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. 24 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Post-Effective Amendment No. 23 [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
- ----------
X on (June 1, 1998) 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
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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.
- ----------
LORD ABBETT DEVELOPING GROWTH FUND, INC.
FORM N-1A
Cross Reference Sheet
Post-Effective Amendment No. 24
Pursuant to Rule 481 (a)
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
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.
PROSPECTUS
June 1, 1998
This Prospectus sets forth concisely the information about Lord Abbett
Developing Growth Fund, Inc. ("we" or the "Fund") that you should know before
investing. Please read this Prospectus before investing and retain it for future
reference. The Fund has five classes of shares. Only four of these classes are
offered by this Prospectus. These classes of shares, designated Class A, B, C
and P, provide investors with different purchasing options. See "Purchases" for
a description of these options.
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 the objective will be achieved. Volatile price movements can
be expected.
The Statement of Additional Information dated June 1, 1998 has been filed with
the Securities and Exchange Commission and is incorporated by reference into
this Prospectus. You may obtain it, 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."
Shaded terms are defined in the Glossary of Terms.
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.
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.
TABLE OF CONTENTS PAGE
How We Invest 2
Risk Factors 2
Portfolio Management 2
Investor Expenses 2
Financial Highlights 3
Purchases 4
Opening Your Account 6
Shareholder Services 6
Redemptions 7
Dividends and Capital Gains 8
Our Management 8
Fund Performance 8
Investment Policies, Risks and Limits 9
Sales Compensation 9
Glossary of Terms 9
Lord, Abbett & Co.
Investment Management
A Tradition of Performance Through Disciplined Investing
The General Motors Building
767 Fifth Avenue - New York - New York o10153
Broker-Dealer Division: (800) 426-1130
Financial Advisers Division: (888) 522-2388
<PAGE>
HOW WE INVEST
Normally, 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. This phase is a period of swift development, when
growth occurs at a rate rarely equaled by established companies in their mature
years. We look for companies in this phase and, under normal circumstances, will
invest at least 65% of our total assets in securities of such companies.
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, these companies are now in a
position to grow rapidly in their market. However, the actual growth of a
company cannot be foreseen and it may be difficult to determine in which phase a
company is presently situated. In addition, we may invest in companies which are
in their formative years.
See "Investment Policies, Risks and Limits."
RISK FACTORS
An investment in the Fund is not intended as a complete investment program. The
value of your investment will fluctuate in response to stock market movements.
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. In addition,
the Fund will not provide significant current income.
PORTFOLIO MANAGEMENT
Stephen J. McGruder, Executive Vice President of the Fund, serves as Senior
Portfolio Manager and has done so since he joined Lord, Abbett & Co. ("Lord
Abbett") in 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.
INVESTOR EXPENSES
The expenses shown below are based on historical expenses adjusted to
reflect current fees. Future expenses may be different than those shown.
Class A Class B Class C Class P
Shareholder Transaction Expenses
Maximum Sales Charge on Purchases
(as a % of offering price) 5.75% None None None
Deferred Sales Charge (See "Purchases") None 5.00% 1.00% None
Annual Fund Operating Expenses (as a % of average net assets)
Management Fees .56% .56% .56% .56%
(See "Our Management")
12b-1 Fees(1) .26% 1.00% 1.00% .45%
Other Expenses .24% .24% .24% .24%
(See "Our Management")
Total Operating Expenses 1.06% 1.80% 1.80% 1.25%
EXAMPLE Assume an average annual return of 5% and no change in the level of
expenses. For a $1,000 investment with all dividends and distributions
reinvested, you would have paid the following total expenses, assuming you sold
your shares at the end of each time period indicated.
Share Class 1 year 3 years 5 years 10 years
Class A shares $68 $89 $113 $180
Class B shares(2) $68 $87 $117 $192
Class C shares $29 $57 $97 $212
Class P shares $13 $40 $69 $151
You would pay the following expenses on the same investment,
assuming you kept your shares:
Class A shares $68 $89 $113 $180
Class B shares(2) $18 $57 $97 $192
Class C shares $18 $57 $97 $212
Class P shares $13 $40 $69 $151
This example is for comparison and is not a representation of the Fund's actual
expenses and returns, either past or present.
(1)Because of the 12b-1 fee, long-term shareholders may indirectly pay more than
the equivalent of the maximum permitted front-end sales charge.
(2)Class B
shares will automatically convert to Class A shares on the eighth anniversary of
your original purchase of Class B shares.
<PAGE>
FINANCIAL HIGHLIGHTS The following table has been audited by Deloitte & Touche
LLP, independent accountants, in connection with their annual audit of the
Fund's Financial Statements, whose report may be obtained on request. Call
800-874-3733 and ask for the Lord Abbett Developing Growth Fund, Inc.'s 1998
annual report.
<TABLE>
Per Class A Share+ Operating Year Ended January 31,
Performance: 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $12.80 $11.49 $9.58 $10.65 $10.11 $10.86 $7.98 $6.96 $7.19 $6.50
Income from investment operations
Net investment income (loss) (.10)a) (.03) (.02) (.04) (.05) (.02) .02 .01(a) .01(a) .03(a)
Net realized and unrealized
gain (loss) on securities 3.16 3.12 4.80 (.22) 1.62 (.24) 3.28 1.01 (.02) .66
Total from investment operations 3.06 3.09 4.78 (.26) 1.57 (.26) 3.30 1.02 (.01) .69
Distributions
Dividends from net investment income .--- .---- .--- --- .--- (.02) (.02) --- (.03) ---
Distributions from net realized gain (1.59) (1.78) (2.87) (.81) (1.03) (.47) (.40) --- (.19) ---
Net asset value, end of year $14.27 $12.80 $11.49 $9.58 $10.65 $10.11 $10.86 $7.98 $6.96 $7.19
Total Return(b) 24.38% 28.35% 50.22% (2.74)% 16.41% (2.31)% 41.53% 14.66% (.38)% 10.62%
Ratios to Average Net Assets:
Expenses 1.06% 1.10% 1.03% 1.31% 1.34% 1.31% 1.14% 1.24% 1.13% 1.08%
Net investment income (.72)% (.67)% (.52)% (.38)% (.51)% (.25)% .26% .20% .08% .37%
</TABLE>
Class B Shares Class B Shares
Per Class Share Operating Year Ended August 1, 1996(d) to
Performance January 31, 1998 January 31, 1997
Net Asset Value beginning of period $12.75 $12.14
Net investment income (loss) (.20)(a) (.05)
Net realized and unrealized
gain on securities 3.14 2.28
Total from investment operations 2.94 2.23
Distributions
Dividends from net realized gain (1.57) (1.62)
Net asset value, end of period (14.12) $12.75
Total Return(b) 23.48% 19.43%(c)
Ratios to Average Net Assets:
Expenses 1.76% .93%(c)
Net investment (loss) (1.39)% (.73)%(c)
Class C Shares Class C Shares
Per Class Share Operating Year Ended August 1, 1996(d) to
Performance January 31, 1998 January 31, 1997
Net Asset Value beginning of period $12.75 $12.14
Net investment income (loss) (.19)(a) (.05)
Net realized and unrealized
gain on securities 3.14 2.28
Total from investment operations 2.95 2.23
Distributions
Dividends from net realized gain (1.57) (1.62)
Net asset value, end of period (14.13) $12.75
Total Return(b) 23.55% 19.43%(c)
Ratios to Average Net Assets:
Expenses 1.71% .93%(c)
Net investment (loss) (1.34)% (.73)%(c)
Class P Shares
Per Class Share Operating January 5, 1998(d) to
Performance January 31, 1998
Net Asset Value beginning of period $14.38
Net investment income (loss) (.01)(a)
Net realized and unrealized
gain on securities (.11)
Total from investment operations (.12)
Distributions
Dividends from net realized gain -
Net asset value, end of period (14.26)
Total Return(b) (.80)%
Ratios to Average Net Assets:
Expenses .08%(c)%
Net investment (loss) (.05)%(c)
Supplemental Data Year Ended January 31,
For All Classes: 1998 1997 1996 1995 1994
Net assets, end of year (000) $553,086 $330,358 197,602 $127,579 143,693
Portfolio turnover rate 33.60% 42.35% 50.12% 17.57% 16.29%
Average commissions per share
paid on equity transactions $.049 $.046 $.053 $.059 n/a
Supplemental Data Year Ended January 31,
For All Classes: 1993 1992 1991 1990 1989
Net assets, end of year (000) $151,068 $156,932 $117,786 $119,836 $163,676
Portfolio turnover rate 17.22% 12.62% 12.76% 14.57% 20.20%
Average commissions per share
paid on equity transactions n/a n/a n/a n/a n/a
+ The Fund had only one class of shares prior to August 1, 1996. That class of
shares is now designated Class A shares.
(a)Calculated using average shares
outstanding during the period.
(b)Total return does not consider the effects of sales loads.
(c) Not annualized.
(d) Commencement of operations of Class shares.
See Notes to Financial Statements.
<PAGE>
PURCHASES
This Prospectus offers four classes of shares: Class A, B, C and P. These
classes of shares represent investments in the same portfolio of securities but
are subject to different expenses. Our shares are continuously offered based on
the per share net asset value ("NAV") next computed after we accept your
purchase order submitted in proper form, plus a front-end sales charge as
described below, in the case of the Class A shares and without a front-end sales
charge, in the case of the Class B, C and P shares as described below. Investors
should read this section carefully to determine which class of shares represents
the best investment option for their particular situation.
Class A
o Normally offered with a front-end sales charge.
o Lower annual expenses than Class B and Class C shares.
Class B
o No front-end sales charge.
o Higher annual expenses than Class A shares.
o A contingent deferred sales charge is applied to shares
sold prior to the sixth anniversary of purchase.
o Automatically convert to Class A shares after eight years.
Class C
o No front-end sales charge.
o Higher annual expenses than Class A shares.
o A contingent deferred sales charge usually is applied to shares sold prior to
the first anniversary of purchase.
Class P shares, available to a limited number of shareholders, are described on
the next page.
It may not be suitable for you to place a purchase order for Class B shares of
$500,000 or more or a purchase order for Class C shares of $1,000,000 or more.
You should discuss pricing options with your investment professional. For more
information, see "Alternative Sales Arrangements" in the Statement of Additional
Information.
CLASS A SHARES. Front-end sales charges are as
follows:
To Compute
As a % of As a % of Offering Price
Offering Your Divide
Price Investment NAV by
Your Investment
Less than $50,000 5.75% 6.10% .9425
$50,000 to $99,999 4.75% 4.99% .9525
$100,000 to $249,999 3.75% 3.90% .9625
$250,000 to $499,999 2.75% 2.83% .9725
$500,000 to $999,999 2.00% 2.04% .9800
$1,000,000 over No Sales Charge 1.0000
REDUCING
YOUR CLASS A FRONT-END SALES CHARGES. There are several ways you can
qualify for a lower sales charge when purchasing Class A shares if you
inform the Fund that you are eligible at the time of purchase:
o Rights of Accumulation -- a Purchaser can add the share value of any Eligible
Fund already owned to the amount of the next purchase of Class A shares for
purposes of calculating the sales charge.
o Statement of Intention -- a Purchaser can purchase Class A shares of
any Eligible Fund over a 13-month period and receive the same sales charge as if
all shares had been purchased at once. Shares purchased through reinvestment of
distributions are not included.
For more information on eligibility for these
privileges, read the applicable sections in the attached application.
CLASS A SHARE PURCHASES WITHOUT A FRONT-END SALES CHARGE. Class A shares may be
purchased without a front-end sales charge under the following circumstances.
1Purchases of $1 million or more.*
2 Purchases by Retirement Plans with at least*
100 eligible employees.
3 Purchases under a Special Retirement Wrap Program.*
4 Purchases made with dividends and distributions on Class A shares of
another Eligible Fund.
5 Purchases representing repayment under the loan feature of the
Lord Abbett-sponsored prototype 403(b) plan for Class A shares.
6 Employees of any consenting securities dealer having a sales agreement
with Lord Abbett Distributor.
7 Purchases under a Mutual Fund Wrap-Fee Program.
8 Lord Abbett Consultants/Advisers.
9 Employees of our shareholder servicing agent.
10 Employees of any national securities trade organization to which Lord
Abbett belongs.
11 Employees of Lord Abbett and our Directors/Trustees (active or
retired), their spouses, including surviving spouses and other family members.
12 Trustees or custodians of any pension or profit sharing plan, or payroll
deduction IRA for the persons mentioned in 6, 9, 10 and 11 above.
*May be subject to a CDSC.
<PAGE>
CONTINGENT DEFERRED SALES CHARGES ("CDSC"). The CDSC, regardless of class, is
not charged on shares acquired through reinvestment of dividends or capital
gains distributions and is charged on the original purchase cost or the current
market value of the shares being sold, whichever is lower. In addition,
repayment of loans under Retirement Plans and 403(b) plans will constitute new
sales for purposes of assessing the CDSC.
CLASS A SHARE CDSC. If you buy Class A shares under one of the starred (O)
categories listed above subject to a dealer's concession of up to 1% and you
redeem any of the Class A shares within 24 months after the month in which you
initially purchased such shares, the Fund normally will collect a CDSC of 1%.
The Class A share CDSC generally will be waived under the following
circumstances.
o Benefit payments such as Retirement Plan loans, hardship withdrawals,
death, disability, retirement, separation from service or any excess
distribution under Retirement Plans (documentation may be required).
o Redemptions continuing as investments in another fund
participating in a Special Retirement Wrap Program.
CLASS B SHARE CDSC. The CDSC for Class B shares normally applies if you redeem
your shares before the sixth anniversary of their initial purchase. The CDSC
varies depending on how long you own your shares according to the following
schedule.
Contingent Deferred
Anniversary(1) Sales Charge on
of the Day on Redemptions
Which the Purchase (As % of Amount
Order Was Accepted Subject to Charge)
On Before
1st 5.0%
1st 2nd 4.0%
2nd 3rd 3.0%
3rd 4th 3.0%
4th 5th 2.0%
5th 6th 1.0%
on or after the None
6th anniversary(2)
(1)Anniversary is the 365th day subsequent to a purchase or a prior anniversary.
(2)Class B shares will automatically convert to Class A shares on the eighth
anniversary of the purchase of Class B shares.
The Class B share CDSC generally will be waived under the following
circumstances.
o Benefit payments such as Retirement Plan loans, hardship withdrawals, death,
disability, retirement, separation from service or any excess distribution under
Retirement Plans.
o Eligible Mandatory Distributions under 403(b) plans and
individual retirement accounts.
o Death of the shareholder (natural person).
o On redemptions of shares in connection with Div-Move and Systematic Withdrawal
Plans (up to 12% per year).
See "Systematic Withdrawal Plan" for more
information on CDSCs with respect to Class B shares.
CLASS C SHARE CDSC. The 1% CDSC for Class C shares normally applies if you
redeem your shares before the first anniversary of your original purchase. An
exception is made for shares redeemed from a Mutual Fund Wrap-Fee Program.
APPLICATION OF CDSC TO A REDEMPTION. To determine if a CDSC applies to a
redemption, the Fund redeems shares in the following order.
1 Shares acquired by
reinvestment of dividends and capital gains.
2 Shares held for six years or more
(Class B) or one year or more (Class C).
3 Shares held the longest before the
sixth anniversary of their purchase (Class B) or before the first anniversary of
their purchase (Class C).
Class P Shares.
o No front-end sales charge.
o Lower annual expenses than Class B and Class C shares.
o No CDSC.
Class P shares are available to a limited number of investors. Class P shares
are currently sold at net asset value to the trustees of, or employer-sponsors
with respect to, pension or Retirement Plans with at least 100 eligible
employees (such as a plan under Section 401(a), 401(k) or 457(b) of the Internal
Revenue Code) which engage an investment professional providing or participating
in an agreement to provide certain recordkeeping, administrative and/or
sub-transfer agency services to the Fund on behalf of the Class P shareholders.
