1933 Act File No. 2-38910
1940 Act File No. 811-2145
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 38 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Post-Effective Amendment No. 19 [X]
LORD ABBETT BOND-DEBENTURE 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
Kenneth B. Cutler, Vice President & Secretary
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) of Rule 485
X on May 1, 1995 pursuant to paragraph (b) of Rule 485
______ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
______ on (date) pursuant to paragraph (a) (1) of Rule 485
______ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
______ on (date) pursuant to paragraph (a) (2) of Rule 485
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Rule 24f-2(a) (1) and a Rule 24f-2 Notice for
Registrant's most recent fiscal year was filed with the Commission on or about
February 27, 1995.
<PAGE>
LORD ABBETT BOND-DEBENTURE FUND, INC.
FORM N-1A
Cross Reference Sheet
Post-Effective Amendment No. 38
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) 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
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
and Shareholder Services; Investment Advisory
and Other Services
<PAGE>
Form N-1A Location in Prospectus or
Item No. Statement of Additional Information
--------- -----------------------------------
16 (h) Investment Advisory and Other Services
16 (i) N/A
17 (a) Portfolio Transactions
17 (b) N/A
17 (c) Portfolio Transactions
17 (d) Portfolio Transactions
17 (e) N/A
18 (a) Cover Page
18 (b) N/A
19 (a) (b) Purchases, Redemptions
and Shareholder Services; Notes
to Financial Statements
19 (c) N/A
20 Taxes
21 (a) Purchases, Redemptions
and Shareholder Services
21 (b) (c) N/A
22 (a) N/A
22 (b) Past Performance
23 Financial Statements
<PAGE>
LORD ABBETT
BOND-DEBENTURE FUND, INC.
THE GENERAL MOTORS BUILDING
767 FIFTH AVENUE
NEW YORK, NY 10153-0203
800-426-1130
OUR FUND, LORD ABBETT BOND-DEBENTURE FUND, INC. ("WE" OR THE "FUND"), IS A
DIVERSIFIED, OPEN-END MANAGEMENT INVESTMENT COMPANY INCORPORATED UNDER MARYLAND
LAW ON JANUARY 23, 1976. WE HAVE A SINGLE CLASS OF SHARES WITH EQUAL RIGHTS AS
TO VOTING, DIVIDENDS, ASSETS AND LIQUIDATION.
OUR INVESTMENT OBJECTIVE IS HIGH CURRENT INCOME AND THE OPPORTUNITY FOR
CAPITAL APPRECIATION TO PRODUCE A HIGH TOTAL RETURN THROUGH A
PROFESSIONALLY-MANAGED PORTFOLIO CONSISTING PRIMARILY OF CONVERTIBLE AND
DISCOUNT DEBT SECURITIES, MANY OF WHICH ARE LOWER-RATED. THESE LOWER-RATED DEBT
SECURITIES ENTAIL GREATER RISKS THAN INVESTMENTS IN HIGHER-RATED DEBT SECURITIES
AND, THEREFORE, THE FORMER ARE REFERRED TO COLLOQUIALLY AS JUNK BONDS. INVESTORS
SHOULD CAREFULLY CONSIDER THESE RISKS SET FORTH UNDER HOW WE INVEST BEFORE
INVESTING. THERE CAN BE NO ASSURANCE THAT WE WILL ACHIEVE OUR OBJECTIVE.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE FUND THAT A
PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING. ADDITIONAL INFORMATION ABOUT
THE FUND HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE
STATEMENT OF ADDITIONAL INFORMATION IS INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS AND MAY BE OBTAINED, WITHOUT CHARGE, BY WRITING TO THE FUND OR BY
CALLING 800-874-3733. ASK FOR PART B OF THE PROSPECTUS - THE STATEMENT OF
ADDITIONAL INFORMATION.
THE DATE OF THIS PROSPECTUS AND OF THE STATEMENT OF ADDITIONAL INFORMATION
IS MAY 1, 1995.
PROSPECTUS
INVESTORS SHOULD READ AND RETAIN THIS PROSPECTUS. SHAREHOLDER INQUIRIES SHOULD
BE MADE IN WRITING TO THE FUND OR BY CALLING 800-821-5129. YOU CAN ALSO MAKE
INQUIRIES THROUGH YOUR BROKER-DEALER.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
AN INVESTMENT IN THE FUND INVOLVES RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
CONTENTS PAGE
1 Investment Objective 2
2 Fee Table 2
3 Financial Highlights 2
4 How We Invest 3
5 Purchases 5
6 Shareholder Services 7
7 Our Management 8
8 Dividends, Capital Gains
Distributions and Taxes 8
9 Redemptions 9
10 Performance 10
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
1 INVESTMENT OBJECTIVE
Our investment objective is high current income and the opportunity for capital
appreciation to produce a high total return through a professionally-managed
portfolio consisting primarily of convertible and discount debt securities, many
of which are lower-rated.
2 FEE TABLE
A summary of the Funds expenses is set forth in the table below. The example
should not be considered a representation of past or future expenses. Actual
expenses may be greater or less than those shown.
<TABLE>
<CAPTION>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
(AS A PERCENTAGE OF OFFERING PRICE)
Maximum Sales Load(1) on Purchases
(See Purchases) 4.75%
Deferred Sales Load(1) (See Purchases) None(2)
- ----------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees (See Our Management) .48%
12b-1 Fee (See Purchases) .23%
Other Expenses (See Our Management) .17%
- ----------------------------------------------------
Total Operating Expenses .88%
====================================================
Example: Assume an annual return of 5% and there is no change in the level of
- -------
expenses described above. For every $1,000 invested, with reinvestment of all
distributions, you would pay the following total expenses if you closed your
account after the number of years indicated.
1 year 3 years 5 years 10 years
------ ------- ------- --------
$56(3) $74(3) $94(3) $151(3)
<FN>
(1)Sales load is referred to as sales charge and deferred sales load is referred
to as contingent deferred reimbursement charge throughout this Prospectus.
(2)Redemptions of shares on which the Funds 1% Rule 12b-1 sales distribution
fee for purchases of $1 million or more has been paid are subject to a 1%
contingent deferred reimbursement charge, if the redemption occurs within 24
months after the month of purchase, subject to certain exceptions described
herein.
(3)Based on total operating expenses shown in the table above.
The foregoing is provided to give investors a better understanding of the
expenses that are incurred by an investment in the Fund.
</FN>
</TABLE>
3 FINANCIAL HIGHLIGHTS
The following table has been audited by Deloitte & Touche LLP, independent
accountants, in connection with their annual audit of the Funds Financial
Statements, whose report thereon is incorporated by reference in the Statement
of Additional Information and may be obtained upon request, and has been
included herein in reliance upon their authority as experts in accounting and
auditing.
<TABLE>
<CAPTION>
PER SHARE OPERATING YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PERFORMANCE: 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $9.95 $9.43 $9.02 $7.36 $9.03 $9.59 $9.39 $10.29 $10.56 $9.82
INCOME FROM INVESTMENT OPERATIONS
Net investment income .84 .89 .95 .98 1.02 1.04 1.09 1.07 1.16 1.19
Net realized and unrealized
gain (loss) on securities (1.203) .55 .42 1.66 (1.65) (.56) .15 (.85) (.10) .75
TOTAL FROM INVESTMENT OPERATIONS (.363) 1.44 1.37 2.64 (.63) .48 1.24 .22 1.06 1.94
DISTRIBUTIONS
Dividends from net investment income (.877) (.92) (.96) (.98) (1.04) (1.04) (1.04) (1.12) (1.19) (1.20)
Distribution from net realized gain - - - - - - - - ( .14) -
NET ASSET VALUE, END OF YEAR $8.71 $9.95 $9.43 $9.02 $7.36 $9.03 $9.59 $9.39 $10.29 $10.56
TOTAL RETURN* (3.87)% 15.97% 15.99% 38.34% (7.57)% 5.06% 13.80% 1.88% 10.61% 21.01%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $987,613 $969,736 $734,017 $594,008 $480,847 $643,953 $717,775 $733,198 $700,553 $299,307
RATIOS TO AVERAGE NET ASSETS:
Expenses .88% .88% .84% .85% .80% .59% .64% .65% .61% .68%
Net investment income 8.97% 9.17% 10.18% 11.96% 12.48% 10.97% 11.29% 10.49% 11.09% 11.69%
PORTFOLIO TURNOVER RATE 147.98% 159.79% 188.44% 208.49% 145.47% 123.77% 140.01% 176.37% 137.33% 81.96%
<FN>
* Total return does not consider the effects of sales loads
See Financial Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
4 HOW WE INVEST
We believe that a high total return (current income and capital appreciation)
may be derived from an actively-managed, diversified debt-security portfolio. In
no event will we voluntarily purchase any securities other than debt securities,
if, at the time of such purchase or acquisition, the value of the debt
securities in our portfolio is less than 80% of the value of our total assets.
We seek unusual values, particularly in lower-rated debt securities, some of
which are convertible into common stocks or have warrants to purchase common
stocks.
Higher yield on debt securities can occur during periods of inflation when
the demand for borrowed funds is high. Also, buying lower-rated bonds when the
credit risk is above average but, we think, likely to decrease, can generate
higher yields. Such debt securities normally will consist of secured debt
obligations of the issuer (i.e., bonds), general unsecured debt obligations of
the issuer (i.e., debentures) and debt securities which are subordinate in right
of payment to other debt of the issuer.
Capital appreciation potential is an important consideration in the
selection of portfolio securities. Capital appreciation may be obtained by (1)
investing in debt securities when the trend of interest rates is expected to be
down; (2) investing in convertible debt securities or debt securities with
warrants attached entitling the holder to purchase common stock; and (3)
investing in debt securities of issuers in financial difficulties when, in our
opinion, the problems giving rise to such difficulties can be successfully
resolved, with a consequent improvement in the credit standing of the issuers
(such investments involve corresponding risks that interest and principal
payments may not be made if such difficulties are not resolved). In no event
will we invest more than 10% of our gross assets at the time of investment in
debt securities which are in default as to interest or principal.
Normally we invest in long-term debt securities when we believe that
interest rates in the long run will decline and prices of such securities
generally will be higher. When we believe that long-term interest rates will
rise, we will endeavor to shift our portfolio into short-term debt securities
whose prices might not be affected as much by an increase in interest rates.
The following policies are subject to change without shareholder approval:
(a) we must keep at least 20% of the value of our total assets in (1) debt
securities which, at the time of purchase, are rated within one of the four
highest grades determined either by Moody's Investors Service, Inc. or Standard
& Poor's Corporation, (2) debt securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, (3) cash or cash equivalents
(short-term obligations of banks, corporations or the U.S. Government), or (4) a
combination of any of the foregoing; (b) we may invest up to 10% of our gross
assets, at market value, in debt securities primarily traded in foreign
countries such foreign debt securities normally will be limited to issues where
there does not appear to be substantial risk of nationalization, exchange
controls, confiscation or other government restrictions; (c) subject to the
percentage limitations for purchases of other than debt securities described
below, we may purchase common and preferred stocks; (d) we may hold or sell any
property or securities which we may obtain through the exercise of conversion
rights or warrants or as a result of any reorganization, recapitalization or
liquidation proceedings for any issuer of securities owned by us. In no event
will we voluntarily purchase any securities other than debt securities, if, at
the time of such purchase or acquisition, the value of the property and
securities, other than debt securities, in our portfolio is greater than 20% of
the value of our gross assets. A purchase or acquisition will not be considered
voluntary if made in order to avoid loss in value of a conversion or other
premium; and (e) we do not purchase securities for short-term trading, nor do we
purchase securities for the purpose of exercising control of management.
We may invest up to 15% of our net assets in illiquid securities. Bonds
which are subject to legal or contractual restrictions on resale, but which have
been determined by the Board of Directors to be liquid, will not be subject to
this limit. Investment by the Fund in such securities, initially determined to
be liquid, could have the effect of diminishing the level of the Funds liquidity
during periods
<PAGE>
of decreased market interest in such securities.
We may, but have no present intention to, commit more than 5% of our gross
assets to the lending of our portfolio securities.
We will not change our investment objective without shareholder approval.
