offset losses on
the futures contract.
We may incur additional brokerage commissions through entering into futures
contracts, although we also can save on commissions by hedging through such
contracts rather than through buying or selling individual securities in
anticipation of market moves. Successful use by us of futures contracts will
depend upon Lord Abbett's ability to predict movements in the direction of the
over-the-counter market generally, which requires different skills and
techniques than predicting changes in the prices of individual stocks.
To date, we have not entered into any futures contracts and have no present
intent to do so. An established, regularly-quoted stock index for equities of
the character in which we invest has not yet been established. If such an index
is established and we actually use futures contracts, we will disclose such use
in our Prospectus.
<PAGE>
2.
Directors and Officers
The following directors are partners of Lord, Abbett & Co. ("Lord Abbett"), The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. They
have been associated with Lord Abbett for over five years and are also officers
and/or directors or trustees of the twelve other Lord Abbett-sponsored funds.
They are "interested persons" as defined in the Act, and as such, may be
considered to have an indirect financial interest in the Rule 12b-1 Plan
described in the Prospectus.
Robert S. Dow, age 52, Chairman and President
E. Wayne Nordberg, age 59, Vice President
The following outside directors are also directors or trustees of the twelve
other Lord Abbett-sponsored funds referred to above.
E. Thayer Bigelow
Courtroom Television Network
600 Third Avenue
New York, New York
Chief Executive Officer of Courtroom Television. Formerly President and Chief
Executive Officer of Time Warner Cable Programming, Inc. Age 56.
Stewart S. Dixon
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon. Age 67.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 72.
C. Alan MacDonald
Directorship Inc.
8 Sound Shore Drive
Greenwich, Connecticut
Managing Director of Directorship Inc., a consultancy in board management and
corporate governance. Formerly General Partner of The Marketing Partnership,
Inc., a full service marketing consulting firm (1994-1997). Formerly Chairman
and Chief Executive Officer of Lincoln Snacks, Inc., manufacturer of branded
snack foods (1992-1994). Currently serves as Director of Den West Restaurant
Co., J. B. Williams, and Fountainhead Water Company. Age 64.
<PAGE>
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 69.
Thomas J. Neff
Spencer Stuart U.S.
277 Park Avenue
New York, New York
Chairman of Spencer Stuart U.S., an executive search consulting firm. Age 60.
The second column of the following table sets forth the compensation accrued for
the Fund's outside directors. The third column sets forth information with
respect to the equity-based benefits accrued for outside directors by the Lord
Abbett-sponsored funds. The fourth column sets forth the total compensation
payable by such funds to the outside directors. No director of the Fund
associated with Lord Abbett and no officer of the Fund received any compensation
from the Fund for acting as a director or officer.
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED JANUARY 31, 1997
(1) (2) (3) (4)
For Year Ended
Equity-Based December 31, 1996
Benefits Accrued Total Compensation
Aggregate by the Fund and Accrued by the Fund and
Compensation Twelve Other Lord Twelve Other Lord
Accrued by Abbett-sponsored Abbett-sponsored
NAME OF DIRECTOR THE FUND1 FUNDS2 FUNDS3
<S> <C> <C> <C>
E. Thayer Bigelow $832 $11,563 $48,200
Stewart S. Dixon $806 $22,283 $46,700
John C. Jansing $806 $28,242 $46,700
C. Alan MacDonald $837 $29,942 $48,200
Hansel B. Millican, Jr. $851 $24,499 $49,600
Thomas J. Neff $816 $15,990 $46,900
<FN>
1. Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on the
net assets of each fund. A portion of the fees payable by the Fund to its
outside directors is being deferred under a plan that deems the deferred
amounts to be invested in shares of the Fund for later distribution to the
directors. The amounts of the aggregate compensation payable by the Fund as
of January 31, 1997 deemed invested in Fund shares, including dividends
reinvested and changes in net asset value applicable to such deemed
investments, were: Mr. Bigelow, $1,892; Mr. Dixon, $50,314; Mr. Jansing,
$51,883; Mr. MacDonald, $17,789; Mr. Millican, $53,269 and Mr. Neff, $53,574.
