SUPPLEMENT DATED MAY 22, 1995 TO THE CURRENT STATEMENT OF ADDITIONAL INFORMATION
FOR LORD ABBETT VALUE APPRECIATION FUND, INC.
<PAGE>
INVESTMENT MANAGEMENT
A TRADITION OF PERFORMANCE THROUGH DISCIPLINED INVESTING.
<PAGE>
"We believe that an investment firm worthy of the name fosters a sound
professional relationship between the House and the Client."
<PAGE>
PARTNERSHIP AT LORD, ABBETT & CO.
INDEPENDENCE AND EXCELLENCE
Established in 1929, Lord, Abbett & Co. is guided by a long tradition of
independence and excellence. We are a partnership and all of our partners are
active in the daily management of the Firm. Attributes such as dedication,
accountability, involvement and performance define our organization and and
characterize the way we invest.
Assets under management currently total about $16 billion, consisting of a
family of mutual funds and separately-managed equity, fixed-income and balanced
accounts for corporations, institutions and individuals.
<PAGE>
"THE MOST IMPORTANT
ELEMENT IN SECURING THE FIRMS FUTURE:
ALWAYS PUT THE INVESTOR FIRST."
RONALD P. LYNCH,
MANAGING PARTNER
[Picture]
Seated:
Ronald P. Lynch,
Managing Partner
Standing, left to right:
Thomas S. Henderson,
Partner and Portfolio Manager
Daniel E. Carper,
Partner in charge of Sales and Marketing
Robert S. Dow,
Partner in charge of Fixed Income and Portfolio Manager
<PAGE>
LORD ABBETT'S INVESTMENT PHILOSOPHY
[Picture]
SEATED:
ROBERT S. DOW,
PARTNER IN CHARGE OF FIXED INCOME AND PORTFOLIO MANAGER
STANDING, LEFT TO RIGHT:
ROBERT G. MORRIS,
DIRECTOR OF EQUITY INVESTMENTS
JULIE M. CANNELL,
ASSOCIATE DIRECTOR OF EQUITY RESEARCH
ZANE E. BROWN,
DIRECTOR OF FIXED INCOME AND PORTFOLIO MANAGER
EQUITY MANAGEMENT
For decades, value has been at the heart of our approach to investing. We invest
for the long term in the securities of companies whose earnings potential, cash
flow or net assets are underpriced in the marketplace. Often this means sifting
through companies that are out of favor with Wall Street and the investing
public to identify the best relative values. Our objective is to obtain
above-average total returns consistently, with less volatility than the market.
What distinguishes us as value managers is the investment process used to
find securities that we believe are positioned to benefit from change. This
process combines quantitative, fundamental and economic analysis in the
disciplined selection of securities.
<PAGE>
LORD ABBETT'S INVESTMENT PHILOSPHY
"INVESTING IN SECURITIES THAT ARE UNDERVALUED HAS PRODUCED COMPETITIVE,
CONSISTENT LONG-TERM RETURNS WITH BELOW-MARKET RISK."
ROBERT S. DOW,
PARTNER IN CHARGE OF
FIXED INCOME AND
PORTFOLIO MANAGER
FIXED-INCOME MANAGEMENT
We utilize a total return approach to fixed-income management, with an emphasis
on current income. Maturities and sectors are adjusted to reflect our outlook
for inflation, interest rates, changes in Federal Reserve policy and cyclical
market pressures. Call protection, issuers creditworthiness and prepayment risk
are important considerations in determining intrinsic value. We also believe
bonds can become mispriced for non-economic reasons, which creates
opportunities for value investors.
BALANCED MANAGEMENT
Our balanced portfolios combine our fundamentally-driven, value-oriented equity
management with an actively managed, primarily high-quality, fixed-income
portfolio. The ratio of stocks to bonds is determined at periodic strategy
meetings based on our assessment of the risk-adjusted prospects for both
markets.
<PAGE>
A TALENTED INVESTMENT TEAM
Our investment effort is built on in-house research. We do our own market and
securities analyses and we make our own financial forecasts. On-site plant
inspections and discussions with senior corporate management are an important
part of evaluating the companies currently held in our portfolios as well as
those we are considering for investment. These efforts add perspective on a
companys costs, long-term strategies and the competitive dynamics a company has
within its industry.
Our portfolio managers, research analysts and economist work closely in all
aspects of investment decision making. We currently have a staff of 38
investment professionals, who average 19 years of experience in the business and
8 years of tenure with Lord, Abbett & Co.
<PAGE>
INTERNATIONAL EXPERTISE
"INVESTMENT POTENTIAL SHIFTS THROUGHOUT THE WORLD. GLOBAL INVESTING ALLOWS
INVESTORS TO CAPITALIZE ON GROWTH OPPORTUNITIES ABROAD."
E. WAYNE NORDBERG,
PARTNER AND
PORTFOLIO MANAGER
[Picture]
LEFT TO RIGHT:
E. WAYNE NORDBERG,
PARTNER AND PORTFOLIO MANAGER
ZANE E. BROWN,
DIRECTOR OF FIXED INCOME AND PORTFOLIO MANAGER
BURTON ZWICK,
SENIOR ECONOMIST
We maintain an advisory relationship with Dunedin Fund Managers Limited of
Scotland, which adds a global dimension to our resources. Dunedin and its
predecessors have been managing global investments since 1873.
Dunedin's investment philosophy complements Lord Abbett's: Dunedin's
decision-making process is based on fundamental research, which is applied to
the global markets. Throughout its history, Dunedin has derived its strength and
reputation from its high-quality staff and its record of superior returns.
<PAGE>
CONSISTENCY OF PERFORMANCE
Our performance is the results of a collaborative effort where everyone works
toward a common goal uncommon investment results. We believe that by striving
for consistent performance through our focus on value investing, we will
continually increase the assets we manage. We have not diluted our efforts by
expansion into any other enterprises. Money management is Lord Abbetts only
business.
"TAKING AN INVESTOR
TO HIS OR HER STATED
GOALTHATS OUR DENITION
OF PERFORMANCE."
THOMAS S. HENDERSON,
PARTNER AND
PORTFOLIO MANAGER
[Picture]
LEFT TO RIGHT:
THOMAS S. HENDERSON,
PARTNER AND PORTFOLIO MANAGER
ROBERT G. MORRIS,
DIRECTOR OF EQUITY INVESTMENTS
VICTOR W. PIZZOLATO,
SENIOR SECURITIES TRADER
<PAGE>
LORD, ABBETT & CO.
INVESTMENT
MANAGERS & UNDERWRITERS
SINCE 1929
WE INVITE YOU TO CALL LORD, ABBETT & CO.
800-426-1130
<PAGE>
OUR FAMILY OF FUNDS
LORD, ABBETT & CO.
Investment Management
[P1]
A Tradition of Performance
Through Disciplined Investing
<PAGE>
Founded in 1929, Lord, Abbett & Co. was one of the nation's first mutual
fund managers. While many things have changed since then, we have remained
committed to:
. Putting the investor first - our future depends on it.
. Providing investors with investment options - the Lord Abbett Family of
Funds consists of 25 portfolios to meet a variety of investment needs.
. Working with financial professionals - who provide valuable, informed
advice and help investors select the appropriate funds for their needs.
. Investing with a disciplined, value approach - we believe it is the best
way to achieve competitive returns and reduce portfolio risk.
. Attracting and retaining a qualified staff of investment professionals -
which currently consists of 41 professionals who average 19 years of
industry experience and 9 years of tenure with Lord, Abbett & Co.
This commitment has helped us earn the trust of financial professionals,
mutual fund investors, private investors, corporations and institutions.
"The most important element
[P2] in securing the Firm's future:
Ronald P. Lynch, always put the investor first."
Managing Partner
Ronald P. Lynch,
Managing Partner
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
<S> <C>
About Lord, Abbett & Co............................................... 1
Selecting A Fund...................................................... 3
Fund Data
. Fund Performance............................................. 4
. Growth Funds................................................. 5
. Growth & Income Funds........................................ 6
. Balanced Fund................................................ 6
. Income Funds................................................. 7
. Tax-Free Income Funds........................................ 8
. Limited-Term Income Funds.................................... 12
Service & Flexibility................................................. 13
</TABLE>
<PAGE>
ABOUT
LORD,
ABBETT
WHO INVESTS IN THE LORD ABBETT FAMILY OF FUNDS? & CO.
- -------------------------------------------------------------------------
Number Of
Accounts*
. FIDUCIARIES
Trusts...................................................... 25,810
Custodians for minors....................................... 24,487
Pension, Profit-Sharing, and 401(k) Retirement Plans........ 24,099
457 Retirement & 403(b) Plans............................... 7,975
Estates..................................................... 1,192
. INSTITUTIONS
Accounts held in Broker/Dealer Street Name.................. 170,297
Corporations................................................ 2,410
Charitable & religious organizations........................ 993
Banks, credit unions & other financial organizations........ 982
Clubs & fraternal organizations............................. 330
Cemeteries.................................................. 148
Government Agencies......................................... 104
Colleges & universities..................................... 79
Nursing homes & hospitals................................... 69
. INDIVIDUALS
Single & joint accounts..................................... 200,831
IRAs........................................................ 85,517
-------
TOTAL 545,323
Lord Abbetts current and retired employees and their families have over $175
million invested in the Lord Abbett Family of Funds.
*As of 3/31/95.
Lord Abbett currently manages over
$16 billion for private investors,
corporations and institutions. [G1]
Assets under management
break out as follows:
1
<PAGE>
ABOUT
LORD,
ABBETT
& CO. WHAT MAKES LORD ABBETT DIFFERENT?
-----------------------------------------------------------------
AN INVESTMENT PHILOSOPHY ROOTED IN VALUE
A focus on value investing is the cornerstone of our investment
philosophy. Simply put, value investing is bargain hunting.
What distinguishes Lord, Abbett & Co. from other equity value managers
is our disciplined, three-step investment process used to identify and
invest in bargain-priced securities. Our goal is to provide investors
with portfolios that offer competitive total returns with less
volatility than the market.
OUR DISCIPLINED INVESTMENT PROCESS
. Quantitive Research is performed
to identify the most attractively
priced stocks. These "Targets of
Opportunity" undergo further
analyses.
. Fundamental Research helps . A Macro-Economic/Interest-
assess a company's resources Rate Screen helps portfolio
and determines if, given these managers identify opportunities
resources, a company's afforded by economic or
strategic plan is realistic. interest-rate influences.
In the management of fixed-income portfolios, our goal is total return
with an emphasis on current income. Based on our outlook for inflation,
interest rates and changes in Federal Reserve policy, we look for
undervalued securities. Active portfolio management strategies,
including adjusting maturities and sectors, and analyzing an issuer's
creditworthiness and prepayment risk, help us identify opportunities in
the fixed-income markets.
These same investment disciplines are used to manage our global mutual
funds. Dunedin Fund Managers Limited of Scotland serves as sub-adviser
and adds a global dimension to our resources. Dunedin and its
predecessors have been managing money since 1873.
"Our goal in investing in undervalued
[P3] securities is to produce competitive long-term
returns with reduced market risk."
Robert G. Morris,
Director of Equity Investments
left to right:
Julie M. Cannell,
Associate Director of
Equity Research
Robert G. Morris,
Director of Equity Investments
2
<PAGE>
SELECTING
A FUND
THE LORD ABBETT INVESTMENT SPECTRUM
- -------------------------------------------------------------------
The Lord Abbett Family of Funds consists of 25 portfolios
designed to meet various investment objectives. Shareholders
may reallocate assets among our funds at any time.
<TABLE>
<CAPTION>
GROWTH INCOME
- ------ ------------
Growth Growth & Balanced Income Tax-Free Limited-Term-
Funds Income Funds Fund Funds Income Funds Income Funds
- ------ ------------ -------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Developing Affiliated Fund Investment U.S. Government -National Investment Trust
Growth Fund Trust- Securities Fund -California Limited Duration
Fundamental Balanced -Connecticut U.S. Government
Value Value Fund Series Bond-Debenture -Florida Securities Series
Appreciation Fund -Georgia
Fund -Hawaii U.S. Government
Global Fund- -Michigan Securities Money
Global Fund- Income Series -Minnesota Market Fund
Equity Series -Missouri
-New Jersey
-New York
-Pennsylvania
-Texas
-Washington
</TABLE>
For more complete information on any of these funds, including charges,
risk factors, expenses assumed and fees waived, please contact your
financial adviser or call Lord, Abbett & Co. at 800-874-3733 for a
prospectus. Please read the prospectus carefully before investing.