FUTURE CONVERSION. In the future, upon shareholder approval, the Fund may seek
to achieve its investment objective by investing all of its assets in another
investment company (or series or class thereof) having the same investment
objective. Shareholders will be notified thirty days in advance of such
conversion. Shareholders of the Fund will be able to exchange shares for shares
of the other funds, series or classes in the Lord Abbett family having an
exchange privilege with the Fund. (See Shareholder Services).
RISK FACTORS. We may invest substantially in lower-rated bonds for their higher
yields. In general, the market for lower-rated bonds is more limited than that
for higher-rated bonds and, therefore, may be less liquid. Market prices of
lower-rated bonds may fluctuate more than those of higher-rated bonds,
particularly in times of economic change and stress. In addition, because the
market for lower-rated corporate debt securities has in past years experienced
wide fluctuations in the values of certain of these securities, past experience
may not provide an accurate indication of the future performance of that market
or of the frequency of default, especially during periods of recession.
Objective pricing data for lower-rated bonds may be more limited than for
higher-rated bonds and valuation of such securities may be more difficult and
require greater reliance upon judgment.
While the market for lower-rated bonds may be less sensitive to interest
rate changes, the market prices of these bonds structured as zero coupon or
pay-in-kind securities may be affected to a greater extent by such changes and
thus may be more volatile than prices of lower-rated securities paying interest
periodically in cash. Lower-rated bonds that are receivable prior to maturity
may be more susceptible to refunding during periods of falling interest rates,
requiring replacement with lower-yielding securities.
Since the risk of default generally is higher among lower-rated bonds, the
research and analysis performed by Lord, Abbett & Co. (Lord Abbett) are
especially important in the selection of such bonds, which, if rated BB/Ba or
lower, often are described as high-yield bonds because of their generally higher
yields and referred to colloquially as junk bonds because of their greater
risks. In selecting lower-rated bonds for our investment, Lord Abbett does not
rely upon ratings, which evaluate only the safety of principal and interest, not
market value risk, and which, furthermore, may not accurately reflect an issuers
current financial condition. We do not have any minimum rating criteria for our
investments in bonds and some issuers may default as to principal and/or
interest payments subsequent to the purchase of their securities. Through
portfolio diversification, good credit analysis and attention to current
developments and trends in interest rates and economic conditions, investment
risk can be reduced, although there is no assurance that losses will not occur.
Laws enacted from time to time could limit the tax or other advantages of,
and the issuance of, lower-rated securities and could adversely affect their
secondary market and the financial condition of their issuers. On the other
hand, such legislation (curtailing the supply of new issues) could improve the
liquidity, market values and demand for outstanding issues.
During our past fiscal year, the percentages of our average net assets
invested in (a) rated bonds and (b) unrated bonds judged by us to be of a
quality comparable to rated bonds, on a dollar-weighted basis, calculated
monthly were as follows: 16.68% AAA/Aaa, 1.38% AA/Aa, 3.6% A/A, 5.26% BBB/Baa,
7.55% BB/Ba, 53.14% B/B, 6.68% CCC/Caa, 0% C/C, .05% D and 5.66% unrated.
FOREIGN SECURITIES - Securities markets of foreign countries in which the
Fund may invest generally are not subject to the same degree of regulation as
the U.S. markets and may be more volatile and less liquid than the major U.S.
markets. Lack of liquidity may affect the Funds ability to purchase or sell
large blocks of securities and thus obtain the best price. There may be less
publicly-available information on publicly-traded companies, banks
<PAGE>
and governments in foreign countries than generally is the case for such
entities in the United States. The lack of uniform accounting standards and
practices among countries impairs the validity of direct comparisons of
valuation measures (such as price/earnings ratios) for securities in different
countries. Other considerations include political and social instability,
expropriation, higher transaction costs, withholding taxes that cannot be passed
through as a tax credit or deduction to shareholders, currency fluctuations and
different securities settlement practices. Settlement periods for foreign
securities, which are sometimes longer than those for securities of U.S.
issuers, may affect portfolio liquidity. In addition, foreign securities held by
the Fund may be traded on days that the Fund does not value its portfolio
securities, such as Saturdays and customary business holidays and, accordingly,
the Funds net asset value may be significantly affected on days when
shareholders do not have access to the Fund.
5 PURCHASES
You may buy our shares through any independent securities dealer having a sales
agreement with Lord Abbett, our exclusive selling agent. Place your order with
your investment dealer or send it to Lord Abbett Bond-Debenture Fund, Inc. (P.O.
Box 419100, Kansas City, Missouri 64141). The minimum initial investment is
$1,000 except for Invest-A-Matic and Div-Move ($250 initial and $50 subsequent)
and Retirement Plans ($250 minimum). See Shareholder Services.
The net asset value of our shares is calculated every business day as of the
close of the New York Stock Exchange (NYSE) by dividing net assets by the number
of shares outstanding. Securities are valued at their market value as more fully
described in the Statement of Additional Information.
Orders for shares received by the Fund prior to the close of the NYSE or
received by dealers prior to such close and received by Lord Abbett prior to the
close of its business day, will be confirmed at the applicable public offering
price effective at such NYSE close. Orders received by dealers after the NYSE
closes and received by Lord Abbett in proper form prior to the close of its next
business day are executed at the applicable public offering price effective as
of the close of the NYSE on that next business day. The dealer is responsible
for the timely transmission of orders to Lord Abbett. A business day is a day on
which the NYSE is open for trading.
For information regarding the proper form of a purchase or redemption order,
call the Fund at 800-821-5129. This offering may be suspended, changed or
withdrawn. Lord Abbett reserves the right to reject any order.
The offering price is based on the per-share net asset value next computed
after your order is accepted plus a sales charge as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS A DEALERS
PERCENTAGE OF: CONCESSION
------------------ AS A TO COMPUTE
NET PERCENTAGE OFFERING
OFFERING AMOUNT OF OFFERING PRICE, DIVIDE
SIZE OF INVESTMENT PRICE INVESTED PRICE* NAV BY
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.00% .9525
$50,000 to $99,999 4.75% 4.99% 4.25% .9525
$100,000 to $249,999 3.75% 3.90% 3.25% .9625
$250,000 to $499,999 2.75% 2.83% 2.50% .9725
$500,000 to $999,999 2.00% 2.04% 1.75% .9800
$1,000,000 or more No Sales Charge 1.00% 1.0000
<FN>
*Lord Abbett may, for specified periods, allow dealers to retain the full sales
charge for sales of shares during such periods, or pay an additional concession
to a dealer who, during a specified period, 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 may, from time to time,
implement promotions under which Lord Abbett 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'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 resorts or other locations, including
meals and entertainment, or the receipt of merchandise. The cash payments will
include payment of various business expenses of the dealer.
</FN>
</TABLE>
In selecting dealers to execute portfolio transactions for the Funds
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.
VOLUME DISCOUNTS. This section describes several ways to qualify for a lower
sales charge if you
<PAGE>
inform Lord Abbett or the Fund that you are eligible at the time of purchase.
(1) Any purchaser (as described below) may aggregate a purchase in the Fund
with purchases of any other eligible Lord Abbett-sponsored fund, together with
the current value at maximum offering price of any shares in the Fund and in any
eligible Lord Abbett-sponsored funds held by the purchaser. (Holdings in the
following funds are not eligible for the above rights of accumulation: Lord
Abbett Equity Fund (LAEF), Lord Abbett Series Fund (LASF), Lord Abbett Research
Fund if not offered to the general public (LARF) and Lord Abbett U.S. Government
Securities Money Market Fund (GSMMF), except for existing holdings in GSMMF
which are attributable to shares exchanged from a Lord Abbett-sponsored fund
offered with a front-end sales charge or from a fund in the Lord Abbett Counsel
Group.) (2) A purchaser may sign a non-binding 13 month statement of intention
to invest $100,000 or more in the Fund or in any of the above eligible funds. If
the intended purchases are completed during the period, each purchase will be at
the sales charge, if any, applicable to the aggregate of such purchasers
intended purchases. If not completed, each purchase will be at the sales charge
for the aggregate of the actual purchases. Shares issued upon reinvestment of
dividends or distributions are not included in the statement of intention. 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.
Our 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 trustee 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 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 directors or
employees spouse (including the surviving spouse of a deceased director or
employee). The terms directors and employees of Lord Abbett also include other
family members and retired directors and employees. Our shares also may be
purchased at net asset value (a) at $1 million or more, (b) with dividends and
distributions from other Lord Abbett-sponsored funds, except for dividends and
distributions on shares of LARF, LAEF, LASF and Lord Abbett Counsel Group, (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 in
accordance with certain standards approved by Lord Abbett, 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, (e) by employees, partners and owners
of unaffiliated consultants and advisers to Lord Abbett or Lord Abbett-sponsored
funds who consent to such purchase if such persons provide services to Lord
Abbett or such funds on a continuing basis and are familiar with such funds and
(f) subject to appropriate documentation, through a securities dealer where the
amount invested represents redemption proceeds from shares (Redeemed Shares) of
a registered open-end management investment company not distributed or managed
by Lord Abbett (other than a money market fund), if such redemptions have
occurred no more than 60 days prior to the purchase of our shares, the Redeemed
Shares were held for at least six months prior to redemption and the proceeds of
redemption were maintained
<PAGE>
in cash or a money market fund prior to purchase. Purchasers should consider the
impact, if any, of contingent deferred sales charges in determining whether to
redeem shares for subsequent investment in our shares. Lord Abbett may suspend
or terminate the purchase option referred to in (f) above at any time.
Our assets may be issued at net asset value in exchange for the assets,
subject to possible tax adjustment, of a personal holding company or an
investment company.
RULE 12B-1 PLAN. We have adopted a Rule 12b-1 Plan (the Plan) which authorizes
the payment of distribution fees to dealers in order to provide additional
incentives for them (a) to provide continuing information and investment
services to their shareholder accounts and otherwise to encourage their accounts
to remain invested in the Fund and (b) to sell shares of the Fund. Under the
Plan (except as to certain accounts for which tracking data is not available),
the Fund pays Lord Abbett, who passes on to dealers, (1) an annual service fee
(payable quarterly) of .25% of the average daily net asset value of the Funds
shares sold by dealers on or after June 1, 1990 and .15% of the average daily
net asset value of shares sold by dealers prior to that date and (2) a one-time
1% sales distribution fee, at the time of sale, on all shares at the $1 million
level sold by dealers including sales qualifying at such level under the rights
of accumulation and statement of intention privileges. Lord Abbett is required
to pay the sales distribution fee to dealers as compensation for selling our
shares.
Holders of shares on which the 1% sales distribution fee has been paid will
be required to pay to the Fund a contingent deferred reimbursement charge of 1%
of the original cost or the then net asset value, whichever is less, of all
shares so purchased which are redeemed out of the Lord Abbett-sponsored family
of funds on or before the end of the twenty-fourth month after the month in
which the purchase occurred. (An exception is made for redemptions by
tax-qualified plans under Section 401 of the Internal Revenue Code due to plan
loans, hardship withdrawals, death, retirement or separation from service with
respect to plan participants.) If the shares have been exchanged into another
Lord Abbett fund and are thereafter redeemed out of the Lord Abbett family on or
before the end of such twenty-fourth month, the charge will be collected for the
Fund by the other fund. The Fund will collect such a charge for other Lord
Abbett-sponsored funds in a similar situation. Shares of a fund or series on
which the 1% sales distribution fee has been paid may not be exchanged into a
fund or series with a Rule 12b-1 Plan for which the payment provisions have not
been in effect for at least one year.
6 SHAREHOLDER SERVICES
We offer the following shareholder services:
TELEPHONE EXCHANGE PRIVILEGE: Shares may be exchanged, without a service
charge, for those of any other Lord Abbett-sponsored fund except for (i) LAEF,
LASF, LARF and Lord Abbett Counsel Group and (ii) 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 (together, Eligible Funds).
You or YOUR REPRESENTATIVE WITH PROPER IDENTIFICATION can instruct the Fund
to exchange uncertificated shares (held by the transfer agent) by telephone.
