1940 Act File No.811-2145
1933 Act File No.2-38910
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No.48 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT |X|
OF 1940
Post-Effective Amendment No.28 |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
--------------------------------------------
Thomas F. Konop, Vice President
767 FIFTH AVENUE, NEW YORK, N. Y. 10153
---------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
|_| immediately on filing pursuant to paragraph (b)
|_| on (date) pursuant to paragraph (b)
|X| 60 days after filing pursuant to paragraph (a) (1)
|_| on (date) pursuant to paragraph (a) (1)
|_| 75 days after filing pursuant to paragraph (a) (2)
|_| on (date) pursuant to paragraph (a) (2) of Rule 485
If appropriate, check the following box:
|_| this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
<PAGE>
Prospectus March 1, 1999
Lord Abbett
Class Y Shares
Bond-Debenture Fund
Developing Growth Fund
Mid-Cap Value Fund
FPO
[LOGO](R) LORD ABBETT & Co.
Investment Management
A Tradition of Performance Through Disciplined Investing
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 these funds for investment merit. It is a criminal offense to
state otherwise.
Only class Y shares of certain funds are offered to the general public and
available in all states. Please call 800-821-5129 for further information.
<PAGE>
Table of Contents
The Funds Page
Information about past Bond-Debenture Fund 2
performance, fees and Developing Growth Fund 4
expenses, and state risks Mid-Cap Value Fund 8
Your Investment
Information for managing Purchases 8
your fund account Redemptions 9
Distributions and Taxes 9
Services For Fund Investors 10
Management 10
For More Information
How to learn more Other Investment Techniques 12
about the funds Glossary of Shaded Terms 17
Recent Performance 18
Financial Information
Financial highlights Bond-Debenture Fund 19
of each fund and Developing Growth Fund 21
broker compensation Mid-Cap Value Fund 25
How to learn more about the Back Cover
funds and other Lord Abbett funds
<PAGE>
Bond-Debenture Fund
The Funds
GOAL / APPROACH
The fund seeks high current income and the opportunity for capital
appreciation to produce a high total return. Normally, we invest
principally in lower-rated debt securities, sometimes called "junk bonds,"
which entail greater risks than investments in higher-rated debt
securities. In addition, however, at least 20% of our assets must be
invested in a combination of investment grade debt securities, U.S.
government securities, and cash equivalents. Also, the fund may invest up
to 10% of its assets in foreign securities.
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 bond and debentures. These debt securities normally will consist of
secured debt obligations (bonds), general unsecured debt obligations
(debentures) and debt securities that are subordinated to other debt of
the same issuer. 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. In doing so, we use fundamental,
bottoms-up research to identify undervalued 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 investment objective.
The fund may engage in active and frequent trading of its portfolio
securities to achieve its principal investment objective and may have a
portfolio turnover rate greater than 100%. This turnover may increase
transaction costs, but is not expected to have adverse tax consequences.
MAIN RISKS
The lower-rated debt securities in which the fund principally invests
involve greater credit risks than do investment grade bonds. In other
words, some companies whose securities we own may default on principal
and/or interest payments after we buy their securities. Companies that
issue high yield debt securities are not as strong financially as those
with higher credit ratings. 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, meaning that you could lose money. In addition, we
attempt to reduce investment risk by 20% of our assets must be invested in
a combination of investment grade debt securities, U.S. government
securities, and cash equivalents.
In addition, as with other bond funds, the value of your investment will
change as interest rates fluctuate. When interest rates rise, share value
is likely to decline.
Finally, the high yield debt securities market is prone to sudden and
sharp changes in prices due to a variety of factors. Changes in economic
forecasts, investor psychology, stock market activities and other forces
can cause prices to fluctuate greatly.
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, but you also have the potential to make money.
We or the fund refers to the Lord Abbett Bond-Debenture Fund ("Bond Debenture"),
which operates under the supervision of the its 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
municipal bonds purchased with the pooled money of investors. It strives to
reach its stated goal, although as with all funds, it cannot guarantee results.
High Yield Debt Securities. High yield debt securities or "junk bonds" are rated
BB/Ba or lower and 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. The Fund will not invest more
than 10% of its assets measured at the time of investment in high yield debt
securities.
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.
Foreign Securities. Foreign securities are securities primarily traded in
countries outside the United States. These securities are not subject to the
same degree of regulation and may be more volatile and less liquid than
securities traded in major U.S. markets. Other considerations include political
and social instability, expropriations, higher transaction costs, currency
fluctuations, nondeductable withholding taxes and different settlement
practices.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describe the other investment strategies used by the funds and
their risks.
2 The Funds
<PAGE>
Bond-Debenture Fund
Symbols: Class Y -
PAST PERFORMANCE
The information below provides some indication of the risks of investing
in the fund, showing changes in the fund's 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.
AWAITING DATA
================================================================================
The table below shows a comparison of the fund's class A average annual
total return to that of the S&P 500(R) Index. Fund returns assume
reinvestment of dividends and distributions and payment of the maximum
applicable front-end or deferred sales charge. All periods end on December
31, 1998.
Class 1 Year 5 Years 10 Years Inception(iii)
A 0.00.% 0.00.% 0.00.% 0.00.%
- --------------------------------------------------------------------------------
S&P 500(R)Index(ii) 0.00.% 0.00.% 0.00.% 0.00.%
- --------------------------------------------------------------------------------
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
================================================================================
Fee table
- --------------------------------------------------------------------------------
Class Y
Shareholder Fees (Fees paid directly from your investment)
- --------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
- --------------------------------------------------------------------------------
(as a % of offering price) none
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases") none
- --------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from fund assets) (as a % of
average net assets)(1)
- --------------------------------------------------------------------------------
Management Fees (See "Management") 0.32%
- --------------------------------------------------------------------------------
Other Expenses (See "Management") 0.08%
- --------------------------------------------------------------------------------
Total Operating Expenses 0.40%
- --------------------------------------------------------------------------------
================================================================================
Expense example
- --------------------------------------------------------------------------------
This example, like that in other funds' prospectuses, assumes a $10,000 initial
investment, 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.
Share class 1 Year 3 Years 5 Years 10 Years
Class Y shares $41 $128 $224 $507
- --------------------------------------------------------------------------------
You would pay the following expenses on the same investment, assuming you kept
your shares.
Class Y shares $41 $128 $224 $507
- --------------------------------------------------------------------------------
This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present.
Past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
(i) Because class Y shares are new, the bar chart and table show returns for
class A shares. Returns for class Y shares will be somewhat higher,
because class Y shares has lower expenses.
(ii) Performance for the unmanaged S&P 500(R) Index does not reflect
transaction costs or management fees.
(iii) The date of inception of class A is 1/1/50.
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 transfer
agency, legal and share registration fees.
- --------------------------------------------------------------------------------
(1) The annual operating expense have been restated from fiscal year amounts
to reflect current fees.
The Funds 3
<PAGE>
Developing Growth Fund
GOAL / APPROACH
The fund seeks capital appreciation. It does this by investing primarily
in the common stocks of small companies with exciting prospects, strong
management, and above-average, long-term growth potential. The fund uses a
bottom-up stock selection process, which means that it focuses on the
investment fundamentals of companies, rather than reacting to market
events. Normally, the fund invests at least 65% of its total assets in
securities of small companies.
The fund tries to identify companies that are in the developing growth
phase. This is a period of swift development when growth occurs at a rate
rarely equaled by established companies in their mature years. The fund
focuses on companies that it believes are strongly positioned in this
phase. Of course, because the actual growth of a company cannot be
foreseen, Lord Abbett may not always be correct in its judgments about
which phase a company is in.
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 investment objective.
MAIN RISKS
Although small-company stocks offer significant appreciation potential,
they generally carry more risk than larger companies. Generally, small
companies rely on limited product lines and markets, financial resources,
or other factors, and may lack management depth or experience. This may
make them more susceptible to setbacks or economic downturns.
Small-company stocks tend to be more volatile in price, have fewer shares
outstanding and trade less frequently than other stocks. Therefore,
small-company stocks often are subject to wider price fluctuations. Many
small-company stocks are traded over the counter and are not traded in the
volume typical of stocks listed on a national securities exchange.
We or the fund refers to Lord Abbett Developing Growth Fund, Inc. ("Developing
Growth fund") which operates under the supervision of its Board with the advice
of Lord, Abbett & Co.("Lord Abbett"), it's investment manager.
About the fund. This fund is a mutual fund: a pooled investment that is
professionally managed and gives you the opportunity to participate in
securities markets. It strives to reach its stated goal, although as with all
mutual funds, it cannot guarantee results.
Growth Stocks are stocks which exhibit faster-than-average gains in earnings and
are expected to continue profit growth at a high level, but also tend to be more
volatile than bargain stocks.
Small-Company Stocks. Stocks of smaller companies which often are new and less
established, with a tendency to be faster-growing but more volatile than large
company stocks.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describes the other investment strategies used by the funds and
their risks.
4 The Funds
<PAGE>
Developing Growth Fund
Symbols:Class Y -
PAST PERFORMANCE
The information below provides some indication of the risks of investing
in the fund, showing changes in the fund's 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.
AWAITING DATA
================================================================================
The table below shows a comparison of the fund's class A average annual
total return to that of the Russell Mid-Cap Growth Index(R). Fund returns
assume reinvestment of dividends and distributions and payment of the
maximum applicable front-end or deferred sales charge. All periods end on
December 31, 1998.
Class 1 Year Inception(iii)
A 0.00.% 0.00.%
- --------------------------------------------------------------------------------
Russell Mid-Cap Growth Index(R)(ii) 0.00.% 0.00.%
- --------------------------------------------------------------------------------
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
================================================================================
Fee table
- --------------------------------------------------------------------------------
Class Y
Shareholder Fees (Fees paid directly from your investment)
- --------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
- --------------------------------------------------------------------------------
(as a % of offering price) none
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases") none
- --------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from fund assets) (as a % of
average net assets)(1)
- --------------------------------------------------------------------------------
Management Fees (See "Management") 0.90%
- --------------------------------------------------------------------------------
Other Expenses (See "Management") 0.28%
- --------------------------------------------------------------------------------
Total Operating Expenses 1.18%
- --------------------------------------------------------------------------------
================================================================================
Expense example
- --------------------------------------------------------------------------------
This example, like that in other funds' prospectuses, assumes a $10,000 initial
investment, 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.
Share class 1 Year 3 Years 5 Years 10 Years
Class Y shares $12 $37 $649 $1,434
- --------------------------------------------------------------------------------
You would pay the following expenses on the same investment, assuming you kept
your shares.
Class Y shares $12 $37 $649 $1,434
- --------------------------------------------------------------------------------
This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present.
Past performance is not a prediction of future results.
