Lord Abbett
Bond-Debenture Fund
Prospectus
May 1, 1999
(As Revised August 1, 1999)
[LOGO]
As with all mutual funds, the Securities and Exchange Commission does not
guarantee that the information in this prospectus is accurate or complete, and
it has not judged this fund for its investment merit. It is a criminal offense
to state otherwise.
<PAGE>
Table of Contents
The Fund Page
What you should know Goal/Strategy 2
about the fund Main Risks 2
Past Performance 3
Fees and Expenses 4
Your Investment
Information for managing Purchases 5
your fund account Opening Your Account 7
Redemptions 8
Distributions and Taxes 8
Services For Fund Investors 9
Sales Charges and Service Fees 10
Management 11
For More Information
How to learn more Other Investment Techniques 12
about the fund Glossary of Shaded Terms 12
Recent Performance 14
Financial Information
Financial Highlights 15
Compensation For Your Dealer 17
How to learn more about the Back Cover
fund and other Lord Abbett funds
<PAGE>
GOAL/STRATEGY
The fund seeks high current income and the opportunity for capital
appreciation to produce a high total return. We believe that a high total
return (current income and capital appreciation) may be derived from an
actively managed, diversified security portfolio. Normally, we invest at
least 65% of our total assets in bonds (secured obligations) and debentures
(generally unsecured obligations). We seek unusual values, using
fundamental, bottom-up research to identify undervalued securities.
We invest principally in lower-rated debt securities, securities
convertible into common stock, preferred stocks and bonds and investment
grade debt. At least 20% of the portfolio must be invested in investment
grade debt, or U.S. government securities. In addition, the fund may invest
up to 20% of its assets in foreign securities. In recent years, the fund
has found good value in lower-rated, higher yielding debt securities and
has invested more than half its assets in those securities.
While typically fully invested, we may take a temporary defensive position
in cash and short-term debt securities. This could prevent the fund from
realizing its invest- ment objective.
MAIN RISKS
The fund faces interest rate risk, credit risk, and currency risk.
As with other bond funds, the value of your investment may change as
interest rates fluctuate, due to interest rate risk. This is because often
the prices of fixed-income securities rise when interest rates fall and
fall when interest rates rise. Longer-term bonds are usually more sensitive
to interest rate changes. Put another way, the longer the maturity of a
bond or other debt security, the greater the effect a change in interest
rates is likely to have on the instrument's price. The fund tends to own
securities with longer maturities, so it may face more interest rate risk
than some fixed income funds.
Lower-rated debt securities involve greater credit risks than do investment
grade bonds. Companies that issue high yield debt securities are not as
strong financially as those with higher credit ratings and may default on
principal or interest payments. Through portfolio diversification, good
credit analysis and attention to current developments and trends in
interest rates and economic conditions, we attempt to reduce investment
risk, but losses may occur. In addition, we attempt to reduce investment
risk by investing at least 20% of our assets in a combination of investment
grade debt securities, U.S. government securities, and cash equivalents.
Finally, because it may invest up to 20% of its assets in foreign
securities, the fund faces the risk that unfavorable changes in currency
exchange rates could reduce its share price.
An investment in the fund is not a bank deposit. It is not FDIC-insured or
government-endorsed. It is not a complete investment program. You could
lose money in this fund.
We or the fund refers to the Lord Abbett Bond-Debenture Fund, Inc. (the
"company"), which operates under the supervision of the company's Board with the
advice of Lord, Abbett & Co. ("Lord Abbett"), its investment manager.
About the fund. The fund is a professionally managed portfolio primarily holding
securities purchased with the pooled money of investors. It strives to reach its
stated goal, although as with all funds, it cannot guarantee results.
Investment grade debt securities are, at the time of purchase, rated in one of
the four highest grades determined either by Moody's Investors Service, Inc. or
Standard & Poor's Ratings Services, or determined by Lord Abbett to be
equivalent in quality.
U.S. government securities are obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
High yield debt securities, commonly known as "junk bonds" typically pay a
higher yield than investment grade debt securities. These bonds have a higher
risk of default than investment grade bonds and their prices can be much more
volatile.
Foreign securities are securities primarily traded in countries outside the
United States. These securities are not subject to the same degree of regulation
and may be more volatile and less liquid than securities traded in major U.S.
markets. Other considerations include political and social instability,
expropriations, higher transaction costs, currency fluctuations, nondeductible
withholding taxes and different settlement practices.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describes the other investment strategies, and their risks, used
by the fund.
2 The Fund
<PAGE>
Bond-Debenture Fund Symbols: Class A -LBNDX
Class B -LBNBX
Class C -BDLAX
PAST PERFORMANCE
The information below provides some indication of the risks of investing in
the fund by showing changes in the fund's class A shares' performance from
calendar year to calendar year and by showing how the fund's average annual
returns compare with those of a broad measure of market performance. Past
performance is not a prediction of future results.
[GRAPHIC OMITTED]
Best Quarter 1st Q '91 13.85%
Worst Quarter: 3rd Q '90 -8.24%
The table below shows a comparison of the fund's class A, B and C average
annual total return to that of the Salomon Brothers Broad Investment
High-Grade Index ("SBBIHGI") and the First Boston High-Yield Index
("FBHYI"). Fund returns assume reinvestment of all dividends and
distributions and payment of the maximum applicable front-end or deferred
sales charge. All periods end on December 31, 1998.
<TABLE>
<CAPTION>
Class 1 Year 5 Years 10 Years Since Inception (i) SBBIHGI (ii) FBHYI (ii)
<S> <C> <C> <C> <C> <S> <S>
A (0.20)% 7.13% 9.82% 9.94% -- --
B (0.86)% -- 8.19% 10.01% (iii) 8.25% (iii)
C 3.01% -- -- 9.69% 9.59% (iv) 8.44% (iv)
SBBIHGI 8.72% 7.30% 9.31% -- -- --
FBHYI 0.57% 8.16% 10.74% -- -- --
</TABLE>
(i) The date of inception for each class is: A -4/1/71; B -8/1/96; and C
-7/15/96.
