1940 Act File No. 8115476
1933 Act File No. 3320309
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 13 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT |X|
OF 1940
Post-Effective Amendment No.13 |X|
LORD ABBETT GLOBAL FUND, INC.
------------------------------------------------
Exact Name of Registrant as Specified in Charter
767 FIFTH AVENUE, NEW YORK, N. Y. 10153-0203
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Address of Principal Executive Office
Registrant's Telephone Number (212) 848-1800
--------------------------------------------
Thomas F. Konop, Vice President
767 FIFTH AVENUE, NEW YORK, N. Y. 10153
---------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
|_| immediately upon filing pursuant to paragraph (b)
|_| on (date) pursuant to paragraph (b)
|X| 60 days after filing pursuant to paragraph (a) (1)
|_| on (date) pursuant to paragraph (a) (1)
|_| 75 days after filing pursuant to paragraph (a) (2)
|_| on (date) pursuant to paragraph (a) (2) of rule 485
If appropriate, check the following box:
|_| this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
Prospectus
May 1, 1999
Lord Abbett
Global Funds
Lord Abbett Global Equity Fund
Lord Abbett Global Income Fund
[LOGO](R) LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
As with all mutual funds, the Securities and Exchange Commission does not
guarantee that the information in this prospectus is accurate or complete, and
it has not judged these funds for investment merit. It is a criminal offense to
state otherwise.
Class P shares of the Income Fund are currently offered by this prospectus.
Class P shares of the Equity fund are neither offered to the general public nor
available in all states. Please call 800-821-5129 for further information.
<PAGE>
Table of Contents
The Funds Page
Information about the goal/ Equity Fund 2
approach, main risks, past Income Fund 4
performance, fees and expenses
Your Investment
Information for managing Purchases 8
your fund account Opening Your Account 10
Redemptions 11
Distributions and Taxes 11
Services For Fund Investors 12
Sales Charges and Service Fees 13
Management 14
For More Information
How to learn more Other Investment Techniques 15
about the funds Glossary of Shaded Terms 15
Recent Performance 24
Financial Information
Financial highlights of Equity Fund 18
each fund and Income Fund 20
broker compensation
How to learn more about the Back Cover
funds and other Lord Abbett
funds
<PAGE>
Global Equity Fund
Symbols: CLASS A - LAGEX
CLASS B - LAGBX
CLASS C - LAGCX
GOAL / APPROACH
The fund seeks long-term growth of capital and income consistent with
reasonable risk. The production of current income is a secondary
consideration.
To pursue its goal, the fund primarily invests in the common stocks of
domestic and foreign companies in sound financial condition which are
expected to show above-average price appreciation. Under normal
circumstances, the fund will invest its total assets in domestic and
foreign securities with at least 65% of such assets invested in equity
securities primarily traded in at least three countries (including the
United States).
The fund may take a temporary defensive position by investing in domestic
securities or in securities primarily traded in fewer than three foreign
countries or in debt securities to a greater extent than 35% of the fund's
total assets. This could prevent the fund from realizing its investment
objective.
MAIN RISKS
Investment in the fund requires consideration of certain factors that are
not normally involved in investments in U.S. securities. Generally most of
the assets of the fund will be denominated or traded in foreign
currencies.
An investment in each 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 each fund, but you also have the potential to make money.
We or the funds refers to Lord Abbett Income Fund ("Income Fund") or Lord Abbett
Equity Fund ("Equity Fund"). Each fund is a portfolio of Lord Abbett Global
Fund, Inc. (the "company"), which operates through its officers under the
supervision of its Board, with the advice of Lord, Abbett & Co.("Lord Abbett"),
its investment manager.
About each fund. Each fund is a professionally managed portfolio primarily
holding municipal bonds purchased with the pooled money of investors. It strives
to reach its stated goal, although as with all funds, it cannot guarantee
results.
Foreign Securities. Foreign securities are securities primarily traded in
countries outside the United States. These securities are not subject to the
same degree of regulation and may be more volatile and less liquid than
securities traded in major U.S. markets. Other considerations include political
and social instability, expropriations, higher transaction costs, currency
fluctuations, nondeductable withholding taxes and different settlement
practices.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describe the other investment strategies used by the funds and
their risks.
2 The Funds
<PAGE>
PAST PERFORMANCE
The information below provides some indication of the risks of investing
in the fund, showing changes in the fund's performance from calendar year
to calendar year and by showing how the fund's average annual returns
compare with those of a broad measure of market performance.
- - --------------------------------------------------------------------------------
The table below shows a comparison of the fund's class A and C average
annual total return to that of the Morgan Stanley World Index. Fund
returns assume reinvestment of dividends and distributions and payment of
the maximum applicable front-end or deferred sales charge. All periods end
on December 31, 1998.
Class 1 Year 5 Years 10 Years Inception(i)
A 0.00% 0.00% 0.00% 0.00%
- - --------------------------------------------------------------------------------
B 0.00% 0.00% 0.00% 0.00%
- - --------------------------------------------------------------------------------
C 0.00% 0.00% 0.00% 0.00%
- - --------------------------------------------------------------------------------
Morgan Stanley World Index(ii) 0.00% 0.00% 0.00% 0.00%
- - --------------------------------------------------------------------------------
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
- - --------------------------------------------------------------------------------
Fee table
- - --------------------------------------------------------------------------------
Class A Class B Class C Class P
Shareholder Fees (Fees paid directly from your investment)
- - --------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
(as a % of offering price) 5.75% none none none
- - --------------------------------------------------------------------------------
Maximum Deferred Sales Charge
(See "Purchases") none 5.00%(2)(5) 1.00%(3) none
- - --------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses
deducted from fund assets) (as a % of average net assets)(1)
- - --------------------------------------------------------------------------------
Management Fees (See "Management") 0.75% 0.75% 0.75% 0.75%
- - --------------------------------------------------------------------------------
Distribution and Service (12b-1 Fees)(4) 0.35% 1.00% 1.00% 0.45%
- - --------------------------------------------------------------------------------
Other Expenses (See "Management") 0.25% 0.25% 0.25% 0.00%
- - --------------------------------------------------------------------------------
Total Operating Expenses 1.20% 1.85% 1.85% 0.00%
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Expense example
- - --------------------------------------------------------------------------------
This example, like that in other funds' prospectuses, assumes a $10,000 initial
investment at maximum sales charge, if any, 5% total return each year and no
changes in expenses. You pay the following expenses over the course of each
period shown if you sell your shares at the end of the period, although your
actual cost may be higher or lower. The expenses include any applicable
contingent deferred sales charges.
Share class 1 Year 3 Years 5 Years 10 Years
Class A shares $560 $750 $000 $000
- - --------------------------------------------------------------------------------
Class B shares(5) $660 $810 $000 $000
- - --------------------------------------------------------------------------------
Class C shares $260 $510 $000 $000
- - --------------------------------------------------------------------------------
Class P shares $000 $000 $000 $000
- - --------------------------------------------------------------------------------
You would pay the following expenses on the same investment, assuming you kept
your shares.
Class A shares $560 $750 $000 $000
- - --------------------------------------------------------------------------------
Class B. shares(5) $160 $510 $000 $000
- - --------------------------------------------------------------------------------
Class C shares $160 $510 $000 $000
- - --------------------------------------------------------------------------------
Class P shares $000 $000 $000 $000
- - --------------------------------------------------------------------------------
This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present.
Past performance is not a prediction of future results.
- - --------------------------------------------------------------------------------
(i) The dates of inception for each class are as follows: A - 9/30/88; B
-8/1/96; and C - 8/1/96.
(ii) Performance for the Morgan Stanley World Index does not reflect
transaction costs or management fees.
Management fee: The fee paid to Lord Abbett for the fund's investment
management.
12b-1 fees: 12b-1 refers to the federal securities regulation that permits funds
to pay distribution fees for activities that are primarily intended to result in
the sale of fund shares and service fees for shareholder account service and
maintenance.
Other expenses: Fees paid by the fund for miscellaneous items such as transfer
agency, custody, accounting, legal and share registration fees.
- - --------------------------------------------------------------------------------
(1) The annual operating expenses have been restated from fiscal year amounts
to reflect current fees.
(2) 5.00% if shares are redeemed before 1st anniversary of purchase, declining
to 1% before 6th anniversary and eliminated on and after 6th anniversary.
(3) 1.00% if shares are redeemed before 1st anniversary of purchase.
(4) Because 12b-1 distribution fees (up to: 0.25%- class A; 0.75%- classes B
and C; and 0.20%- class P) are paid out on an on-going basis, over time
they will increase the cost of your investment and may cost you more than
paying other types of sales charges. Service fees under each class's 12b-1
Plan equal up to 0.25%.
(5) Class B shares will convert to class A shares on the eighth anniversary of
your original purchase of class B shares.
The Funds 3
<PAGE>
Global Income Fund
Symbols: CLASS A - LAGIX
CLASS B - LAIBX
CLASS C - GBLAX
GOAL / APPROACH
The fund seeks high current income consistent with reasonable risk.
Capital appreciation is a secondary consideration.
To pursue its goal, the fund primarily invest in high-quality debt
securities. These high-quality debt securities consist of those securities
rated within one of the two highest grades assigned by Standard & Poor's
Ratings Services ("S&P") or Moody's Investor Services, Inc. ("Moody's").
Under normal circumstances, the fund will invest its total assets in
domestic and foreign securities with at least 65% of such assets invested
in long-term debt securities primarily traded in at least three countries
(including the United States).
The fund may take a temporary defensive position by investing in domestic
securities or in securities primarily traded in fewer than three foreign
countries or in equity or short-term debt securities to a greater extent
than 35% of the fund's total assets. Consequently, the market prices of
long-term debt securities tend to be more volatile than those of
short-term debt securities when interest rates change. This could prevent
the fund from realizing its investment objective.
MAIN RISKS
Investment in the fund requires consideration of certain factors that are not
normally involved in investments in U.S. securities. Generally, most of the
assets of the fund will be denominated or traded in foreign currencies.
An investment in each 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 each fund, but you also have the potential to make money.
Foreign Securities. Foreign securities are securities primarily traded in
countries outside the United States. These securities are not subject to the
same degree of regulation and may be more volatile and less liquid than
securities traded in major U.S. markets. Other considerations include political
and social instability, expropriations, higher transaction costs, currency
fluctuations, nondeductable withholding taxes and different settlement
practices.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describe the other investment strategies used by the funds and
their risks.
4 The Funds
<PAGE>
Global Income Fund
PAST PERFORMANCE
The information below provides some indication of the risks of investing
in the fund, showing changes in the fund's performance from calendar year
to calendar year and by showing how the fund's average annual returns
compare with those of a broad measure of market performance.
AWAITING DATA
- - --------------------------------------------------------------------------------
The table below shows a comparison of the fund's class A, B, and C average
annual total return to that of the J.P. Morgan Global Government Bond
Index. Fund returns assume reinvestment of dividends and distributions and
payment of the maximum applicable front-end or deferred sales charge. All
periods end on December 31, 1998.
Class 1 Year 5 Years 10 Years Inception(i)
A 0.00% 0.00% 0.00% 0.00%
- - --------------------------------------------------------------------------------
B 0.00% 0.00% 0.00% 0.00%
- - --------------------------------------------------------------------------------
C 0.00% 0.00% 0.00% 0.00%
- - --------------------------------------------------------------------------------
J.P. Morgan Global Gov't Bond Index(ii) 0.00% 0.00% 0.00% 0.00%
- - --------------------------------------------------------------------------------
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
- - --------------------------------------------------------------------------------
Fee table
- - --------------------------------------------------------------------------------
Class A Class B Class C Class P
Shareholder Fees (Fees paid directly
from your investment)
- - --------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
(as a % of offering price) 5.75% none none none
- - --------------------------------------------------------------------------------
Maximum Deferred Sales Charge
(See "Purchases") none 5.00%(2)(5) 1.00%(3) none
- - --------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from fund assets) (as a % of
average net assets)(1)
- - --------------------------------------------------------------------------------
Management Fees (See "Management") 0.75% 0.75% 0.75% 0.75%
- - --------------------------------------------------------------------------------
Distribution and Service (12b-1 Fees)(4) 0.35% 1.00% 1.00% 0.45%
- - --------------------------------------------------------------------------------
Other Expenses (See "Management") 0.25% 0.25% 0.25% 0.25%
- - --------------------------------------------------------------------------------
Total Operating Expenses 1.20% 1.85% 1.85% 0.00%
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Expense example
- - --------------------------------------------------------------------------------
This example, like that in other funds' prospectuses, assumes a $10,000 initial
investment at maximum sales charge, if any, 5% total return each year and no
changes in expenses. You pay the following expenses over the course of each
period shown if you sell your shares at the end of the period, although your
actual cost may be higher or lower. The expenses include any applicable
contingent deferred sales charges.
Share class 1 Year 3 Years 5 Years 10 Years
- - --------------------------------------------------------------------------------
Class A shares $580 $810 $1,050 $1,750
- - --------------------------------------------------------------------------------
Class B shares(5) $680 $870 $1,180 $1,930
- - --------------------------------------------------------------------------------
Class C shares $280 $570 $980 $2,120
- - --------------------------------------------------------------------------------
Class P shares $000 $000 $000 $000
- - --------------------------------------------------------------------------------
You would pay the following expenses on the same investment, assuming you kept
your shares.
Class A shares $580 $450 $570 $900
- - --------------------------------------------------------------------------------
Class B shares(5) $180 $570 $980 $1,930
- - --------------------------------------------------------------------------------
Class C shares $180 $570 $980 $2,120
- - --------------------------------------------------------------------------------
Class P shares $000 $000 $000 $000
- - --------------------------------------------------------------------------------
This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present.
Past performance is not a prediction of future results.
- - --------------------------------------------------------------------------------
(i) The dates of inception for each class are as follows: A -9/30/88; B-
8/1/96; and C -7/15/96.
(ii) Performance for the unmanaged J.P. Morgan's Global Government Bond Index
does not reflect transaction costs or management fees.
Management fees are payable to Lord Abbett for the fund's investment management.
12b-1 fees refer to fees incurred for activities that are primarily intended to
result in the sale of fund shares and service fees for shareholder account
service and maintenance.
Other expenses include fees paid for miscellaneous items such as transfer
agency, legal and share registration fees.
- - --------------------------------------------------------------------------------
(1) The annual operating expenses have been restated from fiscal year amounts
to reflect current fees.
(2) 5.00% if shares are redeemed before 1st anniversary of purchase, declining
to 1.00% before 6th anniversary and eliminated on and after 6th
anniversary.
(3) 1.00% if shares are redeemed before 1st anniversary of purchase.
(4) Because 12b-1 distribution fees (up to: 0.35%- class A; 0.75%- classes B
and C; and 0.20- class P) are paid on an on-going basis, over time they
will increase the cost of your investment and may cost you more than
paying other types of sales charges. Service fees under each class's 12b-1
Plan equal up to 0.25%.
(5) Class B shares will convert to class A shares on the eighth anniversary of
your original purchase of class B shares.
The Fund 5
<PAGE>
Your Investment
PURCHASES
This prospectus offers four classes of shares, classes A, B, C and P for
each fund. Although a fund may have more than one class of shares, these
different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses. Our shares are
continuously offered. The offering price is based on the Net Asset Value
("NAV") per share next determined after we receive your purchase order
submitted in proper form. A front-end sales charge is added to the NAV, in
the case of the class A shares. There is no front-end sales charge,
although there is a CDSC in the case of the class B and C shares, as
described below.
You should read this section carefully to determine which class of shares
represents the best investment option for your particular situation. It
may not be suitable for you to place a purchase order for class B shares
of $500,000 or more, or a purchase order for class C shares of $1,000,000
or more. You should discuss pricing options with your investment
professional.
For more information, see "Alternative Sales Arrangements" in the
Statement of Additional Information.
We reserve the right to withdraw all or any part of the offering made by
this prospectus or to reject any purchase order. We also reserve the right
to waive or change minimum investment requirements. All purchase orders
are subject to our acceptance and are not binding until confirmed or
accepted in writing.
- - --------------------------------------------------------------------------------
Front-End Sales Charges - Class A Shares
(Equity Fund only)
- - --------------------------------------------------------------------------------
As a % of As a % of To Compute Offering
Your Investment Offering Price Your Investment Price of Divide NAV by
- - --------------------------------------------------------------------------------
Less than $50,000 5.75% 6.10% .9425
- - --------------------------------------------------------------------------------
$50,000 to $99,999 4.75% 4.99% .9525
- - --------------------------------------------------------------------------------
$100,000 to $249,999 3.75% 3.90% .9625
- - --------------------------------------------------------------------------------
$250,000 to $499,999 2.75% 2.83% .9725
- - --------------------------------------------------------------------------------
$500,000 to $999,999 2.00% 2.04% .9800
- - --------------------------------------------------------------------------------
$1,000,000 and over No Sales Charge 1.0000
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Front-End Sales Charges - Class A Shares
(Income Fund Only)
- - --------------------------------------------------------------------------------
As a % of As a % of To Compute Offering
Your Investment Offering Price Your Investment Price of Divide NAV by
- - --------------------------------------------------------------------------------
Less than $50,000 4.75% 4.99% .9525
- - --------------------------------------------------------------------------------
$50,000 to $99,999 4.75% 4.99% .9525
- - --------------------------------------------------------------------------------
$100,000 to $249,999 3.75% 3.90% .9625
- - --------------------------------------------------------------------------------
$250,000 to $499,999 2.75% 2.83% .9725
- - --------------------------------------------------------------------------------
$500,000 to $999,999 2.00% 2.04% .9800
- - --------------------------------------------------------------------------------
$1,000,000 and over No Sales Charge 1.0000
- - --------------------------------------------------------------------------------
NAV per share for each class of fund shares is calculated each business day at
the close of regular trading on the New York Stock Exchange ("NYSE"). Each fund
is open on those business days when the NYSE is open. Purchases and sales of
fund shares are executed at the NAV next determined after the fund receives your
order. In calculating NAV, securities for which market quotations are available
are valued at those quotations. Securities for with such quotations are not
available are valued at fair value under procedures approved by the Board.
Share classes
Class A
o normally offered with a front- end sales charge
Class B
o no front-end sales charge, how-ever, a contingent deferred sales charge is
applied to shares sold prior to the sixth anniversary of purchase
o higher annual expenses than class A shares
o automatically convert to class A shares after eight years
Class C
o no front-end sales charge
o higher annual expenses than class A shares
o a contingent deferred sales charge is applied to shares sold prior to the
first anniversary of purchase
Class P
o available to certain pension or retirement plans and pursuant to a Mutual
Fund Advisory Program
6 Your Investment
<PAGE>
Reducing Your Class A Front-End Sales Charges. Class A shares maybe purchased at
a discount if you qualify under either of the following:
o Rights of Accumulation -- A Purchaser can apply the value (at public
offering price) of the shares you already own to a new purchase of class A
shares of any Eligible Fund in order to reduce the sales charge.
o Statement of Intention -- A Purchaser of class A shares can purchase
additional shares of any Eligible Fund over a 13-month period and receive
the same sales charge as if you had purchased all shares at once. Shares
purchased through reinvestment of dividends and distributions are not
included. A statement of intention can be backdated~90 days. Current
holding under rights of accumulation can be included in a statement of
intention.
