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. 25 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Post-Effective Amendment No. 24 [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)
immediately on filing pursuant to paragraph (b)(1)(ix) of Rule 485
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X on June 30, 1998 pursuant to paragraph (b) of Rule 485
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60 days after filing pursuant to paragraph (a) (1) of Rule 485
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on (June 30, 1998) pursuant to paragraph (a) (1) of Rule 485
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75 days after filing pursuant to paragraph (a) (2) of rule 485
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on (date) pursuant to paragraph (a) (2) of rule 485
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If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<PAGE>
LORD ABBETT DEVELOPING GROWTH FUND, INC.
FORM N-1A
Cross Reference Sheet
Post-Effective Amendment No. 25
Pursuant to Rule 481 (a)
This Post-Effective Amendment No. 25 (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 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, C and P 24
Form N-1A Location In Prospectus or
Item No. Statement of Additional Information
1 Cover Page
2 Fee Table
3 Financial Highlights
4 (a) (i) Cover Page
4 (a) (ii)I Investment Objectives
4 (b) (c) How We Invest
5 (a) (b) (c) Our Management; Last Page
5 (d) N/A
5 (e) Our Management
5 (f) Our Management
5 (g) Purchases
6 (a) Cover Page
6 (b) (c) (d) N/A
6 (e) Cover Page; Purchases
6 (f) (g) Dividends, Capital Gains
Distributions and Taxes
6 (h) Purchases
7 (a) Back Cover Page
7 (b) (c) (d) Purchases
8 (a) (b) (c) (d) Redemptions,
Purchases, and Shareholder Services
9 N/A
10 Cover Page
11 Cover Page -- Table of Contents
12 N/A
13 (a) (b) (c) (d) Investment Policies
14 Directors (Trustees) and Officers
<PAGE>
Form N-1A Location in Prospectus or
Item No. Statement of Additional Information
15 (a) (b) (c) Directors (Trustees) and Officers
16 (a) (i) Investment Advisory and Other
Services
16 (a) (ii) Trustees 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 and Shareholder
Services
16 (h) Investment Advisory and Other Services
16 (i) N/A
17 (a) Portfolio Transactions
17 (b) N/A
17 (c) Portfolio Transactions
17 (d) (e) N/A
18 (a) Cover Page
18 (b) N/A
19 (a) (b) Purchases; Redemptions and
Shareholder Services; Notes
to Financial Statements
19 (c) N/A
20 Taxes
21 (a) Purchases, Redemptions and Shareholder
Services
21 (b) (c) N/A
22 N/A
22 (b) Past Performance
23 Financial Statements; Supplementary
Financial Information
<PAGE>
LORD ABBETT
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Prospectus `98
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June 30, 1998
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Application Inside
LORD ABBETT
DEVELOPING
GROWTH FUND
CLASS Y SHARES
[LOGO] LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
<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 five classes of shares. These classes, designated Class A, B, C, P and Y
shares, provide investors with different purchasing options. Only Class Y shares
of the Fund are offered for purchase by this Prospectus. See "Purchases" for a
description of this option.
The Fund seeks 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 this 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
movements can be expected.
This Prospectus sets forth concisely the information about the Lord Abbett
Developing Growth Fund that you 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. This 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
and asking for "Part B of the Prospectus -- the Statement of Additional
Information."
The date of this Prospectus and the Statement of Additional Information is
June 30, 1998.
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.
Mutual Fund shares are not deposits or obligations of, or guaranteed or
endorsed by, any bank. Shares are not 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 Financial Highlights 3
4 How We Invest 3
5 Purchases 5
6 Shareholder Services 6
7 Our Management 6
8 Dividends, Capital Gains
Distributions and Taxes 7
9 Redemptions 7
10 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 more or
less than those shown.
Shareholder Transaction Expenses Class Y Shares
(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") .56%
12b-1 Fees (See "Purchases") None
Other Expenses (See "Our Management") .24%
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Total Operating Expenses .80%
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Example: Assume an average annual return of 5% and there is no change in the
level of expenses. For a $1,000 investment, with reinvestment of all dividends
and distributions, you would have paid the following total expenses, assuming
you sold your shares at the end of each time period indicated:
1 year 3 years 5 years 10 years
------ ------- ------- --------
Class Y shares $8 $26 $44 $97
You would pay the following expenses on the same investment, assuming you kept
your shares:
1 year 3 years 5 years 10 years
------ ------- ------- --------
Class Y shares $8 $26 $44 $97
This example is for comparison and is not a representation of the Fund's actual
expenses and returns, either past or present.