Purchases and redemptions of Class P shares will be effected at net asset value
by trustees, custodians or employers on behalf of plan participants.
<PAGE>
OPENING YOUR ACCOUNT
Minimum Initial Investment
o Regular account $1,000
o Individual Retirement Accounts,
(Traditional, Education and Roth) and 403(b) $250
o Invest-A-Matic and Div-Move $250 initial
$50 subsequent minimum
For Retirement Plans and Mutual Fund Wrap-Fee Programs, there is no minimum
investment required, regardless of share class.
You may purchase shares through any independent securities dealer who has a
sales agreement with Lord Abbett Distributor or you can fill out the attached
application and send it to the Fund at the address stated below. You may be
charged a fee if you effect transactions through an independent dealer or agent.
You should read this Prospectus carefully before placing your order to assure
your order is in proper form.
Lord Abbett Developing Growth Fund, Inc.
P.O. Box 419100
Kansas City, MO 64141
PROPER FORM. To be in proper form an order submitted directly to the Fund must
contain (1) a completed Application Form or information and documentation
required supplementally by the Fund, and (2) payment by check. For more
information regarding proper form of a purchase order, call the Fund at
800-821-5129.
Payment must be credited in U.S. dollars to our custodian bank's account.
IMPORTANT INFORMATION. If you fail to provide a correct taxpayer identification
number or to make certain required certifications, you may be subject to a $50
penalty under the Internal Revenue Code and we may be required to withhold a
portion (31%) of any redemption proceeds and of any dividend or distribution on
your account.
BY EXCHANGE. Telephone the Fund at 800-821-5129 to request an
exchange from any eligible Lord Abbett-sponsored fund. We reserve the right to
withdraw all or any part of the offering made by this Prospectus or to reject
any purchase order. We also reserve the right to waive, increase or establish
minimum investment requirements. All purchase orders are subject to our
acceptance and are not binding until confirmed or accepted in writing.
SHAREHOLDER SERVICES
TELEPHONE EXCHANGES. You or your investment professional, with proper
identification, can instruct the Fund by telephone to exchange shares of any
class for the same class of any Eligible Fund. Instructions must be received by
the Fund in Kansas City by calling 800-821-5129 prior to the close of the New
York Stock Exchange ("NYSE") to obtain an Eligible Fund's NAV per class share on
that day. Exchanges will be treated as a sale for federal tax purposes.
For your protection, telephone requests for exchanges are recorded. We will take
measures to verify the identity of the caller, such as asking for your name,
account number, social security or taxpayer identification number and other
relevant information. The Fund will not be liable for following instructions
communicated by telephone that it reasonably believes to be genuine.
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. The Fund reserves the right
to limit or terminate this privilege for any shareholder making frequent
exchanges and may revoke the privilege for all shareholders upon 60 days' prior
written notice. You have this privilege unless you refuse it in writing.
You should read the prospectus of the other Lord Abbett-sponsored fund(s)
selected before making an exchange.
INVEST-A-MATIC. You can make fixed, periodic investments ($250 initial and $50
subsequent minimum) into the Fund by means of automatic money transfers from
your bank checking account. See the attached Application Form for instructions.
DIV-MOVE. You can invest the dividends paid on your account ($50 minimum) into
another account, within the same class, in any Eligible Fund. The account must
be either your account, a joint spousal account, or a custodial account for your
minor child.
INVESTING BY PHONE. Upon completion and receipt of the attached application form
(in particular, section 7), you can instruct the Fund by phone to have money
transferred from your bank account to purchase shares of the Fund for an
existing account. The Fund will purchase the requested shares upon receipt of
the money from your bank.
SYSTEMATIC WITHDRAWAL PLAN ("SWP"). You can make periodic cash withdrawals from
your account which are automatically paid to you in fixed or variable amounts.
To participate, the value of your shares must be at least $10,000, except for
retirement plans for which there is no minimum.
With respect to Class B shares, the CDSC will be waived on redemptions of up to
12% of the current net asset value of your account at the time of your SWP
request. For Class B share redemptions over 12% per year, the CDSC will apply to
the entire redemption. Please contact the Fund for assistance in minimizing the
CDSC in this situation. Redemption proceeds due to a SWP for Class B (up to 12%
per year) and Class C shares, will be redeemed in the order described under
"Redemptions."
LORD ABBETT'S RETIREMENT PLANS. The Lord Abbett Family of Funds offers a range
of qualified retirement plans, including IRAs (Traditional, Education and Roth),
SIMPLE IRAs, Simplified Employee Pension Plans, 403(b) and pension and
profit-sharing plans, including 401(k) plans. To find out more about these
plans, call the Fund at 800-842-0828.
ACCOUNT CHANGES. For any changes you need to make to your account, consult your
investment professional or call the Fund at 800-821-5129.
HOUSEHOLDING. Generally, shareholders with the same last name and address will
receive a single copy of an annual or semi-annual report, unless additional
reports are specifically requested in writing to the Fund.
REINVESTMENT PRIVILEGE. If you sell shares of the Fund, you have the one-time
right to reinvest some or all of the proceeds in the same class of any Eligible
Fund within 60 days without a sales charge. If you paid a CDSC when you sold
your shares, you will be credited with the amount of the CDSC. All accounts
involved must have the same registration.
PRICING SHARES. The net asset value ("NAV") per share for each class of shares
is calculated each business day at the close of regular trading on the New York
Stock Exchange ("NYSE") by dividing a Class's net assets by the number of shares
outstanding. The Fund is open on those business days when the NYSE is open.
Purchases and redemptions are executed at the next NAV to be calculated after
your order is accepted.
REDEMPTIONS By Broker. Call your broker or investment professional for
directions on how to redeem your shares.
BY TELEPHONE. To obtain the proceeds of an expedited redemption of $50,000 or
less, you or your representative can call the Fund at 800-821-5129. The Fund
will employ the procedures described in telephone exchanges to confirm that the
instructions received are genuine. The Fund will not be liable for following
instructions communicated by telephone that it reasonably believes to be
genuine.
BY MAIL. Submit a written redemption request indicating your Fund's name, your
share class, your account number, the name(s) in which the account is registered
and the dollar value or number of shares you wish to sell.
Include all necessary signatures. If the signer has any Legal Capacity, the
signature and capacity must be guaranteed by an Eligible Guarantor. Certain
other legal documentation may be required. For more information regarding proper
documentation call 800-821-5129. We will verify that the shares being redeemed
were purchased at least 15 days earlier. Your account balance must be sufficient
to cover the amount being redeemed or your redemption order will not be
processed. Normally a check will be mailed to the name(s) and address(es) in
which the account is registered, or otherwise according to your instruction
within one business day after receipt of your redemption request. The Fund
reserves the right to make payment within three business days.
To determine if a CDSC applies to a redemption, see "Contingent Deferred Sales
Charges" above.
DIVIDENDS AND CAPITAL GAINS
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.
OUR MANAGEMENT
The Fund is supervised by a Board of Directors, an independent body which has
ultimate responsibility for the Fund's activities. The Board has retained Lord
Abbett as investment manager pursuant to a Management Agreement. Lord Abbett has
been an investment manager for over 69 years and currently manages about $27
billion in a family of mutual funds and other advisory accounts. Lord Abbett
provides similar services to twelve other funds having various investment
objectives and also advises other investment clients. For more information about
the services Lord Abbett provides to the Fund, see the Statement of Additional
Information.
The Fund pays Lord Abbett a monthly fee based on average daily net assets for
each month. For the fiscal year ended January 31, 1998, the fee paid to Lord
Abbett was at an annual rate of 0.56 of 1% for the Fund. In addition, the Fund
pays 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 and P shares have equal rights
as to voting, dividends, assets and liquidation except for differences resulting
from certain class-specific expenses.
FUND 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.
<PAGE>
See the performance chart on the second to last page of this Prospectus.
INVESTMENT POLICIES, RISKS AND LIMITS
The Fund is permitted to utilize, within limits established by the Board of
Directors, the following investment policy in an effort to enhance the Fund's
performance. This policy has risks associated with it. However, the Fund follows
certain practices that may reduce these risks. To the extent the Fund utilizes
this policy, its overall performance may be positively or negatively affected.
FOREIGN SECURITIES: Foreign securities are securities primarily traded in
countries outside the United States.
Risk: 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 withholding taxes
and different settlement practices.
Limit: The Fund may invest up to 10% of its assets at the time of investment in
foreign securities.
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.
SALES COMPENSATION
As part of its plan for distributing shares, the Fund, along with Lord Abbett
Distributor, pays compensation to Authorized Institutions that sell the Fund's
shares. These firms typically pass along a portion of this compensation to your
financial representative.
Compensation payments originate from two sources: sales charges (front-end,
level load and back-end) and 12b-1 fees that are paid out of the Fund's assets
("12b-1" refers to the federal securities regulation authorizing annual fees of
this type). The 12b-1 fee rates vary by share class, according to the Rule 12b-1
plan adopted by the Fund for each share class. The sales charges and 12b-1 fees
paid by investors are detailed in the class-by-class information under "Investor
Expenses" and "Purchases." The portion of these expenses that are paid as
compensation to Authorized Institutions, such as your dealer, are shown in the
chart on the last page of this Prospectus. Sometimes compensation is not paid
where tracking data is not available for certain accounts or where the
Authorized Institution waives part of the compensation as with an account under
a Mutual Fund Wrap-Fee Program.
Rule 12b-1 distribution fees may be used to pay for sales compensation to
Authorized Institutions, for any activity which is primarily intended to result
in the sale of shares and, for Class B shares, the financing of sales
commissions.
FIRST YEAR COMPENSATION. Whenever you make an investment in the Fund, the
Authorized Institution receives compensation as described in the chart on the
last page of this Prospectus.
ANNUAL COMPENSATION AFTER FIRST YEAR. Beginning with the second year after an
investment is made, the Authorized Institution receives annual compensation as
described in the chart on the last page of this Prospectus.
Additional Concessions may be paid to Authorized Institutions from time to time.
<PAGE>
GLOSSARY OF TERMS
ADDITIONAL CONCESSIONS. A supplemental annual distribution fee equal to 0.10% of
the average daily net asset value of the Class A shares is available to
Authorized Institutions which have a program for the promotion and retention of
such shares satisfying Lord Abbett Distributor. Class A shares held pursuant to
a satisfactory program would, for example, (i) constitute a significant
percentage of the Fund's net assets, (ii) be held for a substantial length of
time and/or (iii) have a lower than average redemption rate. Lord Abbett
Distributor may, for specified periods, allow dealers to retain the full sales
charge for sales of shares or may pay an additional concession to a dealer who
sells a minimum dollar amount of our shares and/or shares of other Lord
Abbett-sponsored funds. In some instances, such additional concessions will be
offered only to certain dealers expected to sell significant amounts of shares.
Lord Abbett Distributor may, from time to time, implement promotions under which
Lord Abbett Distributor will pay a fee to dealers with respect to certain
purchases not involving imposition of a sales charge. Additional payments may be
paid from Lord Abbett Distributor's own resources and will be made in the form
of cash or, if permitted, non-cash payments. The non-cash payments will include
business seminars at Lord Abbett's headquarters or other locations, including
meals and entertainment, or the receipt of merchandise. The cash payments may
include payment of various business expenses of the dealer. In selecting dealers
to execute portfolio transactions for the Fund's portfolio, if two or more
dealers are considered capable of obtaining best execution, we may prefer the
dealer who has sold our shares and/or shares of other Lord Abbett-sponsored
funds.
AUTHORIZED INSTITUTIONS. Institutions and persons permitted by law to receive
service and/or distribution fees under a Rule 12b-1 plan are "authorized
institutions."
ELIGIBLE FUND. (a) Any Lord Abbett-sponsored fund except certain tax-free,
single-state series where the exchanging shareholder is a resident of a state in
which such series is not offered for sale; Lord Abbett Equity Fund; Lord Abbett
Series Fund; Lord Abbett Research Fund -- Mid-Cap Series; Lord Abbett U.S.
Government Securities Money Market Fund ("GSMMF") (except for holdings in GSMMF
which are attributable to any shares exchanged from the Lord Abbett Family of
Funds). (b) Any Authorized Institution's affiliated money market fund satisfying
Lord Abbett Distributor as to certain omnibus account and other criteria.
ELIGIBLE GUARANTOR. Any broker or bank that is a member of the medallion stamp
program. Most major securities firms and banks are members of this program. A
notary public is not an eligible guarantor.
ELIGIBLE MANDATORY DISTRIBUTIONS. If Class B shares represent a part of an
individual's total IRA or 403(b) investment, the CDSC waiver is available only
for that portion of a mandatory distribution which bears the same relation to
the entire mandatory distribution as the B share investment bears to the total
investment.
EMPLOYEES OF LORD ABBETT/FUND DIRECTORS (TRUSTEES). The terms "directors,"
"trustees" (of a Fund) and "employees" (of Lord Abbett) include a director's
(trustee's) or employee's spouse (including the surviving spouse of a deceased
director (trustee) or employee). The terms "directors," "trustees" and
"employees of Lord Abbett" also include other family members and retired
directors (trustees) and employees.
LEGAL CAPACITY. With respect to a redemption request, if (for example) the
request is on behalf of the estate of a deceased shareholder, John W. Doe, by a
person (Robert A. Doe) who has the legal capacity to act for the estate of the
deceased shareholder because he is the executor of the estate, then the request
must be executed as follows: Robert A. Doe, Executor of the Estate of John W.
Doe. Similarly, if (for example) the redemption request is on behalf of the ABC
Corporation by a person (Mary B. Doe) that has the legal capacity to act on
behalf of this corporation, because she is the President of the corporation,
then the request must be executed as follows: ABC Corporation by Mary B. Doe,
President.
<PAGE>
An acceptable form of guarantee would be as follows:
o In the case of the estate -
Robert A. Doe, Executor
of the Estate of John W. Doe
[Date] SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
/S/ [ILLEGIBLE]
___________________________________________
AUTHORIZED SIGNATURE
o In the case of the corporation -
ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date] SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
/S/ [ILLEGIBLE]
___________________________________________
AUTHORIZED SIGNATURE
LORD ABBETT CONSULTANTS/ADVISERS. Consultants and advisers to Lord Abbett, Lord
Abbett Distributor or Lord Abbett-sponsored funds who consent to such purchase
if such persons provide services to Lord Abbett, Lord Abbett Distributor or such
funds on a continuing basis and are familiar with such fund.
LORD ABBETT DISTRIBUTOR LLC. Lord Abbett Distributor is the Fund's exclusive
selling agent. 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.
MUTUAL FUND WRAP-FEE PROGRAM. Certain unaffiliated authorized brokers, dealers,
registered investment advisers or other financial institutions who have entered
into an agreement with Lord Abbett Distributor in accordance with certain
standards approved by Lord Abbett Distributor, providing specifically for the
use of our shares (and sometimes providing for acceptance of orders for such
shares on our behalf) in particular investment products made available for a fee
to clients of such brokers, dealers, registered investment advisers and other
financial institutions.
PURCHASER. The term "purchaser" includes: (i) an individual, (ii) an individual
and his or her spouse and children under the age of 21 and (iii) a trustee or
other fiduciary purchasing shares for a single trust estate or single fiduciary
account (including a pension, profit-sharing or other employee benefit trust
qualified under Section 401 of the Internal Revenue Code -- more than one
qualified employee benefit trust of a single employer, including its
consolidated subsidiaries, may be considered a single trust, as may qualified
plans of multiple employers registered in the name of a single bank trustee as
one account), although more than one beneficiary is involved.
RETIREMENT PLANS. Employer-sponsored retirement plans under the Internal Revenue
Code.
SPECIAL RETIREMENT WRAP PROGRAM. A program sponsored by an authorized
institution showing one or more characteristics distinguishing it, in the
opinion of Lord Abbett Distributor, from a mutual fund wrap-fee program. Such
characteristics include, among other things, the fact that an authorized
institution does not charge its clients any fee of a consulting or advisory
nature that is economically equivalent to the distribution fee under Class A
12b-1 Plan and the fact that the program relates to participant-directed
Retirement Plans.
