<PAGE>
Lord Abbett
Bond-Debenture Fund
Developing Growth Fund
Mid-Cap Value Fund
Class Y Shares
Prospectus
May 1, 1999
[LOGO]
As with all mutual funds, the Securities and Exchange Commission does not
guarantee that the information in this prospectus is accurate or complete, and
it has not judged these funds for investment merit. It is a criminal offense to
state otherwise.
Only class Y shares of certain funds are offered to the general public and
available in all states. Please call 800-821-5129 for further information.
<PAGE>
Table of Contents
<TABLE>
<S> <C>
The Funds Page
Information about goal/ Bond-Debenture Fund 2
strategy, main risks, past Developing Growth Fund 4
performance, fees and expenses Mid-Cap Value Fund 6
Your Investment
Information for managing Purchases 8
your fund account Redemptions 9
Distributions and Taxes 9
Services For Fund Investors 10
Management 11
For More Information
How to learn more Other Investment Techniques 12
about the funds Glossary of Shaded Terms 13
Recent Performance 13
Financial Information
Financial highlights Bond-Debenture Fund 16
and line graph comparison Developing Growth Fund 18
Mid-Cap Value Fund 20
How to learn more about the Back Cover
funds and other Lord Abbett funds
</TABLE>
<PAGE>
Bond-Debenture Fund
The Funds
GOAL/STRATEGY
The fund seeks high current income and the opportunity for capital
appreciation to produce a high total return. We believe that a high total
return (current income and capital appreciation) may be derived from an
actively managed, diversified security portfolio. Normally, we invest at
least 65% of our total assets in bonds (secured obligations) and debentures
(generally unsecured obligations). We seek unusual values, using
fundamental, bottoms-up research to identify undervalued securities.
We invest principally in lower-rated debt securities convertible into
common stock, preferred stocks and bonds and investment grade debt. At
least 20% of the portfolio must be invested in investment grade debt, or
U.S. government securities. In addition, the fund may invest up to 20% of
its assets in foreign securities. In recent years, the fund has found good
value in lower-rated, higher yielding debt securities and has invested more
than half its assets in those securities.
While typically fully invested, we may take a temporary defensive position
in cash and short-term debt securities. This could prevent the fund from
realizing its investment objective.
MAIN RISKS
The fund faces interest rate risk, credit risk, and currency risk.
As with other bond funds, the value of your investment may change as
interest rates fluctuate, due to interest rate risk. This is because often
the prices of fixed-income securities rise when interest rates fall and
fall when interest rates rise. Longer-term bonds are usually more sensitive
to interest rate changes. Put another way, the longer the maturity of a
bond or other debt security, the greater the effect a change in interest
rates is likely to have on the instrument's price. The fund tends to own
securities with longer maturities, so it may face more interest rate risk
than some fixed income funds.
Lower-rated debt securities involve greater credit risks than do investment
grade bonds. Companies that issue high yield debt securities are not as
strong financially as those with higher credit ratings and may default on
principal or interest payments. Through portfolio diversification, good
credit analysis and attention to current developments and trends in
interest rates and economic conditions, we attempt to reduce investment
risk, but losses may occur. In addition, we attempt to reduce investment
risk by investing at least 20% of our assets in a combination of investment
grade debt securities, U.S. government securities, and cash equivalents.
Finally, because it may invest up to 20% of its assets in foreign
securities, the fund faces the risk that unfavorable changes in currency
exchange rates could reduce its share price.
An investment in the fund is not a bank deposit. It is not FDIC insured or
government-endorsed. It is not a complete investment program. You could
lose money in this fund.
We or the fund refers to Lord Abbett Bond-Debenture Fund, Inc., which operates
under the supervision of its Board with the advice of Lord, Abbett & Co.("Lord
Abbett"), its investment manager.
About the fund. The fund is a professionally managed portfolio primarily holding
securities purchased with the pooled money of investors. It strives to reach its
stated goal, although as with all funds, it cannot guarantee results.
Investment grade debt securities are, at the time of purchase, rated in one of
the four highest grades determined either by Moody's Investors Service, Inc. or
Standard & Poor's Ratings Service, or determined by Lord Abbett to be equivalent
in quality.
U.S. government securities are obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
High yield debt securities, commonly known as "junk bonds" typically pay a
higher yield than investment grade debt securities. These bonds have a higher
risk of default than investment grade bonds and their prices can be much more
volatile.
Foreign securities are securities primarily traded in countries outside the
United States. These securities are not subject to the same degree of regulation
and may be more volatile and less liquid than securities traded in major U.S.
markets. Other considerations include political and social instability,
expropriations, higher transaction costs, currency fluctuations, nondeductible
withholding taxes and different settlement practices.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describes the other investment strategies, and their risks, used
by the fund.
2 The Funds
<PAGE>
Bond-Debenture Fund
Past Performance(i)
The information below provides some indication of the risks of investing in
the fund, by showing changes in the fund's class A shares' performance from
calendar year to calendar year and by showing how the fund's average annual
returns compare with those of a broad measure of market performance. The
returns shown do not reflect deduction of any sales loads related to class
A shares, which are not applicable to class Y shares. Past performance is
not a prediction of future results.
[PERFORMANCE GRAPH]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- -------------------------------------------------------------------------------------------------
13.8% 5.1% -7.6% 38.3% 16.0% 16.0% -3.9% 17.5% 11.2% 12.7% 4.8%
</TABLE>
Best Quarter: 1st Q '91 13.85%
Worst Quarter: 3rd Q '90 (8.24)%
===============================================================================
The table below shows a comparison of the fund's class A average annual total
returns to that of a broad measure of market performance, as represented by the
Salomon Brothers Broad Investment High-Grade Index ("SBBIHGI") and the First
Boston High-Yield Index ("FBHY"). Fund returns assume reinvestment of dividends
and distributions at net asset value. All periods end on December 31, 1998.
<TABLE>
<CAPTION>
Class 1 Year 5 Years 10 Years Since Inception(i)
<S> <C> <C> <C> <C>
A 4.76% 8.19% 10.36% 10.14%
- --------------------------------------------------------------------
SBBIHGI(ii) 8.72% 7.30% 9.31% -
- --------------------------------------------------------------------
FBHYI(ii) 0.57% 8.16% 10.74% -
- --------------------------------------------------------------------
</TABLE>
(i) Because class Y shares are new the bar chart and table show returns for
class A shares. Returns for class Y shares will be somewhat higher, because
class Y shares have lower expenses. The date of inception of class A shares
is 4/1/71.
(ii) Performance for the unmanaged Salomon Brothers Investment High-Grade Index
and First Boston High-Yield Index do not reflect transaction costs or
management fees.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
====================================================================================================
Fee table
- ----------------------------------------------------------------------------------------------------
<S> <C>
Class Y
Shareholder Fees (Fees paid directly from your investment)
- ----------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases (as a % of offering price) none
- ----------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge none
- ----------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from fund assets) (as a % of average net assets)
- ----------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.46%
- ----------------------------------------------------------------------------------------------------
Other Expenses 0.14%
- ----------------------------------------------------------------------------------------------------
Total Operating Expenses 0.60%
- ----------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
Expense example
================================================================================
This example, like that in other funds' prospectuses, assumes a $10,000 initial
investment, 5% total return each year and no changes in expenses. You pay the
following expenses over the course of each period shown if you sell your shares
at the end of the period, although your actual cost may be higher or lower. You
also would pay the same expenses, assuming you kept your shares.
<TABLE>
<CAPTION>
Share class 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Class Y shares $61 $192 $335 $752
- --------------------------------------------------------------------------------
</TABLE>
This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present.
Management fees are payable to Lord Abbett for the fund's investment
management.
Other expenses include fees paid for miscellaneous items such as shareholder
service and professional fees.
The Funds 3
<PAGE>
Developing Growth Fund
GOAL/STRATEGY
The fund seeks capital appreciation. It does this by investing primarily in
the common stocks of small companies with exciting prospects, strong
management, and above-average, long-term growth potential. The fund uses a
bottom-up stock selection process, which means that it focuses on the
investment fundamentals of companies, rather than reacting to market
events. Normally, the fund invests at least 65% of its total assets in
securities of small companies.
The fund tries to identify companies that are in the developing growth
phase. This is a period of swift development when growth occurs at a rate
rarely equaled by established companies in their mature years. The fund
focuses on companies that it believes are strongly positioned in this
phase. Of course, because the actual growth of a company cannot be
foreseen, Lord Abbett may not always be correct in its judgments about
which phase a company is in.
While typically fully invested, we may take a temporary defensive position
in cash and short-term debt securities. This could prevent the fund from
realizing its investment objective.
MAIN RISKS
Although small-company stocks offer significant appreciation potential,
they generally carry more risk than larger companies. Generally, small
companies rely on limited product lines and markets, financial resources,
or other factors, and may lack management depth or experience. This may
make them more susceptible to setbacks or economic downturns.
Small-company stocks tend to be more volatile in price, have fewer shares
outstanding and trade less frequently than other stocks. Therefore,
small-company stocks often are subject to wider price fluctuations. Many
small-company stocks are traded over the counter and are not traded in the
volume typical of stocks listed on a national securities exchange.
An investment in the fund is not a bank deposit. It is not FDIC insured or
government-endorsed. It is not a complete investment program. You could
lose money in this fund.
We or the fund refers to Lord Abbett Developing Growth Fund, Inc., which
operates under the supervision of its Board with the advice of Lord, Abbett &
Co.("Lord Abbett"), its investment manager.
About the fund. The fund is a professionally managed portfolio primarily holding
securities purchased with the pooled money of investors. It strives to reach its
stated goal, although as with all funds, it cannot guarantee results.
Growth stocks are stocks which exhibit faster-than-average gains in earnings and
are expected to continue profit growth at a high level, but also tend to be
more volatile than bargain stocks.
Small-Company stocks are stocks of smaller companies which often are new and
less established, with a tendency to be faster-growing but more volatile than
large-company stocks.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describes the other investment strategies, and their risks, used
by the fund.
4 The Funds
<PAGE>
Developing Growth Fund
PAST PERFORMANCE(i)
The information below provides some indication of the risks of investing in
the fund, by showing changes in the fund's class A shares performance from
calendar year to calendar year and by showing how the fund's average annual
returns compare with those of a broad measure of market performance. The
returns shown do not reflect deduction of any sales loads related to class
A shares, which are not applicable to class Y shares. Past performance is
not a prediction of future results.
[PERFORMANCE GRAPH]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ---------------------------------------------------------------------------------------
14.1% -6.4% 56.4% -3.1% 12.6% 6.2% 45.7% 22.2% 30.8% 8.3%
</TABLE>
Best Quarter: 1st Q '91 29.96%
Worst Quarter: 3rd Q '90 (24.62)%
===============================================================================
The table below shows a comparison of the fund's class A average annual total
return to that of a broad measure of market performance, as represented by the
Russell 2000 Index. Fund returns assume reinvestment of dividends and
distributions at net asset value. All periods end on December 31, 1998.
<TABLE>
<CAPTION>
Class 1 Year 5 Years 10 Years Since Inception
<S> <C> <C> <C> <C>
A 8.27% 21.76% 17.17% 12.80%(i)
- -------------------------------------------------------------------------------
Russell 2000 Index(ii) (2.55)% 11.87% 12.92% -
- -------------------------------------------------------------------------------
</TABLE>
(i) Because class Y shares are relatively new the bar chart and table show
returns for class A shares. Returns for class Y shares will be somewhat
higher, because class Y shares have lower expenses. The date of inception
of class A is 10/10/73.