If the amounts deemed invested in Fund shares were added to each director's
actual holdings of Fund shares as of January 31, 1997, each would own, the
following: Mr. Bigelow, 148 shares; Mr. Dixon, 4,899 shares; Mr. Jansing,
20,760 shares; Mr. McDonald, 1,390 shares; Mr. Millican, 7,521 shares; and
Mr. Neff, 8,863 shares.
<PAGE>
2. Each Lord Abbett-sponsored fund has a retirement plan providing that outside
directors may receive annual retirement benefits for life equal to 100% of
their final annual retainers following retirement at or after age 72 with at
least 10 years of service. Each plan also provides for a reduced benefit upon
early retirement under certain circumstances, a pre-retirement death benefit
and actuarially reduced joint-and-survivor spousal benefits. Such retirement
plans, and the deferred compensation plans referred to in footnote one, have
been amended recently to, among other things, enable outside directors to
elect to convert their prospective benefits under the retirement plans to
equity-based benefits under the deferred compensation plans (renamed the
equity-based plans and hereinafter referred to as such). Five of the six
outside directors made such an election. Mr. Jansing did not. The amounts
accrued in column 3 were accrued by the Lord Abbett-sponsored funds for the
twelve months ended October 31, 1996 with respect to the equity-based plans.
These accruals were based on the plans as in effect before the recent
amendments and on the fees payable to outside directors of the Fund for the
twelve months ended October 31, 1996. Under the recent amendments, the annual
retainer was increased to $50,000 and the annual retirement benefits were
increased from 80% to 100% of a director's final annual retainer. Thus, if
Mr. Jansing were to retire at or after age 72 and the annual retainer payable
by the funds were the same as it today, he would receive annual retirement
benefits of $50,000.
3. This column shows aggregate compensation, including directors fees and
attendance fees for board and committee meetings, of a nature referred to in
footnote one, accrued by the Lord Abbett-sponsored funds during the year
ended December 31, 1996.
</FN>
</TABLE>
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Allen, Brown, Carper, Ms. Foster, Messrs. Hilstad, Morris, Noelke and Walsh are
partners of Lord Abbett; the others are employees: Stephen J. McGruder age 54,
Executive Vice President, Paul A. Hilstad, age 54, Vice President and Secretary
(with Lord Abbett since 1995; formerly Senior Vice President and General Counsel
of American Capital Management & Research, Inc.); Stephen I. Allen, age 44; Zane
E. Brown, age 46; Daniel E. Carper, age 45; Daria L. Foster, age 43; Lawrence H.
Kaplan, age 40; Thomas F. Konop, age 55; Robert G. Morris, age 52; Robert J.
Noelke, age 40; A. Edward Oberhaus, age 37; John J. Walsh, age 61, Vice
Presidents; and Keith F. O'Connor, age 42, Vice President and Treasurer.
The Fund's By-Laws provide that the Fund shall not hold an annual meeting of its
stockholders in any year unless one or more matters are required to be acted on
by stockholders under the Act, as amended (the "Act"), or unless called by a
majority of the Board of Directors or by stockholders holding at least one
quarter of the stock of the Fund outstanding and entitled to vote at the
meeting. When any such annual meeting is held, the stockholders will elect
directors and vote on the approval of the independent auditors of the Fund.
As of September 30, 1997, our officers and directors, as a group, owned less
than 1% of our outstanding shares.
3.
Investment Advisory and Other Services
As described under "Our Management" in the Prospectus, Lord Abbett is the Fund's
investment manager. Ten of the twelve general partners of Lord Abbett are
officers and/or directors of the Fund, and are identified as follows: Stephen I.