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 maximum public offering price. When total return is quoted for Class
A shares, it includes the payment of the maximum initial sales charge. When
total return is shown for Class B and Class C shares, it reflects the effect of
the applicable CDSC. There is no CDSC for Class P shares. Total return also may
be presented for other periods or based on investments at reduced sales charge
levels or net asset value. Any quotation of total return not reflecting the
maximum sales charge (front-end, level load or back-end) would be reduced if
such sales charge were used. 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.
<PAGE>
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 more than or less than that shown below for Class B, C and P 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 in the Fund, assuming reinvestment of all dividends
and distributions and the unmanaged Russell 2000 Index.
Fund at NAV Fund at Russell 2000 Index
Maximum Offering Price
1988 10,000 9,420
1989 11,062 10,420 12,514
1990 11,020 10,381 12,710
1991 12,635 11,902 12,229
1992 17,882 16,845 17,705
1993 17,470 16,456 20,049
1994 20,336 19,157 23,776
1995 19,777 18,630 22,347
1996 29,710 27,987 29,040
1997 38,132 35,921 34,544
1998 47,431 44,681 40,786
(LINE GRAPH OMITTED)
Average Annual Total Return for Class A Shares(3)
19951 Year 5 Years 10 Years
17.319960% 20.66% 16.15%
Average Annual Total Return for Class B Shares(4)
1 Year Life of Class (8/1/96-1/31/98)
18.54% 26.08%
Average Annual Total Return for Class C Shares(5)
1 Year Life of Class (8/1/96-1/31/98)
23.55% 29.61%
Total Return for Class P Shares(6)(7)
Life of Class (1/5/98-1/31/98)
(.80)%
(1)Data reflects the deduction of the maximum initial sales charge of 5.75%
applicable to Class A shares. (2)Performance numbers for the unmanaged Russell
2000 Index do not reflect transaction costs or management fees. An investor
cannot invest directly in this Index.
(3)Total return is the percent change in value, after deduction of the maximum
initial sales charge of 5.75% applicable to Class A shares, with all dividends
and distributions reinvested for the periods shown ending January 31, 1998 using
the SEC-required uniform method to compute such return. (4) Performance reflects
the deduction of the applicable CDSC.
(5) Performance is at net asset value.
(6) Not annualized.
(7) No sales charge.
FIRST YEAR COMPENSATION
Class A investments
Front-end
sales charge Dealer's Service Total Compensation
paid by investors concession Fee(1) (%of offering
(% of offering (% of (%of net price)
price) offering price) investment)
Less than $50,000 5.75% 5.00% 0.25% 5.24%
$50,000 - $99,999 4.75% 4.00% 0.25% 4.24%
$100,000 - $249,999 3.75% 3.25% 0.25% 3.49%
$250,000 - $499,999 2.75% 2.25% 0.25% 2.49%
$500,000 - $999,999 2.00% 1.75% 0.25% 2.00%
$1 million or more(3) or
Retirement Plan - 100 or more eligible employees(3) or
Special Retirement Wrap Program(3)
First $5 million no front-end sales charge 1.00% 0.25% 1.25%
Next $5 million no front-end sales 0.55% 0.25% 0.80%
above that
Next $40 million nofront-end sales charge 0.50% 0.25% 0.75%
above that
Over $50 million no front-end sales charge 0.25% 0.25% 0.50%
Class B investments Paid at time of sale (% of net asset value) (4)
net asset value)(4)
All amounts no front-end sales charge 3.75% 0.25% 4.00%
Class C investments
All amounts no front-end sales charge 0.75% 0.25% 1.00%
Class P investments Percentage of average net assets
All amounts no front-end sales charge 0.25% 0.20% 0.45%
ANNUAL COMPENSATION AFTER FIRST YEAR
Class A investments
All amounts no front-end sales charge none 0.25% 0.25%
Class B investments Percentage of average net assets (5)
All amounts no front-end sales charge none 0.25% 0.25%
Class C investments
All amounts no front-end sales charge 0.75% 0.25% 1.00%
Class P investments
All amounts no front end sales charge 0.25% 0.20% 0.45%
(1) The service fee for Class A and P shares is paid quarterly and for Class A
shares may not exceed 0.15% if sold prior to June 1, 1990. The first year's
service fee on Class B and C shares is paid at the time of sale.
(2) Reallowance/concession percentages and service fee percentages are
calculated from different amounts, and therefore may not equal total
compensation percentages if combined using simple addition. Additional
Concessions may be paid to Authorized Institutions from time to time.
(3) Concessions are paid at the time of sale on all Class A shares sold during
any 12-month period starting from the day of the first net asset value sale.
With respect to (a) Class A share purchases at $1 million or more, sales
qualifying at such level under rights of accumulation and statement of intention
privileges are included and (b) for Special Retirement Wrap Programs, only new
sales are eligible and exchanges into the Fund are excluded.
(4) Class C shares of the Fund may be purchased under a Mutual Fund Wrap-Fee
Program, in which case, an alternative method of payment may be made quarterly
on average net assets, on a pro-rata basis, during the first year subsequent to
the purchase of shares, excluding dividend and distribution reinvestments. After
the first year, payments with respect to C shares under a Mutual Fund Wrap-Fee
Program follow the chart above as set forth under "Annual Compensation After
First Year."
(5) With respect to Class B, C and P shares, 0.25% and 1.00% and
0.45%, respectively, of the average annual net asset value of such shares
outstanding during the quarter (including distribution reinvestment shares after
the first anniversary of their issuance) is paid to Authorized Institutions.
These fees are paid quarterly in arrears.
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
June 1, 1998
Application Inside
LORD ABBETT
DEVELOPING GROWTH FUND, INC.
<PAGE>
LORD ABBETT
STATEMENT OF ADDITIONAL INFORMATION JUNE 1, 1998
LORD ABBETT
DEVELOPING GROWTH FUND, INC.
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from your securities dealer or from Lord Abbett Distributor LLC
("Lord Abbett Distributor") at The General Motors Building, 767 Fifth Avenue,
New York, New York 10153-0203. This Statement relates to, and should be read in
conjunction with, the Prospectus dated June 1, 1998.
Lord Abbett Developing Growth Fund, Inc. (sometimes referred to as "we" or the
"Fund") was incorporated under Maryland law on August 21, 1978 and its
predecessor corporation was organized on July 11, 1973. The Fund has
1,000,000,000 shares of authorized capital stock consisting of five classes of
shares. This Statement of Additional Information offers four of those classes
(A, B ,C and P), $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 affected by such
matter. Rule 18f-2 further provides that a class shall be deemed to be affected
by a matter unless the interests of each class in the matter are substantially
identical or the matter does not affect any interest of such class. 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 18
7. Taxes 18
8. Information About the Fund 20
9. Financial Statements 20
<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 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
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.
<PAGE>
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 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.
<PAGE>
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 53, 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 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. * Elected a director,
effective as of June 17, 1998
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.
<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.
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
Compensation Twelve Other Lord and Twelve Other Lord
Accrued by Abbett-sponsored Abbett-sponsored
Name of Director the Fund1 Funds2 Funds3
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
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.
<PAGE>
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.
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, Nordberg 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; 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 than1% 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. Of the twelve general partners of Lord Abbett, six are
officers and/or directors of the Fund: Daniel E. Carper, Robert S. Dow, Paul A.
Hilstad, Robert G. Morris, E. Wayne Nordberg and John J. Walsh. The six other
general partners are: Stephen Allen, Zane Brown, Daria L. Foster, W. Thomas
Hudson, Michael B. McLaughlin, and Robert J. Noelke. The address of each partner
is The General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203.
<PAGE>
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, C and P 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.
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 auditors 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.
<PAGE>
Some of these brokers also provide research services at least some of which are
useful to Lord Abbett in their overall responsibilities with respect to us and
the other accounts they manage. Research includes the furnishing of analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts and trading equipment and
computer software packages, acquired from third-party suppliers, that enable
Lord Abbett to access various information bases. Such services may be used by
Lord Abbett in servicing all their accounts, and not all of such services will
necessarily be used by Lord Abbett in connection with their management of the
Fund; conversely, such services furnished in connection with brokerage on other
accounts managed by Lord Abbett may be used in connection with their management
of the Fund, and not all of such services will necessarily be used by Lord
Abbett in connection with their advisory services to such other accounts. We
have been advised by Lord Abbett that research services received from brokers
cannot be allocated to any particular account, are not a substitute for Lord
Abbett's services but are supplemental to their own research effort and when
utilized, are subject to internal analysis before being incorporated by Lord
Abbett into their investment process. As a practical matter, it would not be
possible for Lord Abbett to generate all of the information presently provided
by brokers. While receipt of research services from brokerage firms has not
reduced Lord Abbett's normal research activities, the expenses of Lord Abbett
could be materially increased if it attempted to generate such additional
information through its own staff and purchased such equipment and software
packages directly from the suppliers.
No commitments are made regarding the allocation of brokerage business to or
among brokers, and trades are executed only when they are dictated by investment
decisions of the 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.
<PAGE>
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 maximum offering price of our Class A shares on January 31, 1998 was
computed as follows:
Net asset value per share (net assets divided by
shares outstanding)..............................................$14.27
Maximum offering price per share (net asset value
divided by .9425)................................................$15.14
The net asset value per share for the Class B, C and P shares is determined in
the same manner as for the Class A shares (net assets divided by shares
outstanding). Our Class B, C and P shares are sold 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.
For the last three fiscal years, Lord Abbett, as our principal underwriter,
received net commissions after allowance of a portion of the sales charge to
independent dealers with respect to Class A shares as follows:
Year Ended January 31
1998 1997 1996
---- ---- ----
Gross sales charge $3,195,724 $2,604,448 $747,825
Amount allowed to dealers $2,768,167 $2,285,132 $679,143
---------- ---------- --------
Net commissions
received by Lord Abbett $427,557 $319,316 $68,682
CONVERSION OF CLASS B SHARES. The conversion of Class B shares on the eighth
anniversary of their purchase is subject to the continuing availability of a
private letter ruling from the Internal Revenue Service, or an opinion of
counsel or tax adviser, to the effect that the conversion of Class B shares does
not constitute a taxable event for the holder under Federal income tax law. If
such a revenue ruling or opinion is no longer available, the automatic
conversion feature may be suspended, in which event no further conversions of
Class B shares would occur while such suspension remained in effect. Although
Class B shares could then be exchanged for Class A shares on the basis of
relative net asset value of the two classes, without the imposition of a sales
charge or fee, such exchange could constitute a taxable event for the holder.
ALTERNATIVE SALES ARRANGEMENTS
CLASSES OF SHARES. The Fund offers investors five different classes of shares.
This Statement of Additional Information offers four of those classes designated
Class A, B, C and P. The different classes of shares represent investments in
the same portfolio of securities but are subject to different expenses and will
likely have different share prices. Investors should read this section carefully
to determine which class represents the best investment option for their
particular situation.
<PAGE>
CLASS A SHARES. If you buy Class A shares, you pay an initial sales charge on
investments of less than $1 million (or on investments for employer-sponsored
retirement plans under the Internal Revenue Code (hereinafter referred to as
"Retirement Plans") with less than 100 eligible employees or on investments that
do not qualify to be under a "special retirement wrap program" as a program
sponsored by an authorized institution showing one or more characteristics
distinguishing it, in the opinion of Lord Abbett Distributor from a mutual fund
wrap fee program). If you purchase Class A shares as part of an investment of at
least $1 million (or for Retirement Plans with at least 100 eligible employees
or under a special retirement wrap program) in shares of one or more Lord
Abbett-sponsored funds, you will not pay an initial sales charge, but if you
redeem any of those shares within 24 months after the month in which you buy
them, you may pay to the Fund a contingent deferred sales charge ("CDSC") of 1%
except for redemptions under a special retirement wrap program. Class A shares
are subject to service and distribution fees that are currently estimated to
total annually approximately 0.28 of 1% of the annual net asset value of the
Class A shares. The initial sales charge rates, the CDSC and the Rule 12b-1 plan
applicable to the Class A shares are described in "Buying Class A Shares" below.
CLASS B SHARES. If you buy Class B shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the sixth anniversary of
buying them, you will normally pay a CDSC to Lord Abbett Distributor LLC ("Lord
Abbett Distributor"). That CDSC varies depending on how long you own shares.
Class B shares are subject to service and distribution fees at an annual rate of
1% of the annual net asset value of the Class B shares. The CDSC and the Rule
12b-1 plan applicable to the Class B shares are described below.
CLASS C SHARES. If you buy Class C shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the first anniversary of
buying them, you will normally pay the Fund a CDSC of 1%. Class C shares are
subject to service and distribution fees at an annual rate of 1% of the annual
net asset value of the Class C shares. The CDSC and the Rule 12b-1 plan
applicable to the C shares are described below.
CLASS P SHARES. If you buy Class P shares, you pay no sales charge at the time
of purchase, and if you redeem your shares you pay no CDSC. Class P shares are
subject to service and distribution fees at an annual rate of .45 of 1% of the
average daily net asset value of the Class P shares. The Rule 12b-1 plan
applicable to the Class P shares is described below. Class P shares are
available to a limited number of investors.
Which Class of Shares Should You Choose? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial adviser. The Fund's class-specific expenses and the
effect of the different types of sales charges on your investment will affect
your investment results over time. The most important factors are how much you
plan to invest and how long you plan to hold your investment. If your goals and
objectives change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider another class of
shares.
In the following discussion, to help provide you and your financial adviser with
a framework in which to choose a class, we have made some assumptions using a
hypothetical investment in the Fund. We used the sales charge rates that apply
to Class A, Class B and Class C, and considered the effect of the higher
distribution fees on Class B and Class C expenses (which will affect your
investment return). Of course, the actual performance of your investment cannot
be predicted and will vary, based on the Fund's actual investment returns, the
operating expenses borne by each class of shares, and the class of shares you
purchase. The factors briefly discussed below are not intended to be investment
advice, guidelines or recommendations, because each investor's financial
considerations are different. The discussion below of the factors to consider in
purchasing a particular class of shares assumes that you will purchase only one
class of shares and not a combination of shares of different classes.
<PAGE>
HOW LONG DO YOU EXPECT TO HOLD YOUR INVESTMENT? While future financial needs
cannot be predicted with certainty, knowing how long you expect to hold your
investment will assist you in selecting the appropriate class of shares. For
example, over time, the reduced sales charges available for larger purchases of
Class A shares may offset the effect of paying an initial sales charge on your
investment, compared to the effect over time of higher class-specific expenses
on Class B or Class C shares for which no initial sales charge is paid. Because
of the effect of class-based expenses, your choice should also depend on how
much you plan to invest.
INVESTING FOR THE SHORT TERM. If you have a short-term investment horizon (that
is, you plan to hold your shares for not more than six years), you should
probably consider purchasing Class A or Class C shares rather than Class B
shares. This is because of the effect of the Class B CDSC if you redeem before
the sixth anniversary of your purchase, as well as the effect of the Class B
distribution fee on the investment return for that class in the short term.
Class C shares might be the appropriate choice (especially for investments of
less than $100,000), because there is no initial sales charge on Class C shares,
and the CDSC does not apply to amounts you redeem after holding them one year.
However, if you plan to invest more than $100,000 for the short term, then the
more you invest and the more your investment horizon increases toward six years,
the more attractive the Class A share option may become. This is because the
annual distribution fee on Class C shares will have a greater impact on your
account over the longer term than the reduced front-end sales charge available
for larger purchases of Class A shares. For example, Class A might be more
appropriate than Class C for investments of more than $100,000 expected to be
held for 5 or 6 years (or more). For investments over $250,000 expected to be
held 4 to 6 years (or more), Class A shares may become more appropriate than
Class C. If you are investing $500,000 or more, Class A may become more
desirable as your investment horizon approaches 3 years or more.