- --------------------------------------------------------------------------------
(i) Because class Y shares are new, the bar chart and table show returns for
class A shares. Returns for class Y shares will be somewhat higher,
because class Y shares has lower expenses.
(ii) Performance for the unmanaged Russell Mid-Cap Growth Index(R) does not
reflect transaction costs or management fees.
(iii) The date of inception of class A is 8/1/95.
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 transfer
agency, legal and share registration fees.
- --------------------------------------------------------------------------------
(1) The annual operating expenses have been restated from fiscal year amounts
to reflect current fees.
The Funds 5
<PAGE>
Mid-Cap Value Fund
GOAL / APPROACH
The fund seeks capital appreciation. It does so by investing primarily in
common stocks of mid-sized companies while using a value approach to
investing. This means that it tries to identify bargain stocks. The fund
generally focuses on companies with market capitalizations of roughly $500
million to $5 billion, but not less than approximately $50 million. The
fund selects stocks based on appreciation potential, without regard to
current income.
We try to identify companies that have the potential for significant
market appreciation from growing recognition of improvement in their
financial results or increasing anticipation of such improvement. In
trying to identify those companies, we look for such factors as:
o changes in economic and financial environment,
o new or improved products or services,
o new or rapidly expanding markets,
o changes in management or structure of the company,
o price increases
o improved efficiencies resulting from new technologies or changes in
distribution, or
o changes in government regulations, political climate or competitive
conditions.
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 investment objective.
MAIN RISKS
While stocks have historically been a leading choice of long-term
investors, they fluctuate in price. The value of your investment in the
fund will go up and down, which means that you could lose money.
Our performance may sometimes be lower or higher than that of other types
of funds (such as those emphasizing small-company stocks or growth
stocks), or other funds of the same type. Different types of stocks tend
to shift in out of favor depending on market and economic conditions.
There is the risk that an investment may never reach what we think is its
full value, or may go down in value, but our value approach might limit
our downside risk because value stocks in theory are already underpriced.
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, but you also have the potential to make money.
We or the fund refers to Lord Abbett Mid-Cap Value Fund, Inc. ("Mid-Cap Value
Fund") which operates under the supervision of its Board with the advice of
Lord, Abbett & Co.("Lord Abbett"), it's investment manager.
About the fund. This fund is a mutual fund: a pooled investment that is
professionally managed and gives you the opportunity to participate in
securities markets. It strives to reach its stated goal, although as with all
mutual funds, it cannot guarantee results.
Bargain stocks are stocks of companies that appear under- priced according to
certain financial measurements of their intrinsic worth or business prospects.
Growth Stocks. Stocks which exhibit faster-than-average gains in earnings and
are expected to continue profit growth at a high level, but also tend to be more
volatile than bargain stocks.
Large companies are established companies that are considered "known
quantities." Large companies often have the resources to weather economic
shifts, though they can be slower to innovate than small companies.
Middle-sized companies usually have market capitalizations of roughly $500
million to $5 billion, but not less than $50 million.
Small-Company Stocks. Stocks of smaller companies which often are new and less
established, with a tendency to be faster-growing but more volatile than large
company stocks.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describe the other investment strategies used by the fund and
their risks.
8 The Funds
<PAGE>
Mid-Cap Value Fund Symbols: Class Y -
PAST PERFORMANCE
Because High Yield fund began operations on December __, 1998, there is no
bar or table of performance.
AWAITING DATA
================================================================================
The table below shows a comparison of the fund's class A average annual
total return to that of the Lehman Brothers Aggregate Bond Index. Fund
returns assume reinvestment of dividends and distributions and payment of
the maximum applicable front-end or deferred sales charge. All periods end
on December 31, 1998.
Class 1 Year Inception(i)
A 0.00.% 0.00.%
- --------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index(ii) 0.00.% 0.00.%
- --------------------------------------------------------------------------------
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
================================================================================
Fee table
- --------------------------------------------------------------------------------
Class Y
Shareholder Fees (Fees paid directly from your investment)
- --------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
- --------------------------------------------------------------------------------
(as a % of offering price) none
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases") none
- --------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from fund assets) (as a % of
average net assets)(1)
- --------------------------------------------------------------------------------
Management Fees (See "Management") 0.60%
- --------------------------------------------------------------------------------
Other Expenses (See "Management") 0.25%
- --------------------------------------------------------------------------------
Total Operating Expenses 0.85%
- --------------------------------------------------------------------------------
================================================================================
Expense example
- --------------------------------------------------------------------------------
This example, like that in other funds' prospectuses, assumes a $10,000 initial
investment, 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.
Share class 1 Year 3 Years 5 Years 10 Years
Class Y shares $ 90 $ 270 $ 471 $1,051
- --------------------------------------------------------------------------------
You would pay the following expenses on the same investment, assuming you kept
your shares.
Class Y shares $ 90 $ 270 $ 471 $1,051
- --------------------------------------------------------------------------------
This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present.
Past performance is not a prediction of future results.
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 transfer
agency, legal and share registration fees.
- --------------------------------------------------------------------------------
(1) The annual operating expenses have been restated from the fund's fiscal
year amounts to reflect current fees.
The Funds 9
<PAGE>
Your Investment
PURCHASES
Class Y shares. Class Y shares are purchased at net asset value ("NAV")
with no sales charge of any kind. The net asset value of our shares is
calculated every business day as of the close of the New York Stock
Exchange.
Who May Invest? Eligible purchasers of Class Y shares include: (i) certain
authorized brokers, dealers, registered investment advisers or other
financial institutions who have entered into an agreement with Lord Abbett
Distributor in accordance with certain standards approved by Lord Abbett
Distributor, providing specifically for the use of our Class Y shares in
particular investment products made available for a fee to clients of such
brokers, dealers, registered investment advisers or other financial
institutions ("mutual fund wrap-fee programs"), (ii) the trustee or
custodian under any deferred compensation or pension or profit-sharing
plan or payroll deduction IRA established for the benefit of the employees
of any company with an account(s) in excess of $10 million managed by Lord
Abbett or its sub-advisors on a private-advisory-account basis, and (iii)
institutional investors, including retirement plans, companies,
foundations, trusts, endowments and other entities where the total amount
of potential investable assets exceeds $20 million that were not
introduced to Lord Abbett by persons associated with a broker or dealer
primarily involved in the retail security business. Additional payments
may be made by Lord Abbett out of its own resources with respect to
certain of these sales.
How Much Must You Invest? You may buy our shares through any independent
securities dealer having a sales agreement with Lord Abbett Distributor,
our exclusive selling agent. Place your order with your investment dealer
or send the funds to the fund you selected (P.O. Box 419100, Kansas City,
Missouri 64141). The minimum initial investment is $1 million except for
mutual fund wrap-fee programs which have no minimum. This offering may be
suspended, changed or withdrawn by Lord Abbett Distributor which reserves
the right to reject any order.
Buying Shares Through Your Dealer. Orders for shares received by a fund
prior to the close of the NYSE, or received by dealers prior to such close
and received by Lord Abbett Distributor prior to the close of its business
day, will be confirmed at NAV effective at such NYSE close. Orders
received by dealers after the NYSE closes and received by Lord Abbett
Distributor in proper form prior to the close of its next business day are
executed at the net asset value effective as of the close of the NYSE on
that next business day. The dealer is responsible for the timely
transmission of orders to Lord Abbett Distributor. A business day is a day
on which the NYSE is open for trading.
Buying Shares By Wire. To open an account, call 800-821-5129 Ext. 34028,
Institutional Trade Dept., to set up your account and to arrange a wire
transaction. Wire to: United Missouri Bank of Kansas City, N.A., Routing
number - 101000695, bank account number: 9878002611, FBO: (account name)
and (your Lord Abbett account number). Specify the complete name of the
fund of your choice, note Class Y shares and include your new account
number and your name. To add to an existing account, wire to: United
Missouri Bank of Kansas City, N.A., routing number - 101000695, bank
account number: 9878002611, FBO: (account name) and (your Lord Abbett
account number). Specify the complete name of the fund of your choice,
note Class Y shares and include your account number and your name.
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"). Each 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 quotations are available
are valued at those quotations. Securities for which such quotations are not
available are valued at fair value under procedures approved by the Board.
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.
10 Your Investment
<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. Redemption request for shares
initially purchased by check will not be honored for up to 15 days, unless
we are assured that the check has cleared earlier.
DISTRIBUTIONS AND TAXES
Each fund pays its shareholders dividends from its net investment income,
and distributes any net capital gains that it has realized. Each fund
expects to pay income dividends and capital gain distributions once a
year, usually in December. Your distributions will be reinvested in your
fund unless you instruct the fund to pay them to you in cash.
The tax status of distributions is the same regardless of how long they
have been in the fund or whether distributors 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 and above
- --------------------------------------------------------------------------------
Income Ordinary
dividends 15% income rate
- --------------------------------------------------------------------------------
Short-term Ordinary
capital gains 15% 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.
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.
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.
Taxes on Transactions. The chart at left also can provide a "rule of thumb"
guide for your potential U.S. federal 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.
Your Investment 11
<PAGE>
SERVICES FOR FUND INVESTORS
AUTOMATIC SERVICES
We offer the following shareholder services:
Telephone Exchange Privilege: Class Y shares may be exchanged without a
service charge for Class Y shares of any eligible Lord Abbett-sponsored
fund.
Account Statements. Generally, shareholders with the same last name and
address will receive quarterly account statements.
Householding. Generally, 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 funds.
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.
MANAGEMENT
The funds' 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 approximately $28 billion in
more than 35 mutual fund portfolios and other advisory accounts. For more
information about the services Lord Abbett provides to the funds, see the
Statement of Additional Information.
Affiliated Fund - The fund pays Lord Abbett a monthly fee based on average
daily net assets for each month. For the fiscal year ended October 31,
1998, the fee paid to Lord Abbett was at an annual rate of .00 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 company's investments. W. Thomas Hudson Jr., Partner of Lord
Abbett and Executive Vice President and Portfolio Manager, heads the team,
the senior members of which are ? Mr. Hudson has been with Lord Abbett
since 1982.
Growth Opportunities Fund - The fund pays Lord Abbett a monthly fee based
on the average daily net assets for each month. For the fiscal year ended
October 31, 1998, the fee paid to Lord Abbett was at an annual rate of .00
of 1%. In addition, the fund pays all expenses not expressly assumed by
Lord Abbett.
Stephen J. McGruder, Partner of Lord Abbett and Executive Vice President
and Senior Portfolio Manager of the Growth Opportunities Fund is primarily
responsible for the day-today management of the fund. He joined Lord
Abbett in 1995 and has over 29 years of investment experience. Before
joining Lord Abbett, Mr. McGruder served since October of 1988 as Vice
President of Wafra Investment Advisory Group, a private investment
company. Mr. McGruder is assisted by, and may delegate management duties
to, other Lord Abbett employees.