For more information on eligibility for these privileges, read the applicable
sections in the attached application.
Class A Share Purchases Without A Front-End Sales Charge. Class A shares may be
purchased without a front-end sales charge under any of the following:
o purchases of $1 million or more *
o purchases by Retirement Plans with at least 100 eligible employees *
o purchases under a Special Retirement Wrap Program *
o purchases made with dividends and distributions on class A shares of
another Eligible Fund
o purchases representing repayment under the loan feature of the Lord
Abbett- sponsored prototype 403(b) Plan for class A shares
o purchases by employees of any consenting securities dealer having a sales
agreement with Lord Abbett Distributor
o purchases under a Mutual Fund Advisory Program
o purchases by trustees or custodians of any pension or profit sharing plan,
or payroll deduction IRA for employees of any consenting securities dealer
having a sales agreement with Lord Abbett Distributor
See the Statement of Additional Information for a listing of other categories of
purchasers who qualify for class A share purchases without a front-end sales
charge.
Class A Share CDSC. If you buy class A shares under one of the starred (*)
categories listed above and you redeem any of them within 24 months after the
month in which you initially purchased them, the fund normally will collect a
CDSC of 1%.
The class A share CDSC generally will be waived for the following:
o benefit payments such as Retirement Plan loans, hardship withdrawals,
death, disability, retirement, separation from service or any excess
distribution under Retirement Plans (documentation may be required)
o redemptions continuing as investments in another fund participating in a
Special Retirement Wrap Program
Class B Share CDSC. The CDSC for class B shares normally applies if you redeem
your shares before the sixth anniversary of their initial purchase. The CDSC
declines the longer you own your shares, according to the following schedule:
* These categories may be subject to a Contingent Deferred Sales Charge
("CDSC").
CDSC regardless of class, is not charged on shares acquired through reinvestment
of dividends or capital gains distributions and is charged on the original
purchase cost or the current market value of the shares at the time they are
being sold, which-ever is lower. In addition, repayment of loans under
Retirement Plans and 403(b) Plans will constitute new sales for purposes of
assessing the CDSC.
To determine if a CDSC applies to a redemption, the fund redeems shares in the
following order:
1. shares acquired by reinvestment of dividends and capital gains
2. shares held for six years or more (class B) or two years or more after the
month of purchase (class A) or one year or more (class C)
3. shares held the longest before the sixth anniversary of their purchase
(class B) or before the second anni-versary after the month of purchase
(class A) or before the first anniversary of their purchase (class C)
Retirement Plans include employer-sponsored retirement plans under the Internal
Revenue Code, excluding Individual Retirement Accounts.
Lord Abbett Distributor LLC ("Lord Abbett Distributor") acts as agent for the
funds to work with investment professionals that buy and/or sell shares of the
funds on behalf of their clients. Generally, Lord Abbett Distributor does not
sell fund shares directly to investors.
Benefit Payment Documentation.
(Class A only)
o under $50,000 - no documentation necessary
o over $50,000 - reason for benefit payment must be received in writing. Use
the address indicated under opening your account.
Your Investment 7
<PAGE>
- - --------------------------------------------------------------------------------
Contingent Deferred Sales Charges - Class B Shares
- - --------------------------------------------------------------------------------
Anniversary(1) of Contingent Deferred Sales Charge
the day on which the on redemptions (as a % of amount
purchase order was accepted subject to charge)
On Before
- - --------------------------------------------------------------------------------
1st 5.0%
- - --------------------------------------------------------------------------------
1st 2nd 4.0%
- - --------------------------------------------------------------------------------
2nd 3rd 3.0%
- - --------------------------------------------------------------------------------
3rd 4th 3.0%
- - --------------------------------------------------------------------------------
4th 5th 2.0%
- - --------------------------------------------------------------------------------
5th 6th 1.0%
- - --------------------------------------------------------------------------------
on or after the 6th(2) None
- - --------------------------------------------------------------------------------
(1) Anniversary is the 365th day after to a purchase or a prior anniversary.
(2) Class B shares will automatically convert to class A shares on the eighth
anniversary of the purchase of class B shares.
The class B share CDSC generally will be waived under any one of the
following:
o benefit payments such as Retirement Plan loans, hardship
withdrawals, death, disability, retirement, separation from service
or any excess contribution or distribution under Retirement Plans
o Eligible Mandatory Distributions under 403(b) Plans and individual
retirement accounts
o death of the shareholder (natural person)
o redemptions of shares in connection with Div-Move and Systematic
Withdrawal Plans (up to 12% per year)
See "Systematic Withdrawal Plan" under "Services For Fund Investors" below
for more information on CDSCs with respect to class B shares.
Class C Share CDSC. The 1% CDSC for class C shares normally applies if you
redeem your shares before the first anniversary of your original purchase.
Class P Shares. Class P shares have lower annual expenses than class B and
class C shares, no front-end sales charge, and no CDSC. Class P shares are
currently sold and redeemed at NAV (a) pursuant to Mutual Fund Advisory
Program, or (b) to the trustees of, or employer-sponsors with respect to,
pension or retirement plans with at least 100 eligible employees (such as
a plan under Section 401(a), 401(k) or 457(b) of the Internal Revenue
Code) which engage an investment professional providing or participating
in an agreement to provide, certain recordkeeping, administrative and/or
sub-transfer agency services to the fund on behalf of the class P
shareholders.
OPENING YOUR ACCOUNT
MINIMUM INITIAL INVESTMENT
o Regular account $1,000
o Individual Retirement Accounts and
403(b) Plans under the Internal Revenue Code $250
o Uniform Gift to Minor Account $250
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.
8 Your Investment
<PAGE>
For Retirement Plans and Mutual Fund Advisory Programs, no minimum
investment is required, regardless of share class.
You may purchase shares through any independent securities dealer who has
a sales agreement with Lord Abbett Distributor or you can fill out the
attached application and send it to the fund you select at the address
stated below. You should carefully read the paragraph below entitled
"Proper Form" before placing your order to assure your order will be
accepted.
Name of Fund
P.O. Box 419100
Kansas City, MO 64141
Proper Form. An order submitted directly to the fund must contain: (1) a
completed application, and (2) payment by check. For more information
regarding proper form of a purchase order, call the fund at 800-821-5129.
Payment must be credited in U.S. dollars to our custodian bank's account.
By Exchange. Telephone the fund at 800-821-5129 to request an exchange
from any eligible Lord Abbett-sponsored fund.
REDEMPTIONS
By Broker. Call your investment professional for directions on how to
redeem your shares.
By Telephone. To obtain the proceeds of a redemption of $50,000 or less
from your account, you or your representative can call the fund at
800-821-5129.
By Mail. Submit a written redemption request indicating, the name(s) in
which the account is registered, the fund's name, the class of shares,
your account number, and the dollar value or number of shares you wish to
sell.
Include all necessary signatures. If the signer has any Legal Capacity,
the signature and capacity must be guaranteed by an Eligible Guarantor.
Certain other legal documentation may be required. For more information
regarding proper documentation call 800-821-5129.
Normally a check will be mailed to the name and address in which the
account is registered (or otherwise according to your instruction) within
three business days after receipt of your redemption request. Your account
balance must be sufficient to cover the amount being redeemed or your
redemption order will not be processed. Redemption requests for shares
initially purchased by check will not be honored for up to 15 days, unless
we are assured that the check has cleared earlier.
To determine if a CDSC applies to a redemption, see "Class A share CDSC,"
"Class B share CDSC" or "Class C share CDSC."
DISTRIBUTIONS AND TAXES
Each fund pays its shareholders dividends from its net investment income,
and distributes net capital gains that it has realized. Each fund expects
that its dividends from investment income will be tax exempt and expects
to pay such dividends to shareholders monthly. If a capital gain
distribution is declared, it will be paid annually. Your distributions
will be reinvested in your fund unless you instruct the fund to pay them
to you in cash. There are no sales charges on reinvestments.
Small Accounts. Our Board may authorize closing any account in which there are
fewer than 25 shares if it is in a fund's best interest to do so.
Eligible Guarantor is any broker or bank that is a member of the Medallion Stamp
Program. Most major securities firms and banks are members of this program. A
notary public is not an eligible guarantor.
Your Investment 9
<PAGE>
The tax status of distributions are the same for all shareholders
regardless of how long they have been in the fund or whether distributions
are reinvested or paid in cash. In general, distributions are taxable as
follows:
- - --------------------------------------------------------------------------------
Federal Taxability Of Distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
- - --------------------------------------------------------------------------------
Income Ordinary Income
dividends 15% Rate
- - --------------------------------------------------------------------------------
Short-term Ordinary Income
capital gains 15% Rate
- - --------------------------------------------------------------------------------
Long-term
capital gains 10% 20%
- - --------------------------------------------------------------------------------
Except in tax-advantaged accounts, any sale or exchange of fund shares may
be a taxable event.
SERVICES FOR FUND INVESTORS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described
below. With each service, you select a schedule and amount, subject to
certain restrictions. You can set up most of these services when filling
out your application or by calling 800-821-5129.
- - --------------------------------------------------------------------------------
For investing
Invest-A-Matic You can make fixed, periodic investments ($50 minimum)
(Dollar-cost into your fund account by means of automatic money
averaging) transfers from your bank checking account. See the
attached application for instructions.
Div-Move You can automatically reinvest the dividends and
distributions from your account into another account in
any Eligible Fund. ($50 minimum)
For selling shares
Systematic You can make regular withdrawals from most Lord Abbett
Withdrawal funds. Automatic cash withdrawals can be paid to you from
Plan ("SWP") your account in fixed or variable amounts. To establish a
plan, the value of your shares must be at least $10,000,
except for Retirement Plans for which there is no
minimum. Your shares must be in non-certificate form.
Class B shares The CDSC will be waived on redemptions of up to 12% of
the current net asset value of your account at the time
of your SWP request. For class B share redemptions over
12% per year, the CDSC will apply to the entire
redemption. Please contact the fund for assistance in
minimizing the CDSC in this situation.
Class B and Redemption proceeds due to a SWP for class B and class C
C shares shares will be redeemed in the order described under
"Contingent Deferred Sales Charges" under "Purchases."
- - --------------------------------------------------------------------------------
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.
Lord Abbett offers a variety of Retirement Plans. Call 800-253-7299 for
information about:
o Traditional, Rollover, Roth and Education IRAs
o Simple IRAs, SEP-IRAs, 401(k) and 403(b) accounts
o Defined Contribution Plans
Telephone Transactions. You have this privilege unless you refuse it in writing.
For your security, telephone transaction requests are recorded. We will take
measures to verify the identity of the caller, such as asking for your name,
account number, social security or taxpayer identification number and other
relevant information. 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>
OTHER SERVICES
Telephone Investing. After we have received the attached application
(selecting "yes" under Section 7C and completing Section 7), you can
instruct us by phone to have money transferred from your bank account to
purchase shares of the fund for an existing account. The fund will
purchase the requested shares when it receives of the money from your
bank.
Telephone Exchanges. You or your investment professional, with proper
identification, can instruct your fund by telephone to exchange shares of
any class for shares of the same class of any Eligible Fund by calling
800-821-5129. The fund must receive instructions for the exchange before
the close of the NYSE on the day of your call. If you meet this
requirement, you will get the NAV per share of the Eligible Fund
determined on that day. Exchanges will be treated as a sale for federal
tax purposes. Be sure to read the current prospectus for any fund into
which you are exchanging.
Reinvestment Privilege. If you sell shares of the fund, you have a one
time right to reinvest some or all of the proceeds in the same class of
any Eligible Fund within 60 days without a sales charge. If you paid a
CDSC when you sold your shares, you will be credited with the amount of
the CDSC. All accounts involved must have the same registration.
Account Statements. Every Lord Abbett investor automatically receives
quarterly account statements.
Householding. Shareholders with the same last name and address will
receive a single copy of a prospectus and an annual or semi-annual report,
unless additional reports are specifically requested in writing to the
fund.
Account Changes. For any changes you need to make to your account, consult
your investment professional or call the fund at 800-821-5129.
Systematic Exchange. You or your investment professional can establish a
schedule of exchanges between the same classes of any Eligible Fund.
SALES CHARGES AND SERVICE FEES
Sales and Service Compensation. As part of its plan for distributing
shares, each fund and Lord Abbett Distributor pay sales and service
compensation to Authorized Institutions that sell the fund's shares and
service its shareholder accounts.
Sales compensation originates from two sources: sales charges and 12b-1
distribution fees that are paid out of each fund's assets. Service
compensation originates from 12b-1 service fees. The 12b-1 fee rates vary
by share class, according to the Rule 12b-1 plan adopted by each fund. The
sales charges and 12b-1 fees paid by investors are shown in the
class-by-class information under "Fees and Expenses" and "Purchases." The
portion of these expenses that is paid as sales and service compensation
to Authorized Institutions, such as your dealer, is shown in the chart at
the end of this prospectus. The portion of such sales and service
compensation paid to Lord Abbett Distributor is discussed under "Sales
Activities" and "Service Activities." Sometimes we do not pay sales and
service compensation where tracking data is not available for certain
accounts or where the Authorized Institution waives part of the
compensation.
We may pay Additional Concessions to Authorized Institutions from time to
time.
Sales Activities. We may use 12b-1 distribution fees to pay Authorized
Institutions to finance any activity which is primarily intended to result
in the sale of shares. Lord Abbett Distributor uses its portion of the
distribution fees attributable to a fund's class A and class C shares for
activities that are primarily intended to result in the sale of such class
A
12b-1 fees payable regardless of expenses. The amounts payable by a fund need
not be directly related to expenses. If Lord Abbett Distributor's actual
expenses. If Lord Abbett Distributor's actual expenses exceed the fee payable to
it. A fund will not have to pay more than that fee. If Lord Abbett Distributor's
expenses are less than the fee it receives, Lord Abbett Distributor will keep
the full amount of the fee.
Your Investment 11
<PAGE>
and class C shares, respectively. These activities include, but are not
limited to, printing of prospectuses and statements of additional
information and reports for other than existing shareholders, preparation
and distribution of advertising and sales material, expenses of organizing
and conducting sales seminars, Additional Concessions to Authorized
Institutions, the cost necessary to provide distribution-related services
or personnel, travel, office expenses, equipment and other allocable
overhead.
Service Activities. We may pay Rule 12b-1 service fees to Authorized
Institutions for any activity which is primarily intended to result in
personal service and/or the maintenance of shareholder accounts. Any
portion of the service fees paid to Lord Abbett Distributor will be used
to service and maintain shareholder accounts.
MANAGEMENT
The fund's investment adviser is Lord, Abbett & Co., 767 Fifth Avenue, New
York, NY 10153-0203. Founded in 1929, Lord Abbett manages one of the
nation's oldest mutual fund complexes, with approximately $28 billion in
more than 35 mutual fund portfolios and other advisory accounts. For more
information about the services Lord Abbett provides to the funds, see the
Statement of Additional Information.
The fund pays Lord Abbett a monthly fee based on the average daily net
assets for each month. For the fiscal year ended December 31, 1998, the
fee paid to Lord Abbett was at an annual rate of .00 of 1%. In addition,
the fund pays all expenses not expressly assumed by Lord Abbett.
Lord Abbett uses a team of portfolio managers and analysts acting together
to manage the company's investments. Zane E. Brown, Partner and Director
of Fixed Income of Lord Abbett, heads the team, the senior members of
which are Christopher Taylor, Deputy Managing Director of Fuji Investment
Management Co. (Europe), Ltd. ("Fuji") serves as portfolio manager of the
Equity fund. Timothy W. Horan and Jerald M. Lanzotti assist Mr. Brown on
the Income fund.
12 Your Investment
<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. These strategies may involve buying or selling
derivative instruments, such as options and futures contracts, stripped
securities, currency exchange contracts, swap agreements, short sales of
securities, indexed securities and rights and warrants. The fund may use
these transactions to change the risk and return characteristics of 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 a fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. each underlying fund may borrow only for temporary or emergency
purposes, and not in an amount exceeding 33 1/3% of its total assets.
Diversification. Each fund is a diversified fund, which means that with
respect to 3/4 of its total assets, it will not purchase a security if, as
a result, more than 5% of the fund's total assets would be invested in
securities of a single issuer or the fund would hold more than 10% of the
outstanding voting securities of the issuer. (Name of fund is a
nondiversified mutual fund. This means that the fund may invest a greater
portion of its assets in, and own a greater amount of the voting
securities of, a single company than a diversified fund. This may expose
the fund to greater risk.)
Foreign Currency Hedging Techniques. Although the funds do not normally
engage in extensive currency hedging, they may use currency forwards and
options to hedge the risk to the portfolio if they expect that foreign
exchange price movements will be unfavorable for U.S. investors.
Generally, these instruments allow a fund to lock in a specified exchange
rate for a period of time. If the fund's forecast proves to be wrong, such
a hedge may cause a loss. Also, it may be difficult or impractical to
hedge currency risk in many emerging countries. The funds generally will
not enter into a forward contract with a term greater than one year. Under
some circumstances, a fund may commit a substantial portion or the entire
value of its portfolio to the completion of forward contracts. Although
such contracts will be used primarily to attempt to protect the fund from
adverse currency movements, their use involves the risk Lord Abbett will
not accurately predict currency movements, and the fund's return could be
reduced.
Illiquid Securities. These securities include those that are not traded on
the open market or that trade irregularly or in very low volume. They may
be difficult or impossible to sell at the time and price the fund would
like. Each underlying fund may invest up to 15% of its assets in illiquid
securities.
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.
For More Information 13
<PAGE>
GLOSSARY OF SHADED TERMS
Additional Concessions. Lord Abbett Distributor may, for specified periods,
allow dealers to retain the full sales charge for sales of shares or may pay an
additional concession to a dealer who sells a minimum dollar amount of our
shares and/or shares of other Lord Abbett-sponsored funds. In some instances,
such additional concessions will be offered only to certain dealers expected to
sell significant amounts of shares. Additional payments may be paid from Lord
Abbett Distributor's own resources or from distribution fees received from a
fund and will be made in the form of cash or, if permitted, non-cash payments.
The non-cash payments will include business seminars at Lord Abbett's
headquarters or other locations, including meals and entertainment, or the
receipt of merchandise. The cash payments may include payment of various
business expenses of the dealer.
In selecting dealers to execute portfolio transactions for a fund's portfolio,
if two or more dealers are considered capable of obtaining best execution, we
may prefer the dealer who has sold our shares and/or shares of other Lord
Abbett-sponsored funds.
Authorized Institutions. Institutions and persons permitted by law to receive
service and/or distribution fees under a Rule 12b-1 plan are "authorized
institutions". Lord Abbett Distributor is an Authorized Institution.