(1) The annual operating expenses shown in the summary have been restated from
January 31, 1998 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.
2
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3 FINANCIAL HIGHLIGHTS
==============================================================================
The following financial highlights have been audited by Deloitte & Touche
LLP, independent accountants, whose report thereon is incorporated by reference
into the Statement of Additional Information and may be obtained on request by
calling 800-874-3733.
DEVELOPING GROWTH FUND, INC. Class Y Shares
For the Period
December 30, 1997(a)
Per Share Operating to
Performance: January 31, 1998
- -------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.12
Income from investment operations
Net investment income(loss) -- (b)(c)
Net realized and unrealized
gain on securities .15
Total from investment operations .15
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Net asset value, end of period $ 14.27
Total Return(d) 1.06%(e)
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Ratios to Average Net Assets:
Expenses .06%(e)
Net investment income(loss) (.02)%(e)
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- -------------------------------------------------------------------------------
(a) Commencement of operations.
(b) Calculated using average shares outstanding during the period.
(c) Amount less than $.01.
(d) Total return does not consider the effects of sales load.
(e) Not annualized.
See notes to Financial Statements.
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Supplemental Data: Developing Growth Fund, Inc.
Net assets, end of year (000) $553,086
Portfolio turnover rate 33.60%
Average commissions per share
paid on equity transactions $.049
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4 HOW WE INVEST
==============================================================================
The Fund's present investment strategy, as developed by Lord, Abbett & Co.
("Lord Abbett"), the Fund's 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, often young (in relation to the large companies which make up the
Standard & Poor's 500 Stock-Index), and their shares are frequently 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
3
<PAGE>
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; and 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
and characteristics 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.
There may be times when Fund 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).
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.
Foreign Securities. Foreign securities are securities primarily traded in
countries outside the United States. These securities are not subject to the
same degree of regulation and may be more volatile and less liquid than
securities traded in major U.S. markets. Other considerations include political
and social instability, expropriations, higher transaction costs, currency
fluctuations, nondeductible witholding taxes and different
4
<PAGE>
settlement practices.
Objective, Restriction and Policy Changes. The Fund will not change its
investment objective or its fundamental restrictions without shareholder
approval. If the Fund determines that its objective can best be achieved by a
substantive change in investment policy, which may be changed without
shareholder approval, the Fund may make such change by disclosing it in the
Prospectus.
For more information about investment policies, restrictions and risk factors,
see the Statement of Additional information.
5 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. Additional payments may be made by Lord Abbett out of
its own resources with respect to certain of these sales.
How Much Must You Invest? You may buy 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, Inc. (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 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, bank account number: 9878002611,
FBO: (account name) and (your Lord Abbett 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, bank account
number:9878002611, FBO: (account name) and (your Lord Abbett 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
<PAGE>
6 SHAREHOLDER SERVICES
==============================================================================
We offer the following shareholder services:
Telephone Exchange Privilege: Class Y shares may be exchanged without a
service charge for Class Y shares of any other Lord Abbett-sponsored fund.
You or your investment professional, 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, Inc. (P.O. Box 419100, Kansas City, Missouri 64141, or call 800-821-5129).
7 OUR 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 69 years and currently manages
approximately $27 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 Senior Portfolio Manager and has done so since
he joined Lord Abbett in May 1995. Prior to joining Lord Abbett, Mr. McGruder
served since October of 1988 as Vice President of Wafra Investment Advisory
Group, a private investment company. Mr. McGruder is assisted by, and may
delegate management duties to, other Lord Abbett employees who may be Fund
officers. Mr. McGruder has over 29 years of investment experience.
Under the Management Agreement, we pay Lord Abbett a monthly fee based on
average daily net assets for each month. For the period ended January 31, 1998,
the effective fee paid to Lord Abbett as a percentage of average daily net
assets was at the annual rate of .56%. 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 21, 1978. Our predecessor corporation
was organized on July 11, 1973. Its Class A, B, C, P 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
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12b-1 charges. Class P shares, sold to a limited number of investors, are also
sold with no font-end sales charge or contingent deferred sales charge. Class A,
B and C shares sold to the retail public and Class P shares 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 P and Y shares. For more information regarding the Class A, B,
C and P shares, please call 800-874-3733 to request a prospectus for those
shares.