Allen, Zane E. Brown, Daniel E. Carper, Robert S. Dow, Daria L. Foster, Paul A.
Hilstad, Robert G. Morris, Robert J. Noelke, E. Wayne Nordberg and John J.
Walsh. The address of each partner is The General Motors Building, 767 Fifth
Avenue, New York, New York 10153-0203.
The services performed by Lord Abbett are described under "Our Management" in
the Prospectus. Under the Management Agreement, we are obligated to pay Lord
Abbett a monthly fee, based on average daily net assets for each month, at the
annual rate of .75 of 1% of the portion of our net assets not in excess of
$100,000,000 and .50 of 1% of such assets over $100,000,000. This fee is
allocated among Class A, B and C shares based on the classes' proportionate
shares of such average daily net assets. For the fiscal years ended January 31,
1997, 1996 and 1995, the management fees paid to Lord Abbett amounted to
$1,579,214, $1,098,965 and $897,585, respectively.
We pay 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 security transactions.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281, are
the independent accountants of the Fund and must be approved at least annually
by our Board of Directors to continue in such capacity. They perform audit
services for the Fund including the examination of financial statements included
in our annual report to shareholders.
The Bank of New York ("BNY"), 48 Wall Street, New York, New York 10286, is the
Fund's custodian. In accordance with the requirements of Rule 17f-5 under the
Act, the Fund's directors 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.
4.
Portfolio Transactions
Our policy is to obtain best execution on all our portfolio transactions, which
means that we seek 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 transactions. 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 the 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, with 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
<PAGE>
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 Fund to purchase or sell portfolio securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold our shares and/or
shares of other Lord Abbett-sponsored funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as we do, transactions will, to the extent practicable, be allocated among all
participating accounts in proportion to the amount of each order and will be
executed daily until filled so that each account shares the average price and
commission cost of each day. Other clients who direct that their brokerage
business be placed with specific brokers or who invest through wrap accounts
introduced to Lord Abbett by certain brokers may not participate with us in the
buying and selling of the same securities as described above. If these clients
wish to buy or sell the same security as we do, they may have their transactions
executed at times different from our transactions and thus may not receive the
same price or incur the same commission cost as we do.
We will not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from dealers as
consideration for the direction to them of portfolio business.
During the fiscal years ended January 31, 1997, 1996 and 1995, we paid total
commissions to independent dealers of $1,696,590, $981,015 and $399,634
respectively.
5.
Purchases, Redemptions
and Shareholder Services
The Fund values its portfolio securities at market value as of the close of the
NYSE. Market value will be determined as follows: securities listed or admitted
to trading privileges on the New York or American Stock Exchange or on the
NASDAQ National Market System are valued at the last sales price, or, if there
is no sale on that day, at the mean between the last bid and asked prices, or,
in the case of bonds, in the over-the-counter market if, in the judgment of the
Fund's officers, that market more accurately reflects the market value of the
bonds. Over-the-counter securities not traded on the NASDAQ National Market
System are valued at the mean between the last bid and asked prices. Securities
for which market quotations are not available are valued at fair market value
under procedures approved by the Board of Directors.
Information concerning how we value our shares for the purchase and redemption
of our shares is described in the Prospectus under "Purchases" and
"Redemptions", respectively.
<PAGE>
As disclosed in the Prospectus, we calculate our net asset value and are
otherwise open for business on each day that the NYSE is open for trading. The
NYSE is closed on Saturdays and Sundays and the following holidays -- New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
The net asset value per share for the Class Y shares will be determined by
taking Class Y shares (net assets divided 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
a New York limited liability company and subsidiary of Lord Abbett under which
Lord Abbett Distributor is obligated to use its best efforts to find purchasers
for the shares of 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.
CLASS Y SHARE 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 any Lord Abbett-sponsored funds currently offering Class Y
Shares to the public. Currently those funds consist of Affiliated Fund,
Small-Cap Series, International Series and Bond-Debenture 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 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 Directors may authorize redemption of all of the shares in any
account in which there are fewer than 25 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least 30 days' prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
6.