(ii) Performance for the unmanaged Russell 2000 Index does not reflect
transaction costs or management fees.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
====================================================================================================
Fee table
- ----------------------------------------------------------------------------------------------------
<S> <C>
Class Y
Shareholder Fees (Fees paid directly from your investment)
- ----------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases (as a % of offering price) none
- ----------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge none
- ----------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from fund assets) (as a % of average net assets)
- ----------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.53%
- ----------------------------------------------------------------------------------------------------
Other Expenses 0.19%
- ----------------------------------------------------------------------------------------------------
Total Operating Expenses 0.72%
- ----------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
EXPENSE EXAMPLE
================================================================================
This example, like that in other funds' prospectuses, assumes a $10,000 initial
investment, 5% total return each year and no changes in expenses. You pay the
following expenses over the course of each period shown if you sell your shares
at the end of the period, although your actual cost may be higher or lower. You
also would pay the same expenses, assuming you kept your shares.
<TABLE>
<CAPTION>
Share class 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Class Y shares $73 $230 $401 $897
- --------------------------------------------------------------------------------
</TABLE>
This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present.
Management fees are payable to Lord Abbett for the fund's investment management.
Other expenses include fees paid for miscellaneous items such as shareholder
service and professional fees.
The Funds 5
<PAGE>
Mid-Cap Value Fund
GOAL/STRATEGY
The fund seeks capital appreciation through investments, primarily in
equity securities, which are believed to be undervalued in the marketplace.
Normally, at least 65% of our total assets will consist of investments in
mid-sized companies, with market capitalizations of roughly $500 million to
$5 billion. Generally, the fund, using a value approach, tries to identify
bargain stocks of companies that have the potential for significant market
appreciation, due to growing recognition of improvement in their financial
results, or increasing anticipation of such improvement. In trying to
identify those companies, we look for such factors as:
changes in economic and financial environment
new or improved products or services
new or rapidly expanding markets
changes in management or structure of the company
price increases for the company's products or services
improved efficiencies resulting from new technologies or changes in
distribution
changes in government regulations, political climate or competitive
conditions
While typically fully invested, we may take a temporary defensive position
in cash and short-term debt securities. This could prevent the fund from
realizing its investment objective.
MAIN RISKS
While stocks have historically been a leading choice of long-term
investors, they fluctuate in price. The value of your investment in the
fund will go up and down.
The fund's performance may sometimes be lower or higher than that of other
types of funds (such as those emphasizing small-company stocks or growth
stocks), or other funds of the same type. Different types of stocks tend to
shift in and out of favor depending on market and economic conditions.
There is the risk that an investment may never reach what we think is its
full value, or may go down in value, but our value approach might limit our
downside risk because value stocks in theory are already underpriced.
An investment in the fund is not a bank deposit. It is not FDIC insured or
government-endorsed. It is not a complete investment program. You could
lose money in this fund.
We or the fund refers to Lord Abbett Mid-Cap Value Fund, Inc., which operates
under the supervision of its Board with the advice of Lord, Abbett & Co.("Lord
Abbett"), its investment manager.
About the fund. The fund is a professionally managed portfolio primarily holding
securities purchased with the pooled money of investors. It strives to reach its
stated goal, although as with all mutual funds, it cannot guarantee results.
Bargain stocks are stocks of companies that appear underpriced according to
certain financial measurements of their intrinsic worth or business prospects.
Growth stocks exhibit faster-than-average gains in earnings and are expected to
continue profit growth at a high level, but also tend to be more volatile than
bargain stocks.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describes the other investment strategies, and their risks, used
by the fund.
6 The Funds
<PAGE>
Mid-Cap Value Fund
PAST PERFORMANCE
The information below provides some indication of the risks of investing in
the fund, by showing changes in the fund's class A shares' performance from
calendar year to calendar year and by showing how the fund's average annual
returns compare with those of a broad measure of market performance. The
returns shown do not reflect deduction of any sales loads related to class
A shares, which are not applicable to class Y shares. Past performance is
not a prediction of future results.
[PERFORMANCE GRAPH]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ----------------------------------------------------------------------------------------
20.1% -4.6% 27.4% 13.5% 14.0% -3.3% 26.1% 21.2% 31.5% -0.5%
</TABLE>
Best Quarter: 2nd Q '97 13.81%
Worst Quarter: 3rd Q '98 (17.30)%
===============================================================================
The table below shows a comparison of the fund's class A average annual total
return to that of a broad measure of market performance, as represented by the
Russell Mid-Cap Index ("RMC Index"). Fund returns assume reinvestment of
dividends and distributions at net asset value. All periods end on December 31,
1998.
<TABLE>
<CAPTION>
Class 1 Year 5 Years 10 Years Since Inception(i)
<S> <C> <C> <C> <C>
A (0.45)% 14.13% 13.83% 12.75%
- --------------------------------------------------------------------------------
RMC Index(ii) 10.09% 17.35% 16.69% -
- --------------------------------------------------------------------------------
</TABLE>
(i) Because class Y shares are new, the bar chart and table show returns for
class A shares. Returns for class Y shares will be somewhat higher because
class Y shares have lower expenses. The date of inception of class A is
6/28/83.
(ii) Performance for the unmanaged RMC Index does not reflect transaction costs
or management fees.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
====================================================================================================
Fee table
- ----------------------------------------------------------------------------------------------------
<S> <C>
Class Y
Shareholder Fees (Fees paid directly from your investment)
- ----------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases (as a % of offering price) none
- ----------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge none
- ----------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from fund assets) (as a % of average net assets)
- ----------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.70%
- ----------------------------------------------------------------------------------------------------
Other Expenses 0.22%
- ----------------------------------------------------------------------------------------------------
Total Operating Expenses 0.92%
- ----------------------------------------------------------------------------------------------------
</TABLE>
=================================================================
Expense example
=================================================================
This example, like that in other funds' prospectuses, assumes a
$10,000 initial investment, 5% total return
each year and no changes in expenses. You pay the following
expenses over the course of each period shown
if you sell your shares at the end of the period, although your
actual cost may be higher or lower. You also would
pay the same expenses, assuming you kept your shares.
<TABLE>
<CAPTION>
Share class 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Class Y shares $94 $293 $509 $1,134
- -------------------------------------------------------------------------------
</TABLE>
This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present.
Management fees are payable to Lord Abbett for the fund's investment management.
Other expenses include fees paid for miscellaneous items such as shareholder
service and professional fees.
The Funds 7
<PAGE>
Your Investment
PURCHASES
CLASS Y SHARES. Class Y shares are purchased at Net Asset Value ("NAV") with
no sales charge. The NAV of our shares is calculated every business day as
of the close of the New York Stock Exchange. Our shares are continuously
offered. The offering price is based on NAV per share next determined after
we receive your order submitted in proper form. We reserve the right to
withdraw all or any part of the offering made by this prospectus, or to
reject any purchase order. We also reserve the right to waive or change
minimum investment requirements. All purchase orders are subject to our
acceptance and are not binding until confirmed or accepted in writing.
WHO MAY INVEST? Eligible purchasers of class Y shares include: (1) certain
authorized brokers, dealers, registered investment advisers or other
financial institutions who either (a) have an arrangement with Lord Abbett
Distributor in accordance with certain standards approved by Lord Abbett
Distributor, providing specifically for the use of our class Y shares in
particular investment products made available for a fee to clients of such
brokers, dealers, registered investment advisers or other financial
institutions, or (b) charge an advisory consulting or other fee for their
services and buy shares for their own accounts or the accounts of their
clients ("Mutual Fund Advisory Programs"); (2) the trustee or custodian
under any deferred compensation or pension or profit-sharing plan or payroll
deduction IRA established for the benefit of the employees of any company
with an account(s) in excess of $10 million managed by Lord Abbett or its
sub-advisors on a private-advisory-account basis; (3) institutional
investors, including retirement plans, companies, foundations, trusts,
endowments and other entities where the total amount of potential investable
assets exceeds $50 million that were not introduced to Lord Abbett by
persons associated with a broker or dealer primarily involved in the retail
security business; and (4) members of each fund's Board of Directors or
Trustees, officers of the funds and partners of Lord Abbett. Additional
payments may be made by Lord Abbett out of its own resources with respect to
certain of these sales.
HOW MUCH MUST YOU INVEST? You may buy our shares through any independent
securities dealer having a sales agreement with Lord Abbett Distributor, our
exclusive selling agent. Place your order with your investment dealer or
send the money to the fund you selected (P.O. Box 419100, Kansas City,
Missouri 64141). The minimum initial investment is $1 million except for
Mutual Fund Advisory Programs, Directors, Trustees or officers of the funds
and partners of Lord Abbett, which are subject to no minimum. This offering
may be suspended, changed or withdrawn by Lord Abbett Distributor which
reserves the right to reject any order.
BUYING SHARES THROUGH YOUR DEALER. Orders for shares received by a fund
prior to the close of the NYSE, or received by dealers prior to such close
and received by Lord Abbett Distributor prior to the close of its business
day, will be confirmed at NAV effective at such NYSE close. Orders received
by dealers after the NYSE closes and received by Lord Abbett Distributor in
proper form prior to the close of its next business day are executed at the
NAV effective as of the close of the NYSE on that next business day. The
dealer is responsible for the timely transmission of orders to Lord Abbett
Distributor. A business day is a day on which the NYSE is open for trading.
NAV per share is calculated each business day at the close of regular trading on
the New York Stock Exchange ("NYSE"). Each fund is open on those business days
when the NYSE is open. Purchases and sales of fund shares are executed at the
NAV next determined after the fund receives your order. In calculating NAV,
securities for which market quotations are available are valued at those
quotations. Securities for which such quotations are not available are valued at
fair value under procedures approved by the Board.
LORD ABBETT DISTRIBUTOR LLC ("Lord Abbett Distributor") acts as agent for the
funds to work with investment professionals that buy and/or sell shares of the
funds on behalf of their clients. Generally, Lord Abbett Distributor does not
sell fund shares directly to investors.
8 Your Investment
<PAGE>
BUYING SHARES BY WIRE. To open an account, call 800-821-5129 Ext. 34028,
Institutional Trade Dept., to set up your account and to arrange a wire
transaction. Wire to: United Missouri Bank of Kansas City, N.A., Routing
number - 101000695, bank account number: 9878002611, FBO: (account name) and
(your Lord Abbett account number). Specify the complete name of the fund of
your choice, note class Y shares and include your new account number and
your name. To add to an existing account, wire to: United Missouri Bank of
Kansas City, N.A., routing number - 101000695, bank account number:
9878002611, FBO: (account name) and (your Lord Abbett account number).
Specify the complete name of the fund of your choice, note class Y shares
and include your account number and your name.
REDEMPTIONS
BY BROKER. Call your investment professional for directions on how to redeem
your shares.
BY TELEPHONE. To obtain the proceeds of a redemption of $50,000 or less from
your account, you or your representative can call the fund at 800-821-5129.
BY MAIL. Submit a written redemption request indicating, the name(s) in
which the account is registered, the fund's name, the class of shares, your
account number, and the dollar value or number of shares you wish to sell.
Include all necessary signatures. If the signer has any Legal Capacity, the
signature and capacity must be guaranteed by an Eligible Guarantor. Certain
other legal documentation may be required. For more information regarding
proper documentation call 800-821-5129.