(ii) Performance for the unmanaged Salomon Brothers Broad Investment High-Grade
Index and First Boston High-Yield Index do not reflect transaction costs or
management fees.
(iii) Represents total returns for the period 8/31/96 to 12/31/98, to correspond
with class B inception date.
(iv) Represents total returns for the period 7/31/96 to 12/31/98, to correspond
with class C inception date.
The Fund 3
<PAGE>
Bond-Debenture Fund Symbols: Class A -LBNDX
Class B -LBNBX
Class C -BDLAX
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
<TABLE>
<CAPTION>
===================================================================================================
Fee table
- ---------------------------------------------------------------------------------------------------
Class A Class B Class C Class P
Shareholder Fees (Fees paid directly from your investment)
- ---------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(as a % of offering price) 4.75% none none none
- ---------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases") none 5.00% (1) 1.00% none
- ---------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from fund assets) (as a % of average net assets) (2)
- ---------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.46% 0.46% 0.46% 0.46%
- ---------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees (3) 0.35% 1.00% 1.00% 0.45%
- ---------------------------------------------------------------------------------------------------
Other Expenses 0.14% 0.14% 0.14% 0.14%
- ---------------------------------------------------------------------------------------------------
Total Operating Expenses 0.95% 1.60% 1.60% 1.05%
===================================================================================================
</TABLE>
Expense example
This example, like that in other funds' prospectuses, assumes a $10,000 initial
investment at maximum sales charge, if any, 5% total return each year and no
changes in expenses. You pay the following expenses over the course of each
period shown if you sell your shares at the end of the period, although your
actual cost may be higher or lower. The expenses include any applicable
contingent deferred sales charges.
<TABLE>
<CAPTION>
Share class 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Class A shares $567 $763 $ 976 $1,588
- ---------------------------------------------------------------------------------------------------
Class B shares $663 $805 $1,071 $1,728
- ---------------------------------------------------------------------------------------------------
Class C shares $263 $505 $ 871 $1,902
- ---------------------------------------------------------------------------------------------------
Class P shares $107 $334 $ 579 $1,285
- ---------------------------------------------------------------------------------------------------
You would pay the following expenses on the same investment, assuming you kept your shares.
Class A shares $567 $763 $976 $1,588
- ---------------------------------------------------------------------------------------------------
Class B shares $163 $505 $871 $1,728
- ---------------------------------------------------------------------------------------------------
Class C shares $163 $505 $871 $1,902
- ---------------------------------------------------------------------------------------------------
Class P shares $107 $334 $579 $1,285
- ---------------------------------------------------------------------------------------------------
</TABLE>
This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present.
Management fees are payable to Lord Abbett for the fund's investment management.
12b-1 fees refer to fees incurred for activities that are primarily intended to
result in the sale of fund shares and service fees for shareholder account
service and maintenance.
Other expenses include fees paid for miscellaneous items such as shareholder
service and professional fees.
- --------------------------------------------
(1) Class B shares will convert to class A shares on the eighth anniversary of
your original purchase of class B shares.
(2) The annual operating expenses have been restated from fiscal year amounts
to reflect current fees.
(3) Because 12b-1 distribution fees are paid out on an ongoing basis, over time
they will increase the cost of your investment and may cost you more than
paying other types of sales charges.
4 The Fund
<PAGE>
YOUR INVESTMENT
PURCHASES
This prospectus offers four classes of shares, Class A, B, C and P.
Although the fund has more than one class of shares, these different
classes of shares represent investments in the same portfolio of securities
but are subject to different expenses. Our shares are continuously offered.
The offering price is based on the Net Asset Value (" NAV") per share next
determined after we receive your purchase order submitted in proper form. A
front-end sales charge is added to the NAV, in the case of the class A
shares. There is no front-end
sales charge, although there is a Contingent Deferred Sales Charge in the
case of the class B and C shares, as described below.
You should read this section carefully to determine which class of shares
represents the best investment option for your particular situation. It may
not be suitable for you to place a purchase order for class B shares of
$500,000 or more or a purchase order for class C shares of $1,000,000 or
more. You should discuss pricing options with your investment professional.
For more information, see "Alternative Sales Arrangements" in the Statement
of Additional Information.
We reserve the right to withdraw all or any part of the offering made by
this prospectus or to reject any purchase order. We also reserve the right
to waive or change minimum investment requirements. All purchase orders are
subject to our acceptance and are not binding until confirmed or accepted
in writing.
================================================================================
Front-End Sales Charges -Class A Shares
- --------------------------------------------------------------------------------
To Compute
As a % of As a % of Offering Price
Your Investment Offering Price Your Investment Divide NAV by
Less than $100,000 4.75% 4.99% .9525
- --------------------------------------------------------------------------------
$100,000 to $249,999 3.95% 4.11% .9605
- --------------------------------------------------------------------------------
$250,000 to $499,999 2.75% 2.83% .9725
- --------------------------------------------------------------------------------
$500,000 to $999,999 1.95% 1.99% .9805
- --------------------------------------------------------------------------------
$1,000,000 and over No Sales Charge 1.0000
- --------------------------------------------------------------------------------
Reducing Your Class A Front-End Sales Charges. Class A shares may be
purchased at a discount if you qualify under either of the following
conditions:
Rights of Accumulation - A Purchaser can apply the value (at public
offering price) of the shares you already own to a new purchase of
class A shares of any Eligible Fund in order to reduce the sales
charge.
Statement of Intention - A Purchaser of class A shares can purchase
additional shares of any Eligible Fund over a 13-month period and
receive the same sales charge as if you had purchased all shares at
once. Shares purchased through reinvestment of dividends or
distributions are not included. A statement of intention can be
backdated 90 days. Current holdings under rights of accumulation can
be included in a statement of intention.
For more information on eligibility for these privileges, read the
applicable sections in the attached application.
NAV per share for each class of fund shares is calculated each business day at
the close of regular trading on the New York Stock Exchange (" NYSE"). The fund
is open on those business days when the NYSE is open. Purchases and sales of
fund shares are executed at the NAV next determined after the fund receives your
order. In calculating NAV, securities for which market Information. quotations
are available are value at those quotations. Securities for which such
quotations are not available are valued at fair value under procedures approved
by the Board.