For most investors who invest $1 million or more or for Retirement Plans with at
least 100 eligible employees or for investments pursuant to a special retirement
wrap program, in most cases Class A shares will be the most advantageous choice,
no matter how long you intend to hold your shares. For that reason, it may not
be suitable for you to place a purchase order for Class B shares of $500,000 or
more or a purchase order for Class C shares of $1,000,000 or more. In addition,
it may not be suitable for you to place an order for Class B or C shares for a
Retirement Plan with at least 100 eligible employees or for a special retirement
wrap program. You should discuss this with your financial advisor.
INVESTING FOR THE LONGER TERM. If you are investing for the longer term (for
example, to provide for future college expenses for your child) and do not
expect to need access to your money for seven years or more, Class B shares may
be an appropriate investment option, if you plan to invest less than $100,000.
If you plan to invest more than $100,000 over the long term, Class A shares will
likely be more advantageous than Class B shares or Class C shares, as discussed
above, because of the effect of the expected lower expenses for Class A shares
and the reduced initial sales charges available for larger investments in Class
A shares under the Fund's Rights of Accumulation. Of course, these examples are
based on approximations of the effect of current sales charges and expenses on a
hypothetical investment over time, and should not be relied on as rigid
guidelines.
ARE THERE DIFFERENCES IN ACCOUNT FEATURES THAT MATTER TO YOU? Some account
features are available in whole or in part to Class A, Class B and Class C
shareholders. Other features (such as Systematic Withdrawal Plans) might not be
advisable in non-Retirement Plan accounts for Class B shareholders (because of
the effect of the CDSC on the entire amount of a withdrawal if it exceeds 12%
annually) and in any account for Class C shareholders during the first year of
share ownership (due to the CDSC on withdrawals during that year). See
"Systematic Withdrawal Plan" under "Shareholder Services" in the Prospectus for
more information about the 12% annual waiver of the CDSC. You should carefully
review how you plan to use your investment account before deciding which class
of shares you buy. For example, the dividends payable to Class B and Class C
shareholders will be reduced by the expenses borne solely by each of these
classes, such as the higher distribution fee to which Class B and Class C shares
are subject, as described below.
<PAGE>
HOW DOES IT AFFECT PAYMENTS TO MY BROKER? A salesperson, such as a broker, or
any other person who is entitled to receive compensation for selling Fund shares
may receive different compensation for selling one class than for selling
another class. As discussed in more detail below, such compensation is primarily
paid at the time of sale in the case of Class A and B shares and is paid over
time, so long as shares remain outstanding, in the case of Class C shares. It is
important that investors understand that the primary purpose of the CDSC for the
Class B shares and the distribution fee for Class B and Class C shares is the
same as the purpose of the front-end sales charge on sales of Class A shares: to
compensate brokers and other persons selling such shares. The CDSC, if payable,
supplements the Class B distribution fee and reduces the Class C distribution
fee expenses for the Fund and Class C shareholders.
CLASS A, B, C AND P RULE 12B-1 PLANS. As described in the Prospectus, the Fund
has adopted a Distribution Plan and Agreement pursuant to Rule 12b-1 of the Act
for each of the four Fund Classes: the "A Plan," the "B Plan," the"C Plan," and
the "P Plan," respectively. In adopting each Plan and in approving its
continuance, the Board of Directors has concluded that there is a reasonable
likelihood that each Plan will benefit its respective Class and such Class'
shareholders. The expected benefits include greater sales and lower redemptions
of shares of each Class, which should allow each Class to maintain a consistent
cash flow, and a higher quality of service to shareholders by authorized
institutions than would otherwise be the case. During the last fiscal year ended
January 31, 1998, the Fund accrued or paid through Lord Abbett to authorized
institutions $998,221, $244,235, $138,510, and $203 under the A, B, C and P
Plans, respectively. Lord Abbett used all amounts received under each Plan for
payments to dealers for (i) providing continuous services to shareholders, such
as answering shareholder inquiries, maintaining records, and assisting
shareholders in making redemptions, transfers, additional purchases and
exchanges and (ii) their assistance in distributing shares of the Fund.
Each Plan requires the directors to review, on a quarterly basis, written
reports of all amounts expended pursuant to the Plan and the purposes for which
such expenditures were made. Each Plan shall continue in effect only if its
continuance is specifically approved at least annually by vote of the directors,
including a majority of the directors who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related to the Plan ("outside directors"), cast in
person at a meeting called for the purpose of voting on the Plan. No Plan may be
amended to increase materially above the limits set forth therein the amount
spent for distribution expenses thereunder without approval by a majority of the
outstanding voting securities of the applicable class and the approval of a
majority of the directors, including a majority of the outside directors. Each
Plan may be terminated at any time by vote of a majority of the outside
directors or by vote of a majority of its Class's outstanding voting securities.
CONTINGENT DEFERRED SALES CHARGES. A Contingent Deferred Sales Charge ("CDSC")
(i) applies regardless of class, (ii) will not apply to shares purchased by the
reinvestment of dividends or capital gains distributions; (iii) will be assessed
on the lesser of the net asset value of the shares at the time of redemption or
the original purchase price and (iv) will not be imposed on (a) the aggregate
dollar amount of your account, in the case of Class A shares, and (b) the
percentage of each share redeemed, in the case of class B and C shares,
representing an increase in net asset value over the initial purchase price
(including increases due to the reinvestment of dividends and capital gains
distributions) and upon early redemption of shares. In the case of Class A
shares, this increase is represented by shares having an aggregate dollar value
in your account. In the case of Class B and C shares, this increase is
represented by that percentage of each share redeemed where the net asset value
exceeded the initial purchase price. Class A Shares. As stated in the
Prospectus, subject to certain exceptions, a CDSC of 1% is imposed with respect
to those Class A shares (or Class A shares of another Lord Abbett-sponsored fund
or series acquired through exchange of such shares) on which the Fund has paid
the one-time distribution fee of 1% if such shares are redeemed out of the Lord
Abbett-sponsored family of funds within a period of 24 months from the end of
the month in which the original sale occurred.
CLASS B SHARES. As stated in the Prospectus, subject to certain exceptions, if
Class B shares (or Class B shares of another Lord Abbett-sponsored fund or
series acquired through exchange of such shares) are redeemed out of the Lord
Abbett-sponsored family of funds for cash before the sixth anniversary of their
purchase, a CDSC will be deducted from the redemption proceeds. The Class B CDSC
is paid to Lord Abbett Distributor to reimburse its expenses, in whole or in
part, for providing distribution-related services to the Fund in connection with
the sale of Class B shares.
<PAGE>
To determine whether the CDSC applies to a redemption, the Fund redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held on or after the sixth anniversary
of their purchase, and (3) shares held the longest before such sixth
anniversary.
The amount of the CDSC will depend on the number of years since you invested and
the dollar amount being redeemed, according to the following schedule:
Anniversary of the Day on Contingent Deferred Sales Charge
Which the Purchase Order Was Accepted on Redemptions (As % of Amount
Subject to Charge)
Before the 1st........................................................5.0%
On the 1st, before the 2nd............................................4.0%
On the 2nd, before the 3rd............................................3.0%
On the 3rd, before the 4th............................................3.0%
On the 4th, before the 5th............................................2.0%
On the 5th, before the 6th ...........................................1.0%
On or after the 6th anniversary.......................................None
In the table, an "anniversary" is the 365th day subsequent to the acceptance of
a purchase order or a prior anniversary. All purchases are considered to have
been made on the business day on which the purchase order was accepted.
CLASS C SHARES. As stated in the Prospectus, subject to certain exceptions, if
Class C shares are redeemed for cash before the first anniversary of their
purchase, the redeeming shareholder will be required to pay to the Fund on
behalf of Class C shares a CDSC of 1% of the lower of cost or the then net asset
value of Class C shares redeemed. If such shares are exchanged into the same
class of another Lord Abbett-sponsored fund and subsequently redeemed before the
first anniversary of their original purchase, the charge will be collected by
the other fund on behalf of this Fund's Class C shares.
GENERAL. The percentage (1% in the case of Class A and C shares and 5% through
1% in the case of Class B shares) used to calculate CDSCs described above for
the Class A, Class B and Class C shares is sometimes hereinafter referred to as
the "Applicable Percentage."
With respect to Class A and Class B shares, no CDSC is payable on redemptions by
participants or beneficiaries from employer-sponsored retirement plans under the
Internal Revenue Code for benefit payments due to plan loans, hardship
withdrawals, death, retirement or separation from service and for returns of
excess contributions to retirement plan sponsors. With respect to Class A shares
purchased pursuant to a special retirement wrap program, no CDSC is payable on
redemptions which continue as investments in another fund participating in the
program. With respect to Class B shares, no CDSC is payable for redemptions (i)
in connection with Systematic Withdrawal Plan and Div-Move services as described
below under those headings, (ii) in connection with mandatory distribution under
403(b) plans and IRAs and (iii) in connection with death of an individual
shareholder (a natural person). In the case of Class A and Class C shares, the
CDSC is received by the Fund and is intended to reimburse all or a portion of
the amount paid by the Fund if the shares are redeemed before the Fund has had
an opportunity to realize the anticipated benefits of having a long-term
shareholder account in the Fund. In the case of Class B shares, the CDSC is
received by Lord Abbett Distributor and is intended to reimburse its expenses of
providing distribution-related services to the Fund (including recoupment of the
commission payments made) in connection with the sale of Class B shares before
Lord Abbett Distributor has had an opportunity to realize its anticipated
reimbursement by having such a long-term shareholder account subject to the B
Plan distribution fee.
<PAGE>
The other funds and series which participate in the Telephone Exchange Privilege
(except (a) Lord Abbett U.S. Government Securities Money Market Fund, Inc.
("GSMMF"), (b) certain series of Lord Abbett Tax-Free Income Fund and Lord
Abbett Tax-Free Income Trust for which a Rule 12b-1 Plan is not yet in effect,
and (c) any authorized institution's affiliated money market fund satisfying
Lord Abbett Distributor as to certain omnibus account and other criteria,
hereinafter referred to as an "authorized money market fund" or "AMMF"
(collectively, the "Non-12b-1 Funds")) have instituted a CDSC for each class on
the same terms and conditions. No CDSC will be charged on an exchange of shares
of the same class between Lord Abbett funds or between such funds and AMMF. Upon
redemption of shares out of the Lord Abbett family of funds or out of AMMF, the
CDSC will be charged on behalf of and paid: (i) to the fund in which the
original purchase (subject to a CDSC) occurred, in the case of the Class A and
Class C shares and (ii) to Lord Abbett Distributor if the original purchase was
subject to a CDSC, in the case of the Class B shares. Thus, if shares of a Lord
Abbett fund are exchanged for shares of the same class of another such fund and
the shares of the same class tendered ("Exchanged Shares") are subject to a
CDSC, the CDSC will carry over to the shares of the same class being acquired,
including GSMMF and AMMF ("Acquired Shares"). Any CDSC that is carried over to
Acquired Shares is calculated as if the holder of the Acquired Shares had held
those shares from the date on which he or she became the holder of the Exchanged
Shares. Although the Non-12b-1 Funds will not pay a distribution fee on their
own shares, and will, therefore, not impose their own CDSC, the Non-12b-1 Funds
will collect the CDSC (a) on behalf of other Lord Abbett funds, in the case of
the Class A and Class C shares and (b) on behalf of Lord Abbett Distributor, in
the case of the Class B shares. Acquired Shares held in GSMMF and AMMF which are
subject to a CDSC will be credited with the time such shares are held in GSMMF
but will not be credited with the time such shares are held in AMMF. Therefore,
if your Acquired Shares held in AMMF qualified for no CDSC or a lower Applicable
Percentage at the time of exchange into AMMF, that Applicable Percentage will
apply to redemptions for cash from AMMF, regardless of the time you have held
Acquired Shares in AMMF.
In no event will the amount of the CDSC exceed the Applicable Percentage of the
lesser of (i) the net asset value of the shares redeemed or (ii) the original
cost of such shares (or of the Exchanged Shares for which such shares were
acquired). No CDSC will be imposed when the investor redeems (i) shares
representing an aggregate dollar amount of your account, in the case of Class A
shares, (ii) that percentage of each share redeemed, in the case of Class B and
C shares, derived from increases in the value of the shares above the total cost
of shares being redeemed due to increases in net asset value, (iii) shares with
respect to which no Lord Abbett fund paid a 12b-1 fee and, in the case of Class
B shares, Lord Abbett Distributor paid no sales charge or service fee (including
shares acquired through reinvestment of dividend income and capital gains
distributions) or (iv) shares which, together with Exchanged Shares, have been
held continuously for 24 months from the end of the month in which the original
sale occurred (in the case of Class A shares); for six years or more (in the
case of Class B shares) and for one year or more (in the case of Class C
shares). In determining whether a CDSC is payable, (a) shares not subject to the
CDSC will be redeemed before shares subject to the CDSC and (b) of the shares
subject to a CDSC, those held the longest will be the first to be redeemed.
EXCHANGES. The Prospectus briefly describes the Telephone Exchange Privilege.
You may exchange some or all of your shares of any class for those in the same
class of: (i) Lord Abbett-sponsored funds currently offered to the public with a
sales charge (front-end, back-end or level ), (ii) GSMMF or (iii) AMMF, to the
extent offers and sales may be made in your state. You should read the
prospectus of the other fund before exchanging. In establishing a new account by
exchange, shares of the Fund being exchanged must have a value equal to at least
the minimum initial investment required for the other fund into which the
exchange is made.
Shareholders in other Lord Abbett-sponsored funds and AMMF have the same right
to exchange their shares for the corresponding class of the Fund's shares.
Exchanges are based on relative net asset values on the day instructions are
received by the Fund in Kansas City if the instructions are received prior to
the close of the NYSE in proper form. No sales charges are imposed except in the
case of exchanges out of GSMMF or AMMF (unless a sales charge (front-end,
back-end or level) was paid on the initial investment in a Lord Abbett-sponsored
fund). Exercise of the exchange privilege will be treated as a sale for federal
income tax purposes, and, depending on the circumstances, a gain or loss may be
recognized. In the case of an exchange of shares that have been held for 90 days
or less where no sales charge is payable on the exchange, the original sales
charge incurred with respect to the exchanged shares will be taken into account
in determining gain or loss on the exchange only to the extent such charge
exceeds the sales charge that would have been payable on the acquired shares had
they been acquired for cash rather than by exchange. The portion of the original
sales charge not so taken into account will increase the basis of the acquired
shares.
<PAGE>
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as a means for taking advantage of
short-term swings in the market, and we reserve the right to terminate or limit
the privilege of any shareholder who makes frequent exchanges. We can revoke or
modify the privilege for all shareholders upon 60 days' prior notice. "Eligible
Funds" are AMMF and other Lord Abbett-sponsored funds which are eligible for the
exchange privilege, except Lord Abbett Series Fund ("LASF") which offers its
shares only in connection with certain variable annuity contracts, Lord Abbett
Equity Fund ("LAEF") which is not issuing shares, and series of Lord Abbett
Research Fund not offered to the general public ("LARF").
STATEMENT OF INTENTION. Under the terms of the Statement of Intention as
described in the Prospectus, you may invest $100,000 or more over a 13-month
period in shares of a Lord Abbett-sponsored fund (other than shares of LAEF,
LASF, LARF, GSMMF and AMMF, unless holdings in GSMMF and AMMF are attributable
to shares exchanged from a Lord Abbett-sponsored fund offered with a front-end,
back-end or level sales charge). Shares currently owned by you are credited as
purchases (at their current offering prices on the date the Statement is signed)
toward achieving the stated investment and reduced initial sales charge for
Class A shares. Class A shares valued at 5% of the amount of intended purchases
are escrowed and may be redeemed to cover the additional sales charge payable if
the Statement of Intention is not completed. The Statement of Intention is
neither a binding obligation on you to buy, nor on the Fund to sell, the full
amount indicated.