Normally a check will be mailed to the name and address in which the account
is registered (or otherwise according to your instruction) within three
business days after receipt of your redemption request. Your account balance
must be sufficient to cover the amount being redeemed or your redemption
order will not be processed. Under unusual circumstances, the fund may
suspend redemptions, or postpone payment for more than seven days, as
permitted by federal securities laws.
BY WIRE. In order to receive funds by wire, our servicing agent must have
the wiring instructions on file. To verify that this feature is in place,
call 800-821-5129 Ext. 34028, Institutional Trading Dept. minimum wire:
$1,000. Your wire redemption request must received by your fund before the
close of the NYSE for money to be wired on the next business day.
DISTRIBUTIONS AND TAXES
Each fund pays its shareholders dividends from its net investment income,
and distributes any net capital gains that it has realized. Bond-Debenture
Fund expects to pay income dividends monthly. Developing Growth Fund and
Mid-Cap Value Fund expect to pay income dividends, if any, annually. Each
fund expects to pay capital gain distributions, if any, once a year. A
supplemental distribution may also be paid to comply with the Internal
Revenue Code. Your distributions will be reinvested in your fund unless you
instruct the fund to pay them to you in cash.
IMPORTANT INFORMATION. You may be subject to a $50 penalty under the Internal
Revenue Code if you do not provide a correct taxpayer identification number
(Social Security Number for individuals) or make certain required
certifications. In addition, we may be required to withhold from your account
and pay to the U.S. Treasury 31% of any redemption proceeds and of any dividend
or distribution from your account.
ELIGIBLE GUARANTOR is any broker or bank that is a member of the Medallion
Stamp Program. Most major securities firms and banks are members of this
program. A NOTARY PUBLIC IS NOT AN ELIGIBLE GUARANTOR.
Your Investment 9
<PAGE>
The tax status of distributions is the same regardless of how long they have
been in the fund or whether distributions are reinvested or paid in cash. In
general, distributions are taxable as follows:
<TABLE>
<CAPTION>
===============================================================================
Federal Taxability Of Distributions
<S> <C> <C>
Type of Tax rate for taxpayer Tax rate for taxpayer subject
distribution subject to 15% bracket to 28% bracket and above
- -------------------------------------------------------------------------------
INCOME Ordinary Ordinary
DIVIDENDS income rate income rate
- -------------------------------------------------------------------------------
SHORT-TERM Ordinary Ordinary
CAPITAL GAINS income rate income rate
- -------------------------------------------------------------------------------
LONG-TERM
CAPITAL GAINS 10% 20%
- -------------------------------------------------------------------------------
</TABLE>
Except in tax-advantaged accounts, any sale or exchange of fund shares may
be a taxable event.
ANNUAL INFORMATION - Information concerning the tax treatment of dividends
and other distributions will be mailed to shareholders each year. Each fund
will also provide annually to its shareholders information regarding the
source of dividends and distributions of capital gains paid by that fund.
Because everyone's tax situation is unique, you should consult your tax
adviser regarding the treatment of those distributions under the federal,
state and local tax rules that apply to you, as well as the tax consequences
of gains or losses from the redemption or exchange of your shares.
SERVICES FOR FUND INVESTORS
AUTOMATIC SERVICES
We offer the following shareholder services:
TELEPHONE EXCHANGE PRIVILEGE. Class Y shares may be exchanged without a
service charge for class Y shares of any Eligible Fund among the Lord
Abbett-sponsored funds.
ACCOUNT STATEMENTS. Every Lord Abbett investor automatically receives
quarterly statements.
HOUSEHOLDING. Shareholders with the same last name and address will receive
a single copy of a prospectus and an annual or semi-annual report, unless
additional reports are specifically requested in writing to the funds.
ACCOUNT CHANGES. For any changes you need to make to your account, consult
your investment professional or call the fund at 800-821-5129.
SYSTEMATIC EXCHANGE. You or your investment professional can establish a
schedule of exchanges between the same classes of any Eligible Fund.
TAXES ON TRANSACTIONS. The chart at left also can provide a "rule of thumb"
guide for your potential U.S. federal tax liability when selling or exchanging
fund shares. The second row, "Short-term capital gains," applies to fund shares
sold within 12 months of purchase. The third row, "Long-term capital gains,"
applies to shares held for more than 12 months.
Starting January 1, 2001, sales of securities held for more than five years will
be taxed at special lower rates.
Any gains realized on a fund's transactions in options and financial futures
will be treated as taxable long- or short-term capital gains.
TELEPHONE TRANSACTIONS. You have this privilege unless you refuse it in writing.
For your security, telephone transaction requests are recorded. We will take
measures to verify the identity of the caller, such as asking for your name,
account number, social security or taxpayer identification number and other
relevant information. Each fund will not be liable for following instructions
communicated by telephone that it reasonably believes to be genuine.
Transactions by telephone may be difficult to implement in times of drastic
economic or market change.
Exchanges by telephone should not be used to take advantage of short-term swings
in the market. Each fund reserves the right to limit or terminate this privilege
for any shareholder making frequent exchanges or abusing the privilege and may
revoke the privilege for all shareholders upon 60 days' written notice.
10 Your Investment
<PAGE>
MANAGEMENT
The funds' investment adviser is Lord, Abbett & Co., 767 Fifth Avenue, New
York, NY 10153-0203. Founded in 1929, Lord Abbett manages one of the
nation's oldest mutual fund complexes, with over $30 billion in more than 35
mutual fund portfolios and other advisory accounts. For more information
about the services Lord Abbett provides to the funds, see the Statement of
Additional Information.
Each fund pays Lord Abbett a monthly fee based on average daily net assets
for each month. For each of the fund's respective fiscal year end, the
management fee paid to Lord Abbett was at an annual rate of .46 of 1% for
Bond-Debenture Fund, .53 of 1% for Developing Growth Fund and .70 of 1% for
Mid-Cap Value Fund.
Lord Abbett uses a team of portfolio managers and analysts acting together
to manage the fund's investments.
BOND-DEBENTURE FUND. Christopher J. Towle, Partner of Lord Abbett, heads the
team, the other senior members of which include Richard Szaro, Michael
Goldstein and Thomas Baade. Messrs. Towle and Szaro have been with Lord
Abbett since 1988 and 1983, respectively. Mr. Goldstein has been with Lord
Abbett since 1997. Before joining Lord Abbett, Mr. Goldstein was a bond
trader for Credit Suisse BEA Associates from August 1992 through April 1997.
Mr. Baade joined Lord Abbett in 1998; prior to that he was a credit analyst
with Greenwich Street Advisors.
DEVELOPING GROWTH FUND. Stephen J. McGruder, Partner of Lord Abbett, heads
the team, the other senior members of which include Lesley-Jane Dixon, Rayna
Lesser and Cinda Hughes. Mr. McGruder and Ms. Dixon have been with Lord
Abbett since 1995, Ms. Lesser has been with Lord Abbett since 1996 and Ms.
Hughes since 1998. Prior to joining Lord Abbett, Mr. McGruder was a
portfolio manager with Wafra Investment Advisory Group. Ms. Dixon was an
equity analyst with Wafra Investment Advisory Group before joining Lord
Abbett. Ms. Lesser joined Lord Abbett directly from Barnard College. Ms.
Hughes was an Analyst/Director of Equity Research at Phoenix Investment
Counsel and an Associate Strategist at Paine Webber, Inc./Kidder, Peabody &
Co. before joining Lord Abbett.
MID-CAP VALUE FUND. Edward K. von der Linde, Portfolio Manager, heads the
team, the other senior members of which include Howard Hansen, David Builder
and Eileen Banko. Both Mr. von der Linde and Ms. Banko have been with Lord
Abbett for more than five years. Mr. Hansen joined Lord Abbett in 1995;
before that he was an analyst at Alfred Berg Inc. from 1990 - 1995 and at
Kidder Peabody from 1987 - 1990. Mr. Builder joined Lord Abbett in 1998;
before that he was an analyst at Bear Stearns from 1996 - 1998 and at Weiss
Peck & Greer from 1994 - 1995.
Your Investment 11
<PAGE>
For More Information
OTHER INVESTMENT TECHNIQUES
This section describes some of the investment techniques that might be used
by the funds and their risks.
ADJUSTING INVESTMENT EXPOSURE. Each fund may, but is not required to, use
various strategies to change its investment exposure to adjust to changing
security prices, interest rates, currency exchange rates, commodity prices
and other factors. Each fund may use these transactions to change the risk
and return characteristics of each fund's portfolio. If we judge market
conditions incorrectly or use a strategy that does not correlate well with
the fund's investments, it could result in a loss, even if we intended to
lessen risk or enhance returns. These transactions may involve a small
investment of cash compared to the magnitude of the risk assumed and could
produce disproportionate gains or losses. Also, these strategies could
result in losses if the counterparty to a transaction does not perform as
promised.
BORROWING. Each fund may borrow from banks. If the fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. Each fund may borrow only for temporary or emergency purposes, and
not in an amount exceeding 331/3% of its total assets.
DIVERSIFICATION. Each fund is a diversified fund, which means that with
respect to 75% of its total assets, it will not purchase a security if, as a
result, more than 5% of the fund's total assets would be invested in
securities of a single issuer or the fund would hold more than 10% of the
outstanding voting securities of the issuer. U.S. government securities are
not subject to these requirements.
FOREIGN SECURITIES. These securities are not subject to the same degree of
regulation and may be more volatile and less liquid than securities traded
in major U.S. markets. Foreign portfolio securities may trade on days when
an underlying fund does not value them. Fund share prices could be affected
on days an investor cannot purchase or sell shares. Other risks include less
information on public companies, banks and governments; political and social
instability; expropriations; higher transaction costs; currency
fluctuations; nondeductible withholding taxes and different accounting and
settlement practices. Developing Growth Fund and Mid-Cap Value Fund may each
invest up to 10% of their assets at the time of investment in foreign
securities. Bond-Debenture Fund may invest up to 20% of its assets in
foreign securities.
ILLIQUID SECURITIES. These securities include those that are not traded on
the open market or that trade irregularly or in very low volume. They may be
difficult or impossible to sell at the time and price the fund would like.
Bond-Debenture Fund and Mid-Cap Value Fund each may invest up to 15% of
their assets in illiquid securities.
PORTFOLIO SECURITIES LENDING. Each fund may lend securities to
broker-dealers and financial institutions, as a means of earning income.
This practice could result in a loss or delay in recovering a fund's
securities, if the borrower defaults. Each fund will limit its security
loans to 30% of its total assets.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price from a broker-dealer or financial institution and simultaneously
agrees to sell the same security back to the same party at a higher price in
the future. If the other party to the agreement defaults or becomes
insolvent, the fund could lose money.
12 For More Information
<PAGE>
GLOSSARY OF SHADED TERMS
ELIGIBLE FUND. An Eligible Fund is any Lord Abbett-sponsored fund offering
class Y shares.
LEGAL CAPACITY. This term refers to the authority of an individual to act on
behalf of an entity or other person(s). For example, if a redemption request
were to be made on behalf of the estate of a deceased shareholder, John W.
Doe, by a person (Robert A. Doe) who has the legal capacity to act for the
estate of the deceased shareholder because he is the executor of the estate,
then the request must be executed as follows: Robert A. Doe, Executor of the
Estate of John W. Doe. That signature using that capacity must be guaranteed
by an Eligible Guarantor.
To give another example, if a redemption request were to be made on behalf
of the ABC Corporation by a person (Mary B. Doe) who has the legal capacity
to act on behalf of the corporation, because she is the president of the
corporation, the request must be executed as follows: ABC Corporation by
Mary B. Doe, President. That signature using that capacity must be
guaranteed by an Eligible Guarantor (see example in right column).