Eligible Fund. An Eligible Fund is any Lord Abbett-sponsored fund except for (1)
certain tax-free, single-state funds where the exchanging shareholder is a
resident of a state in which such series is not offered for sale; (2) Lord
Abbett Equity Fund; (3) Lord Abbett Series Fund; and (4) Lord Abbett U.S.
Government Securities Money Market Fund ("GSMMF") (except for holdings in GSMMF
which are attributable to any shares exchanged from the Lord Abbett family of
funds). An Eligible Fund also is any Authorized Institution's affiliated money
market fund satisfying Lord Abbett Distributor as to certain omnibus account and
other criteria.
Eligible Mandatory Distributions. If class B shares represent a part of an
individual's total IRA or 403(b) investment, the CDSC will be waived only for
that part of a mandatory distribution which bears the same relation to the
entire mandatory distribution as the B share investment bears to the total
investment.
Legal Capacity. This term refers to the authority of an individual to act on
behalf of an entity or other person(s). For example, if a redemption request
were to be made on behalf of the estate of a deceased shareholder, John W. Doe,
by a person (Robert A. Doe) who has the legal capacity to act for the estate of
the deceased shareholder because he is the executor of the estate, then the
request must be executed as follows: Robert A. Doe, Executor of the Estate of
John W. Doe. That signature using that capacity must be guaranteed by an
Eligible Guarantor.
To give another example, if a redemption request were to be made on behalf of
the ABC Corporation by a person (Mary B. Doe) the has the legal capacity to act
on the half of the Corporation, because she is the president of the corporation,
the request must be executed as follows: ABC Corporation by Mary B. Doe,
President. That signature using that capacity must be guaranteed by an Eligible
Guarantor.
Mutual Fund Advisory Program. Certain unaffiliated authorized brokers, dealers,
registered investment advisers or other financial institutions who have entered
into an agreement with Lord Abbett Distributor in accordance with certain
standards approved by Lord Abbett Distributor, providing specifically for the
use of fund shares (and sometimes providing for acceptance of orders for such
shares on Lord Abbett Distributor's behalf) in particular investment products
made available for a fee to clients of such brokers, dealers, registered
investment advisers and other financial institutions.
Purchaser. The term "purchaser" includes: (i) an individual, (ii) an individual
and his or
Guaranteed signature. An acceptable form of guarantee would be as follows:
o In the case of the estate -
Robert A. Doe
Executor of the Estate of
John W. Doe
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
/s/ [ILLEGIBLE]
-------------------------
AUTHORIZED SIGNATURE
(960) X9003 70
SECURITIES TRANSFER AGENT
MEDALLION PROGRAM)(TM)
SR
o In the case of the corporation - ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
/s/ [ILLEGIBLE]
-------------------------
AUTHORIZED SIGNATURE
(960) X9003 70
SECURITIES TRANSFER AGENT
MEDALLION PROGRAM)(TM)
SR
14 For More Information
<PAGE>
her spouse and children under the age of 21 and (iii) a trustee or other
fiduciary purchasing shares for a single trust estate or single fiduciary
account (including a pension, profit-sharing, or other employee benefit
trust qualified under Section 401 of the Internal Revenue Code - more than
one qualified employee benefit trust of a single employer, including its
consolidated subsidiaries, may be considered a single trust, as may
qualified plans of multiple employers registered in the name of a single
bank trustee as one account), although more than one beneficiary is
involved.
Special Retirement Wrap Program. A program sponsored by an authorized
institution showing one or more characteristics distinguishing it, in the
opinion of Lord Abbett Distributor from a mutual fund wrap-fee program.
Such characteristics include, among other things, the fact that an
authorized institution does not charge its clients any fee of a consulting
or advisory nature that is economically equivalent to the distribution fee
under the class A 12b-1 Plan and the fact that the program relates to
participant-directed Retirement Plans.
RECENT PERFORMANCE
[INSERT To FOLLOW]
Year 2000 Issues. Each fund could be adversely affected if the computers used by
each fund and their service providers do not properly process and calculate
date-related information from and after January 1, 2000.
While year 2000-related computer problems could have a negative effect on each
fund, Lord Abbett is working to avoid such problems and has assurances from each
fund's service providers that they are taking similar steps. However, because
the problem is unprecedented and efforts to identify and fix it are on-going, we
don't know whether these efforts will be successful. Accordingly, each fund may
be adversely affected.
Euro. On January 1, 1999, the eleven member states of the European Union
converted to a common currency, known as the "Euro." Each fund could be
adversely affected if the computers used by it and its service providers do not
properly process and calculate euro-related information from and after January
1, 1999. While euro-related computer problems could have a negative effect on
each fund, Lord Abbett is working to avoid such problems and has assurances from
each fund's service providers that they are taking similar steps. However,
because the problem is unprecedented, we don't know whether these efforts will
be successful and, accordingly, each fund may be adversely affected.
For More Information 15
<PAGE>
Global Equity 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 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 A Shares
---------------------------------------------------------------------------------------------
Year Ended December 31,
Per Share Operating Performance: 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.55 $11.96 $11.55 $12.44
- - ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
- - ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .07(b) .07 .16 .10
- - ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- - ------------------------------------------------------------------------------------------------------------------------------------
gain (loss) on investments .90 .93 .90 (.1125)
- - ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .97 1.00 1.06 (.0125)
- - ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- - ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.06) (.07) (.17) (.10)
- - ------------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain (1.11) (.21) (.48) (.7775)
- - ------------------------------------------------------------------------------------------------------------------------------------
Distributions from foreign currency transactions (.27) (.13) -- --
- - ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.08 $12.55 $11.96 $11.55
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 7.99% 8.37% 9.19% (0.09)%
- - ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- - ------------------------------------------------------------------------------------------------------------------------------------
Expenses, including waiver(e) 1.51% 1.52% 1.63% 1.56%
- - ------------------------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver 1.51% 1.52% 1.63% 1.56%
- - ------------------------------------------------------------------------------------------------------------------------------------
Net investments income 0.57% 0.54% 1.31% .79%
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Class B Shares Class C Shares
Year Ended December 31, Year Ended December 31,
---------------------------------------------- -----------------------------------------------
Per Share Operating Performance: 1998 1997 1996(c) 1998 1997 1996(c)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.53 $12.30 $12.54 $12.31
- - ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income (loss) (.02)(b) (.01) (.01)(a) .00
- - ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- - ------------------------------------------------------------------------------------------------------------------------------------
gain (loss) on investments .89 .58 .90 .57
- - ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .87 .57 .89 .57
- - ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- - ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income -- -- (.01) --
- - ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net realized gain (1.11) (.21) (1.11) (.21)
- - ------------------------------------------------------------------------------------------------------------------------------------
Distributions from foreign currency
- - ------------------------------------------------------------------------------------------------------------------------------------
transactions (.26) (.13) (.26) (.13)
- - ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.03 $12.53 $12.05 $12.54
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 7.19% 4.56%(d) 7.34% 4.64%(d)
- - ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- - ------------------------------------------------------------------------------------------------------------------------------------
Expenses(e) 2.23% .83%(d) 2.14% .83%(d)
- - ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss (.16%) (.16%)(d) (.06%) (.11%)(d)
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
-----------------------------------------------------------------------------------------------
Supplemental Data For All Classes: 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net assets, end of period (000) $80,820 $92,164 $84,731 $83,739
- - ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 99.05% 81.97% 83.32% 75.39%
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of front-end sales or
contingent deferred sales charges.
(b) Calculated using average shares during the period.
(c) Commencement of operations of Class shares: B and C - August 1, 1996.
(d) Not annualized.
(e) The ratios for 1997 include expenses paid through an expense offset
arrangement.
The Fund had only one class of shares prior to July 12, 1996. That class
of shares is now designated class A shares.
See Notes to Financial Statements.
16 Financial Information
<PAGE>
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in class A
shares to the same investment in the Morgan Stanley World Index, assuming
reinvestment of all dividends and distributions.
- - --------------------------------------------------------------------------------
AWAITING DATA
- - --------------------------------------------------------------------------------
Average Annual Total Return At Maximum Applicable
Sales Charge For The Periods Ending December 31, 1998
1 Year 5 Years 10 Years (or Life)
- - --------------------------------------------------------------------------------
Class A(3) 0.00% 0.00% 0.00%
- - --------------------------------------------------------------------------------
Class B(3) 0.00% 0.00% 0.00%
- - --------------------------------------------------------------------------------
Class C(1) 0.00% 0.00% 0.00%
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(1) Data reflects the deduction of the maximum initial sales charge of 5.75%
applicable to class A shares.
(2) Performance numbers for the unmanaged Morgan Stanley World (Source: Lipper
Analytical Services Inc.) index does not reflect transaction costs or
management fees.
(3) Total return is the percent change in value, after deduction of the
maximum initial sales charge of 5.75% applicable to class A shares with
all dividends and distributions reinvested for the periods shown ending
December 31, 1998 using the SEC-required uniform method to compute such
return.
(4) Performance numbers reflect the deduction of the applicable CDSC.
Financial Information 17
<PAGE>
Global Income 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 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 A Shares
----------------------------------------------------------------------------------------------
Year Ended December 31,
Per Share Operating Performance: 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $8.34 $8.58 $7.98 $9.02
- - ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
- - ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .51(b) .53 .77 .65
- - ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- - ------------------------------------------------------------------------------------------------------------------------------------
gain (loss) on investments (.18) (.04) .6138 (.9603)
- - ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .33 .49 1.3838 (.3103)
- - ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- - ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.51) (.61) (.6613) (.6035)
- - ------------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain -- -- -- --
- - ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from paid-in capital (.07) -- -- (.1262)
- - ------------------------------------------------------------------------------------------------------------------------------------
Distributionsfrom foreign currency transactions -- (.12) (.1225) --
- - ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.09 $8.34 $8.58 $7.98
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 4.23% 6.12% 17.86% (3.40)%
- - ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- - ------------------------------------------------------------------------------------------------------------------------------------
Expenses, including waiver(e) 1.10% 1.04% 1.04% 1.02%
- - ------------------------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver 1.10% 1.04% 1.04% 1.02%
- - ------------------------------------------------------------------------------------------------------------------------------------
Net investments income 6.29% 6.52% 7.60% 7.72%
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Class B Shares Class C Shares
Year Ended December 31, Year Ended December 31,
Per Share Operating Performance: 1998 1997 1996(c) 1998 1997 1996(c)
Net asset value, beginning of period $8.34 $8.24 $8.34 $8.14
- - ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .45(b) .23 .45(b) .21
- - ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- - ------------------------------------------------------------------------------------------------------------------------------------
gain (loss) on investments (.18) .22 (.18) .37
- - ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .27 .45 .27 .58
- - ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- - ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.46) (.23) (.46) (.26)
- - ------------------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from paid
- - ------------------------------------------------------------------------------------------------------------------------------------
capital (.06) -- (.06) --
- - ------------------------------------------------------------------------------------------------------------------------------------
Distributions from foreign currency
- - ------------------------------------------------------------------------------------------------------------------------------------
transactions -- (.12) -- (.12)
- - ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.09 $8.34 $8.09 $8.34
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 3.49% 5.58%(d) 3.48% 7.43%(d)
- - ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- - ------------------------------------------------------------------------------------------------------------------------------------
Expenses(e) 1.78% .73%(d) 1.77% .87%(d)
- - ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 5.57% 2.11%(d) 5.62% 2.69%(d)
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------------------------------------------
Supplemental Data For All Classes: 1998 1997 1996 1995 1994
Net assets, end of period (000) $148,785 $202,494 $238,291 $249,490
- - ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 616.63% 621.79% 1,073.69% 1,230.20%
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of front-end sales or
contingent deferred sales charges.
(b) Calculated using average shares during the period.
(c) Commencement of operations of Class shares: B- August 1, 1996, and C -
July 15, 1996.
(d) Not annualized.
(e) The ratios for 1997 include expenses paid through an expense offset
arrangement.
The Fund had only one class of shares prior to July 12, 1996. That class
of shares is now designated class A shares.
See Notes to Financial Statements.
18 The Funds
<PAGE>
Global Income Fund
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in class A
shares to the same investment in the J.P. Morgan Global Government Bond
Index, assuming reinvestment of all dividends and distributions.
- - --------------------------------------------------------------------------------
AWAITING DATA
- - --------------------------------------------------------------------------------
Average Annual Total Return At Maximum Applicable
Sales Charge For The Periods Ending December 31, 1998
1 Year 5 Years 10 Years (or Life)
- - --------------------------------------------------------------------------------
Class A(3) 0.00% 0.00%
- - --------------------------------------------------------------------------------
Class B(3) 0.00% 0.00%
- - --------------------------------------------------------------------------------
Class C(1) 0.00% 0.00%
- - --------------------------------------------------------------------------------
(1) Data reflects the deduction of the maximum initial sales charge of 4.75%
applicable to class A shares.
(2) Performance numbers for the unmanaged J.P. Morgan Global Government Bond
Index (Source: Bloomberg LLP) does not reflect transaction costs or
management fees.
(3) Total return is the percent change in value, after deduction of the
maximum initial sales charge of 4.75%, with all dividends and
distributions reinvested for the periods shown ending December 31, 1998
using the SEC-required uniform method to compute such return.
(4) Performance numbers reflect the deduction of the applicable CDSC.
Financial Information 19
<PAGE>
COMPENSATION FOR YOUR DEALER - Global Equity Fund
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
FIRST YEAR COMPENSATION
Front-end
sales charge Dealer's
paid by investors concession Service fee(1) Total compensation(2)
Class A investments (% of offering price) (% of offering price) (% of net investment) (% of offering price)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 5.75% 5.00% 0.25% 5.24%
- - ------------------------------------------------------------------------------------------------------------------------------------
$50,000 - $99,999 4.75% 4.00% 0.25% 4.24%
- - ------------------------------------------------------------------------------------------------------------------------------------
$100,000 - $249,999 3.75% 3.25% 0.25% 3.49%
- - ------------------------------------------------------------------------------------------------------------------------------------
$250,000 - $499,999 2.75% 2.25% 0.25% 2.49%
- - ------------------------------------------------------------------------------------------------------------------------------------
$500,000 - $999,999 2.00% 1.75% 0.25% 2.00%
- - ------------------------------------------------------------------------------------------------------------------------------------
$1 million or more(3) or Retirement Plan - 100 or more eligible employees(3) or
Special Retirement Wrap Program(3)
- - ------------------------------------------------------------------------------------------------------------------------------------
First $5 million no front-end sales charge 1.00% 0.25% 1.25%
- - ------------------------------------------------------------------------------------------------------------------------------------
Next $5 million above that no front-end sales charge 0.55% 0.25% 0.80%
- - ------------------------------------------------------------------------------------------------------------------------------------
Next $40 million above that no front-end sales charge 0.50% 0.25% 0.75%
- - ------------------------------------------------------------------------------------------------------------------------------------
Over $50 million no front-end sales charge 0.25% 0.25% 0.50%
- - ------------------------------------------------------------------------------------------------------------------------------------
Class B investments Paid at time of sale (% of net asset value)
- - ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 3.75% 0.25% 4.00%
- - ------------------------------------------------------------------------------------------------------------------------------------
Class C investments
- - ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.75% 0.25% 1.00%
- - ------------------------------------------------------------------------------------------------------------------------------------
Class P investments Percentage of average net assets
- - ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION AFTER FIRST YEAR
Class A investments
- - ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.25% 0.25%
- - ------------------------------------------------------------------------------------------------------------------------------------
Class B investments Percentage of average net assets(4)
- - ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.25% 0.25%
- - ------------------------------------------------------------------------------------------------------------------------------------
Class C investments
- - ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.75% 0.25% 1.00%
- - ------------------------------------------------------------------------------------------------------------------------------------
Class P investments
- - ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The service fee for class A shares is paid quarterly. The first year's
service fee on class B and C shares is paid at the time of sale.
(2) Reallowance / concession percentages and service fee percentages are
calculated from different amounts, and therefore may not equal total
compensation percentages if combined using simple addition. Additional
Concessions may be paid to Authorized Institutions from time to time.
(3) Concessions are paid at the time of sale on all class A shares sold during
any 12-month period starting from the day of the first net asset value
sale. With respect to (a) class A share purchases at $1 million or more,
sales qualifying at such level under rights of accumulation and statement
of intention privileges are included and (b) for Special Retirement Wrap
Programs, only new sales are eligible and exchanges into the fund are
excluded.
(4) With respect to class B, C and P shares, 0.25%, 1.00% and 0.45%,
respectively, of the average annual net asset value of such shares
outstanding during the quarter (including distribution reinvestment shares
after the first anniversary of their issuance) is paid to Authorized
Institutions. These fees are paid quarterly in arrears. CDSC revenues
collected may be used to fund commission payments when there is no initial
sales charge.
20 Financial Information
<PAGE>
COMPENSATION FOR YOUR DEALER - Global Income Fund
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
FIRST YEAR COMPENSATION
Front-end
sales charge Dealer's
paid by investors concession Service fee(1) Total compensation(2)
Class A investments (% of offering price) (% of offering price) (% of net investment) (% of offering price)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.00% 0.25% 4.24%
- - ------------------------------------------------------------------------------------------------------------------------------------
$50,000 to $99,999 4.75% 4.25% 0.25% 4.49%
- - ------------------------------------------------------------------------------------------------------------------------------------
$100,000 - $249,999 3.75% 3.25% 0.25% 3.49%
- - ------------------------------------------------------------------------------------------------------------------------------------
$250,00 - $499,999 2.75% 2.50% 0.25% 2.74%
- - ------------------------------------------------------------------------------------------------------------------------------------
$500,000 - $999,999 2.00% 1.75% 0.25% 2.00%
- - ------------------------------------------------------------------------------------------------------------------------------------
$1 million or more(3) or
- - ------------------------------------------------------------------------------------------------------------------------------------
Retirement Plan - 100 or more eligible employees(3) or
- - ------------------------------------------------------------------------------------------------------------------------------------
Special Retirement Wrap Program(3)
- - ------------------------------------------------------------------------------------------------------------------------------------
First $5 million no front-end sales charge 1.00% 0.25% 1.25%
- - ------------------------------------------------------------------------------------------------------------------------------------
Next $5 million above that no front-end sales charge 0.55% 0.25% 0.80%
- - ------------------------------------------------------------------------------------------------------------------------------------
Next $40 million above that no front-end sales charge 0.50% 0.25% 0.75%
- - ------------------------------------------------------------------------------------------------------------------------------------
Over $50 million no front-end sales charge 0.25% 0.25% 0.50%
- - ------------------------------------------------------------------------------------------------------------------------------------
Class B investments Paid at time of sale (% of net asset value)
- - ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 3.75% 0.25% 4.00%
- - ------------------------------------------------------------------------------------------------------------------------------------
Class C investments
- - ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.75% 0.25% 1.00%
- - ------------------------------------------------------------------------------------------------------------------------------------
Class P investments Percentage of average net assets
- - ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION AFTER FIRST YEAR
Class A investments
- - ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.25% 0.25%
- - ------------------------------------------------------------------------------------------------------------------------------------
Class B investments Percentage of average net assets(4)
- - ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.25% 0.25%
- - ------------------------------------------------------------------------------------------------------------------------------------
Class C investments
- - ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.65% 0.25% 0.90%
- - ------------------------------------------------------------------------------------------------------------------------------------
Class P investments
- - ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The service fee for class A shares is paid quarterly. The first year's
service fee on class B and C shares is paid at the time of sale.