RIGHTS OF ACCUMULATION. As stated in the Prospectus, purchasers (as defined in
the Prospectus) may accumulate their investment in Lord Abbett-sponsored funds
(other than LAEF, LARF, LASF, GSMMF, and AMMF unless holdings in GSMMF or AMMF
are attributable to shares exchanged from a Lord Abbett-sponsored fund offered
with a front-end, back-end or level sales charge) so that a current investment,
plus the purchaser's holdings valued at the current maximum offering price,
reach a level eligible for a discounted sales charge for Class A shares.
NET ASSET VALUE PURCHASES OF CLASS A SHARES. As stated in the Prospectus, our
Class A shares may be purchased at net asset value by our directors, employees
of Lord Abbett, employees of our shareholder servicing agent and employees of
any securities dealer having a sales agreement with Lord Abbett who consents to
such purchases or by the director or custodian under any pension or
profit-sharing plan or Payroll Deduction IRA established for the benefit of such
persons or for the benefit of employees of any national securities trade
organization to which Lord Abbett belongs or any company with an account(s) in
excess of $10 million managed by Lord Abbett on a private-advisory-account
basis. For purposes of this paragraph, the terms "directors" and "employees"
include a director's or employee's spouse (including the surviving spouse of a
deceased director or employee). The terms "our directors" and "employees of Lord
Abbett" also include retired directors and employees and other family members
thereof.Our Class A shares also may be purchased at net asset value (a) at $1
million or more, (b) with dividends and distributions from Class A shares of
other Lord Abbett-sponsored funds, except for LARF, LAEF and LASF, (c) under the
loan feature of the Lord Abbett-sponsored prototype 403(b) plan for share
purchases representing the repayment of principal and interest, (d) by certain
authorized brokers, dealers, registered investment advisers or other financial
institutions who have entered into an agreement with Lord Abbett Distributor in
accordance with certain standards approved by Lord Abbett Distributor, providing
specifically for the use of our shares in particular investment products made
available for a fee to clients of such brokers, dealers, registered investment
advisers and other financial institutions ("mutual fund wrap fee program"), (e)
by employees, partners and owners of unaffiliated consultants and advisors to
Lord Abbett, Lord Abbett Distributor or Lord Abbett-sponsored funds who consent
to such purchase if such persons provide service to Lord Abbett, Lord Abbett
Distributor or such funds on a continuing basis and are familiar with such
funds, (f) through Retirement Plans with at least 100 eligible employees and (g)
in connection with a merger, acquisition or other reorganization (h) through a
"special retirement wrap program sponsored by an authorized institution having
one or more characteristics distinguishing it, in the opinion of Lord Abbett
Distributor, from a mutual fund wrap program. Such characteristics include,
among other things, the fact that an authorized institution does not charge its
clients any fee of a consulting or advisory nature that is economically
equivalent to the distribution fee under the Class A 12b-1 Plan and the fact
that the program relates to a participant-directed Retirement Plan. Shares are
offered at net asset value to these investors for the purpose of promoting
goodwill with employees and others with whom Lord Abbett Distributor and/or the
Fund has business relationships.
<PAGE>
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.
DIV-MOVE. Under the Div-Move service described in the Prospectus, you can invest
the dividends paid on your account of any class into an existing account of the
same class in any other Eligible Fund. The account must be either your account,
a joint account for you and your spouse, a single account for your spouse, or a
custodial account for your minor child under the age of 21. You should read the
prospectus of the other fund before investing.
INVEST-A-MATIC. The Invest-A-Matic method of investing in the Fund and/or any
other Eligible Fund is described in the Prospectus. To avail yourself of this
method you must complete the application form, selecting the time and amount of
your bank checking account withdrawals and the funds for investment, include a
voided, unsigned check and complete the bank authorization.
SYSTEMATIC WITHDRAWAL PLANS. The Systematic Withdrawal Plan ("SWP") also is
described in the Prospectus. You may establish a SWP if you own or purchase
uncertificated shares having a current offering price value of at least $10,000.
Lord Abbett prototype retirement plans have no such minimum. With respect to
Class B shares the CDSC will be waived on redemptions of up to 12% per year of
the current net asset value of your account at the time the SWP is established.
For Class B share redemptions of over 12% per year, the CDSC will apply to the
entire redemption. Therefore, please contact the Fund for assistance in
minimizing the CDSC in this situation. With respect to Class C shares, the CDSC
will be waived on and after the first anniversary of their purchase. The SWP
involves the planned redemption of shares on a periodic basis by receiving
either fixed or variable amounts at periodic intervals. Since the value of
shares redeemed may be more or less than their cost, gain or loss may be
recognized for income tax purposes on each periodic payment. Normally, you may
not make regular investments at the same time you are receiving systematic
withdrawal payments because it is not in your interest to pay a sales charge on
new investments when in effect a portion of that new investment is soon
withdrawn. The minimum investment accepted while a withdrawal plan is in effect
is $1,000. The SWP may be terminated by you or by us at any time by written
notice.
RETIREMENT PLANS. The Prospectus indicates the types of retirement plans for
which Lord Abbett provides forms and explanations. Lord Abbett makes available
the retirement plan forms including 401(k) plans and custodial agreements for
IRAs (Individual Retirement Accounts, including Traditional, Education, Roth and
SIMPLE IRAs and Simplified Employee Pensions), 403(b) plans and qualified
pension and profit-sharing plans. The forms name Investors Fiduciary Trust
Company as custodian and contain specific information about the plans excluding
401(k) plans. Explanations of the eligibility requirements, annual custodial
fees and allowable tax advantages and penalties are set forth in the relevant
plan documents. Adoption of any of these plans should be on the advice of your
legal counsel or qualified tax adviser.
<PAGE>
6.
Past Performance
The Fund computes the average annual compounded rate of total return during
specified periods that would equate the initial amount invested to the ending
redeemable value of such investment by adding one to the computed average annual
total return, raising the sum to a power equal to the number of years covered by
the computation and multiplying the result by one thousand dollars, which
represents a hypothetical initial investment. The calculation assumes deduction
of the maximum sales charge (as described in the next paragraph) from the
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 covered by the average annual total return
computation.
In calculating total returns for Class A shares, the current maximum sales
charge of 5.75% (as a percentage of the offering price) is deducted from the
initial investment (unless the return is shown at net asset value). For Class B
shares, the payment of the applicable CDSC (5.0% prior to the first anniversary
of purchase, 4.0% prior to the second anniversary of purchase, 3.0% prior to the
third and fourth anniversaries of purchase, 2.0% prior to the fifth anniversary
of purchase, 1.0% prior to the sixth anniversary of purchase and no CDSC on and
after the sixth anniversary of purchase) is applied to the Fund's investment
result for that class for the time period shown (unless the total return is
shown at net asset value). For Class C shares, the 1.0% CDSC is applied to the
Fund's investment result for that class for the time period shown prior to the
first anniversary of purchase (unless the total return is shown at net asset
value). For Class P shares, there is no CDSC. 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.
Using the computation method described above, the Fund's average annual
compounded rates of return for the last one, five and ten year(s) ending on
January 31, 1998 were as follows: 17.30%, 20.66% and 16.15%, respectively for
the Fund's Class A shares. For Class B shares, the Fund's average annual rates
of return for the last one year and life of the class periods ending on January
31, 1998 were 18.54% and 26.08%, respectively. For Class C shares, the Fund's
average annual rates of return for the last one year and life of the class
periods ending on January 31, 1998 were 23.55% and 29.61%, respectively. For
Class P shares, the Fund's total return for the life of the class period
(January 5, 1998 to January 31, 1998) was (.80)%.
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, repurchase or
sale is made. Any gain or loss generally will be taxable for federal income tax
purposes. Any loss realized on the redemption, repurchase or sale 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.
<PAGE>
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.
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.
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 shares.
<PAGE>
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 accounts. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Fund's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security 7 days
before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account
considers a trade or trades in such security, 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 auditors, 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.
<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, 1998.
Part B- Statement of Net Assets at January 31, 1998.
Statement of Operations for the year ended January
31, 1998. Statements of Changes in Net Assets for
the years ended January 31, 1998 and 1997. Financial
Highlights for the five years ended January 31,
1998.
(b) Exhibits -
99.B1 Restated Articles*
99.B2 By-Laws*
99.B11 Consent of Deloitte & Touche LLP*
99.B18 Form of Plan entered into by Registrant pursuant to
Rule 18f-3.**
Ex. 16 Computation of Performance and Yield*
Ex. 27 Financial Data Schedule*
* 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 May 8, 1998 Class A - 37,063
Class B - 10,684
Class C - 4,626
Class P - 9
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.
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.
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
E. Wayne Nordberg Vice President
John J. Walsh Vice President
The other partners, as follows, are neither officers nor directors of the Fund:
Stephen I Allen, Zane E. Brown, Daria L. Foster, W. Thomas Hudson, Michael B.
McLaughlin and Robert J. Noelke.
(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).
<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
29th day of May.
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 May 29, 1998
Robert S. Dow (Title) (Date)
Vice President
/s/ Keith F. O'Connor and Chief Financial Officer May 29, 1998
Keith F. O'Connor (Title) (Date)
/s/ E. Wayne Nordberg Director May 29, 1998
E. Wayne Nordberg (Title) (Date)
/s/ E. Thayer Bigelow Director May 29, 1998
E. Thayer Bigelow (Title) (Date)
/s/ Stewart S. Dixon Director May 29, 1998
Stewart S. Dixon (Title) (Date)
/s/ John C. Jansing Director May 29, 1998
John C. Jansing (Title) (Date)
/s/ C. Alan MacDonald Director May 29, 1998
C. Alan MacDonald (Title) (Date)
/s/ Hansel B. Millican, Jr. Director May 29, 1998
Hansel B. Millican, Jr. (Title) (Date)
/s/ Thomas J. Neff Director May 29, 1998
Thomas J. Neff (Title) (Date)
<PAGE>
LORD ABBETT DEVELOPING GROWTH FUND, INC.
ARTICLES OF RESTATEMENT
FIRST: LORD ABBETT DEVELOPING GROWTH FUND, INC., a Maryland
corporation, (the "Corporation") desires to restate
its charter as currently in effect.
SECOND: The following provisions are all the provisions of
the charter currently in effect.
RESTATED ARTICLES OF INCORPORATION
OF
LORD ABBETT DEVELOPING GROWTH FUND, INC.
ARTICLE I
I, the subscriber, Kenneth B. Cutler, whose post office
address is 63 Wall Street, New York, New York 10005, being at least twenty-one
years of age, am acting as incorporator with the intention of forming a
corporation under and by virtue of the General Laws of the State of Maryland
authorizing the formation of corporations.
ARTICLE II
The name of the corporation (hereinafter called the
"Corporation") is Lord Abbett Developing Growth Fund, Inc.
<PAGE>
ARTICLE III
The current post office address of the place at which the
principal office of the Corporation in the State of Maryland is located is c/o
The Prentice-Hall Corporation System, Maryland, 11 East Chase Street, Baltimore,
Maryland 21202.
The Corporation's current resident agent is The Prentice-Hall
Corporation System, Maryland, 11 East Chase Street, Baltimore, Maryland 21202.
Said resident agent is a corporation in the State of Maryland.
ARTICLE IV
The purpose or purposes for which the Corporation is formed
and the business or objects to be transacted, carried on and promoted by it, are
as follows:
1. To conduct, operate and carry on the business of an
investment company.
2. To purchase, subscribe for, invest in or otherwise acquire,
and to own, hold, sell, possess, transfer or otherwise dispose of, or turn to
account or realize upon, and generally deal in, all forms of securities of every
nature, kind, character, type and form, including but not limited to, shares,
stocks, bonds, debentures, notes, scrip, participation certificates, rights to
subscribe, warrants, options, certificates of deposit, choses in action,
evidences of indebtedness, certificates of indebtedness and certificates of
interest of any and every kind and nature whatsoever, secured and unsecured,
issued or to be issued, by any corporation, partnership, association, trust,
entity or person, public or private, whether organized under the laws of the
United States, or any state, commonwealth, territory or possession thereof, or
organized under the laws of any foreign country.
3. To issue, sell, repurchase, redeem, retire, cancel,
acquire, resell, transfer, and otherwise deal in shares of the capital stock of
the Corporation, and to apply to any such repurchase, redemption, retirement,
cancellation or acquisition of shares of capital stock of the Corporation, any
funds of the Corporation, whether capital, surplus or otherwise to the full
extent permitted by the laws of Maryland, all without the vote or consent of the
stockholders of the Corporation.
<PAGE>
4. To conduct its business in the State of Maryland, all other
states and elsewhere in any part of the world, and to have one or more offices
outside the State of Maryland.
5. To do any and all things herein set forth, and in addition
such other acts and things as are necessary or convenient to the attainment of
the purposes of this Corporation, or any of them, to the same extent as natural
persons lawfully might or could do in any part of the world, and to engage in
any lawful act or activity for which corporations may be organized under the
laws of the state of Maryland.
The foregoing objects and purposes shall, except as otherwise
expressly provided, be in no way limited or restricted by reference to, or
inference from the terms of any other clause of this or any other Article of
these Articles of Incorporation, and shall each be regarded as independent, and
construed as powers as well as objects and purposes, and the enumeration of
specific purposes, objects and powers shall not be construed to limit or
restrict in any manner the meaning of general terms or the general powers of the
Corporation now or hereafter conferred by the laws of the State of Maryland, nor
shall the expression of one thing be deemed to exclude another, though it be of
like nature, not expressed; provided, however, that the Corporation shall not
have power to carry on within the State of Maryland any business whatsoever the
carrying on of which would preclude it from being classified as an ordinary
business corporation under the laws of said State; nor shall any of the
foregoing statements of its objects, purposes and powers be deemed to permit the
Corporation to carry on any business, or exercise any powers, in any state,
territory, district or county except to the extent that the same may lawfully be
carried on or exercised under the laws thereof.
ARTICLE V
SECTION 1. The total number of shares which the Corporation
has authority to issue is 75,000,000 shares of capital stock of the par value of
$.001 each, having an aggregate par value of $75,000. The Board of Directors of
the Corporation shall have full power and authority, from time to time, to
classify or reclassify any unissued shares of stock of the Corporation,
including, without limitation, the power to classify or reclassify unissued
shares into series, and to classify or reclassify a series into one or more
classes of stock that may be invested together in the common investment
portfolio in which the series is invested, by setting or changing the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or conditions of
redemption of such shares of stock. All shares of stock of a series shall
represent the same interest in the Corporation and have the same preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption as the other
shares of stock of that series, except to the extent that the Board of Directors
provides for differing preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of shares of stock of classes of such series as
determined pursuant to Articles Supplementary filed for record with the State
Department of Assessments and Taxation of Maryland, or as otherwise determined
pursuant to these Articles or by the Board of Directors in accordance with law.
Prior to the first classification of unissued shares of stock into additional
series, all outstanding shares of stock shall be of a single series, and prior
to the first classification of a series into additional classes, all outstanding
shares of stock of such series shall be of a single class. Notwithstanding any
other provision of these Articles, upon the first classification of unissued
shares of stock into additional series, the Board of Directors shall specify a
legal name for the outstanding series, as well as for the new series, in
appropriate charter documents filed for record with the State Department of
Assessments and Taxation of Maryland providing for such name change and
classification, and upon the first classification of a series into additional
classes, the Board of Directors shall specify a legal name for the outstanding
class, as well as for the new class or classes, in appropriate charter documents
filed for record with the State Department of Assessments and Taxation of
Maryland providing for such name change and classification.
<PAGE>
[On July 3, 1996, the Articles of Incorporation of the Corporation were
amended by the filing of Articles of Amendment with the State Department of
Assessments and Taxation of Maryland which specified the legal name for the
existing class of capital stock of the Corporation, both outstanding shares and
unissued shares, as Class A.