High Yield Fund - The fund's investment adviser is Lord, Abbett & Co., 767
Fifth Avenue, New York, New York 10153-0203. Founded in 1929, Lord Abbett
manages one of the nation's oldest mutual fund complexes, with more than
$25 billion in 36 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.
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.
Exchanges by telephone should not be used to take advantage of short-term swings
in the market. The fund reserves the right to limit or terminate this privilege
for any shareholder making frequent exchanges or abusing the privilege and may
revoke the privilege for all shareholders upon 60 days' written notice.
12 Your Investment
<PAGE>
The fund pays Lord Abbett a monthly fee based on the average daily net assets
for each month. For the fiscal year ended November 31, 1998, the fee paid to
Lord Abbett was at an annual rate of .00 of 1%. In addition, the fund pays all
expenses not expressly assumed by Lord Abbett.
Christopher J. Towle, Partner of Lord Abbett and Executive Vice President and
Co-Portfolio Manager of the Fund, is primarily responsible for the day-to-day
management of the Fund. Mr. Towle has been with Lord Abbett since 1988 and has
over 17 years of investment experience. Mr. Towle is assisted by, and may
delegate management duties to, other Lord Abbett employees.
Michael Goldstein serves as Co-Portfolio Manager of the Fund. Mr. Goldstein has
been with Lord Abbett since April 1997. Before joining Lord Abbett, Mr.
Goldstein was a bond trader for Credit Suisse BEA Associates from August 1992
through April 1997.
International Fund - The fund pays Lord Abbett a monthly fee based on the
average daily net assets for each month. For the fiscal year ended October 31,
1998, the fee paid to Lord Abbett was at an annual rate of .75 of 1%. In
addition, the fund pays all expenses not expressly assumed by Lord Abbett.
Lord Abbett has entered into an agreement with Fuji-Lord Abbett International
Ltd. (the "Sub-Adviser"), under which the Sub-Adviser provides Lord Abbett with
advice regarding the International Fund's assets. Lord Abbett pays the
Sub-Adviser a monthly fee equal to 1/2 of Lord Abbett's fee.
Christopher J. Taylor, Managing Director of the Sub-Adviser and Portfolio
Manager of International Fund, is primarily responsible for fee date-to-day
management of the fund. Mr. Taylor has been with the Sub-Adviser and its
predecessor since 1987 and has over fifteen years of investment experience.
Small-Cap Fund - The fund pays Lord Abbett a monthly fee based on the average
daily net assets for each month. For the fiscal year ended November 30, 1998,
the fee paid to Lord Abbett was at an annual rate of .75 of 1%. In addition, the
fund pays all expenses not expressly assumed by Lord Abbett.
Robert P. Fetch, Partner of Lord Abbett and Executive Vice President and
Portfolio Manager of the Small-Cap Fund, is primarily responsible for the
day-to-day management of the Small-in Cap Fund since its inception. Mr. Fetch is
assisted by Gregory M. Macosko, and may delegate management duties to other Lord
Abbett employees. Before joining Lord Abbett, Mr. Fetch was a Managing Director
of Prudential Investment Advisors.
Your Investment 13
<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. These strategies may involve buying or selling
derivative instruments, such as options and futures contracts, stripped
securities, currency exchange contracts, swap agreements, short sales of
securities, indexed securities and rights and warrants. 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.
Borrowing. The fund may borrow from banks. If the fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. The fund may borrow only for temporary or emergency purposes,
and not in an amount exceeding 331/3% of its total assets.
Diversification. Each fund is a diversified fund, which means that with
respect to 3/4 of its total assets, it will not purchase a security if, as
a result, more than 5% of the fund's total assets would be invested in
securities of a single issuer or the fund would hold more than 10% of the
outstanding voting securities of the issuer. (Name of fund is a
nondiversified mutual fund. This means that the fund may invest a greater
portion of its assets in, and own a greater amount of the voting
securities of, a single company than a diversified fund. This may expose
the fund to greater risk.)
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. This affects block trading. Foreign portfolio
securities may trade on days when an underlying 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; nondeductable withholding
taxes and different accounting and settlement practices.
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. Each underlying fund may invest up to 15% of its assets in illiquid
securities.
Portfolio Securities Lending. Each fund may lend securities to
broker-dealers and financial institutions, as a means of earning income.
This practice could result of a loss or delay in recovering a fund's
securities, if the borrower defaults. Each fund will limit its securities
loans to 33 1/3% of its total assets.
Repurchase Agreements. In a repurchase agreement, a fund buys a security
at one price from a broker-dealer or financial institution and
simultaneously agrees to sell the
14 For More Information
<PAGE>
same security back to the same party at a higher price in the future. If
the other party to the agreement defaults or becomes insolvent, the fund
could lose money.
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
pay-ments 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 headquarters or other
locations, including meals and entertainment, or the receipt of
merchandise. The cash payments may include payment of various business
expenses of the dealer.
In selecting dealers to execute portfolio transactions for 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 (1) certain tax-free, single-state funds where the exchanging
shareholder is a resident of a state in which such series is not offered
for sale; (2) Lord Abbett Equity Fund; (3) Lord Abbett Series Fund; and
(4) 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. This term refers to the authority of an individual to act
on behalf of an entity or other person(s). For example, if a redemption
request were to be made 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.
To give another example, if a redemption request were to be made on behalf
of the ABC Corporation by a person (Mary B. Doe) the has the legal
capacity to act on the half of the Corporation, because she is the
president of the corporation, 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.
Mutual Fund Advisory Program. Certain unaffiliated authorized brokers,
dealers, registered investment advisers or other financial institutions
who have entered into an agreement with Lord Abbett Distributor in
accordance with certain standards approved
Guaranteed signature. An acceptable form of guarantee would be as follows:
o In the case of the estate -
Robert A. Doe
Executor of the Estate of
John W. Doe
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
/s/ [ILLEGIBLE]
- ------------------------------------------------
AUTHORIZED SIGNATURE
(960) X9003470
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM(SM)
SR
o In the case of the corporation -
ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
/s/ [ILLEGIBLE]
- ------------------------------------------------
AUTHORIZED SIGNATURE
(960) X9003470
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM(SM)
SR
For More Information 15
<PAGE>
by Lord Abbett Distributor, providing specifically for the use of fund
shares (and sometimes providing for acceptance of orders for such shares
on Lord Abbett Distributor's behalf) in particular investment products
made available for a fee to clients of such brokers, dealers, registered
investment advisers and other financial institutions.
Purchaser. The term "purchaser" includes: (i) an individual, (ii) an
individual and his or her spouse and children under the age of 21 and
(iii) a trustee or other fiduciary purchasing shares for a single trust
estate or single fiduciary account (including a pension, profit-sharing,
or other employee benefit trust qualified under Section 401 of the
Internal Revenue Code more than one qualified employee benefit trust of a
single employer, including its consolidated subsidiaries, may be
considered a single trust, as may qualified plans of multiple employers
registered in the name of a single bank trustee as one account), although
more than one beneficiary is involved.
Special Retirement Wrap Program. A program sponsored by an authorized
institu-tion showing one or more characteristics distinguishing it, in the
opinion of Lord Abbett Distributor from a mutual fund wrap-fee program.
Such characteristics include, among other things, the fact that an
authorized institution does not charge its clients any fee of a consulting
or advisory nature that is economically equivalent to the distribution fee
under the class A 12b-1 Plan and the fact that the program relates to
participant- directed Retirement Plans.
RECENT PERFORMANCE
Bond-Debenture Fund -
Developing Growth Fund - To come from Annual Report
Large-Cap Research Fund - To come from Annual Report
Mid-Cap Value Fund - To come from Annual Report
Year 2000 Issues. Each fund could be adversely affected if the computers used by
each fund and their service providers do not properly process and calculate
date-related information from and after January 1, 2000.
While year 2000-related computer problems could have a negative effect on each
fund, Lord Abbett is working to avoid such problems and has assurances from each
fund's service providers that they are taking similar steps. However, because
the problem is unprecedented and efforts to identify and fix it are on-going, we
don't know whether these efforts will be successful. Accordingly, each fund may
be adversely affected.
Euro. On January 1, 1999, the eleven member states of the European Union
converted to a common currency, know as the "Euro." Each fund could be adversely
affected if the computers used by it and its service providers do not properly
process and calculate Euro-related information from and after January 1, 1999.
While Euro-related computer problems could have a negative effect on each fund,
Lord Abbett is working to avoid such problems and has assurances from each
fund's service providers that they are taking similar steps. However, because
the problem is unprecedented, we don't know whether these efforts will be
successful and, accordingly, each fund may be adversely affected.
16 For More Information
<PAGE>
Bond-Debenture Fund
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 October 31,
1998 and the Independent Auditors' Report thereon appear in the Annual
Report to Shareholders for the fiscal year ended October 31, 1998 and are
incorporated by reference into the Statement of Additional Information,
which is available upon request.
================================================================================
Class Y Shares
--------------------------------------------
Year Ended October 31,
Per Share Operating Performance: 1998(a)
Net asset value, beginning of year $ 15.44
- --------------------------------------------------------------------------------
Income from investment operations
- --------------------------------------------------------------------------------
Net investment income .15
- --------------------------------------------------------------------------------
Net realized and unrealized
- --------------------------------------------------------------------------------
gain (loss) on investments (.89)
- --------------------------------------------------------------------------------
Total from investment operations (.74)
- --------------------------------------------------------------------------------
Distributions
- --------------------------------------------------------------------------------
Dividends from net investment income (.13)
- --------------------------------------------------------------------------------
Distributions from net realized gain --
- --------------------------------------------------------------------------------
Net asset value, end of year $ 14.57
- --------------------------------------------------------------------------------
Total Return(b) (4.77)%
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
- --------------------------------------------------------------------------------
Expenses excluding waiver 0.24%
- --------------------------------------------------------------------------------
Net investment income 0.00%
================================================================================
Year Ended October 31,
--------------------------------------------
Supplemental Data For All Classes: 1998
Net Assets, end of year (000) $8,520,603
- --------------------------------------------------------------------------------
Portfolio turnover rate 56.49%
- --------------------------------------------------------------------------------
(a) From March 27, 1998 to October 31, 1998 commencement of operations.
(b) Total return is not annualized and assumes the reinvestment of all
distributions..
(c) Not annualized.
See Notes to Financial Statements.
Financial Information 17
<PAGE>
Bond-Debenture Fund
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in class Y
shares to the same investment in the S&P 500(R) Index, assuming
reinvestment of all dividends and distributions.
================================================================================
AWAITING DATA
================================================================================
Average Annual Total Return At Maximum Applicable Sales Charge For The
Periods Ending October 31, 1998
1 Year 5 Years 10 Years (or Life)
- --------------------------------------------------------------------------------
Class Y(4) 4.40% 4.66% 7.65%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Reflects the deduction of the maximum initial sales charge of 4.75%
(2) Performance for the unmanaged Lehman Municipal Bond Index does not reflect
transaction costs, management fees or sales charges.