"Having access to a complete family of funds
gives the professional financial adviser the
flexibility to build an individualized portfolio
from a combination of funds to meet each [P4]
client's unique investment objective."
Daniel E. Carper,
Partner in Charge of Marketing and Sales
left to right:
Stephen I. Allen,
Partner, National Sales
Manager
Daniel E. Carper,
Partner in Charge of
Marketing and Sales
3
<PAGE>
FUND
DATA
FUND PERFORMANCE (AS OF 3/31/95)
--------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Rates of Return at Maximum
Sales Charge for the Periods Ended 3/31/95
------------------------------------------------
Inception 10 Years or
Date Symbol 1 Year 3 Years 5 Years Since Inception
--------- ------ ------ ------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Growth Funds
------------
Developing Growth Fund 10/10/73 LAGWX 6.00% 6.06% 10.89% 7.79%
Value Appreciation Fund 6/28/83 LAVLX 1.20 7.49 9.39 11.74
Global Fund--Equity Series 9/30/88 LAGEX -6.60 6.68 4.70 5.54*
Growth & Income Funds
---------------------
Affiliated Fund 5/14/34 LAFFX 10.00 10.77 9.70 12.68
Fundamental Value Fund 7/8/86 LDFVX 7.20 8.94 9.19 9.70*
Balanced Fund
-------------
Investment Trust--Balanced Series 12/27/94 LABFX** - - - 0.90*+
Income Funds
------------
U.S. Government Securities Fund 9/19/32 LAGVX -1.60 4.28 7.54 9.17++
Bond-Debenture Fund 4/1/71 LBNDX -3.60 6.79 10.71 9.70
Global Fund--Income Series 9/30/88 LAGIX 3.50 6.32 8.85 8.19*
Tax-Free Income Funds
---------------------
National Series 4/2/84 LANSX 0.50 4.86 6.81 9.10
California Fund 9/3/85 LCFIX -0.90 4.40 6.67 7.96*
Connecticut Series 4/1/91 LACTX 0.60 5.31 - 6.55*
Florida Series 9/25/91 LAFLX 0.70 5.52 - 5.27*
Georgia Series 12/27/94 LAGAX** - - - 1.20*+
Hawaii Series 10/28/91 LAHIX 0.80 5.10 - 5.36*
Michigan Series 12/1/92 LAMIX 1.00 - - 4.57*
Minnesota Series 12/27/94 LAMNX** - - - 0.20*+
Missouri Series 5/31/91 LAMOX 0.00 4.86 - 6.47*
New Jersey Series 1/2/91 LANJX 1.10 5.85 - 7.32*
New York Series 4/2/84 LANYX -1.70 4.34 6.55 8.70
Pennsylvania Series 2/3/92 LAPAX 1.20 5.73 - 5.49*
Texas Series 1/20/87 LATIX 1.90 5.25 7.22 7.29*
Washington Series 4/15/92 LAWAX 0.80 - - 5.11*
Limited-Term Income Funds
-------------------------
Investment Trust--Limited Duration
U.S. Government Securities Series 11/4/93 LALDX** -0.40 - - -2.00*
U.S. Government Securities Money
Market Fund 6/27/79 LACXX 4.17 3.01 4.12 5.55
</TABLE>
* Since inception.
** Proposed.
+ Not annualized.
++ Prior to 10/15/85, the Fund invested in both corporate and U.S.
Government securities. Since that date, the Fund has invested in
U.S. Government securities exclusively. Average annual total return
from that date is 8.32%.
Performance results shown above reflect the percent change in
value assuming the reinvestment of all distributions. The results
quoted herein represent past performance which is no indication of
future results. The investment return and principal value of an
investment in the funds will fluctuate so that shares, on any given
day or when redeemed, may be worth more or less than their original
cost. The maximum sales charge is 3.00% for investments under $100,000
in the Limited Duration U.S. Government Securities Series; 5.75% for
investments under $50,000 in any of the growth or growth & income
funds; and 4.75% for investments under $100,000 in the Balanced Series
and in any of the remaining income funds except for the Money Market
Fund (which has no sales charge). See the prospectus of the fund you
are interested in for a discussion of fees waived and expense
subsidies.
4
<PAGE>
FUND
DATA
GROWTH FUNDS
- -------------------------------------------------------------------------
LORD ABBETT DEVELOPING GROWTH FUND Inception: 10/10/73
-------------------------------------------------------------------------
The goal of the Fund is to allow shareholders Average Annual Total
to participate in the future of selected small Returns as of 3/31/95
companies with above-average prospects for growth.
Composition: A portfolio of stocks of small companies.
Goal: To provide you with long-term price appreciation.
Net Assets: $138.9 million
Initial [G2]
Investment: $1,000 minimum; $250 for IRAs
Dividends: Paid or reinvested annually (if declared)
LORD ABBETT VALUE APPRECIATION FUND Inception: 6/28/83
--------------------------------------------------------------------------
The Fund is one of only a few funds that focuses Average Annual Total
on out-of-favor midsized companies (those with Returns as of 3/31/95
market capitalizations of roughly $500 million
to $3 billion).
Composition: A portfolio of undervalued stocks of midsized companies.
Goal: To provide you with growth of capital.
Net Assets: $194.5 million
Initial [G3]
Investment: $1,000 minimum; $250 for IRAs
Dividends: Paid or reinvested annually
LORD ABBETT GLOBAL FUND - EQUITY SERIES Inception: 9/30/88
--------------------------------------------------------------------------
Global diversification gives the Series the Average Annual Total
potential to benefit from favorable economic Returns as of 3/31/95
trends and undervalued securities throughout
the world.
Composition: A portfolio of undervalued stocks from around the world.
Goal: To provide you with long-term growth and income.
Net Assets: $80.6 million
Initial [G4]
Investment: $1,000 minimum; $250 for IRAs
Dividends: Paid or reinvested semi-annually
Country Diversification
on 3/31/95
[G5]
All results are at net asset value. See "Fund Performance" on page 4 for
performance at the applicable maximum sales charge. For a description of
fees waived and expense subsidies, see the prospectus of the fund you are
interested in.
5
<PAGE>
FUND
DATA
GROWTH & INCOME FUNDS
- -------------------------------------------------------------------------
LORD ABBETT'S AFFILIATED FUND Inception: 5/14/34
---------------------------------------------------------------------------
The Fund utilizes a disciplined investment approach Average Annual Total
to identify out-of-favor stocks of large, blue-chip Returns as of 3/31/95
companies.
Composition: A portfolio of undervalued stocks of
large, well-seasoned companies.
Goal: To provide you with long-term growth
of capital and income without excessive
price fluctuations.
Net Assets: $4.4 billion
Initial [G6]
Investment: $250 minimum
Dividends: Paid or reinvested quarterly
LORD ABBETT FUNDAMENTAL VALUE FUND Inception: 7/8/86
---------------------------------------------------------------------------
The Fund invests in out-of-favor stocks of Average Annual Total
large and midsized companies. This policy allows Returns as of 3/31/95
management to look at opportunities in a very
large universe.
Composition: A portfolio of stocks of large and
midsized companies.
Goal: To provide you with growth of capital and income.
Net Assets: $35.6 million
Initial [G7]
Investment: $1,000 minimum; $250 for IRAs
Dividends: Paid or reinvested semi-annually
BALANCED FUND
- -------------------------------------------------------------------------
LORD ABBETT INVESTMENT TRUST--BALANCED SERIES Inception: 12/27/94
---------------------------------------------------------------------------
Composition: A portfolio that combines fundamentally
driven, value-oriented stocks with
actively-managed fixed-income investments. [NEW]
Goal: To provide you with current income and
long-term growth of capital.
Initial
Investment: $1,000 minimum; $250 for IRAs
Dividends: Paid or reinvested monthly
All results are at net asset value. See "Fund Performance" on page 4 for
performance at the applicable maximum sales charge. For a description of
fees waived and expense subsidies, see the prospectus of the fund you are
interested in.
6
<PAGE>
FUND
DATA
INCOME FUNDS
- --------------------------------------------------------------------------
Lord Abbett U.S. Government Securities Fund Inception: 9/19/32
---------------------------------------------------------------------------
Invests exclusively in obligations issued Average Annual Total
or backed by the U.S. Government, its agencies or Returns as of 3/31/95
instrumentalities.
Composition: A portfolio of U.S. Government securities.
Goal: To provide you with high current income.
Net Assets: $3.2 billion
Initial [G8]
Investment: $500 minimum; $250 for IRAs
Dividends: Paid or reinvested monthly
* Prior to 10/15/85, the Fund invested in both corporate and U.S.
Government securities. Since that date, the Fund has invested exclusively
in U.S. Government securities. Average annual total return from that date
is 8.9%.
LORD ABBETT BOND-DEBENTURE FUND Inception: 4/1/71
---------------------------------------------------------------------------
The Fund emphasizes convertible issues and lower Average Annual Total
rated debt. The Fund focuses on the most attractive Returns as of 3/31/95
sectors of the bond market based on Lord Abbetts
judgment with respect to anticipated changes in
interest rates, the economy and the financial markets.
Composition: A portfolio of lower rated corporate bonds, equity-related
securities and high-grade bonds.
Goal: To provide you with high current income and capital growth
to produce high total returns.
Net Assets: $1.0 billion
Initial [G9]
Investment: $1,000 minimum; $250 for IRAs
Dividends: Paid or reinvested monthly Portfolio Composition
on 3/31/95
[G10]
All results are at net asset value. See "Fund Performance" on page 4 for
performance at the applicable maximum sales charge. For a description of
fees waived and expense subsidies, see the prospectus of the fund you are
interested in.
7
<PAGE>
FUND
DATA
INCOME FUNDS (Continued)
---------------------------------------------------------------------
Lord Abbett Global Fund Income Series Inception: 9/30/88
-----------------------------------------------------------------------
The Series seeks high real returns (i.e., yield Average Annual Total
minus inflation) by primarily investing in high- Returns as of 3/31/95
quality debt securities issued or guaranteed by
the U.S. or other foreign governments or their
agencies; high-quality U.S. and foreign
corporate debt and debt obligations of banks and
bank holding companies.
Composition: A portfolio of high-quality international and U.S. debt.
Goal: To provide you with high current income. Although not a
primary objective, the Series also is managed for growth
of capital.
Net Assets: $252.6 million
Initial [G11]
Investment: $1,000 minimum; $250 for IRAs
Dividends: Paid or reinvested monthly
Portfolio quality Country Diversification
on 3/31/95 on 3/31/95
[G12] [G13]
TAX-FREE INCOME FUNDS
- --------------------------------------------------------------------------
Lord Abbett manages several tax-free funds to provide you with high
current income exempt from federal income taxes and, for single-state
portfolios, exemption from state income and/or personal property taxes
(if applicable). All of Lord Abbett's tax-free income funds focus on
high-quality securities.
NATIONAL SERIES INCEPTION: 4/2/84
------------------------------------------------------------------------
Goal: To provide you with income Average Annual Total
exempt from federal income taxes. Returns as of 3/31/95
Net Assets: $655.8 million
Initial [G14]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio quality
on 3/31/95
[G15]
* Includes holdings which are not rated by an independent ratings
service but are, in Lord Abbett's opinion, of comparable quality.
Please see the prospectus of the fund you are interested in for a
description of fees waived and expense subsidies for certain Lord Abbett
tax-free portfolios. All results are at net asset value. A portion of
income derived from tax-free portfolios may be subject to the
Alternative Minimum Tax. See "Fund Performance" on page 4 for
performance at the maximum sales charge and page 12 for important
information.
8
<PAGE>
FUND
DATA
TAX-FREE INCOME FUNDS (Continued)
- --------------------------------------------------------------------------
CALIFORNIA FUND Inception: 9/3/85
---------------------------------------------------------------------------
Goal: To provide you with income Average Annual Total
exempt from federal and Returns as of 3/31/95
California income taxes.