On July 9, 1996, the Articles of Incorporation of the
Corporation were further supplemented by the filing of Articles Supplementary
with the State Department of Assessments and Taxation of Maryland which, as
subsequently corrected by a Certificate of Correction filed on September 5,
1996, (a) increased the number of shares of Class A capital stock which the
Corporation shall have authority to issue to 1,000,000,000 of the par value
$.001 each, having an aggregate par value of $1,000,000 and (b) pursuant to the
authority of the Board of Directors of the Corporation to classify and
reclassify unissued shares of stock of the Corporation and to classify a series
into one or more classes of such series, classified and reclassified (i)
25,000,000 authorized but unissued Class A shares as Class C shares and (ii)
20,000,000 authorized but unissued Class A shares as Class B shares. Such
Articles Supplementary further provided that subject to the power of the Board
of Directors to classify and reclassify unissued shares, all shares of the
Corporation's Class B and Class C stock shall be invested in the same investment
portfolio of the Corporation as the Class A 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
Corporation and shall be subject to all other provisions of the Articles of
Incorporation relating to stock of the Corporation generally.
<PAGE>
On December 8, 1997, the Articles of Incorporation of the Corporation
were further supplemented by the filing of Articles Supplementary with the State
Department of Assessments and Taxation of Maryland which, pursuant to the
authority of the Board of Directors of the Corporation to classify and
reclassify unissued shares of stock of the Corporation and to classify a series
into one or more classes of such series, classified and reclassified 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. Such
Articles Supplementary further provided that 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 same 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 Corporation and shall be subject to all other provisions of the Articles
of Incorporation relating to stock of the Corporation generally.]
SECTION 2. A description of the relative preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption of all series
and classes of series of shares is as follows, unless otherwise set forth in
Articles Supplementary filed with the State Department of Assessments and
Taxation of Maryland or otherwise determined pursuant to these Articles:
<PAGE>
(a) Assets Belonging to Series. All consideration received or
receivable by the Corporation for the issue or sale of shares of a
particular series, together with all assets in which consideration is
invested or reinvested, all income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that series for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account
of the Corporation. Such consideration, assets, income, earnings,
profits and proceeds, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds, in whatever form the
same may be, together with any unallocated items (as hereinafter
defined) relating to that series as provided in the following sentence,
are herein referred to as "assets belonging to" that series. In the
event that there are any assets, income, earnings, profits or proceeds
thereof, funds or payments that are not readily identifiable as
belonging to any particular series (collectively "Unallocated Items"),
the Board of Directors shall allocate such Unallocated Items to and
among any one or more of the series created from time to time in such
manner and on such basis as it, in its sole discretion, deems fair and
equitable; and any Unallocated Items so allocated to a particular
series shall belong to that series. Each such allocation by the Board
of Directors shall be conclusive and binding upon stockholders of all
series for all purposes.
(b) Liabilities Belonging to Series. The assets belonging to
each particular series shall be charged with the liabilities of the
Corporation in respect of that series, including any class thereof, and
with all expenses, costs, charges and reserves attributable to that
series, including any such class, and shall be so recorded upon the
books of account of the Corporation. Such liabilities, expenses, costs,
charges and reserves, together with any unallocated items (as
hereinafter defined) relating to that series, including any class
thereof, as provided in the following sentence, so charged to that
series, are herein referred to as "liabilities belonging to" that
series. In the event there are any unallocated liabilities, expenses,
costs, charges or reserves of the Corporation which are not readily
identifiable as belonging to any particular series (collectively
"Unallocated Items"), the Board of Directors shall allocate and charge
such Unallocated Items to and among any one or more of the series
created from time to time in such manner and on such basis as the Board
of Directors in its sole discretion deems fair and equitable; and any
Unallocated Items so allocated and charged to a particular series shall
belong to that series. Each such allocation by the Board of Directors
shall be conclusive and binding upon the stockholders of all series for
all purposes. To the extent determined by the Board of Directors,
liabilities and expenses relating solely to a particular class
(including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative expenses under an administration or
service agreement, plan or other arrangement, however designated, which
may be adopted for such class) shall be allocated to and borne by such
class and shall be appropriately reflected (in the manner determined by
the Board of Directors) in the net asset value, dividends and
distributions and liquidation rights of the shares of such class.
<PAGE>
(c) Dividends. Dividends and distributions on shares of a
particular series may be paid to the holders of shares of that series
at such times, in such manner and from such of the income and capital
gains, accrued or realized, from the assets belonging to that series,
after providing for actual and accrued liabilities belonging to that
series, as the Board of Directors may determine. Such dividends and
distributions may vary between or among classes of a series to reflect
differing allocations of liabilities and expenses of such series
between or among such classes to such extent as may be provided in or
determined pursuant to Articles Supplementary filed for record with the
State Department of Assessments and Taxation of Maryland or as may
otherwise be determined by the Board of Directors.
(d) Liquidation. In the event of the liquidation or
dissolution of the Corporation, the stockholders of each series shall
be entitled to receive, as a series, when and as declared by the Board
of Directors, the excess of the assets belonging to that series over
the liabilities belonging to that series. The assets so distributable
to the stockholders of one or more classes of a series shall be
distributed among such stockholders in proportion to the respective
aggregate net asset values of the shares of such series held by them
and recorded on the books of the Corporation.
(e) Voting. On each matter submitted to vote of the
stockholders, each holder of a share shall be entitled to one vote for
each such share standing in his name on the books of the Corporation
irrespective of the series or class thereof and all shares of all
series and classes shall vote as a single class ("Single Class
Voting"); provided, however, that (i) as to any matter with respect to
which a separate vote of any series or class is required by the
Investment Company Act of 1940, as amended from time to time,
applicable rules and regulations thereunder, or the Maryland General
Corporation Law, such requirement as to a separate vote of that series
or class shall apply in lieu of Single Class Voting as described above;
(ii) in the event that the separate vote requirements referred to in
(i) above apply with respect to one or more (but less than all) series
or classes, then, subject to (iii) below, the shares of all other
series and classes shall vote as a single class; and (iii) as to any
matter which does not affect the interest of a particular series or
class, only the holders of shares of the one or more affected series or
classes shall be entitled to vote.
<PAGE>
(f) Conversion. At such times (which times may vary among
shares of a class) as may be determined by the Board of Directors,
shares of a particular class of a series may be automatically converted
into shares of another class of such series based on the relative net
asset values of such classes at the time of conversion, subject,
however, to any conditions of conversion that may be imposed by the
Board of Directors.
SECTION 3. Each share of the capital stock of the Corporation,
shall be subject to the following provisions:
(a) All shares of the capital stock of the Corporation now or
hereafter authorized shall be subject to redemption and redeemable at
the option of the stockholder, in the sense used in the General Laws of
the State of Maryland authorizing the formation of corporations. Each
holder of the shares of capital stock of the Corporation, upon request
to the Corporation accompanied by surrender (to the Corporation, or an
agent designated by it) of the appropriate stock certificate or
certificates, if any, in proper form for transfer, and such other
instruments as the Board of Directors may require, shall be entitled to
require the Corporation to redeem all or any part of the shares of
capital stock outstanding in the name of such holder on the books of
the Corporation, at a redemption price equal to the net asset value of
such shares determined as hereinafter set forth. Notwithstanding the
foregoing, the Corporation may deduct from the proceeds otherwise due
to any stockholder requiring the Corporation to redeem shares a
redemption charge not to exceed one percent (1%) of such net asset
value or a reimbursement charge, a deferred sales charge or other
charge that is integral to the Corporation's distribution program
(which charges may vary within and among series and classes) as may be
established from time to time by the Board of Directors.
<PAGE>
(b) Notwithstanding the foregoing, the Board of Directors of
the Corporation may suspend the right of the holders of the capital
stock of the Corporation to require the Corporation to redeem shares of
such capital stock or may suspend any voluntary purchase of such
capital stock:
(i) for any period (A) during which the New York
Stock Exchange is closed other than the customary weekend and
holiday closing, or (B) during which trading on the New York
Stock Exchange is restricted;
(ii) for any period during which an emergency, as
defined by the rules of the Securities and Exchange Commission
or any successor thereto, exists as a result of which (A)
disposal by the Corporation of securities owned by it is not
reasonably practicable, or (B) it is not reasonably
practicable for the Corporation fairly to determine the value
of its net assets; or
(iii) for such other periods as the Securities and
Exchange Commission or any successor thereto may by order
permit for the protection of security holders of the
Corporation.
(c) the Corporation, pursuant to a resolution of the Board of
Directors and without the vote or consent of stockholders of the
Corporation, shall have the right to redeem at net asset value all
shares of capital stock in any stockholder account in which there are
less than 25 shares or such lesser number of shares as shall be
specified in such resolution. Such resolution shall set forth that
redemption of shares in such accounts has been determined to be in the
economic best interest of the Corporation or necessary to reduce
disproportionately burdensome expenses in servicing stockholder
accounts. Such resolution shall provide that prior notice of at least
30 days shall be given to a stockholder before such redemption of
shares, and that the stockholder will have 30 days (or such longer
period as is specified in the resolution) from the date of the notice
to avoid such redemption by increasing his account to at least 25
shares, or such lesser number of shares as is specified in the
resolution.
<PAGE>
SECTION 4. Notwithstanding any provision of law requiring any
action to be taken or authorized by the affirmative vote of the holders of a
designated proportion greater than a majority of the shares or votes entitled to
be cast, such action shall be effective and valid if taken or authorized by the
affirmative vote of the holders of a majority of the total number of shares
outstanding or entitled to vote thereon pursuant to the provisions of these
Articles of Incorporation.
SECTION 5. No holder of stock of the Corporation shall, as
such holder, have any right to purchase or subscribe for any shares of the
capital stock of the Corporation which it may issue or sell (whether out of the
number of shares now or hereafter authorized by these Articles of Incorporation,
or any amendment thereof, or out of any shares of the capital stock of the
Corporation acquired by it after the issue thereof, or otherwise) other than
such right, if any, as the Board of Directors, in its discretion, may determine.
ARTICLE VI
The current number of directors of the Corporation is eight,
and the names of those who shall act as such until their successors are duly
elected and qualify are as follows:
Robert S. Dow
E. Wayne Nordberg
E. Thayer Bigelow
Stewart S. Dixon
John C. Jansing
C. Alan MacDonald
Hansel B. Millican
Thomas J. Neff
However, the By-Laws of the Corporation may fix the number of directors at a
number other than eight and may authorize the Board of Directors, by the vote of
a majority of the entire Board of Directors, to divide the Board into classes,
to increase or decrease the number of directors within a limit specified in the
By-Laws, provided that in no case shall the number of directors be less than
three, and to fill the vacancies created by any such increase in the number of
directors. Unless otherwise provided in the By-Laws of the Corporation, the
directors of the Corporation need not be stockholders.
<PAGE>
ARTICLE VII
The following provisions are inserted for the management of
the business and conduct of the affairs of the Corporation, and to create,
define, limit and regulate the powers of the Corporation, the directors and the
stockholders.
SECTION 1. In furtherance and not in limitation of the powers
conferred by the statute and pursuant to these Articles of Incorporation, the
Board of Directors is expressly authorized to do the following:
(a) To make, adopt, alter, amend and repeal By-Laws of
the Corporation.
(b) To distribute, in its discretion, for any fiscal year (in
the year or in the next fiscal year) as ordinary dividends and as
capital gains distributions, respectively, amounts sufficient to enable
the Corporation as a regulated investment company to avoid any
liability for Federal income tax in respect of such year. Any
distribution or dividend paid to stockholders from any capital source
shall be accompanied by a written statement showing the source or
sources of such payment;
(c) To issue and sell or to cause the issuance and sale of
shares of the Corporation's capital stock in such amounts and on such
terms and conditions, for such purpose and for such amount or kind of
consideration as is now or hereafter permitted by the laws of the State
of Maryland;
(d) To purchase and to cause to be purchased shares of the
capital stock of the Corporation, pursuant to these Articles of
Incorporation, upon tender thereof by the holder or holders thereof or
otherwise, provided the Corporation has assets legally available for
such purpose whether arising out of paid-in surplus, other surplus, net
profits or otherwise, to such extent and in such manner and upon such
terms as the Board of Directors shall deem expedient, and to pay for
such shares in cash then held or owned by the Corporation;
<PAGE>
(e) To authorize, subject to such vote, consent, or approval
of stockholders and other conditions, if any, as may be required by any
applicable statute, rule or regulation, the execution and performance
by the Corporation of an agreement or agreements with any person,
corporation, association, partnership, or other organization whereby,
subject to the supervision and control of the Board of Directors, any
such other person, corporation, association, partnership, or other
organization, shall render managerial, investment advisory and related
services to the Corporation (including, if deemed advisable, the
management or supervision of the investment portfolios of the
Corporation) upon such terms and conditions as may be provided in such
agreement or agreements;
(f) To authorize, subject to such vote, consent or approval of
stockholders and other conditions, if any, as may be required by any
applicable statute, rule or regulation, the execution and performance
by the Corporation of an agreement or agreements, which may be
exclusive, with any person, corporation, association, partnership or
other organization, as distributor, providing for the sale and
distribution of shares of the capital stock of the Corporation. Such
agreement or agreements may provide for the charge by the Corporation
of a premium over the net asset value (determined as hereinafter
provided) of such shares and allowance of a discount by the Corporation
to such distributor, and may further provide for the reallowance by
such distributor of concessions or commissions from such discount;
provided, however, that such discount shall not exceed the amount of
the premium;
(g) To authorize any agreement of the character described in
subsection (e) or (f) of this Section 1 with any person, corporation,
association, partnership or other organization, although one or more of
the members of the Board of Directors or officers of the Corporation
may be the other party to any such agreement or an officer, director,
shareholder, or member of such other party, and no such agreement shall
be invalidated or rendered voidable by reason of the existence of any
such relationship. Any director of the Corporation who is also a
director or officer of such corporation or who is so interested may be
counted in determining the existence of a quorum at any meeting of the
Board of Directors which shall authorize any such agreement, and may
vote thereat to authorize any such contract or transaction, with like
force and effect as if he were not such director or officer of such
other corporation or not so interested. Any agreement entered into
pursuant to said subsections (e) or (f) shall be consistent with and
subject to the requirements of the Investment Company Act of 1940, as
amended from time to time, applicable rules and regulations thereunder,
or any other applicable Act of Congress hereafter enacted, and no
amendment to any agreement entered into pursuant to said subsection (e)
(other than an amendment reducing the compensation of the other party
thereto) shall be effective unless assented to by the affirmative vote
of a majority of the outstanding voting securities of the Corporation
(as such phrase is defined in the Investment Company Act of 1940, as
amended from time to time) entitled to vote on the matter.
<PAGE>
SECTION 2. The Board of Directors may authorize the purchase
by the Corporation, either directly or through any agent, of shares of its
capital stock, in the open market or otherwise, at prices not in excess of the
net asset value of such shares (determined as hereinafter provided) as of a time
determined by the Board of Directors reasonably proximate to the time of
purchase by the Corporation or any such agent.
SECTION 3. For the purposes referred to in these Articles of
Incorporation, the net asset value of the shares of the capital stock of the
Corporation of each series and class as of any particular time (a "determination
time") shall be determined by or pursuant to the direction of the Board of
Directors as follows:
(a) At times when a series is not classified into multiple
classes, the net asset value of each share of stock of a series, as of
a determination time, shall be the quotient, carried out to not less
than two decimal points, obtained by dividing the net value of the
assets of the Corporation belonging to that series (determined as
hereinafter provided) as of such determination time by the total number
of shares of that series then outstanding, including all shares of that
series which the Corporation has agreed to sell for which the price has
been determined, and excluding shares of that series which the
Corporation has agreed to purchase or which are subject to redemption
for which the price has been determined.