(3) Source: Lipper Analytical Services.
(4) This shows total return which 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 September 30, 1998 using the SEC-required uniform method to
compute total return. The class Y share inception date is 12/10/97.
18 Financial Information
<PAGE>
Developing Growth Fund
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 October 31,
1998 and the Independent Auditors' Report thereon appear in the Annual
Report to Shareholders for the fiscal year ended October 31, 1998 and are
incorporated by reference into the Statement of Additional Information,
which is available upon request.
================================================================================
Class Y Shares
--------------------------------------------
Year Ended October 31,
Per Share Operating Performance: 1998(a)
Net asset value, beginning of year $ 11.28
- --------------------------------------------------------------------------------
Income from investment operations
- --------------------------------------------------------------------------------
Net investment income .15
- --------------------------------------------------------------------------------
Net realized and unrealized
- --------------------------------------------------------------------------------
gain (loss) on investments .98
- --------------------------------------------------------------------------------
Total from investment operations .74
- --------------------------------------------------------------------------------
Distributions
- --------------------------------------------------------------------------------
Dividends from net investment income 1.13
- --------------------------------------------------------------------------------
Distributions from net realized gain --
- --------------------------------------------------------------------------------
Net asset value, end of year --
- --------------------------------------------------------------------------------
Total Return(b)(c) 10.02%
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
- --------------------------------------------------------------------------------
Expenses excluding waiver 0.84%
- --------------------------------------------------------------------------------
Net investment income 1.11%
- --------------------------------------------------------------------------------
================================================================================
Year Ended October 31,
--------------------------------------------
Supplemental Data For All Classes: 1998 1997(d)
Net Assets, end of year (000) $153,033 $37,334
- --------------------------------------------------------------------------------
Portfolio turnover rate 20.52% 29.72%
- --------------------------------------------------------------------------------
(a) From December 30, 1997 to October 31, 1998 commencement of operations.
(b) Total return is not annualized and assumes the reinvestment of all
distributions..
(c) Not annualized.
(d) From December 30, 1996 to October 31, 1997.
See Notes to Financial Statements.
Financial Information 19
<PAGE>
Developing Growth Fund
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in class Y
shares to the same investment in the S&P 500(R) Index, assuming
reinvestment of all dividends and distributions.
================================================================================
AWAITING DATA
================================================================================
Average Annual Total Return At Maximum Applicable Sales Charge For The
Periods Ending October 31, 1998
1 Year 5 Years 10 Years (or Life)
- --------------------------------------------------------------------------------
Class Y(4) 4.40% 4.66% 7.65%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Reflects the deduction of the maximum initial sales charge of 4.75%
(2) Performance for the unmanaged Lehman Municipal Bond Index does not reflect
transaction costs, management fees or sales charges.
(3) Source: Lipper Analytical Services.
(4) This shows total return which 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 September 30, 1998 using the SEC-required uniform method to
compute total return. The class Y share inception date is 12/10/97.
Financial Information 21
<PAGE>
Mid-Cap Value Fund
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 November 30,
1998 and the Independent Auditors' Report thereon appear in the Annual
Report to Shareholders for the fiscal year ended November 30, 1998 and are
incorporated by reference into the Statement of Additional Information,
which is available upon request.
================================================================================
Class Y Shares
-----------------------------------------------
Year Ended November 30,
Per Share Operating Performance: 1998(a)
Net asset value, beginning of year $ 16.34
- --------------------------------------------------------------------------------
Income from investment operations
- --------------------------------------------------------------------------------
Net investment income .00(c)
- --------------------------------------------------------------------------------
Net realized and unrealized
- --------------------------------------------------------------------------------
gain (loss) on investments .00
- --------------------------------------------------------------------------------
Total from investment operations .00
- --------------------------------------------------------------------------------
Distributions
- --------------------------------------------------------------------------------
Dividends from net investment income (.00)
- --------------------------------------------------------------------------------
Distributions from net realized gain --
- --------------------------------------------------------------------------------
Net asset value, end of year $ 0.00
- --------------------------------------------------------------------------------
Total Return(b) 0.00%
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
- --------------------------------------------------------------------------------
Expenses excluding waiver 0.00%(c)
- --------------------------------------------------------------------------------
Net investment income 0.00%
- --------------------------------------------------------------------------------
================================================================================
Year Ended November 30,
-----------------------------------------------
Supplemental Data For All Classes: 1998
- --------------------------------------------------------------------------------
Net Assets, end of year (000) $000,000
- --------------------------------------------------------------------------------
Portfolio turnover rate 0.00%
- --------------------------------------------------------------------------------
(a) From December 30, 1997 to November 30, 1998 commencement of operations
(unaudited).
(b) Total return is not annualized and assumes the reinvestment of all
distributions..
(c) amount less than 0.01%.
(d) Not annualized.
See Notes to Financial Statements.
Financial Information 23
<PAGE>
Mid-Cap Value Fund
Line Graph Comparison
Immediately below is a comparison of a $10,000 investment in class Y
shares to the same investment in the Russell 2000(R) Index, assuming
reinvestment of all dividends and distributions.
================================================================================
AWAITING DATA
================================================================================
Average Annual Total Return At Maximum Applicable
Sales Charge For The Periods Ending November 30, 1998
1 Year 5 Years 10 Years (or Life)
- --------------------------------------------------------------------------------
Class Y(4) 4.40% 4.66% 7.65%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Reflects the deduction of the maximum initial sales charge of 4.75%
(2) Performance for the unmanaged Lehman Municipal Bond Index does not reflect
transaction costs, management fees or sales charges.
(3) Source: Lipper Analytical Services.
(4) This shows total return which 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 September 30, 1998 using the SEC-required uniform method to
compute total return. The class Y share inception date is 12/10/97.
24 Financial Information
<PAGE>
For more Information
More information on these funds is available free upon request, including
the following:
ANNUAL/SEMI-ANNUAL REPORT
Describes the funds, lists portfolio holdings and contains a letter from
the funds' manager discussing recent market conditions and each 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).
Bond-Debenture Fund
Developing Growth Fund
Large-Cap Research Fund
Mid-Cap Value Fund
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
---------------------------
SEC file number: 811-?, 811-?, 811-3691
To obtain information:
By telephone. Call the funds at
800-426-1130
By mail. Write to the funds at:
The Lord Abbett Family of Funds
767 Fifth Avenue
New York, NY 10153-0203
Via the Internet. Text only
versions of fund documents
can be viewed online or
downloaded from:
Lord, Abbett & Co.
http://www.lordabbett.com
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.
<PAGE>
LORD, ABBETT & CO.
Statement of Additional Information May 1, 1999
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
This Statement of Additional Information is not a Prospectus. A Prospectus for
the Class Y shares of Lord Abbett Developing Growth Fund, Inc. ("Developing
Growth Fund"), Lord Abbett Bond-Debenture Fund, Inc. ("Bond-Debenture Fund"),
and Lord Abbett Mid-Cap Value Fund ("Mid-Cap Value Fund"), individually ("we" or
the "Fund"), collectively (the "Funds"), may be obtained from your securities
dealer or from Lord Abbett Distributor LLC ("Lord Abbett Distributor") at The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. This
Statement of Additional Information relates to, and should be read in
conjunction with, the Prospectus, dated May 1, 1999.
Our Boards of Directors have authority to create and classify shares in separate
series, without further action by shareholders. To date, the Boards of Directors
have authorized five classes of shares for Developing Growth Fund,
Bond-Debenture Fund, and Mid-Cap Value Fund (Class A, B, C, P and Y). The Board
of a Fund will allocate a Fund's shares among its classes from time to time. All
shares of a Fund have equal noncumulative voting rights and equal rights with
respect to dividends, assets and liquidation, except for certain class-specific
expenses. They are fully paid and nonassessable when issued and have no
preemptive or conversion rights. Although no present plans exist to do so,
further series may be added to one or more of the Funds in the future. The
Investment Company Act of 1940, as amended (the "Act"), requires that where more
than one series exists for a Fund, each series must be preferred over all other
series in respect of assets specifically allocated to such series.
Rule 18f-2 under the Act provides that any matter required to be submitted, by
the provisions of the Act or applicable state law or otherwise, to the holders
of the outstanding voting securities of an investment company such as the Fund
shall not be deemed to have been effectively acted upon unless approved by the
holders of a majority of the outstanding shares of each class or series affected
by such matter. Rule 18f-2 further provides that a class or series shall be
deemed to be affected by a matter unless the interests of each class or series
in the matter are substantially identical or the matter does not affect any
interest of such class or series. However, the Rule exempts the selection of
independent public accountants, the approval of a contract with a principal
underwriter and the election of directors from its separate voting requirements.
Shareholder inquiries should be made by writing directly to the Fund or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
TABLE OF CONTENTS Page
1. Investment Objective and Policies 2
2. Directors and Officers 5
3. Investment Advisory and Other Services 7
4. Portfolio Transactions 8
5. Purchases, Redemptions and Shareholder Services 9
6. Past Performance 10
7. Taxes 11
8. Information About the Fund 11
9. Financial Statements 12
<PAGE>
1.
Investment Objective and Policies
Fundamental Investment Restrictions. Each Fund is subject to the following
investment restrictions which cannot be changed without approval of the holders
of a majority of a Fund's outstanding shares. Each Fund may not: (1) borrow
money, except that (i) each Fund may borrow from banks (as defined in the
Investment Company Act of 1940 ("the Act")) in amounts up to 33 1/3% of its
total assets (including the amount borrowed), (ii) each Fund may borrow up to an
additional 5% of its total assets for temporary purposes, (iii) each Fund may
obtain such short-term credit as may be necessary for the clearance of purchases
and sales of portfolio securities and (iv) each Fund may purchase securities on
margin to the extent permitted by applicable law; (2) pledge its assets (other
than to secure such borrowings, or to the extent permitted by the Fund's
investment policies, as permitted by applicable law; (3) engage in the
underwriting of securities, except pursuant to a merger or acquisition or to the
extent that, in connection with the disposition of its portfolio securities, it
may be deemed to be an underwriter under federal securities laws; (4) make loans
to other persons, except that the acquisition of bonds, debentures or other
corporate debt securities and investment in government obligations, commercial
paper, pass-through instruments, certificates of deposit, bankers acceptances,
repurchase agreements or any similar instruments shall not be subject to this
limitation and except further that each Fund may lend its portfolio securities,
provided that the lending of portfolio securities may be made only in accordance
with applicable law; (5) buy or sell real estate (except that each Fund may
invest in securities directly or indirectly secured by real estate or interests
therein or issued by companies which invest in real estate or interests therein)
commodities or commodity contracts (except to the extent each Fund may do so in
accordance with applicable law and without registering as a commodity pool
operator under the Commodity Exchange Act as, for example, with futures
contracts); (6) with respect to 75% of the gross assets of each Fund, buy
securities of one issuer representing more than (i) 5% of the Fund's gross
assets, except securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities or (ii) 10% of the voting securities of such
issuer; (7) invest more than 25% of its assets, taken at market value, in the
securities of issuers in any particular industry (excluding securities of the
U.S. Government, its agencies and instrumentalities); or (8) issue senior
securities to the extent such issuance would violate applicable law.