(2) Reallowance / concession percentages and service fee percentages are
calculated from different amounts, and therefore may not equal total
compensation percentages if combined using simple addition. Additional
Concessions may be paid to Authorized Institutions from time to time.
(3) Concessions are paid at the time of sale on all class A shares sold during
any 12-month period starting from the day of the first net asset value
sale. With respect to (a) class A share purchase at $1 million or more,
sales qualifying at such level under rights of accumulation and statement
of intention privileges are included and (b) for Special Retirement Wrap
Programs, only new sales are eligible and exchanges into the Fund are
excluded.
(4) With respect to class B, C and P shares, 0.25%, 0.90% and 0.45%,
respectively, of the average annual net asset value of such shares
outstanding during the quarter (including distribution reinvestment shares
after the first anniversary of their issuance) is paid to Authorized
Institutions. These fees are paid quarterly in arrears. In the case of
class C shares for fixed-income series, 0.10% of the average net asset
value of such shares is retained by Lord Abbett Distributor, thus reducing
from 0.75% to 0.65% after the first year. Lord Abbett & Co. uses 0.10% for
expenses primarily intended to result in the sale of such series' shares.
CDSC revenues collected may be used to fund commission payments when there
is no initial sales charge.
The Funds 21
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
For More Information
More information on these funds is available free upon request, including
the following:
ANNUAL/SEMI-ANNUAL REPORT
Describes the funds, lists portfolio holdings and contains a letter from
the funds' manager discussing recent market conditions and each fund's
investment strategies.
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
Provides more details about the funds and their policies. A current SAI is
on file with the Securities and Exchange Commission ("SEC") and is
incorporated by reference (is legally considered part of this prospectus).
Equity Fund
Income Fund
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
-----------------------
SEC file number: 811-3942
- - --------------------------------------------------------------------------------
To obtain information:
By telephone. Call the funds at 800-426-1130
By mail. Write to the funds at: The Lord Abbett Family of Funds 767 Fifth Avenue
New York, NY 10153-0203
Via the Internet. Text only versions of fund documents can be viewed online or
downloaded from:
Lord, Abbett & Co. http://www.lordabbett.com
SEC
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 800-SEC-0330) or by sending your request and a duplicating
fee to the SEC's Public Reference Section, Washington, DC 20549-6009.
<PAGE>
LORD ABBETT
Statement of Additional Information May 1, 1999
Global Fund, Inc.
This Statement of Additional Information is not a prospectus. A prospectus for
Lord Abbett Global Fund, Inc. (the "fund"or "we") may be obtained from your
securities dealer or form Lord Abbett Distributor LLC ("Lord Abbett
Distributor") at The General Motors Building, 767 Fifth Avenue, New York, New
York 10153-0203. This Statement relates to, and should be read in conjunction
with, the prospectus dated May 1, 1999.
Our Board of Directors has authority to create and classify shares of common
stock in separate series, without further action by shareholders. To date,
500,000,000 shares of the Equity fund and 500,000,000 shares of the Income fund
have been authorized at $0.001 par value. Both funds consist of form classes (A,
B, C and P ). The Board of Directors will allocate these authorized shares among
the classes of each fund from time to time. All shares 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 in the future. The
Investment Company Act of 1940, as amended (the "Act"), requires that where more
than one fund exists, each fund must be preferred over all other funds in
respect of assets specifically allocated to such funds.
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 fund affected
by such matter. Rule 18f-2 further provides that a class or fund shall be deemed
to be affected by a matter unless the interests of each class or fund 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 the separate voting requirements of the Rule.
Shareholder inquiries should be made by writing directly to the fund or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
TABLE OF CONTENTS Page
1. Investment Policies 2
2. Directors and Officers 6
3. Investment Advisory and Other Services 9
4. Portfolio Transactions 11
5. Purchases, Redemptions and Shareholder Services 12
6. Past Performance 19
7. Taxes 20
8. Information About the Fund 21
9. Financial Statements 21
10. Appendix 22
1
<PAGE>
1.
Investment Policies
Fundamental Investment Restrictions
We are subject to the following investment restrictions which cannot be changed
without approval of a majority of our outstanding shares. Neither fund may: (1)
borrow money, except that (i) it may borrow from banks (as defined in the Act)
in amounts up to 33 1/3% of its total assets (including the amount borrowed),
(ii) it may borrow up to an additional 5% of its total assets for temporary
purposes, (iii) it may obtain such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio securities and (iv) it may
purchase securities on margin to the extent permitted by applicable law; (2)
pledge its assets (other than to secure borrowings, or to the extent permitted
by the funds' 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 a 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) or commodities or commodity contracts (except to the
extent a 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 the Equity fund, buy securities of one issuer representing more than
(i) 5% of the Equity funds' 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. Neither
fund may: (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 the securities of other investment companies except as permitted by
applicable law; (5) invest in securities of issuers which, with their
predecessors, have a record of less than three years' continuous operations, if
more than 5% of a funds' total assets would be invested in such securities (this
restriction shall not apply to mortgage-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 if more than
1/2 of 1% of the securities of such issuer are owned beneficially by one or more
officers or directors of the fund or by one or more partners or members of a
funds' underwriter or investment adviser if these owners in the aggregate own
beneficially more than 5% of the securities of such issuer; (7) invest in
warrants if, at the time of the acquisition, its investment in warrants, valued
at the lower of cost or market, would exceed 5% of such funds' total assets
(included within such limitation, but not to exceed 2% of such 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 other development programs, except that each fund may invest in
securities issued by companies that engage in oil, gas or other mineral
exploration or other development activities; (9) write, purchase or sell puts,
calls, straddles, spreads or combinations thereof, except to the extent
permitted in the funds' prospectus and statement of additional information, as
they may be amended from time to time; or (10) buy from or sell to any of its
officers, directors, employees, or its investment adviser or any of its
2
<PAGE>
officers, directors, partners or employees, any securities other than shares of
the funds' common stock.
The Income fund will be required to meet the diversification rules under
Subchapter M of the Internal Revenue Code.
Although it has no current intention to do so, the fund may invest in financial
futures and options on financial futures.
Portfolio Turnover Rate
For the fiscal years ended December 31, 1998, 1997 and 1996 the portfolio
turnover rates were _____%, 99.05% and 81.97% for the Equity fund, and _____%,
616.63% and 621.79% for the Income fund, respectively.
Foreign Currency Hedging Techniques
The fund may utilize various foreign currency hedging techniques described
below, including forward foreign currency contracts and foreign currency put and
call options.
Forward Foreign Currency Contracts. A forward foreign currency contract involves
an obligation to purchase or sell a specific amount of a specific currency at a
set price at a future date. The fund expects to enter into forward foreign
currency contracts in primarily two circumstances. First, when the fund enters
into a contract for the purchase or sale of a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security. By
entering into a forward contract for the purchase or sale of the amount of
foreign currency involved in the underlying security transaction, the fund will
be able to protect against a possible loss resulting from an adverse change in
the relationship between the U.S. dollar and the subject foreign currency during
the period between the date the security is purchased or sold and the date on
which payment is made or received.
Second, when management believes that the currency of a particular foreign
country may suffer a decline against the U.S. dollar, the fund may enter into a
forward contract to sell the amount of foreign currency approximating the value
of some or all of the funds' portfolio securities denominated in such foreign
currency or, in the alternative, the fund may use a cross-hedging technique
whereby it sells another currency which the fund expects to decline in a similar
way but which has a lower transaction cost. Precise matching of the forward
contract amount and the value of the securities involved will not generally be
possible since the future value of such securities denominated in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date the forward contract is entered into and the
date it matures. The fund does not intend to enter into such forward contracts
under this second circumstance on a continuous basis.
Foreign Currency Put and Call Options. The fund may also purchase foreign
currency put options and write foreign currency call options on U.S. exchanges
or U.S. over-the-counter markets. A put option gives the fund, upon payment of a
premium, the right to sell a currency at the exercise price until the expiration
of the option and serves to insure against adverse currency price movements in
the underlying portfolio assets denominated in that currency.
Exchange-listed options markets in the United States include several major
currencies, and trading may be thin and illiquid. A number of major investment
firms trade unlisted options which are more flexible than exchange-listed
options with respect to strike price and maturity date. Unlisted options
generally are available in a wider range of currencies, including those of most
of the developed countries. Unlisted foreign currency options are generally less
liquid than listed options and involve the credit risk associated with the
individual issuer. Unlisted options are subject to a limit of 5% of each funds'
net assets illiquid securities.
A call option written by the fund gives the purchaser, upon payment of a
premium, the right to purchase from the fund a currency at the exercise price
until the expiration of the option. The fund may write a call option on a
foreign currency only in conjunction with a purchase of a put option on that
currency. Such a strategy is designed to reduce the cost of downside currency
protection by limiting currency appreciation potential. The face value of such
writing may not exceed 90% of the value of the securities denominated in such
currency invested in by the fund or in such cross currency (referred to above)
to cover such call writing.
3
<PAGE>
Investment Techniques
The fund intends to utilize, from time to time, one or more of the investment
techniques described below, including covered call options, rights and warrants
and repurchase agreements. It is the funds' current intention that no more than
5% of each funds' net assets will be at risk in the use of any one of such
investment techniques. While some of these techniques involve risk when utilized
independently, the fund intends to use them to reduce risk and volatility in its
portfolios.
Covered Call Options. Each fund may write covered call options on securities it
owns ("call options"), provided that the securities held to cover such call
options do not represent more than 5% of a funds' net assets. A call option on
stock gives the purchaser of the option, upon payment of a premium to the writer
of the option, the right to call upon the writer to deliver a specified number
of shares of a stock on or before a fixed date at a predetermined price.
The writing of call options will, therefore, involve a potential loss of
opportunity to sell securities at higher prices. In exchange for the premium
received. The writer of a fully collateralized call option gives up the gain
possibility of the underlying stock beyond the call price and continues to have
the downside risk of such securities. In addition, in exchange for the premium
received, the writer of the call gives up the gain possibility of the stock
appreciating above the call price. While an option that has been written is in
force, the maximum profit that may be derived from the optioned stock is the sum
of the premium less brokerage commissions and fees plus the difference between
the strike price of the call and the market price of the underlying security.
Each fund will not use call options on individual equity securities traded on
foreign securities markets.
The funds' custodian will segregate cash or liquid high-grade debt securities in
an amount not less than that required by SEC Release 10666 and any SEC staff
interpretations thereof with respect to each funds' assets committed to (a)
forward foreign currency contracts and (b) cross hedges. If the value of the
segregated securities declines, additional cash, equity and debt securities
consistent with the funds' policies and such SEC requirements will be added on a
daily basis (i.e., marked to market) so that the segregated amount will not be
less than the amount of the funds' commitments with respect to such forward
contracts and cross hedges.
Rights and Warrants. Each fund may invest in rights and warrants to purchase
securities. Included within that amount, but not to exceed 2% of the value of
the fund' s net assets, may be warrants which are not listed on the New York
Stock Exchange ("NYSE") or American Stock Exchange.
Rights represent a privilege offered to holders of record of issued securities
to subscribe (usually on a pro-rata basis) for additional securities of the same
class, of a different class, or of a different issuer, as the case may be.
Warrants represent the privilege to purchase securities at a stipulated price
and are usually valid for several years. Rights and warrants generally do not
entitle a holder to dividends or voting rights with respect to the underlying
securities, nor do they represent any rights in the assets of the issuing
company.
Also, the value of a right or warrant may not necessarily change with the value
of the underlying securities and rights and warrants cease to have value if they
are not exercised prior to their expiration date.
Repurchase Agreements. Each fund may enter into repurchase agreements with
respect to a security. A repurchase agreement is a transaction by which the fund
acquires a security and simultaneously commits to resell that security to the
seller (a bank or securities dealer) at an agreed-upon price on an agreed-upon
date. The resale price reflects the purchase price plus an agreed-upon market
rate of interest which is unrelated to the coupon rate or date of maturity of
the purchased security. In this type of transaction, the securities purchased by
the fund have a total value in excess of the value of the repurchase agreement.
Each fund requires at all times that the repurchase agreement be collateralized
by cash or U.S. Government securities having a value equal to, or in excess of,
the value of the repurchase agreement. Such agreements permit the each fund to
keep all of its assets at work while retaining flexibility in pursuit of
investments of a longer-term nature.
4
<PAGE>
The use of repurchase agreements involves certain risks. For example, if the
seller of the agreement defaults on its obligation to repurchase the underlying
securities at a time when the value of these securities has declined, a fund may
incur a loss upon their disposition. If the seller of the agreement becomes
insolvent and subject to liquidation or reorganization under the Bankruptcy Code
or other laws, a bankruptcy court may determine that the underlying securities
are collateral not within the control of the fund and are therefore subject to
sale by the trustee in bankruptcy. Even though the repurchase agreements may
have maturities of seven days or less, they may lack liquidity, especially if
the issuer encounters financial difficulties. While the fund acknowledges these
risks, it is expected that they can be controlled through stringent selection
criteria and careful monitoring procedures. Each fund intends to limit
repurchase agreements to transactions with dealers and financial institutions
believed by the fund to present minimal credit risks. Each fund will monitor
creditworthiness of the repurchase agreement sellers on an ongoing basis.
Lending Portfolio Securities
Each fund may lend its portfolio securities to registered broker-dealers. These
loans, if and when made, may not exceed 15% of each funds' total assets. Each
funds' lending of securities will be collateralized by cash or marketable
securities issued or guaranteed by the U.S. Government or its agencies ("U.S.
Government securities") or other permissible means. The cash or instruments
collateralizing each funds' lending of securities will be maintained at all
times in an amount at least equal to the current market value of the loaned
securities. From time to time, a Series may allow a part of the interest
received with respect to the investment of collateral to be paid to the borrower
and/or a third party that is not affiliated with the fund and is acting as a
"placing broker." No fee will be paid to affiliated persons of a fund.
By lending portfolio securities, a fund can increase its income by continuing to
receive interest on the loaned securities as well as by either investing the
cash collateral in permissible investments, such as U.S. Government securities,
or obtaining yield in the form of interest paid by a borrower when such U.S.
Government securities are used as collateral. Each fund will comply with the
following conditions whenever it lends securities: (i) the funds must receive at
least 100% collateral from the borrower; (ii) the borrower must increase the
collateral whenever the market value of the securities loaned rises above the
level of the collateral; (iii) the funds must be able to terminate the loan at
any time; (iv) the funds must receive reasonable compensation with respect to
the loan, as well as any dividends, interest or other distributions on the
loaned securities; (v) the funds may pay only reasonable fees in connection with
the loan; and (vi) voting rights on the loaned securities may pass to the
borrower, except that if a material event adversely affecting the investment in
the loaned securities occurs, the funds' Board of Directors must terminate the
loan and regain the right to vote the securities.
INCOME FUND ONLY
When-Issued Transactions
As stated in the prospectus, the Income fund may purchase portfolio securities
on a when-issued basis. When-issued transactions involve a commitment by the
Income fund to purchase securities, with payment and delivery ("settlement") to
take place in the future, in order to secure what is considered to be an
advantageous price or yield at the time of entering into the transaction. When
the Income fund enters into a when-issued purchase, it becomes obligated to
purchase securities and it assumes all the rights and risks attendant to
ownership of a security, although settlement occurs at a later date. The value
of fixed-income securities to be delivered in the future will fluctuate as
interest rates vary. At the time the Income fund makes the commitment to
purchase a security on a when-issued basis, it will record the transaction and
reflect the liability for the purchase and the value of the security in
determining its net asset value. The Income fund generally has the ability to
close out a purchase obligation on or before the settlement date, rather than
take delivery of the security. Under no circumstances will settlement for such
securities take place more than 120 days after the purchase date.
5
<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 or trustee 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 53, Chairman and President
The following outside directors are also directors or trustees of some or all 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 Exective Officer of
Courtroom Television Network (1997-1998). Formerly President and Chief Executive
Officer of Time Warner Cable Programming, Inc. (1991-1997). Prior to that,
(1997-1998) 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 of the Board of the financial 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.
6
<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, Gerneral Partner of the 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 Director of ACE, Ltd. (NYSE). Age 61.
The second column of the following table sets forth the compensation accrued for
the funds' outside directors. The third column sets forth information with
respect to the equity-based benefits accrued for outside directors by the Lord
Abbett-sponsored funds. The fourth column sets forth the total compensation
payable by such funds to the outside directors. No director of the fund
associated with Lord Abbett and no officer of the fund received any compensation
from the fund for acting as a director or officer.
<TABLE>
<CAPTION>
For the Fiscal Year Ended December 31, 1998
(1) (2) (3) (4)
Pension or For Year Ended
Retirement Benefits December 31, 1998
Accrued by the Total Compensation
Aggregate fund and Accrued by the fund and
Compensation Twelve Other Lord Twelve Other Lord
Accrued by Abbett-sponsored Abbett-sponsored
Name of Director the fund(1) funds(2) funds(3)
<S> <C> <C> <C>
E. Thayer Bigelow $ $ $
William H.T. Bush* $ $ $
Robert B. Calhoun, Jr.* $ $ $
Stewart S. Dixon $ $ $
John C. Jansing $ $ $
C. Alan MacDonald $ $ $
Hansel B. Millican, Jr. $ $ $
Thomas J. Neff $ $ $
</TABLE>
* Elected as of August 13, 1998
7
<PAGE>
** Elected as of June 17, 1998
1. Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on the
net assets of each fund. A portion of the fees payable by the fund to its
outside directors 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.
2. The amounts in Column 3 were accrued by the Lord Abbett-Sponsored funds
for the 12 months ended December 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. Current
directors had the option to convert their accrued benefits under the
retirement plan. All of the outside directors except one made such an
election. Each plan also provides for a pre-retirement death benefit and
actuarially reduced joint-and-survivor spousal benefits.
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 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, $--------; Mr.
Dixon, $--------; Mr. Jansing, $--------; Mr. MacDonald, $-------; Mr.
Millican, $------- and Mr. Neff, $------. 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, ---- shares; Mr. Dixon, ------- shares; Mr. Jansing, -------
shares; Mr. MacDonald, ------- shares; Mr. Millican, ----- shares; and Mr.
Neff, ------ shares.
4. Mr. Jansing chose to continue to receive benefits under the retirement
plan which provides that outside directors (Trustees) may receive annual
retirement benefits for life equal to their final annual retainer
following retirement at or after age 72 with at least ten years of
service. Thus, if Mr. Jansing were to retire and the annual retainer
payable by the funds were the same as it is today, he would receive annual
retirement benefits of $50,000.