Past 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 average annual total return computation.
In calculating total returns for Class Y shares no sales charge is deducted from
the initial investment and the return is shown at net asset value. Total returns
also assume that all dividends and capital gains distributions during the period
are reinvested at net asset value per share, and that the investment is redeemed
at the end of the period.
Class A share performance. Using the computation method described above, the
Fund's average annual compounded rates of total return for the last one, five
and ten fiscal year(s) ending on January 31, 1997 were as follows:
21.00%, 14.98% and 12.12%, respectively for the Fund's Class A shares.
<PAGE>
These figures represent past performance, and an investor should be aware that
the investment return and principal value of a Fund 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 value of any shares redeemed by the Fund or otherwise sold may be more or
less than your tax basis in the shares at the time the redemption or sale is
made. Any gain or loss generally will be taxable for federal income tax
purposes. Any loss realized on the sale, or redemption of Fund shares which you
have held for six months or less will be treated for tax purposes as a long-term
capital loss to the extent of any capital gains distributions which you received
with respect to such shares. Losses on the sale of stock or securities are not
deductible if, within a period beginning 30 days before the date of the sale and
ending 30 days after the date of the sale, the taxpayer acquires stock or
securities that are substantially identical.
As described in the Prospectus under "Risk Factors", the Fund may be subject to
foreign withholding taxes which would reduce the yield on its investments. Tax
treaties between certain countries and the United States may reduce or eliminate
such taxes. It is expected that Fund shareholders who are subject to United
States federal income tax will not be entitled to claim a federal income tax
credit or deduction for foreign income taxes paid by the Fund.
Gains and losses realized by the Fund on certain transactions, including sales
of foreign debt securities and certain transactions involving foreign currency,
will be treated as ordinary income or loss for federal income tax purposes to
the extent, if any, that such gains or losses are attributable to changes in
exchange rates for foreign currencies. Accordingly, distributions taxable as
ordinary income will include the net amount, if any, of such foreign exchange
gains and will be reduced by the net amount, if any, of such foreign exchange
losses.
If the Fund purchases shares in certain foreign investment entities, called
"PFICs" or "passive foreign investment companies," it may be subject to United
States federal income tax on a portion of any "excess distribution" or gain from
the disposition of such shares, even if such income is distributed as a taxable
dividend by the Fund to its shareholders. Additional charges in the nature of
interest may be imposed on either the Fund or its shareholders with respect to
deferred taxes arising from such distributions or gains. If the Fund were to
invest in a passive foreign investment company with respect to which the Fund
elected to make a "qualified electing fund" election, 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. Proposed legislation
would revise the passive foreign investment company rules in various respects;
it is unclear whether and in what form such legislation might be enacted.
The Fund will be subject to a 4% nondeductible excise tax on certain amounts not
distributed (and not treated as having been distributed) on a timely basis in
accordance with a calendar year distribution requirement. 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 should qualify for the dividends-received deduction
for corporations, to the extent they are derived from dividends paid by domestic
corporations.
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to United States persons (United States citizens or residents and
United States domestic corporations, partnerships, trusts and estates). Each
shareholder who is not a United States person should consult his tax adviser
regarding the U.S. and foreign tax consequences of the ownership of shares of
the Fund, including a 30% (or lower treaty rate) United States withholding tax
<PAGE>
on dividends representing ordinary income and net short-term capital gains, and
the applicability of United States gift and estate taxes to non-United States
persons who own Fund share.
8.
Information About the Fund
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 seven days
before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account
considers a trade or trades in such security, from profiting on trades of the
same security within 60 days and from 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 the Advisory Group.
9.
