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1933 Act File No. 33-47641
1940 Act File No. 811-6650
SECURITIES AND 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. 24 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Amendment No. 24 [X]
LORD ABBETT RESEARCH FUND
-------------------------
Exact Name of Registrant as Specified in Charter
767 FIFTH AVENUE, NEW YORK, N. Y. 10153-0203
--------------------------------------------
Address of Principal Executive Office
Registrant's Telephone Number (212) 848-1800
--------------------------------------------
Larence H. Kaplan, Vice President & Assistant Secretary
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)
_____60 days after filing pursuant to paragraph (a) (1)
__X__on May 1, 1999 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.
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LORD Affiliated Fund
ABBETT Growth Opportunities Fund
High Yield Fund
CLASS Y SHARES International Fund
PROSPECTUS Large-Cap Research Fund
MAY 1, 1999 Small-Cap Value Fund
</TABLE>
[LOGO]
As with all mutual funds, the Securities and Exchange Commission does not
guarantee that the information in this prospectus is accurate or complete, and
it has not judged these funds for investment merit. It is a criminal offense to
state otherwise.
Only class Y shares of the International Fund, the Small-Cap Value Fund and the
Large-Cap Research Fund are available in all states. Please call 800-821-5129
for further information.
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TABLE OF CONTENTS
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PAGE
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THE FUNDS
Information about past Affiliated Fund 2
performance, fees and expenses Growth Opportunities Fund 4
High Yield Fund 6
International Fund 8
Large-Cap Research Fund 10
Small-Cap Value Fund 12
YOUR INVESTMENT
Information for managing Purchases 14
your fund account Redemptions 15
Distributions and Taxes 15
Services For Fund Investors 16
Management 16
FOR MORE INFORMATION
How to learn more Other Investment Techniques 18
about the funds Glossary of Shaded Terms 22
Recent Performance 22
FINANCIAL INFORMATION
Financial highlights and/or Affiliated Fund 24
line graph comparisons Growth Opportunities Fund 26
of certain funds International Fund 27
Large-Cap Research Fund 29
Small-Cap Value Fund 30
How to learn more about the Back Cover
funds and other Lord Abbett funds
</TABLE>
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AFFILIATED FUND
<TABLE>
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GOAL/APPROACH
The fund's investment objective is long-term growth of capital and income WE OR THE FUND refers to Lord Abbett
without excessive fluctuations in market value. Typically, in choosing Affiliated Fund, Inc. (the "company"),
stocks, we look for companies using a three-step process. which operates under the supervision of
the company's Board with the advice of
QUANTITATIVE RESEARCH is performed on a universe of large, seasoned U.S. Lord, Abbett & Co. ("Lord Abbett"), its
and multi-national companies to identify those whose stocks we believe investment manager.
represent the best bargains.
ABOUT THE FUND. This fund is a
FUNDAMENTAL RESEARCH is conducted to assess a company's operating professionally managed portfolio
environment, resources and strategic plans, and to determine its primarily holding securities purchased
prospects for exceeding the earnings expectations reflected in with the pooled money of investors. It
its stock price. strives to reach its stated goal,
al-though as with all funds, it cannot
BUSINESS CYCLE ANALYSIS is used to assess the economic and interest-rate guarantee results.
sensitivity of our portfolio. This analysis helps us assess how adding
or deleting stocks changes our portfolio's overall sensitivity to LARGE COMPANIES are established
economic activity and interest rates. companies that are considered "known
quantities." Large com-panies often
We believe that investors purchase and redeem our shares to meet long-term have the resources to weather economic
financial objectives rather than to try to take advantage of short-term shifts, though they can be slower to
price fluctuations. If so, their needs are best served by an investment innovate than small companies.
seeking capital appreciation with less fluctuations in market value than
the Standard & Poor's Composite Index of 500 stocks ("S&P 500(R) Index"). SEASONED COMPANIES are usually
For this reason, we try to keep our assets invested in securities which established companies whose securities
are selling at reasonable prices and, therefore, we are willing to forego have gained a reputation for quality
some opportunities for gains when, in our judgment, they are too risky. with the investing public and enjoy
liquidity in the market.
We generally sell a stock when we think it is no longer a bargain, appears
less likely to benefit from the current market and economic environment, BARGAIN STOCKS are stocks of companies
shows deteriorating fundamentals or falls short of our expectations. that appear underpriced according to
certain financial measurements of their
While typically fully invested, at times we may take a temporary defensive intrinsic worth or business prospects.
position by investing some of our assets in short-term debt securities.
This could have the effect of reducing the benefit from any upswing in the SMALL-COMPANY STOCKS are stocks of
market and prevent the fund from realizing its investment objective. smaller companies which often are new
and less established, with a tendency
to be faster-growing but more volatile
MAIN RISKS than large company stocks.