With respect to the restrictions mentioned herein, compliance therewith will not
be affected by change in the market value of portfolio securities but will be
determined at the time of purchase or sale of such securities.
Non-Fundamental Investment Restrictions. In addition to the investment
restrictions above which cannot be changed without shareholder approval, we also
are subject to the following non-fundamental investment policies which may be
changed by the Board of Directors without shareholder approval. Each Fund may
not: (1) borrow in excess of 33 1/3% of its total assets (including the amount
borrowed), and then only as a temporary measure for extraordinary or emergency
purposes; (2) make short sales of securities or maintain a short position except
to the extent permitted by applicable law; (3) invest knowingly more than 15% of
its net assets (at the time of investment) in illiquid securities, except for
securities qualifying for resale under Rule 144A of the Securities Act of 1933,
deemed to be liquid by the Board of Directors; (4) invest in securities of other
investment companies as defined in the Act, except as permitted by applicable
law; (5) invest in securities of issuers which, with their predecessors, have a
record of less than three years of continuous operation, if more than 5% of each
Fund's total assets would be invested in such securities (this restriction shall
not apply to mortgaged-backed securities, asset-backed securities or obligations
issued or guaranteed by the U. S. Government, its agencies or
instrumentalities); (6) hold securities of any issuer when more than 1/2 of 1%
of the securities of such issuer are owned beneficially by one or more of each
Fund's officers or directors or by one or more partners of each Fund's
underwriter or investment adviser if these owners in the aggregate own
beneficially more than 5% of such securities of such issuer; (7) invest in
warrants if, at the time of acquisition, its investment in warrants, valued at
the lower of cost or market, would exceed 5% of each Fund's total assets
(included within such limitation, but not to exceed 2% of the Funds total
assets, are warrants which are not listed on the New York or American Stock
Exchange or a major foreign exchange); (8) invest in real estate limited
partnership interests or interests in oil, gas or other mineral leases, or
exploration or development programs, except that each Fund may invest in
securities issued by companies that engage
2
<PAGE>
in oil, gas or other mineral exploration or development activities; (9) write,
purchase or sell puts, calls, straddles, spreads or combinations thereof, except
to the extent permitted in the prospectus and statement of additional
information, as may be amended from time to time; or (10) buy from or sell to
any of its officers, directors, employees, or its investment adviser or any of
its officers, directors, partners or employees, any securities other than shares
of each Fund's common stock.
Although they have no current intention to do so, each Fund may invest in
financial futures and options on financial futures.
Each Fund did not invest in repurchase agreements or lend portfolio securities
during last fiscal year and have no present intent to do so.
PORTFOLIO TURNOVER RATE. For the fiscal year ended January 31, 1998, the
portfolio turnover rate for Developing Growth Fund was 33.60%, versus 42.35% for
the prior fiscal year; for the fiscal year ended December 31, 1997, the
portfolio turnover rate for Bond-Debenture Fund was 89.14%, versus 106.79% for
the prior year; and for the fiscal year ended December 31, 1997, the portfolio
turnover rate for Mid-Cap Value Fund was 56.96%, versus 38.88% for the prior
year.
INVESTMENT POLICIES (WHICH CAN BE CHANGED WITHOUT SHAREHOLDER APPROVAL)
Rule 144A Securities (All Funds). The Fund may invest in securities qualifying
for resale to "qualified institutional buyers" under SEC Rule 144A that are
determined by the Board, or by Lord Abbett pursuant to the Board's delegation,
to be liquid securities. The Board will review quarterly the liquidity of the
investments the Fund makes in such securities. Investments by the Fund in Rule
144A securities initially determined to be liquid could have the effect of
diminishing the level of the Fund's liquidity during periods of decreased market
interest in such securities among qualified institutional buyers.
The Fund's custodian will segregate cash or liquid high-grade debt securities in
an amount not less than that required by Securities Exchange Commission ("SEC")
Release 10666 with respect to Fund assets committed to written covered call
options. If the value of the segregated securities declines, additional cash or
debt securities will be added on a daily basis (i.e., marked-to-market) so that
the segregated amount will not be less than the amount of each Fund's
commitments with respect to such written options.
Stock Index Futures Contracts (Developing Growth). The Fund believes it can
reduce the volatility inherent in its portfolio through the use of stock index
futures contracts. (A stock index futures contract is an agreement pursuant to
which two parties agree, one to receive and the other to pay, on a specified
date an amount of cash equal to a specified dollar amount -- established by an
exchange or board of trade -- times the difference between the value of the
index at the close of the last trading day of the contract and the price at
which the futures contract is originally written. No consideration is paid or
received at the time the contract is entered into, only the good faith deposit
described herein.) When Lord Abbett, our investment manager, anticipates a
general decline in the sector of the stock market which includes our portfolio
assets, we can reduce risk by hedging the effect of such decline on our ability
to sell assets at best price or otherwise hedge a decision to delay the sale of
portfolio securities. Such hedging would be possible if there were an
established, regularly-quoted stock index for equities of the character in which
we invest and if an active public market were to develop on a stock exchange or
board of trade in futures contracts based on such index.
The market value of a futures contract is based primarily on the value of the
underlying index. Changes in the value of the index will cause roughly
corresponding changes in the market price of the futures contract, except as
otherwise described below. If a stock index is established which is made up of
securities whose market characteristics closely parallel the market
characteristics of the securities in our portfolio, then the market value of a
futures contract on that index should fluctuate in a way closely resembling the
market fluctuation of our portfolio. Thus, if we should sell futures contracts,
a decline in the market value of the portfolio will be offset by an increase in
the value of the short futures position to the extent of the hedge (i.e., the
percentage of the portfolio value represented by the value of the futures
position). Conversely, when we are in a strong cash position (for example,
through substantial sales of our shares) and wish to invest the cash in
anticipation of a rising market, we could rapidly
3
<PAGE>
hedge against the expected market increase by buying futures contracts to offset
the cash position and thus cushion the adverse effect of attempting to buy
individual securities in a rising market.
The public markets for existing stock index futures contracts, such as those
using the Standard & Poor's 100 Index and 500 Index traded on the Chicago
Mercantile Exchange or those using the New York Stock Exchange Composite Index
traded on the New York Stock Exchange ("NYSE"), are active and have developed
substantial liquidity and we expect a similar market to develop for stock index
futures on a representative group of over-the-counter stocks. The existence of
an active market would permit us to close out our position in futures contracts
by purchasing an equal and opposite position in the public market. Under futures
contracts currently in use, the purchaser would be required to segregate in a
separate account, as a good faith deposit, cash or Treasury bills in an amount
set by a board of trade or exchange (currently approximately 5% of the contract
value). Each day during the contract period we would either pay or receive an
amount of cash equal to the daily change in the total value of the contracts.
The amount which we may segregate upon entering into a futures contract may not
exceed, together with the amounts on deposit under all outstanding contracts, 5%
of the value of our total assets, nor may we enter into additional futures
contracts if, as a result, the aggregate amount committed under all our open
futures contracts would exceed more than one-third of the value of such assets.
There are several risks in connection with the use of futures contracts as a
hedging device. One risk is the imperfect correlation between the composition of
our portfolio securities and the applicable stock index. If the value of the
futures contract moves more than the value of the stock being hedged, we would
experience either a loss or a gain on the futures contract which would not be
completely offset by movements in the value of the securities which are the
subject of the hedge. Another risk is that the value of futures contracts may
not correlate perfectly with movement in the stock index due to certain market
distortions. Although we will enter into futures contracts strictly to hedge our
portfolio or cash positions, other investors use these investment vehicles for
other, sometimes more speculative, purposes. At times, excess speculation in the
futures market can distort the normal market relationship between the price of
the futures contract and the value of the index. If we decide to enter into or
close out our futures position during a period of such excess speculation, the
hedging strategy will be more or less successful, depending on the direction and
amount of this distortion, than otherwise would be the case. Due to the
possibility of price distortion in the futures market and because of the
imperfect correlation between movements in the stock index and movements in the
price of stock index futures contracts, a correct forecast of general market
trends by Lord Abbett may still not result in a successful hedging transaction.
It is possible that, when we sell futures contracts to hedge our portfolio
against a decline in the market, the market, as measured by the stock index, may
advance while the value of securities held in our portfolio may decline. If this
occurs, we will lose money on the futures contracts and also experience a
decline in value in our portfolio securities. However, Lord Abbett believes that
over time the value of a diversified portfolio will tend to move in the same
direction as the market index upon which the futures contracts are based.
Where futures contracts are purchased to hedge against a possible increase in
the price of stock before we are able to invest our cash position in stock in an
orderly fashion, it is possible that the market may decline instead and we would
realize a loss; if we then decide not to invest in stock at that time because of
concern as to possible further market decline or for other reasons, we would
realize a loss on the futures contract that would be offset, to the extent the
cash position had not been invested in stocks being hedged.
Positions in futures contracts may be closed out only on an exchange or board of
trade which provides a market for such contracts. Although we intend to purchase
or sell futures contracts only if an active market has developed and is
continuing, there is no assurance that a liquid market on an exchange or board
of trade will exist for any particular contract or at any particular time. In
such event, it may not be possible to close out a futures position, and in the
event of adverse price movements, we would continue to be required to make daily
cash payments marking our position to market. However, since futures contracts
would have been used to hedge portfolio securities and such securities would not
be sold until the futures contracts had been terminated, an increase in the
price of the securities, if any, may partially or completely offset losses on
the futures contract.
4
<PAGE>
We may incur additional brokerage commissions through entering into futures
contracts, although we also can save on commissions by hedging through such
contracts rather than through buying or selling individual securities in
anticipation of market moves. Successful use by us of futures contracts will
depend upon Lord Abbett's ability to predict movements in the direction of the
over-the-counter market generally, which requires different skills and
techniques than predicting changes in the prices of individual stocks.
To date, we have not entered into any futures contracts and have no present
intent to do so. An established, regularly-quoted stock index for equities of
the character in which we invest has not yet been established. If such an index
is established and we actually use futures contracts, we will disclose such use
in our Prospectus.
2.