Share classes
Class A
normally offered with a frontend sales charge
Class B
no front-end sales charge, however, a contingent deferred sales charge is
applied to shares sold prior to the sixth anniversary of purchase
higher annual expenses than class A shares
automatically convert to class A shares after eight years
Class C
no front-end sales charge
higher annual expenses than class A shares
a contingent deferred sales charge is applied to shares sold prior to the
first anniversary of purchase
Class P
available to certain pension or retirement plans and pursuant to a Mutual
Fund Advisory Program
Your Investment 5
<PAGE>
Class A Share Purchases Without A Front-End Sales Charge. Class A shares may be
purchased without a front-end sales charge under any of the following
conditions:
purchases of $1 million or more +
purchases by Retirement Plans with at least 100 eligible employees +
purchases under a Special Retirement Wrap Program +
purchases made with dividends and distributions on class A shares of
another Eligible Fund
purchases representing repayment under the loan feature of the Lord
Abbettsponsored prototype 403(b) Plan for class A shares
purchases by employees of any consenting securities dealer having a sales
agreement with Lord Abbett Distributor
purchases under a Mutual Fund Advisory Program
purchases by trustees or custodians of any pension or profit sharing plan,
or payroll deduction IRA for employees of any consenting securities dealer
having a sales agreement with Lord Abbett Distributor
See the Statement of Additional Information for a listing of other categories of
purchasers who qualify for class A share purchases without a front-end sales
charge.
+ These categories may be subject to a Contingent Deferred Sales Charge ("
CDSC").
Class A Share CDSC. If you buy class A shares under one of the starred (+)
categories listed above and you redeem any of them within 24 months after the
month in which you initially purchased them, the fund will normally collect a
CDSC of 1%.
The class A share CDSC will generally be waived for the following conditions:
benefit payments such as Retirement Plan loans, hardship withdrawals,
death, disability, retirement, separation from service or any excess
distribution under Retirement Plans (documentation may be required)
redemptions continuing as investments in another fund participating in a
Special Retirement Wrap Program
Class B Share CDSC. The CDSC for class B shares normally applies if you redeem
your shares before the sixth anniversary of their initial purchase. The CDSC
declines the longer you own your shares, according to the following schedule:
================================================================================
Contingent Deferred Sales Charges -Class B Shares
- --------------------------------------------------------------------------------
Anniversary (1) of Contingent Deferred Sales Charge
the day on which the on redemption (as % of amount
purchase order was accepted subject to charge)
On Before
- --------------------------------------------------------------------------------
1st 5.0%
- --------------------------------------------------------------------------------
1st 2nd 4.0%
- --------------------------------------------------------------------------------
2nd 3rd 3.0%
- --------------------------------------------------------------------------------
3rd 4th 3.0%
- --------------------------------------------------------------------------------
4th 5th 2.0%
- --------------------------------------------------------------------------------
5th 6th 1.0%
- --------------------------------------------------------------------------------
on or after the 6th (2) None
- --------------------------------------------------------------------------------
(1) The anniversary is the same calendar day in each respective year after the
date of purchase. For example, the anniversaries for shares purchased on
May 1 will be May 1 of each succeeding year.
(2) Class B shares will automatically convert to class A shares on the eighth
anniversary of the purchase of class B shares.
CDSC, regardless of class, is not charged on shares acquired through
reinvestment of dividends or capital gains distributions and is charged on the
original purchase cost or the current market value of the shares at the time
they are being sold, whichever is lower. In addition, repayment of loans under
Retirement Plans and 403(b) Plans will constitute new sales for purposes of
assessing the CDSC.
To minimize the amount of any CDSC, the fund redeems shares in the following
order:
1. shares acquired by reinvestment of dividends and capital gains (always free
of a CDSC)
2. shares held for six years or more (class B) or two years or more after the
month of purchase (class A) or one year or more (class C)
3. shares held the longest before the sixth anniversary of their purchase
(class B) or before the second anniversary after the month of purchase
(class A) or before the first anniversary of their purchase (class C)
Retirement Plans include employersponsored retirement plans under the Internal
Revenue Code, excluding Individual Retirement Accounts.
Lord Abbett Distributor LLC (" Lord Abbett Distributor") acts as agent for the
funds to work with investment professionals that buy and/or sell shares of the
funds on behalf of their clients. Generally, Lord Abbett Distributor does not
sell fund shares directly to investors.
Benefit Payment Documentation
(class A only)
under $50,000 -no documentation necessary
over $50,000 -reason for benefit payment must be received in writing. Use
the address indicated under "Opening Your Account."
6 Your Investment
<PAGE>
The class B share CDSC will generally be waived under any one of the
following conditions:
benefit payments such as Retirement Plan loans, hardship withdrawals,
death, disability, retirement, separation from service or any excess
contribution or distribution under Retirement Plans (documentation may
be required)
Eligible Mandatory Distributions under 403(b) Plans and individual
retirement accounts
death of the shareholder (natural person)
redemptions of shares in connection with Div-Move and Systematic
Withdrawal Plans (up to 12% per year)
See "Systematic Withdrawal Plan" under "Services For Fund Investors"
below for more information onCDSCs with respect to class B shares.
Class C Share CDSC. The 1% CDSC for class C shares normally applies if you
redeem your shares before the anniversary of the purchase of such shares.
Class P Shares. Class P shares have lower annual expenses than class B and
class C shares, no front-end sales charge, and no CDSC. Class P shares are
currently sold and redeemed at NAV (a) pursuant to a Mutual Fund Advisory
Program, or (b) to the trustees of, or employer-sponsors with respect to,
pension or retirement plans with at least 100 eligible employees (such as a
plan under Section 401(a), 401(k) or 457(b) of the Internal Revenue Code)
which engage an investment professional providing or participating in an
agreement to provide certain recordkeeping, administrative and/or
sub-transfer agency services to the fund on behalf of the class P
shareholders.
OPENING YOUR ACCOUNT
MINIMUM INITIAL INVESTMENT
Regular account $1,000
Individual Retirement Accounts and
403(b) Plans under the Internal Revenue Code $250
Uniform Gifts to Minors Account $250
For Retirement Plans and Mutual Fund Advisory Programs, no minimum
investment is required, regardless of share class.