8 DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
==============================================================================
Dividends/Capital Gains Distributions. Dividends from net investment income, if
any, are expected to be paid annually. Any capital gains distribution is
expected to be made annually and may be taken in cash or reinvested. A second
distribution may be made in order to comply with Federal income tax requirements
that a certain percentage of capital gains be distributed during the year.
Distributions by the Fund of any net long-term capital gains will be taxable to
a shareholder as long-term capital gains regardless of how long the shareholder
has held the shares. 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%
for distributions derived from the sale of assets held by the Fund for more than
18 months. (If the taxpayer is in the 15% tax bracket, the rate is 10%.) For
distributions derived from the sale of assets held by the Fund between 12 and 18
months, the tax rate remains at 28% (15% if the taxpayer is in the 15% tax
bracket).
Dividends/Capital Gains: Receipt or Reinvestment. If you elect to receive
dividends or capital gains in cash, a check will be mailed to you as soon as
possible after the reinvestment date. If you arrange for direct deposit, your
payment will be electronically transmitted to your bank account within one day
after the payable date. Most investors reinvest their dividends and capital
gains. If you choose this option, or if you do not indicate any choice, your
dividends and capital gains distributions will be automatically reinvested in
additional shares.
Taxes. The Fund pays no federal income tax on the earnings it distributes to
shareholders. Consequently, dividends you receive from the Fund, whether
reinvested or taken in cash, are generally considered taxable. Dividends
declared in December of any year 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.
Each January, the Fund will mail to you, if applicable, a Form 1099 tax
information statement detailing your dividends and capital gain distributions.
You should consult your tax adviser concerning applicable state and local taxes.
For more information about the tax consequences from dividends and
distributions, see the Statement of Additional Information.
9 REDEMPTIONS
==============================================================================
To obtain the proceeds of an expedited redemption of $50,000 or less, you or
your investment professional 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.
7
<PAGE>
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,
accompanied 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 800-821-5129. The minimum wire amount is $1,000. Your
wire redemption request must be received by the Fund before the close of the
NYSEfor 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.
10 PERFORMANCE
=============================================================================
During the past fiscal year, the Fund continued its strategy of
identifying and investing in unique companies that we believe offer good
long-term earnings prospects. Although the sector allocation of the Fund's
portfolio continues to be well-diversified, there was a slight overweighting in
the energy and software sectors, where we found many of our strongest
performers. Our criteria for stock-picking remains focused on reasonably priced
stocks of companies with above-average, long-term potential, and away from the
high-multiple "momentum" stocks.
Total Return. Total return for the one-, five- and ten-year periods represents
the 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
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.
8
<PAGE>
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-1-698
(6/98)
LORD ABBETT
DEVELOPING GROWTH FUND, INC.
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION June 30, 1998
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
of Additional Information relates to, and should be read in conjunction with,
the Prospectus, dated June 30, 1998.
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 five classes of shares (A, B, C, P 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 11
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)
plegde 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 33 1/3% of its total assets (including the amount
borrowed), 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,
straddles, spreads or combinations thereof, except to the extent permitted in
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the prospectus and statement of additional information, as 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, 1998, our
portfolio turnover rate was 33.60 % versus 42.35% 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%
of the value of our total assets, nor may we enter into
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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.
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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 all or some 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 53, Chairman and President
E. Wayne Nordberg, age 59
The following outside directors are also directors or trustees of all or some 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 Network. Formerly President and
Chief Executive Officer of Time Warner Cable Programming, Inc. Prior to that,
President and Chief Operating Officer of Home Box Office. Age 56.
Robert B. Calhoun
Monitor Clipper Partners
650 Madison Avenue, 9th Floor
New York, New York
Managing Director of Monitor Clipper Partners and President of The Clipper
Group, both private equity investment funds. Age 55.
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). Prior to that,
Chairman and Chief Executive Officer of Lincoln Snacks, Inc., manufacturer of
branded snack foods (1992 - 1994). His career spans 36 years at Stouffers and
Nestle with 18 of the years as Chief Executive Officer. Currently serves as
Director of DenAmerica Corp., J.B. Williams Company, Inc., Fountainhead Water
Company and Exigent Diagnostics. Age 65.