Except where indicated, the following executive officers of the fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Brown, Carper, Hilstad, Morris and Walsh are partners of Lord Abbett; the others
are employees:
Executive Vice Presidents
Zane E. Brown, age 47
Timothy W. Horan, age 43 (with Lord Abbett since 1996 - formerly Senior Manager
of Credit Suisse; prior thereto Vice President of Aubrey G. Lanston & Co.)
Vice Presidents
Paul A. Hilstad, age 56, Vice President and Secretary (with Lord Abbett since
1995 - formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.)
Daniel E. Carper, age 47
Lawrence H. Kaplan, age 42 (with Lord Abbett since 1997 - formerly vice
president and Chief Counsel of Salomon Brothers Asset Management Inc from 1995
to 1997, prior thereto Senior Vice President, Director and General Counsel of
Kidder Peabody Asset Management, Inc.)
Thomas F. Konop, age 56
Jerald M. Lanzotti, age 30 (with Lord Abbett since 1996 - formerly an Associate
of Deutsche Morgan Grenfell/C.J. Lawrence Inc.)
8
<PAGE>
Robert G. Morris, age 54
A. Edward Oberhaus, age 39
Keith F. O'Connor, age 43
Fernando Saldanha, age 45 (with Lord Abbett since 1998 - formerly Senior
Financial Officer at World Bank from 1988)
John J. Walsh, age 62
Treasurer
Donna M. McManus, age 38, (with Lord Abbett since 1996, formerly a Senior
Manager at Deloitte & Touche LLP).
The funds' By-Laws provide that the fund shall not hold an annual meeting of its
stockholders in any year unless one or more matters are required to be acted on
by stockholders under the Investment Company Act of 1940, as amended (the
"Act"), or unless called by a majority of the Board of Directors or by
stockholders holding at least one quarter of the stock of the fund outstanding
and entitled to vote at the meeting. When any such annual meeting is held, the
stockholders will elect directors and vote on the approval of the independent
auditors of the fund.
As of April 1, 1998, our officers and directors, as a group, owned less than 1%
of our outstanding shares. As of April 1, 1999 there were no record holders of
5% or more of the funds' outstanding shares.
3.
Investment Advisory and Other Services
As described under "Management" in the Prospectus, Lord Abbett is the funds'
investment manager. Seven of the twelve general partners of Lord Abbett are
officers and/or directors of the fund, as follows: Zane E. Brown, Daniel E.
Carper, Robert S. Dow, Paul A. Hilstad, , Robert G. Morris, E. Wayne Nordberg
and J ohn J. Walsh. The address of each partner is The General Motors Building,
767 Fifth Avenue, New York, New York 10153-0203.
The services performed by Lord Abbett are described under " Management" in the
prospectus. Under the Management Agreement, we pay Lord Abbett a monthly fee,
based on average daily net assets for each month, at the annual rate of .75 of
1% for the Equity fund and .50 of 1% for the Income fund. Notwithstanding the
above, Lord Abbett may, but is not required to, waive its fee or directly pay
all or any portion of the expenses of either fund not expressly assumed by Lord
Abbett under the Management Agreement.
9
<PAGE>
The expense ratios for 1998, 1997 and 1996 were as follows:
1998 1997 1996
---- ---- ----
A B C A B C A B* C*
- - - - - - - -- --
Income 1.10% 1.78% 1.77% 1.04% .73% .87%
Equity 1.51% 2.23% 2.14% 1.52% .83% .83%
* not annualized
We pay all expenses not expressly assumed by Lord Abbett, including without
limitation 12b-1 expenses, outside directors' fees and expenses, association
membership dues, legal and auditing fees, taxes, transfer and dividend
disbursing agent fees, shareholder servicing costs, expenses relating to
shareholder meetings, expenses of preparing, printing and mailing stock
certificates and shareholder reports, expenses of registering our shares under
federal and state securities laws, expenses of preparing, printing and mailing
prospectuses to existing shareholders, insurance premiums, brokerage and other
expenses connected with executing portfolio transactions.
There is a Sub-Investment Management Agreement (the "New Agreement") with
respect to the Equity fund between Lord Abbett and Edinburgh fund Managers
plc(the "Sub-Adviser"), under which the Sub-Adviser provides Lord Abbett with
advice with respect to that portion of the Equity funds' assets invested in
countries other than the United States, as more particularly described in the
prospectus.
The Sub-Adviser provides international investment research and advisory services
to private and institutional clients, investment trusts, pension clients and
unit trusts both in the United Kingdom and overseas. The Sub-Adviser currently
manages approximately $10 billion, and its investment and administrative staffs
have substantial global investment management experience.
Securities held by either of the funds may also be held by other funds or
investment advisory clients for which Lord Abbett or the Sub-Adviser (in the
case of the Equity fund) or their affiliates provide investment advice. Because
of different investment objectives or other factors, a particular security may
be bought for one or more funds or clients when one or more other funds or
clients are selling the same security. If opportunities for purchase or sale of
securities by Lord Abbett or the Sub-Adviser (in the case of the Equity fund)
for the fund or for other funds or clients for which they render investment
advice arise for consideration at or about the same time, transactions in such
securities will be made insofar as feasible for the respective funds or clients
in a manner deemed equitable to all of them. To the extent that transactions on
behalf of more than one client of Lord Abbett, the Sub-Adviser (in the case of
the Equity fund) or their affiliates may increase the demand for securities
being purchased or the supply of securities being sold, there may be an adverse
effect on price.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281 are
the independent accountants of the fund and must be approved at least annually
by our Board of Directors to continue in such capacity. They perform audit
services for the fund including the examination of financial statements included
in our annual report to shareholders.
The Bank of New York ("BNY"), 48 Wall Street, New York, New York 10286, is the
funds' custodian. Rules adopted by the Securities & Exchange Commission under
the Act permit the fund to maintain its foreign assets in the custody of certain
eligible foreign banks and securities depositories. The funds' portfolio
securities and cash, when invested in foreign securities and not held by BNY or
its foreign branches, are held by sub-custodians of BNY approved by the Board of
Directors of the fund in accordance with such rules.
10
<PAGE>
The Sub-Custodians of BNY are:
Euro-Clear (a transnational securities depository); Australia: ANZ Banking
Group; Austria: Creditanstalt-Bankverein; Canada: Canadian Imperial Bank of
Commerce; Chile: Citibank, N.A.; Czech Republic: Ceskoslovenska Obchodni Banka;
Denmark: Den Danske Bank; Finland: Union Bank of Finland; Germany: J.P. Morgan
GmbH; Greece: National Bank of Greece S.A.; Hong Kong, Indonesia, Philippines,
Taiwan and Thailand: Hong Kong & Shanghai Banking Corp.; Hungary: Citibank
Budapest Rt; India: Hong Kong and Shanghai Banking Corporation; Ireland: Allied
Irish Banks, PLC; Israel: Bank Leumi LE-Israel B.M.; Japan: The Fuji Bank, Ltd.;
Jordan: Citibank, N.A.; Korea: Bank of Seoul; Luxembourg: Banque Internationale
A Luxembourg, S.A.; Mexico: Citibank, N.A.; Morocco: Banque Commerciale du
Maroc; Netherlands: Bank van Haften Labouchere; New Zealand: Anz Banking Group
Ltd.; Norway: Den Norske Bank; Pakistan: Citibank, N.A.; Peru: Citibank, N.A.;
Poland: Bank Handlowy w Warszawie S.A.; Portugal: Banco Espirito Santo E
Comercial de Lisboa; Malaysia, Singapore: Development Bank of Singapore; South
Africa: The First National Bank of Southern Africa; Sri Lanka: Hong Kong and
Shanghai Banking Corporation; Sweden: Skandinaviska Enskilda Banken;
Switzerland: Bank Leu; Turkey: Citibank, N.A.; Venezuela: Citibank, N.A.
4.
Portfolio Transactions
With respect to the Income fund, purchases and sales of portfolio securities
usually will be principal transactions and normally such securities will be
purchased directly from the issuer or from an underwriter or market maker for
the securities. Therefore, the Income fund usually will pay no brokerage
commissions for such purchases. Purchases from underwriters of portfolio
securities will include a commission or concession paid by the issuer to the
underwriter and purchases from dealers serving as market makers will include a
dealer's markup. Principal transactions, including riskless principal
transactions, are not afforded the protection of the safe harbor in Section 28
(e) of the Securities Exchange Act of 1934.
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
dealer markups and markdowns and any brokerage commissions and taking into
account the full range and quality of the brokers' services. With respect to the
Equity fund, consistent with obtaining best execution, we may 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. For foreign securities purchased or sold by
the Equity fund, the selection is made by the Sub-Adviser. They are responsible
for obtaining best execution.
In transactions on stock exchanges in the United States, commissions are
negotiated, whereas on many foreign stock exchanges commissions are fixed. In
the case of securities traded in the foreign and domestic over-the-counter
markets, there is generally no stated commission, but the price usually includes
an undisclosed commission or markup. Purchases from underwriters of newly-issued
securities for inclusion in the funds' portfolios usually will include a
concession paid to the underwriter by the issuer and purchases from dealers
serving as market makers will include the spread between the bid and asked
prices. When commissions are negotiated, we pay a commission rate that we
believe is appropriate to give maximum assurance that our brokers will provide
us, on a continuing basis, the highest level of brokerage services available.
While we do not always seek the lowest possible commission 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
11
<PAGE>
such factors as showing the fund trading opportunities including blocks,
willingness and ability to take positions in securities, knowledge of a
particular security or market, proven ability to handle a particular type of
trade, confidential treatment, promptness and reliability. Some of our 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-part suppliers, that enable Lord Abbett to access
various information bases. Such services may be used by Lord Abbett in servicing
all their accounts, and not all of such services will necessarily be used by
Lord Abbett in connection with their management of the fund; conversely, such
services furnished in connection with brokerage of other accounts managed by
Lord Abbett may be used in connection with their management of the fund, and not
all of such services will necessarily be used by Lord Abbett in connection with
their advisory services to such other accounts. The fund has been advised by
Lord Abbett that research services received from brokers cannot be allocated to
any particular account, are not a substitute for Lord Abbett's services but are
supplemental to their own research effort and, when utilized, are subject to
internal analysis before being incorporated by Lord Abbett into their investment
process. As a practical matter, it would not be possible for Lord Abbett to
generate all of the information presently provided by brokers. While receipt of
research services from brokerage firms has not reduced Lord Abbett's normal
research activities, the expenses of Lord Abbett could be materially increased
if it attempted to generate such additional information through its own staff
and purchased such equipment and software packages directly from the suppliers.
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 Lord Abbett to purchase or sell portfolio securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold our shares and/or
shares of other Lord Abbett-sponsored funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as we do, transactions will, to the extent practicable, be allocated among all
participating accounts in proportion to the amount of each order and will be
executed daily until filled so that each account shares the average price and
commission cost of each day. Other clients who direct that their brokerage
business be placed with specific brokers or who invest through wrap accounts
introduced to Lord Abbett by certain brokers may not participate with us in the
buying and selling of the same securities as described above. If these clients
wish to buy or sell the same security as we do, they may have their transactions
executed at times different from our transactions and thus may not receive the
same price or incur the same commission cost as we do.
We will not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from dealers as
consideration for the direction to them of portfolio business.
During the fiscal years ended December 31, 1998, 1997, and 1996 , the fund paid
total commissions to independent broker-dealers of $ -----------, $414,606, and
$372,219, respectively.
5.
Purchases, Redemptions
and Shareholder Services
The fund values its portfolio securities at their market values as of the close
of the NYSE. Market value will be determined as follows: securities listed or
admitted to trading privileges on any national or foreign securities exchange
are valued at the last sales price on the principal securities exchange on which
such securities are traded, or, if there is no sale on that day, at the mean
between the last bid and asked prices, or, in the case of bonds, in the
over-the-counter market if, in the judgment of the funds' officers, that market
more accurately reflects the market value of the bonds. Over-the-counter
securities that are not traded on the NASDAQ National Market System are valued
at the mean between the last bid and asked price. 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 each fund values its shares for the purchase and
redemption or repurchase of its shares is briefly described in the Prospectus
under "Purchases" and "Redemptions," respectively.
12
<PAGE>
As disclosed in the Prospectus, each Series calculates its net asset value and
is 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.
All assets and liabilities expressed in foreign currencies will be converted
into United States dollars at the mean between the buying and selling rates of
such currencies against United States dollars last quoted by any major bank. If
such quotations are not available, the rate of exchange will be determined in
accordance with policies established by the Board of Directors of the fund. The
Board of Directors will monitor, on an ongoing basis, the funds' method of
valuation.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each business day in New York. In addition, European or Far Eastern
securities trading generally or in a particular country or countries may not
take place on all business days in New York. Furthermore, trading takes place in
various foreign markets on days which are not business days in New York and on
which the funds' net asset values are not calculated. Such calculation does not
take place contemporaneously with the determination of the prices of the
majority of the portfolio securities used in such calculation. Events affecting
the values of portfolio securities that occur between the time their prices are
determined and the close of the NYSE will not be reflected in the funds'
calculation of net asset values unless the funds' Directors determine that the
particular event would materially affect net asset value, in which case an
adjustment will be made.
The net asset value per share for the Class B and Class C shares is determined
in the same manner as for the Class A shares (net assets divided by shares
outstanding). Our Class B and Class C shares are sold at net asset value.
The maximum offering prices of each funds' Class A shares on December 31, 1998
were computed as follows:
Equity Income
Series Series
Net asset value per share (net assets
divided by shares outstanding) .................... $____ $____
Maximum offering price per share (net asset
value divided by .9425 and .9525,
respectively) ..................................... $____ $____
The fund has entered into a distribution agreement with Lord Abbett Distributor
under which Lord Abbett is obligated to use its best efforts to find purchasers
for the shares of the fund and to make reasonable efforts to sell fund shares,
so long as, in Lord Abbett Distributor's judgment, a substantial distribution
can be obtained by reasonable efforts.
For the last three fiscal years Lord Abbett, as the funds' principal
underwriter, received net commissions after allowance of a portion of the sales
charge to independent dealers with respect to Class A shares as follows:
Equity fund
Year Ended December 31,
1998 1997 1996
---- ---- ----
Gross sales charge $_______ $200.054 $ 310,158
Amount allowed
to dealers $_______ $170,647 $ 267,318
-------
Net commissions
received by
13
<PAGE>
Lord Abbett $_______ $ 29,407 42,840
======
Income fund
Year Ended December 31,
1998 1997 1996
---- ----
Gross sales charge $____ $75,727 $ 172,464
Amount allowed
to dealers $------ $65,169 $ 148,333
Net commissions
received by
Lord Abbett $------ $24,131 $ 43,332
======= ======= ========
Conversion of Class B Shares. The conversion of Class B shares on the eighth
anniversary of their purchase is subject to the continuing availability of a
private letter ruling from the Internal Revenue Service, or an opinion of
counsel or tax adviser, to the effect that the conversion of Class B shares does
not constitute a taxable event for the holder under Federal income tax law. If
such a revenue ruling or opinion is no longer available, the automatic
conversion feature may be suspended, in which event no further conversions of
Class B shares would occur while such suspension remained in effect. Although
Class B shares could then be exchanged for Class A shares on the basis of
relative net asset value of the two classes, without the imposition of a sales
charge or fee, such exchange could constitute a taxable event for the holder.
Class A, B, C and P Rule 12b-1 Plans. As described in the prospectus, the fund
has adopted on behalf of each class of each fund, a Distribution Plan and
Agreement pursuant to Rule 12b-1 of the Act: the "A Plans," the "B Plans" , "C
Plans," and "P Plans", respectively. In adopting each Plan and in approving its
continuance, the Board of Directors has concluded that there is a reasonable
likelihood that each Plan will benefit its respective Class and such Class'
shareholders. The expected benefits include greater sales and lower redemptions
of Class shares, which should allow each Class to maintain a consistent cash
flow, and a higher quality of service to shareholders by authorized institutions
than would otherwise be the case. Lord Abbett used all amounts received under
each Plan for payments to dealers for (i) providing continuous services to the
shareholders, such as answering shareholder inquiries, maintaining records, and
assisting shareholders in making redemptions, transfers, additional purchases
and exchanges and (ii) their assistance in distributing shares of each fund.
The fees payable under the A Plan, B Plan and C Plan are described in the
prospectus. For the fiscal year ended December 31, 1998 fees paid to dealers
under the A Plans for the Equity fund and Income fund were $ ----- and $-------,
respectively.
For the period ending December 31, 1998, fees paid to dealers under the B Plans
for the Equity fund and Income fund were $------ and $-------, respectively.
For the period ending December 31, 1998 for the Equity fund and for the period
ending December 31, 1998 for the Income fund, fees paid to dealers under the C
Plans were $------ and $-------, respectively.
Each Plan requires the directors to review, on a quarterly basis, written
reports of all amounts expended pursuant to the Plan and the purposes for which
such expenditures were made. Each Plan shall continue in effect only if its
continuance is specifically approved at least annually by vote of the directors,
including a majority of the directors who are not interested persons of the fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related to the Plan ("outside directors"), cast in
person at a meeting called for the purpose of voting on the Plan. No Plan may be
amended to increase materially above the limits set forth therein the amount
spent for distribution expenses thereunder without approval by a majority of the
outstanding voting securities of the applicable Class and the
14
<PAGE>
approval of a majority of the directors, including a majority of the outside
directors. Each Plan may be terminated at any time by vote of a majority of the
outside directors or by vote of a majority of its Class's outstanding voting
securities.
Contingent Deferred Sales Charges. A Contingent Deferred Sales Charge ("CDSC")
(i) applies regardless of class, (ii) will not apply to shares purchased by the
reinvestment of dividends or capital gains distributions; (iii) will be assessed
on the lesser of the net asset value of the shares at the time of redemption or
the original purchase price and (iv) will not be imposed on the amount of your
account value represented by the increase in net asset value over the initial
purchase price (including increases due to the reinvestment of dividends and
capital gains distributions) and upon early redemption of shares.
Class A Shares. As stated in the prospectus, subject to certain exceptions, a
CDSC of 1% is imposed with respect to those Class A shares (or Class A shares of
another Lord Abbett-sponsored fund or series acquired through exchange of such
shares) on which the fund has paid the one-time distribution fee of 1% if such
shares are redeemed out of the Lord Abbett-sponsored family of funds within a
period of 24 months from the end of the month in which the original sale
occurred.
Class B Shares. As stated in the prospectus, subject to certain exceptions, if
Class B shares (or Class B shares of another Lord Abbett-sponsored fund or
series acquired through exchange of such shares) are redeemed out of the Lord
Abbett-sponsored family of funds for cash before the sixth anniversary of their
purchase, a CDSC will be deducted from the redemption proceeds. The Class B CDSC
is paid to Lord Abbett Distributor to reimburse its expenses, in whole or in
part, for providing distribution-related service to the fund in connection with
the sale of Class B shares.