You may purchase shares through any independent securities dealer who has a
sales agreement with Lord Abbett Distributor or you can fill out the
attached application and send it to the fund at the address stated below.
You should carefully read the paragraph below entitled "Proper Form" before
placing your order to assure your order will be accepted.
Lord Abbett Bond-Debenture Fund
P. O. Box 419100
Kansas City, MO 64141
Proper Form. An order submitted directly to the fund must contain: (1) a
completed application, and (2) payment by check. When purchases are made by
check, redemptions will not be allowed until the fund or the transfer agent
is advised that the check has cleared, which may take up to 15 calendar
days. For more information regarding proper form of a purchase order, call
the fund at 800-821-5129.
By Exchange. Telephone the fund at 800-821-5129 to request an exchange from
any eligible Lord Abbett-sponsored fund.
Important Information. You may be subject to a $50 penalty under the Internal
Revenue Code if you do not provide a correct taxpayer identification number
(Social Security Number for individuals) or make certain required
certifications. In addition, we may be required to withhold from your account
and pay to the U. S. Treasury 31% of any redemption proceeds and any dividend or
distribution from your account.
Your Investment 7
<PAGE>
REDEMPTIONS
By Broker. Call your investment professional for directions on how to
redeem your shares.
By Telephone. To obtain the proceeds of a redemption of $50,000 or less
from your account, you or your representative can call the fund at
800-821-5129.
By Mail. Submit a written redemption request indicating the name(s) in
which the account is registered, the fund's name, the class of shares, your
account number, and the dollar value or number of shares you wish to sell.
Include all necessary signatures. If the signer has any Legal Capacity, the
signature and capacity must be guaranteed by an Eligible Guarantor. Certain
other legal documentation may be required. For more information regarding
proper documentation call 800-821-5129.
Normally a check will be mailed to the name and address in which the
account is registered (or otherwise according to your instruction) within
three business days after receipt of your redemption request. Your account
balance must be sufficient to cover the amount being redeemed or your
redemption order will not be processed. Under unusual circumstances, the
fund may suspend redemptions, or postpone payment for more than seven days,
as permitted by federal securities laws.
To determine if a CDSC applies to a redemption, see "Class A Share CDSC,""
Class B Share CDSC" or "Class C Share CDSC."
Small Accounts. Our Board may authorize closing any account in which there are
fewer than 25 shares if it is in a fund's best interest to do so.
Eligible Guarantor is any broker or bank that is a member of the Medallion
Stamp Program. Most major securities firms and banks are members of this
program. A notary public is not an eligible guarantor.
DISTRIBUTIONS AND TAXES
The fund pays its shareholders dividends from its net investment income,
and distributes any net capital gains that it has realized. The fund
expects to pay income dividends to shareholders monthly. If a capital gain
distribution is declared, it is expected to be paid annually. Your
distributions will be reinvested in your fund unless you instruct the fund
to pay them to you in cash. There are no sales charges on reinvestments.
The tax status of distributions is the same for all shareholders regardless
of how long they have been in the fund or whether distributions are
reinvested or paid in cash. In general, distributions are taxable as
follows:
================================================================================
Federal Taxability Of Distributions
Type of Tax rate for taxpayer Tax rate for taxpayer subject
distribution subject to 15% bracket to 28% bracket or above
- --------------------------------------------------------------------------------
Income Ordinary Ordinary
dividends income rate income rate
- --------------------------------------------------------------------------------
Short-term Ordinary Ordinary
- --------------------------------------------------------------------------------
capital gains income rate income rate
- --------------------------------------------------------------------------------
Long-term
capital gains 10% 20%
- --------------------------------------------------------------------------------
Except in tax-advantaged accounts, any sale or exchange of fund shares may
be a taxable event.
Taxes on Transactions. The chart at left also can provide a "rule of thumb"
guide for your potential U. S. federal income tax liability when selling or
exchanging fund shares. The second row, "Short-term capital gains," applies to
fund shares sold within 12 months of purchase. The third row, "Long-term capital
gains," applies to shares held for more than 12 months.
Starting January 1, 2001, sales of securities held for more than five years will
be taxed at special lower rates.
Any gains realized on a fund's transactions in options and financial futures
will be treated as taxable long-or short-term capital gains.
8 Your Investment
<PAGE>
Annual Information - Information concerning the tax treatment of
dividends and other distributions will be mailed to shareholders each
year. The fund will also provide annually to its shareholders
information regarding the source of dividends and distributions of
capital gains paid by the fund. Because everyone's tax situation is
unique, you should consult your tax adviser regarding the treatment of
those distributions under the federal, state and local tax rules that
apply to you as well as the tax consequences of gains or losses from
the redemption or exchange of your shares.
SERVICES FOR FUND INVESTORS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services
described below. With each service, you select a schedule and amount,
subject to certain restrictions. You can set up most of these services
when filling out your application or by calling 800-821-5129.
<TABLE>
<CAPTION>
For investing
<S> <C>
Invest-A-Matic You can make fixed, periodic investments ($ 50 minimum) into your fund
(Dollar-cost account by means of automatic money transfers from your bank checking
averaging) account. See the attached application for instructions.
Div-Move You can automatically reinvest the dividends and distributions from your
account into another account in any Eligible Fund ($ 50 minimum).
For selling shares
Systematic You can make regular withdrawals from most Lord Abbett funds. Automatic
Withdrawal cash withdrawals can be paid to you from your account in fixed or variable
Plan (" SWP") amounts. To establish a plan, the value of your shares must be at least
$10,000, except for Retirement Plans for which there is no minimum. Your
shares must be in non-certificate form.
Class B shares The CDSC will be waived on SWP redemptions of up to 12% of the current net
asset value of your account at the time of your SWP request. For class B share
SWP redemptions over 12% per year, the CDSC will apply to the entire redemption.
Please contact the fund for assistance in minimizing the CDSC in this situation.
Class B and Redemption proceeds due to a SWP for class B and class C shares will be
C shares redeemed in the order described under "Purchases."