Financial Statements
The financial statements for the fiscal year ended January 31, 1997 and the
report of Deloitte & Touche LLP, independent accountants, on such financial
statements contained in the 1997 Annual Report to Shareholders of Lord Abbett
Developing Growth Fund, Inc. are incorporated herein by reference to such
financial statements and report in reliance upon the authority of Deloitte &
Touche LLP as experts in auditing and accounting.
<PAGE>
PART C OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Part A- Financial Highlights for the ten years ended January
31, 1997.
Part B- Statement of Net Assets at January 31, 1997.
Statement of Operations for the year ended January
31, 1997. Statements of Changes in Net Assets for
the years ended January 31, 1997 and 1996. Financial
Highlights for the five years ended January 31,
1997.
(b) Exhibits -
99.B1 Form of Articles Supplementary*
99.B18 Form of Plan entered into by Registrant pursuant to
Rule 18f-3.**
* Filed herewith.
** Incorporated by Reference to Post-Effective Amendment No. 12 to
the Registration Statement on Form N-1A of Lord Abbett Investment
Trust (File No. 33-68090).
Exhibit items not listed above are not applicable.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
Item 26. NUMBER OF RECORD HOLDERS OF SECURITIES
At October 31, 1997 - Class A - 26,861
Class B - 4,156
Class C - 2,051
Item 27. INDEMNIFICATION
Registrant is incorporated under the laws of the State of Maryland and
is subject to Section 2-418 of the Corporations and Associations
Article of the Annotated Code of the State of Maryland controlling the
indemnification of the directors and officers. Since Registrant has its
executive offices in the State of New York, and is qualified as a
foreign corporation doing business in such State, the persons covered
by the foregoing statute may also be entitled to and subject to the
limitations of the indemnification provisions of Section 721-726 of the
New York Business Corporation Law.
The general effect of these statutes is to protect officers, directors
and employees of Registrant against legal liability and expenses
incurred by reason of their positions with the Registrant. The statutes
provide for indemnification for liability for proceedings not brought
on behalf of the corporation and for those brought on behalf of the
corporation, and in each case place conditions under which
indemnification will be permitted, including requirements that the
officer, director or employee acted in good faith. Under certain
conditions, payment of expenses in advance of final disposition may be
permitted. The By-laws of Registrant, without limiting the authority of
Registrant to indemnify any of its officers, employees or agents to the
extent consistent with applicable law, make the indemnification of its
directors mandatory subject only to the conditions and limitations
<PAGE>
imposed by the above- mentioned Section 2-418 of Maryland law and by
the provisions of Section 17(h) of the Investment Company Act of 1940
as interpreted and required to be implemented by SEC Release No.
IC-11330 of September 4, 1980.
In referring in its By-laws to, and making indemnification of directors
subject to the conditions and limitations of, both Section 2-418 of the
Maryland law and Section 17(h) of the Investment Company Act of 1940,
Registrant intends that conditions and limitations on the extent of the
indemnification of directors imposed by the provisions of either
Section 2-418 or Section 17(h) shall apply and that any inconsistency
between the two will be resolved by applying the provisions of said
Section 17(h) if the condition or limitation imposed by Section 17(h)
is the more stringent. In referring in its By-laws to SEC Release No.