To determine whether the CDSC applies to a redemption, the fund redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held on or after the sixth anniversary
of their purchase, and (3) shares held the longest before such sixth
anniversary.
The amount of the contingent deferred sales charge will depend on the number of
years since you invested and the dollar amount being redeemed, according to the
following schedule:
Anniversary of the Day on Contingent Deferred Sales Charge
Which the Purchase Order Was Accepted on Redemptions (As % of Amount Subject to
Charge)
Before the 1st 5.0%
On the 1st, before the 2nd 4.0%
On the 2nd, before the 3rd 3.0%
On the 3rd, before the 4th 3.0%
On the 4th, before the 5th 2.0%
On the 5th, before the 6th 1.0%
On or after the 6th anniversary None
In the table, an "anniversary" is the 365th day subsequent to the acceptance of
a purchase order or a prior anniversary. All purchases are considered to have
been made on the business day on which the purchase order was accepted.
Class C Shares. As stated in the prospectus, subject to certain exceptions, if
Class C shares are redeemed for cash before the first anniversary of their
purchase, the redeeming shareholder will be required to pay to the fund on
behalf of Class C shares a CDSC of 1% of the lower of cost or the then net asset
value of Class C shares redeemed. If such shares are exchanged into the same
class of another Lord Abbett-sponsored fund and subsequently redeemed before the
first anniversary of their original purchase, the charge will be collected by
the other fund on behalf of the funds' Class C shares.
Class P Shares. If you buy Class P shares, you pay no sales charge at the time
of purchase, and if you redeem your shares you pay no CDSC. Class P shares are
subject to service and distribution fees at an annual rate of .45 of 1% of the
average daily net asset value of the Class P shares. The Rule 12b-1 plan
applicable to the Class P shares is described in "Class P Rule 12b-1 Plan".
Class P shares are available to a limited number of investors
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General. The percentage (1% in the case of Class A and C shares and 5% through
1% in the case of Class B shares) used to calculate CDSCs described above for
the Class A, Class B and Class C shares is sometimes hereinafter referred to as
the "Applicable Percentage."
With respect to Class A and Class B shares, no CDSC is payable on redemptions by
participants or beneficiaries from employer-sponsored retirement plans under the
Internal Revenue Code for benefit payments due to plan loans, hardship
withdrawals, death, retirement or separation from service and for returns of
excess contributions to retirement plan sponsors. With respect to Class B
shares, no CDSC is payable for redemptions (i) in connection with Systematic
Withdrawal Plan and Div-Move services as described below under those headings,
(ii) in connection with mandatory distribution under 403(b) plans and IRAs and
(iii) in connection with death of the shareholder. In the case of Class A and
Class C shares, the CDSC is received by the fund and is intended to reimburse
all or a portion of the amount paid by the fund if the shares are redeemed
before the fund has had an opportunity to realize the anticipated benefits of
having a long-term shareholder account in the fund. In the case of Class B
shares, the CDSC is received by Lord Abbett Distributor and is intended to
reimburse its expenses of providing distribution-related service to the fund
(including recoupment of the commission payments made) in connection with the
sale of Class B shares before Lord Abbett Distributor has had an opportunity to
realize its anticipated reimbursement by having such a long-term shareholder
account subject to the B Plan distribution fee.
The other funds and series which participate in the Telephone Exchange Privilege
(except (a) Lord Abbett U.S. Government Securities Money Market fund, Inc.
("GSMMF"), (b) certain series of Lord Abbett Tax-Free Income fund and Lord
Abbett Tax-Free Income Trust for which a Rule 12b-1 Plan is not yet in effect,
and (c) any authorized institution's affiliated money market fund satisfying
Lord Abbett Distributor as to certain omnibus account and other criteria,
hereinafter referred to as an "authorized money market fund" or "AMMF"
(collectively, the "Non-12b-1 funds")) have instituted a CDSC for each class on
the same terms and conditions. No CDSC will be charged on an exchange of shares
of the same class between Lord Abbett funds or between such funds and AMMF. Upon
redemption of shares out of the Lord Abbett family of funds or out of AMMF, the
CDSC will be charged on behalf of and paid: (i) to the fund in which the
original purchase (subject to a CDSC) occurred, in the case of the Class A and
Class C shares and (ii) to Lord Abbett Distributor if the original purchase was
subject to a CDSC, in the case of the Class B shares. Thus, if shares of a Lord
Abbett fund are exchanged for shares of the same class of another such fund and
the shares of the same class tendered ("Exchanged Shares") are subject to a
CDSC, the CDSC will carry over to the shares of the same class being acquired,
including GSMMF and AMMF ("Acquired Shares"). Any CDSC that is carried over to
Acquired Shares is calculated as if the holder of the Acquired Shares had held
those shares from the date on which he or she became the holder of the Exchanged
Shares. Although the Non-12b-1 funds will not pay a distribution fee on their
own shares, and will, therefore, not impose their own CDSC, the Non-12b-1 funds
will collect the CDSC (a) on behalf of other Lord Abbett funds, in the case of
the Class A and Class C shares and (b) on behalf of Lord Abbett Distributor, in
the case of the Class B shares. Acquired Shares held in GSMMF and AMMF which are
subject to a CDSC will be credited with the time such shares are held in GSMMF
but will not be credited with the time such shares are held in AMMF. Therefore,
if your Acquired Shares held in AMMF qualified for no CDSC or a lower Applicable
Percentage at the time of exchange into AMMF, that Applicable Percentage will
apply to redemptions for cash from AMMF, regardless of the time you have held
Acquired Shares in AMMF.
In no event will the amount of the CDSC exceed the Applicable Percentage of the
lesser of (i) the net asset value of the shares redeemed or (ii) the original
cost of such shares (or of the Exchanged Shares for which such shares were
acquired). No CDSC will be imposed when the investor redeems (i) amounts derived
from increases in the value of the account above the total cost of shares being
redeemed due to increases in net asset value, (ii) shares with respect to which
no Lord Abbett fund paid a 12b-1 fee and, in the case of Class B shares, Lord
Abbett Distributor paid no sales charge or service fee (including shares
acquired through reinvestment of dividend income and capital gains
distributions) or (iii) shares which, together with Exchanged Shares, have been
held continuously for 24 months from the end of the month in which the original
sale occurred (in the case of Class A shares); for six years or more (in the
case of Class B shares) and for one year or more (in the case of Class C
shares). In determining whether a CDSC is payable, (a) shares not subject to the
CDSC will be redeemed before shares subject to the CDSC and (b) of the shares
subject to a CDSC, those held the longest will be the first to be redeemed.
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Exchanges. The prospectus briefly describes the Telephone Exchange Privilege.
You may exchange some or all of your shares of any class for those in the same
class of: (i) Lord Abbett-sponsored funds currently offered to the public with a
sales charge (front-end, back-end or level ), (ii) GSMMF or (iii) AMMF, to the
extent offers and sales may be made in your state. You should read the
prospectus of the other fund before exchanging. In establishing a new account by
exchange, shares of the fund being exchanged must have a value equal to at least
the minimum initial investment required for the other fund into which the
exchange is made.
Shareholders in other Lord Abbett-sponsored funds and AMMF have the same right
to exchange their shares for the corresponding class of each funds' shares.
Exchanges are based on relative net asset values on the day instructions are
received by the fund in Kansas City if the instructions are received prior to
the close of the NYSE in proper form. No sales charges are imposed except in the
case of exchanges out of GSMMF or AMMF (unless a sales charge (front-end,
back-end or level) was paid on the initial investment in a Lord Abbett-sponsored
fund). Exercise of the exchange privilege will be treated as a sale for federal
income tax purposes, and, depending on the circumstances, a gain or loss may be
recognized. In the case of an exchange of shares that have been held for 90 days
or less where no sales charge is payable on the exchange, the original sales
charge incurred with respect to the exchanged shares will be taken into account
in determining gain or loss on the exchange only to the extent such charge
exceeds the sales charge that would have been payable on the acquired shares had
they been acquired for cash rather than by exchange. The portion of the original
sales charge not so taken into account will increase the basis of the acquired
shares.
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as a means for taking advantage of
short-term swings in the market, and we reserve the right to terminate or limit
the privilege of any shareholder who makes frequent exchanges. We can revoke or
modify the privilege for all shareholders upon 60 days' prior notice. "Eligible
funds" are AMMF and other Lord Abbett-sponsored funds which are eligible for the
exchange privilege, except Lord Abbett Series fund ("LASF") which offers its
shares only in connection with certain variable annuity contracts, Lord Abbett
Equity fund ("LAEF") which is not issuing shares, and series of Lord Abbett
Research fund not offered to the general public ("LARF").
Statement of Intention. Under the terms of the Statement of Intention to invest
$50,000 or more over a 13-month period as described in the prospectus, shares of
a Lord Abbett-sponsored fund (other than shares of LAEF, LASF, LARF, GSMMF and
AMMF, unless holdings in GSMMF and AMMF are attributable to shares exchanged
from a Lord Abbett-sponsored fund offered with a front-end, back-end or level
sales charge) currently owned by you are credited as purchases (at their current
offering prices on the date the Statement is signed) toward achieving the stated
investment and reduced initial sales charge for Class A shares. Class A shares
valued at 5% of the amount of intended purchases are escrowed and may be
redeemed to cover the additional sales charge payable if the Statement is not
completed. The Statement of Intention is neither a binding obligation on you to
buy, nor on the fund to sell, the full amount indicated.
Rights of Accumulation. As stated in the prospectus, purchasers (as defined in
the Prospectus) may accumulate their investment in Lord Abbett-sponsored funds
(other than LAEF, LARF, LASF, GSMMF, and AMMF unless holdings in GSMMF or AMMF
are attributable to shares exchanged from a Lord Abbett-sponsored fund offered
with a front-end, back-end or level sales charge) so that a current investment,
plus the purchaser's holdings valued at the current maximum offering price,
reach a level eligible for a discounted sales charge for Class A shares.
Net Asset Value Purchases of Class A Shares. As stated in the prospectus, our
Class A shares may be purchased at net asset value by our directors, employees
of Lord Abbett, employees of our shareholder servicing agent and employees of
any securities dealer having a sales agreement with Lord Abbett who consents to
such purchases or by the director or custodian under any pension or
profit-sharing plan or Payroll Deduction IRA established for the benefit of such
persons or for the benefit of employees of any national securities trade
organization to which Lord Abbett belongs or any company with an account(s) in
excess of $10 million managed by Lord Abbett on a private-advisory-account
basis. For purposes of this paragraph, the terms "directors" and "employees"
include a trustee's or employee's spouse (including the surviving spouse of a
deceased director or employee). The terms "our directors" and "employees of Lord
Abbett" also include other family members and retired directors and employees.
Our Class A shares also may be purchased at net asset value (a) at $1 million or
more, (b) with dividends and distributions from Class A shares of other Lord
Abbett-sponsored funds, except for LARF, LAEF and LASF, (c) under
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the loan feature of the Lord Abbett-sponsored prototype 403(b) plan for share
purchases representing the repayment of principal and interest, (d) by certain
authorized brokers, dealers, registered investment advisers or other financial
institutions who have entered into an agreement with Lord Abbett Distributor in
accordance with certain standards approved by Lord Abbett Distributor, providing
specifically for the use of our shares in particular investment products made
available for a fee to clients of such brokers, dealers, registered investment
advisers and other financial institutions, ("mutual fund wrap fee program"), (e)
by employees, partners and owners of unaffiliated consultants and advisors to
Lord Abbett, Lord Abbett Distributor or Lord Abbett-sponsored funds who consent
to such purchase if such persons provide service to Lord Abbett, Lord Abbett
Distributor or such funds on a continuing basis and are familiar with such
funds, (f) through Retirement Plans with at least 100 eligible employees, (g)
our Class A shares also may be purchased at net asset value, subject to
appropriate documentation, through a securities dealer where the amount invested
represents redemption proceeds from shares ("Redeemed Shares") of a registered
open-end management investment company not distributed or managed by Lord Abbett
(other than a money market fund), if such redemption has occurred no more than
60 days prior to the purchase of our shares, the Redeemed Shares were held for
at least six months prior to redemption and the proceeds of redemption were
maintained in cash or a money market fund prior to purchase. Purchasers should
consider the impact, if any, of contingent deferred sales charges in determining
whether to redeem shares for subsequent investment in our Class A shares
pursuant to the purchase option in (g) above. Lord Abbett may suspend, change or
terminate this purchase option in (g) above at any time. We plan to terminate
this net asset value transfer privilege in (g) on June 1, 1997. Shares are
offered at net asset value to these investors for the purpose of promoting
goodwill with employees and others with whom Lord Abbett Distributor and/or the
fund has business relationships.
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 fund to carry out the order. The signature(s) and
any legal capacity of the signer(s) must be guaranteed by an eligible guarantor.
See the prospectus for expedited redemption procedures.
The right to redeem and receive payment, as described in the prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Directors may authorize redemption of all of the shares in any
account in which there are fewer than 25 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least 6 month's 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.
Div-Move. Under the Div-Move service described in the prospectus, you can invest
the dividends paid on your account of any class into an existing account of the
same class in any other Eligible fund. The account must be either your account,
a joint account for you and your spouse, a single account for your spouse, or a
custodial account for your minor child under the age of 21. You should read the
prospectus of the other fund before investing.
Invest-A-Matic. The Invest-A-Matic method of investing in the fund and/or any
other Eligible fund is described in the Prospectus. To avail yourself of this
method you must complete the application form, selecting the time and amount of
your bank checking account withdrawals and the funds for investment, include a
voided, unsigned check and complete the bank authorization.
Systematic Withdrawal Plans. The Systematic Withdrawal Plan ("SWP") also is
described in the prospectus. You may establish a SWP if you own or purchase
uncertificated shares having a current offering price value of at least $10,000.
Lord Abbett prototype retirement plans have no such minimum. With respect to a
SWP for Class B shares, the CDSC will be waived for redemptions of 12% or less
per year. For redemptions over 12% per year, the CDSC will apply to the entire
redemption. Therefore, please contact the fund for assistance in minimizing the
CDSC in this situation. With respect to Class C shares, the CDSC will be waived
on and after the first anniversary of their purchase. The SWP involves the
planned redemption of shares on a periodic basis by receiving either fixed or
variable amounts
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at periodic intervals. Since the value of shares redeemed may be more or less
than their cost, gain or loss may be recognized for income tax purposes on each
periodic payment. Normally, you may not make regular investments at the same
time you are receiving systematic withdrawal payments because it is not in your
interest to pay a sales charge on new investments when in effect a portion of
that new investment is soon withdrawn. The minimum investment accepted while a
withdrawal plan is in effect is $1,000. The SWP may be terminated by you or by
us at any time by written notice.
Retirement Plans. The prospectus indicates the types of retirement plans for
which Lord Abbett provides forms and explanations. Lord Abbett makes available
the retirement plan forms, including 401(k) plans and custodial agreements for
IRAs (Individual Retirement Accounts, including SIMPLE IRAs and Simplified
Employee Pensions), 403(b) plans and qualified pension and profit-sharing plans.
The forms name Investors Fiduciary Trust Company as custodian except in the case
of 401 (k) plans and contain specific information about the plans. Explanations
of the eligibility requirements, annual custodial fees and allowable tax
advantages and penalties are set forth in the relevant plan documents. Adoption
of any of these plans should be on the advice of your legal counsel or qualified
tax adviser.
6.
Past Performance
Each fund computes the average annual compounded rate of total return for each
Class of 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 deduction of the maximum sales charge from the amount
invested and reinvestment of all income dividends and capital gains
distributions on the reinvestment dates at prices calculated as stated in the
prospectus. The ending redeemable value is determined by assuming a complete
redemption at the end of the period(s) covered by the average annual total
return computation.
In calculating total returns for Class A shares, the current maximum sales
charge of 5.75% in the case of the Equity fund and 4.75% in the case of the
Income fund (as a percentage of the offering price) is deducted from the initial
investment (unless the return is shown at net asset value). For Class B shares
of each fund, the payment of the applicable CDSC (5.0% prior to the first
anniversary of purchase, 4.0% prior to the second anniversary of purchase, 3.0%
prior to the third and fourth anniversaries of purchase, 2.0% prior to the fifth
anniversary of purchase, 1.0% prior to the sixth anniversary of purchase and no
CDSC on and after the sixth anniversary of purchase) is applied to each Series'
investment result for that class for the time period shown (unless the total
return is shown at net asset value). For Class C shares of each fund, the 1.0%
CDSC is applied to each fund' investment result for that class for the time
period shown prior to the first anniversary of purchase (unless the total 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.
Using the computation method described above, the funds' average annual
compounded rates of total return for the last one-, five-year and
life-of-the-funds' period ending on December 31, 1998 for the Equity fund were
as follows: ------%, ----- % and -----% for the funds' Class A shares,
respectively. For the funds' Class B shares, the average annual compounded rates
of total return for the last one-year period and life-of-the-fund period ending
on December 31, 1998 were: ----% and -----%, respectively. For the funds' Class
C shares, the average annual compounded rates of total return for the last
one-year period and life-of-the-funds period ending on December 31, 1998 were:
- - ----% and ----%, respectively.
Using the computation method described above, the funds' average annual
compounded rates of total return for the last one-, three- and five-year period
and life-of-the-fund period ending on December 31, 1998 for the Income fund were
as follows: .-----%, -----% and -----% for the funds' Class A shares,
respectively. For the funds' Class B shares, the average annual compounded rates
of total return for the last one-year period and life-of-the-funds period ending
on December 31, 1998 were: -----% and -----%, respectively. For the funds' Class
C shares, the average annual compounded rates of total return for the last
one-year period and life-of-the-funds period ending on December 31, 1998 were:
- - ------% and ------%, respectively.
Our yield quotation is based on a 30-day period ended on a specified date,
computed by dividing our net investment income per share earned during the
period by our maximum offering price per share on the last day of the period.
This is determined by finding the following quotient: take each funds' dividends
and interest earned during the period minus its expenses accrued for the period
and divide by the product of (i) the average daily number of such funds' shares
outstanding during the period that were entitled to receive dividends and (ii)
such funds' maximum offering price per share on the last day of the period. To
this quotient add one. This sum is multiplied by itself five times. Then one is
subtracted from the product of this multiplication and the remainder is
multiplied by two. Yield for the Class A shares reflects the deduction of the
maximum initial sales charge, but may also be shown based on such funds' net
asset value per share. Yields for Class B and C shares do not reflect the
deduction of the CDSC. For the 30-day period ended December 31, 1998, the yield
for the Class A, B and C shares of the Income fund were ------%, -----% and
- - -----%, respectively.
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These figures represent past performance, and an investor should be aware that
the investment return and principal value of an investment in the fund will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost. Therefore, there is no assurance that this performance
will be repeated in the future.
7.