The net value of the assets of the Corporation of a series as
of a determination time shall be determined in accordance with sound
accounting practice by deducting from the gross value of the assets of
the Corporation belonging to that series (determined as hereinafter
provided), the amount of all liabilities belonging to that series (as
such terms are defined in subsection (b) of Section 2 of Article V), in
each case as of such determination time.
<PAGE>
The gross value of the assets of the Corporation belonging to
a series as of such determination time shall be an amount equal to all
cash, receivables, the market value of all securities for which market
quotations are readily available and the fair value of other assets of
the Corporation belonging to that series (as such terms are defined in
subsection (a) of Section 2 of Article V) at such determination time,
all determined in accordance with sound accounting practice and giving
effect to the following:
(1) the market value as of any such determination
time of any security owned by the Corporation which is listed
or admitted to trading privileges on the New York Stock
Exchange or the American Stock Exchange shall be the last sale
price or (in the case of a security in which there has been no
previously reported sale transaction since the last
determination time) the mean between the last bid price and
the last asked price, for such security on such exchange. In
case securities being valued are listed or admitted to trading
privileges on any securities exchange other than the New York
Stock Exchange or the American Stock Exchange, the securities
exchange, sale transactions or bid or asked prices which are
to be used as aforesaid shall be selected by the Board of
Directors or any officer or other person designated by the
Board of Directors for the purpose.
(2) The market value of securities dealt in in an
over-the-counter market shall be the mean between the last bid
and asked price in such market prior to such determination
time.
(3) The market value of other property, including any
securities which are neither listed nor admitted to trading
privileges on any exchange or dealt in an over-the-counter
market, shall be determined in good faith in such manner as
the Board of Directors shall prescribe from time to time.
(4) The determination of the market value of
securities hereunder may be made in reliance on any recognized
source of quotations or basis for ascertaining quotations.
(5) If a security is traded in more than one market,
a determination may be made as to which market most accurately
reflects the value of such security.
<PAGE>
(b) At times when a series is classified into multiple
classes, the net asset value of each share of stock of a class of such
series shall be determined in accordance with subsections (a) and (c)
of this Section 3 with appropriate adjustments to reflect differing
allocations of liabilities and expenses of such series between or among
such classes to such extent as may be provided in or determined
pursuant to Articles Supplementary filed for record with the State
Department of Assessments and Taxation of Maryland or as may otherwise
be determined by the Board of Directors.
(c) The Board of Directors is empowered, in its discretion, to
establish other methods for determining such net asset value whenever
such other methods are deemed by it to be necessary or desirable,
including, but without limiting the generality of the foregoing, any
method deemed necessary or desirable in order to enable the Corporation
to comply with any provision of the Investment Company Act of 1940 or
any rule or regulation thereunder.
SECTION 4. Any determination as to any of the following
matters made by or pursuant to the direction of the Board of Directors
consistent with these Articles of Incorporation and in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of duties, shall
be final and conclusive and shall be binding upon the Corporation and every
holder of the shares of capital stock of the Corporation, of any series or
class, namely, the amount of the assets, obligations, liabilities and expenses
of the Corporation or belonging to any series or with respect to any class; the
amount of the net income of the Corporation from dividends and interest for any
period and the amount of assets at any time legally available for the payment of
dividends with respect to any series or class; the amount of paid-in surplus,
other surplus, annual or other net profits, or net assets in excess of capital,
undivided profits, or excess of profits over losses on sales of securities
belonging to the Corporation or any series or class; the amount, purpose, time
of creation, increase or decrease, alteration or cancellation of any reserves or
charges and the propriety thereof (whether or not any obligation or liability
for which such reserves or charges shall have been created shall have been paid
or discharged) with respect to the Corporation or any series or class; the
market value, or any sale, bid or asked price to be applied in determining the
market value, of any security owned or held by the Corporation; the fair value
of any other asset owned by the Corporation; the number of shares of stock of
any series or class issued or issuable; the existence of conditions permitting
the postponement of payment of the repurchase price of shares of stock of any
series or class or the suspension of the right of redemption as provided by law;
any matter relating to the acquisition, holding and disposition of securities
and other assets by the Corporation; any question as to whether any transaction
constitutes a purchase of securities on margin, a short sale of securities, or
an underwriting of the sale of, or participation in any underwriting or selling
group in connection with the public distribution of any securities; and any
matter relating to the issue, sale, repurchase and/or other acquisition or
disposition of shares of stock of any series or class.
<PAGE>
SECTION 5. If the Corporation should change its name and adopt
its corporate title through permission of the firm of Lord, Abbett & Co., which
shall have entered into a management or advisory contract with the Corporation,
the Corporation shall make appropriate agreements that upon the termination of
such contract for any cause, or if such firm or subsidiary or affiliate or
successor deems it advisable to withdraw the right to the use of its name, the
Corporation will, at the request of such firm or subsidiary or affiliate or
successor, take such action as may be necessary to change its name to eliminate
all use of or reference to the words "Lord Abbett" in any form and will neither
use the registered service mark of Lord, Abbett & Co., without the written
consent of such firm or subsidiary or affiliate or successor. The Corporation
shall also agree in such contract that investment companies other than the
Corporation for which such firm or a subsidiary successor may act as investment
adviser, and other companies affiliated with Lord, Abbett & Co., may be formed
with the words "Lord Abbett" in their corporate titles. Such agreements on the
part of the Corporation are hereby made binding upon it, its directors,
officers, stockholders, creditors and all other persons claiming under or
through it.
ARTICLE VIII
From time to time any of the provisions of these Articles of
Incorporation may be amended, altered or repealed (including any amendment that
changes the terms of any of the outstanding Shares by classification,
reclassification or otherwise), and other provisions that might, under the
statutes of the State of Maryland at the time in force, be lawfully contained in
Articles of Incorporation may be added or inserted, upon the vote of the holders
of a majority of the Shares of all Classes or of the affected Classes, as the
case may be, at the time outstanding and entitled to vote, and all rights at any
time conferred upon the stockholders of the Corporation by these Articles of
Incorporation are subject to the provisions of this Article VIII.
<PAGE>
THIRD: The foregoing restatement of the charter has been
approved by a majority of the entire board of directors.
FOURTH: The charter is not amended by these Articles of
Restatement.
FIFTH: The current address of the principal office of the
Corporation is set forth in Article III of the foregoing
restatement of the charter.
SIXTH: The name and address of the Corporation's current
resident agent are set forth in Article III of the
foregoing restatement of the charter.
SEVENTH: The number of directors of the Corporation and the
names of those currently in office are set forth in
Article VI of the foregoing restatement of the charter.
The undersigned President acknowledges these Articles of
Restatement to be the corporate act of the Corporation and as to all matters or
facts set forth herein required to be verified under oath, the undersigned
President acknowledges that to the best of his knowledge, information and
belief, these matters and facts are true in all material respects and that this
statement is made under the penalties of perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles
to be signed in its name and on its behalf by its President and witnessed to by
its Secretary on this 27th day of May, 1998.
LORD ABBETT DEVELOPING GROWTH FUND, INC.
By /s/ Robert S. Dow
Robert S. Dow, President
WITNESS:
/s/ Paul A. Hilstad
Paul A. Hilstad, Secretary
<PAGE>
BY-LAWS
OF
LORD ABBETT DEVELOPING GROWTH FUND, INC.
(a Maryland corporation)
ARTICLE I
OFFICES
Section 1. Principal Office The principal office of the Corporation in Maryland
shall be in the City of Baltimore, and the name of the resident agent in charge
thereof is the Prentice-Hall Corporation Systems, Maryland.
Section 2. Other Offices The Corporation may also have an office in the City and
State of New York and offices at such other places as the Board of Directors may
from time to time determine.
ARTICLE II
STOCKHOLDERS MEETINGS
SECTION 1. ANNUAL MEETINGS The
Corporation shall not hold an annual meeting of its stockholders in any fiscal
year of the Corporation unless required in accordance with the following
sentence. The Chairman of the Board or the President shall call an annual
meeting of the stockholders when one or more matters are required to be acted on
by stockholders under the Investment Company Act of 1940, as amended, and the
Chairman of the Board, the President, a Vice President, the Secretary or any
director shall call an annual meeting of stockholders at the request in writing
of a majority of the Board of Directors or of stockholders holding at least
onequarter of the stock of the Corporation outstanding and entitled to vote at
the meeting. Any annual meeting of the stockholders held pursuant to the
foregoing sentence shall be held at such time and at such place, within the City
of New York or elsewhere, as may be fixed by the Chairman of the Board or the
President or the Board of Directors or by the stockholders holding at least
one-quarter of the stock of the Corporation outstanding and entitled to vote, as
the case may be, and as may be stated in the notice setting forth such call,
provided that any stockholders requesting such meeting shall have paid to the
Corporation the reasonably estimated cost of preparing and mailing the notice
thereof, which the Secretary shall determine and specify to such stockholders.
Any meeting of stockholders held in accordance with this Section 1 shall for all
purposes constitute the annual meeting of stockholders for the fiscal year of
the Corporation in which the meeting is held and, without limiting the
generality of the foregoing, shall be held for the purposes of (a) acting on any
such matter or matters so required to be acted on by stockholders under the
Investment Company Act of 1940, as amended, and (b) electing directors to hold
the offices of any directors who have held office for more than one year (or, in
the case of directors elected prior to July 1, 1987, who have held office for
more than three years) or who have been elected by the Board of Directors to
fill vacancies which result from any cause and for transacting such other
business as may properly be brought before the meeting. Only such business, in
addition to that prescribed by law, by the Articles of Incorporation and by
these By-Laws, may be brought before such meeting as may be specified by
resolution of the Board of Directors or by writing filed with the Secretary of
the Corporation and signed by the Chairman of the Board or by the President or
by a majority of the directors or by stockholders holding at least one-quarter
of the stock of the Corporation outstanding and entitled to vote at the meeting.
<PAGE>
SECTION 2. SPECIAL MEETINGS
Special meetings of the stockholders for any purpose or purposes may be held
upon call by the President or by a majority of the Board of Directors, and shall
be called by the President, a Vice President, the Secretary or any director at
the request in writing of a majority of the Board of Directors or of
stockholders holding at least one-quarter of the stock of the Corporation
outstanding and entitled to vote at the meeting, at such time and at such place
where an annual meeting of stockholders could be held, as may be fixed by the
President or the Board of Directors or by the stockholders holding at least
one-quarter of the stock of the Corporation outstanding and so entitled to vote,
as the case may be, and as may be stated in the notice setting forth such call.
Such request shall state the purpose or purposes of the proposed meeting, and
only such purpose or purposes so specified may properly be brought before such
meeting.
<PAGE>
SECTION 3. NOTICE OF MEETINGS
Written or printed notice of every annual or special meeting of stockholders,
stating the time and place thereof and the general nature of the business
proposed to be transacted at any such meeting, shall be delivered personally or
mailed not less than 10 nor more than 90 days previous thereto to each
stockholder of record entitled to vote at the meeting at his address as the same
appears on the books of the Corporation. Meetings may be held without notice if
all of the stockholders entitled to vote are present or represented at the
meeting, or if notice is waived in writing, either before or after the meeting,
by those not present or represented at the meeting. No notice of an adjourned
meeting of the stockholders other than an announcement of the time and place
thereof at the preceding meeting shall be required.
SECTION 4. QUORUM At every meeting of the
stockholders the holders of record of one-third of the outstanding shares of the
stock of the Corporation entitled to vote at the meeting, whether present in
person or represented by proxy, shall, except as otherwise provided by law,
constitute a quorum. If at any meeting there shall be no quorum, the holders of
record of a majority of such shares entitled to vote at the meeting so present
or represented may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall have been obtained, at
which time any business may be transacted which might have been transacted at
the meeting as originally called.
<PAGE>
SECTION 5. VOTING Each stockholder entitled
to vote at any meeting shall have one vote in person or by proxy for each share
of stock held by him, but no proxy shall be voted after eleven months from its
date, unless such proxy provides for a longer period. All elections of directors
shall be had, and all questions except as otherwise provided by law or by the
Articles of Incorporation or by these By-Laws, shall be decided, by a majority
of the votes cast by stockholders present or represented and entitled to vote
thereat in person or by proxy.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The property, affairs and business
of the Corporation shall be managed by the Board of Directors, provided,
however, that the Board of Directors may authorize the Corporation to enter into
an agreement or agreements with any person, corporation, association,
partnership or other organization, subject to the Board's supervision and
control for the purpose of providing managerial, investment advisory and related
services to the Corporation which may include management or supervision of the
investment portfolio of the Corporation.
SECTION 2. NUMBER, CLASS, QUORUM, ELECTION, TERM OF OFFICE AND
QUALIFICATIONS. The Board of Directors of the Corporation shall consist of not
less than three or more than fifteen persons, none of whom need be stockholders
of the Corporation. The number of directors (within the above limits) shall be
determined by the Board of Directors from time to time, as it sees fit, by vote
of a majority of the whole Board. Directors elected prior to July 1, 1987, shall
be divided into three classes, each to hold office for a term of three years;
directors elected thereafter shall consist of one class only. The directors
shall be elected at each annual meeting of stockholders and, whether or not
elected for a specific term, shall hold office, unless sooner removed, until
their respective successors are elected and qualify.
<PAGE>
One-third of the whole Board, but in no event less than two,
shall constitute a quorum for the transaction of business, but if at any meeting
of the Board there shall be less than a quorum present, a majority of the
directors present may adjourn the meeting from time to time until a quorum shall
have been obtained, when any business may be transacted which might have been
transacted at the meeting as originally convened. No notice of an adjourned
meeting of the directors other than an announcement of the time and place
thereof at the preceding meeting shall be required. The acts of the majority of
the directors present at any meeting at which there is a quorum shall be the
acts of the Board, except as otherwise provided by law, by the Articles of
Incorporation or by these By-Laws.
SECTION 3. VACANCIES The Board of
Directors, by vote of a majority of the whole Board, may elect directors to fill
vacancies in the Board resulting from an increase in the number of directors or
from any other cause. Directors so chosen shall hold office until their
respective successors are elected and qualify, unless sooner displaced pursuant
to law or these By-Laws.
<PAGE>
The stockholder, at any meeting called for the purpose, may,
with or without cause, remove any director by the affirmative vote of the
holders of a majority of the votes entitled to be cast, and at any meeting
called for the purpose may fill the vacancy in the Board thus caused.
SECTION 4. REGULAR MEETINGS
Regular meetings of the Board of Directors shall be held at such time and place,
within or without the State of Maryland, as may from time to time be fixed by
Resolution of the Board or as may be specified in the notice of any meeting. No
notice of regular meetings of the Board shall be required.
SECTION 5. SPECIAL MEETINGS
Special meetings of the Board of Directors may be called from time to time by
the President, any Vice President or any two directors. Each special meeting of
the Board shall be held at such place, either within or outside the State of
Maryland, as shall be designated in the notice of such meeting. Notice of each
such meeting shall be mailed to each director, at his residence or usual place
of business, at least two days before the day of the meeting, or shall be
directed to him at such place by telegraph or cable, or be delivered to him
personally not later than the day before the day of the meeting. Every such
notice shall state the time and place of the meeting but need not state the
purposes thereof, except as otherwise expressly provided in these By-Laws or by
statute.
<PAGE>
SECTION 6. TELEPHONE CONFERENCE MEETINGS Any meeting of the Board or any
committee thereof may be held by conference telephone, regardless where each
director may be located at the time, by means of which all persons participating
in the meeting can hear each other, and participation in such meeting in such
manner shall constitute presence in person at such meeting.
SECTION 7. FEES AND EXPENSES The
directors shall receive such fees and expenses for services to the Corporation
as may be fixed by the Board of Directors, subject however, to such limitations
as may be provided in the Articles of Incorporation. Nothing herein contained
shall be construed to preclude any director from serving the Corporation in any
other capacity as an officer, agent or otherwise and receiving compensation
therefor.