IC-11330 as the source for interpretation and implementation of said
Section 17(h), Registrant understands that it would be required under
its By-laws to use reasonable and fair means in determining whether
indemnification of a director should be made and undertakes to use
either (1) a final decision on the merits by a court or other body
before whom the proceeding was brought that the person to be
indemnified ("indemnitee") was not liable to Registrant or to its
security holders by reason of willful malfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct
of his office ("disabling conduct") or (2) in the absence of such a
decision, a reasonable determination, based upon a review of the facts,
that the indemnitee was not liable by reason of such disabling conduct,
by (a) the vote of a majority of a quorum of directors who are neither
"interested persons" (as defined in the 1940 Act) of Registrant nor
parties to the proceeding, or (b) an independent legal counsel in a
written opinion. Also, Registrant will make advances of attorneys' fees
or other expenses incurred by a director in his defense only if (in
addition to his undertaking to repay the advance if he is not
ultimately entitled to indemnification) (1) the indemnitee provides a
security for his undertaking, (2) Registrant shall be insured against
losses arising by reason of any lawful advances, or (3) a majority of a
quorum of the non-interested, non-party directors of Registrant, or an
independent legal counsel in a written opinion, shall determine, based
on a review of readily available facts, that there is reason to believe
that the indemnitee ultimately will be found entitled to
indemnification.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expense incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
In addition, Registrant maintains a directors' and officers' errors and
omissions liability insurance policy protecting directors and officers
against liability for breach of duty, negligent act, error or omission
committed in their capacity as directors or officers. The policy
contains certain exclusions, among which is exclusion from coverage for
active or deliberate dishonest or fraudulent acts and exclusion for
fines or penalties imposed by law or other matters deemed uninsurable.
<PAGE>
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Lord, Abbett & Co. acts as investment adviser for twelve other open-end
investment companies (of which it is principal underwriter for
thirteen) and as investment adviser to approximately 5,700 private
accounts. Other than acting as directors and/or officers of open-end
investment companies sponsored by Lord, Abbett & Co., none of Lord,
Abbett & Co.'s partners has, in the past two fiscal years, engaged in
any other business, profession, vocation or employment of a substantial
nature for his own account or in the capacity of director, officer,
employee, or partner of any entity except as follows:
John J. Walsh
Trustee
The Brooklyn Hospital Center
100 Parkside Avenue
Brooklyn, N.Y.
Item 29.(a) PRINCIPAL UNDERWRITER
Lord Abbett Affiliated Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett Series Fund, Inc.
Lord Abbett U.S. Government Money Market Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Tax-Free Income Trust
Lord Abbett Securities Trust
Lord Abbett Investment Trust
Lord Abbett Research Fund, Inc.
INVESTMENT ADVISOR
American Skandia Trust (Lord Abbett Growth & Income Portfolio)
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
BUSINESS ADDRESS (1) WITH REGISTRANT
Robert S. Dow Chairman and President
Paul A. Hilstad Vice President & Secretary
Stephen I. Allen Vice President
Zane E. Brown Vice President
Daniel E. Carper Vice President
Daria L. Foster Vice President
Robert G. Morris Vice President
Robert J. Noelke Vice President
E. Wayne Nordberg Vice President
John J. Walsh Vice President
Michael McLaughlin Partner
W. Thomas Hudson, Jr. Partner
(1) Each of the above has a principal business address:
767 Fifth Avenue, New York, NY 10153
(c) Not applicable
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Registrant maintains the records, required by Rules 31a - 1(a)
and (b), and 31a - 2(a) at its main office.
Lord, Abbett & Co. maintains the records required by Rules 31a -
1(f) and 31a - 2(e) at its main office.
Certain records such as cancelled stock certificates and correspondence
may be physically maintained at the main office of the Registrant's
Transfer Agent, Custodian, or Shareholder Servicing Agent within the
requirements of Rule 31a-3.
Item 31. MANAGEMENT SERVICES
(a) None
Item 32. UNDERTAKINGS
(c) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
The registrant undertakes, if requested to do so by the holders of
at least 10% of the registrant's outstanding shares, to call a
meeting of shareholders for the purpose of voting upon the
question of removal of a director or directors and to assist in
communications with other shareholders as required by Section
16(c).
The Registrant undertakes to file a post-effective amendment to
the registration statement, using financial statements with
respect to the Class Y shares which need not be certified, within
4 to 6 months after the effective date of the registration
statement.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all the requirements
for effectiveness of this Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Registration Statement
and/or any amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on the
17th day of November, 1997.
LORD ABBETT DEVELOPING GROWTH FUND, INC.