</TABLE>
OTHER SERVICES
Telephone Investing . After we have received the attached application
(selecting "yes" under Section 7C and completing Section 7), you can
instruct us by phone to have money transferred from your bank account to
purchase shares of the fund for an existing account. The fund will purchase
the requested shares when it receives the money from your bank.
Exchanges. You or your investment professional can instruct your fund to
exchange shares of any class for shares of the same class of any Eligible
Fund. Instruction may be provided in writing or by telephone, with proper
identification, by calling 800-821-5129. The fund must receive instructions
for the exchange before the close of the NYSE on the day of your call. If
you meet this requirement, you will get the NAV per share of the Eligible
Fund determined on that day. Exchanges will be treated as a sale for
federal tax purposes. Be sure to read the current prospectus for any fund
into which you are exchanging.
Reinvestment Privilege. If you sell shares of the fund, you have a one time
right to reinvest some or all of the proceeds in the same class of any
Eligible Fund within 60 days
- ----------------------------
Lord Abbett offers a variety of Retirement Plans. Call 800-253-7299 for
information about:
Traditional, Rollover, Roth and Education IRAs
Simple IRAs, SEP-IRAs, 401(k) and 403(b) accounts
Defined Contribution Plans
Telephone Transactions. You have this privilege unless you refuse it in writing.
For your security, telephone transaction requests are recorded. We will take
measures to verify the identity of the caller, such as asking for your name,
account number, social security or taxpayer identification number and other
relevant information. The fund will not be liable for following instructions
communicated by telephone that it reasonably believes to be genuine.
Transactions by telephone may be difficult to implement in times of drastic
economic or market change.
Exchange Limitations. Exchanges should not be used to try to take advantage of
short-term swings in the market. Frequent exchanges create higher expenses for
the fund. Accordingly, the fund reserves the right to limit or terminate this
privilege for any shareholder making frequent exchanges or abusing the
privilege. The fund also may revoke the privilege for all shareholders upon 60
days' written notice.
Your Investment 9
<PAGE>
without a sales charge. If you paid a CDSC when you sold your shares, you
will be credited with the amount of the CDSC. All accounts involved must
have the same registration.
Account Statements. Every Lord Abbett investor automatically receives
quarterly account statements.
Householding. Shareholders with the same last name and address will receive
a single copy of a prospectus and an annual or semi-annual report, unless
additional reports are specifically requested in writing to the fund.
Account Changes. For any changes you need to make to your account, consult
your investment professional or call the fund at 800-821-5129.
Systematic Exchange. You or your investment professional can establish a
schedule of exchanges between the same classes of any Eligible Fund.
SALES CHARGES AND SERVICE FEES
Sales and Service Compensation. As part of its plan for distributing
shares, the fund and Lord Abbett Distributor pay sales and service
compensation to Authori zed Institutions that sell the fund's shares and
service its shareholder accounts.
Sales compensation originates from two sources: sales charges and 12b-1
distribution fees that are paid out of the fund's assets. Service
compensation originates from 12b-1 service fees. The 12b-1 fee rates vary
by share class, according to the Rule 12b-1 Plan adopted by the fund. The
sales charges and 12b-1 fees paid by investors are shown in the
class-by-class information under "Fees and Expenses" and "Purchases." The
portion of these expenses that is paid as sales and service compensation to
Authorized Institutions, such as your dealer, is shown in the chart at the
end of this prospectus. The portion of such sales and service compensation
paid to Lord Abbett Distributor is discussed under "Sales Activities" and
"Service Activities." Sometimes we do not pay sales and service
compensation where tracking data is not available for certain accounts or
where the Authorized Institution waives part of the compensation. We may
pay Additional Concessions to Authorized Institutions from time to time.
Sales Activities. We may use 12b-1 distribution fees to pay Authorized
Institutions to finance any activity which is primarily intended to result
in the sale of shares. Lord Abbett Distributor uses its portion of the
distribution fees attributable to a fund's class A and class C shares for
activities which are primarily intended to result in the sale of such class
A and class C shares, respectively. These activities include, but are not
limited to, printing of prospectuses and statements of additional
information and reports for other than existing shareholders, preparation
and distribution of advertising and sales material, expenses of organizing
and conducting sales seminars, Additional Concessions to Authorized
Institutions, the cost necessary to provide distribution-related services
or personnel, travel, office expenses, equipment and other allocable
overhead.
Service Activities. We may pay Rule 12b-1 service fees to Authorized
Institutions for any activity which is primarily intended to result in
personal service and/or the maintenance of shareholder accounts. Any
portion of the service fees paid to Lord Abbett Distributor will be used to
service and maintain shareholder accounts.
12b-1 fees payable regardless of expenses. The amounts payable by a fund need
not be directly related to expenses. If Lord Abbett Distributor's actual
expenses exceed the fee payable to it, the fund will not have to pay more than
that fee. If Lord Abbett Distributor's expenses are less than the fee it
receives, Lord Abbett Distributor will keep the full amount of the fee.
10 Your Investment
<PAGE>
MANAGEMENT
The fund's investment adviser is Lord, Abbett & Co., 767 Fifth Avenue, New
York, NY 10153-0203. Founded in 1929, Lord Abbett manages one of the
nation's oldest mutual fund complexes, with over $30 billion in more than
35 mutual fund portfolios and other advisory accounts. For more information
about the services Lord Abbett provides to the fund, see the Statement of
Additional Information.
The fund pays Lord Abbett a monthly fee based on average daily net assets
for each month. For the fiscal year ended December 31, 1998, the fee paid
to Lord Abbett was at an annual rate of .46 of 1%. In addition, the fund
pays all expenses not expressly assumed by Lord Abbett.
Lord Abbett uses a team of portfolio managers and analysts acting together
to manage the fund's investments. Christopher J. Towle, Partner of Lord
Abbett, heads the team, the other senior members of which include Richard
Szaro, Michael Goldstein and Thomas Baade. Messrs. Towle and Szaro have
been with Lord Abbett since 1988 and 1983, respectively. Mr. Goldstein has
been with Lord Abbett since 1997. Before joining Lord Abbett, Mr. Goldstein
was a bond trader for Credit Suisse BEA Associates from August 1992 through
April 1997. Mr. Baade joined Lord Abbett in 1998; prior to that he was a
credit analyst with Greenwich Street Advisors.