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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, 1998
-------------------------------------------
(1) (2) (3) (4)
For Year Ended
Equity-Based December 31, 1997
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 Fund(1) Funds(2) Funds(3)
- ---------------- ----------- ----------------- -----------------------
<S> <C> <C> <C>
Robert B. Calhoun* -- -- --
E. Thayer Bigelow $1,114 $17,068 $56,000
Stewart S. Dixon $1,092 $32,190 $55,000
John C. Jansing $1,092 $45,085(4) $55,000
C. Alan MacDonald $1,139 $30,703 $57,400
Hansel B. Millican, Jr $1,092 $37,747 $55,000
Thomas J. Neff $1,114 $19,853 $56,000
</TABLE>
(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/trustees 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/trustees.
(2) The amounts in Column 3 were accrued by the Lord Abbett-Sponsored Funds
for the 12 months ended October 31, 1997 with respect to the equity based
plans established for independent directors in 1996. This plan supercedes
a previously approved retirement plan for all future directors. Current
directors had the option to convert their accrued benefits under the
retirement plan. All of the outside directors except one made such an
election.
(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, 1997. The amounts of the aggregate compensation
payable by the Fund as of January 31, 1998 deemed invested in Fund shares,
including dividends reinvested and changes in net asset value applicable
to such deemed investments, were: Mr. Bigelow, $3,724; Mr. Dixon, $29,166;
Mr. Jansing, $65,878; Mr. MacDonald, $22,129; Mr. Millican, $67,603 and
Mr. Neff, $68,005. If the amounts deemed invested in Fund shares were
added to each director's actual holdings of Fund shares as of January 31,
1998, each would own, the following: Mr. Bigelow, 260 shares; Mr. Dixon,
3,125 shares; Mr. Jansing, 22,764 shares; Mr. MacDonald, 1,550 shares; Mr.
Millican, 4,737 shares; and Mr. Neff, 8,420 shares.
(4) Mr. Jansing chose to continue to receive benefits under the retirement
plan, which provides that outside directors (trustees) may receive annual
retirement benefits for life equal to their final annual retainer
following retirement at or after age 72 with at least ten years of
service. Thus, if Mr. Jansing were to retire and the annual retainer
payable by the funds were the same as it is today, he would receive annual
retirement benefits of $50,000.
* Elected a director, effective as of June 17, 1998.
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Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Carper, Hilstad, Morris, and Walsh are partners of Lord Abbett; the others are
employees: Stephen J. McGruder, Executive Vice President, age 54; Paul A.
Hilstad, age 55, Vice President and Secretary (with Lord Abbett since 1995 -
formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.); Daniel E. Carper, age 46; Cinda C. Hughes, age 35
(with Lord Abbett since 1998 - formerly Director, Equity Research of Phoenix
Duff & Phelps from 1996 to 1998; prior thereto Analyst, PaineWebber from 1993 to
1996); Thomas W. In, age 30 (with Lord Abbett since 1997 - formerly Assistant
Vice President of Deutsche Morgan Grenfell from 1994 to 1997); Lawrence H.
Kaplan, age 41 (with Lord Abbett since 1997 - formerly Vice President and Chief
Counsel of Salomon Brothers Asset Management Inc from 1995 to 1997, prior
thereto Senior Vice President, Director and General Counsel of Kidder Peabody
Asset Management, Inc.); Thomas F. Konop, age 56; Robert G. Morris, age 53; A.
Edward Oberhaus, age 38; Keith F. O'Connor, age 42; John J. Walsh, age 62, Vice
Presidents; and Donna M. McManus, age 37, Treasurer (with Lord Abbett since
1996, formerly a Senior Manager at Deloitte & Touche LLP).
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 May 1, 1998, 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. Five of the twelve general partners of Lord Abbett are
officers and/or directors of the Fund, and are identified as follows: Daniel E.
Carper, Robert S. Dow, Paul A. Hilstad, Robert G. Morris, and John J. Walsh. The
address of each partner is The General Motors Building, 767 Fifth Avenue, New
York, New York 10153-0203. The other general partners who are neither officers
nor directors of the Fund are: Stephen Allen, Zane E. Brown, Daria L. Foster, W.
Thomas Hudson, Michael B. McLaughlin, Robert J. Noelke and E. Wayne Nordberg.
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 all class shares based on the classes' proportionate shares of
such average daily net assets. For the fiscal years ended January 31, 1998, 1997
and 1996, the management fees paid to Lord Abbett amounted to $2,325,894,
$1,579,214, and $1,098,965, respectively.