Directors and Officers
The following director is a partner of Lord, Abbett & Co. ("Lord Abbett"), The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. He has
been associated with Lord Abbett for over five years and is also an officer
and/or director of all of the twelve other Lord Abbett-sponsored funds. He is an
"interested person" as defined in the Act, and as such, may be considered to
have an indirect financial interest in the Rule 12b-1 Plan described in the
Prospectus.
Robert S. Dow, age 53, Chairman and President
The following outside directors are also directors or trustees of all or some of
the twelve other Lord Abbett-sponsored funds referred to above.
E. Thayer Bigelow
Courtroom Television Network
600 Third Avenue
New York, New York
Chief Executive Officer of Courtroom Television Network. Formerly President and
Chief Executive Officer of Time Warner Cable Programming, Inc. Prior to that,
President and Chief Operating Officer of Home Box Office. Age 57.
William H. T. Bush
Bush-O'Donnell & Co., Inc.
101 South Hanley Road, Suite 1025
St. Louis, Missouri
Co-founder and Chairman for the Board of financial advisory firm of
Bush-O'Donnell & Company. Age 60.
Robert B. Calhoun
Monitor Clipper Partners
650 Madison Avenue, 9th Floor
New York, New York
Managing Director of Monitor Clipper Partners and President of The Clipper
Group, both private equity investment funds. Age 55.
Stewart S. Dixon
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon. Age 67.
5
<PAGE>
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 72.
C. Alan MacDonald
Directorship Inc.
8 Sound Shore Drive
Greenwich, Connecticut
Managing Director of Directorship Inc., a consultancy in board management and
corporate governance. Formerly General Partner of The Marketing Partnership,
Inc., a full service marketing consulting firm (1994 - 1997). Prior to that,
Chairman and Chief Executive Officer of Lincoln Snacks, Inc., manufacturer of
branded snack foods (1992 - 1994). His career spans 36 years at Stouffers and
Nestle with 18 of the years as Chief Executive Officer. Currently serves as
Director of DenAmerica Corp., J.B. Williams Company, Inc., Fountainhead Water
Company and Exigent Diagnostics. Age 65.
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 70.
Thomas J. Neff
Spencer Stuart U.S.
277 Park Avenue
New York, New York
Chairman of Spencer Stuart U.S., an executive search consulting firm. Age 60.
The second column of the following table sets forth the compensation accrued for
the Fund's outside directors. The third column sets forth information with
respect to the equity-based benefits accrued for outside directors by the Lord
Abbett-sponsored funds. The fourth column sets forth the total compensation
payable by such funds to the outside directors. No director of the Fund
associated with Lord Abbett and no officer of the Fund received any compensation
from the Fund for acting as a director or officer.
For the Fiscal Year Ended January 31, 1998 (Developing Growth Fund)
For the Fiscal Year Ended December 31, 1998 (Bond-Debenture Fund)
For the Fiscal Year Ended December 31, 1998 (Mid-Cap Value Fund)
(1) (2) (3) (4)
For Year Ended
Equity-Based December 31, 1997
Benefits Accrued Total Compensation
Aggregate by the Fund and Accrued by the Fund
Compensation Twelve Other Lord and Twelve Other Lord
Accrued by Abbett-sponsored Abbett-sponsored
Name of Director the Fund(1) Funds(2) Funds(3)
- ---------------- ------------ ----------------- ---------------------
E. Thayer Bigelow $ 1,114 $17,068 $56,000
William H. T. Bush* None None None
Robert B. Calhoun** None None None
Stewart S. Dixon $ 1,092 $32,190 $55,000
6
<PAGE>
John C. Jansing $ 1,092 $45,085(4) $55,000
C. Alan MacDonald $ 1,139 $30,703 $57,400
Hansel B. Millican, Jr $ 1,092 $37,747 $55,000
Thomas J. Neff $ 1,114 $19,853 $56,000
* Elected as a director, June 17, 1998, effective as of August 13, 1998
** Elected as a director, May 5, 1998, effective as of June 17, 1998
1. Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on the
net assets of each fund. A portion of the fees payable by the Fund to its
outside directors/trustees is being deferred under a plan that deems the
deferred amounts to be invested in shares of the Fund for later
distribution to the directors/trustees.
2. The amounts in Column 3 were accrued by the Lord Abbett-Sponsored Funds
for the 12 months ended October 31, 1997 with respect to the equity based
plans established for independent directors in 1996. This plan supercedes
a previously approved retirement plan for all future directors. Current
directors had the option to convert their accrued benefits under the
retirement plan. All of the outside directors except one made such an
election.
3. This column shows aggregate compensation, including directors fees and
attendance fees for board and committee meetings, of a nature referred to
in footnote one, accrued by the Lord Abbett-sponsored funds during the
year ended December 31, 1997. The amounts of the aggregate compensation
payable by the Fund as of January 31, 1998 deemed invested in Fund shares,
including dividends reinvested and changes in net asset value applicable
to such deemed investments, were: Mr. Bigelow, $3,724; Mr. Dixon, $29,166;
Mr. Jansing, $65,878; Mr. MacDonald, $22,129; Mr. Millican, $67,603 and
Mr. Neff, $68,005. If the amounts deemed invested in Fund shares were
added to each director's actual holdings of Fund shares as of January 31,
1998, each would own, the following: Mr. Bigelow, 260 shares; Mr. Dixon,
3,125 shares; Mr. Jansing, 22,764 shares; Mr. MacDonald, 1,550 shares; Mr.
Millican, 4,737 shares; and Mr. Neff, 8,420 shares.
4. Mr. Jansing chose to continue to receive benefits under the retirement
plan, which provides that outside directors (trustees) may receive annual
retirement benefits for life equal to their final annual retainer
following retirement at or after age 72 with at least ten years of
service. Thus, if Mr. Jansing were to retire and the annual retainer
payable by the funds were the same as it is today, he would receive annual
retirement benefits of $50,000.
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Carper, Hilstad, Morris, and Walsh are partners of Lord Abbett; the others are
employees:
Executive Vice Presidents:
Stephen J. McGruder, age 54 (Developing Growth Fund); Christopher Towle, age 40
(Bond-Debenture Fund); Edward K. Von Der Linde, age (Mid-Cap Value Fund).
Vice Presidents:
Paul A. Hilstad, age 55, Vice President and Secretary (all Funds) (with Lord
Abbett since 1995 - formerly Senior Vice President and General Counsel of
American Capital Management & Research, Inc.); Thomas J. Baade, age 33
(Bond-Debenture Fund) (with Lord Abbett since 1998 - formerly Vice President of
Smith Barney from 1990 to 1998); Zane Brown, age 46 (Bond-Debenture Fund);
Daniel E. Carper, age 46 (all Funds); Michael S. Goldstein, age 29
(Bond-Debenture Fund); Cinda C. Hughes, age 35 (Developing Growth) (with Lord
Abbett since 1998 - formerly Director, Equity Research of Phoenix Duff & Phelps
from 1996 to 1998; prior thereto Analyst, PaineWebber from 1993 to 1996); Thomas
W. In, age 30 (Developing Growth) (with Lord Abbett since 1997 - formerly
Assistant Vice President of Deutsche Morgan Grenfell from 1994 to 1997);
Lawrence H. Kaplan, age 41 (all Funds) (with Lord Abbett since 1997 formerly
Vice President and Chief Counsel of Salomon Brothers Asset Management Inc from
1995 to 1997, prior thereto Senior Vice President, Director and General Counsel
of Kidder Peabody Asset Management, Inc.); Thomas F. Konop, age 56 (all Funds);
Robert G. Morris, age 53 (Bond-Debenture
7
<PAGE>
Fund, Mid-Cap Value Fund); A. Edward Oberhaus, age 38 (all Funds); Keith F.
O'Connor, age 42 (all Funds); Richard S. Szaro, age 55 (Bond-Debenture Fund);
John J. Walsh, age 62, Vice Presidents; and
Treasurer:
Donna M. McManus, age 37, Treasurer (with Lord Abbett since 1996, formerly a
Senior Manager at Deloitte & Touche LLP).
The Fund's By-Laws provide that the Fund shall not hold an annual meeting of its
stockholders in any year unless one or more matters are required to be acted on
by stockholders under the Act, as amended (the "Act"), or unless called by a
majority of the Board of Directors or by stockholders holding at least one
quarter of the stock of the Fund outstanding and entitled to vote at the
meeting. When any such annual meeting is held, the stockholders will elect
directors and vote on the approval of the independent auditors of the Fund.
As of May 1, 1998, our officers and directors, as a group, owned less than 1% of
each Fund's outstanding shares.
3.
Investment Advisory and Other Services
As described under "Our Management" in the Prospectus, Lord Abbett is the Funds'
investment manager. Five of the general partners of Lord Abbett are officers
and/or directors of the Funds, and are identified as follows: Daniel E. Carper,
Robert S. Dow, Paul A. Hilstad, Robert G. Morris, and John J. Walsh. The address
of each partner is The General Motors Building, 767 Fifth Avenue, New York, New
York 10153-0203. The other general partners who are neither officers nor
directors of the Fund are: Stephen Allen, Zane E. Brown, Daria L. Foster, W.
Thomas Hudson, Michael B. McLaughlin, and Robert J. Noelke.
The services performed by Lord Abbett are described under "Our Management" in
the Prospectus.
Under the Management Agreement, Developing Growth Fund is obligated to pay Lord
Abbett a monthly fee, based on average daily net assets for each month, at the
annual rate of .75 of 1% of the portion of our net assets not in excess of
$100,000,000 and .50 of 1% of such assets over $100,000,000. This fee is
allocated among all class shares based on the classes' proportionate shares of
such average daily net assets. For the fiscal years ended January 31, 1998, 1997
and 1996, the management fees paid to Lord Abbett amounted to $2,325,894,
$1,579,214, and $1,098,965, respectively.
Under its Management Agreement, Bond-Debenture Fund is 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. This fee is allocated among
all classes based on each's proportionate shares of such average daily net
assets. For the fiscal years ended December 31, 1997, 1996 and 1995, the
management fees paid to Lord Abbett by Bond-Debenture Fund amounted to
$11,621,344, $7,802,104, and $5,342,563, respectively.
Under its Management Agreement, Mid-Cap Value Fund is obligated to pay Lord
Abbett a monthly fee, based on average daily net assets at the annual rate of
.75 of 1% on the first $200 million; .65 of 1% on the next $300 million; and .50
of 1% on the excess over $500 million. For the fiscal years ended December 31,
1997, 1996 and 1995, the management fees paid to Lord Abbett by Mid-Cap Value
Fund amounted to $2,102,611, $1,733,689 and $1,584,007.
We pay all expenses not expressly assumed by Lord Abbett, including, without
limitation, 12b-1 expenses, outside directors' fees and expenses, association
membership dues, legal and auditing fees, taxes, transfer and dividend
disbursing agent fees, shareholder servicing costs, expenses relating to
shareholder meetings, expenses of preparing, printing and mailing stock
certificates and shareholder reports, expenses of registering our shares under
federal and state securities laws, expenses of preparing, printing and mailing
prospectuses to existing shareholders, insurance premiums, brokerage and other
expenses connected with executing portfolio security transactions.