MUTUAL FUND ADVISORY PROGRAM. Certain unaffiliated authorized brokers,
dealers, registered investment advisers or other financial institutions who
either (a) have an arrangement with Lord Abbett Distributor in accordance
with certain standards approved by Lord Abbett Distributor, providing
specifically for the use of our shares (and sometimes providing for
acceptance of orders for such shares on our behalf) in particular
in-vestment products made available for a fee to clients of such brokers,
dealers, registered investment advisers and other financial institutions, or
(b) charge an advisory, consulting or other fee for their services and buy
shares for their own accounts or the accounts of their clients.
RECENT PERFORMANCE
BOND-DEBENTURE FUND. U.S. financial markets were subject to significant
volatility throughout the fund's fiscal year. Many investors became unnerved
at mid-year as the economic crises in Asia and Japan infected the emerging
markets in South America and Eastern Europe. These crises, in turn, seemed
likely to negatively impact corporate earnings in the U.S. and other
developed market countries. During both May and June, investors worldwide
left corporate and high-yield investments for the safety of U.S.
Treasury bonds.
A series of autumn rate cuts initiated by the U.S. Federal Reserve Board
helped to calm the turmoil in the capital markets that existed throughout
the late summer. In October, a more optimistic view of global economies
emerged. During the fourth quarter, high-yield and convertible debt
securities substantially outperformed Treasury instruments of comparable
maturities.*
Throughout the year, we underweighted the fund's corporate bond holdings in
basic industries such as steel, paper and chemicals because we considered
that, given global economic conditions, there was little pricing power
within these industries. We emphasized industries with steady cash flows,
such as telecommunications, media and cable television providers.
Bond-Debenture Fund's focus on high-yield bonds provided substantial rewards
for shareholders during the fourth quarter as high-yield bonds performed
well.
*Unlike Treasury securities, an investment in the fund is neither insured
nor guaranteed by the U.S. government and is regarded as involving a
greater degree of risk. The fund's share price and income are not
guaranteed and the value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
GUARANTEED SIGNATURE. An acceptable form of guarantee would be as follows:
In the case of the estate --
Robert A. Doe
Executor of the Estate of
John W. Doe
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
[SIGNATURE ILLEGIBLE]
- ------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
In the case of the corporation --
ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
[SIGNATURE ILLEGIBLE]
- ------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
YEAR 2000 ISSUES. Each fund could be adversely affected if the computers used by
each fund and their service providers do not properly process and calculate
date-related information from and after January 1, 2000.
Lord Abbett is working to avoid such problems and has received assurances from
each fund's service providers that they are taking similar steps. Of course, the
Year 2000 problem is unprecedented and, therefore, Lord Abbett cannot eliminate
altogether the possibility that it or the fund will be affected.
For More Information 13
<PAGE>
In our view, the current environment of low inflation, global overcapacity,
and an anticipated slowdown of U.S. economic growth makes a reversal of the
Federal Reserve's interest-rate policy unlikely. As a result, interest rates
should remain low for the duration of 1999. Against this backdrop, we expect
attractive returns from the high-yield bonds that we have selected. Because
such bonds are currently yielding more than 6% over Treasury securities with
comparable maturities, we believe that they represent particularly good
value, and we plan to maintain the fund's current overweighting of the
high-yield sector. We believe that our ability to fine-tune the fund's
investments among high-yield bonds, convertible securities and high-grade
bonds, including U.S. Treasury securities, will be a key to uncovering
exciting investment opportunities through most market conditions, while
helping to manage risk.
DEVELOPING GROWTH FUND. Small-cap investors saw positive returns early on in
the fund's fiscal year erased by a sharp third-quarter downturn. This
downturn was caused in part by a "flight to quality" stemming from
international monetary and economic crises as well as political problems
that led investors to seek more liquid investments, such as larger-company
stocks and higher-quality bonds. While all major asset classes of the U.S.
equity market experienced weakness during the third quarter of 1998,
small-cap equities had the lowest returns.
The month of October, however, saw some price recovery for small-cap stocks
after August's severe declines. The October upswing turned out to be a
harbinger of extremely strong performance during the entire fourth quarter
as economic and political uncertainties that had previously affected
investor confidence subsided and a more optimistic outlook emerged. Key to
this turnaround was the Federal Reserve Board's decisive move to lower U.S.
interest rates through a series of autumn rate cuts.
Most sectors of the U.S. equity market participated in the fourth quarter
upswing. However, as the market reached its previous highs, certain sectors,
such as technology and consumer non-cyclicals, that had provided price
leadership earlier on, once again moved ahead of the broad market. In
addition, large-cap stocks continued to outperform mid- and small-cap
investments.
Our focus on bottom-up stock selection allowed the fund to overcome
industry-specific difficulties throughout most of the period under review.
Our strategy and philosophy remain constant. We concentrate on selecting
those companies that we believe will offer our investors superior long-term
stock price appreciation regardless of industry-specific problems or
large-scale economic trends.
In our view, the current backdrop of growth in the economy, low levels of
inflation and interest rates, paired with adequate liquidity supported by
Federal Reserve policy, should enable the U.S. equity market to show
progress in the next year. However, a slowing U.S. economy could spur
small-cap price volatility due to lower corporate earnings and employment
growth. We believe our focus on identifying financially strong companies
that can be purchased at attractive prices will help the fund to uncover
exciting investment opportunities even during a slowing economy. Since
small-cap stocks remain significantly undervalued with respect to relative
earnings versus large-caps, we also expect that a period of strong relative
performance by small-caps is likely during 1999.
14 For More Information
<PAGE>
MID-CAP VALUE FUND. January through December 1998 was as difficult a period
as we can remember for value investing in the mid-cap universe. High
volatility and a strong performance bias toward larger-capitalization and
high-expectation growth stocks characterized the year. While the fund
performed well during the first half, the second half of 1998 was a
different story: the financial panic of the third quarter hit mid- and
small-cap value companies harder than the rest of the market. Investors
seeking to raise cash aggressively sold the shares of mid-sized and smaller
companies across all industry groups regardless of the fundamental outlook.
These companies are our bread and butter - the companies where value
manifests itself most readily.
What was most surprising during 1998 was the speculative frenzy born out of
the panic. Whipsawed investors have raced back into the stocks of companies
perceived to have the highest (if yet distant and vaguely defined) growth
opportunities such as Yahoo, eBay and other internet stocks. While many of
our portfolio holdings snapped back during the fourth quarter, performance
in the mid-cap segment of the market was heavily concentrated in technology
companies whose valuations and market action we do not find attractive from
a risk/reward standpoint. It is currently a sector where we are not willing
to risk investors' hard-earned capital. While we are disappointed with our
short-term performance, we recognize that the market goes through these
phases and that we are best served by sticking to what we do best. We will
remain focused on finding companies that we believe offer the best mix of
attractive valuation and improving fundamentals in the mid-capitalization
sector.
For More Information 15
<PAGE>
Bond-Debenture Fund
Financial Information
FINANCIAL HIGHLIGHTS
This table describes the fund's performance for the fiscal periods
indicated. "Total return" shows how much your investment in the fund would
have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These Financial Highlights have
been audited by Deloitte & Touche LLP, the fund's independent auditors, in
conjunction with their annual audit of the fund's financial statements.
Financial statements for the fiscal year ended December 31, 1998 and the
Independent Auditors' Report thereon appear in the Annual Report to
Shareholders for the fiscal year ended December 31, 1998 and are
incorporated by reference into the Statement of Additional Information,
which is available upon request.
<TABLE>
<CAPTION>
==============================================================================
CLASS Y SHARES
--------------------------
Period Ended December 31,
<S> <C>
Per Share Operating Performance: 1998(a)
NET ASSET VALUE, BEGINNING OF PERIOD $9.98
- ------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------
Net investment income .59(c)
- ------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------
gain (loss) on investments (.54)
- ------------------------------------------------------------------------------
Total from investment operations .05
- ------------------------------------------------------------------------------
DISTRIBUTIONS
- ------------------------------------------------------------------------------
Dividends from net investment income (.59)
- ------------------------------------------------------------------------------
Distributions from net realized gain --
- ------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $9.44
- ------------------------------------------------------------------------------
TOTAL RETURN(b) 0.55%(d)
- ------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ------------------------------------------------------------------------------
Expenses(e) 0.46%(d)
- ------------------------------------------------------------------------------
Net investment income 6.24%(d)
- ------------------------------------------------------------------------------
==============================================================================
Year Ended December 31,
- ------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES: 1998
NET ASSETS, END OF YEAR (000) $3,540,124
- ------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 86.48%
- ------------------------------------------------------------------------------
</TABLE>
(a) Commencement of offering class Y shares - 3/27/98.
(b) Total return assumes the reinvestment of all distributions.
(c) Calculated using average shares outstanding during the period.
(d) Not annualized.
(e) The ratios for 1998 include expenses paid through an expense offset
arrangement.
16 Financial Information
<PAGE>
Bond-Debenture Fund
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in class A shares
to the same investment in the Salomon Brothers Broad Investment High-Grade
Index, First Boston High-Yield Index, and the Value Line Convertible Index,
assuming reinvestment of all dividends and distributions.
- ------------------------------------------------------------------------------
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
===============================================================================
Average Annual Total Return
For The Periods Ending December 31, 1998
1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A(2) 4.76% 8.19% 10.36%
- -------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
(1) Performance for the unmanaged Salomon Brothers Broad Investment
High-Grade Index, First Boston High Yield Index and Value Line Convertible
Index do not reflect transaction costs, management fees or sales charges.
(2) This shows total return which is the percent change in net asset value, with
all dividends and distributions reinvested for the periods shown ending
December 31, 1998 using the SEC-required uniform method to compute total
return. Because class Y shares are new, the line graph comparison and the
total returns shown are for class A shares at net asset value. Returns for
class Y shares will be somewhat higher because Y shares have lower expenses.
The class A share inception date is 4/1/71.
Financial Information 17
<PAGE>
Developing Growth Fund
FINANCIAL HIGHLIGHTS
This table describes the fund's performance for the fiscal periods
indicated. "Total return" shows how much your investment in the fund would
have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These Financial Highlights have
been audited by Deloitte & Touche LLP, the fund's independent auditors, in
conjunction with their annual audit of the fund's financial statements.
Financial statements for the fiscal year ended January 31, 1998 and the
Independent Auditors' Report thereon appear in the Annual Report to
Shareholders for the fiscal year ended January 31, 1998 and are incorporated
by reference into the Statement of Additional Information, which is
available upon request.
<TABLE>
<CAPTION>
=======================================================================================================
CLASS Y SHARES
- -------------------------------------------------------------------------------------------------------
Year Ended January 31,
<S> <C> <C>
Per Share Operating Performance: 1999 1998(d)
NET ASSET VALUE, BEGINNING OF PERIOD $14.27 $14.12
- -------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------------
Net investment income (loss) (.03)(a) --(a)(e)
- -------------------------------------------------------------------------------------------------------
Net realized and unrealized
- -------------------------------------------------------------------------------------------------------
gain on investments 2.11 .15
- -------------------------------------------------------------------------------------------------------
Total from investment operations 2.08 .15
- -------------------------------------------------------------------------------------------------------
DISTRIBUTIONS FROM NET REALIZED GAIN (.05) --
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $16.30 $14.27
- -------------------------------------------------------------------------------------------------------
TOTAL RETURN(b) 14.59% 1.06%(c)
- -------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- -------------------------------------------------------------------------------------------------------
Expenses 0.72%(f) 0.06%(c)
- -------------------------------------------------------------------------------------------------------
Net investment loss (0.22)% (0.02)%(c)
- -------------------------------------------------------------------------------------------------------
========================================================================================================
Year Ended January 31,
- --------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES: 1999 1998
NET ASSETS, END OF YEAR (000) $1,344,203 $553,086
- -------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 30.89% 33.60%
- -------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding during the period.