Net Assets: $308.9 million
Initial [G16]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio Quality
on 3/31/95
[G17]
CONNECTICUT SERIES Inception: 4/1/91
---------------------------------------------------------------------------
Goal: To provide you with income
exempt from federal and
Connecticut income taxes.
Net Assets: $111.0 million
Initial [G18]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio Quality
on 3/31/95
[G19]
FLORIDA SERIES Inception: 9/25/91
---------------------------------------------------------------------------
Goal: To provide you with income
free from federal income taxes
with shares free from Florida
personal property tax.
Net Assets: $180.7 million
Initial [G20]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio Quality
on 3/31/95
[G21]
GEORGIA SERIES Inception: 12/27/94
---------------------------------------------------------------------------
Goal: To provide you with income free from
federal and Georgia income taxes. [NEW]
Shares of the Georgia Series are
subject to the Georgia intangibles
tax.
Initial
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly
Please see the prospectus of the fund you are interested in for a
description of fees waived and expense subsidies for certain Lord Abbett
tax-free portfolios. All results are at net asset value. A portion of
income derived from tax-free portfolios may be subject to the Alternative
Minimum Tax. See Fund Performance on page 4 for performance at the maximum
sales charge and page 12 for important information.
9
<PAGE>
FUND
DATA
TAX-FREE INCOME FUNDS (Continued)
- --------------------------------------------------------------------------------
HAWAII SERIES Inception: 10/28/91
---------------------------------------------------------------------
Goal: To provide you with income Average Annual Total
exempt from federal and Returns as of 3/31/95
Hawaii income taxes.
Net Assets: $87.6 million
Initial [G22]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio Quality
on 3/31/95
[G23]
MICHIGAN SERIES Inception: 12/1/92
---------------------------------------------------------------------
Goal: To provide you with income Portfolio Quality
free from federal and Michigan on 3/31/95
income taxes with shares FUND IS
free from Michigan UNDER
personal property tax. 3 YEARS OLD
Net Assets: $49.8 million [G24]
Initial
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly
MINNESOTA SERIES Inception: 12/27/94
---------------------------------------------------------------------
Goal: To provide you with income exempt from federal and
Minnesota income taxes.
Initial [NEW]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly
MISSOURI SERIES Inception: 5/31/91
---------------------------------------------------------------------------
Goal: To provide you with income Average Annual Total
exempt from federal and Returns as of 3/31/95
Missouri income taxes.
Net Assets: $127.2 million [G25]
Initial
Investment: $1,000 minimum Portfolio Quality
Dividends: Paid or reinvested monthly on 3/31/95
[G26]
* Includes holdings which are not rated by an independent ratings service
but are, in Lord Abbett's opinion, of comparable quality.
Please see the prospectus of the fund you are interested in for a
description of fees waived and expense subsidies for certain Lord Abbett
tax-free portfolios. All results are at net asset value. A portion of
income derived from tax-free portfolios may be subject to the Alternative
Minimum Tax. See "Fund Performance" on page 4 for performance at the
maximum sales charge and page 12 for important information.
10
<PAGE>
FUND
DATA
TAX-FREE INCOME FUNDS (Continued)
- --------------------------------------------------------------------------------
NEW JERSEY SERIES Inception: 1/2/91
--------------------------------------------------------------------------
Goal: To provide you with income Average Annual Total
exempt from federal and Returns as of 3/31/95
New Jersey income taxes.
Net Assets: $188.0 million
Initial [G27]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio Quality
on 3/31/95
[G28]
NEW YORK SERIES Inception: 4/2/84
--------------------------------------------------------------------------
Goal: To provide you with income Average Annual Total
exempt from federal, New York Returns as of 3/31/95
State and City income taxes.
Net Assets: $332.9 million
Initial [G29]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio Quality
on 3/31/95
[G30]
PENNSYLVANIA SERIES Inception: 2/3/92
--------------------------------------------------------------------------
Goal: To provide you with income free Average Annual Total
from federal and Pennsylvania Returns as of 3/31/95
income taxes with shares
free from Pennsylvania
personal property tax.
Net Assets: $89.0 million
Initial [G31]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio Quality
on 3/31/95
[G32]
TEXAS SERIES Inception: 1/20/87
--------------------------------------------------------------------------
Goal: To provide you with income Average Annual Total
exempt from federal Returns as of 3/31/95
income taxes.
Net Assets: $101.6 million
Initial [G33]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio Quality
on 3/31/95
[G34]
* Includes holdings which are not rated by an independent ratings service
but are, in Lord Abbetts opinion, of comparable quality.
Please see the prospectus of the fund you are interested in for a
description of fees waived and expense subsidies for certain Lord Abbett
tax-free portfolios. All results are at net asset value. A portion of
income derived from tax-free portfolios may be subject to the Alternative
Minimum Tax. See Fund Performance on page 4 for performance at the
maximum sales charge and page 12 for important information.
11
<PAGE>
FUND
DATA
TAX-FREE INCOME FUNDS (Continued)
---------------------------------------------------------------------------
WASHINGTON SERIES Inception: 4/15/92
------------------------------------------------------------------------
Goal: To provide you with income
exempt from federal Portfolio Quality
income taxes. on 3/31/95
Net Assets: $73.9 million FUND IS
Initial UNDER
Investment: $1,000 minimum 3 YEARS OLD
Dividends: Paid or reinvested monthly [G35]
Limited-Term Income Funds
---------------------------------------------------------------------------
Lord Abbett Investment Trust -
Limited Duration U.S. Government Securities Series Inception: 11/4/93
------------------------------------------------------------------------
The Fund aims for higher total returns than shorter
term instruments, such as Treasury bills. In addition, FUND IS
the Fund strives to provide total returns that outpace UNDER
inflation and shorter term savings vehicles. Unlike a money 3 YEARS OLD
market fund, the Fund does not seek to maintain a stable
share price. The Fund also will not have the income potential
of a fund investing in longer term securities.
Composition: A portfolio of primarily short- and intermediate-duration
U.S. Government securities and high-quality securities.
Goal: To provide you with high income (relative to money market
instruments) with less fluctuation in principal than long-
term U.S. Government securities.
Net Assets: $7.8 million
Initial
Investment: $1,000 minimum; $250 for IRAs
Dividends: Paid or reinvested monthly
Please see the prospectus of the fund you are interested in for a
description of fees waived and expense subsidies for certain Lord Abbett
portfolios. All results are at net asset value. A portion of income
derived from tax-free portfolios may be subject to the Alternative
Minimum Tax. See Fund Performance on page 4 for performance at the
maximum sales charge.
Each tax-free portfolio may invest up to 20% of its net assets in
residual interest bonds (RIBs). A RIB, sometimes referred to as an
inverse floater, is a debt instrument with a floating or variable
interest rate that moves in the opposite direction of the interest rate
on another security or the value of an index. Changes in the interest
rate on the other security or index inversely affect the residual
interest paid on the RIB, with the result that when interest rates rise,
RIBs give lower interest payments and their values fall faster than
other similar fixed-rate bonds. But when interest rates fall, not only
do RIBs give higher interest payments, their values also rise faster
than other similar fixed-rate bonds. The market for RIBs is relatively
new.
12
<PAGE>
FUND
DATA
LIMITED-TERM INCOME FUNDS (Continued)
- --------------------------------------------------------------------------------
LORD ABBETT U.S. GOVERNMENT SECURITIES
MONEY MARKET FUND Inception: 6/27/79
-------------------------------------------------------------------------
(formerly Lord Abbett Cash Reserve Fund) Average Annual Total
Returns as of 3/31/95
Primarily invests in obligations issued or
backed by the U.S. Government, its agencies
or instrumentalities.
COMPOSITION: A portfolio of short-term U.S. Government securities.
GOAL: To provide you with high current income on your cash
reserves, while preserving capital and maintaining liquidity.
NET ASSETS: $145.6 million
INITIAL [G36]
INVESTMENT: $1,000 minimum; $250 for IRAs
DIVIDENDS: Paid or reinvested monthly
An investment in this Fund is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that the Fund will maintain a
constant net asset value of $1.00 per share. This Fund is managed to
maintain, and has maintained, its stable $1.00 per share price.
All results are at net asset value. For a description of fees waived and
expense subsidies, see the prospectus of the fund you are interested in.
SERVICE &
FEXIBILITY
AT YOUR SERVICE
- --------------------------------------------------------------------------------
DISTRIBUTION OPTIONS:
-------------------------------------------------------------------------
. REINVEST: You can reinvest dividends and capital gains distributions to
purchase additional shares in each Fund. Reinvested dividends and
distributions continue working for you.
. DIVIDEND-MOVE: You can invest dividends ($50 or more) from one fund
into another fund. If no account exists in the second fund, one can be
established by investing $250.
. CASH: You can receive dividends and/or capital gains in cash.
AUTOMATIC INVESTMENT PLANS:
-------------------------------------------------------------------------
. INVEST-A-MATIC (DOLLAR-COST AVERAGING): A set dollar amount ($50 or
more) can be deducted from your bank account and invested in any
fund(s) automatically - monthly, quarterly or semi-annually ($250
minimum initial investment).
. SYSTEMATIC WITHDRAWAL PLAN: A check for a specific dollar amount can be
sent to you (or deposited in your bank account) monthly, quarterly,
semi-annually or annually, from an account with a balance of at least
$10,000.
. SYSTEMATIC EXCHANGE: A set dollar amount of $50 or more can be
automatically exchanged between funds monthly, quarterly, semi-annually
or annually, to dollar-cost average. If no account exists in the second
fund, a $250 initial investment requirement must be met.
13
<PAGE>
SERVICE &
FLEXIBILITY
AT YOUR SERVICE (Continued)
--------------------------------------------------------------------
SHAREHOLDER PRIVILEGES:
--------------------------------------------------------
. Lifetime Discounts or Rights of Accumulation*:
You and your family may qualify for a discount
on purchases of one fund or a combination of
funds based on the total assets you have invested
in the Lord Abbett Family. See the prospectus(es)
for further information.
. Letter of Intention (LOI)*: You and your family
can sign a non-binding 13-month statement of
intention to invest a fixed-dollar amount in the
Family, in order to qualify for the maximum discount.
. Exchange Privileges: You can reposition your
assets by exchanging shares of one fund for
another fund in the Family by calling 800-521-5315.
The exchange privilege can be modified or terminated.
. Account Information: You have access to an
automated telephone information service that
provides data on your fund investments.
. Free Checkwriting Privileges: You can write
checks (bank drafts) for $500 or more. Your
account continues to earn interest until checks
clear. (Applies to Lord Abbett U.S. Government
Securities Money Market Fund only.)
Lord Abbett Retirement Plan Services:
--------------------------------------------------------
Lord Abbett has been a pioneer in the mutual fund
retirement planning market. We have maintained a
structured retirement planning department for over
two decades under the direction of ERISA attorneys.
Lord Abbett offers a full menu of retirement
planning services. IRS-approved sign-up documents
are available for IRA, Rollover IRA, SEP-IRA, 403(b)
and Defined Contribution Retirement Plans. A complete
TurnKey package is available for 401(k) plans.
Reports Provided by the Lord Abbett
Family of Funds:
---------------------------------------------------------
Shareholders receive annual (audited) and semi-annual
reports for their fund(s), and year-to-date statements
reflecting every transaction, current share balance and
the cost basis for purchases made within the year.
* Does not include initial purchases of shares of
Lord Abbett U.S. Government Securities Money Market
Fund purchased without a sales charge.
Additional Information
--------------------------------------------------------------------
If used as sales material after 6/30/95, this
piece must be accompanied by Lord Abbett's
Performance Quarterly for the most recently
completed calendar quarter. Results quoted herein
represent past performance and are no guarantee
of future results.
For additional information and literature
(including a prospectus) for any Lord Abbett
mutual fund, call your financial adviser or Lord,
Abbett & Co. at 800-874-3733. A prospectus
contains important information, including sales
charges, expenses, and a full discussion of risk
factors, and should be read carefully before you
invest.