Your Investment 11
<PAGE>
For More Information
OTHER INVESTMENT TECHNIQUES
This section describes some of the investment techniques that might be used
by the fund and their risks.
Adjusting Investment Exposure. The fund may, but is not required to, use
various strategies to change its investment exposure to adjust to changing
security prices, interest rates, currency exchange rates, commodity prices
and other factors. The fund may use these transactions to change the risk
and return characteristics of the fund's portfolio. If we judge market
conditions incorrectly or use a strategy that does not correlate well with
the fund's investments, it could result in a loss, even if we intended to
lessen risk or enhance returns. These transactions may involve a small
investment of cash compared to the magnitude of the risk assumed and could
produce disproportionate gains or losses. Also, these strategies could
result in losses if the counterparty to a transaction does not perform as
promised.
Covered Call Options. The Fund may write (sell) call options on securities
it owns. A call option on stock gives the purchaser of the option, upon
payment of a premium to the writer of the option, the right to call upon
the writer to deliver a specified number of shares of a stock on or before
a fixed date at a predetermined price.
Foreign Securities. These securities are not subject to the same degree of
regulation and may be more volatile and less liquid than securities traded
in major U. S. markets. Foreign portfolio securities may trade on days when
the fund does not value them. Fund share prices could be affected on days
an investor cannot purchase or sell shares. Other risks include less
information on public companies, banks and governments; political and
social instability; expropriations; higher transaction costs; currency
fluctuations; nondeductible withholding taxes and different accounting and
settlement practices. The fund may invest up to 20% of its assets in
foreign securities.
Illiquid Securities. These securities include those that are not traded on
the open market or that trade irregularly or in very low volume. They may
be difficult or impossible to sell at the time and price the fund would
like. The fund may invest up to 15% of its assets in illiquid securities.
Portfolio Securities Lending. The fund may lend securities to
broker-dealers and financial institutions, as a means of earning income.
This practice could result in a loss or delay in recovering a fund's
securities, if the borrower defaults. The fund will limit its security
loans to 30% of its total assets.
GLOSSARY OF SHADED TERMS
Additional Concessions. Lord Abbett Distributor may, for specified periods,
allow dealers to retain the full sales charge for sales of shares or may
pay an additional concession to a dealer who sells a minimum dollar amount
of our shares and/or shares of other Lord Abbett-sponsored funds. In some
instances, such additional concessions will be offered only to certain
dealers expected to sell significant amounts of shares. Additional payments
may be paid from Lord Abbett Distributor's own resources or from
distribution fees received from a fund and will be made in the form of cash
or, if permitted, non-cash payments. The non-cash payments will include
business seminars at Lord Abbett's head-
12 For More Information
<PAGE>
quarters or other locations, including meals and entertainment, or the
receipt of merchandise. The cash payments may include payment of various
business expenses of the dealer.
In selecting dealers to execute portfolio transactions for a fund's
portfolio, if two or more dealers are considered capable of obtaining best
execution, we may prefer the dealer who has sold our shares and/or shares
of other Lord Abbett-sponsored funds.
Authorized Institutions. Institutions and persons permitted by law to
receive service and/or distribution fees under a Rule 12b-1 Plan are
"Authorized Institutions." Lord Abbett Distributor is an Authorized
Institution.
Eligible Fund. An Eligible Fund is any Lord Abbett-sponsored fund except
for certain tax-free, single-state funds where the exchanging shareholder
is a resident of a state in which such a fund is not offered for sale; Lord
Abbett Equity Fund; Lord Abbett Series Fund; Lord Abbett U. S. Government
Securities Money Market Fund (" GSMMF") (except for holdings in GSMMF which
are attributable to any shares exchanged from the Lord Abbett family of
funds). An Eligible Fund also is any Authorized Institution's affiliated
money market fund satisfying Lord Abbett Distributor as to certain omnibus
account and other criteria.
Eligible Mandatory Distributions. If class B shares represent a part of an
individual's total IRA or 403(b) investment, the CDSC will be waived only
for that part of a mandatory distribution which bears the same relation to
the entire mandatory distribution as the B share investment bears to the
total investment.
Legal Capacity. With respect to a redemption request, if (for example) the
request is on behalf of the estate of a deceased shareholder, John W. Doe,
by a person (Robert A. Doe) who has the legal capacity to act for the
estate of the deceased shareholder because he is the executor of the
estate, then the request must be executed as follows: Robert A. Doe,
Executor of the Estate of John W. Doe. That signature using that capacity
must be guaranteed by an Eligible Guarantor.
Similarly, if (for example) the redemption request is on behalf of the by a
person (Mary B. Doe) that has the legal capacity to act on behalf of this
corporation, because she is the President of the corporation, then the
request must be executed as follows: ABC Corporation by Mary B. Doe,
President. That signature using that capacity must be guaranteed by an
Eligible Guarantor (see example in right column).
Mutual Fund Advisory Program. Certain unaffiliated authorized brokers,
dealers, registered investment advisers or other financial institutions who
either (1) have an arrangement with Lord Abbett Distributor in accordance
with certain standards approved by Lord Abbett Distributor, providing
specifically for the use of our shares (and sometimes providing for
acceptance of orders for such shares on our behalf ) in particular
investment products made available for a fee to clients of such brokers,
dealers, registered investment advisers and other financial institutions,
or (2) charge an advisory, consulting or other fee for their services and
buy shares for their own accounts or the accounts of their clients.
Purchaser. The term "purchaser" includes: (1) an individual, (2) an
individual and his or her spouse and children under the age of 21 and (3) a
trustee or other fiduciary purchasing shares for a single trust estate or
single fiduciary account (including a pension, profit-sharing, or other
employee benefit trust qualified under Section 401 of the Internal Revenue
Code - more than one qualified employee benefit trust of a single employer,
including its consolidated subsidiaries, may be considered a single trust,
as may qualified plans of multiple employers registered in the name of a
single bank trustee as one account), although more than one beneficiary is
involved.