Shareholders have this privilege unless they refuse it in writing. The Fund will
not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine and will employ reasonable procedures to
confirm that instructions received are genuine, including requesting proper
identification and recording all telephone exchanges. Instructions must be
received by the Fund in Kansas City (800-521-5315) prior to the close of the
NYSE to obtain each funds net asset value per share on that day. Expedited
exchanges by telephone may be difficult to implement in times of drastic
economic or market change. The exchange privilege should not be used to take
advantage of short-term swings in the market. The Fund reserves the right to
terminate or limit the privilege of any shareholder who makes frequent
exchanges. The Fund can revoke the privilege for all shareholders upon 60 days
prior written notice. A prospectus for the other Lord Abbett-sponsored fund
selected by you should be obtained and read before an exchange. Exercise of the
Exchange Privilege will be treated
<PAGE>
as a sale for federal income tax purposes and, depending on the
circumstances, a capital gain or loss may be recognized. SYSTEMATIC WITHDRAWAL
PLAN: Except for retirement plans for which there is no such minimum, if the
maximum offering price value of your uncertificated shares is at least $10,000,
you may have periodic cash withdrawals automatically paid to you in either fixed
or variable amounts. DIV-MOVE: You can invest the dividends paid on your account
($50 minimum investment) into an existing account in any 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: You can make fixed, periodic investments ($50 minimum
investment) into the Fund and/or any Eligible Fund by means of automatic money
transfers from your bank checking account. You should read the prospectus of the
other fund before investing. RETIREMENT PLANS: Lord Abbett makes available the
retirement plan forms and custodial agreements for IRA's (Individual Retirement
Accounts including Simplified Employee Pensions), 403(b) plans and pension and
profit-sharing plans, including 401(k) plans.
All correspondence should be directed to Lord Abbett Bond-Debenture Fund,
Inc. (P.O. Box 419100, Kansas City, Missouri 64141; 800-821-5129).
7 OUR MANAGEMENT
Our business is managed by our officers on a day-to-day basis under the overall
direction of our Board of Directors. We employ Lord Abbett as investment manager
pursuant to a Management Agreement. Lord Abbett has been an investment manager
for over 60 years and currently manages approximately $16 billion in a family of
mutual funds and other advisory accounts. Under the Management Agreement, Lord
Abbett provides us with investment management services and executive and other
personnel, pays the remuneration of our officers and directors affiliated with
Lord Abbett, provides us with office space and pays for ordinary and necessary
office and clerical expenses relating to research, statistical work and
supervision of our portfolio and certain other costs. Lord Abbett provides
similar services to fifteen other Lord Abbett-sponsored funds having various
investment objectives and also advises other investment clients. Since 1992,
Morais A. Taylor has served, and continues, as portfolio manager for the Fund.
Mr. Taylor joined Lord Abbett in 1989.
We pay Lord Abbett a monthly fee, based on average daily net assets for
each month. For the fiscal year ended December 31, 1994, the fee paid to Lord
Abbett as a percentage of average daily net assets was at the annual rate of
.48%. In addition, we pay all expenses not expressly assumed by Lord Abbett. Our
ratio of expenses, including management fee expenses, to average net assets for
the year ended December 31, 1994 was .88%.
8 DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
Our net investment income is paid to shareholders monthly as a dividend.
Dividends may be taken in cash or reinvested in additional shares at net asset
value without a sales charge.
Checks representing dividends paid in cash will be mailed to shareholders
as soon as practicable after the payment date.
A long-term capital gains distribution is made when we have net profits
during the year from sales of securities which we have held more than one year.
If we realize net short-term capital gains, they also will be distributed. Any
capital gains distribution will be paid in January. You may take the
distribution in cash or reinvest it in additional shares at net asset value
without a sales charge.
Supplemental dividends and distributions also may be paid in December or
January. Dividends and distributions declared in October, November or December
of any year to shareholders of record as of a date in such a month will be
treated for federal income tax purposes as having been received by shareholders
in that year if they are paid before February 1 of the following year. We intend
to continue to meet the requirements of Subchapter M of the Internal Revenue
Code. We will try to distribute to shareholders all our net investment income
and net realized capital gains, so as to
<PAGE>
avoid the necessity of the Fund paying federal income tax. Shareholders,
however, must report dividends and capital gains distributions as taxable
income. Distributions derived from net long-term capital gains which are
designated by the Fund as capital gains dividends will be taxable to
shareholders as long-term capital gains, whether received in cash or shares,
regardless of how long a taxpayer has held the shares. Under current law, net
long-term capital gains are taxed at the rates applicable to ordinary income,
except that the maximum rate for long-term capital gains for individuals is 28%.
Provisions of the Contract with America Tax Relief Act of 1995, that were
pending in Congress as of the date of this Prospectus, would have the effect of
reducing the federal income tax rate on capital gains. See Performance for a
discussion of the purchase of high-coupon securities at a premium and the
distribution to shareholders as ordinary income of all interest income on those
securities. This practice increases current income of the Fund, but may result
in higher taxable income to Fund shareholders than other portfolio management
practices.
Shareholders may be subject to a $50 penalty under the Internal Revenue
Code and we may be required to withhold and remit to the U.S. Treasury a portion
(31%) of any redemption proceeds (including the value of shares exchanged into
another Lord Abbett-sponsored fund), and of any dividend or distribution on any
account, where the payee (shareholder) failed to provide a correct taxpayer
identification number or to make certain required certifications.
We will inform shareholders of the federal tax status of each dividend and
distribution after the end of each calendar year. Shareholders should consult
their tax advisers concerning applicable state and local taxes as well as on the
tax consequences of gains or losses from the redemption or exchange of our
shares.
9 REDEMPTIONS
To obtain the proceeds of an expedited redemption of $50,000 or less, you or
your representative with proper identification can telephone the Fund. The Fund
will not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine and will employ reasonable procedures to
confirm that instructions received are genuine, including requesting proper
identification, recording all telephone redemptions and mailing the proceeds
only to the named shareholder at the address appearing on the account
registration.
If you do not qualify for the expedited procedures described above, to
redeem shares directly, send your request to Lord Abbett Bond-Debenture Fund,
Inc. (P.O. Box 419100, Kansas City, Missouri 64141) with signature(s) and any
legal capacity of the signer(s) guaranteed by an eligible guarantor, accompanied
by any certificates for shares to be redeemed and other required documentation.
We will make payment of the net asset value of the shares on the date the
redemption order was received in proper form. Payment will be made within seven
days (such period to be reduced to three business days on and after June 7,
1995). The Fund may suspend the right to redeem shares for not more than seven
days (or longer under unusual circumstances as permitted by Federal law). If you
have purchased Fund shares by check and subsequently submit a redemption
request, redemption proceeds will be paid upon clearance of your purchase check,
which may take up to 15 days. To avoid delays you may arrange for the bank upon
which a check was drawn to communicate to the Fund that the check has cleared.
Shares also may be redeemed by the Fund at net asset value through your
securities dealer who, as an unaffiliated dealer, may charge you a fee. If your
dealer receives your order prior to the close of the NYSE and communicates it to
Lord Abbett, as our agent, prior to the close of Lord Abbett's business day, you
will receive the net asset value as of the close of the NYSE on that day. If the
dealer does not communicate such an order to Lord Abbett until the next business
day, you will receive the net asset value as of the close of the NYSE on that
next business day.
Shareholders who have redeemed their shares have a one-time right to
reinvest, in another account having the identical registration, in any of the
Eligible Funds at the then applicable net asset value without the payment of a
sales charge. Such reinvestment must be made within 60 days of the
<PAGE>
redemption and is limited to no more than the amount of the redemption proceeds.
Under certain circumstances and subject to prior written notice, our Board
of Directors may authorize redemption of all of the shares in any account in
which there are fewer than 25 shares.
TAX-QUALIFIED PLANS: For redemptions of $50,000 or less, follow normal
redemption procedures. Redemptions over $50,000 must be in writing from the
employer, broker or plan administrator stating the reason for the redemption.
The reason for the redemption must be received by the Fund prior to, or
concurrent with, the redemption request.
10 PERFORMANCE
Lord Abbett Bond-Debenture Fund completed its fiscal year on December 31, 1994.
The Fund's total return (the percent change in net asset value, assuming the
reinvestment of all distributions) was -3.9% for the year. Dividends totaling
$.877 per share were paid over this period. The Fund's dividend distribution
rates (based on the monthly dividend of $.073) were 10.06% and 9.58% based on
the net asset value of $8.71 and the maximum offering price of $9.14,
respectively, at the close of the fiscal year.
Both the equity and debt markets were characterized by market volatility
during the year. The Federal Reserve raised short-term interest rates six times
during 1994 in an attempt to slow economic growth and keep inflation under
control. Uncertainty about whether the Federal Reserve would be able to keep
inflation under control overshadowed the strong earnings of many companies in
1994. Weakness in the bond and stock markets spread to the convertible bond
market. The increase in bond yields caused a decrease in the market value of
straight debt securities held by the Fund and undermined the protection offered
by the bond component of convertible securities, contributing to a 4% to 6%
decline in convertible bond prices.
Because of overall market weakness, the Fund adopted a fairly defensive
strategy throughout most of the year. The Fund ended the year with a relatively
high cash position of 13%. In the high- yield market, security selection was
focused on the higher quality issues that would allow the Fund to earn its
dividend. Similarly, convertible bonds were defensively selected and weaker
securities were sold. Because of a volatile government bond market, investment
grade securities were kept to a minimum.
We believe the high-yield market remains attractive, as evidenced by the
Funds portfolio composition on December 31: higher-yielding, lower-rated debt
(including straight-preferred stocks) composed 62.5% of the portfolio; the
balance was invested in convertible securities, U.S. Government securities,
other investment-grade securities and equity holdings.
YIELD AND TOTAL RETURN. Yield and total return data may, from time to time, be
included in advertisements about the Fund. Yield is calculated by dividing the
Funds annualized net investment income per share during a recent 30-day period
by the maximum public offering price per share on the last day of that period.
The Funds yield reflects the deduction of the maximum initial sales charge and
reinvestment of all income dividends and capital gains distributions. 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. Total return also may be presented for other periods or
based on investment at reduced sales charge levels or net asset value. Any
quotation of total return not reflecting the maximum initial sales charge 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.
The Funds dividend distribution rate may differ from its SEC yield
primarily because the Fund may purchase short- and intermediate-term high-coupon
securities at a premium and, consistent with applicable tax regulations,
distribute to shareholders all of the interest income on these securities
without amortizing the premiums. This practice also is used by the Fund for
financial statement purposes and is in accordance with generally accepted
accounting principles. In other words,
<PAGE>
the Fund may pay more than face value for a security that pays a
greater-than-market rate of interest and then distribute all such interest as
dividends. The principal payable on the security at maturity will equal face
value, and so the market value of the security will gradually decrease to face
value, assuming no changes in the market rate of interest or in the credit
quality of the issuer. Shareholders should recognize that such dividends
therefore will tend to decrease the net asset value of the Fund. Dividends paid
from this interest income are taxable to shareholders at ordinary income rates.
The Fund may make distributions in excess of net investment income from
time to time to provide more stable dividends. Such distributions could cause
slight decreases in net asset values over time, but historically have not
resulted in a return of capital for tax purposes.
See "Performance" in the Statement of Additional Information for a more
detailed discussion concerning the computation of the Funds total return and
yield.
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.
Comparison of change in value of a $10,000 investment in the Fund, assuming
reinvestment of all dividends and distributions, with Salomon Brothers Broad
Investment High-Grade Index, First Boston High-Yield Index and Value Line
Convertible Index.
<TABLE>
<CAPTION>
FUND FUND SALOMON
AT AT BROTHERS FIRST
NET MAXIMUM BROAD INVESTMENT BOSTON VALUE LINE
ASSET OFFERING HIGH-GRADE HIGH-YIELD CONVERTIBLE
DATE VALUE PRICE INDEX INDEX INDEX
---- ------ -------- --------------- --------- ------------
<S> <C> <C> <C> <C> <C>
12-31-84 $10,000 $ 9,525 $10,000 $10,000 $10,000
12-31-85 12,102 11,526 12,225 12,494 12,539
12-31-86 13,386 12,749 14,114 14,447 14,378
12-31-87 13,637 12,989 14,479 15,392 13,350
12-31-88 15,519 14,781 15,636 17,496 15,265
12-31-89 16,304 15,528 17,894 17,564 16,405
12-31-90 15,070 14,353 19,521 16,443 14,248
12-31-91 20,847 19,856 22,638 23,634 18,417
12-31-92 24,181 23,031 24,359 27,574 21,763
12-31-93 28,043 26,711 26,775 32,785 26,264
12-31-94 26,959 26,677 26,009 32,470 25,234
<FN>
(1) Data reflects the deduction of the maximum sales charge of 4.75%.