Taxes
The value of any shares redeemed by a fund or repurchased or otherwise sold may
be more or less than a shareholder's tax basis in the shares at the time the
redemption, repurchase or sale is made. Any gain or loss will generally be
taxable for federal income tax purposes. Any loss realized on the sale,
redemption or repurchase of fund shares which a shareholder has 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 were received with respect
to such shares. Losses on the sale of stock or securities are not deductible if,
within a period beginning 30 days before the date of the sale and ending 30 days
after the date of the sale, the taxpayer acquires stock or securities that are
substantially identical.
Each fund will be subject to a 4% non-deductible excise tax on certain amounts
not distributed (and not treated as having been distributed) on a timely basis
in accordance with a calendar year distribution requirement. Each fund intends
to distribute to shareholders each year an amount adequate to avoid the
imposition of such excise tax.
Dividends paid by the fund will qualify for the dividends-received deduction for
corporations to the extent that they are derived from dividends paid by domestic
corporations.
As described in the prospectus, the fund may be subject to withholding taxes and
other taxes imposed by foreign countries. If, at the close of any fiscal year,
more than 50% of the assets of either of the funds consist of stock or
securities of foreign corporations, such funds may elect to treat foreign income
taxes paid by the funds as having been paid directly by its shareholders. If a
fund qualifies for and makes such an election, the shareholders of such fund
will be required to (i) include in ordinary gross income (in addition to taxable
dividends actually received) their pro rata share of foreign income taxes paid
by such fund and (ii) treat such pro rata share as foreign income taxes paid by
them. Such shareholders may then use such pro rata portion of foreign income
taxes as foreign tax credits, subject to applicable limitations, or,
alternatively, deduct them in computing their taxable income. Shareholders who
do not itemize deductions for federal income tax purposes will not be entitled
to deduct their pro rata portion of foreign taxes paid by a fund, although such
shareholders will be required to include their share of such taxes in gross
income. Shareholders who claim a foreign tax credit for foreign taxes paid by a
fund may be required to treat a portion of dividends received from such fund as
separate category income for purposes of computing the limitations on the
foreign tax credit. Tax-exempt shareholders will ordinarily not benefit from
this election. Each year that a fund qualifies for and makes the election
described above, its shareholders will be notified of the amount of (i) each
shareholder's pro rata share of foreign income taxes paid by such fund and (ii)
the portion of dividends which represents income from each foreign country.
Forward foreign currency contracts, foreign currency put and call options and
other investment techniques and practices which the fund may utilize, as
described above under "Investment Objectives and Policies," may create
"straddles" for
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United States federal income tax purposes and may affect the character and
timing of the recognition of gains and losses by a fund. Such hedging
transactions may increase the amount of short-term capital gain realized by such
fund, which is taxed as ordinary income when distributed to shareholders'.
Limitations imposed by the Internal Revenue Code on regulated investment
companies may restrict each fund' ability to engage in transactions in options
and forward contracts.
Gains and losses 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 purchases shares in certain foreign investment entities, called
"passive foreign investment companies," that fund may be subject to United
States federal income tax on a portion of any "excess distribution" or gain from
the disposition of such shares, even if such income is distributed as a taxable
dividend by the fund to its shareholders. Additional charges in the nature of
interest may be imposed on either the fund or its shareholders with respect to
deferred taxes arising from such distributions or gains. If the funds' were to
invest in a passive foreign investment company with respect to which the funds'
elected to make a "qualified electing fund" election, in lieu of the foregoing
requirements, the fund might be required to include in income each year a
portion of the ordinary earnings and net capital gains of the qualified electing
fund, even if such amount were not distributed to the fund.
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 to non-United States
persons who own fund shares.
8.
Information About the fund
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment accounts. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the funds' Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security 7 days
before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account
considers a trade or trades in such security, from profiting on trades of the
same security within 60 days and from trading on material and non-public
information. The Code imposes certain similar requirements and restrictions on
the independent directors and trustees of each Lord Abbett-sponsored mutual fund
to the extent contemplated by the recommendations of the Advisory Group.
9.
Financial Statements
The financial statements for the fiscal year ended December 31, 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
Global 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.
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Appendix
Moody's Investors Service, Inc.'s Corporate Bond Ratings
Aaa - Bonds which are rated Aaa are judged to be of the best quality and carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are unlikely to impair the fundamentally strong position of such
issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance and
other terms of the contract over any long period of time may be small.
Caa - Bonds that are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds that are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C - Bonds that are rated C are the lowest-rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Standard & Poor's Corporation's Corporate Bond Ratings
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong and in the majority of instances they
differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
22
<PAGE>
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
BB-B-0CCC-CC-C - Debt rated BB, B, CCC, CC and C is regarded as having
predominately speculative characteristics with respect to capacity to pay
interest and repay principal. 'BB' indicates the least degree of speculation and
'CCC' the highest. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
D - Debt rated 'D' is in payment default. The 'D' rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes such payments will
be made during such grace period. The 'D' rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
23
<PAGE>
PART C OTHER INFORMATION
Item 23. Exhibits
(a) Articles of Incorporation. Incorporated by reference to
Post-Effective Amendment No. 7 to the Registration Statement on Form
N-1A filed on May 27, 1995. .Articles of Amendment. Incorporated by
reference to Post-Effective Amendment No. 9 to the Registration
Statement on Form N-1A filed on July 11, 1996.
(b) By-Laws.
(c) Instruments Defining Rights of Security Holders. Incorporated by
reference.
(d) Investment Advisory Contracts. Incorporated by reference.
(e) Underwriting Contracts. Incorporated by reference.
(f) Bonus or Porfit Sharing Incorporated by reference to Post-Effective
Amendment No. 10 to the Registration Statement on Form N-1A filed on
April 30, 1997..
(g) Custodian Agreements.. Incorporated by reference.
(h) Other Material Contracts. Incorporated by reference.
(i) Legal Opinions. Incorporated by reference.
(j) Other Opinions. Incorporated by reference.
(k) Omitted Financial Statements. Incorporated by reference.
(l) Initial Capital Agreements. Incorporated by reference.
(m) Rule 12b-1 Plan. Incorporated by reference to Post-Effective
Amendment No. 10 to the Registration Statement on Form N-1A filed on
April 30, 1997.
(n) Financial Data Schedule.
(o) Rule 18f-3 Plan. Incorporated by reference to Post-Effective
Amendment No. 11 to the Registration Statement on Form N-1A filed on
April 30, 1998.
Item 24. Persons Controlled by or Under Common Control with the Fund.
None.
Item 25. Indemnification
Registrant is incorporated under the laws of the State of Maryland
and is subject to Section 2-418 of the Corporations and Associations
Article of the Annotated Code of the State of Maryland controlling
the indemnification of directors and officers. Since Registrant has
its executive offices in the State of New York, and is qualified as
a foreign corporation doing business in such State, the persons
covered by the foregoing statute may also be entitled to and subject
to the limitations of the indemnification provisions of Section
721-726 of the New York Business Corporation Law.
The general effect of these statutes is to protect officers,
directors and employees of Registrant against legal liability and
expenses incurred by reason of their positions with the Registrant.
The statutes provide for indemnification for liability for
proceedings not brought on behalf of the corporation and for those
brought on behalf of the corporation, and in each case place
conditions under which indemnification will be permitted, including
requirements that the officer, director or employee acted in good
faith. Under certain conditions, payment of expenses in advance of
final disposition may be permitted. The By-Laws of Registrant,
without limiting the authority of Registrant to indemnify any of its
officers, employees or agents to the extent consistent with
applicable law, makes the indemnification of its directors mandatory
subject only to the conditions and limitations imposed by the
above-mentioned Section 2-418 of Maryland Law and by the provisions
of Section 17(h) of the Investment Company Act of 1940 as
interpreted and required to be implemented by SEC Release No.
IC-11330 of September 4, 1980.
In referring in its By-Laws to, and making indemnification of
directors subject to the conditions and limitations of, both Section
2-418 of the Maryland Law and Section 17(h) of the Investment
Company Act
1
<PAGE>
of 1940, Registrant intends that conditions and limitations on the
extent of the indemnification of directors imposed by the provisions
of either Section 2-418 or Section 17(h) shall apply and that any
inconsistency between the two will be resolved by applying the
provisions of said Section 17(h) if the condition or limitation
imposed by Section 17(h) is the more stringent. In referring in its
By-Laws to SEC Release No. IC-11330 as the source for interpretation
and implementation of said Section 17(h), Registrant understands
that it would be required under its By-Laws to use reasonable and
fair means in determining whether indemnification of a director
should be made and undertakes to use either (1) a final decision on
the merits by a court or other body before whom the proceeding was
brought that the person to be indemnified ("indemnitee") was not
liable to Registrant or to its security holders by reason of willful
malfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office ("disabling
conduct") or (2) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the indemnitee
was not liable by reason of such disabling conduct, by (a) the vote
of a majority of a quorum of directors who are neither "interested
persons" (as defined in the 1940 Act) of Registrant nor parties to
the proceeding, or (b) an independent legal counsel in a written
opinion. Also, Registrant will make advances of attorneys' fees or
other expenses incurred by a director in his defense only if (in
addition to his undertaking to repay the advance if he is not
ultimately entitled to indemnification) (1) the indemnitee provides
a security for his undertaking, (2) Registrant shall be insured
against losses arising by reason of any lawful advances, or (3) a
majority of a quorum of the non- interested, non-party directors of
Registrant, or an independent legal counsel in a written opinion,
shall determine, based on a review of readily available facts, that
there is reason to believe that the indemnitee ultimately will be
found entitled to indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expense incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
In addition, Registrant maintains a directors' and officers' errors
and omissions liability insurance policy protecting directors and
officers against liability for breach of duty, negligent act, error
or omission committed in their capacity as directors or officers.
The policy contains certain exclusions, among which is exclusion
from coverage for active or deliberate dishonest or fraudulent acts
and exclusion for fines or penalties imposed by law or other matters
deemed uninsurable.
Item 26. Business and Other Connections of Investment Adviser
Lord, Abbett & Co. acts as investment advisor for twelve, other
open-end investment companies (of which it is principal underwriter
for thirteen) and as investment adviser to approximately 6,220
private accounts. Other than acting as directors and/or officers of
open-end investment companies managed by Lord, Abbett & Co., none of
Lord, Abbett & Co.'s partners has, in the past two fiscal years,
engaged in any other business, profession, vocation or employment of
a substantial nature for his own account or in the capacity of
director, officer, employee, partner or trustee of any entity.
Item 27. Principal Underwriter
(a) Lord Abbett Affiliated Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
2
<PAGE>
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett U.S. Government Securities Money Market Fund, Inc.
Lord Abbett Series Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Tax-Free Income Trust
Lord Abbett Securities Trust
Lord Abbett Investment Trust
Lord Abbett Research Fund, Inc.
Investment Adviser
American Skandia Trust (Lord Abbett Growth and Income Portfolio)
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
Business Address(1) with Registrant
------------------- ---------------
Robert S. Dow Chairman and President
Zane E. Brown Executive Vice President
Paul A. Hilstad Vice President & Secretary
Daniel E. Carper Vice President
Robert G. Morris Vice President
John J. Walsh Vice President
The other partners who are neither officers nor directors of the
Fund are, as follows: Stephen Allen, Daria L. Foster, W. Thomas
Hudson, Michael B. McLaughlin and Robert J. Noelke.
Each of the above has a principal business address at 767 Fifth
Avenue, New York, NY 10153
(c) Not applicable
Item 28. Location of Accounts and Records
Registrant maintains the records required by Rules 31a - 1(a) and
(b) and 31a - 2(a) at its main office.
Lord, Abbett & Co. maintains the records required by Rules 31a -
1(f) and 31a - 2(e) at its main office.
Certain records such as canceled stock certificates and
correspondence may be physically maintained at the main office of
the Registrant's Transfer Agent, Custodian, or Shareholder Servicing
Agent within the requirements of Rule 31a-3.
Item 29. Management Services
None
Item 30. Undertakings
The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
3
<PAGE>
The registrant undertakes, if requested to do so by the holders of
at least 10% of the registrant's outstanding shares, to call a
meeting of shareholders for the purpose of voting upon the question
of removal of a director or directors and to assist in
communications with other shareholders as required by Section 16(c).
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant had duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, and State of New York on the 1st day of
March, 1999.
BY: /s/ Thomas F. Konop
-------------------
Thomas F. Konop
Vice President
LORD ABBETT GLOBAL FUND, INC.
5
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below on this Amendment to the
Registration Statement hereby constitutes and appoints Paul A. Hilstad, Lawrence
H. Kaplan and Thomas F. Konop, each of them, with full power to act without the
other, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (until revoked in writing) to sign any and all amendments
to this Registration Statement of each Fund enumerated on Exhibit A hereto
(including post-effective amendments and amendments thereto), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
- - ---------- ----- ----
Chairman, President
/s/ Robert S. Dow* and Director/Trustee March 1, 1999
- - -------------------------- -------------------- -----------------
Robert S. Dow
/s/ E. Thayer Bigelow* Director/Trustee March 1, 1999
- - --------------------------- ---------------- -----------------
E. Thayer Bigelow
/s/ William H. T. Bush* Director/Trustee March 1, 1999
- - --------------------------- ---------------- -----------------
William H. T. Bush
/s/ Robert B. Calhoun, Jr*. Director/Trustee March 1, 1999
- - --------------------------- ---------------- -----------------
Robert B. Calhoun, Jr.
/s/ Stewart S. Dixon* Director/Trustee March 1, 1999
- - --------------------------- ---------------- -----------------
Stewart S. Dixon
/s/ John C. Jansing* Director/Trustee March 1, 1999
- - --------------------------- ---------------- -----------------
John C. Jansing
/s/ C. Alan MacDonald* Director/Trustee March 1, 1999
- - --------------------------- ---------------- -----------------
C. Alan MacDonald
/s/ Hansel B. Millican, Jr*. Director/Trustee March 1, 1999
- - --------------------------- ---------------- -----------------
Hansel B. Millican, Jr.
/s/ Thomas J. Neff* Director/Trustee March 1, 1999
- - --------------------------- ---------------- -----------------
Thomas J. Neff
*BY: /s/ Thomas F. Konop
-------------------
Thomas F. Konop
Attorney-in-Fact
6
<PAGE>
EXHIBIT A
Lord Abbett Affiliated Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett Investment Trust
Lord Abbett Securities Trust
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Tax-Free Income Trust
Lord Abbett U.S. Government Securities Money Market Fund, Inc.
Lord Abbett Research Fund, Inc.
Lord Abbett Series Fund, Inc.
Lord Abbett Equity Fund, Inc.
7
<PAGE>
BY-LAWS
OF
LORD ABBETT GLOBAL FUND, INC.
ARTICLE I
OFFICES
Section 1. Principal Office. The principal office of the Corporation in
Maryland shall be in the City of Baltimore, and the name of the resident agent
in charge thereof is the Prentice-Hall Corporation Systems, Maryland.
Section 2. Other Offices. The Corporation may also have an office in the
City and State of New York and offices at such other places as the Board of
Directors from time to time determine.
ARTICLE II
STOCKHOLDERS MEETINGS
Section 1. Annual Meetings. The Corporation shall not hold an annual
meeting of its stockholders in any fiscal year of the Corporation unless
required in accordance with the following sentence. The Chairman of the Board or
the President shall call an annual meeting of the stockholders when the election
of directors is required to be acted on by stockholders under the Investment
Company Act of 1940, as amended, and the Chairman of the Board, the President, a
Vice President, the Secretary or any director shall call an annual meeting of
stockholders at the request in writing of a majority of the Board of Directors
or of stockholders holding at least one-quarter of the stock of the Corporation
outstanding and entitled to vote at the meeting. Any annual meeting of the
stockholders
<PAGE>
2
held pursuant to the foregoing sentence shall be held at such time and at such
place, within the City of New York or elsewhere, as may be fixed by the Chairman
of the Board or the President or the Board of Directors or by the stockholders
holding at least one-quarter of the stock of the Corporation outstanding and
entitled to vote, as the case may be, and as may be stated in the notice setting
forth such call, provided that any stockholders requesting such meeting shall
have paid to the Corporation the reasonably estimated cost of preparing and
mailing the notice thereof, which the Secretary shall determine and specify to
such stockholders. Any meeting of stockholders held in accordance with this
Section 1 shall for all purposes constitute the annual meeting of stockholders
for the fiscal year of the Corporation in which the meeting is held and, without
limiting the generality of the foregoing, shall be held for the purpose of (a)
acting on any such matter or matters so required to be acted on by stockholders
under the Investment Company Act of 1940, as amended, and (b) electing directors
to hold the offices of any directors who have held office for more than one year
or who have been elected by the Board of Directors to fill vacancies which
result from any cause, and for transacting such other business as may properly
be brought before the meeting. Only such business, in addition to that
prescribed by law, by the Articles of Incorporation and by these By-laws, may be
brought before such meeting as may be specified by resolution of the Board of
Directors or by writing filed with the Secretary of the Corporation and signed
by the Chairman of the Board or by the President or by a majority of the
directors
<PAGE>
3
or by stockholders holding at least one-quarter of the stock of the Corporation
outstanding and entitled to vote at the meeting.
Section 2. Special Meetings. Special meetings of the stockholders for any
purpose or purposes may be held upon call of the Chairman of the Board or by a
majority of the Board of Directors, and shall be called by the Chairman of the
Board, the President, a Vice President, the Secretary or any director at the
request in writing of a majority of the Board of Directors or of stockholders
holding at least one-quarter of the stock of the Corporation outstanding and
entitled to vote at the meeting, at such time and at such place where an annual
meeting of stockholders could be held, as may be fixed by the Chairman of the
Board, the President or the Board of Directors or by the stockholders holding at
least one-quarter of the stock of the Corporation outstanding and so entitled to
vote, as the case may be, and as may be stated in the notice setting forth such
call. Such request shall state the purpose or purposes of the proposed meeting,
and only such purpose or purposes so specified may properly be brought before
such meeting.
RESOLVED, that a paragraph be added to Section 2 of Article II of the
By-Laws of the Corporation, to read as follows:
"The Board of Directors shall promptly call a special meeting of the
stockholders of the Corporation for the purpose of voting upon the question of
removal of any director when requested in writing to do so by the record holders
of not loss than lot of the stock of the Corporation outstanding and entitled to
vote. Whenever ten or more stockholders of the Corporation, who have been
stockholders for at least six months and hold shares having a net asset value of
at least $25,000 or representing at least 1% of the outstanding stock of the
Corporation, shall state in writing their desire to communicate with other
stockholders with a view to obtaining signatures to request a meeting of
stockholders, accompanied by a form of the proposed communication, the Board of
<PAGE>
4
Directors shall, within five business days, either (i) give applicants access to
a list of the names and addresses of all stockholders of record or (ii) inform
then of the approximate number of stockholders of record and the approximate
cost of sailing such communication to such stockholders. If the Board of
Directors elects to follow the course specified in the foregoing clause (ii),
the board, upon the written request of such applicants, accompanied by a tender
of the material to be mailed and of the reasonable expenses of mailing, shall,
with reasonable promptness, mail such material to all stockholders of record at
their addresses as recorded on the books of the Corporation, unless within five
business days after such tender the Board of Directors shall mail to such ten or
more stockholders and file with the Securities and Exchange Commission, together
with a copy of the material to be mailed, a written statement signed by at least
a majority of the directors to the effect that in their opinion either such
material contains untrue statements of fact or omits to state facts necessary to
make the statements contained therein not misleading, or would be in violation
of applicable law, and specifying the basis of such opinion. If the Securities
and Exchange Commission enters an order refusing to sustain any such objections
or stating that all objections sustained have been met, the Board of Directors
shall mail copies of such materials to all stockholders of record with
reasonable promptness."