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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
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
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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, 1998, 1997 and 1996, we paid total
commissions to independent dealers of $1,930,696, $1,696,590, and $ 981,015,
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.
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, Martin Luther King, Jr. 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.
9
<PAGE>
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 Class Y shares for Class Y
shares of any other Lord Abbett-sponsored fund currently offering Class Y shares
to the public. Currently those other funds consist of the Affiliated Fund, the
Research Fund Small-Cap Series, the Securities Trust - International Series and
the 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 applicable sales charge deduction 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 total return computation for the period.
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 Y share performance. Using the computation method described above, the
Fund's cumulative total return for the one-month period ending January 31, 1998
was 1.10%.
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.
10
<PAGE>
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 "How We Invest - 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
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
11
<PAGE>
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, 1998 and the
report of Deloitte & Touche LLP, independent accountants, on such financial
statements contained in the 1998 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.
12
<PAGE>
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Highlights for the period December 30, 1997 to January
31, 1998.
(b) Exhibits -
99.B11 Consent of Deloitte & Touche LLP*
16 Computation of Performance and Yield*
27 Financial Data Schedule*
* Filed herewith.
Exhibit items not listed above have either already been filed
or are not applicable.
Item 25. Persons Controlled by or Under Common Control with Registrant
None.
Item 26. Number of Record Holders of Securities
At June 22, 1998 Class A - 30,089
Class B - 10,551
Class C - 4,797
Class P - 8
Class Y - 8
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
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.
<PAGE>
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.
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 6,220 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.
<PAGE>
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
Daniel E. Carper Vice President
Robert G. Morris Vice President
John J. Walsh Vice President
The other partners, as follows, are neither officers nor directors of the Funds:
Stephen I Allen, Zane E. Brown, Daria L. Foster, W. Thomas Hudson, Michael B.
McLaughlin, Robert J. Noelke and E. Wayne Nordberg.
(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
<PAGE>
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).
<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
30th day of June, 1998.
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
and Director
/s/ Robert S. Dow 6/30/98
Robert S. Dow (Title) (Date)
Vice President and
Chief Financial Officer
/s Keith F. O'Connor 6/30/98
Keith F. O'Connor (Title) (Date)
Director
/s/ Stewart S. Dixon 6/30/98
Stewart S. Dixon (Title) (Date)
Director
/s/ E. Wayne Nordberg 6/30/98
E. Wayne Nordberg (Title) (Date)
Director
/s/ John C. Jansing 6/30/98
John C. Jansing (Title) (Date)
Director
/s/ C. Alan MacDonald 6/30/98
C. Alan MacDonald (Title) (Date)
Director
/s/ Hansel B. Millican 6/30/98
Hansel B. Millican, Jr. (Title) (Date)
Director
/s/Thomas J. Neff 6/30/98
Thomas J. Neff (Title) (Date)
Director
/s/ E. Thayer Bigelow 6/30/98
E. Thayer Bigelow (Title) (Date)
Director
/s/ Robert B. Calhoun 6/30/98
Robert B. Calhoun (Title) (Date)
Exhibit 16
Lord Abbett Developing Growth Fund, Inc. - Class Y
Fiscal Year Ending January 31, 1998
Life of Series
---------------
Initial Investment $1,000
Dividend by Initial Offering Price $14.12
Equals Shares Purchased 70.822
------
Plus Shares Acquired through Dividend and Capital Gains Reinvestment 0.000
------
Equals Shares held at Ending Period Date 70.822
Multiplied by Net Asset Value at Ending Period Date $14.27
------
Equals Ending Value before Deduction of CDSC at Period End Date $1,011
Less Deferred Sales Charge 0
------
Equals Ending Redeemable Value (ERV) at Period End Date $1,011
Divide ERV by $1,000 1.011
------
Subtract 1 $0.011
------
Expressed as a Percentage-Equals the Aggregate
Total Return for the Period 1.10%
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CONSENT OF INDEPENDENT AUDITORS
Lord Abbett Developing Growth Fund, Inc.:
We consent to the incorporation by reference in Post Effective Amendment No. 25
to Registration Statement No.2-62797 of our report dated February 25, 1998
appearing in the annual report to shareholders and to the reference to us under
the caption "Financial Highlights" in the Prospectus and to the references to us
under the captions "Investment Advisory and Other Services" and "Financial
Statements" appearing in the Statement of Additional Information, both of which
are part of such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
June 26, 1998