(2) Performance numbers for Salomon Brothers Broad Investment High-Grade Index,
First Boston High-Yield Index and Value Line Convertible Index do not
reflect transaction costs or management fees. An investor cannot invest
directly in any of the indices. A review of the Funds 1994 annual
shareholders report shows a history of the Funds portfolio blend changing
through the years but composed primarily of three categories of securities:
(i) lower rated debt (including straight-preferred stocks), (ii)
equity-related securities and (iii) high-grade debt. The three indices
chosen to compare to the Funds performance have elements of these three
categories, but since there is no one index combining all three in the same
annual blend as the Funds portfolio, these three separate indices may not
be a valid comparison for the Fund.
(3) Total return is the percent change in value, after deduction of the maximum
sales charge of 4.75%, with all dividends and distributions reinvested for
the periods shown ending December 31, 1994 using the SEC-required uniform
method to compute such return.
</FN>
</TABLE>
<PAGE>
UNDERWRITER AND INVESTMENT MANAGER
Lord, Abbett & Co.
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
212-848-1800
CUSTODIAN
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10005
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.
LABD-1-595
<PAGE>
LORD ABBETT
BOND-DEBENTURE FUND, INC.
THE GENERAL MOTORS BUILDING
767 FIFTH AVENUE
NEW YORK, NY 10153-0203
LORD
ABBETT
MAY 1
- ---------
APPLICATION
INSIDE
LORD
ABBETT
BOND-
DEBENTURE
FUND
A MUTUAL FUND SEEKING HIGH CURRENT INCOME AND THE OPPORTUNITY FOR CAPITAL
APPRECIATION TO PRODUCE A HIGH TOTAL RETURN.
<PAGE>
LORD ABBETT MAY 1, 1995
STATEMENT OF ADDITIONAL INFORMATION
LORD ABBETT
BOND-DEBENTURE
FUND, INC.
- ------------------------------------------------------------------------------
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from your securities dealer or from Lord, Abbett & Co. 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 May 1, 1995.
Lord Abbett Bond-Debenture Fund, Inc. (sometimes referred to as "we" or the
"Fund") was organized in 1970 and was incorporated under Maryland law on January
23, 1976. Our authorized capital stock consists of a single class of 300,000,000
shares, $1.00 par value. All shares have equal noncumulative voting rights and
equal rights with respect to dividends, assets and liquidation. They are fully
paid and nonassessable when issued and have no preemptive or conversion rights.
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 3
3. Investment Advisory and Other Services 5
4. Portfolio Transactions 6
5. Purchases, Redemptions and Shareholder Services 7
6. Past Performance 11
7. Taxes 12
8. Information About the Fund 12
9. Financial Statements 13
10. Appendix 13
<PAGE>
1.
Investment Objective and Policies
The Fund's investment objective and policies are described in the Prospectus on
the cover page and under "How We Invest." In addition to those policies
described in the Prospectus, we are subject to the following investment
restrictions which cannot be changed without shareholder approval. We may not:
(1) sell short or buy on margin, although we may obtain short-term credit as
needed to clear purchases of securities; (2) buy or sell put or call options,
although we may buy, hold or sell warrants acquired with debt securities; (3)
borrow in excess of 5% of our gross assets taken at cost or market value,
whichever is lower at the time of borrowing, and then only as a temporary
measure for extraordinary or emergency purposes; (4) act as an underwriter of
securities issued by others, except where we may be deemed to be an underwriter
by selling a portfolio security requiring registration under the Securities Act
of 1933; (5) invest knowingly more than 15% of our gross assets in illiquid
securities; (6) make loans, except for (a) time or demand deposits with banks,
(b) purchasing commercial paper or publicly-offered debt securities at original
issue or otherwise, (c) short-term repurchase agreements with sellers of
securities we have bought and (d) loans of our portfolio securities to
registered broker-dealers if 100% secured by cash or cash equivalents, made in
full compliance with applicable regulations and which, in management's opinion,
do not expose us to significant risks or impair our qualification for
pass-through tax treatment under the Internal Revenue Code; (7) pledge,
mortgage, or hypothecate our assets; (8) buy or sell real estate (including
limited partnership interests but excluding securities of companies, such as
real estate investment trusts, which deal in real estate or interests therein)
or oil, gas or other mineral leases, or commodities, or commodity contracts
although we may buy securities of companies that deal in such interests
(however, we may hold and sell any of the aforementioned or any other property
acquired through ownership of other securities, although we may not purchase
securities for the purpose of acquiring those interests); (9) buy securities
issued by any other open-end investment company (except pursuant to a plan of
merger, consolidation or acquisition of assets), although we may invest up to 5%
of our gross assets, taken at market value at the time of investment, in
closed-end investment companies, provided such purchase is made in the open
market and does not involve the payment of a fee or commission greater than the
customary broker's commission; (10) invest more than 5% of our gross assets,
taken at market value at the time of investment, in securities of companies with
less than three years' continuous operation, including predecessor companies;
(11) with respect to 75% of our gross assets, buy the securities of any issuer
if the purchase causes us (a) to have more than 5% of our gross assets invested
in the securities of such issuer (except obligations of the United States, its
agencies or instrumentalities) or (b) to own more than 10% of the outstanding
voting securities of such issuer; (12) hold securities of any issuer, any of
whose officers, directors or security holders is an officer, director or partner
of our investment adviser or an officer or director of the Fund, if after the
purchase of the securities of such issuer by us, one or more of such persons
owns beneficially more than 1/2 of 1% of the securities of such issuer and such
persons together own beneficially more than 5% of such securities; (13)
concentrate our investments in a particular industry, though, if it is deemed
appropriate to our investment objective, up to 25% of the market value of our
gross assets at the time of investment may be invested in any one industry
classification we use for investment purposes; (14) buy from or sell to any of
our officers, directors, employees, or our investment adviser or any of its
officers, directors, partners or employees, any securities other than shares of
our common stock; or (15) invest more than 10% of the market value of our gross
assets at the time of investment in debt securities which are in default as to
interest or principal.
With respect to investment restriction (5) above, securities subject to legal or
contractual restrictions on resale, which are determined by the Board of
Directors, or by Lord Abbett pursuant to delegated authority, to be liquid are
considered liquid securities.
Other Investment Restrictions (which can be changed without shareholder
approval)
- --------------------------------------------------------------------------------
Pursuant to Texas regulations, we will not invest more than 5% of our assets in
warrants and not more than 2% of such value in warrants not listed on the New
York or American Stock Exchanges, except when they form a unit with other
securities. As a matter of operating policy, we will not invest more than 5% of
our net assets in rights.
2
<PAGE>
PORTFOLIO TURNOVER RATE
For the year ended December 31, 1994, our portfolio turnover was 147.98% versus
159.79% for the prior year.
2.
DIRECTORS AND OFFICERS
The following directors are partners of Lord, Abbett & Co., 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 fifteen other Lord Abbett-sponsored funds. They are
"interested persons" as defined in the Investment Company Act of 1940, as
amended (the "Act"), and as such, may be considered to have an indirect
financial interest in the Rule 12b-1 Plan described in the Prospectus.
Ronald P. Lynch, age 59, President and Chairman
Robert S. Dow, age 50, Vice President
The following outside directors are also directors or trustees of the fifteen
other Lord Abbett-sponsored funds referred to above except for Lord Abbett
Research Fund, Inc., of which only Messrs. Millican and Neff are directors.
E. Thayer Bigelow
Time Warner Cable
300 First Stamford Place
Stamford, Connecticut
President and Chief Executive Officer of Time Warner Cable Programming, Inc.
Formerly President and Chief Operating Officer of Home Box Office, Inc. Age 53.
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 64.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 69.
C. Alan MacDonald
The Marketing Partnership, Inc.
27 Signal Road
Stamford, Connecticut
General Partner, The Marketing Partnership, Inc., a full service marketing
consulting firm that specializes in strategic planning and customer-specific
marketing. Formerly Acquisition Consultant, The Noel Group, a private consulting
firm (1994). Formerly Chairman and Chief Executive Officer of Lincoln Foods,
Inc., manufacturer of branded snack foods (1992-1994). Formerly President and
Chief Executive Officer of Nestle Foods Corporation, a subsidiary of Nestle S.A.
(Switzerland). Age 61.
3
<PAGE>
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 65.
Thomas J. Neff
277 Park Avenue
New York, New York
President of Spencer Stuart & Associates, an executive search consulting firm.
Age 57.
The second column of the following table sets forth the compensation accrued for
the Fund's outside directors. The third and fourth columns set forth information
with respect to the retirement plan for outside directors maintained by the Lord
Abbett-sponsored funds. The fifth column sets forth the total compensation
payable by such funds to the outside directors. The information provided is for
the fiscal year ended December 31, 1994. No director of the Fund associated with
Lord Abbett and no officer of the Fund received any compensation from the Fund
for acting as a director or officer.
<TABLE>
<CAPTION>
For the Fiscal Year December 31, 1994
(1) (2) (3) (4) (5)
Pension or Estimated Annual
Retirement Benefits Benefits Upon
Accrued as Expenses Retirement Proposed Total Compensation
by the Fund to be Paid by the Fund Accrued by the Fund and
Aggregate and Fifteen Other and Fifteen Other Fifteen Other Lord
Compensation Lord Abbett-sponsored Lord Abbett-sponsored Abbett-sponsored
Name of Director from the Fund (1) Funds (2) Funds(2) Funds (3)
---------------- ----------------- --------------------- ---------------------- ------------------------
<S> <C> <C> <C> <C>
E. Thayer Bigelow 4 $694 None $33,600 $8,400
Thomas F. Creamer 5 $2,287 $27,578 $33,600 $29,650
Stewart S. Dixon $3,442 $22,595 $33,600 $43,600
John C. Jansing $3,354 $28,636 $33,600 $42,500
C. Alan MacDonald $3,275 $27,508 $33,600 $41,500
Hansel B. Millican, Jr. $3,296 $24,842 $33,600 $41,750
Thomas J. Neff $3,250 $16,214 $33,600 $41,200
<FN>
1. Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on net
assets of each fund. Fees payable by the Fund to its outside directors are
being deferred under a plan that deems the deferred amounts to be invested
in shares of the Fund for later distribution to the directors. The amounts
accrued by the Fund for the year ended December 31, 1994, are as set forth
after each outside Director's name above. The total amount accrued for each
outside Director since the beginning of his tenure with the Fund, together
with dividends reinvested and changes in net asset value applicable to such
deemed investments, were as follows as of December 31, 1994: Mr. Bigelow,
$694; Mr. Creamer, $38,881; Mr. Dixon, $45,569; Mr. Jansing, $45,368; Mr.
MacDonald, $28,819; Mr. Millican, $45,665; and Mr. Neff, $45,872.
2. Each Lord Abbett-sponsored fund has a retirement plan providing that
outside directors will receive annual retirement benefits for life equal to
80% of their final annual retainers following retirement at or after age 72
with at least 10 years of service. Each plan also provides for a reduced
benefit upon early retirement under certain circumstances, a pre-retirement
death benefit and actuarially reduced joint-and-survivor spousal benefits.
The amounts stated, except in the case of Mr. Creamer, would be payable
annually under such retirement plans if the director were to retire at age
72 and the annual retainers payable by such funds were the same as they are
today. The amounts accrued in column 3 were accrued by the Lord
Abbett-sponsored funds
4
<PAGE>
during the fiscal year ended December 31, 1994 with respect to the
retirement benefits in column 4.
3. This column shows aggregate compensation, including director's 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, 1994.
4. Mr. Bigelow was elected a director of the Fund on October 19, 1994.
5. Mr. Creamer retired as a director of the Fund effective September 21, 1994.
The stated amount of his retirement income (column 4) is the annual amount
payable to him by the Lord Abbett-sponsored funds before reduction for a
joint-and-survivor spousal benefit.
</FN>
</TABLE>
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Allen, Carper, Cutler, Dow, Henderson, Nordberg and Walsh are partners of Lord
Abbett; the others are employees: Morais A. Taylor, age 42, Executive Vice
President, Kenneth B. Cutler, age 62, Vice President and Secretary; Stephen I.