(b) Total return assumes the reinvestment of all distributions.
(c) Not annualized.
(d) Commencement of offering class Y shares - 12/30/97.
(e) Amount less than $.01.
(f) The ratios for 1999 include expenses paid through an expense offset
arrangement.
18 Financial Information
<PAGE>
Developing Growth Fund
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in class A shares
to the same investment in the Russell 2000 Index, assuming reinvestment of
all dividends and distributions.
- ------------------------------------------------------------------------------
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
==============================================================================
Average Annual Total Return
For The Periods Ending January 31, 1999
1 YEAR 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A(2) 14.24% 21.65% 17.22%
- ------------------------------------------------------------------------------
</TABLE>
- ------------------------------------------------------------------------------
(1) Performance for the unmanaged Russell 2000 Index does not reflect
transaction costs, management fees or sales charges.
(2) This shows total return which is the percent change in net asset value, with
all dividends and distributions reinvested for the period shown ending
January 31, 1999 using the SEC-required uniform method to compute total
return. Because class Y shares are relatively new, the line graph comparison
and the total returns shown are for class A shares at net asset value.
Returns for class Y shares will be somewhat higher because Y shares have
lower expenses. The class A share inception date is 10/10/73.
Financial Information 19
<PAGE>
Mid-Cap Value Fund
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in class A shares
to the same investment in the Russell Mid-Cap Index, assuming reinvestment
of all dividends and distributions.
- -------------------------------------------------------------------------------
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
===============================================================================
Average Annual Total Return
For The Periods Ending December 31, 1998
1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A(2) (0.45)% 14.13% 13.83%
- -------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
(1) Performance for the unmanaged Russell Mid-Cap Index does not reflect
transaction costs, management fees or sales charges.
(2) This shows total return which is the percent change in value, at net asset
value, with all dividends and distributions reinvested for the periods shown
ending December 31, 1998 using the SEC-required uniform method to compute
total return. Because class Y shares are new, the line graph comparison and
the total returns shown are for class A shares at net asset value. Returns
for class Y shares will be somewhat higher because Y shares have lower
expenses. The class A share inception date is 6/28/83.
20 Financial Information
<PAGE>
More information on these funds is available free upon request, including
the following:
ANNUAL/SEMI-ANNUAL REPORT
Describes each fund, lists portfolio holdings and contains a letter from
each fund's manager discussing recent market conditions and each fund's
investment strategies.
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
Provides more details about the funds and their policies. A current SAI is
on file with the Securities and Exchange Commission ("SEC") and is
incorporated by reference (is legally considered part of this prospectus).
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
------------------------------------------------------------
SEC file number: 811-2145, 811-2871, 811-3691
To obtain information:
BY TELEPHONE. Call the funds at:
800-426-1130
BY MAIL. Write to the funds at:
The Lord Abbett Family of Funds
767 Fifth Avenue
New York, NY 10153-0203
VIA THE INTERNET.
LORD, ABBETT & CO.
http://www.lordabbett.com
Text only versions of fund documents can be viewed online or downloaded from:
SEC
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 800-SEC-0330) or by sending your request and a duplicating
fee to the SEC's Public Reference Section, Washington, DC 20549-6009.
LAPROSP-Y-3-1-599
(5/99)
<PAGE>
LORD, ABBETT & CO.
STATEMENT OF ADDITIONAL INFORMATION MAY 1, 1999
LORD ABBETT BOND-DEBENTURE FUND, INC.
LORD ABBETT DEVELOPING GROWTH FUND, INC.
LORD ABBETT MID-CAP VALUE FUND, INC.
- -------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus. A Prospectus for
the Class Y shares of Lord Abbett Bond-Debenture Fund, Inc. ("Bond-Debenture
Fund"), Lord Abbett Developing Growth Fund, Inc. ("Developing Growth Fund"), and
Lord Abbett Mid-Cap Value Fund, Inc. ("Mid-Cap Value Fund"), individually ("we"
or the "Fund"), collectively (the "Funds"), may be obtained from your securities
dealer or from Lord Abbett Distributor LLC ("Lord Abbett Distributor") at The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. This
Statement of Additional Information relates to, and should be read in
conjunction with, the Prospectus dated May 1, 1999 (the "Prospectus").
Our Boards of Directors have authority to create and classify shares in separate
series, without further action by shareholders. To date, the Boards of Directors
have authorized five classes of shares for Developing Growth Fund,
Bond-Debenture Fund, and Mid-Cap Value Fund (Class A, B, C, P and Y). The Board
of a Fund will allocate a Fund's shares among its classes from time to time. All
shares of a Fund have equal noncumulative voting rights and equal rights with
respect to dividends, assets and liquidation, except for certain class-specific
expenses. They are fully paid and nonassessable when issued and have no
preemptive or conversion rights. Although no present plans exist to do so,
further series may be added to one or more of the Funds in the future. The
Investment Company Act of 1940, as amended (the "Act"), requires that where more
than one series exists for a Fund, each series must be preferred over all other
series in respect of assets specifically allocated to such series.
Rule 18f-2 under the Act provides that any matter required to be submitted, by
the provisions of the Act or applicable state law or otherwise, to the holders
of the outstanding voting securities of an investment company such as the Fund
shall not be deemed to have been effectively acted upon unless approved by the
holders of a majority of the outstanding shares of each class or series affected
by such matter. Rule 18f-2 further provides that a class or series shall be
deemed to be affected by a matter unless the interests of each class or series
in the matter are substantially identical or the matter does not affect any
interest of such class or series. However, the Rule exempts the selection of
independent public accountants, the approval of a contract with a principal
underwriter and the election of directors from its separate voting requirements.
Shareholder inquiries should be made by writing directly to the Fund or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C> <C>
1. Investment Objective and Policies 2
2. Directors and Officers 5
3. Investment Advisory and Other Services 10
4. Portfolio Transactions 11
5. Purchases, Redemptions and Shareholder Services 12
6. Past Performance 13
7. Taxes 13
8. Information About the Funds 14
9. Financial Statements 14
</TABLE>
<PAGE>
1.
INVESTMENT OBJECTIVE AND POLICIES
Fundamental Investment Restrictions. Each Fund is subject to the following
investment restrictions which cannot be changed without approval of the holders
of a majority of a Fund's outstanding shares. Each Fund may not: (1) borrow
money, except that (i) each Fund may borrow from banks (as defined in the
Investment Company Act of 1940 ("the Act")) in amounts up to 33 1/3% of its
total assets (including the amount borrowed), (ii) each Fund may borrow up to an
additional 5% of its total assets for temporary purposes, (iii) each Fund may
obtain such short-term credit as may be necessary for the clearance of purchases
and sales of portfolio securities and (iv) each Fund may purchase securities on
margin to the extent permitted by applicable law); (2) pledge its assets (other
than to secure such borrowings, or to the extent permitted by the Fund's
investment policies, as permitted by applicable law; (3) engage in the
underwriting of securities, except pursuant to a merger or acquisition or to the
extent that, in connection with the disposition of its portfolio securities, it
may be deemed to be an underwriter under federal securities laws; (4) make loans
to other persons, except that the acquisition of bonds, debentures or other
corporate debt securities and investment in government obligations, commercial
paper, pass-through instruments, certificates of deposit, bankers acceptances,
repurchase agreements or any similar instruments shall not be subject to this
limitation, and except further that each Fund may lend its portfolio securities,
provided that the lending of portfolio securities may be made only in accordance
with applicable law; (5) buy or sell real estate (except that each Fund may
invest in securities directly or indirectly secured by real estate or interests
therein or issued by companies which invest in real estate or interests therein)
commodities or commodity contracts (except to the extent each Fund may do so in
accordance with applicable law and without registering as a commodity pool
operator under the Commodity Exchange Act as, for example, with futures
contracts); (6) with respect to 75% of the gross assets of each Fund, buy
securities of one issuer representing more than (i) 5% of the Fund's gross
assets, except securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities or (ii) 10% of the voting securities of such
issuer; (7) invest more than 25% of its assets, taken at market value, in the
securities of issuers in any particular industry (excluding securities of the
U.S. Government, its agencies and instrumentalities); or (8) issue senior
securities to the extent such issuance would violate applicable law.
With respect to the restrictions mentioned herein, compliance therewith will not
be affected by changes in the market value of portfolio securities but will be
determined at the time of purchase or sale of such securities.
Non-Fundamental Investment Restrictions. In addition to the investment
restrictions above which cannot be changed without shareholder approval, each
Fund is also subject to the following non-fundamental investment policies which
may be changed by the Board of Directors without shareholder approval. Each Fund
may not: (1) borrow in excess of 33 1/3% of its total assets (including the
amount borrowed), and then only as a temporary measure for extraordinary or
emergency purposes; (2) make short sales of securities or maintain a short
position except to the extent permitted by applicable law; (3) invest knowingly
more than 15% of its net assets (at the time of investment) in illiquid
securities, except for securities qualifying for resale under Rule 144A of the
Securities Act of 1933, deemed to be liquid by the Board of Directors; (4)
invest in securities of other investment companies as defined in the Act, except
as permitted by applicable law; (5) invest in securities of issuers which, with
their predecessors, have a record of less than three years of continuous
operation, if more than 5% of each Fund's total assets would be invested in such
securities (this restriction shall not apply to mortgaged-backed securities,
asset-backed securities or obligations issued or guaranteed by the U. S.
Government, its agencies or instrumentalities); (6) hold securities of any
issuer when more than 1/2 of 1% of the securities of such issuer are owned
beneficially by one or more of each Fund's officers or directors or by one or
more partners or members of each Fund's underwriter or investment adviser if
these owners in the aggregate own beneficially more than 5% of such securities
of such issuer; (7) invest in warrants if, at the time of acquisition, its
investment in warrants, valued at the lower of cost or market, would exceed 5%
of each Fund's total assets (included within such limitation, but not to exceed
2% of the Funds total assets, are warrants which are not listed on the New York
or American Stock Exchange or a major foreign exchange); (8) invest in real
estate limited partnership interests or interests in oil, gas or other mineral
leases, or exploration or development programs, except that each Fund may invest
in securities issued by companies that engage in oil, gas or other mineral
exploration or development activities; (9) write,
2
<PAGE>
purchase or sell puts, calls, straddles, spreads or combinations thereof, except
to the extent permitted in a Fund's prospectus and statement of additional
information, as may be amended from time to time; or (10) buy from or sell to
any of a Fund's officers, directors, employees, or its investment adviser or any
of a Fund's officers, directors, partners or employees, any securities other
than shares of each Fund.
With respect to Developing Growth Fund, it did not invest in repurchase
agreements or lend portfolio securities during the last fiscal year and has no
present intent to do so.
Although they have no current intention to do so, the Funds may invest in
financial futures and options on financial futures.