SECTION 8. TRANSACTIONS WITH DIRECTORS Except as otherwise provided by law or in
the Articles of Incorporation, a director of the Corporation shall not in the
absence of fraud be disqualified from office by dealing or contracting with the
Corporation either as a vendor, purchaser or otherwise, nor in the absence of
fraud shall any transaction or contract of the Corporation be void or voidable
or affected by reason of the fact that any director, or any firm of which any
director is a member, or any corporation of which any director is an officer,
director or stockholder, is in any way interested in such transaction or
contract, provided that at the meeting of the Board of Directors, at which said
contract or transaction is authorized or confirmed, the existence of an interest
of such director, firm or corporation is disclosed or made known and there shall
be present a quorum of the Board of Directors a majority of which, consisting of
directors not so interested, shall approve such contract or transaction. Nor
shall any director be liable to account to the Corporation for any profit
realized by him from or through any such transaction or contract of the
Corporation ratified or approved as aforesaid, by reason of the fact that he or
any firm of which he is a member, or any corporation of which he is an officer,
director, or stockholder, was interested in such transaction or contract.
Directors so interested may be counted when present at meetings of the Board of
Directors for the purpose of determining the existence of a quorum. Any
contract, transaction or act of the Corporation or of the Board of Directors
(whether or not approved or ratified as hereinabove provided) which shall be
ratified by a majority of the votes cast at any annual or special meeting at
which a quorum is present called for such purpose, or approved in writing by a
majority in interest of the stockholders having voting power without a meeting,
shall except as otherwise provided by law, be valid and as binding as though
ratified by every stockholder of the Corporation.
<PAGE>
SECTION 9. COMMITTEES The Board of Directors may, by resolution adopted by a
majority of the whole Board, designate one or more committees each such
committee to consist of two or more directors of the Corporation, which, to the
extent permitted by law and provided in said resolution, shall have and may
exercise the powers of the Board over the business and affairs of the
Corporation, and may have power to authorize the seal of the Corporation to be
affixed to all papers which may require it. Such committee or committees shall
have such name or names as may be determined from time to time by resolution
adopted by the Board of Directors. A majority of the members of any such
committee may determine its action and fix the time and place of its meetings,
unless the Board of Directors shall otherwise provide. The Board of Directors
shall have power at any time to change the membership of, to fill vacancies in,
or to dissolve any such committee.
SECTION 10. WRITTEN CONSENTS Any action required or permitted to be taken at any
meeting of the Board of Directors or by any committee thereof may be taken
without a meeting, if a written consent thereto is signed by all members of the
Board or of such committee, as the case may be, and such written consent is
filed with the minutes or proceedings of the Board or committee. Section 11.
Waiver of NoticeSection
11. WAIVER OF NOTICE. Whenever under the provisions of
these By-Laws, or of the Articles of Incorporation, or of any of the laws of the
State of Maryland, or other applicable statute, the Board of Directors is
authorized to hold any meeting or take any action after notice or after the
lapse of any prescribed period of time, a waiver thereof, in writing, signed by
the person or persons entitled to such notice or lapse of time, whether before
or after the time of meeting or action stated herein, shall be deemed equivalent
thereto. The presence at any meeting of a person or persons entitled to notice
thereof shall be deemed a waiver of such notice as to such person or persons.
<PAGE>
ARTICLE IV
OFFICERS
SECTION 1. NUMBER AND DESIGNATION The Board of Directors shall each year appoint
from among their members a Chairman and a President of the Corporation, and
shall appoint one or more Vice Presidents, a Secretary and a Treasurer and, from
time to time, any other officers and agents as it may deem proper. Any two of
the above-mentioned offices, except those of the President and a Vice President,
may be held by the same person, but no officer shall execute, acknowledge or
verify any instrument in more than one capacity if such instrument be required
by law or by these By-Laws to be executed, acknowledged or verified by any two
or more officers.
SECTION 2. TERM OF OFFICE The term
of office of all officers shall be one year or until their respective successors
are chosen; but any officer or agent chosen or appointed by the Board of
Directors may be removed, with or without cause, at any time, by the affirmative
vote of a majority of the members of the Board then in office. Section 3.
DutiesSection 3. Duties. Subject to such limitations as the Board of Directors
may from time to time prescribe, the officers of the Corporation shall each have
such powers and duties as generally appertain to their respective offices as
well as such powers and duties as from time to time may be conferred by the
Board of Directors.
<PAGE>
ARTICLE V
CERTIFICATE OF STOCK
SECTION 1. FORM AND ISSUANCE Each
stockholder of the Corporation shall be entitled upon request, to a certificate
or certificates, in such form as the Board of Directors may from time to time
prescribe, which shall represent and certify the number of shares of stock of
the Corporation owned by such stockholder. The certificates for shares of stock
of the Corporation shall bear the signature, either manual or facsimile, of the
President or a Vice President and the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, and shall be sealed with the seal of the
Corporation or bear a facsimile of such seal. The validity of any stock
certificate shall not be affected if any officer whose signature appears thereon
ceases to be an officer of the Corporation before such certificate is issued.
SECTION 2. TRANSFER OF STOCK The
shares of stock of the Corporation shall be transferable on the books of the
Corporation by the holder thereof in person or by a duly authorized attorney,
upon surrender for cancellation of a certificate or certificates for a like
number of shares, with a duly executed assignment and power of transfer endorsed
thereon or attached thereto, or, if no certificate has been issued to the holder
in respect of shares of stock of the Corporation, upon receipt of written
instructions, signed by such holder, to transfer such shares from the account
maintained in the name of such holder by the Corporation or its agent. Such
proof of the authenticity of the signatures as the Corporation or its agent may
reasonably require shall be provided.
SECTION 3. LOST, STOLEN. DESTROYED AND MUTILATED CERTIFICATESSECTION The holder
of any stock of the Corporation shall immediately notify the Corporation of any
loss, theft, destruction or mutilation of any certificate therefor, and the
Board of Directors may, in its discretion, cause to be issued to him a new
certificate or certificates of stock, upon the surrender of the mutilated
certificate or in case of loss, theft or destruction of the certificate upon
satisfactory proof of such loss, theft, or destruction; and the Board of
Directors may, in its discretion, require the owner of the lost, stolen or
destroyed certificate, or his legal representatives, to give to the Corporation
and to such registrar or transfer agent as may be authorized or required to
countersign such new certificate or certificates a bond, in such sum as they may
direct, and with such surety or sureties, as they may direct, as indemnity
against any claim that may be made against them or any of them on account of or
in connection with the alleged loss, theft, or destruction of any such
certificates.
<PAGE>
SECTION 4. RECORD DATE The Board of
Directors may fix, in advance, a date as the record date for the purpose of
determining stockholders entitled to notice of, or to vote at, any meeting of
stockholders, or stockholders entitled to receive payment of any dividend or the
allotment of any rights, or in order to make a determination of stockholders for
any other proper purpose. Such date, in any case, shall be not more than 90
days, and in case of a meeting of stockholders, not less than 10 days, prior to
the date on which the particular action requiring such determination of
stockholders is to be taken. In lieu of fixing a record date, the Board of
Directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, 20 days prior to the date of any meeting
of stockholders or the date for payment of any dividend or the allotment of
rights. If the stock transfer books are closed for the purpose of determining
stockholders entitled to notice of or to vote at a meeting of stockholders, such
books shall be closed for at least 10 days immediately preceding such meeting.
If no record date is fixed and the stock transfer books are not closed for
determination of stockholders, the record date for the determination of
stockholders entitled to notice of, or to vote at, a meeting of stockholders
shall be at the close of business on the day on which notice of the meeting is
mailed or the day 30 days before the meeting, whichever is closer date to the
meeting, and the record date for the determination of stockholders entitled to
receive payment of a dividend or an allotment of any rights shall be at the
close of business on the day on which the resolution of the Board of Directors
declaring the dividend or allotment of rights is adopted, provided that the
payment or allotment date shall not be more than 90 days after the date of the
adoption of such resolution.
ARTICLE VI
CORPORATE BOOKS
The books of the Corporation, except the original or a
duplicate stock ledger, may be kept outside the State of Maryland at such place
or places as at the Board of Directors may from time to time determine. The
original or duplicate stock ledger shall be maintained at the office of the
Corporation's transfer agent.
ARTICLE VII
SIGNATURES
Except as otherwise provided in these By-Laws or as the Board
of Directors may generally or in particular cases authorize the execution
thereof in some other manner, all deeds, leases, transfers, contracts, bonds,
notes, checks, drafts and other obligations made, accepted or endorsed by the
Corporation and all endorsements, assignments, transfers, stock powers or other
instruments of transfer of securities owned by or standing in the name of the
Corporation shall be signed or executed by two officers of the Corporation, who
shall be the President or a Vice President and a Vice President, the Secretary
or the Treasurer.
<PAGE>
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Corporation shall be established by
resolution of the Board of Directors of the Corporation.
ARTICLE IX
CORPORATE SEAL
The corporate seal of the Corporation shall consist of a flat
faced circular die with the word "Maryland" together with the name of the
Corporation, the year of its organization, and such other appropriate legend as
the Board of Directors may from time to time determine, cut or engraved thereon.
In lieu of the corporate seal, when so authorized by the Board of Directors or a
duly empowered committee thereof, a facsimile thereof may be impressed or
affixed or reproduced.
ARTICLE X
INDEMNIFICATION
As part of the consideration for agreeing to serve and serving
as a director of the Corporation, each director of the Corporation shall be
indemnified by the Corporation against every judgment, penalty, fine,
settlement, and reasonable expense (including attorneys' fees) actually incurred
by the director in connection with any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, in
which the director was, is, or is threatened to be made a named defendant or
respondent (or otherwise becomes a party) by reason of such director's service
in that capacity or status as such, and the amount of every such judgement,
penalty, fine, settlement and reasonable expense so incurred by the director
shall be paid by the Corporation or, if paid by the director, reimbursed to the
director by the Corporation, subject only to the conditions and limitations
imposed by the applicable provisions of Section 2-418 of the Corporations and
Associations Article of the Annotated Code of the State of Maryland and by the
provisions of Section 17(h) of the United States Investment Company Act of 1940
as interpreted and as required to be implemented by Securities and Exchange
Commission Release No. IC-11330 of September 4, 1980. The foregoing shall not
limit the authority of the Corporation to indemnify any of its officers,
employees or agents to the extent consistent with applicable law.
<PAGE>
ARTICLE XI
AMENDMENTS
All By-Laws of the Corporation shall be subject to alteration,
amendment, or repeal, and new By-Laws not inconsistent with any provision of the
Articles of Incorporation of the Corporation may be made, either by the
affirmative vote of the holders of record of a majority of the outstanding stock
of the Corporation entitled to vote in respect thereof, given at an annual
meeting or at any special meeting, provided notice of the proposed alteration,
amendment, or repeal of the proposed new By-Laws is included in or accompanies
the notice of such meeting, or by the affirmative vote of a majority of the
whole Board of Directors given at a regular or special meeting of the Board of
Directors, provided that the notice of any such special meeting indicates that
the By-Laws are to be altered, amended, repealed, or that new By-Laws are to be
adopted.
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
Lord Abbett Developing Growth Fund, Inc.:
We consent to the incorporation by reference in Post-Effective Amendment No. 24
to Registration Statement No. 2-62797 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" in the Statement of Additional Information, both of which are part
of such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
May 20, 1998
<PAGE>
EXHIBIT 16
LORD ABBETT DEVELOPING GROWTH FUND, INC.
POST EFFECTIVE AMENDMENT NO. 24 ON FORM N-1A
CLASS A SHARES
FISCAL YEAR ENDING JANUARY 31, 1998
1 Year 5 Year 10 Years
Initial Investment $1,000 $1,000 $1,000
Dividend by Initial Offering Price $13.58 $10.73 $6.90
Equals Shares Purchased 73.638 93.197 144.928
Plus Shares Acquired through Dividend
and Capital Gains Reinvestment 8.524 76.290 168.187
Equals Shares held at Ending Peiord Date 82.162 169.487 313.115
Multiplied by Net Asset Value at Ending
Period Date 14.27 14.27 14.27
Equals Ending Value before Deduction of
CDSC at Period End Date $1,173 $2,558 $4,468
Less Deferred Sales Charge 0 0 0
Equals Ending Redeemable Value(ERV)at
Period End Date $1,173 $2,558 $4,468
Divide ERV by $1000 $1.173 $2.558 4.468
Subtract 1 $0.173 $1.558 $3.468
Expressed as a Percentage-Equals the Aggregate
Total Return for the Period 17.30% 155.80% 346.80%
Divide ERV by $1000 1.173 2.558 4.468
Raise to the power of 1 0.2 0.1
Equals 1.173 1.207 1.161
Subtract 1 0.173 0.207 0.162
Expressed as a Percentage-Equals the Average
Annualized Total Return for the Period 17.30% 20.66% 16.15%
CLASS B SHARES
FISCAL YEAR ENDING JANUARY 31, 1998
1 Year Life of Class
Initial Investment $1,000 $1,000
Dividend by Initial Offering Price $12.75 $12.14
Equals Shares Purchased 78.431 82.372
Plus Shares Acquired through Dividend
and Capital Gains Reinvestment 9.015 22.065
Equals Shares held at Ending Peiord Date 87.446 104.437
Multiplied by Net Asset Value at Ending
Period Date 14.12 14.12
Equals Ending Value before Deduction of
CDSC at Period End Date $1,235 1,475
Less Deferred Sales Charge 4% 4%
Equals Ending Redeemable Value(ERV)at
Period End Date $1,185.35 $1,415.67
Divide ERV by $1000 $1.185 $1.416
Subtract 1 $0.185 $0.416
Expressed as a Percentage-Equals the Aggregate
Total Return for the Period 18.54% 41.57%
Divide ERV by $1000 1.185 1.416
Raise to the power of 1 0.664845173
Equals 1.185 1.260
Subtract 1 0.185 0.260
Expressed as a Percentage-Equals the Average
Annualized Total Return for the Period 18.54% 26.08%
CLASS C SHARES
FISCAL YEAR ENDING JANUARY 31, 1998
1 Year 1 Year Life of Class
Initial Investment $1,000 $1,000
Dividend by Initial Offering Price $12.75 $12.14
Equals Shares Purchased 78.431 82.372
Plus Shares Acquired through Dividend
and Capital Gains Reinvestment 9.009 22.059
Equals Shares held at Ending Peiord Date 87.440 104.431
Multiplied by Net Asset Value at Ending
Period Date 14.13 14.13
Equals Ending Value before Deduction of
CDSC at Period End Date $1,236 1,476
Less Deferred Sales Charge 0 0
Equals Ending Redeemable Value(ERV)at
Period End Date $1,236 $1,476
Divide ERV by $1000 1.236 1.476
Subtract 1 $0.236 $0.476
Expressed as a Percentage-Equals the Aggregate
Total Return for the Period 23.55% 47.56%
Divide ERV by $1000 1.236 1.476
Raise to the power of 1 0.664845173
Equals 1.236 1.295
Subtract 1 0.236 0.295
Expressed as a Percentage-Equals the Average
Annualized Total Return for the Period 23.55% 29.61%
CLASS P SHARES
FISCAL YEAR ENDING JANUARY 31, 1998
Life of Class
Initial Investment $1,000
Dividend by Initial Offering Price $14.38
Equals Shares Purchased 69.541
Plus Shares Acquired through Dividend
and Capital Gains Reinvestment 0.000
Equals Shares held at Ending Peiord Date 69.541
Multiplied by Net Asset Value at Ending
Period Date 14.26
Equals Ending Value before Deduction of
CDSC at Period End Date $992
Less Deferred Sales Charge 0
Equals Ending Redeemable Value(ERV)at
Period End Date $992
Divide ERV by $1000 0.992
Subtract 1 ($0.008)
Expressed as a Percentage-Equals the Aggregate
Total Return for the Period -0.80%
Divide ERV by $1000 0.992
Raise to the power of 1
Equals 0.992
Subtract 1 (0.008)
Expressed as a Percentage-Equals the Average
Annualized Total Return for the Period -0.80%
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