Allen, age 41, Daniel E. Carper age, 43, Robert S. Dow, age 50, Thomas S.
Henderson, age 63, E. Wayne Nordberg, age 57, John J. Walsh, age 58, Jeffery H.
Boyd, age 38 (with Lord Abbett since 1994 - formerly partner in the law firm of
Robinson & Cole), John J. Gargana, Jr., age 63, Thomas F. Konop, age 53 Victor
W. Pizzolato, age 62, Vice Presidents; and Keith F. O'Connor, age 39, Treasurer.
The Fund's By-Laws provide that the Fund shall not hold an annual meeting of its
stockholders in any year unless one or more matters are required to be acted on
by stockholders under the Act, 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 April 1, 1994, our officers and directors as a group owned less than 1% of
our outstanding shares.
3.
Investment Advisory and Other Services
As described under "Our Management" in the Prospectus, Lord Abbett is the Fund's
investment manager. The eight general partners of Lord Abbett, all of whom are
officers and/or directors of the Fund, are: Stephen I. Allen, Daniel E. Carper,
Kenneth B. Cutler, Robert S. Dow, Thomas S. Henderson, Ronald P. Lynch, E. Wayne
Nordberg and John J. Walsh. The address of each partner is The General Motors
Building, 767 Fifth Avenue, New York, New York 10153- 0203.
The services performed by Lord Abbett are described in the Prospectus under "Our
Management". 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 .50 of 1% of the Fund's first $500 million of average daily net assets
and .45% of such assets over $500 million. For the fiscal years ended December
31, 1994, 1993, and 1992, respectively, the management fees paid to Lord Abbett
amounted to $4,786,098, $4,091,742 and $3,196,124, 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 transactions.
We have agreed with the State of California to limit operating expenses
(including management fees but excluding taxes, interest, extraordinary expenses
and brokerage commissions) to 2 1/2% of average annual net assets up to
$30,000,000, 2% of the next $70,000,000 of such assets and 1 1/2% of such assets
in excess of $100,000,000. The expense limitation is a condition on the
registration of investment company shares for sale in the state, and applies so
long as our shares are registered for sale in that state.
5
<PAGE>
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.
Morgan Guaranty Trust Company of New York ("Morgan"), 60 Wall Street, New York,
New York 10005, 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 Morgan or its foreign branches
to be held by certain qualified foreign banks and depositories.
4.
Portfolio Transactions
Our policy is 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, consistent with
obtaining best execution, except to the extent that we may pay a higher
commission as described below. This policy 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.
We select broker-dealers on the basis of their professional capability and the
value and quality of their brokerage and research services. Normally, the
selection is made by our traders who are officers of the Fund and also are
employees of Lord Abbett. Our 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 the negotiation of
prices and commissions.
A broker may receive a commission for portfolio transactions exceeding the
amount another broker would have charged for the same transaction if our traders
determine that such amount is reasonable in relation to the value of the
brokerage and research services performed by the executing broker viewed in
terms of either the particular transaction or the broker's overall
responsibilities with respect to us and other accounts managed by Lord Abbett.
Brokerage services may include such factors as showing us trading opportunities
including blocks, 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, reliability and
quotation and pricing services. Research may include the furnishing of analyses
and reports concerning issuers, industries, securities, economic factors and
trends, portfolio strategy and the performance of accounts. Such research may be
used by Lord Abbett in servicing all their accounts, and not all of such
research will necessarily be used by Lord Abbett in connection with their
services to us; conversely, research furnished in connection with brokerage on
other accounts managed by Lord Abbett may be used in connection with their
services to us, and not all of such research will necessarily be used by Lord
Abbett in connection with their services to such other accounts. We have been
advised by Lord Abbett that, although such research is often useful, no dollar
value can be ascribed to it nor can it be accurately ascribed or allocated to
any account and it is not a substitute for services provided by them to us; nor
does it materially reduce or otherwise affect the expenses incurred by Lord
Abbett in the performance of such services. We make no commitments regarding the
allocation of brokerage business to or among dealers.
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.
If we tender portfolio securities pursuant to a cash tender offer, we will seek
to recapture any fees or commissions involved by designating Lord Abbett as our
agent so that the fees may be passed back to us. As other legally permissible
opportunities come to our attention for the direct or indirect recapture by us
of brokerage commissions or similar fees paid on portfolio transactions, our
directors will determine whether we should or should not seek such recapture.
6
<PAGE>
We do not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from
broker-dealers as consideration for the direction to them of portfolio business.
During the fiscal years ending December 31, 1994, 1993 and 1992, respectively,
we paid total commissions to independent dealers of $4,482,094, $5,739,293 and
$3,633,194, respectively.
5.
Purchases, Redemptions
and Shareholder Services
The Fund values its portfolio securities at market value as of the close of the
New York Stock Exchange ("NYSE"). Market value will be determined as follows:
securities listed or admitted to trading privileges on the New York or American
Stock Exchange or on the NASDAQ National Market System are valued at the last
sales price, or, if there is no sale on that day, at the mean between the last
bid and asked prices, or, in the case of bonds, in the over-the-counter market
if, in the judgment of the Fund's officers, that market more accurately reflects
the market value of the bonds. Over-the-counter securities not traded on the
NASDAQ National Market System are valued at the mean between the last bid and
asked prices. Securities for which market quotations are not available are
valued at fair market value under procedures approved by the Board of Directors.
Information concerning how we value our shares for the purchase and redemption
of our shares is described in the Prospectus under "Purchases" and
"Redemptions", respectively.
As disclosed in the Prospectus, we calculate our net asset value and are
otherwise open for business on each day that the NYSE is open for trading. The
NYSE is closed on Saturdays and Sundays and the following holidays -- New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
The maximum offering price of our shares on December 31, 1994 was computed as
follows:
Net asset value per share (net assets divided by shares outstanding) $8.71
Maximum offering price per share (net asset value divided by .9525) $9.14
The Fund has entered into a distribution agreement with Lord Abbett under which
Lord Abbett 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's judgment, a substantial distribution can be obtained by
reasonable efforts.
7
<PAGE>
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 as follows:
Year Ended December 31,
-----------------------
1994 1993 1992
---- ---- ----
Gross sales charge $7,717,386 $8,973,226 $5,298,064
Amount allowed to
dealers $6,648,480 $7,739,343 $4,541,439
---------- ---------- ----------
Net commissions
received by
Lord Abbett $1,068,906 $1,233,883 $756,625
========== ========== =========
As described in the Prospectus, the Fund has adopted a Distribution Plan and
Agreement (the "Plan") pursuant to Rule 12b-1 of the Act. In adopting the Plan
and in approving its continuance, the Board of Directors has concluded that
there is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. The expected benefits include greater sales and lower redemptions
of Fund shares, which should allow the Fund to maintain a consistent cash flow,
and a higher quality of service to shareholders by dealers than would otherwise
be the case. During the last fiscal year, the Fund accrued or paid through Lord
Abbett to dealers $2,350,013 under the Plan. Lord Abbett uses all amounts
received under the Plan for payments to dealers for (i) providing continuous
services to the Fund's 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.
The Plan requires the Board of Directors to review, on a quarterly basis,
written reports of all amounts expended pursuant to the Plan and the purpose for
which such expenditures were made. The Plan shall continue in effect only if its
continuance is specifically approved at least annually by vote of the Fund's
Board of Directors and of the Fund's 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 such Plan and
agreements. The Plan may not be amended to increase materially the amount spent
for distribution expenses without approval by a majority of the Fund's
outstanding voting securities and the approval of a majority of the directors,
including a majority of the Fund's outside directors. The Plan may be terminated
at any time by vote of a majority of the Fund's outside directors or by vote of
a majority of the Fund's outstanding voting securities.
As stated in the Prospectus, a 1% contingent deferred reimbursement charge
("CDRC") is imposed with respect to those shares (or shares of another Lord
Abbett-sponsored fund or series acquired through exchange of such shares) on
which the Fund has paid the one-time 1% 12b-1 sales distribution fee 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.
No CDRC is payable on redemptions by tax-qualified plans under section 401 of
the Internal Revenue Code for benefit payments due to plan loans, hardship
withdrawals, death, retirement or separation from service with respect to plan
participants. The CDRC 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
large, long-term shareholder account in the Fund. Shares of a fund or series on
which such 1% sales distribution fee has been paid may not be exchanged into a
fund or series with a Rule 12b-1 plan for which the payment provisions have not
been in effect for at least one year.
The other Lord Abbett-sponsored funds and series which participate in the
Telephone Exchange Privilege (except Lord Abbett U.S. Government Securities
Money Market Fund, Inc. ("GSMMF") and certain series of Lord Abbett Tax-Free
8
<PAGE>
Income Fund, Inc. and Lord Abbett Tax-Free Income Trust for which a Rule 12b-1
Plan is not yet in effect (collectively, the "Series")) have instituted a CDRC
on the same terms and conditions. No CDRC will be charged on an exchange of
shares between Lord Abbett funds. Upon redemption out of the Lord Abbett family
of funds the CDRC will be charged on behalf of and paid to the fund in which the
original purchase (subject to a CDRC) occurred. Thus, if shares of a Lord Abbett
fund are exchanged for shares of another such fund and the shares tendered
("Exchanged Shares") are subject to a CDRC, the CDRC will carry over to the
shares being acquired, including GSMMF ("Acquired Shares"). Any CDRC 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 GSMMF and the Series will not pay a 1% sales
distribution fee on $1 million purchases of their own shares, and will therefore
not impose their own CDRC, GSMMF will collect the CDRC on behalf of other Lord
Abbett funds. Acquired shares held in GSMMF which are subject to a CDRC will be
credited with the time such shares are held in that fund.
In no event will the amount of the CDRC exceed 1% 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 CDRC will be
imposed when the investor redeems (i) amounts derived from increases in the
value of the account above the total cost of shares being redeemed due to
increases in net asset value, (ii) shares with respect to which no Lord Abbett
fund paid a 1% sales distribution fee on issuance (including shares acquired
through reinvestment of dividend income and capital gains distributions) or
(iii) 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
determining whether a CDRC is payable, (a) shares not subject to the CDRC will
be redeemed before shares subject to the CDRC and (b) of shares subject to a
CDRC, those held the longest will be the first to be redeemed.
Under the terms of the Statement of Intention to invest $100,000 or more over a
13-month period as described in the Prospectus, shares of Lord Abbett-sponsored
funds (other than shares of Lord Abbett Equity Fund ("LAEF"), Lord Abbett Series
Fund ("LASF"), Lord Abbett Research Fund if not offered to the general public
("LARF"), and GSMMF, unless holdings in GSMMF are attributable to shares
exchanged from a Lord Abbett-sponsored fund offered with a sales charge or from
a fund in the Lord Abbett Counsel Group) 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. 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 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.
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, and GSMMF, unless holdings in GSMMF are attributable to shares
exchanged from a Lord Abbett-sponsored fund offered with a front-end sales
charge or from Lord Abbett Counsel Group) 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.
As stated in the Prospectus, our 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 trustee 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 other family members and
retired directors and employees.
Our shares also may be purchased at net asset value (a) at $1 million or more,
(b) with dividends and distributions from other Lord Abbett-sponsored funds,
except for LARF, LAEF, LASF and Lord Abbett Counsel Group, (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
9
<PAGE>
who have entered into an agreement with Lord Abbett in accordance with certain
standards approved by Lord Abbett, 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, and (e) by employees, partners and owners of unaffiliated
consultants and advisors to Lord Abbett or Lord Abbett-sponsored funds who
consent to such purchase if such persons provide service to Lord Abbett or such
funds on a continuing basis and are familiar with such funds. Shares are offered
at net asset value to these investors for the purpose of promoting goodwill with
employees and others with whom Lord Abbett and/or the Fund have business
relationships.
Our shares also may be purchased at net asset value, subject to appropriate
documentation, through a securities dealer where the amount invested represents
redemption proceeds from shares ("Redeemed Shares") of a registered open-end
management investment company not distributed or managed by Lord Abbett (other
than a money market fund), if such redemption has occurred no more than prior to
the purchase of our shares, the Redeemed Shares were held for at least six
months prior to redemption and the proceeds of redemption were maintained in
cash or a money market fund prior to purchase. Purchasers should consider the
impact, if any, of contingent deferred sales charges in determining whether to
redeem shares for subsequent investment in our shares. Lord Abbett may suspend,
change or terminate this purchase option at any time.