Lord, Abbett & Co.
Investment Management
The GM Building . 767 Fifth Avenue . New York, NY . 10153-0203
800-426-1130
LAFOFB-40-395
14
<PAGE>
FUND ACTION
THE MUTUAL FUND NEWS REPORT THAT SPARKS IDEAS
WE WERE PLEASED THAT OUR MANAGING
PARTNER RECEIVED THIS HONOR. I WANTED
TO SHARE THIS ARTICLE WITH YOU.
MIKE MCLAUGHLIN
DIRECTOR OF MARKETING
EXCERPTED FROM
VOLUME 6, NUMBER 1,
JANUARY 3, 1995
SPECIAL REPORT:
RONALD P. LYNCH
NAMED FUND LEADER
OF 1994
SPECIAL REPORT: RONALD P. LYNCH
NAMED FUND LEADER OF 1994
1994 was a watershed year for the fund industry. The press fell out of
love with mutual funds. News of INVESCOs insider trading flap, derivatives
debacles, multiple money fund rescues and Fidelity's price reporting snafu
peppered the country's newspapers. It was a year the industry needed a statesman
at its helm. And fortunately it was a year the industry had one. That statesman
was Lord Abbett's managing partner Ron Lynch.
As chairman of the Investment Company Institute, Ron Lynch kept a steady
hand on the industrys tiller throughout a tempestuous 1994. When regulators and
the press began questioning industry ethical standards, Lynch faced the issue
head-on. He quickly assembled a Blue Ribbon Panel to study intra-industry
trading practices and make recommendations for possible improvement. The result?
Accolades from SEC Chairman Arthur Levitt, who praised the industry for its
quick and diligent response.
More importantly, Lynch's actions underscored the industrys dedication to
high ethical standards and fiduciary responsibility. It is because of Lynch's
successful skippering of the industry through rough waters that Fund Action is
naming him the 1994 Fund Leader of the Year.
HE'S A QUIET LEADER WHO LEADS WITH MORAL SUASION.
OPPENHEIMERS JON FOSSEL
Perseverance and consensus building, say friends and associates, are the
qualities that best characterize Lynch. Whether he's forging a business strategy
with his partners at Lord Abbett or piloting the ICI, he gets the job done. And
in getting the job done, he studies all the angles and strives to build a
consensus among constituents. Constructive compromise, not coercion, is Lynch's
stock in trade.
HE PUT ASIDE WHATEVER HIS GROUP OR ANY INDIVIDUAL FUND GROUP MIGHT THINK WAS
BEST FOR THEMSELVES.
BOB GRAHAM OF AIM
Nipping issues in the bud before they become full-blown problems has been
Lynch's modus operandi. And, those who speak for the industry must, like Lynch,
be willing to fight to maintain its integrity.
When INVESCO fired portfolio manager John Kaweske for failing to report
personal trades, the industry faced press reports and congressional inquiries
regarding its ethical standards. Reporters immediately set to work trying to
ferret out similar abuses at other advisory firms. Lynch took a proactive step.
He formed a Blue Ribbon Panel of fund company chiefs. Its mission was to examine
the personal trading issue, and make recommendations that would raise investor
confidence in the industrys ability to police itself.
"We raised the bar so that it is very difficult for abuses to occur," says
Lynch proudly. And what particularly pleases him is that the industry took the
bull by the horns.
The results of the panel exemplify Lynch's talents as a consensus builder.
Panel members represented differing opinions on personal trading within the
industry. Weaving our way around that to get a balance was quite a challenge,
says T.Rowe Price chief Jim Riepe. "Ron's concern was to come up with a solution
that was best for the industry," points out Bob Graham of AIM. "He put aside
whatever his group or any individual fund group might think was best for
themselves." Some have criticized the Blue Ribbon Panel for being too harsh.
Lynch responds, "I'd rather err on the side of being too strict. Riepe agrees:
"It has preempted any harsher reaction by the regulators, by Congress or by the
press."
Colleagues who watched Lynch work with the ICI's Blue Ribbon Panel weren't
surprised by his consensus-building skills. Many had previously observed him
forge a meeting of the minds between the SEC and the industry on Rule 12b-1.
Lynch was vice chairman of the National Association of Securities Dealers group
that revamped the 12b-1 Rule. Lynch boosters suggest that his efforts kept 12b-1
plans from being squelched by an unappreciative SEC.
Back in 1988, the regulators proposed rules to rein in 12b-1 plans. "Our
proposal was greeted with horror by the industry moguls on Wall Street," says
Kathy McGrath, then SEC director of Investment Management.
Lynch decided it would be better for those who were affected by changes in
Rule 12b-1 to do something about it. "I went to the industry and told them that
if we didn't get it done, someone would want to do it for us," he says. The
debate centered around how to rejigger 12b-1 fees so that the industry and the
SEC would accept them. Lynch and others approached the NASD with their proposal
to study the 12b-1 plan problem.
The NASD gave its Investment Companies Committee the thumbs up to
examine 12b-1 fees. Lynch chaired the committee from 1989 to 1991.
In 1990 the Investment Companies Committee announced rule changes of
mind-boggling complexity. The bottom line was that annual sales charges and
service charges paid by a fund to distributors could not exceed 1%. "Our aim was
to get financial parity between front-end and back-end shares," says Lynch. The
industry and the SEC were satisfied.
"HE IS ONE OF THOSE PEOPLE
WHO GETS THINGS DONE."
CHARLIE JOHNSON, FRANKLIN
A key to the success of the 12b-1 issue was Lynch's constant contact with
the SEC. He gave them regular updates on the NASD committees progress. "He's a
wonderful and delightful person to work with," says McGrath. "And he's as
honest as the day is long."
Franklin chief Charlie Johnson, an old friend of Lynch's, worked on the
12b-1 issue with him. "He was very much responsible for grasping the problems
and bringing to fruition the whole 12b-1 Rule that the NASD adopted," says
Johnson. "He is one of those people who gets things done."
Ron Lynch's laundry list of achievements begins before he started his
career at Lord Abbett. First he put himself through Cornell University, where he
received a BS in economics. A short while later, Lynch hooked up with Lord
Abbett. A regional sales manager at 28, he was 10 years younger than any other
professional at the firm. Lynch's first wholesale region covered New England,
New York and Pennsylvania. Lynch then moved to the warmer climes of California
where he headed sales in the West then a relatively untapped market. After eight
years, Lynch returned to New York, but not before he had doubled Lord Abbett's
share of the market out West. When he returned to Lord Abbett in New York, Lynch
was made a senior partner. In 1983, he became managing partner.
When Lynch takes time off from mutual funds, he's fundraising for his alma
mater, Cornell. He's vice chairman of the board of trustees and the chair of the
investment committee, responsible for a $1.8 billion endowment. Lynch has a
special interest in the Cornell University Medical Center, where he's on the
Joint Board and the Board of Overseers.
He and his wife Susan have three sons. The two younger Lynchs are
following in their father's academic footsteps at Cornell. The eldest, Ron Lynch
Jr., has already caught the fund bug. He is a wholesaler for Chase Manhattan's
Vista Funds on the West Coast. -- S.E. Canaday
For more complete information on any Lord Abbett-managed fund, call 800-874-3733
for a prospectus. A prospectus contains information on a fund, including charges
and expenses and should be read carefully before investing in a fund.
LORD, ABBETT & CO.
INVESTMENT MANAGEMENT
A TRADITION OF PERFORMANCE THROUGH DISCIPLINED INVESTING
EXCERPTED FROM FUND ACTION, COPYRIGHT 1995 FUND WORLD, INC. ALL RIGHTS RESERVED.
<PAGE>
GRAPHIC APPENDIX
P1 LORD ABBETT & CO. COMPANY LOGO
P2 PICTURE OF COMPANY CHAIRMAN, RONALD P. LYNCH
G1 PIE CHART - 41.8% EQUITY
38.8% TAXABLE FIXED INCOME
19.4% TAX-FREE FIXED INCOME
P3 PICTURE OF LORD ABBETT PERSONNEL DESCRIBED UNDER PICTURE
P4 PICTURE OF LORD ABBETT PERSONNEL DESCRIBED UNDER PICTURE
G2 BAR GRAPH - 3 YEARS - 8.2%
5 YEARS - 12.2%
10 YEARS - 8.4%
G3 BAR GRAPH - 3 YEARS - 9.6%
5 YEARS - 10.7%
10 YEARS - 12.4%
G4 BAR GRAPH - 3 YEARS - 8.8%
5 YEARS - 6.0%
LIFE - 6.5%
G5 PIE CHART - 29.2% PACIFIC RIM
25.8% USA
18.4% EUROPE
12.5% CASH/EQUIVALENT
11.9% UK
2.1% EMERGING MARKETS
0.1% CANADA
G6 BAR GRAPH - 3 YEARS - 13.0%
5 YEARS - 11.0%
10 YEARS - 13.3%
G7 BAR GRAPH - 3 YEARS - 11.1%
5 YEARS - 10.5%
LIFE - 10.5%
G8 BAR GRAPH - 3 YEARS - 6.1%
5 YEARS - 8.6%
10 YEARS - 9.7%*
G9 BAR GRAPH - 3 YEARS - 8.5%
5 YEARS - 11.8%
10 YEARS - 10.2%
G10 PIE CHART - 65.3% LOWER RATED DEBT
18.5% EQUITY-RELATED SECURITIES
16.2% HIGH-GRADE DEBT
(INCLUDING OTHER ASSETS, LESS LIABILITIES)
G11 BAR GRAPH - 3 YEARS - 8.0%
5 YEARS - 9.9%
LIFE - 9.0%
G12 PIE CHART - 91.5% AAA
8.5% AA
G13 PIE CHART - 43.8% USA
38.7% EUROPE
17.5% FAR EAST
G14 PIE CHART - 67.8% AAA
18.4% AA
7.6% A
6.2% BBB
G15 BAR GRAPH - 3 YEARS - 6.6%
5 YEARS - 7.9%
10 YEARS - 9.6%
G16 PIE CHART - 69.3% AAA
22.4% AA
8.3% A
G17 BAR GRAPH - 3 YEARS - 6.1%
5 YEARS - 7.7%
LIFE - 8.5%
G18 PIE CHART - 61.6% AAA
19.0% AA
16.8% A
2.6% BBB
G19 BAR GRAPH - 3 YEARS - 7.1%
LIFE - 7.9%
G20 PIE CHART - 70.0% AAA
16.4% AA
13.0% A
0.6% BBB
G21 BAR GRAPH - 3 YEARS - 7.3%
LIFE - 6.8%
G22 PIE CHART - 77.9% AAA
12.7% AA
9.4% A
G23 BAR GRAPH - 3 YEARS - 6.9%
LIFE - 6.9%
G24 PIE CHART - 64.4% AAA
14.4% AA
17.0% A
4.2% BBB
G25 PIE CHART - 74.7% AAA
16.0% AA
4.6% A
4.7% BBB
G26 BAR GRAPH - 3 YEARS - 6.6%
LIFE - 7.8%
G27 PIE CHART - 71.0% AAA
17.5% AA
6.2% A
5.3% BBB*
G28 BAR GRAPH - 3 YEARS - 7.6%
LIFE - 8.6%
G29 PIE CHART - 60.9% AAA
14.0% AA
19.6% A
5.5% BBB
G30 BAR GRAPH - 3 YEARS - 6.0%
5 YEARS - 7.6%
10 YEARS - 9.2%
G31 PIE CHART - 70.6% AAA
11.8% AA
14.8% A
2.8% BBB
G32 BAR GRAPH - 3 YEARS - 7.5%
LIFE - 7.2%
G33 PIE CHART - 54.7% AAA
28.9% AA
15.9% A
0.5% BBB*
G34 BAR GRAPH - 3 YEARS - 7.0%
5 YEARS - 8.3%
LIFE - 7.9%
G35 PIE CHART - 81.9% AAA
9.0% AA
9.1% A
G36 BAR GRAPH - 3 YEARS - 3.0%
5 YEARS - 4.1%
10 YEARS - 5.6%
<PAGE>
<PAGE>
LORD ABBETT
STATEMENT OF ADDITIONAL INFORMATION MAY 1, 1995
LORD ABBETT
VALUE APPRECIATION
FUND, INC.