For the fiscal year ended January 31, 1999, the portfolio turnover rate for
Developing Growth Fund was 30.89%, versus 33.60% for the prior fiscal year; for
the fiscal year ended December 31, 1998, the portfolio turnover rate for
Bond-Debenture Fund was 86.48%, versus 89.14% for the prior year; and for the
fiscal year ended December 31, 1998, the portfolio turnover rate for Mid-Cap
Value Fund was 46.58%, versus 56.96% for the prior year.
INVESTMENT TECHNIQUES
Stock Index Futures Contracts (Developing Growth Fund). The Fund believes it can
reduce the volatility inherent in its portfolio through the use of stock index
futures contracts. (A stock index futures contract is an agreement pursuant to
which two parties agree, one to receive and the other to pay, on a specified
date an amount of cash equal to a specified dollar amount -- established by an
exchange or board of trade -- times the difference between the value of the
index at the close of the last trading day of the contract and the price at
which the futures contract is originally written. No consideration is paid or
received at the time the contract is entered into, only the good faith deposit
described herein.) When Lord Abbett, our investment manager, anticipates a
general decline in the sector of the stock market which includes our portfolio
assets, we can reduce risk by hedging the effect of such decline on our ability
to sell assets at best price or otherwise hedge a decision to delay the sale of
portfolio securities. Such hedging would be possible if there were an
established, regularly-quoted stock index for equities of the character in which
we invest and if an active public market were to develop on a stock exchange or
board of trade in futures contracts based on such index.
The market value of a futures contract is based primarily on the value of the
underlying index. Changes in the value of the index will cause roughly
corresponding changes in the market price of the futures contract, except as
otherwise described below. If a stock index is established which is made up of
securities whose market characteristics closely parallel the market
characteristics of the securities in our portfolio, then the market value of a
futures contract on that index should fluctuate in a way closely resembling the
market fluctuation of our portfolio. Thus, if we should sell futures contracts,
a decline in the market value of the portfolio will be offset by an increase in
the value of the short futures position to the extent of the hedge (i.e., the
percentage of the portfolio value represented by the value of the futures
position). Conversely, when we are in a strong cash position (for example,
through substantial sales of our shares) and wish to invest the cash in
anticipation of a rising market, we could rapidly hedge against the expected
market increase by buying futures contracts to offset the cash position and thus
cushion the adverse effect of attempting to buy individual securities in a
rising market.
The public markets for existing stock index futures contracts, such as those
using the Standard & Poor's 100 Index and 500 Index traded on the Chicago
Mercantile Exchange or those using the New York Stock Exchange Composite Index
traded on the New York Stock Exchange ("NYSE"), are active and have developed
substantial liquidity and we expect a similar market to develop for stock index
futures on a representative group of over-the-counter stocks. The existence of
an active market would permit us to close out our position in futures contracts
by purchasing an equal and opposite position in the public market. Under futures
contracts currently in use, the purchaser would be required to segregate in a
separate account, as a good faith deposit, cash or Treasury bills in an amount
set by a board of trade or exchange (currently approximately 5% of the contract
value). Each day during the contract period we would either pay or receive an
amount of cash equal to the daily change in the total value of the contracts.
The amount which we may segregate upon entering into a futures contract may not
exceed, together with the amounts on deposit under all outstanding contracts, 5%
of the value of our total assets, nor may we enter into
3
<PAGE>
additional futures contracts if, as a result, the aggregate amount committed
under all our open futures contracts would exceed more than one-third of the
value of such assets.
There are several risks in connection with the use of futures contracts as a
hedging device. One risk is the imperfect correlation between the composition of
our portfolio securities and the applicable stock index. If the value of the
futures contract moves more than the value of the stock being hedged, we would
experience either a loss or a gain on the futures contract which would not be
completely offset by movements in the value of the securities which are the
subject of the hedge. Another risk is that the value of futures contracts may
not correlate perfectly with movement in the stock index due to certain market
distortions. Although we will enter into futures contracts strictly to hedge our
portfolio or cash positions, other investors use these investment vehicles for
other, sometimes more speculative, purposes. At times, excess speculation in the
futures market can distort the normal market relationship between the price of
the futures contract and the value of the index. If we decide to enter into or
close out our futures position during a period of such excess speculation, the
hedging strategy will be more or less successful, depending on the direction and
amount of this distortion, than otherwise would be the case. Due to the
possibility of price distortion in the futures market and because of the
imperfect correlation between movements in the stock index and movements in the
price of stock index futures contract a correct forecast of general market
trends by Lord Abbett may still not result in a successful hedging transaction.
It is possible that, when we sell futures contracts to hedge our portfolio
against a decline in the market, the market, as measured by the stock index, may
advance while the value of securities held in our portfolio may decline. If this
occurs, we will lose money on the futures contracts and also experience a
decline in value in our portfolio securities. However, Lord Abbett believes that
over time the value of a diversified portfolio will tend to move in the same
direction as the market index upon which the futures contracts are based.
Where futures contracts are purchased to hedge against a possible increase in
the price of stock before we are able to invest our cash position in stock in an
orderly fashion, it is possible that the market may decline instead and we would
realize a loss; if we then decide not to invest in stock at that time because of
concern as to possible further market decline or for other reasons, we would
realize a loss on the futures contract that would be offset, to the extent the
cash position had not been invested in stocks being hedged.
Positions in futures contracts may be closed out only on an exchange or board of
trade which provides a market for such contracts. Although we intend to purchase
or sell futures contracts only if an active market has developed and is
continuing, there is no assurance that a liquid market on an exchange or board
of trade will exist for any particular contract or at any particular time. In
such event, it may not be possible to close out a futures position, and in the
event of adverse price movements, we would continue to be required to make daily
cash payments marking our position to market. However, since futures contracts
would have been used to hedge portfolio securities and such securities would not
be sold until the futures contracts had been terminated, an increase in the
price of the securities, if any, may partially or completely offset losses on
the futures contract.
We may incur additional brokerage commissions through entering into futures
contracts, although we also can save on commissions by hedging through such
contracts rather than through buying or selling individual securities in
anticipation of market moves. Successful use by us of futures contracts will
depend upon Lord Abbett's ability to predict movements in the direction of the
over-the-counter market generally, which requires different skills and
techniques than predicting changes in the prices of individual stocks.
SEGREGATED ACCOUNTS (DEVELOPING GROWTH FUND). To the extent required to comply
with Securities and Exchange Commission Release 10666 and any related SEC
policies, when purchasing a futures contract, or writing a put option,
Developing Growth Fund will maintain in a segregated account at it custodian
bank cash, U.S. Government and other permitted securities to cover its position.
4
<PAGE>
2.
DIRECTORS AND OFFICERS
The following director is a partner of Lord, Abbett & Co. ("Lord Abbett"), The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. He has
been associated with Lord Abbett for over five years and is also an officer
and/or director of the other Lord Abbett-sponsored funds. He is an "interested
person" as defined in the Act, and as such, may be considered to have an
indirect financial interest in the Rule 12b-1 Plan described in the Prospectus.
Robert S. Dow, age 54, Chairman and President
The following outside directors are also directors of all or some of the other
Lord Abbett-sponsored funds referred to above.
E. Thayer Bigelow
Time Warner Inc.
1271 Avenue of the Americas
New York, New York
Senior Adviser, Time Warner Inc. Formerly, Acting Chief Executive Officer of
Courtroom Television Network (1997 - 1998). Formerly, President and Chief
Executive Officer of Time Warner Cable Programming, Inc. (1991 - 1997). Prior to
that, President and Chief Operating Officer of Home Box Office, Inc. Age 57.
William H. T. Bush
Bush-O'Donnell & Co., Inc.
101 South Hanley Road, Suite 1025
St. Louis, Missouri
Co-founder and Chairman for the Board of financial advisory firm of
Bush-O'Donnell & Company. Age 60.
Robert B. Calhoun, Jr.
Monitor Clipper Partners
650 Madison Avenue, 9th Floor
New York, New York
Managing Director of Monitor Clipper Partners and President of The Clipper Group
L.P., both private equity investment funds. Age 56.
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 68.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 73.
5
<PAGE>
C. Alan MacDonald
Directorship Inc.
8 Sound Shore Drive
Greenwich, Connecticut
Managing Director of Directorship Inc., a consultancy in board management and
corporate governance. Formerly General Partner of The Marketing Partnership,
Inc., a full service marketing consulting firm (1994 - 1997). Prior to that,
Chairman and Chief Executive Officer of Lincoln Snacks, Inc., manufacturer of
branded snack foods (1992 - 1994). His career spans 36 years at Stouffers and
Nestle with 18 of the years as Chief Executive Officer. Currently serves as
Director of DenAmerica Corp., J.B. Williams Company, Inc., Fountainhead Water
Company and Exigent Diagnostics. Age 65.
Hansel B. Millican, Jr.
Rochester Button Company
1328 Broadway (Suite 816)
New York, New York
President and Chief Executive Officer of Rochester Button Company. Age 70.
Thomas J. Neff
Spencer Stuart
277 Park Avenue
New York, New York
Chairman of Spencer Stuart, an executive search consulting firm. Currently
serves as a Director of Ace, Ltd. (NYSE) Age 61.
For the Fiscal Year Ended January 31, 1999 (Developing Growth Fund)
For the Fiscal Year Ended December 31, 1998 (Bond-Debenture Fund)
For the Fiscal Year Ended December 31, 1998 (Mid-Cap Value Fund)
----------------------------------------------------------------
The following table sets forth the compensation accrued for each Fund's outside
directors.
<TABLE>
<CAPTION>
Aggregate
Compensation
Accrued by
Name of Directors each Fund(1)
- ---------------- --------------
Developing Bond- Mid-Cap
Growth Debenture Value
Fund Fund Fund
---- ---- ----
<S> <C> <C> <C>
E. Thayer Bigelow $2,468 $ 9,758 $1,119
William H. T. Bush* $1,183 $ 4,675 $ 536
Robert B. Calhoun, Jr.** $1,441 $ 5,695 $ 653
Stewart S. Dixon $2,430 $ 9,605 $1,102
John C. Jansing(4) $2,387 $ 9,435 $1,082
C. Alan MacDonald $2,365 $ 9,350 $1,073
Hansel B. Millican, Jr. $2,387 $ 9,435 $1,082
Thomas J. Neff $2,430 $ 9,605 $1,102
</TABLE>
*Elected August 13, 1998
**Elected June 17, 1998
The following table sets forth information with respect to the equity-based
benefits accrued for outside directors by the Lord Abbett-sponsored funds.
6
<PAGE>
<TABLE>
<CAPTION>
Name of Directors Pension or Retirement Benefits
Accrued by each Fund and
Other Lord Abbett-sponsored
Funds(2)
---------
<S> <C>
E. Thayer Bigelow $17,068
William H. T. Bush* $0
Robert B. Calhoun, Jr.** $0
Stewart S. Dixon $32,190
John C. Jansing $45,085(4)
C. Alan MacDonald $30,703
Hansel B. Millican, Jr. $37,747
Thomas J. Neff $19,853
</TABLE>
The following table sets forth the total compensation payable by such funds to
the outside directors. No director of the funds associated with Lord Abbett and
no officers of the funds received any compensation from the funds for acting as
a director or officer.