By s/Robert S. Dow
--------------------------------------
Robert S. Dow
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Chairman, President
s/Robert S. Dow AND DIRECTOR November 17, 1997
- ------------------------ -------------------- --------------------
Robert S. Dow (Title) (Date)
s/Keith F. O'Connor Vice President November 17, 1997
- ------------------------ -------------------- --------------------
Keith F. O'Connor (Title) (Date)
s/E. Wayne Nordberg DIRECTOR November 17, 1997
- ------------------------ -------------------- --------------------
E. Wayne Nordberg (Title) (Date)
s/E. Thayer Bigelow DIRECTOR November 17, 1997
- ------------------------ -------------------- --------------------
E. Thayer Bigelow (Title) (Date)
s/Stewart S. Dixon DIRECTOR November 17, 1997
- ------------------------ -------------------- --------------------
Stewart S. Dixon (Title) (Date)
s/John C. Jansing DIRECTOR November 17, 1997
- ------------------------ -------------------- --------------------
John C. Jansing (Title) (Date)
s/C. Alan MacDonald DIRECTOR November 17, 1997
- ------------------------ -------------------- --------------------
C. Alan MacDonald (Title) (Date)
s/Hansel B. Millican, Jr. DIRECTOR November 17, 1997
- ------------------------ -------------------- --------------------
Hansel B. Millican, Jr. (Title) (Date)
s/Thomas J. Neff DIRECTOR November 17, 1997
- ------------------------ -------------------- --------------------
Thomas J. Neff (Title) (Date)
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
LORD ABBETT DEVELOPING GROWTH FUND, INC.
LORD ABBETT DEVELOPING GROWTH FUND, INC., a Maryland
corporation having its principal office c/o The Prentice-Hall Corporation
System, 11 Chase Street, Baltimore, Maryland 21202 (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland, that:
FIRST: The Corporation presently has authority to issue
1,000,000,000 shares of capital stock, of the par value $.001 each, having an
aggregate par value of $1,000,000. The Board of Directors has previously
classified and designated 955,000,000 authorized shares as Class A shares,
20,000,000 authorized shares as Class B shares, and 25,000,000 authorized shares
as Class C shares.
SECOND: Pursuant to the authority of the Board of Directors to
classify and reclassify unissued shares of stock of the Corporation and to
classify a series into one or more classes of such series, the Board of
Directors hereby classifies and reclassifies 30,000,000 authorized but unissued
Class A shares as Class P shares and another 30,000,000 authorized but unissued
Class A shares as Class Y shares, thus leaving 895,000,000 authorized but
unissued Class A shares of capital stock.
THIRD: Subject to the power of the Board of Directors to
classify and reclassify unissued shares, all shares of the Corporation's Class P
and Class Y stock shall be invested in the same investment portfolio of the
Corporation as the Class A, Class B and Class C stock and shall have the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption set forth in Article V of the Articles of Incorporation of the
<PAGE>
Corporation (hereafter called the "Articles") and shall be subject to all other
provisions of the Articles relating to stock of the Corporation generally.
FOURTH: The Class P and Class Y shares aforesaid have been
duly classified by the Board of Directors under the authority contained in the
Articles.
IN WITNESS WHEREOF, Lord Abbett Developing Growth Fund, Inc.
has caused these presents to be signed in its name and on its behalf by its Vice
President and witnessed by its Secretary on November ___, 1997.
LORD ABBETT DEVELOPING GROWTH FUND, INC.
By _________________________________
Thomas F. Konop
Vice President
WITNESS:
- ---------------------------
Paul A. Hilstad
Vice President and Secretary
<PAGE>
THE UNDERSIGNED, Vice President of LORD ABBETT DEVELOPING
GROWTH FUND, INC., who executed on behalf of said Corporation the foregoing
Articles Supplementary, of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of said Corporation, the foregoing
Articles Supplementary to be the corporate act of said Corporation and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the authorization and
approval thereof are true in all material respects under the penalties of
perjury.
---------------------------
Thomas F. Konop
Vice President