GUARANTEED SIGNATURE. An acceptable form of guarantee would be as follows:
In the case of the estate --
Robert A. Doe
Executor of the Estate of
John W. Doe
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
[SIGNATURE ILLEGIBLE]
- --------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
In the case of the corporation --
ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
[SIGNATURE ILLEGIBLE]
- --------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
For More Information 13
<PAGE>
Special Retirement Wrap Program. A program sponsored by an Authorized
Institution showing one or more characteristics distinguishing it, in the
opinion of Lord Abbett Distributor from a Mutual Fund Advisory Program.
Such characteristics include, among other things, the fact that an
Authorized Institution does not charge its clients any fee of a consulting
or advisory nature that is economically equivalent to the distribution fee
under the class A 12b-1 Plan and the fact that the program relates to
participant-directed Retirement Plans.
RECENT PERFORMANCE
U.S. financial markets were subject to significant volatility throughout
the fund's fiscal year. Many investors became unnerved at mid-year as
the economic crises in Asia and Japan infected the emerging markets in
South America and Eastern Europe. These crises, in turn, seemed likely to
negatively impact corporate earnings in the U. S. and other market
countries. During both May and June, investors worldwide left corporate and
high-yield investments for the safety of U. S. Treasury bonds.
A series of autumn rate cuts initiated by the U. S. Federal Reserve Board
helped to calm the turmoil in the capital markets that existed throughout
the late summer. In October, a more optimistic view of global economies
emerged. During the fourth quarter, high-yield and convertible debt
securities substantially outperformed Treasury instruments of comparable
maturities.*
Throughout the year, we underweighted the fund's corporate bond holdings in
basic industries such as steel, paper and chemicals because we considered
that, given global economic conditions, there was little pricing power
within these industries. We emphasized industries with steady cash flows,
such as telecommunications, media and cable television providers.
Bond-Debenture Fund's focus on high-yield bonds provided substantial
rewards for shareholders during the fourth quarter as high-yield bonds
performed well.
In our view, the current environment of low inflation, global overcapacity,
and an anticipated slowdown of U. S. economic growth makes a reversal of
the Federal Reserve's interest rate policy unlikely. As a result, interest
rates should remain low for the duration of 1999. Against this backdrop, we
expect attractive returns from the high-yield bonds that we have selected.
Because such bonds are currently yielding more than 6% over Treasury
securities with comparable maturities, we believe that they represent
particularly good value, and we plan to maintain the fund's current
overweighting of the high-yield sector. We believe that our ability to
fine-tune the fund's investments among high-yield bonds, convertible
securities and high-grade bonds, including U. S. Treasury securities, will
be a key to uncovering exciting investment opportunities through most
market conditions, while helping to manage risk.
*Unlike Treasury securities, an investment in the fund is neither insured nor
guaranteed by the U. S. government and is regarded as involving a greater
degree of risk. The fund's share price and income are not guaranteed and the
value of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
Year 2000 Issues. The fund could be adversely affected if the computers used by
the fund and their service providers do not properly process developed and
calculate date-related information from and after January 1, 2000.
Lord Abbett is working to avoid such problems and has received assurances from
each fund's service providers that they are taking similar steps. Of course, the
Year 2000 problem is unprecedented and, therefore, Lord Abbett cannot eliminate
altogether the possibility that it or the funds will be affected.
14 For More Information
<PAGE>
Financial Information
FINANCIAL HIGHLIGHTS
This table describes the fund's performance for the fiscal periods
indicated." Total return" shows how much your investment in the fund would
have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These Financial Highlights have
been audited by Deloitte & Touche LLP, the fund's independent auditors, in
conjunction with their annual audit of the fund's financial statements.
Financial statements for the fiscal year ended December 31, 1998 and the
Independent Auditors' Report thereon appear in the Annual Report to
Shareholders for the fiscal year ended December 31, 1998 and are
incorporated by reference into the Statement of Additional Information,
which is available upon request. Certain information reflects financial
results for a single fund share.
<TABLE>
<CAPTION>
Class A Shares
--------------
Year Ended December 31,
Per Share Operating Performance: 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $9.76 $9.41 $9.29 $8.71 $9.95
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .76 (a) .75 (a) .81 .85 .84
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------------
gain (loss) on investments (.31) .40 .17 .606 (1.203)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .45 1.15 .98 1.456 (.363)
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.76) (.80) (.86) (.876) (.877)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $9.45 $9.76 $9.41 $9.29 $8.71
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return (b) 4.76% 12.70% 11.16% 17.50% (3.87)%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses (e) 0.88% 0.89% 0.89% 0.82% 0.88%
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 7.85% 7.89% 8.77% 9.41% 8.97%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Class C Shares Class P Shares
Period Ended December 31, Period Ended December 31, Period Ended December 31,
Per Share Operating Performance: 1998 1997 1996 (c) 1998 1997 1996 (c) 1998 (c)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.75 $9.41 $9.13 $9.77 $9.41 $9.05 $9.54
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .69 (a) .68 (a) .34 .69 (a) .69 (a) .35 .25 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------------
gain (loss) on investments (.31) .38 .26 (. 31) .39 .33 (.09)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .38 1.06 .60 .38 1.08 .68 .16
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.69) (.72) (.32) (.69) (.72) (.32) (.25)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.44 $9.75 $9.41 $9.46 $9.77 $9.41 $9.45
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return (b) 3.98% 11.85% 6.57% (d) 3.98% 11.97% 7.86% (d) 1.73% (d)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses (e) 1.60% 1.63% 0.70% (d) 1.60% 1.58% 0.75% (d) 0.38% (d)
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment Income 7.13% 7.06% 3.37% (d) 7.13% 7.16% 3.72% (d) 2.90% (d)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
Supplemental Data For All Classes: 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of year (000) $3,540,124 $2,866,184 $2,129,421 $1,339,508 $987,613
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 86.48% 89.14% 106.79% 134.90% 147.98%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Commencement of operations for class shares: B -August 1, 1996, C -July 15,
1996 and P -August 21, 1998.
(d) Not annualized.
(e) The ratios for 1998 include expenses paid through an expense offset
arrangement.