<TABLE>
<CAPTION>
Name of Directors For Year Ended December 31, 1998
- ----------------- Total Compensation Accrued by each Fund
and Other Lord Abbett-sponsored
Funds(3)
---------
<S> <C>
E. Thayer Bigelow $57,400
William H. T. Bush* $27,500
Robert B. Calhoun** $33,500
Stewart S. Dixon $56,500
John C. Jansing $55,500
C. Alan MacDonald $55,000
Hansel B. Millican, Jr. $55,500
Thomas J. Neff $56,500
</TABLE>
(1) Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on the
net assets of each fund. A portion of the fees payable by the Fund to its
outside directors is being deferred under a plan that deems the deferred
amounts to be invested in shares of the Fund for later distribution to the
directors. The amount of aggregate compensation payable by each Fund as of
its 1998 fiscal year end deemed invested in Fund shares, including dividends
reinvested and changes in net asset value applicable to such deemed
investments, were as follows:
(2) The amounts were accrued by the Lord Abbett-sponsored funds for the 12
months ended October 31, 1998 with respect to the equity based plans
established for independent directors in 1996. This plan supercedes a
previously approved retirement plan for all future directors. Directors
participating in the retirement plan had the option to convert their
accrued benefits under the plan. All of the outside directors except one
made such an election.
(3) This column shows aggregate compensation, including directors fees and
attendance fees for board and committee meetings, of a nature referred to in
footnote one, accrued by the Lord Abbett-sponsored funds during the year
ended December 31, 1998. The amounts of the aggregate compensation payable
by the Developing Growth Fund as of January 31, 1999 deemed invested in Fund
shares, including
7
<PAGE>
dividends reinvested and changes in net asset value applicable to such
deemed investments, were: Mr. Bigelow, $3,724; Mr. Dixon, $29,166; Mr.
Jansing, $65,878; Mr. MacDonald, $22,129; Mr. Millican, $67,603 and Mr.
Neff, $68,005. If the amounts deemed invested in Fund shares were added to
each director's actual holdings of Fund shares as of January 31, 1999, each
would own, the following: Mr. Bigelow, 260 shares; Mr. Dixon, 3,125 shares;
Mr. Jansing, 22,764 shares; Mr. MacDonald, 1,550 shares; Mr. Millican, 4,737
shares; and Mr. Neff, 8,420 shares.
The amounts of the aggregate compensation payable by the Bond-Debenture Fund
as of December 31, 1998 deemed invested in Fund shares, including dividends
reinvested and changes in net asset value applicable to such deemed
investments, were: Mr. Bigelow, $31,694; Mr. Calhoun, $5,735; Mr. Dixon,
$32,763; Mr. Jansing, $100,161; Mr. MacDonald, $ 41,389; Mr. Millican,
$100,939 and Mr. Neff, $103,424. If the amounts deemed invested in Fund
shares were added to each director's actual holdings of Fund shares as of
December 31, 1998, each would own, the following: Mr. Bigelow, 3,353 shares;
Mr. Calhoun, 607 shares; Mr. Dixon, 3,467 shares; Mr. Jansing, 10,599
shares; Mr. MacDonald, 4,379 shares; Mr. Millican, 10,681 shares; and Mr.
Neff, 10,944 shares.
The amounts of the aggregate compensation payable by Mid-Cap Value as of
December 31, 1998 deemed invested in company shares, including dividends
reinvested and changes in net asset value applicable to such deemed
investments, were: Mr. Bigelow, $4,687; Mr. Dixon, $26,673; Mr. Jansing,
$61,420; Mr. MacDonald, $20,483; Mr. Millican, $63,087; and Mr. Neff,
$63,325. If the amounts deemed invested in Fund shares were added to each
director's actual holdings of Fund shares as of December 31, 1998 each would
own, the following: Mr. Bigelow, 0 shares; Mr. Dixon, 31 shares; Mr.
Jansing, 4,631 shares; Mr. MacDonald, 0 shares; Mr. Millican, 0 shares; and
Mr. Neff, 915 shares.
(4) Mr. Jansing chose to continue to receive benefits under the retirement plan,
which provides that outside directors may receive annual retirement benefits
for life equal to their final annual retainer following retirement at or
after age 72 with at least ten years of service. Thus, if Mr. Jansing were
to retire and the annual retainer payable by the funds were the same as it
is today, he would receive annual retirement benefits of $50,000.
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Carper, Hilstad, Morris, and Walsh are partners of Lord Abbett; the others are
employees:
EXECUTIVE VICE PRESIDENTS:
Stephen J. McGruder, age 55 (Developing Growth Fund)
Christopher Towle, age 41 (Bond-Debenture Fund)
Edward K. von der Linde, age 38 (Mid-Cap Value Fund)
VICE PRESIDENTS:
Paul A. Hilstad, age 56, Vice President and Secretary (all Funds) (with Lord
Abbett since 1995 - formerly Senior Vice President and General Counsel of
American Capital Management & Research, Inc.)
Thomas J. Baade, age 34 (Bond-Debenture Fund) (with Lord Abbett since 1998 -
formerly Vice President of Smith Barney from 1990 to 1998)
Zane Brown, age 47 (Bond-Debenture Fund)
Daniel E. Carper, age 47 (all Funds)
Michael S. Goldstein, age 30 (Bond-Debenture Fund)
Howard Hansen, age 37 (Mid-Cap Value Fund)
Cinda C. Hughes, age 36 (Developing Growth) (with Lord Abbett since 1998 -
formerly Director, Equity Research of Phoenix Duff & Phelps from 1996 to 1998;
prior thereto Analyst, PaineWebber from 1993 to 1996)
8
<PAGE>
Thomas W. In, age 31 (Developing Growth) (with Lord Abbett since 1997 - formerly
Assistant Vice President of Deutsche Morgan Grenfell from 1994 to 1997)
Lawrence H. Kaplan, age 42 (all Funds) (with Lord Abbett since 1997 - formerly
Vice President and Chief Counsel of Salomon Brothers Asset Management Inc. from
1995 to 1997; prior thereto, Senior Vice President, Director and General Counsel
of Kidder Peabody Asset Management, Inc.)
Robert G. Morris, age 54 (Bond-Debenture Fund, Mid-Cap Value Fund)
A. Edward Oberhaus, age 39 (all Funds)
Keith F. O'Connor, age 43 (all Funds)
Richard S. Szaro, age 55 (Bond-Debenture Fund)
John J. Walsh, age 63 (all Funds)
TREASURER:
Donna M. McManus, age 38 (all Funds) Treasurer (with Lord Abbett since 1996,
formerly a Senior Manager at Deloitte & Touche LLP).
As of April 15, 1999, our officers and directors as a group owned less than 1%
of each Fund's outstanding shares. As of that date, the record holders of 5% or
more of each Fund's outstanding shares are as follows:
Lord Abbett Bond-Debenture - Class Y
Lord Abbett Balanced Series - 100%
767 Fifth Avenue
New York, New York 10153
Lord Abbett Developing Growth - Class Y
Lord Abbett Alpha Series - 51%
767 Fifth Avenue
New York, New York 10153
First American National Bank - 7%
300 Union St
Goodletteville, TN 37072
Nashville Memorial Hospital - 5%
1000 North Chase Drive
Goodlettsville, TN 37072
Abilene Christian University - 6.51%
ACU Box 29120
Abilene, TX 79699
Abilene Christian University/Trust Management - 5.14%
ACU Box 29120
Alilene, TX 79699
US Bank National Assoc Custodian - 5.50%
P.O. Box 64010
St. Paul, MN 55164
The Funds' By-Laws provide that a Fund shall not hold annual meetings of
stockholders in any year unless one or more matters are required to be acted on
by stockholders under the Act, as amended (the "Act"), or unless called by a
majority of a Board of Directors or by stockholders holding at least one quarter
of
9
<PAGE>
the stock of a 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 a Fund.
3.
INVESTMENT ADVISORY AND OTHER SERVICES
As described under "Management" in the Prospectus, Lord Abbett is the Funds'
investment manager. The general partners of Lord Abbett who are officers and/or
directors of the Funds are as follows: Zane E. Brown; Daniel E. Carper; Robert
S. Dow; Paul A. Hilstad; Stephen J. McGruder; Robert G. Morris; Christopher J.
Towle; and John J. Walsh.
The other general partners who are neither officers nor directors of the Funds
are: Stephen Allen, John E. Erard, Robert P. Fetch, Daria L. Foster, Robert I.
Gerber, W. Thomas Hudson, Michael B. McLaughlin, Robert J. Noelke, and R. Mark
Pennington. 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 under "Management" in the
Prospectus.
Under the Management Agreement, Developing Growth Fund is obligated to pay Lord
Abbett a monthly fee, based on average daily net assets for each month, at the
annual rate of .75 of 1% of the portion of our net assets not in excess of
$100,000,000 and .50 of 1% of such assets over $100,000,000. This fee is
allocated among all class shares based on each class' proportionate shares of
such average daily net assets. For the fiscal years ended January 31, 1999, 1998
and 1997, the management fees paid to Lord Abbett amounted to $4,444,605,
$2,325,894, and $1,579,214, respectively.
Under its Management Agreement, Bond-Debenture Fund is obligated to pay Lord
Abbett a monthly fee, based on average daily net assets for each month, at the
annual rate of .50 of 1% of the Fund's first $500 million of average daily net
assets and .45% of such assets over $500 million. This fee is allocated among
all classes based on each class' proportionate shares of such average daily net
assets. For the fiscal years ended December 31, 1998, 1997 and 1996, the
management fees paid to Lord Abbett by Bond-Debenture Fund amounted to
$14,835,355, $11,621,344 and $7,802,104, respectively.
Under its Management Agreement, Mid-Cap Value Fund is obligated to pay Lord
Abbett a monthly fee, based on average daily net assets at the annual rate of
.75 of 1% on the first $200 million; .65 of 1% on the next $300 million; and .50
of 1% on the excess over $500 million. For the fiscal years ended December 31,
1998, 1997 and 1996, the management fees paid to Lord Abbett by Mid-Cap Value
Fund amounted to $2,693,928, $2,102,611 and $1,733,689.
We pay all expenses not expressly assumed by Lord Abbett, including, without
limitation, 12b-1 expenses, outside directors' fees and expenses, association
membership dues, legal and auditing fees, taxes, transfer and dividend
disbursing agent fees, shareholder servicing costs, expenses relating to
shareholder meetings, expenses of preparing, printing and mailing stock
certificates and shareholder reports, expenses of registering our shares under
federal and state securities laws, expenses of preparing, printing and mailing
prospectuses to existing shareholders, insurance premiums, brokerage and other
expenses connected with executing portfolio security transactions.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281, are
the independent auditors of the Funds and must be approved at least annually by
the Board of Directors to continue in such capacity. They perform audit services
for the Fund, including the audits of financial statements included in our
annual report to shareholders.
The Bank of New York ("BNY"), 48 Wall Street, New York, New York 10286, is the
Funds' custodian. In accordance with the requirements of Rule 17f-5 under the
Act, the Funds' directors have approved arrangements permitting the Funds'
foreign assets not held by BNY or its foreign branches to be held by certain
qualified foreign banks and depositories.
10
<PAGE>
4.
PORTFOLIO TRANSACTIONS
Our policy is to obtain best execution on all our portfolio transactions, which
means that we seek to have purchases and sales of portfolio securities executed
at the most favorable prices, considering all costs of the transaction,
including brokerage commissions and dealer markups and markdowns and taking into
account the full range and quality of the brokers' services. Consistent with
obtaining best execution, we generally pay, as described below, a higher
commission than some brokers might charge on the same transactions. Our policy
with respect to best execution governs the selection of brokers or dealers and
the market in which the transaction is executed. To the extent permitted by law,
we may, if considered advantageous, make a purchase from or sale to another Lord
Abbett-sponsored fund without the intervention of any broker-dealer.