Our shares may be issued at net asset value in exchange for the assets, subject
to possible tax adjustment, of a personal holding company or an investment
company. There are economies of selling efforts and sales-related expenses with
respect to offers to these investors and those referred to above.
The Prospectus briefly describes the Telephone Exchange Privilege. You may
exchange some or all of your shares for those of Lord Abbett-sponsored funds
currently offered to the public with a sales charge and GSMMF, 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 fund into which the exchange is
made.
Shareholders in such other funds have the same right to exchange their shares
for 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 (unless a sales charge was
paid on the initial investment). Exercise of the exchange privilege will be
treated as a sale for federal income tax purposes, and, depending on the
circumstances, a gain or loss may be recognized. In the case of an exchange of
shares that have been held for 90 days or less where no sales charge is payable
on the exchange, the original sales charge incurred with respect to the
exchanged shares will be taken into account in determining gain or loss on the
exchange only to the extent such charge exceeds the sales charge that would have
been payable on the acquired shares had they been acquired for cash rather than
by exchange. The portion of the original sales charge not so taken into account
will increase the basis of the acquired shares.
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as a means for taking advantage of
short-term swings in the market, and we reserve the right to terminate or limit
the privilege of any shareholder who makes frequent exchanges. We can revoke or
modify the privilege for all shareholders upon 60 days' prior notice. "Eligible
Funds" are other Lord Abbett-sponsored funds which are eligible for the exchange
privilege, except LASF which currently offers its shares only in connection with
certain variable annuity contracts, LAEF which is not issuing shares, LARF and
Lord Abbett Counsel Group.
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 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.
10
<PAGE>
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 six months prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
Under the Div-Move service described in the Prospectus, you can invest the
dividends paid on your account into an existing account 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.
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.
The Systematic Withdrawal Plan (the "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. 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.
The Prospectus indicates the types of retirement plans for which Lord Abbett
provides forms and explanations. Lord Abbett makes available the retirement plan
forms and custodial agreements for IRAs (Individual Retirement Accounts
including Simplified Employee Pensions), 403(b) plans and qualified pension and
profit-sharing plans, including 401(k) plans. The forms name Investors Fiduciary
Trust Company as custodian and contain specific information about the plans.
Explanations of the eligibility requirements, annual custodial fees and
allowable tax advantages and penalties are set forth in the relevant plan
documents. Adoption of any of these plans should be on the advice of your legal
counsel or qualified tax adviser.
6.
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 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.
Using the method described above to compute average annual compounded rates of
total return for the Fund's last one, five and ten fiscal-years ending on
December 31, 1994 are as follows: -8.50%, 9.51% and 9.89%, respectively.
Our yield quotation is based on a 30-day period ended on a specified date,
computed by dividing our net investment income per share earned during the
period by our maximum offering price per share on the last day of the period.
This is determined by finding the following quotient: take the Fund's dividends
and interest earned during the period minus its expenses accrued for the period
11
<PAGE>
and divide by the product of (i) the average daily number of Fund shares
outstanding during the period that were entitled to receive dividends and (ii)
the Fund's maximum offering price per share on the last day of the period. To
this quotient add one. This sum is multiplied by itself five times. Then one is
subtracted from the product of this multiplication and the remainder is
multiplied by two. For the 30-day period ended December 31, 1994, the yield for
the Fund was 9.47%.
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 repurchased 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 will generally be
taxable for federal income tax purposes. Any loss realized on the sale,
redemption or repurchase 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.
The Fund will be subject to a 4% non-deductible 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 will qualify for the
dividends-received deduction for corporations to the extent they are derived
from dividends paid by domestic corporations.
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.
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
12
<PAGE>
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 December 31, 1994 and the
report of Deloitte & Touche LLP, independent auditors, on such financial
statements contained in the 1994 Annual Report to Shareholders of Lord Abbett
Bond-Debenture 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.
10.
Appendix
Corporate Bond Ratings
Moody's Investors Service, Inc.'s Corporate Bond Ratings
Aaa - Bonds which are rated Aaa are judged to be of the best quality and carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa - Bonds which are rated Aa are judged to be of high-quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance and
other terms of the contract over any long period of time may be small.
Caa - Bonds that are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds that are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C - Bonds that are rated C are the lowest-rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
13
<PAGE>
Standard & Poor's Corporation's Corporate Bond Ratings
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong and in the majority of instances they
differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
BB-B-CCC-CC-C - Debt rated BB, B, CCC, CC and C is regarded as having
predominately speculative characteristics with respect to capacity to pay
interest and repay principal. BB indicates the least degree of speculation and
CCC the highest. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes such payments will
be made during such grace period. The D rating also will be used upon the filing
of a bankruptcy petition if debt service payments are jeopardized.
14
<PAGE>
PART C OTHER INFORMATION
Item 24 Financial Statements and Exhibits
---------------------------------
(a) Financial Statements
Part A - Financial Highlights for the ten years ended December
31,1994.
Part B - Statement of Net Assets at December 31, 1994. Statement
of Operations for the year ended December 31, 1994. Statements of
Changes in Net Assets for the years ended December 31, 1994 and
1993. Supplementary Financial Information for the five years
ended December 31, 1994.
(b) Exhibits -
99.B 6 Distribution Agreement
99B.7a Retirement Plan for Non-interested Person Directors and
Trustees of Lord Abbett Funds.***
99.B.7b Lord Abbett Prototype Retirements Plans****
(1) 401(k)
(2) IRA
(3) 403(b)
(4) Profit-Sharing, and
(5) Money Purchases
99.B8 Custody Agreement*
99.B11 Consent of Deloitte & Touche*
99.B16 Total Return and Yield Computations*
* Filed herewith.
** Previously filed.
*** Incorporated by reference to Post-Effective Amendment No. 7 to the
Registration Statement (on Form N1-A) of Lord Abbett Equity Fund (File No.
811-6033).
**** Incorporated by reference to Post-Effective Amendment No. 6 to the
Registration Statement (on Form N-1A) of Lord Abbett Securities Trust (File
No. 811-7538).
Item 25. Persons Controlled by or Under Common Control with Registrant
-------------------------------------------------------------
None.
Item 26. Number of Record Holders of Securities
--------------------------------------
At April 7, 1995 - 54,482
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
<PAGE>
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,
makes 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.
-2-
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
Lord, Abbett & Co. acts as investment adviser for seventeen other
open-end investment companies (of which it is principal underwriter
for fourteen) and as investment adviser to approximately 5,100 private
accounts. Other than acting as directors and/or officers of open-end
investment companies managed 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 the capacity of director,
officer, employee, or partner of any entity except as follows:
John J. Walsh
Trustee
Brooklyn Hospital Center
100 Parkside Avenue
Brooklyn, N.Y.
Item 29. (a) Principal Underwriter
-------------------------
Affiliated Fund, Inc.
Lord Abbett Value Appreciation Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett California Tax-Free Income Fund, Inc.
Lord Abbett Fundamental Value Fund, Inc.
Lord Abbett U.S. Government Securities Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett U.S. Government Securities Money Market Fund, Inc.
Lord Abbett Series Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Tax-Free Income Trust
Lord Abbett Securities Trust
Lord Abbett Investment Trust
Investment Adviser
------------------
American Skandia Trust (Lord Abbett Growth and Income Portfolio)
America's Utility Fund
Lord Abbett Research Fund, Inc.
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
Business Address with Registrant(1)
----------------- ---------------------
Ronald P. Lynch Chairman and President
Kenneth B. Cutler Vice President & Secretary
Stephen I. Allen Vice President
Daniel E. Carper Vice President
Robert S. Dow Vice President
Thomas S. Henderson Vice President
E. Wayne Nordberg Vice President
John J. Walsh Vice President
(1) Each of the above has a principal business address: 767 Fifth Avenue,
New York, NY 10153
-3-
<PAGE>
(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
-------------------
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.
-4-
<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
27th day of April 1995.
LORD ABBETT BOND-DEBENTURE FUND, INC.
By /S/ RONALD P. LYNCH
Ronald P. Lynch, Chairman
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.
NAME TITLE DATE
- ----- ----- ----
Chairman,
/s/ Ronald P. Lynch President & Director April 27, 1995
/s/ John J. Gargana, Jr. Vice President & April 27, 1995
Chief Financial Officer
Robert S. Dow Director
/s/ E. Thayer Bigelow Director April 27, 1995
/s/ Stewart S. Dixon Director April 27, 1995
/s/ John C. Jansing Director April 27, 1995
/s/ C. Alan MacDonald Director April 27, 1995
/s/ Hansel B. Millican, Jr. Director April 27, 1995
/s/ Thomas J. Neff Director April 27, 1995
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
99.B6 Distribution Agreement
99.B8 Custody Agreement
99.B11 Consent of Deloitte & Touche
99.B16 Total Return and Yield Computations
EX-27 Financial Data Schedules
EXHIBIT 99.B6
DISTRIBUTION AGREEMENT
* * * * * * * * * * *
AS IN EFFECT JANUARY 1, 1987
----------------------------
AGREEMENT made this 23rd day of March, 1972, by and between
LORD ABBETT BOND-DEBENTURE FUND, INC., a Delaware corporation (hereinafter
called the "Corporation"), and LORD, ABBETT & CO., a New York partnership
(hereinafter called the "Distributor").
WHEREAS, the Corporation desires to enter into an
agreement with the Distributor for the purpose of finding purchasers for its
securities, and the Distributor is desirous of undertaking to perform these
services upon the terms and conditions hereinafter provided,
NOW, THEREFORE, in consideration of the mutual covenants and
of other good and valuable consideration, receipt of which is hereby
acknowledged, it is agreed as follows:
1. The Corporation hereby appoints the Distributor its
exclusive selling agent for the sale of its shares of common stock, and all
other securities now or hereafter created or issued by the Corporation (except
notes and other evidences of indebtedness issued for borrowed money), pursuant
to paragraph 2 of this Agreement, and the Corporation agrees to issue (and upon
<PAGE>
request of its shareholders make delivery of certificates for) its shares of
stock or other securities, subject to the provisions of its Certificate of
Incorporation, to purchasers thereof as soon as reasonably possible after
receipt of the orders therefor and against payment of the consideration to be
received by the Corporation therefor. The Distributor may appoint one or more
sub-selling agents, and the Distributor or any sub-selling agent may transmit
orders to the corporation for acceptance at its office in New York. Such shares
of stock shall be registered in such name or names and amounts as the
Distributor or any sub-selling agent may request from time to time and all
shares of stock when so paid for and issued shall be fully paid and
non-assessable.
2. The Distributor will act as exclusive selling agent
for the Corporation in selling shares of its stock to investors.
The Distributor agrees to use its best efforts to find
purchasers for shares of stock of the Corporation to be offered; provided,
however, that the services of the Distributor under this Agreement are not
deemed to be exclusive, and nothing in this Agreement shall prevent Distributor,
or any officer, director, partner or employee thereof, from providing similar
services to other investment companies and other clients or to engage in other
activities.
<PAGE>
3. The sales charge or premium relating to shares of common
stock of the Corporation shall be determined by the Board of Directors of the
Corporation, but in no event shall the sales charge or premium exceed the
maximum rate permitted under Federal regulations, and the amount to be retained
by the Corporation on any sale of its shares of common stock shall in each case
be the net asset value per share thereof (determined as provided in the
Certificate of Incorporation of the Corporation). From the premium the
Corporation agrees to pay the Distributor a sales commission. The Distributor
may allow concessions from such sales commission. In such event the amount of
the payment hereunder by the Corporation to the Distributor shall be the
difference between the sales commission and any concessions which have been
allowed in accordance herewith. The sales commission payable to the Distributor
shall not exceed the premium. The Corporation will accept telegraphic orders as
of the time at which such telegrams were received by a telegraph company
according to the time stamps of such company.
Notwithstanding anything herein to the contrary, sales and
distributions of the Corporation's common stock may be made upon the following
special terms:
(a) Capital gains distributions on shares of the
Corporation's stock may be reinvested by shareholders
at net asset value without any sales commission.