Financial Information 15
<PAGE>
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in class A shares
to the same investment in the Salomon Brothers Broad Investment High-Grade
Index, First Boston High-Yield Index, and the Value Line Convertible Index,
assuming reinvestment of all dividends and distributions.
[Graphic Omitted]
Average Annual Total Return at Maximum Sales Charge
for the Periods Ending December 31, 1998
1 Year 5 Years 10 Years (or Life)
Class A (3) (0.20)% 7.13% 9.82%
Class B (4) (0.86)% -- 8.19%
Class C (5) 3.01% -- 9.69%
(1) Data reflects the deduction of the maximum initial sales charge of 4.75%
applicable to class A shares.
(2) Performance numbers for the unmanaged Salomon Brothers Broad Investment
HighGrade Index (source: Chase Global Data Service), First Boston
High-Yield Index (source: Callan Associates), and Value Line Convertible
Index (source: Morgan Stanley) do not reflect transaction costs or
management fees. A review of the fund's 1998 annual shareholders' report
shows a history of the fund's portfolio blend changing through the years
but composed primarily of three categories of securities: (i) high-yield
corporate debt (including straight-preferred stocks), (ii) equity-related
securities and (iii) high-grade debt. The three indices chosen to compare
to the fund's performance have elements of these three categories, but
since there is no one index combining all three in the same annual blend as
the fund's 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
initial sales charge of 4.75% applicable to class A shares, with all
dividends and distributions reinvested for the periods shown ending
December 31, 1998 using the SEC-required uniform method to compute such
return.
(4) The class B shares commenced operations on August 1, 1996. Performance
numbers reflect the deduction of a 4% CDSC.
(5) The class C shares commenced operations on July 15, 1996.
16 Financial Information
<PAGE>
COMPENSATION FOR YOUR DEALER
<TABLE>
<CAPTION>
FIRST YEAR COMPENSATION
Front-end
sales charge Dealer's
paid by investors concession Service fee (1) Total compensation (2)
Class A investments (% of offering price) (% of offering price) (% of net investment) (% of offering price)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $100,000 4.75% 4.00% 0.25% 4.24%
- ------------------------------------------------------------------------------------------------------------------------------------
$100,000 -$249,999 3.95% 3.25% 0.25% 3.49%
- ------------------------------------------------------------------------------------------------------------------------------------
$250,000 -$499,999 2.75% 2.25% 0.25% 2.74%
- ------------------------------------------------------------------------------------------------------------------------------------
$500,000 -$999,999 1.95% 1.75% 0.25% 2.00%
- ------------------------------------------------------------------------------------------------------------------------------------
$1 million or more (3) or Retirement Plan -100 or more
eligible employees (3) or Special Retirement Wrap Program (3)
- ------------------------------------------------------------------------------------------------------------------------------------
First $5 million no front-end sales charge 1.00% 0.25% 1.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Next $5 million above that no front-end sales charge 0.55% 0.25% 0.80%
- ------------------------------------------------------------------------------------------------------------------------------------
Next $40 million above that no front-end sales charge 0.50% 0.25% 0.75%
- ------------------------------------------------------------------------------------------------------------------------------------
Over $50 million no front-end sales charge 0.25% 0.25% 0.50%
- ------------------------------------------------------------------------------------------------------------------------------------
Class B investments Paid at time of sale (% of net asset value)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 3.75% 0.25% 4.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Class C investments
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.75% 0.25% 1.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Class P investments Percentage of average net assets
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL COMPENSATION AFTER FIRST YEAR
Class A investments
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
All amounts no front-end sales charge none 0.25% 0.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Class B investments Percentage of average net assets (4)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.25% 0.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Class C investments
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.65% 0.25% 0.90%
- ------------------------------------------------------------------------------------------------------------------------------------
Class P investments
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The service fee for class A and P shares is paid quarterly and for class A
shares may not exceed 0.15% if sold prior to June 1, 1990. The first year's
service fee on class B and C shares is paid at the time of sale.
(2) Dealer's concession percentages and service fee percentages are calculated
from different amounts, and therefore may not equal total compensation
percentages if combined using simple addition. Additional Concessions may
be paid to Authorized Institutions from time to time.
(3) Concessions are paid at the time of sale on all class A shares sold during
any 12-month period starting from the day of the first net asset value
sale. With respect to (a) class A share purchases at $1 million or more,
sales qualifying at such level under rights of accumulation and statement
of intention privileges are included and (b) for Special Retirement Wrap
Programs, only new sales are eligible and exchanges into the fund are
excluded.
(4) With respect to class B, C and P shares, 0.25%, 0.90% and 0.45%,
respectively, of the average annual net asset value of such shares
outstanding during the quarter (including distribution reinvestment shares
after the first anniversary of their issuance) is paid to Authorized
Institutions. These fees are paid quarterly in arrears. In the case of C
shares for fixed-income portfolios, such as the fund, 0.10% of the average
annual net asset value of such shares is retained by Lord Abbett
Distributor, thus reducing from 0.75% to 0.65% after the first year. Lord
Abbett Distributor uses this 0.10% for expenses primarily intended to
result in the sale of such fund's shares.
Financial Information 17
<PAGE>
More information on this fund is available free upon request, including
the following:
ANNUAL/SEMI-ANNUAL REPORT
Describes the fund, lists portfolio holdings and contains a letter from
the fund's manager discussing recent market conditions and the fund's
investment strategies.
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
Provides more details about the funds and their policies. A current SAI is
on file with the Securities and Exchange Commission ("SEC") and is
incorporated by reference (is legally considered part of this
prospectus).
To obtain information:
By telephone. Call the fund at:
800-426-1130
By mail. Write to the fund at:
The Lord Abbett Family of Funds
767 Fifth Avenue
New York, NY 10153-0203
Via the Internet.
Lord, Abbett & Co.
http://www.lordabbett.com
Text only versions of fund documents can be viewed online or downloaded from:
SEC
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 800-SEC-0330) or by sending your request and a duplicating
fee to the SEC's Public Reference Section, Washington, DC 20549-6009.
Lord Abbett Bond-Debenture Fund
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
- -----------------------
SEC file number: 811-2145
LABDF-1-599
(5/99)