8
<PAGE>
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281, are
the independent accountants of the Funds and must be approved at least annually
by the Boards of Directors to continue in such capacity. They perform audit
services for the Fund, including the examination of financial statements
included in our annual report to shareholders.
The Bank of New York ("BNY"), 48 Wall Street, New York, New York 10286, is the
Fund's custodian. In accordance with the requirements of Rule 17f-5 under the
Act, the Fund' directors have approved arrangements permitting the Funds'
foreign assets not held by BNY or its foreign branches to be held by certain
qualified foreign banks and depositories.
4.
Portfolio Transactions
Our policy is to obtain best execution on all our portfolio transactions, which
means that we seek to have purchases and sales of portfolio securities executed
at the most favorable prices, considering all costs of the transaction,
including brokerage commissions and dealer markups and markdowns and taking into
account the full range and quality of the brokers' services. Consistent with
obtaining best execution, we generally pay, as described below, a higher
commission than some brokers might charge on the same transactions. Our policy
with respect to best execution governs the selection of brokers or dealers and
the market in which the transaction is executed. To the extent permitted by law,
we may, if considered advantageous, make a purchase from or sale to another Lord
Abbett-sponsored fund without the intervention of any broker-dealer.
Broker-dealers are selected on the basis of their professional capability and
the value and quality of their brokerage and research services. Normally, the
selection is made by traders who are officers of the Fund and also are employees
of Lord Abbett. These traders do the trading as well for other accounts
- --investment companies (of which they are also officers) and other investment
clients -- managed by Lord Abbett. They are responsible for obtaining best
execution.
We pay a commission rate that we believe is appropriate to give maximum
assurance that our brokers will provide us, on a continuing basis, with the
highest level of brokerage services available. While we do not always seek the
lowest possible commissions on particular trades, we believe that our commission
rates are in line with the rates that many other institutions pay. Our traders
are authorized to pay brokerage commissions in excess of those that other
brokers might accept on the same transactions in recognition of the value of the
services performed by the executing brokers, viewed in terms of either the
particular transaction or the overall responsibilities of Lord Abbett with
respect to us and the other accounts they manage. Such services include showing
us trading opportunities including blocks, a willingness and ability to take
positions in securities, knowledge of a particular security or market proven
ability to handle a particular type of trade, confidential treatment, promptness
and reliability.
Some of these brokers also provide research services at least some of which are
useful to Lord Abbett in their overall responsibilities with respect to us and
the other accounts they manage. Research includes the furnishing of analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts and trading equipment and
computer software packages, acquired from third-party suppliers, that enable
Lord Abbett to access various information bases. Such services may be used by
Lord Abbett in servicing all their accounts, and not all of such services will
necessarily be used by Lord Abbett in connection with their management of the
Funds; conversely, such services furnished in connection with brokerage on other
accounts managed by Lord Abbett may be used in connection with their management
of the Funds, and not all of such services will necessarily be used by Lord
Abbett in connection with their advisory services to such other accounts. We
have been advised by Lord Abbett that research services received from brokers
cannot be allocated to any particular account, are not a substitute for Lord
Abbett's services but are supplemental to their own research effort and when
utilized, are subject to internal analysis before being incorporated by Lord
Abbett into their investment process. As a practical matter, it would not be
possible for Lord Abbett to generate all of the information presently provided
by brokers. While receipt of research services from brokerage firms has not
reduced Lord Abbett's normal research activities, the expenses of Lord Abbett
could be materially increased if it attempted to generate such additional
information through its own staff and purchased such equipment and software
packages directly from the suppliers.
9
<PAGE>
No commitments are made regarding the allocation of brokerage business to or
among brokers, and trades are executed only when they are dictated by investment
decisions of the Funds to purchase or sell portfolio securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold our shares and/or
shares of other Lord Abbett-sponsored funds may be preferred. If other clients
of Lord Abbett buy or sell the same security at the same time as we do,
transactions will, to the extent practicable, be allocated among all
participating accounts in proportion to the amount of each order and will be
executed daily until filled so that each account shares the average price and
commission cost of each day. Other clients who direct that their brokerage
business be placed with specific brokers or who invest through wrap accounts
introduced to Lord Abbett by certain brokers may not participate with us in the
buying and selling of the same securities as described above. If these clients
wish to buy or sell the same security as we do, they may have their transactions
executed at times different from our transactions and thus may not receive the
same price or incur the same commission cost as we do. We will not seek
"reciprocal" dealer business (for the purpose of applying commissions in whole
or in part for our benefit or otherwise) from dealers as consideration for the
direction to them of portfolio business.
During the fiscal years ended January 31, 1998, 1997 and 1996, Developing Growth
Fund paid total commissions to independent dealers of $1,930,696, $1,696,590,
and $981,015, respectively.
During the fiscal years ended December 31, 1997, 1996 and 1995, the
Bond-Debenture Fund paid total commissions to independent broker-dealers of
414,773,720, $8,760,174 and $6,717,922, respectively.
During the fiscal years ending December 31, 1997, 1996 and 1995, the Mid-Cap
Value Fund paid total commissions to independent broker-dealers of $992,190,
$554,002, and $586,752, respectively.
5.
Purchases, Redemptions
and Shareholder Services
The Funds value their portfolio securities at market value as of the close of
the NYSE. Market value will be determined as follows: securities listed or
admitted to trading privileges on the New York or American Stock Exchange or on
the NASDAQ National Market System are valued at the last sales price, or, if
there is no sale on that day, at the mean between the last bid and asked prices,
or, in the case of bonds, in the over-the-counter market if, in the judgment of
the Fund's officers, that market more accurately reflects the market value of
the bonds. Over-the-counter securities not traded on the NASDAQ National Market
System are valued at the mean between the last bid and asked prices. Securities
for which market quotations are not available are valued at fair market value
under procedures approved by the Board of Directors.
Information concerning how we value our shares for the purchase and redemption
of our shares is described in the Prospectus under "Purchases" and
"Redemptions," respectively.
As disclosed in the Prospectus, we calculate our net asset value and are
otherwise open for business on each day that the NYSE is open for trading. The
NYSE is closed on Saturdays and Sundays and the following holidays -- New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
The net asset value per share for the Class Y shares will be determined by
taking Class Y shares (net assets divided by shares outstanding). Our Class Y
shares will be offered at net asset value.
The Funds have entered into distribution agreements with Lord Abbett
Distributor, a New York limited liability company and subsidiary of Lord Abbett
under which Lord Abbett Distributor is obligated to use its best efforts to find
purchasers for the shares of the Funds, and to make reasonable efforts to sell
Fund shares so long as, in Lord Abbett Distributor's judgment, a substantial
distribution can be obtained by reasonable efforts.
10
<PAGE>
CLASS Y SHARE EXCHANGES. The Prospectus briefly describes the Telephone Exchange
Privilege. You may exchange some or all of your Class Y shares for Class Y
shares of any other eligible Lord Abbett-sponsored fund currently offering Class
Y shares to the public. Currently those other funds consist of Lord Abbett
Affiliated Fund, Inc., Lord Abbett Research Fund, Inc. - Small-Cap Series and
Growth Opportunities Fund, Lord Abbett Securities Trust - International Series.
REDEMPTIONS. A redemption order is in proper form when it contains all of the
information and documentation required by the order form or supplementally by
Lord Abbett Distributor or the Funds to carry out the order. The signature(s)
and any legal capacity of the signer(s) must be guaranteed by an eligible
guarantor. See the Prospectus for expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Boards of Directors for the Funds may authorize redemption of all of the
shares in any account in which there are fewer than 25 shares. Before
authorizing such redemption, the Board must determine that it is in our economic
best interest or necessary to reduce disproportionately burdensome expenses in
servicing shareholder accounts. At least 30 days' prior written notice will be
given before any such redemption, during which time shareholders may avoid
redemption by bringing their accounts up to the minimum set by the Board.
6.
Past Performance
The Fund computes the average annual compounded rate of total return for Class Y
shares during specified periods that would equate the initial amount invested to
the ending redeemable value of such investment by adding one to the computed
average annual total return, raising the sum to a power equal to the number of
years covered by the computation and multiplying the result by one thousand
dollars, which represents a hypothetical initial investment. The calculation
assumes applicable sales charge deduction from the initial amount invested and
reinvestment of all income dividends and capital gains distributions on the
reinvestment dates at prices calculated as stated in the Prospectus. The ending
redeemable value is determined by assuming a complete redemption at the end of
the period(s) covered by the total return computation for the period.
In calculating total returns for Class Y shares no sales charge is deducted from
the initial investment and the return is shown at net asset value. Total returns
also assume that all dividends and capital gains distributions during the period
are reinvested at net asset value per share, and that the investment is redeemed
at the end of the period.
Class Y share performance. Using the computation method described above, the
Developing Growth Fund's cumulative total return for the one-month period ending
January 31, 1998 was 1.10%.
GET THESE NUMBERS FOR BOND-DEBENTURE AND MID-CAP VALUE FROM ROB FAMULARE.
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 Funds or otherwise sold may be more or
less than your tax basis in the shares at the time the redemption or sale is
made. Any gain or loss generally will be taxable for federal income tax
purposes. Any loss realized on the sale, or redemption of Fund shares
11
<PAGE>
which you have held for six months or less will be treated for tax purposes as a
long-term capital loss to the extent of any capital gains distributions which
you received with respect to such shares. Losses on the sale of stock or
securities are not deductible if, within a period beginning 30 days before the
date of the sale and ending 30 days after the date of the sale, the taxpayer
acquires stock or securities that are substantially identical.
As described in the Prospectus under "How We Invest - Risk Factors," the Funds
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
Funds.
Gains and losses realized by the Funds on certain transactions, including sales
of foreign debt securities and certain transactions involving foreign currency,
will be treated as ordinary income or loss for federal income tax purposes to
the extent, if any, that such gains or losses are attributable to changes in
exchange rates for foreign currencies. Accordingly, distributions taxable as
ordinary income will include the net amount, if any, of such foreign exchange
gains and will be reduced by the net amount, if any, of such foreign exchange
losses.
If the Funds purchase shares in certain foreign investment entities, called
"PFICs" or "passive foreign investment companies," it may be subject to United
States federal income tax on a portion of any "excess distribution" or gain from
the disposition of such shares, even if such income is distributed as a taxable
dividend by the Funds to its shareholders. Additional charges in the nature of
interest may be imposed on either the Funds or their shareholders with respect
to deferred taxes arising from such distributions or gains. If the Funds were to
invest in a passive foreign investment company with respect to which the Funds
elected to make a "qualified electing fund" election, in lieu of the foregoing
requirements, the Funds might be required to include in income each year a
portion of the ordinary earnings and net capital gains of the qualified electing
fund, even if such amount were not distributed to the Funds. Proposed
legislation would revise the passive foreign investment company rules in various
respects; it is unclear whether and in what form such legislation might be
enacted.