- -------------------------------------------------------------------------------
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from your securities dealer or from Lord, Abbett & Co. at The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. This
Statement relates to, and should be read in conjunction with, the Prospectus
dated May 1, 1995.
Lord Abbett Value Appreciation Fund, Inc. (sometimes referred to as "we" or the
"Fund") was incorporated under Maryland law on March 14, 1983. Our authorized
capital stock consists of a single class of 150,000,000 shares, $.10 par value.
All shares have equal noncumulative voting rights and equal rights with respect
to dividends, assets and liquidation. They are fully paid and nonassessable when
issued and have no preemptive or conversion rights.
Shareholder inquiries should be made by writing directly to the Fund or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
TABLE OF CONTENTS Page
1. Investment Objective and Policies 2
2. Directors and Officers 2
3. Investment Advisory and Other Services 5
4. Portfolio Transactions 6
5. Purchases, Redemptions and
Shareholder Services 7
6. Past Performance 11
7. Taxes 11
8. Information About the Fund 12
9. Financial Statements 13
<PAGE>
1.
Investment Objective and Policies
The Fund's investment objective and policies are described in the Prospectus
under "How We Invest." In addition to those policies described in the
Prospectus, we are subject to the following investment restrictions which cannot
be changed without shareholder approval. We may not: (1) sell short securities
or buy securities or evidences of interests therein on margin, although we may
obtain short-term credit necessary for the clearance of purchases of securities;
(2) buy or sell put or call options, although we may buy, hold or sell warrants;
(3) borrow money, except as a temporary measure for extraordinary or emergency
purposes, and then not in excess of 5% of our gross assets (at cost or market
value, whichever is lower) at the time of borrowing; (4) invest knowingly in
securities or other assets not readily marketable at the time of purchase or
subject to legal or contractual restrictions on resale; (5) act as underwriter
of securities issued by others, unless we are deemed to be one in selling a
portfolio security requiring registration under the Securities Act of 1933; (6)
make loans other than by making demand or time deposits with banks or buying
commercial paper; (7) pledge, mortgage or hypothecate our assets; (8) buy or
sell real estate including limited partnership interests therein (except
securities of companies, such as real estate investment trusts, that deal in
real estate or interests therein) or oil, gas or other mineral leases,
commodities or commodity contracts in the ordinary course of our business,
except such interests and other property acquired as a result of owning other
securities, though securities will not be purchased in order to acquire any of
these interests; (9) buy securities issued by any other open-end investment
company, except pursuant to a merger, acquisition or consolidation, although we
may invest up to 5% of our gross assets, taken at market value at the time of
purchase in closed-end investment companies if bought in the open market with a
fee or commission no greater than the customary broker's commission; (10) invest
more than 5% of our gross assets, taken at market value at the time of
investment, in companies (including their predecessors) with less than three
years' continuous operation; (11) buy securities if the purchase would then
cause us to have more than 5% of our gross assets, at market value at the time
of purchase, invested in securities of any one issuer, except securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities; (12)
buy voting securities if the purchase would then cause us to own more than 10%
of the outstanding voting stock of any one issuer; (13) own securities in a
company when any of its officers, directors, or security holders is an officer
or director of the Fund or an officer, director or partner of our investment
adviser if, after the purchase, any one of such persons owns beneficially more
than 1/2 of 1% of such securities and such persons together own more than 5% of
such securities; (14) concentrate our investments in any particular industry
but, if deemed appropriate for attainment of our investment objective, up to 25%
of our gross assets (at market value at the time of investment) may be invested
in any one industry classification we use for investment purposes or (15) buy
securities from or sell them to our officers, directors, or employees, or to our
investment adviser or to its partners and employees, other than capital stock of
the Fund.
Other Investment Restrictions (which can be changed without shareholder
approval)
- --------------------------------------------------------------------------------
Pursuant to Texas regulations, we will not invest more than 5% of our net assets
in warrants and not more than 2% in warrants not listed on the New York or
American Stock Exchanges, except when they form a unit with other securities. As
a matter of operating policy, we will not invest more than 5% of our net assets
in rights.
PORTFOLIO TURNOVER RATE
For the year ended December 31, 1994, our portfolio turnover rate was 57.49% and
33.42% for the prior year.
2.
Directors and Officers
The following directors are partners of Lord, Abbett & Co., The General Motors
Building, 767 Fifth Avenue, New York, New York 10153-0203. They have been
associated with Lord Abbett for over five years and are also officers and/or
directors or trustees of the fifteen other Lord Abbett-sponsored funds. They are
"interested persons" as defined in the Investment Company Act of 1940, as
amended, and as such, may be considered to have an indirect financial interest
in the Rule 12b-1 Plan described in the Prospectus.
Ronald P. Lynch, age 59, President and Chairman
2
<PAGE>
Thomas S. Henderson, age 63, Executive President
The following outside directors are also directors or trustees of the fifteen
other Lord Abbett-sponsored funds referred to above except for Lord Abbett
Research Fund, Inc., of which only Messrs. Millican and Neff are directors.
E. Thayer Bigelow
Time Warner Cable
300 First Stamford Place
Stamford, Connecticut
President and Chief Executive Officer of Time Warner Cable Programming, Inc.
Formerly President and Chief Operating Officer of Home Box Office, Inc. Age 53.
Stewart S. Dixon
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon. Age 64.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 69.
C. Alan MacDonald
The Marketing Partnership, Inc.
27 Signal Road
Stamford, Connecticut
General Partner, The Marketing Partnership, Inc., a full service marketing
consulting firm that specializes in strategic planning and customer-specific
marketing. Formerly Acquisition Consultant, The Noel Group, a private consulting
firm (1994). Formerly Chairman and Chief Executive Officer of Lincoln Foods,
Inc., manufacturer of branded snack foods (1992- 1994). Formerly President and
Chief Executive Officer of Nestle Foods Corporation, a subsidiary of Nestle S.A.
(Switzerland). Age 61.
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 65.
Thomas J. Neff
Spencer Stuart & Associates
277 Park Avenue
New York, New York
President of Spencer Stuart & Associates, an executive search consulting firm.
Age 57.
The second column of the following table sets forth the compensation accrued for
the Fund's outside directors. The third and fourth columns set forth information
with respect to the retirement plan for outside directors maintained by the Lord
3
<PAGE>
Abbett-sponsored funds. The fifth column sets forth the total compensation
payable by such funds to the outside directors. The columns give information for
the Fund's fiscal year ended December 31, 1994. No director of the Fund
associated with Lord Abbett and no officer of the Fund received any compensation
from the Fund for acting as a director or officer.
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
(1) (2) (3) (4) (5)
Pension or Estimated Annual
Retirement Benefits Benefits Upon
Accrued as Expenses Retirement Proposed Total Compensation
by the Fund to be Paid by the Fund Accrued by the Fund and
Aggregate and Fifteen Other and Fifteen Other Fifteen Other Lord
Compensation Lord Abbett-sponsored Lord Abbett-sponsored Abbett-sponsored
Name of Director from the Fund (1) Funds (2) Funds(2) Funds (3)
---------------- ----------------- --------------------- ---------------------- ------------------------
<S> <C> <C> <C> <C>
E. Thayer Bigelow 4 $133 None $33,600 $8,400
Thomas F. Creamer 5 $462 $27,578 $33,600 $29,650
Stewart S. Dixon $683 $22,595 $33,600 $43,600
John C. Jansing $666 $28,636 $33,600 $42,500
C. Alan MacDonald $650 $27,508 $33,600 $41,500
Hansel B. Millican, Jr. $654 $24,842 $33,600 $41,750
Thomas J. Neff $645 $16,214 $33,600 $41,200
<FN>
1. Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on net
assets of each fund. Fees payable by the Fund to its outside directors are
being deferred under a plan that deems the deferred amounts to be invested
in shares of the Fund for later distribution to the directors. The amounts
accrued by the Fund for the year ended December 31, 1994, are as set forth
after each outside Director's name above. The total amount accrued for each
outside Director since the beginning of his tenure with the Fund, together
with dividends reinvested and changes in net asset value applicable to such
deemed investments, were as follows as of December 31, 1994: Mr. Bigelow,
$133; Mr. Creamer, $20,473; Mr. Dixon, $28,597; Mr. Jansing, $28,485; Mr.
MacDonald, $10,234; Mr. Millican, $29,262; and Mr. Neff, $29,444.
2. Each Lord Abbett-sponsored fund has a retirement plan providing that
outside directors will receive annual retirement benefits for life equal to
80% of their final annual retainers following retirement at or after age 72
with at least 10 years of service. Each plan also provides for a reduced
benefit upon early retirement under certain circumstances, a pre-retirement
death benefit and actuarially reduced joint-and-survivor spousal benefits.
The amounts stated, except in the case of Mr. Creamer, would be payable
annually under such retirement plans if the director were to retire at age
72 and the annual retainers payable by such funds were the same as they are
today. The amounts accrued in column 3 were accrued by the Lord
Abbett-sponsored funds during the fiscal year ended December 31, 1994 with
respect to the retirement benefits in column 4.
3. This column shows aggregate compensation, including director's fees and
attendance fees for board and committee meetings, of a nature referred to
in footnote one, accrued by the Lord Abbett-sponsored funds during the year
ended December 31, 1994.
4. Mr. Bigelow was elected a director of the Fund on October 19, 1994.
5. Mr. Creamer retired as a director of the Fund effective September 21, 1994.
The stated amount of his retirement income (column 4) is the annual amount
payable to him by the Lord Abbett-sponsored funds before reduction for a
joint-and-survivor spousal benefit.
</FN>
</TABLE>
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Allen, Carper, Cutler, Dow, Henderson, Nordberg and Walsh are partners of Lord
Abbett; the others are employees: John J. Walsh, age 58, Executive Vice
President, Kenneth B. Cutler, age 62, Vice President and Secretary; Stephen I.
Allen, age 41, Daniel E. Carper, age 43, Robert S. Dow, age 50, Thomas S.
Henderson, age 63, E. Wayne Nordberg, age 57, , Jeffery H. Boyd, age 38 (with
Lord Abbett since 1994 - formerly partner in the law firm of Robinson & Cole),
John J. Gargana, Jr., age 63, Thomas F. Konop, age 53, Victor W. Pizzolato, age
62, Vice Presidents; and Keith F. O'Connor, age 39, Treasurer.
4
<PAGE>
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 Investment Company Act of 1940, 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 April 1, 1995, our officers and directors, as a group, owned less than 1%
of our outstanding shares.
3.
Investment Advisory and Other Services
As described under "Our Management" in the Prospectus, Lord Abbett is the Fund's
investment manager. The eight general partners of Lord Abbett, all of whom are
officers and/or directors of the Fund, are: Stephen I. Allen, Daniel E. Carper,
Kenneth B. Cutler, Robert S. Dow, Thomas S. Henderson, Ronald P. Lynch, E. Wayne
Nordberg and John J. Walsh. The address of each partner is The General Motors
Building, 767 Fifth Avenue, New York, New York 10153-0203.
The services performed by Lord Abbett are described in the Prospectus under "Our
Management". Under the Management Agreement, we 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 $200,000,000; .65 of 1% of
the portion in excess of $200,000,000 but not in excess of $500,000,000; and .50
of 1% of the portion in excess of $500,000,000. For the fiscal years ended
December 31, 1994, 1993 and 1992, the management fees paid to Lord Abbett
amounted to $1,385,336, $1,433,925 and $1,179,637, respectively.
We pay all expenses not expressly assumed by Lord Abbett, including, without
limitation, 12b-1 expenses, outside directors' fees and expenses, association
membership dues, legal and auditing fees, taxes, transfer and dividend
disbursing agent fees, shareholder servicing costs, expenses relating to
shareholder meetings, expenses of preparing, printing and mailing stock
certificates and shareholder reports, expenses of registering our shares under
federal and state securities laws, expenses of preparing, printing and mailing
prospectuses to existing shareholders, insurance premiums, brokerage and other
expenses connected with executing portfolio security transactions.