Section 3. Notice of Meetings. Written or printed notice of every annual
or special meeting of stockholders, stating the time and place thereof and the
general nature of the business proposed to be transacted at any such meeting,
shall be delivered personally or mailed not less than 10 or more than 90 days
previous thereto to each stockholder of record entitled to vote at the meeting
at his address as the same appears on the books of the Corporation. Meetings may
be held without notice if all of the stockholders entitled to vote are present
or represented at the meeting, or if notice is waived in writing, either before
or after the meeting, by those not present or represented at the meeting. No
notice of an adjourned meeting of the stockholders other than an announcement of
the time and place thereof at the preceding meeting shall be required.
<PAGE>
5
Section 4. Quorum. The presence in person or by proxy of the holders of a
third of the Shares of all Classes issued and outstanding and entitled to vote
thereat shall constitute a quorum for the transaction of any business at all
meetings of the shareholders except as otherwise provided by law or in the
Articles of Incorporation and except that where the holders of the Shares of any
Class are entitled to a separate vote as a Class (a "Separate Class") or where
the holders of Shares of two or more (but not all) Classes are required to vote
as a single Class (a "Combined Class"), the presence in person or by proxy of
the holders of a majority of the Shares of that Separate Class or Combined
Class, as the case may be, issued and outstanding and entitled to vote thereat
shall constitute a quorum for such vote. If, however, a quorum with respect to
all Classes, a Separate Class or a Combined Class, as the case may be, issued
and outstanding and entitled to vote thereat shall constitute a quorum for such
vote. If, however, a quorum with respect to all Classes, a Separate Class or a
Combined Class, as the case may be, shall not be present or represented at any
meeting of the shareholders, the holder of a majority of the Shares of all
Classes, such Separate Class of such Combined Class, as the case may be, present
in person or by proxy and entitled to vote shall have power to adjourn the
meeting from time to time as to all Classes, such Separate Class or such
Combined Class, as the case may be, without notice other than announcement at
the meeting, until the requisite number of Shares entitled to vote at such
meeting shall be present. At such adjourned meeting at which the requisite
number of Shares entitled to
<PAGE>
6
vote thereat shall be represented any business may be transacted at the meeting
as originally notified. The absence from any meeting of stockholders of the
number of Shares in excess of a majority of the Shares of all Classes or of the
affected Class or Classes, as the case may be, which may be required by laws of
the State of Maryland, the Investment Company Act of 1940 or any other
applicable law or the Articles of Incorporation, for action upon any given
matter shall not prevent action of such meeting upon any other matter or matters
which may properly come before the meeting, if there shall be present thereat,
in person or by proxy, holders of the number of Shares required for action in
respect of such matter or matters.
Section 5. Voting. All elections shall be had and all questions decided by
a majority of the votes cast, without regard to Class, at a duly constituted
meeting, except as otherwise provided by law or by the Articles of Incorporation
or by these By-laws and except that with respect to a question as to which the
holders of Shares of any Class or Classes are entitled or required to vote as a
Separate Class or a Combined Class, as the case may be, such question shall be
decided as to such Separate Class or such Combined Class, as the case may be, by
a majority of the votes cast by Shares of such Separate Class or such Combined
Class, as the case may be.
With respect to all Shares having voting rights (a) a shareholder may
vote the Shares owned of record by him either in person or by proxy executed in
writing by the
<PAGE>
7
shareholder or by his duly authorized attorney-in-fact, provided that no proxy
shall be valid after eleven months from its date unless otherwise provided in
the proxy and (b) in all elections for directors every shareholder shall have
the right to vote, in person or by proxy, the Shares owned of record by him, for
as many persons as there are directors to be elected and for whose election he
has a right to vote.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, provided, however, that
the Board of Directors may authorize the Corporation to enter into an agreement
or agreements with any person, corporation, association, partnership or other
organization, subject to the Board's supervision and control, for the purpose of
providing managerial, investment advisory and related services to the
Corporation which may include management or supervision of the investment
portfolio of the Corporation.
Section 2. Number, Class Quorum, Election, Term of Office and
Qualifications. The Board of Directors of the Corporation shall consist of not
less than three or more than fifteen persons, none of whom need be stockholders
of the Corporation. The number of directors (within the above limits) shall be
determined by the Board of Directors
<PAGE>
8
elected from time to time, as it sees fit, by vote of a majority of the whole
Board. Directors elected shall consist of one class only. The directors shall be
elected at each annual meeting of stockholders and, whether or not elected for a
specific term, shall hold office, unless sooner removed, until their respective
successors are elected and qualify. One-third of the whole Board, but in no
event less than two, shall constitute a quorum for the transaction of business,
but if at any meeting of the Board there shall be less than a quorum present, a
majority of the directors present may adjourn the meeting from time to time
until a quorum shall have been obtained, when any business may be transacted
which might have been transacted at a meeting as originally convened. No notice
of an adjourned meeting of the directors other than an announcement of the time
and place thereof at the preceding meeting shall be required. The acts of the
majority of the directors present at any meeting at which there is a quorum
shall be the acts of the Board, except as otherwise provided by law, by the
Articles of Incorporation or by these By-laws.
Section 3. Vacancies. The Board of Directors, by vote of a majority of the
whole Board, may elect directors to fill vacancies in the Board resulting from
an increase in the number of directors or from any other cause. Directors so
chosen shall hold office until their respective successors are elected and
qualify, unless sooner displaced pursuant to law or by these By-laws. The
stockholders, at any meeting called for the purpose, may, with or without cause,
remove any director by the affirmative vote of the holders of
<PAGE>
9
a majority of the votes entitled to be cast, and at any meeting called for the
purpose may fill the vacancy in the Board thus caused.
Section 4. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such time and place, within or without the State of Maryland,
as may from time to time be fixed by Resolution of the Board or as may be
specified in the notice of any meeting. No notice of regular meetings of the
Board shall be required except as required by the Investment Company Act of
1940, as amended.
Section 5. Special Meetings. Special meetings of the Board of Directors
may be called from time to time by the Chairman of the Board, the President, any
Vice President or any two directors. Each special meeting of the Board shall be
held at such place, either within or outside the State of Maryland, as shall be
designated in the notice of such meeting. Notice of each such meeting shall be
mailed to each director, at his residence or usual place of business, at least
two days before the day of the meeting, or shall be directed to him at such
place by telegraph or cable, or be delivered to him personally not later than
the day before the day of the meeting. Every such notice shall state the time
and place of the meeting but need not state the purposes thereof, except as
otherwise expressly provided in these By-laws or by statute.
Section 6. Telephonic Conference Meetings. Any meeting of the Board or any
committee thereof may be held by conference telephone, regardless where each
director may be located at the time, by means of which all persons participating
in the meeting
<PAGE>
10
can hear each other, and participation in such meeting in such manner shall
constitute presence in person at such meeting, except where the Investment
Company Act of 1940, as amended, specifically requires that the vote of such
director be cast in person.
Section 7. Fees and Expenses. The directors shall receive such fees and
expenses for services to the Corporation as may be fixed by the Board of
Directors, subject however, to such limitations as may be provided in the
Articles of Incorporation. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity as an
officer, agent or otherwise and receiving compensation therefor.
Section 8. Transactions with Directors. Except as otherwise provided by
law or in the Articles of Incorporation, a director of the Corporation shall not
in the absence of fraud be disqualified from office by dealing or contracting
with the Corporation either as a vendor, purchaser or otherwise, nor in the
absence of fraud shall any transaction or contract of the Corporation be void or
voidable or affected by reason of the fact that any director, or any firm of
which any director is a member, or any corporation of which any director is an
officer, director or stockholder, is in any way interested in such transaction
or contract; provided that at the meeting of the Board of Directors, at which
said contract or transaction is authorized or confirmed, the existence of an
interest of such director, firm or corporation is disclosed or made known and
there shall be present a quorum of the
<PAGE>
11
Board of Directors a majority of which, consisting of directors not so
interested, shall approve such contract or transaction. Nor shall any director
be liable to account to the Corporation for any profit realized by him from or
through any such transaction or contract of the Corporation ratified or approved
as aforesaid, by reason of the fact that he or any firm of which he is a member,
or any corporation of which he is an officer, director, or stockholder was
interested in such transaction or contract. Directors so interested may be
counted when present at meetings of the Board of Directors for the purpose of
determining the existence of a quorum. Any contract, transaction or act of the
Corporation or of the Board of Directors (whether or not approved or ratified as
hereinabove provided) which shall be ratified by a majority of the votes cast at
any annual or special meeting at which a quorum is present called for such
purpose, or approved in writing by a majority in interest of the stockholders
having voting power without a meeting, shall, except as otherwise provided by
law, be valid and as binding as though ratified by every stockholder of the
Corporation.
Section 9. Committees. The Board of Directors may, by resolution adopted
by a majority of the whole Board, designate one or more committees each such
committee to consist of two or more directors of the Corporation, which, to the
extent permitted by law and provided in said resolution, shall have and may
exercise the powers of the Board over the business and affairs of the
Corporation, and may have power to authorize the seal of the Corporation to be
affixed to all papers which may require it. Such committee or
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committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors. A majority of the members of
any such committee may determine its action and fix the time and place of its
meetings, unless the Board of Directors shall otherwise provide. The Board of
Directors shall have power at any time to change the membership of, to fill
vacancies in, or to dissolve any such committee.
Section 10. Written Consents. Any action required or permitted to be taken
at any meeting of the Board of Directors or by any committee thereof may be
taken without a meeting, if a written consent thereto is signed by all members
of the Board or of such committee, as the case may be, and such written consent
is filed with the minutes or proceedings of the Board or committee.
Section 11. Waiver of Notice. Whenever under the provisions of these
By-laws, or of the Articles of Incorporation, or of any of the laws of the State
of Maryland, or other applicable statute, the Board of Directors is authorized
to hold any meeting or take any action after notice or after the lapse of any
prescribed period of time, a waiver thereof, in writing, signed by the person or
persons entitled to such notice or lapse of time, whether before or after the
time of meeting or action stated herein, shall be deemed equivalent
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thereto. The presence at any meeting of a person or persons entitled to notice
thereof shall be deemed a waiver of such notice as to such person or persons.
ARTICLE IV
OFFICERS
Section 1. Number and Designation. The Board of Directors shall each year
appoint from among their members a Chairman and a President of the Corporation,
and shall appoint one or more Vice Presidents, a Secretary and a Treasurer and,
from time to time, any other officers and agents as it may deem proper. Any two
of the above-mentioned offices, except those of the President and a Vice
President, may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity if such
instrument may be required by law or by these By-laws to be executed,
acknowledged or verified by any two or more officers.
Section 2. Term of Office. The term of office of all officers shall be one
year or until their respective successors are chosen; but any officer or agent
chosen or appointed by the Board of Directors may be removed, with or without
cause, at any time, by the affirmative vote of a majority of the members of the
Board then in office.
Section 3. Duties. Subject to such limitations as the Board of Directors
may from time to time prescribe, the officers of the Corporation shall each have
such powers
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and duties as generally appertain to their respective offices, as
well as such powers and duties as from time to time may be conferred by the
Board of Directors.
ARTICLE V
CERTIFICATE OF STOCK
Section 1. Form and Issuance. Each stockholder of the Corporation, of a
particular Class, shall be entitled upon request, to a certificate or
certificates, in such form as the Board of Directors may from time to time
prescribe, which shall represent and certify the number of shares of stock of
the Corporation of that Class of stock owned by such stockholder. The
certificates for shares of stock of the Corporation shall bear the signature,
either manual or facsimile, of the Chairman of the Board, the President or a
Vice President and the Treasurer or an Assistant Treasurer or the Secretary or
an Assistant Secretary, and shall be sealed with the seal of the Corporation or
bear a facsimile of such seal. The validity of any stock certificate shall not
be affected if any officer whose signature appears thereon ceases to be an
officer of the Corporation before such certificate is issued.
Section 2. Transfer of Stock. The shares of stock of the Corporation shall
be transferable on the books of the Corporation by the holder thereof in person
or by a duly authorized attorney, upon surrender for cancellation of a
certificate or certificates for a like number of shares, with a duly executed
assignment and power of transfer endorsed
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thereon or attached thereto, or, if no certificate has been issued to the holder
in respect of shares of stock of the Corporation, upon receipt of written
instructions, signed by such holder, to transfer such shares from the account
maintained in the name of such holder by the Corporation or its agent. Such
proof for the authenticity of the signatures as the Corporation or its agent may
reasonable require shall be provided.
Section 3. Lost, Stolen, Destroyed and Mutilated Certificates. The holder
of any stock of the Corporation shall immediately notify the Corporation of any
loss, theft, destruction or mutilation of any certificate therefore, and the
Board of Directors may, in its discretion, cause to be issued to him a new
certificate or certificates of stock of the same Class, upon the surrender of
the mutilated certificate or in the case of loss, theft or destruction of the
certificate upon satisfactory proof of such loss, theft, or destruction; and the
Board of Directors may, in its discretion, require the owner of the lost, stolen
or destroyed certificate, or his legal representatives, to give to the
Corporation and to such registrar or transfer agent as may be authorized or
required to countersign such new certificate or certificates a bond, in such sum
as they may direct, as indemnity against any claim that may be made against them
or any of them on account of or in connection with the alleged loss, theft, or
destruction of any such certificates.
Section 4. Record Date. The Board of Directors may fix, in advance, a date
as the record date for the purpose of determining stockholders, of any Class,
entitled to
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notice of, or vote at, any meeting of stockholders of any Class, or stockholders
of any Class for any other proper purpose. Such date, in any case, shall be not
more than 90 days, and in case of a meeting of stockholders, not less than 10
days, prior to the date on which the particular action requiring such
determination of stockholders is to be taken. In lieu of fixing a record date,
the Board of Directors may provide that the stock transfer books shall be closed
for a stated period but not to exceed, in any case, 20 days prior to the date of
any meeting of stockholders or the date for payment of any dividend or the
allotment of rights. If the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of or to vote at a meeting of
stockholders or the date for payment of any dividend or the allotment of rights.
If the stock transfer books are closed for the purpose of determining
stockholders entitled to notice of or to vote at a meeting of stockholders, such
books shall be closed for at least 10 days immediately preceding such meeting.
If no record date is for the determination of stockholders entitled to notice
of, or to vote at, a meeting of stockholders shall be at the close of business
on the day on which
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notice of and with such surety or sureties, as the meeting is mailed or the day
30 days before the meetings, whichever is the closer date to the meeting, and
the record date for the determination of stockholders entitled to receive
payment of a dividend or an allotment of any rights shall be at the close of
business on the day on which the resolution of the Board of Directors declaring
the dividend or allotment of rights is adopted, provided that the payment or
allotment date shall not be more than 90 days after the date of the adoption of
such resolution.
ARTICLE VI
CORPORATE BOOKS
The books of the Corporation, except the original or a duplicate stock
ledger, may be kept outside the State of Maryland at such place or places as the
Board of Directors may from time to time determine. The original or duplicate
stock ledger shall be maintained at the office of the Corporation's transfer
agent.
ARTICLE VII
SIGNATURES
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Except as otherwise provided in these By-laws or as the Board of Directors
may generally or in particular cases authorize the execution thereof, in some
other manner, all deeds, leases, transfers, contracts, bonds, notes, checks,
drafts and other obligations made, accepted or endorsed by the Corporation and
all endorsements, assignments, transfers, stock powers or other instruments of
transfer of securities owned by or standing in the name of the Corporation shall
be signed or executed by two officers of the Corporation, who shall be the
Chairman, the President or a Vice President and a Vice President, the Secretary
or the Treasurer.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Corporation shall be established by resolution of
the Board of Directors of the Corporation.
ARTICLE IX
CORPORATE SEAL
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The corporate seal of the Corporation shall consist of a flat faced
circular die with the word "Maryland" together with the name of the Corporation,
the year of its organization, and such other appropriate legend as the Board of
Directors may from time to time determine, cut or engraved thereon. In lieu of
the corporate seal, when so authorized by the Board of Directors or a duly
empowered committee thereof, a facsimile thereof may be impressed or affixed or
reproduced.
ARTICLE X
INDEMNIFICATION
As part of the consideration for agreeing to serve and serving as a
director of the Corporation, each director of the Corporation shall be
indemnified by the Corporation against every judgement, penalty, fine,
settlement, and reasonable expense (including attorneys' fees) actually incurred
by the director in connection with any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, in
which the director was, is, or is threatened to be made a named defendant
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or respondent (or otherwise becomes a party) by reason of such director's
service in that capacity or status as such, and the amount of every such
judgement, penalty, fine, settlement and reasonable expense so incurred by the
director shall be paid by the Corporation or, if paid by the director,
reimbursed to the director by the Corporation, subject only to the conditions
and limitations imposed by the applicable provisions of Section 2-418 of the
Corporations and Associations Article of the Annotated Code of the State of
Maryland and by the provisions of Section 17(h) of the United States Investment
Company Act of 1940 as interpreted and as required to be implemented by
Securities and Exchange Commission Release No. IC-1330 of September 4, 1980. The
foregoing shall not limit the authority of the Corporation to indemnify any of
its officers, employees or agents to the extent consistent with applicable law.
ARTICLE XI
AMENDMENT
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All By-Laws of the Corporation shall be subject to alteration, amendment,
or repeal, and new By-Laws not inconsistent with any provision of the Articles
of Incorporation of the Corporation may be made, either by the affirmative vote
of the holders of record of a majority of the outstanding stock of the
Corporation entitled to vote in respect thereof, given at an annual meeting or
at any special meeting, provided notice of the proposed alteration, amendment,
or repeal of the proposed By-Laws is included in or accompanies the notice of
such meeting, or by the affirmative vote of a majority of the whole Board of
Directors given at a regular or special meeting of the Board of Directors,
provided that the notice of any such special meeting indicates that the By-Laws
are to be altered, amended, repealed, or that new By-Laws are to be adopted.
ARTICLE XII
COMPLIANCE WITH INVESTMENT COMPANY ACT OF 1940
Investment Company Act of 1940. No provision of the By-Laws of the
Corporation shall be given effect to the extent inconsistent with the
requirements of the Investment Company Act of 1940, as amended.