(b) Shares of stock may be issued by the Corporation at net
asset value without any sales commission in connection
with offers of exchange between investment companies
having the same Distributor.
(c) Shares of stock may be issued by the Corporation at net
asset value without a sales commission in connection
with any transaction as to which the Securities and
Exchange Commission shall have issued an order or rule
exempting or excepting such transaction from the
requirements of Section 22(d) of the Investment Company
Act of 1940.
(d) Shares of stock may be issued by the Corporation at net
asset value without a sales commission or at a reduced
sales commission as may from time to time be permitted
by rules of the Securities and Exchange Commission
under the Investment Company Act of 1940.
4. The independent broker-dealers who sell the Corporation's
shares may also render other services to the Corporation, such as
executing purchases and sales of portfolio securities, providing
statistical information, and similar services. The receipt of
compensation for other services shall in no way reduce the amount
of the sales commissions payable hereunder by the Corporation to
the Distributor or the amount of the concessions or commissions
allowed.
5. The Distributor agrees to act as agent of the Corporation
in connection with the repurchase of shares of stock of the
Corporation, or in connection with exchanges of shares between
investment companies having the same Distributor, and the
Corporation agrees to advise the Distributor of the net asset
value of its shares of stock as frequently as may be mutually
agreed, and to accept shares duly tendered to the Distributor.
The net asset value shall be determined as provided in the
Certificate of Incorporation of the Corporation.
6. The Corporation will pay all fees, costs, expenses and
charges in connection with the issuance, federal registration,
transfer, redemption and repurchase of its shares of capital
stock, including without limitation, all fees, costs, expenses
and charges of transfer agents and registrars, all taxes and
other Governmental charges, the costs of qualifying or continuing
the qualification of the Corporation as broker-dealer, if
required, and of registering the shares of the Corporation's
capital stock under the state blue sky laws, or similar laws of
any jurisdiction, costs of preparation and mailing prospectuses
to its shareholders, and any other fee, cost, expense or charge
not expressly assumed by the Distributor hereunder. The
Corporation will also furnish to the Distributor daily such
information as may reasonably be requested by the Distributor in
order that it may know all of the facts necessary to sell shares
of the Corporation's stock.
7. The Distributor agrees to pay the cost of all sales
literature and other material which it may require or think
desirable to use in connection with sale of such shares,
including the cost of reproducing the offering prospectus
furnished to it by the Corporation. The Corporation agrees to use
its best efforts to qualify its shares of stock for sale under
the laws of such states of the United States and such other
jurisdictions as the Distributor may reasonably request.
If the Distributor pays for other expenses of the
Corporation or furnishes the Corporation with services, the
cost of which is to be borne by the Corporation under this
Agreement, the Distributor shall not be deemed to have
waived its rights under this Agreement to have the
Corporation pay for such expenses or provide such services
in the future".
<PAGE>
8. The Distributor agrees to use its best efforts to find
purchasers for shares of stock of the Corporation and to make
reasonable efforts to sell the same so long as in the judgment of
the Distributor a substantial distribution can be obtained by
reasonable efforts. It agrees that it will not make any sale of
the shares of stock of the Corporation, except in accordance with
applicable laws.
9. Neither this Agreement nor any other transaction between
the parties hereto pursuant to this Agreement shall be
invalidated or in any way affected by the fact that any or all of
the directors, officers, stockholders, or other representatives
of the Corporation are or may be interested in the Distributor,
or any successor or assignee thereof, or that any or all of the
directors, officers, partners or other representatives of the
Distributor are or may be interested in the Corporation, except
as otherwise may be provided in the Investment Company Act of
1940.
10. The Distributor agrees that it will not sell for its own
account to the Corporation any stocks, bonds or other securities
of any kind or character, except that if it shall own any of the
Corporation's shares of stock or other securities, it may sell
them to the Corporation on the same terms as any other holder
might do.
<PAGE>
11. The Distributor assumes no responsibility under this
Agreement other than to render the services called for hereunder
in good faith, and the Distributor shall not be held liable or
hold accountable for any mistake of law or fact, or for any loss
or damage arising or resulting therefrom suffered by the
Corporation or any of the stockholders, creditors, directors, or
officers of the Corporation; provided however, that nothing
herein shall be deemed to protect the Distributor against any
liability to the Corporation or to its shareholders by reason of
willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder, or by reason of the reckless
disregard of its obligations and duties hereunder.
12. The Distributor agrees that it shall observe and be
bound by all of the terms of the Certificate of Incorporation,
including any amendments thereto, of the Corporation which shall
in any way limit or restrict or prohibit or otherwise regulate
any action of the Distributor.
13. This Agreement shall be effective upon the approval of
the holders of a majority of outstanding shares of the capital
stock of the Corporation, and shall continue in force for one
year from the date thereof, and is renewable annually thereafter
by specific approval of the Board of Directors of the
Corporation, including the vote of a majority of the directors
who are not parties to this Agreement or interested persons of
the Distributor or of the Corporation, cast in person at a
meeting called for the purpose of voting on such approval. The
Agreement may also be renewed by vote of a majority of the
outstanding voting securities of the Corporation and the approval
of the Board of Directors as stated above. This Agreement may be
terminated without penalty at any time by the Corporation on 60
days' written notice. This Agreement shall automatically
terminate in the event of its assignment. The terms "interested
persons," "assignment" and "vote of a majority of the outstanding
voting securities" shall have the same meaning as those terms are
defined in the Investment Company Act of 1940.
IN WITNESS WHEREOF, the Corporation has caused this
amendment to be executed by its duly authorized officers and its
corporate seal to be affixed thereto, and the Distributor has
caused this Agreement to be executed by one of its partners on
the day and year first above written.
LORD ABBETT BOND-DEBENTURE FUND, INC.
By /s/ROBERT S. DRISCOLL
President
ATTEST:
/S/ KENNETH B. CUTLER
Assistant Secretary
LORD, ABBETT & CO.
By PAUL W.H. TREVOR
Partner
EXHIBIT 99.B8
CUSTODY AGREEMENT
* * * * * * * *
THIS AGREEMENT made on March 10, 1971, between LORD
ABBETT BOND - DEBENTURE FUND, INC., a Delaware corporation (hereinafter
called the "Corporation"), and MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, a corporation organized under the laws of the State of New York
(hereinafter called the "Custodian").
WITNESSETH:
WHEREAS, the Corporation desires that all securities
and cash, if any, now held by Custodian for the Corporation, together
with all such other securities and cash as may hereafter he delivered
or caused to be delivered by the Corporation to Custodian shall be
hereafter held and administered by Custodian pursuant to the terms of
this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements
herein made, the Corporation and Custodian, agree as follows:
SEC. 1. DEFINITIONS.
-----------
The word "securities" as used herein includes stocks, bonds,
debentures, notes, evidences of indebtedness, evidences of
interest, warrants and other securities, irrespective of their
form, the name by which they may be described, or the character
or form of the entities by which they are issued or created.
The words "officer's certificate" shall mean a request or
direction or certification in writing signed in the name of the
Corporation by the President or a Vice President and the
Secretary or the Treasurer or an Assistant Secretary or an
Assistant Treasurer.
SEC. 2. NAMES, TITLES AND SIGNATURES.
----------------------------
The Corporation will furnish to Custodian from time to time,
whenever any change occurs, an officer's certificate setting
forth the names, titles and signatures of its officers, the name
of the transfer agent of its capital stock, and the names and
signatures of the officers and employees thereof entitled to
sign.
SEC. 3. RECEIPT AND DISBURSEMENT OF MONEY.
---------------------------------
A. Custodian shall open and maintain a separate account or
accounts in the name of the Corporation and shall hold in such
account or accounts all cash received by it for the account of
the Corporation. Custodian shall make payments of cash to, or for
the account of, the Corporation from such cash accounts only (a)
upon the purchase of securities for the portfolio of the
Corporation and delivery of such securities to Custodian, in
proper form for transfer (b) for the purchase or redemption of
shares of the capital stock of the Corporation, but only upon
receipt of satisfactory evidence that the certificates to be
purchased or redeemed, have been received and cancelled by the
transfer agent of the capital stock of the Corporation as shown
in an officer's certificate, (c) for the payment of dividends,
taxes, management or supervisory fees or operating expenses, (d)
for payments in connection with the conversion, exchange or
surrender of securities owned by the Corporation, or (e) for
other proper corporate purposes. In making any such payment
Custodian shall first receive an officer's certificate requesting
such payment and stating the clause of this subsection A pursuant
to which such payment is permitted, and any additional evidence
specifically called for in this subsection A, and for the
purposes of clause (e) above, the Custodian shall also receive a
resolution of the Board of Directors of the Corporation signed by
an officer of the Corporation and certified by its Secretary or
an Assistant Secretary, setting forth the purposes of such
payment, declaring such purposes to be proper corporate purposes,
and naming the person or persons to which such payment is to be
made.
B. Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received
by Custodian for the account of the Corporation.
<PAGE>
SEC. 4. RECEIPT OF SECURITIES.
---------------------
Custodian agrees to receive and hold in a separate account,
physically segregated at all times from those of any other
person, firms or corporations, any securities owned by the
Corporation which may now or hereafter be delivered to it by or
for the account of the Corporation. All such securities are to be
held or disposed of by Custodian for, and subject at all times to
the instructions of, the Corporation pursuant to the terms of
this Agreement.
Custodian also agrees to receive securities from others than
the Corporation for the account of the Corporation, and to so
hold the same and, if they are registered in the name of the
Corporation or are in proper form for transfer, to cause payment
to be made therefor, in the amounts, if any, certified to be
payable therefor in an officer's certificate, charging such
payments against the account of the Corporation, to the extent
that the funds held by it pursuant to subsection A of Sec. 3
hereof will permit.
SEC. 5. TRANSFER, EXCHANGE, REDELIVERY, ETC. OF SECURITIES.
--------------------------------------------------
Custodian shall have sole power to release or deliver any
securities of the Corporation held by it pursuant to this
Agreement. Custodian agrees to transfer, exchange or deliver
securities held by it hereunder only (a) upon sales of such
securities for the account of the Corporation and receipt by Cus-
todian of payment therefor, (b) when such securities are called,
redeemed or retired or otherwise become payable, (c) for
examination by any broker selling any such securities in
accordance with "street delivery" custom, (d) in exchange for or
upon conversion into other securities alone or other securities
and cash whether pursuant to any plan of merger, consolidation,
reorganization, recapitalization or readjustment, or otherwise,
(e) upon conversion of such securities pursuant to their terms
into other securities, (f) upon exercise of subscription,
purchase or other similar rights represented by such securities,
(g) for the purpose of exchanging interim receipts or temporary
securities for definitive securities, (h) for the purpose of
redeeming in kind shares of capital stock of the Corporation; or
(i) for other proper corporate purposes, but only, for purposes
of this clause (i), upon receipt of a resolution of the Board of
Directors of the Corporation, signed by an officer of the
Corporation and certified by its Secretary or an Assistant
Secretary, specifying the securities to be delivered, setting
forth the purposes for which such delivery is to be made,
declaring such purposes to be proper corporate purposes, and
naming the person or persons, each of whom shall be stated in
such resolution to be an officer or employee of the Corporation
bonded against larceny or embezzlement, to whom delivery of such
securities shall be made. In making any such transfer, exchange
or delivery, Custodian shall first receive an officer's
certificate requesting such transfer, exchange or delivery and
stating the clause of this Section 5 pursuant to which such
transfer, exchange or delivery is permitted, and any additional
evidence specifically called for in this Section 5.
SEC. 6. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS.
-------------------------------------
Unless and until Custodian receives an officer's certi-
ficate to the contrary, Custodian shall:
(a) Present for payment all coupons and other income items
held by it for the account of the Corporation which call for
payment upon presentation; and hold the cash received by it upon
such payment for the account of the Corporation;
(b) Collect interest and cash dividends received, and other
income of any kind, with notice to the Corporation, to the
account of the Corporation;
(c) Hold for the account of the Corporation hereunder all
stock dividends, rights and similar securities issued with
respect to any securities held by it hereunder;
(d) Execute as agent on behalf of the Corporation all
necessary ownership certificates required by the Internal Revenue
Code or the Income Tax Regulations of the United States Treasury
Department now or hereafter in effect, inserting the
Corporation's name on such certificates as the owner of the
securities covered thereby, to the extent it may lawfully do so.