We have agreed with the State of California to limit operating expenses
(including management fees but excluding taxes, interest, extraordinary expenses
and brokerage commissions) to 2 1/2% of average annual net assets up to
$30,000,000, 2% of the next $70,000,000 of such assets and 1 1/2% of such assets
in excess of $100,000,000. The expense limitation is a condition on the
registration of investment company shares for sale in the State and applies so
long as our shares are registered for sale in that State.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281, are
the independent auditors of the Fund and must be approved at least annually by
our Board of Directors to continue in such capacity. They perform audit services
for the Fund including the examination of financial statements included in our
annual report to shareholders.
Morgan Guaranty Trust Company of New York ("Morgan"), 60 Wall Street, New York,
New York 10005, is the Fund's custodian. In accordance with the requirements of
Rule 17f-5 under the Act, the Fund's directors have approved arrangements
permitting the Fund's foreign assets not held by Morgan or its foreign branches
to be held by certain qualified foreign banks and depositories.
4.
Portfolio Transactions
Our policy is to have purchases and sales of portfolio securities executed at
the most favorable prices, considering all costs of the transaction including
brokerage commissions and dealer markups and markdowns, consistent with
obtaining best execution, except to the extent that we may pay a higher
commission as described below. This policy governs the selection
5
<PAGE>
of brokers or dealers and the market in which the transaction is executed. To
the extent permitted by law, we may, if considered advantageous, make a purchase
from or sale to another Lord Abbett-sponsored fund without the intervention of
any broker-dealer.
We select broker-dealers on the basis of their professional capability and the
value and quality of their brokerage and research services. Normally, the
selection is made by our traders who are officers of the Fund and also are
employees of Lord Abbett. Our traders do the trading as well for other accounts
- -- investment companies (of which they are also officers) and other investment
clients -- managed by Lord Abbett. They are responsible for the negotiation of
prices and commissions.
A broker may receive a commission for portfolio transactions exceeding the
amount another broker would have charged for the same transaction if our traders
determine that such amount is reasonable in relation to the value of the
brokerage and research services performed by the executing broker viewed in
terms of either the particular transaction or the broker's overall
responsibilities with respect to us and other accounts managed by Lord Abbett.
Brokerage services may include such factors as showing us trading opportunities
including blocks, willingness and ability to take positions in securities,
knowledge of a particular security or market, proven ability to handle a
particular type of trade, confidential treatment, promptness, reliability and
quotation and pricing services. Research may include the furnishing of analyses
and reports concerning issuers, industries, securities, economic factors and
trends, portfolio strategy and the performance of accounts. Such research may be
used by Lord Abbett in servicing all their accounts, and not all of such
research will necessarily be used by Lord Abbett in connection with their
services to us; conversely, research furnished in connection with brokerage on
other accounts managed by Lord Abbett may be used in connection with their
services to us, and not all of such research will necessarily be used by Lord
Abbett in connection with their services to such other accounts. We have been
advised by Lord Abbett that, although such research is often useful, no dollar
value can be ascribed to it nor can it be accurately ascribed or allocated to
any account and it is not a substitute for services provided by them to us; nor
does it materially reduce or otherwise affect the expenses incurred by Lord
Abbett in the performance of such services. We make no commitments regarding the
allocation of brokerage business to or among dealers.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold our shares and/or
shares of other Lord Abbett-sponsored funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as we do, transactions will, to the extent practicable, be allocated among all
participating accounts in proportion to the amount of each order and will be
executed daily until filled so that each account shares the average price and
commission cost of each day.
We will not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from
broker-dealers as consideration for the direction to them of portfolio business.
If we tender portfolio securities pursuant to a cash tender offer, we will seek
to recapture any fees or commissions involved by designating Lord Abbett our
agent so that the fees may be passed back to us. As other legally permissible
opportunities come to our attention for the direct or indirect recapture by us
of brokerage commissions or similar fees paid on portfolio transactions, our
directors will determine whether we should or should not seek such recapture.
During the fiscal years ended December 31, 1994, 1993 and 1992, we paid total
commissions to independent dealers of $617,797, $290,264 and $622,114,
respectively.
5.
Purchases, Redemptions
and Shareholder Services
The Fund values its portfolio securities at market value as of the close of the
New York Stock Exchange. 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
6
<PAGE>
NASDAQ National Market System are valued at the mean between the last bid and
asked prices. Securities for which market quotations are not available are
valued at fair market value under procedures approved by the Board of Directors.
Information concerning how we value our shares for the purchase and redemption
of our shares is described in the Prospectus under "Purchases" and
"Redemptions", respectively.
As disclosed in the Prospectus, we calculate our net asset value and are
otherwise open for business on each day that the NYSE is open for trading. The
NYSE is closed on Saturdays and Sundays and the following holidays -- New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas. The maximum offering price of our shares on December
31, 1994 was computed as follows:
Net asset value per share (net assets divided by shares
outstanding)........................................................$11.25
Maximum offering price per share (net asset value
divided by .9425)...................................................$11.94
The Fund has entered into a distribution agreement with Lord Abbett under which
Lord Abbett is obligated to use its best efforts to find purchasers for the
shares of the Fund and to make reasonable efforts to sell Fund shares, so long
as, in Lord Abbett's judgment, a substantial distribution can be obtained by
reasonable efforts.
For the last three fiscal years, Lord Abbett, as our principal underwriter,
received net commissions after allowance of a portion of the sales charge to
independent dealers as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Gross sales charge $304,416 $320,040 $171,569
Amount allowed
to dealers 262,840 276,729 148,793
-------- -------- -------
Net commissions
received by
Lord Abbett $ 41,576 $ 43,311 $ 22,776
======== ======== ========
</TABLE>
As described in the Prospectus, the Fund has adopted a Distribution Plan and
Agreement (the "Plan") pursuant to Rule 12b-1 of the Investment Company Act of
1940, as amended. In adopting the Plan and in approving its continuance, the
Board of Directors has concluded that there is a reasonable likelihood that the
Plan will benefit the Fund and its shareholders. The expected benefits include
greater sales and lower redemptions of Fund shares, which should allow the Fund
to maintain a consistent cash flow, and a higher quality of service to
shareholders by dealers than would otherwise be the case. During the last fiscal
year, the Fund accrued or paid through Lord Abbett to dealers $377,509 under the
Plan. Lord Abbett uses all amounts received under the Plan for payments to
dealers for (i) providing continuous services to the Fund's shareholders, such
as answering shareholder inquiries, maintaining records, and assisting
shareholders in making redemptions, transfers, additional purchases and
exchanges and (ii) their assistance in distributing shares of the Fund.
The Plan requires the Board of Directors to review, on a quarterly basis,
written reports of all amounts expended pursuant to the Plan and the purpose for
which such expenditures were made. The Plan shall continue in effect only if its
continuance is specifically approved at least annually by vote of the Fund's
Board of Directors and of the Fund's directors who are not interested persons of
the Fund and who have no direct or indirect financial interest in the operation
of the Plan or in any agreements related to the Plan ("outside directors"), cast
in person at a meeting called for the purpose of voting on such Plan and
agreements. The Plan may not be amended to increase materially the amount spent
for distribution expenses without approval by a majority of the Fund's
outstanding voting securities and the approval of a majority of the directors,
including a majority of the Fund's outside directors. The Plan may be terminated
at any time by vote of a majority of the Fund's outside
7
<PAGE>
directors or by vote of a majority of the Fund's outstanding voting securities.
As stated in the Prospectus, a 1% contingent deferred reimbursement charge
("CDRC") is imposed with respect to those shares (or shares of another Lord
Abbett-sponsored fund or series acquired through exchange of such shares) on
which the Fund has paid the one-time 1% 12b-1 sales distribution fee if such
shares are redeemed out of the Lord Abbett-sponsored family of funds within a
period of 24 months from the end of the month in which the original sale
occurred.
No CDRC is payable on redemptions by tax qualified plans under section 401 of
the Internal Revenue Code for benefit payments due to plan loans, hardship
withdrawals, death, retirement or separation from service with respect to plan
participants. The CDRC is received by the Fund and is intended to reimburse all
or a portion of the amount paid by the Fund if the shares are redeemed before
the Fund has had an opportunity to realize the anticipated benefits of having a
large, long-term shareholder account in the Fund. Shares of a fund or series on
which such 1% sales distribution fee has been paid may not be exchanged into a
fund or series with a Rule 12b-1 plan for which the payment provisions have not
been in effect for at least one year.
The other Lord Abbett-sponsored funds and series which participate in the
Telephone Exchange Privilege (except Lord Abbett U.S. Government Securities
Money Market Fund, Inc. ("GSMMF") and certain series of Lord Abbett Tax-Free
Income Fund, Inc. and Lord Abbett Tax-Free Income Trust for which a Rule 12b-1
Plan is not yet in effect (collectively, the "Series")) have instituted a CDRC
on the same terms and conditions. No CDRC will be charged on an exchange of
shares between Lord Abbett funds. Upon redemption of shares out of the Lord
Abbett family of funds, the CDRC will be charged on behalf of and paid to the
fund in which the original purchase (subject to a CDRC) occurred. Thus, if
shares of a Lord Abbett fund are exchanged for shares of another such fund and
the shares tendered ("Exchanged Shares") are subject to a CDRC, the CDRC will
carry over to the shares being acquired, including GSMMF ("Acquired Shares").
Any CDRC that is carried over to Acquired Shares is calculated as if the holder
of the Acquired Shares had held those shares from the date on which he or she
became the holder of the Exchanged Shares. Although GSMMF and the Series will
not pay a 1% sales distribution fee on $1 million purchases of their own shares,
and will therefore not impose their own CDRC, GSMMF will collect the CDRC on
behalf of other Lord Abbett funds. Acquired shares held in GSMMF which are
subject to a CDRC will be credited with the time such shares are held in that
fund.
In no event will the amount of the CDRC exceed 1% of the lesser of (i) the net
asset value of the shares redeemed or (ii) the original cost of such shares (or
of the Exchanged Shares for which such shares were acquired). No CDRC will be
imposed when the investor redeems (i) amounts derived from increases in the
value of the account above the total cost of shares being redeemed due to
increases in net asset value, (ii) shares with respect to which no Lord Abbett
fund paid a 1% sales distribution fee on issuance (including shares acquired
through reinvestment of dividend income and capital gains distributions) or
(iii) shares which, together with Exchanged Shares, have been held continuously
for 24 months from the end of the month in which the original sale occurred. In
determining whether a CDRC is payable, (a) shares not subject to the CDRC will
be redeemed before shares subject to the CDRC and (b) of shares subject to a
CDRC, those held the longest will be the first to be redeemed.
Under the terms of the Statement of Intention to invest $50,000 or more over a
13-month period as described in the Prospectus, shares of Lord Abbett-sponsored
funds (other than shares of Lord Abbett Equity Fund ("LAEF"), Lord Abbett Series
Fund ("LASF"), Lord Abbett Research Fund if not offered to the general public
("LARF"), and GSMMF, unless holdings in GSMMF are attributable to shares
exchanged from a Lord Abbett-sponsored fund offered with a sales charge or from
a fund in the Lord Abbett Counsel Group) currently owned by you are credited as
purchases (at their current offering prices on the date the Statement is signed)
toward achieving the stated investment. Shares valued at 5% of the amount of
intended purchases are escrowed and may be redeemed to cover the additional
sales charge payable if the Statement is not completed. The Statement of
Intention is neither a binding obligation on you to buy, nor on the Fund to
sell, the full amount indicated.
As stated in the Prospectus, purchasers (as defined in the Prospectus) may
accumulate their investment in Lord Abbett- sponsored funds (other than LAEF,
LARF, LASF, and GSMMF, unless holdings in GSMMF are attributable to shares
exchanged from a Lord Abbett-sponsored fund offered with a front-end sales
charge or from Lord Abbett Counsel Group) so that a current investment, plus the
purchaser's holdings valued at the current maximum offering price, reach a level
8
<PAGE>
eligible for a discounted sales charge.