Broker-dealers are selected on the basis of their professional capability and
the value and quality of their brokerage and research services. Normally, the
selection is made by traders who are officers of the Fund and also are employees
of Lord Abbett. These traders do the trading as well for other accounts
- --investment companies (of which they are also officers) and other investment
clients -- managed by Lord Abbett. They are responsible for obtaining best
execution.
We pay a commission rate that we believe is appropriate to give maximum
assurance that our brokers will provide us, on a continuing basis, with the
highest level of brokerage services available. While we do not always seek the
lowest possible commissions on particular trades, we believe that our commission
rates are in line with the rates that many other institutions pay. Our traders
are authorized to pay brokerage commissions in excess of those that other
brokers might accept on the same transactions in recognition of the value of the
services performed by the executing brokers, viewed in terms of either the
particular transaction or the overall responsibilities of Lord Abbett with
respect to us and the other accounts they manage. Such services include showing
us trading opportunities including blocks, a willingness and ability to take
positions in securities, knowledge of a particular security or market proven
ability to handle a particular type of trade, confidential treatment, promptness
and reliability.
Some of these brokers also provide research services at least some of which are
useful to Lord Abbett in their overall responsibilities with respect to us and
the other accounts they manage. Research includes the furnishing of analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts and trading equipment and
computer software packages, acquired from third-party suppliers, that enable
Lord Abbett to access various information databases. Such services may be used
by Lord Abbett in servicing all their accounts, and not all of such services
will necessarily be used by Lord Abbett in connection with their management of
the Funds; conversely, such services furnished in connection with brokerage on
other accounts managed by Lord Abbett may be used in connection with their
management of the Funds, and not all of such services will necessarily be used
by Lord Abbett in connection with their advisory services to such other
accounts. We have been advised by Lord Abbett that research services received
from brokers cannot be allocated to any particular account, are not a substitute
for Lord Abbett's services but are supplemental to their own research effort and
when utilized, and are subject to internal analysis before being incorporated by
Lord Abbett into their investment process. As a practical matter, it would not
be possible for Lord Abbett to generate all of the information presently
provided by brokers. While receipt of research services from brokerage firms has
not reduced Lord Abbett's normal research activities, the expenses of Lord
Abbett could be materially increased if it attempted to generate such additional
information through its own staff and purchased such equipment and software
packages directly from the suppliers.
No commitments are made regarding the allocation of brokerage business to or
among brokers, and trades are executed only when they are dictated by investment
decisions of the Funds to purchase or sell portfolio securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold our shares and/or
shares of other Lord Abbett-sponsored funds may be preferred. If other clients
of Lord Abbett buy or sell the same security at the same time as we do,
transactions will, to the extent practicable, be allocated among all
participating accounts in proportion to the amount of each order and will be
executed daily until filled so that each account shares the average
11
<PAGE>
price and commission cost of each day. Other clients who direct that their
brokerage business be placed with specific brokers or who invest through wrap
accounts introduced to Lord Abbett by certain brokers may not participate with
us in the buying and selling of the same securities as described above. If these
clients wish to buy or sell the same security as we do, they may have their
transactions executed at times different from our transactions and thus may not
receive the same price or incur the same commission cost as we do. We will not
seek "reciprocal" dealer business (for the purpose of applying commissions in
whole or in part for our benefit or otherwise) from dealers as consideration for
the direction to them of portfolio business.
During the fiscal years ended January 31, 1999, 1998 and 1997, Developing Growth
Fund paid total commissions to independent broker-dealers of $4,920,536,
$1,930,696 and $1,696,590, respectively.
During the fiscal years ended December 31, 1998, 1997 and 1996, the
Bond-Debenture Fund paid total commissions to independent broker-dealers of
$19,393,923, $14,773,720 and $8,760,174, respectively.
During the fiscal years ending December 31, 1998, 1997 and 1996, the Mid-Cap
Value Fund paid total commissions to independent broker-dealers of $1,258,888,
$992,190 and $554,002, respectively.
5.
PURCHASES, REDEMPTIONS
AND SHAREHOLDER SERVICES
The Funds value their portfolio securities at market value as of the close of
the NYSE. Market value will be determined as follows: securities listed or
admitted to trading privileges on the New York or American Stock Exchange or on
the NASDAQ National Market System are valued at the last sales price, or, if
there is no sale on that day, at the mean between the last bid and asked prices,
or, in the case of bonds, in the over-the-counter market if, in the judgment of
a Fund's officers, that market more accurately reflects the market value of the
bonds. Over-the-counter securities not traded on the NASDAQ National Market
System are valued at the mean between the last bid and asked prices. Securities
for which market quotations are not available are valued at fair market value
under procedures approved by the Board of Directors.
Information concerning how we value our shares for the purchase and redemption
of our shares is described in the Prospectus under "Purchases" and
"Redemptions," respectively.
As disclosed in the Prospectus, we calculate our net asset value and are
otherwise open for business on each day that the NYSE is open for trading. The
NYSE is closed on Saturdays and Sundays and the following holidays -- New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
The net asset value per share for the Class Y shares will be determined by
taking Class Y shares (net assets divided by shares outstanding). Our Class Y
shares will be offered at net asset value.
The Funds have entered into distribution agreements with Lord Abbett Distributor
LLC, a New York limited liability company and subsidiary of Lord Abbett under
which Lord Abbett Distributor is obligated to use its best efforts to find
purchasers for the shares of the Funds, and to make reasonable efforts to sell
Fund shares so long as, in Lord Abbett Distributor's judgment, a substantial
distribution can be obtained by reasonable efforts.
CLASS Y SHARE EXCHANGES. The Prospectus describes the Telephone Exchange
Privilege. You may exchange some or all of your Class Y shares for Class Y
shares of any other eligible Lord Abbett-sponsored fund currently offering Class
Y shares to the public. Currently those other funds consist of Lord Abbett
Affiliated Fund, Inc., Lord Abbett Research Fund, Inc. - Small-Cap Research Fund
and Growth Opportunities Fund, Lord Abbett Securities Trust - International
Fund, and Lord Abbett Investment Trust - High Yield Fund, Core Fund and
Strategic Core Fund.
REDEMPTIONS. A redemption order is in proper form when it contains all of the
information and documentation required by the order form or supplementally by
Lord Abbett Distributor or the Funds to
12
<PAGE>
carry out the order. The signature(s) and any legal capacity of the signer(s)
must be guaranteed by an eligible guarantor. See the Prospectus for expedited
redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Boards of Directors for the Funds may authorize redemption of all of the
shares in any account in which there are fewer than 25 shares. Before
authorizing such redemption, the Board must determine that it is in our economic
best interest or necessary to reduce disproportionately burdensome expenses in
servicing shareholder accounts. At least 30 days' prior written notice will be
given before any such redemption, during which time shareholders may avoid
redemption by bringing their accounts up to the minimum set by the Board.
6.
PAST PERFORMANCE
The Fund computes the average annual compounded rate of total return for Class Y
shares during specified periods that would equate the initial amount invested to
the ending redeemable value of such investment by adding one to the computed
average annual total return, raising the sum to a power equal to the number of
years covered by the computation and multiplying the result by one thousand
dollars, which represents a hypothetical initial investment. The calculation
assumes applicable sales charge deduction from the initial amount invested and
reinvestment of all income dividends and capital gains distributions on the
reinvestment dates at prices calculated as stated in the Prospectus. The ending
redeemable value is determined by assuming a complete redemption at the end of
the period(s) covered by the total return computation for the period.
In calculating total returns for Class Y shares no sales charge is deducted from
the initial investment and the return is shown at net asset value. Total returns
also assume that all dividends and capital gains distributions during the period
are reinvested at net asset value per share, and that the investment is redeemed
at the end of the period.
CLASS Y SHARE PERFORMANCE. Using the computation method described above, the
Developing Growth Fund's annual total return for the year ended January 31, 1999
and the period of inception (December 30, 1997) to January 31, 1998 was 14.59%
and 1.06% (non-annualized), respectively, and for Bond-Debenture Fund the
non-annualized total return for the period of inception (March 27, 1998) to
December 31, 1998 was .55%.
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 each Fund or otherwise sold may be more or less
than your tax basis in the shares at the time of disposition. Any gain generally
will be taxable for federal income tax purposes. Any loss realized on the
disposition of a Fund's 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 shares 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 shares that are substantially identical.
A Fund may be subject to foreign withholding taxes which would reduce the yield
on its investments. It is generally expected that shareholders of a Fund 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 such
Funds.
13
<PAGE>
Gain and loss realized by a 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 a Fund purchase shares in certain foreign investment entities called "PFICs"
or "passive foreign investment companies," it may be subject to United States
federal income tax on a portion of any "excess distribution" or gain from the
disposition of such shares, even if such income is distributed as a taxable
dividend by the Fund to its shareholders. Additional charges in the nature of
interest may be imposed on either the Fund or its shareholders in respect of
deferred taxes arising from such distributions or gains. If a Fund were to make
a "qualified electing fund" election with respect to its investment in a passive
foreign investment company in lieu of the foregoing requirements, such 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 such Fund.
Each Fund will be subject to a 4% nondeductible excise tax on certain amounts
not distributed on treated as having been distributed on a timely basis calendar
year. Each Fund intends to distribute to shareholders each year an amount
adequate to avoid the imposition of such excise tax.
Dividends paid by a Fund will qualify for the dividends-received deduction for
corporations, to the extent they are derived from dividends paid by domestic
corporations.
The foregoing discussion relates solely to U.S. Federal income tax law as
applicable to United States persons (United States citizens or residents and
United States domestic corporations, partnerships, trusts and estates). Each
shareholder who is not a United States person should consult his tax adviser
regarding the U.S. and foreign tax consequences of the ownership of shares of a
Fund, including a 30% (or lower treaty rate) United States withholding tax on
dividends representing ordinary income and net short-term capital gains, and the
applicability of United States gift and estate taxes.
8.
INFORMATION ABOUT THE FUNDS
The directors 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 seven days before or after
any Lord Abbett-sponsored fund or Lord Abbett-managed account considers a trade
or trades in such security, from profiting on trades of the same security within
60 days and from trading on material and non-public information. The Code
imposes certain similar requirements and restrictions on the independent
directors of each Lord Abbett-sponsored mutual fund to the extent contemplated
by the recommendations of the Advisory Group.
9.
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended January 31, 1999 and the
report of Deloitte & Touche LLP, independent auditors, on such financial
statements contained in the 1999 Annual Report to Shareholders of Lord Abbett
Developing Growth Fund, Inc. are incorporated herein by reference to such
financial statements and report, in reliance upon the authority of Deloitte &
Touche LLP as experts in auditing and accounting.
14
<PAGE>
The financial statements for the fiscal year ended December 31, 1998 and the
report of Deloitte & Touche LLP, independent auditors, on such financial
statements contained in the 1998 Annual Report to Shareholders of Lord Abbett
Bond-Debenture Fund, Inc. are incorporated herein by reference to such financial
statements and report, in reliance upon the authority of Deloitte & Touche LLP
as experts in auditing and accounting.
The financial statements for the fiscal year ended December 31, 1998 and the
report of Deloitte & Touche LLP, independent auditors, on such financial
statements contained in the 1998 Annual Report to Shareholders of Lord Abbett
Mid-Cap Value Fund, Inc. are incorporated herein by reference to such financial
statements and report, in reliance upon the authority of Deloitte & Touche LLP
as experts in auditing and accounting.
15
STATEMENT OF DIFFERENCES
The service mark symbol shall be expressed as..........................'sm'