The Funds will be subject to a 4% nondeductible excise tax on certain amounts
not distributed (and not treated as having been distributed) on a timely basis
in accordance with a calendar year distribution requirement. The Fund intends to
distribute to shareholders each year an amount adequate to avoid the imposition
of such excise tax.
Dividends paid by the Funds should qualify for the dividends-received deduction
for corporations, to the extent they are derived from dividends paid by domestic
corporations.
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to United States persons (United States citizens or residents and
United States domestic corporations, partnerships, trusts and estates). Each
shareholder who is not a United States person should consult his tax adviser
regarding the U.S. and foreign tax consequences of the ownership of shares of
the Funds, including a 30% (or lower treaty rate) United States withholding tax
on dividends representing ordinary income and net short-term capital gains, and
the applicability of United States gift and estate taxes to non-United States
persons who own Funds' shares.
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
12
<PAGE>
from investing in a security seven days before or after any Lord
Abbett-sponsored fund or Lord Abbett-managed account considers a trade or trades
in such security, from profiting on trades of the same security within 60 days
and from trading on material and non-public information. The Code imposes
certain similar requirements and restrictions on the independent directors and
trustees of each Lord Abbett-sponsored mutual fund to the extent contemplated by
the recommendations of the Advisory Group.
9.
Financial Statements
The financial statements for the fiscal year ended January 31, 1998, the fiscal
half-year ended July 30, 1998, and the report of Deloitte & Touche LLP,
independent accountants, on such financial statements contained in the 1998
Annual Report to Shareholders of Lord Abbett Developing Growth Fund, Inc. are
incorporated herein by reference to such financial statements and report in
reliance upon the authority of Deloitte & Touche LLP as experts in auditing and
accounting.
The financial statements for the fiscal year ended December 31, 1997, the fiscal
half-year ended June 30, 1998, and the report of Deloitte & Touche LLP,
independent public auditors, on such financial statements contained in the 1997
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.
The financial statements for the fiscal year ended December 31, 1997, the fiscal
half-year ended June 30, 1998, and the report of Deloitte & Touche LLP,
independent auditors, on such financial statements contained in the 1997 Annual
Report to Shareholders of Lord Abbett Mid-Cap Value 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.
13
<PAGE>
PART C OTHER INFORMATION
Item 23. Exhibits
(a) Articles of Incorporation. Incorporated by reference.
Restated Articles of Incorporation. Incorporated by reference
to Post-Effective Amendment No. 17 to the Registration
Statement on Form N-1A filed on April 30, 1998.
(b) By-Laws.
(c) Instruments Defining Rights of Security Holders. Incorporated
by reference.
(d) Investment Advisory Contracts. Incorporated by reference.
(e) Underwriting Contracts. Incorporated by reference.
(f) Bonus or Porfit Sharing Incorporated by reference.
(g) Custodian Agreements.. Incorporated by reference.
(h) Other Material Contracts. Incorporated by reference.
(i) Legal Opinions. Incorporated by reference.
(j) Other Opinions. Incorporated by reference.
(k) Omitted Financial Statements. Incorporated by reference.
(l) Initial Capital Agreements. Incorporated by reference.
(m) Rule 12b-1 Plan. Incorporated by reference.
(n) Financial Data Schedule.
(o) Rule 18f-3 Plan. Incorporated by reference to Post-Effective
Amendment No. 40 to the Registration Statement on Form N-1A
filed on May 14, 1996.
Item 24. Persons Controlled by or Under Common Control with the Fund.
None.
Item 25. 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 directors and officers. Since Registrant has
its executive offices in the State of New York, and is qualified as
a foreign corporation doing business in such State, the persons
covered by the foregoing statute may also be entitled to and subject
to the limitations of the indemnification provisions of Section
721-726 of the New York Business Corporation Law.
The general effect of these statutes is to protect officers,
directors and employees of Registrant against legal liability and
expenses incurred by reason of their positions with the Registrant.
The statutes provide for indemnification for liability for
proceedings not brought on behalf of the corporation and for those
brought on behalf of the corporation, and in each case place
conditions under which indemnification will be permitted, including
requirements that the officer, director or employee acted in good
faith. Under certain conditions, payment of expenses in advance of
final disposition may be permitted. The By-Laws of Registrant,
without limiting the authority of Registrant to indemnify any of its
officers, employees or agents to the extent consistent with
applicable law, 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
1
<PAGE>
limitation imposed by Section 17(h) is the more stringent. In
referring in its By-Laws to SEC Release No. IC-11330 as the source
for interpretation and implementation of said Section 17(h),
Registrant understands that it would be required under its By-Laws
to use reasonable and fair means in determining whether
indemnification of a director should be made and undertakes to use
either (1) a final decision on the merits by a court or other body
before whom the proceeding was brought that the person to be
indemnified ("indemnitee") was not liable to Registrant or to its
security holders by reason of willful malfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the
conduct of his office ("disabling conduct") or (2) in the absence of
such a decision, a reasonable determination, based upon a review of
the facts, that the indemnitee was not liable by reason of such
disabling conduct, by (a) the vote of a majority of a quorum of
directors who are neither "interested persons" (as defined in the
1940 Act) of Registrant nor parties to the proceeding, or (b) an
independent legal counsel in a written opinion. Also, Registrant
will make advances of attorneys' fees or other expenses incurred by
a director in his defense only if (in addition to his undertaking to
repay the advance if he is not ultimately entitled to
indemnification) (1) the indemnitee provides a security for his
undertaking, (2) Registrant shall be insured against losses arising
by reason of any lawful advances, or (3) a majority of a quorum of
the non- interested, non-party directors of Registrant, or an
independent legal counsel in a written opinion, shall determine,
based on a review of readily available facts, that there is reason
to believe that the indemnitee ultimately will be found entitled to
indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expense incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
In addition, Registrant maintains a directors' and officers' errors
and omissions liability insurance policy protecting directors and
officers against liability for breach of duty, negligent act, error
or omission committed in their capacity as directors or officers.
The policy contains certain exclusions, among which is exclusion
from coverage for active or deliberate dishonest or fraudulent acts
and exclusion for fines or penalties imposed by law or other matters
deemed uninsurable.
Item 26. Business and Other Connections of Investment Adviser
Lord, Abbett & Co. acts as investment advisor for twelve, other
open-end investment companies (of which it is principal underwriter
for thirteen) and as investment adviser to approximately 6,220
private accounts. Other than acting as directors and/or officers of
open-end investment companies 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 in the capacity of
director, officer, employee, partner or trustee of any entity.
Item 27. Principal Underwriter
(a) Lord Abbett Affiliated Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett U.S. Government Securities Money Market Fund, Inc.
2
<PAGE>
Lord Abbett Series Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Tax-Free Income Trust
Lord Abbett Securities Trust
Lord Abbett Investment Trust
Lord Abbett Research Fund, Inc.
Investment Adviser
American Skandia Trust (Lord Abbett Growth and Income
Portfolio)
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
Business Address(1) with Registrant
------------------- ---------------
Robert S. Dow Chairman and President
Christopher J. Towle Executive Vice President
Paul A. Hilstad Vice President & Secretary
Zane E. Brown Vice President
Daniel E. Carper Vice President
Robert G. Morris Vice President
John J. Walsh Vice President
The other partners who are neither officers nor directors of
the Fund are, as follows: Stephen Allen, John E. Erard, Robert
B. Fetch, Daria L. Foster, Robert I. Gerber, W. Thomas Hudson,
Stephen I. McGruder, Michael B. McLaughlin ,Robert J. Noelke,
and Mark R. Pennington.
Each of the above has a principal business address at 767
Fifth Avenue, New York, NY 10153
(c) Not applicable
Item 28. 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 canceled 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 29. Management Services
None
Item 30. Undertakings
The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
The registrant undertakes, if requested to do so by the holders of
at least 10% of the registrant's
3
<PAGE>
outstanding shares, to call a meeting of shareholders for the
purpose of voting upon the question of removal of a director or
directors and to assist in communications with other shareholders as
required by Section 16(c).
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant had duly caused this Registration
Statement 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 1st day of
March, 1999.
BY: /s/ Thomas F. Konop
-------------------
Thomas F. Konop
Vice President
LORD ABBETT BOND-DEBENTURE FUND, INC.
5
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below on this Amendment to the
Registration Statement hereby constitutes and appoints Paul A. Hilstad, Lawrence
H. Kaplan and Thomas F. Konop, each of them, with full power to act without the
other, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (until revoked in writing) to sign any and all amendments
to this Registration Statement of each Fund enumerated on Exhibit A hereto
(including post-effective amendments and amendments thereto), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
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.
Signatures Title Date
- ---------- ----- ----
Chairman, President
/s/ Robert S. Dow* and Director/Trustee March 1, 1999
- --------------------------- -------------------- -----------------
Robert S. Dow
/s/ E. Thayer Bigelow* Director/Trustee March 1, 1999
- --------------------------- -------------------- -----------------
E. Thayer Bigelow
/s/ William H. T. Bush* Director/Trustee March 1, 1999
- --------------------------- -------------------- -----------------
William H. T. Bush
/s/ Robert B. Calhoun, Jr*. Director/Trustee March 1, 1999
- --------------------------- -------------------- -----------------
Robert B. Calhoun, Jr.
/s/ Stewart S. Dixon* Director/Trustee March 1, 1999
- --------------------------- -------------------- -----------------
Stewart S. Dixon
/s/ John C. Jansing* Director/Trustee March 1, 1999
- --------------------------- -------------------- -----------------
John C. Jansing
/s/ C. Alan MacDonald* Director/Trustee March 1, 1999
- --------------------------- -------------------- -----------------
C. Alan MacDonald
/s/ Hansel B. Millican, Jr*. Director/Trustee March 1, 1999
- --------------------------- -------------------- -----------------
Hansel B. Millican, Jr.
/s/ Thomas J. Neff* Director/Trustee March 1, 1999
- --------------------------- -------------------- -----------------
Thomas J. Neff
*BY: /s/ Thomas F. Konop
-------------------
Thomas F. Konop
Attorney-in-Fact
6
<PAGE>
EXHIBIT A
Lord Abbett Affiliated Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett Investment Trust
Lord Abbett Securities Trust
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Tax-Free Income Trust
Lord Abbett U.S. Government Securities Money Market Fund, Inc.
Lord Abbett Research Fund, Inc.
Lord Abbett Series Fund, Inc.
Lord Abbett Equity Fund, Inc.
7