As stated in the Prospectus, our shares may be purchased at net asset value by
our directors, employees of Lord Abbett, employees of our shareholder servicing
agent and employees of any securities dealer having a sales agreement with Lord
Abbett who consents to such purchases or by the trustee or custodian under any
pension or profit-sharing plan or Payroll Deduction IRA established for the
benefit of such persons or for the benefit of employees of any national
securities trade organization to which Lord Abbett belongs or any company with
an account(s) in excess of $10 million managed by Lord Abbett on a
private-advisory-account basis. For purposes of this paragraph, the terms
"directors" and "employees" include a director's or employee's spouse (including
the surviving spouse of a deceased director or employee). The terms "our
directors" and "employees of Lord Abbett" also include other family members and
retired directors and employees.
Our shares also may be purchased at net asset value (a) at $1 million or more,
(b) with dividends and distributions from other Lord Abbett-sponsored funds,
except for LARF, LAEF, LASF and Lord Abbett Counsel Group, (c) under the loan
feature of the Lord Abbett-sponsored prototype 403(b) plan for share purchases
representing the repayment of principal and interest, (d) by certain authorized
brokers, dealers, registered investment advisers or other financial institutions
who have entered into an agreement with Lord Abbett in accordance with certain
standards approved by Lord Abbett, providing specifically for the use of our
shares in particular investment products made available for a fee to clients of
such brokers, dealers, registered investment advisers and other financial
institutions, and (e) by employees, partners and owners of unaffiliated
consultants and advisors to Lord Abbett or Lord Abbett-sponsored funds who
consent to such purchase if such persons provide service to Lord Abbett or such
funds on a continuing basis and are familiar with such funds. Shares are offered
at net asset value to these investors for the purpose of promoting goodwill with
employees and others with whom Lord Abbett and/or the Fund have business
relationships.
Our shares also may be purchased at net asset value, subject to appropriate
documentation, through a securities dealer where the amount invested represents
redemption proceeds from shares ("Redeemed Shares") of a registered open-end
management investment company not distributed or managed by Lord Abbett (other
than a money market fund), if such redemption has occurred no more than 60 days
prior to the purchase of our shares, the Redeemed Shares were held for at least
six months prior to redemption and the proceeds of redemption were maintained in
cash or a money market fund prior to purchase. Purchasers should consider the
impact, if any, of contingent deferred sales charges in determining whether to
redeem shares for subsequent investment in our shares. Lord Abbett may suspend,
change or terminate this purchase option at any time.
Our shares may be issued at net asset value in exchange for the assets, subject
to possible tax adjustment, of a personal holding company or an investment
company. There are economies of selling efforts and sales-related expenses with
respect to offers to these investors and those referred to above.
The Prospectus briefly describes the Telephone Exchange Privilege. You may
exchange some or all of your shares for those of Lord Abbett-sponsored funds
currently offered to the public with a sales charge and GSMMF, to the extent
offers and sales may be made in your state. You should read the prospectus of
the other fund before exchanging. In establishing a new account by exchange,
shares of the Fund being exchanged must have a value equal to at least the
minimum initial investment required for the fund into which the exchange is
made.
Shareholders in such other funds have the same right to exchange their shares
for the Fund's shares. Exchanges are based on relative net asset values on the
day instructions are received by the Fund in Kansas City if the instructions are
received prior to the close of the NYSE in proper form. No sales charges are
imposed except in the case of exchanges out of GSMMF (unless a sales charge was
paid on the initial investment). Exercise of the exchange privilege will be
treated as a sale for federal income tax purposes, and, depending on the
circumstances, a gain or loss may be recognized. In the case of an exchange of
shares that have been held for 90 days or less where no sales charge is payable
on the exchange, the original sales charge incurred with respect to the
exchanged shares will be taken into account in determining gain or loss on the
exchange only to the extent such charge exceeds the sales charge that would have
been payable on the acquired shares had they been acquired for cash rather than
by exchange. The portion of the original sales charge not so taken into account
will increase the basis of the acquired shares.
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as
9
<PAGE>
a means for taking advantage of short-term swings in the market, and we reserve
the right to terminate or limit the privilege of any shareholder who makes
frequent exchanges. We can revoke or modify the privilege for all shareholders
upon 60 days' prior notice. "Eligible Funds" are other Lord Abbett-sponsored
funds which are eligible for the exchange privilege, except LASF which offers
its shares only in connection with certain variable annuity contracts, LAEF
which is not issuing shares, LARF and Lord Abbett Counsel Group.
A redemption order is in proper form when it contains all of the information and
documentation required by the order form or supplementally by Lord Abbett or the
Fund to carry out the order. The signature(s) and any legal capacity of the
signer(s) must be guaranteed by an eligible guarantor. See the Prospectus for
expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Directors may authorize redemption of all of the shares in any
account in which there are fewer than 25 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least 30 days' prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
Under the Div-Move service described in the Prospectus, you can invest the
dividends paid on your account into an existing account in any other Eligible
Fund. The account must be either your account, a joint account for you and your
spouse, a single account for your spouse, or a custodial account for your minor
child under the age of 21. You should read the prospectus of the other fund
before investing.
The Invest-A-Matic method of investing in the Fund and/or any other Eligible
Fund is described in the Prospectus. To avail yourself of this method you must
complete the application form, selecting the time and amount of your bank
checking account withdrawals and the funds for investment, include a voided,
unsigned check and complete the bank authorization.
The Systematic Withdrawal Plan (the "SWP") also is described in the Prospectus.
You may establish a SWP if you own or purchase uncertificated shares having a
current offering price value of at least $10,000. Lord Abbett prototype
retirement plans have no such minimum. The SWP involves the planned redemption
of shares on a periodic basis by receiving either fixed or variable amounts at
periodic intervals. Since the value of shares redeemed may be more or less than
their cost, gain or loss may be recognized for income tax purposes on each
periodic payment. Normally, you may not make regular investments at the same
time you are receiving systematic withdrawal payments because it is not in your
interest to pay a sales charge on new investments when in effect a portion of
that new investment is soon withdrawn. The minimum investment accepted while a
withdrawal plan is in effect is $1,000. The SWP may be terminated by you or by
us at any time by written notice.
The Prospectus indicates the types of retirement plans for which Lord Abbett
provides forms and explanations. Lord Abbett makes available the retirement plan
forms and custodial agreements for IRAs (Individual Retirement Accounts
including Simplified Employee Pensions), 403(b) plans and qualified pension and
profit-sharing plans, including 401(k) plans. The forms name Investors Fiduciary
Trust Company as custodian and contain specific information about the plans.
Explanations of the eligibility requirements, annual custodial fees and
allowable tax advantages and penalties are set forth in the relevant plan
documents. Adoption of any of these plans should be on the advice of your legal
counsel or qualified tax adviser.
6.
Past Performance
The Fund computes the average annual compounded rate of total return during
specified periods that would equate the initial amount invested to the ending
redeemable value of such investment by adding one to the computed average annual
total return, raising the sum to a power equal to the number of years covered by
the computation and multiplying the result by one thousand dollars, which
represents a hypothetical initial investment. The calculation assumes deduction
of the maximum
10
<PAGE>
sales charge from the initial amount invested and reinvestment of all income
dividends and capital gains distributions on the reinvestment dates at prices
calculated as stated in the Prospectus. The ending redeemable value is
determined by assuming a complete redemption at the end of the period(s) covered
by the average annual total return computation.
Using this method to compute average annual compounded rates of total return for
the Fund's last one, five and ten fiscal year periods ending on December 31,
1994 are as follows: -8.80%, 7.43% and 11.56%, respectively.
Our yield quotation is based on a 30-day period ended on a specified date,
computed by dividing our net investment income per share earned during the
period by our maximum offering price per share on the last day of the period.
This is determined by finding the following quotient: take the Fund's dividends
and interest earned during the period minus its expenses accrued for the period
and divide by the product of (i) the average daily number of Fund shares
outstanding during the period that were entitled to receive dividends and (ii)
the Fund's maximum offering price per share on the last day of the period. To
this quotient add one. This sum is multiplied by itself five times. Then one is
subtracted from the product of this multiplication and the remainder is
multiplied by two. For the 30-day period ended December 31, 1994, the yield for
the Fund was 1.65%.
These figures represent past performance, and an investor should be aware that
the investment return and principal value of a Fund investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Therefore, there is no assurance that this performance will be
repeated in the future.
7.
Taxes
The value of any shares redeemed by the Fund or otherwise sold may be more or
less than your tax basis in the shares at the time the redemption or sale is
made. Any gain or loss generally will be taxable for federal income tax
purposes. Any loss realized on the sale or redemption of Fund shares which you
have held for six months or less will be treated for tax purposes as a long-term
capital loss to the extent of any capital gains distributions which you received
with respect to such shares. Losses on the sale of stock or securities are not
deductible if, within a period beginning 30 days before the date of the sale and
ending 30 days after the date of the sale, the taxpayer acquires stock or
securities that are substantially identical.
The Fund will be subject to a 4% nondeductible excise tax on certain amounts not
distributed (and not treated as having been distributed) on a timely basis in
accordance with a calendar-year distribution requirement. The Fund intends to
distribute to shareholders each year an amount adequate to avoid the imposition
of such excise tax.
As described in the Prospectus under "Risk Factors", the Fund may be subject to
foreign withholding taxes which would reduce the yield on its investments. Tax
treaties between certain countries and the United States may reduce or eliminate
such taxes. It is expected that Fund shareholders who are subject to United
States federal income tax will not be entitled to claim a federal income tax
credit or deduction for foreign income taxes paid by the Fund.
Gains and losses realized by the Fund on certain transactions, including sales
of foreign debt securities and certain transactions involving foreign currency,
will be treated as ordinary income or loss for federal income tax purposes to
the extent, if any, that such gains or losses are attributable to changes in
exchange rates for foreign currencies. Accordingly, distributions taxable as
ordinary income will include the net amount, if any, of such foreign exchange
gains and will be reduced by the net amount, if any, of such foreign exchange
losses.
If the Fund purchases shares in certain foreign investment entities, called
"passive foreign investment companies," it may be subject to United States
federal income tax on a portion of any "excess distribution" or gain from the
disposition of such shares, even if such income is distributed as a taxable
dividend by the Fund to its shareholders. Additional charges in the nature of
interest may be imposed on either the Fund or its shareholders with respect to
deferred taxes arising from such distributions or gains. If the Fund were to
invest in a passive foreign investment company with respect to which the Fund
elected to make a "qualified electing fund" election in lieu of the foregoing
requirements, the Fund might be required to include in income each year a
portion of the ordinary earnings and net capital gains of the qualified electing
fund, even if such amount were not distributed to the Fund.
11
<PAGE>
Dividends paid by the Fund will qualify for the dividends-received deduction for
corporations to the extent they are derived from dividends paid by domestic
corporations.
8.
Information About the Fund
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment accounts. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Fund's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security 7 days
before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account
considers a trade or trades in such security, from profiting on trades of the
same security within 60 days and from trading on material and non-public
information. The Code imposes certain similar requirements and restrictions on
the independent directors and trustees of each Lord Abbett- sponsored mutual
fund to the extent contemplated by the recommendations of the Advisory Group.
9.
Financial Statements
The financial statements for the fiscal year ended December 31, 1994 and the
report of Deloitte & Touche LLP, independent auditors, on such financial
statements contained in the 1994 Annual Report to Shareholders of Lord Abbett
Value Appreciation Fund, Inc. are incorporated herein by reference to such
financial statements and report in reliance upon the authority of Deloitte &
Touche LLP as experts in auditing and accounting.
12
<PAGE>
- --------------------------------------------------------------------------------
VALUE APPRECIATION
FUND
SOME COMPANIES ARE TOO BIG,
SOME COMPANIES ARE TOO SMALL...
LORD ABBETT VALUE APPRECIATION FUND:
FOCUSING ON MIDSIZED COMPANIES
Spring 1995
[P1 - Photo of father and son holdering a water hose]
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
THE IMPACT OF INFLATION
A DOLLAR IS ONLY Since 1984, the purchasing power of the dollar has
AS GOOD AS WHAT decreased by 30%. Put another way, today you need $1.42 to
IT WILL BUY. purchase what a dollar bought in 1984. Had you invested
that dollar in Lord Abbett Value Appreciation Fund, it
would be worth $3.17 today, keeping you well ahead of
inflation.