SEC. 7. REGISTRATION OF SECURITIES.
--------------------------
Custodian shall register all securities, except such as are
in bearer form (except as otherwise directed by an officer's
certificate) in the name of a registered nominee of Custodian as
defined in the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder or in any provision of any
subsequent Federal tax law exempting such transaction from
liability for stock transfer taxes, and shall execute and deliver
all such certificates in connection therewith as may be required
by such laws or Regulations or under the laws of any State.
Custodian shall advise the Corporation of the certificate number
of each certificate so presented for transfer and that of the
certificate received in exchange therefor, and shall use its best
efforts to the end that the specific securities held by it
hereunder shall be at all times identifiable.
The Corporation shall from time to time furnish to Custodian
appropriate instruments to enable Custodian to hold or deliver in
proper form for transfer, or to register in the name of its
registered nominee, any securities which it may hold for the
account of the Corporation and which may from time to time be
registered in the name of the Corporation.
SEC. 8. VOTING AND OTHER ACTION.
-----------------------
Neither Custodian nor any nominee of Custodian shall vote
any of the securities held hereunder by or for the account of the
Corporation, except in accordance with the instructions contained
in an officer's certificate. Custodian shall execute and deliver
or cause to be executed and delivered, to the Corporation all
notices, proxies and proxy soliciting materials with relation to
such securities, but without indicating the manner in which such
proxies are to be voted.
SEC. 9. TRANSFER TAX AND OTHER DISBURSEMENTS.
------------------------------------
The Corporation shall pay or reimburse Custodian from time
to time for any transfer taxes payable upon transfers of
securities made hereunder, and for all other necessary and proper
disbursements and expenses made or incurred by Custodian in the
performance of this Agreement.
Custodian shall execute and deliver such certificates in
connection with securities delivered to it or by it under this
Agreement as may be required under the provisions of the Internal
Revenue Code and any Regulations of the Treasury Department
issued thereunder or under the laws of any State, to exempt from
<PAGE>
taxation any exemptible transfers and/or deliveries of any such
securities.
SEC. 10. CUSTODIAN'S LIABILITY.
---------------------
In taking any action called for by this Agreement, Custodian
shall be entitled in good faith to rely upon the officer's
certificate and other evidence specifically called for by the
appropriate section of this Agreement. The Corporation, its
successors and assigns, shall at all times fully indemnify and
save harmless Custodian, its successors and assigns, from any and
all liability whatsoever which may arise in connection with this
Agreement, except any and all liability which may arise out of
the obligation of Custodian to perform the things to be done by
it under this Agreement. Nothing herein shall exempt Custodian
from liability due to its own negligence or willful misconduct.
REPORTS. Custodian shall advise the Corporation with respect
-------
to transactions for the account of the Corporation and shall
report as to the composition of the Corporation's assets at such
times as the Corporation shall reasonably request. The books and
records of Custodian pertaining to its actions under this
Agreement shall be open to inspection and audit at reasonable
times by the Corporation's officers and auditors.
<PAGE>
SEC. 11. CUSTODIAN COMPENSATION.
----------------------
Custodian shall be paid as compensation for its services
pursuant to this Agreement such compensation as may from time to
time be agreed upon between the two parties.
SEC. 12. TERMINATION OR ASSIGNMENT OF AGREEMENT.
--------------------------------------
This Agreement may be terminated by the Corporation on
thirty days' notice or by Custodian on sixty days' notice given
in writing and sent by registered mail to Custodian at 23 Wall
Street, New York, N.Y. 10015, or to the Corporation, at 63 Wall
Street, New York, N.Y. 10005, as the case may be. Upon any
termination of this Agreement, including any termination pursuant
to Section 13 hereof, Custodian shall not be required to make any
delivery or payment of cash and securities held by it hereunder
until full payment shall have been made by the Corporation of all
liabilities constituting a charge on or against the cash and
securities then held by Custodian or on or against Custodian, and
until full payment shall have been made to Custodian of all its
fees compensation, costs and expenses, or until Custodian shall
have been furnished with security and indemnity satisfactory to
it against any liability, obligation, fees compensation, cost or
expense in connection with this Agreement or on account of any
action taken or omitted by the Corporation or its officers or
directors under this Agreement.
<PAGE>
This Agreement may not be assigned by the Custodian without
the consent of the Corporation, authorized or approved by a
resolution of its Board of Directors.
SEC. 13. SUCCESSORS.
----------
(a) Upon any termination of this Agreement, or in case at
any time Custodian shall tender its resignation or shall be
removed or dissolved, or otherwise shall become incapable of
acting, or in case control of Custodian or of its officers shall
be taken over by any public officer or officers, (i) the
Corporation, by an officer's certificate furnished to Custodian,
may designate a successor, to whom Custodian shall thereupon
deliver all cash and securities of the Corporation held by it, or
(ii) the Corporation may, by an officer's certificate furnished
to Custodian, certify that the stockholders of the Corporation
have duly voted that it function without a qualified bank or
trust company to hold its cash and securities and request
delivery of all cash and securities to it, in which case
Custodian shall thereupon deliver all cash and securities of the
Corporation held by it to the Corporation, or (iii) in the
absence of any officer's certificate pursuant to (i) or (ii),
within a period of 60 days after such resignation, removal,
dissolution, incapacity or taking over, Custodian may deliver any
cash and securities of the Corporation held by it to a bank or
trust company in the City of New York, having a capital, surplus
and undivided profits aggregating not less than $5,000,000
selected by it, such cash and securities to be held subject to
the same terms as those set forth in this Agreement. Any
successor appointed by the Corporation or selected by Custodian
shall immediately and without further act be superseded by a
successor appointed by the holders of not less than a majority of
the shares of the capital stock of the Corporation at the time
outstanding.
(b) Any bank or trust company in or into which Custodian or
any successor hereunder may be merged or converted, or with which
it or any such successor may be consolidated, or any bank or
trust company resulting from any merger, conversion or
consolidation to which Custodian or any such successor shall be a
party, or any bank or trust company succeeding to the business of
Custodian or any such successor, shall be substituted as
successor under this Agreement and any amendments thereof without
the execution of any instrument or any further act on the part of
the Corporation or any such successor, provided such bank or
trust company be a national banking association or trust company
or banking corporation organized under the laws of the United
States or of any State thereof and have a capital, surplus and
undivided profits aggregating not less than $5,000,000.
<PAGE>
(c) Any successor resulting from the provisions of
subsections (a) or (b) above shall be vested with all the powers,
duties and obligations of its predecessor under this Agreement
and any amendments thereof, and shall succeed to all the
exemptions and privileges of its predecessor under this Agreement
and any amendments thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and their respective corporate seals to
be affixed hereto as of the date first above written by their
respective officers thereunto duly authorized.
Executed in six counterparts, each of which is an original.
LORD ABBETT BOND-DEBENTURE FUND, INC.
By /s/ KENNETH B. CUTLER
Vice-President
[Seal]
Attest:
WILLIAM P. KENNEDY
Secretary
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
By G.S. GREENE
Trust Officer
[Seal]
Attest:
----------------------------
Assistant Secretary
<PAGE>
STATE OF NEW YORK )
: s.s.:
COUNTY OF NEW YORK )
On this 10th day of March, 1971, before me personally came Kenneth B.
Cutler to me known, who, being by me duly sworn, did depose and say that he
resides in New York, New York that he is a Vice-President of LORD ABBETT
BOND-DEBENTURE FUND, INC, the Corporation described in and which executed
the foregoing instrument; that he knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation, and that he
signed his name thereto by like order.
/S/ MARY GILDEA WILLIAMSON
Notary Public
STATE OF NEW YORK )
: s.s.:
COUNTY OF NEW YORK )
On this 10th day of March, 1971, before me personally came G. S.
Greene to me known, who, being by me duly sworn, did depose and say that he
resides at 34 Gilgo Beach, Babylon, N.Y.; that he is a Trust Officer of
Morgan Guaranty Trust Company of New York, the corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
/S/ FRANK SCHLIERE
Notary Public
EXHIBIT 99.B11
CONSENT OF INDEPENDENT AUDITORS
Lord Abbett Bond-Debenture Fund, Inc.:
We consent to the use in Post-Effective Amendment No. 38 to Registration
Statement No. 2-38910 of our report dated February 10, 1995 appearing in the
annual report to shareholders and to the reference to us under the captions
"Financial Highlights" in the Prospectus and "Investment Advisory and Other
Services" and "Financial Statements" in the Statement of Additional Information,
both of which are part of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
New York, New York
April 24, 1995
EXHIBIT 99B.16
Lord Abbett Bond-Debenture Fund, Inc.
Post Effective Amendment No. 38 on Form N-1A
Results of a $1,000 investment reflecting the maximum sales charge and the
reinvestment of all distributions for:
Periods Ending December 31, 1994
One Five Ten
Year Years Years
P = 1,000 P = 1,000 P = 1000
N = 1 N = 5 N = 0
ERV = 915 ERV = 1575 ERV = 2568
T = Average annual total return
P(1+T)N = ERV,
1000(1+T)1 = 915 1000(1+T)5 = 1575 1000(1+T)= 2568
(1+T) = 915 (1+T) = 1575 (1+T)10 = 2568
------ ---- -----
1000 1000 1000
1+T = 915 (1+T) = (1575 ).20 (1+T) = (2568).10
------ ----- -----
1,000 (1000) (1000)
T = [915]-1 T = (1575).20-1 T = (2568).10-1
----- ------ -----
[1000] (1000) (1000)
T = 8.50% T = 9.51% T = 9.89%
<PAGE>
Calculation of yield appearing in the Statement of Additional Information for
Lord Abbett Bond-Debenture Fund, Inc. Post- Effective amendment No. 38 on Form
N-1A.
YIELD FORMULA
For the 30 Days
Ended December 31, 1994
YIELD = 2[(a-b+1))6-1] = 9.47%
cd
When a = Fund dividends and interest earned during the period in the
amount of $8,640,567
b = Fund expenses accrued for the period (net of reimbursements)
in the amount of $637,108
c = The average daily number of Fund shares outstanding during
the period that were entitled to receive dividends
were 133,107,740
d = The maximum offering price per Fund share on the last day of
the period was $9.14
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Annual
Report to Shareholders and is qualified in its entirety by reference to such
Annual Report.
</LEGEND>
<CIK> 0000060365
<NAME> LORD ABBETT BOND-DEBENTURE FUND, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 1120137702
<INVESTMENTS-AT-VALUE> 1001143942
<RECEIVABLES> 206821694
<ASSETS-OTHER> 18088890
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1226054526
<PAYABLE-FOR-SECURITIES> 235962906
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2478716
<TOTAL-LIABILITIES> 238441622
<SENIOR-EQUITY> 113423848
<PAID-IN-CAPITAL-COMMON> 1142162530
<SHARES-COMMON-STOCK> 113423848
<SHARES-COMMON-PRIOR> 97441696
<ACCUMULATED-NII-CURRENT> 27096524
<OVERDISTRIBUTION-NII> 0
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<DIVIDEND-INCOME> 6591820
<INTEREST-INCOME> 92124492
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<EXPENSES-NET> 8836734
<NET-INVESTMENT-INCOME> 89879578
<REALIZED-GAINS-CURRENT> 13853235
<APPREC-INCREASE-CURRENT> (144176493)
<NET-CHANGE-FROM-OPS> (40443680)
<EQUALIZATION> 2516546
<DISTRIBUTIONS-OF-INCOME> 93546234
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25133098
<NUMBER-OF-SHARES-REDEEMED> 14137840
<SHARES-REINVESTED> 4986894
<NET-CHANGE-IN-ASSETS> 17876706
<ACCUMULATED-NII-PRIOR> 28246633
<ACCUMULATED-GAINS-PRIOR> (77692132)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4786098
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8836734
<AVERAGE-NET-ASSETS> 1002522272
<PER-SHARE-NAV-BEGIN> 9.95
<PER-SHARE-NII> .84
<PER-SHARE-GAIN-APPREC> (1.203)
<PER-SHARE-DIVIDEND> .877
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.71
<EXPENSE-RATIO> .88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