LORD ABBETT VALUE
APPRECIATION FUND
DECEMBER 31, 1984 DECEMBER 31, 1994 DECEMBER 31, 1994*
[P2 - Photo of dollar bill(s) and coins representing the value of
each of the amounts represented below.]
$1.00 $1.42 $3.17
*Fund performance is at net asset value.
- --------------------------------------------------------------------------------
WHY IS OWNERSHIP IMPORTANT?
HISTORY HAS SHOWN "Ownership of well-managed companies is the only way you
THAT, FOR INVESTORS, can capture the creative potential of the entrepreneur."
THE BEST LONG-TERM
GROWTH PROSPECTS John J. Walsh, Partner -- Equity Investments and Portfolio
LIE IN THE Manager of Lord Abbett Value Appreciation Fund
OWNERSHIP OF WELL-
MANAGED COMPANIES. Equities represent ownership in companies and offer the
opportunity to share in the rewards of a company's profits
and growth.
Owning shares of a mutual fund that invests in a
diversified portfolio of securities issued by well-managed
companies offers investors participation in the
performance of a wide variety of management teams in many
industries. By diversifying its portfolio among many
midsized companies in many different industries, Lord
Abbett Value Appreciation Fund reduces the risks
associated with investing in just one, or a small number
of companies.
1
<PAGE>
FOUR REASONS WHY OPPORTUNITY EXISTS TODAY
- --------------------------------------------------------------------------------
1. THE MID-CAP SECTOR IS UNDER RESEARCHED
There are fewer analysts covering midsized companies than
there are covering large companies. Lord, Abbett & Co.
has a well-staffed research department that uses a
disciplined valuation system to discover targets of
opportunity among midsized companies.
AVERAGE NUMBER OF INDUSTRY ANALYSTS FOLLOWING A
COMPANY WITHIN THIS CATEGORY
[G1 - BAR CHART APPEARS HERE. The chart shows that the average number of
analysts following the 100 Largest Companies at approximately 18 and the
average number of analysts following the Mid-Cap Universe at approximately
8.7]
*Mid-cap companies are defined as stocks with market
capitalizations between $500 million and $3 billion.
Source: Lord, Abbett & Co. and Zacks Investment Research,
Inc.
- --------------------------------------------------------------------------------
2. MORE "BANG" FOR THE BUCK
A consensus opinion of Wall Street analysts estimates that
the expected long-term earnings growth rate for mid-cap
companies exceeds that of large companies. And,
interestingly, current valuation measures (price/earnings
and price-to-book) for the two sectors are approximately
the same. In other words, should Wall Street's estimates
prove correct, our investment analysts believe mid-cap
stocks offer more value than the large-cap sector.
Source: Lord, Abbett & Co. and Zacks Investment Research,
Inc. Of course, there can be no assurance that estimates
will prove correct.
- --------------------------------------------------------------------------------
3. TARGETED INVESTING SIGNALS OPPORTUNITY
IT TAKES ONE TO KNOW Mid-cap companies often concentrate on one product or
ONE. AT LORD ABBETT, service. This focus helps prevent management talent from
THE INVESTMENT becoming diluted. Most large-cap companies have many
BUSINESS IS OUR ONLY divisions and products. By extending their efforts across
BUSINESS. different, unrelated businesses, many larger companies
limit the positive effects of any one component. And,
because these companies are larger, it is relatively
difficult for them to meaningfully grow.
- --------------------------------------------------------------------------------
4. DECREASED TAX BURDEN
Tax rates for capital gains are lower than rates on
ordinary income. Lord Abbett Value Appreciation Fund
derives a greater portion of its total return (price
appreciation plus dividends) from capital appreciation
than from income. The result: a smaller tax burden.
2
<PAGE>
- --------------------------------------------------------------------------------
THE VALUE MANAGEMENT STYLE
Value investing is a concept that means different things
to different people. At Lord, Abbett & Co., the
concept of value investing is really quite simple. By
focusing on companies that are currently unpopular, for
example, we think we can often find bargains. Most
consumers understand this concept.
- --------------------------------------------------------------------------------
CONSUMER "VALUE" QUIZ
Q: When are you most likely to get the best value for your
money when purchasing these items?
<TABLE>
<S> <C> <C> <C>
-----------------------------------------------------------------------------------
Snow Blower [ ] A The morning after a snow storm
[X] B In July
-----------------------------------------------------------------------------------
Summer Fashions [ ] A When the new lines are introduced
[X] B In August
-----------------------------------------------------------------------------------
Convertible Sports Car [ ] A As the weather warms in spring
[X] B In November
-----------------------------------------------------------------------------------
Holiday Gift Wrap [ ] A In December, when malls are crowded
[X] B In January
</TABLE>
The checked responses highlight an important precept of
value investing: when others are not interested in buying
an item, you are more likely to find it on sale.
Like bargain shopping, value investing also requires
moving away from the crowd. Companies that are ignored (or
even shunned) by Wall Street may offer good investment
potential. However, investing is more difficult than
shopping. Just because a company looks like a bargain does
not mean it is a good investment.
Companies are selected for our portfolios if we believe
there are dynamics at work (that have not yet been
identified by the "crowd") that may positively impact the
company. These might include changes in top management,
technological breakthroughs, implementation of a new
business plan; or perhaps changes in external factors,
such as the economic environment or regulatory background.
- --------------------------------------------------------------------------------
RECENT PERFORMANCE
Performance from January 1992 (the beginning of the first
full year that Standard & Poor's tracked mid-cap
stocks) illustrates that mid-cap companies have provided
better returns than large companies and that Lord Abbett
Value Appreciation Fund, a managed portfolio of
undervalued mid-cap companies, performed even better.
CUMULATIVE TOTAL RETURNS:
JANUARY 1, 1992 - DECEMBER 31, 1994
THE FUND VERSUS THE BENCHMARKS
[BAR CHART APPEARS HERE. The information below describes the contents of the Bar
Chart]
Total Return
------------
Lord Abbett Value Appreciation Fund 25.1%
Large Companies 20.0%
Midsized Companies 23.0%
Large company performance is measured by the unmanaged S&P
500 Index.
Midsized company performance is measured by the unmanaged
S&P 400 Mid-Cap Index.
Fund performance is at net asset value. Total return
assumes the reinvestment of all dividends and capital
gains.
The market value of stocks of mid-cap companies may
fluctuate more than the market value of stocks of large
companies.
3
<PAGE>
- --------------------------------------------------------------------------------
THE ADVANTAGE OF OWNERSHIP
PROBLEM: A $100,000 investment in Lord Abbett Value Appreciation
A DOLLAR DOESN'T Fund ten years ago returned, on average, 11.8% per year.
BUY WHAT IT USED TO. Meanwhile, inflation increased the cost of goods and
services by 3.6% per year since 1984. Six-month CDs had an
SOLUTION: average annual return of 6.5% over this period, but did
USE TODAY'S DOLLARS not match the returns earned by the shareholders of Lord
TO BUY WELL-MANAGED Abbett Value Appreciation Fund.
COMPANIES, FOR
TOMORROW. There is no doubt that when it comes to meeting short-term
obligations, CDs can be an important part of your
portfolio. But, when investing for long-term goals such as
a house, a child's education or retirement, owning
companies with the potential for growth through a fund
like Lord Abbett Value Appreciation Fund may provide the
advantage you need to reach your goals.
A REWARDING TOTAL RETURN
[GRAPH APPEARS HERE]
The Six-Month
Fund DCs(1) Inflation
---- --------- ---------
12-31-84 $ 98,273 $100,000 $100,000
12-31-85 129,654 108,305 103,799
12-31-86 150,844 115,396 104,938
12-31-87 144,543 123,413 109,592
12-31-88 167,123 133,085 114,435
12-31-89 200,710 148,971 119,753
12-31-90 191,394 161,243 127,066
12-31-91 243,757 171,048 130,959
12-31-92 276,574 177,627 134,758
12-31-93 315,168 183,483 138,462
12-31-94 304,876 187,359 142,165
Total return is the percent change in value assuming the
reinvestment of all distributions. Results of the CD
investment reflect the average six-month CD rate available
each year during the period. It is important to remember
that, unlike the Fund, a CD's rate and principal are
guaranteed if held to maturity. The FDIC insures CDs up to
$100,000.
/(1)/Source: Salomon Brothers.
SEC AND OTHER IMPORTANT INFORMATION
The SEC-required uniformly computed average annual rates
of total return at the current maximum sales charge of
5.75% for the following periods ended 3/31/95 were:
<TABLE>
<CAPTION>
----------------------------------------------------------------------
1 Year 5 Years 10 Years 10 Years (at net asset value)
<S> <C> <C> <C>
+1.20% +9.39% +11.74% +12.41%
----------------------------------------------------------------------
</TABLE>
Results quoted herein represent past performance based on
the current sales charge schedule and reflect appropriate
Rule 12b-1 Plan expenses from commencement of the Plan.
Past performance is no indication of future results. Tax
consequences are not reflected. The Fund's sales charge
structure has changed from the past. The investment return
and principal value of a Fund investment will fluctuate so
that shares, on any given day or when redeemed, may be
worth more or less than their original cost. If used after
6/30/95, this literature must be accompanied by Lord
Abbett's Performance Quarterly for the most recently
completed calendar quarter.
<PAGE>
- --------------------------------------------------------------------------------
LORD ABBETT VALUE APPRECIATION FUND'S TOP TEN EQUITY HOLDINGS
(AS OF 12/31/94)
Lord Abbett Value Appreciation Fund is one of the few
mutual funds that focuses its research efforts on midsized
companies with market capitalizations generally ranging
from $500 million to $3 billion.
While not all midsized companies have familiar names,
chances are you have used many goods and services they
provide. The Fund is a managed portfolio and holdings are
subject to change.
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
MOORE CORP. A producer of business forms......................................................... 3.2%
TORONTO, ALBERTA,
CANADA
- -----------------------------------------------------------------------------------------------------------------
EASTERN ENTERPRISES Natural gas distributor in Massachusetts; river barging and
WESTON, MA water distribution components........................................................ 3.0%
- -----------------------------------------------------------------------------------------------------------------
SNAP-ON, INC. Manufactures and distributes hand tools and diagnostic
KENOSHA, WI equipment for the automotive industry................................................ 2.9%
- -----------------------------------------------------------------------------------------------------------------
GENUINE PARTS CO. National distributor of automotive replacement parts................................. 2.8%
ATLANTA, GA
- -----------------------------------------------------------------------------------------------------------------
GREAT WESTERN Leading savings and loan company..................................................... 2.7%
FINANCIAL CORP.
CHATSWORTH, CA
- -----------------------------------------------------------------------------------------------------------------
KERR-MCGEE CORP. Oil and gas exploration and production, refining and chemicals....................... 2.7%
OKLAHOMA CITY, OK
- -----------------------------------------------------------------------------------------------------------------
JOHNSON CONTROLS, Diversified manufacturer of auto seats, car batteries, plastic beverage
INC. containers and systems for commercial buildings...................................... 2.6%
MILWAUKEE, WI
- -----------------------------------------------------------------------------------------------------------------
STANDARD PRODUCTS Manufactures plastic and rubber products for the automotive and
CO. appliance industries................................................................. 2.5%
CLEVELAND, OH
- -----------------------------------------------------------------------------------------------------------------
DEAN FOODS CO. Major producer of dairy foods, canned and frozen vegetables.......................... 2.4%
FRANKLIN PARK, IL
- -----------------------------------------------------------------------------------------------------------------
LINCOLN NATIONAL Holding company with operations in insurance, reinsurance and
CORP. investment-related services.......................................................... 2.3%
FORT WAYNE, IN
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
For more complete information on the Fund, including charges and expenses, call
your financial adviser or Lord, Abbett & Co. at 800-874-3733 for a prospectus.
An investor should read the prospectus carefully before investing in the Fund.
Lord, Abbett & Co.
Investment Management
[LOGO OF LORD, ABBETT & CO APPEARS HERE]
A Tradition of Performance
Through Disciplined Investing
767 Fifth Avenue, New York, NY 10153-0203
800-426-1130
LAVA-6-1294
<PAGE>