While stocks have historically been a leading choice of long-term GROWTH STOCKS are stocks which exhibit
investors, they fluctuate in price. The value of your investment in the faster-than-average gains in earnings
fund will go up and down, which means that you could lose money. and are expected to continue profit
growth at a high level, but also tend
Our performance may sometimes be lower or higher than that of other types to be more volatile than bargain
of funds (such as those emphasizing small-company stocks or growth stocks) stocks.
because different types of stocks tend to shift in and out of favor
depending on market and economic conditions. While there is the risk that You should read this entire prospectus,
an investment may never reach what we think is its full value, or may go including "Other Investment
down in value, our emphasis on large, seasoned company bargain stocks Techniques," which concisely describes
could potentially limit our downside risk because bargain stocks in theory the other investment strategies and
are already underpriced and large, seasoned company stocks tend to be less their risks used by the fund.
volatile than small company stocks. In the long run, we may produce more
modest gains than riskier stock funds as a trade-off for this potentially
lower risk.
An investment in the fund is not a bank deposit. It is not FDIC-insured or
government-endorsed. It is not a complete investment program. You could
lose money in this fund, but you also have the potential to make money.
</TABLE>
2 The Funds
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AFFILIATED FUND
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PAST PERFORMANCE(i)
The information below provides some indication of the risks of
investing in the fund by 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.
[PERFORMANCE GRAPH] Past performance is not a prediction of
future results.
"89" 23.5% -------------------------------------------
"90" -5.2% (i) Because class Y shares are new, the
"91" 22.0% bar chart and table show returns for
"92" 12.4% class A shares. Returns for class Y
"93" 13.2% shares will be somewhat higher, because
"94" 4.1% class Y shares have lower expenses.
"95" 31.7%
"96" 20.1% (ii) Performance for the unmanaged S&P
"97" 25.2% 500'r' Index does not reflect
"98" 14.4% transaction costs or management
fees.
Best Quarter: 17.10% Worst Quarter: -12.57%
(iii) The date of inception of class A
shares is 1/1/50.
=========================================================================
The table below shows a comparison of the fund's class A average annual
total return to that of the S&P 500'r' Index. Fund returns assume
reinvestment of dividends and distributions and payment of the maximum
applicable front-end or deferred sales charge. All periods end on
December 31, 1998.
CLASS 1 YEAR 5 YEARS 10 YEARS INCEPTION(iii)
A(i) 7.90% 17.30% 14.97% 12.67%
- -------------------------------------------------------------------------
S&P 500'r' Index(ii) 28.74% 24.08% 19.20% --
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you MANAGEMENT FEES are payable to Lord
buy and hold shares of the fund. Abbett for the fund's investment
management.
=========================================================================
Fee table OTHER EXPENSES include fees paid for
========================================================================= miscellaneous items such as transfer
agency, legal and share registration
CLASS Y fees.
SHAREHOLDER FEES (Fees paid directly from your investment)
- -------------------------------------------------------------------------
Maximum Sales Charge on Purchases (as a % of offering price) none
- -------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases") none
- -------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from
fund assets) (as a % of average net assets)
- -------------------------------------------------------------------------
Management Fees (See "Management") 0.31%
- -------------------------------------------------------------------------
Other Expenses (See "Management") 0.09%
- -------------------------------------------------------------------------
Total Operating Expenses 0.40%
- -------------------------------------------------------------------------
=========================================================================
Expense example
=========================================================================
This example, like that in other funds' prospectuses, assumes a $10,000
initial investment, 5% total return each year and no changes in expenses.
You pay the following expenses over the course of each period shown if you
sell your shares at the end of the period, although your actual cost may
be higher or lower. You also would pay the same expenses, assuming you
kept your shares.
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class Y shares $41 $128 $224 $507
- -------------------------------------------------------------------------
This example is for comparison and is not a representation of the fund's
actual expenses or returns, either past or present.
</TABLE>
The Funds 3
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GROWTH OPPORTUNITIES FUND
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GOAL/APPROACH
The Growth Opportunities Fund seeks capital appreciation. Normally, we
invest primarily in equity securities of mid-sized companies. The fund
uses a growth style of investing. This means that we favor companies that
show the potential for stronger than expected earnings or growth. Under
normal circumstances, at least 65% of our total assets will consist of
investments made in growth stocks, as determined at the time of purchase. WE OR THE FUND refers to Lord
Abbett Growth Opportunities Fund, a
In making investments, we look for companies using the following process: portfolio of Lord Abbett Research
Fund, Inc. (the "company") which
QUANTITATIVE RESEARCH is performed on a universe of mid-sized companies operates under the supervision of
to identify those with superior growth possibilities. the company's Board with the advice
of Lord, Abbett & Co. ("Lord
FUNDAMENTAL RESEARCH is performed to identify companies likely to Abbett"), its investment manager.
produce superior returns over a thirty-six month time frame, by
analyzing the dynamics in each company within its industry ABOUT THE FUND. This fund is a
and within the economy. professionally managed portfolio
primarily holding securities
Before July 15, 1998, the fund used a value style of investing. This meant purchased with the pooled money of
that companies were selected without regard to current earnings under a investors. It strives to reach its
process that sought to identify and invest in undervalued securities. stated goal, although as with all
funds, it cannot guarantee results.
While typically fully invested, we may take a temporary defensive
position by investing some of our assets in short-term debt securities. GROWTH STOCKS are stocks which
This could reduce the benefit from any upswing in the market and prevent exhibit faster-than-average gains
the fund from realizing its investment objective. in earnings and are expected to
continue profit growth at a high
level, but also tend to be more
MAIN RISKS volatile than bargain stocks.
The value of your investment will fluctuate in response to stock market MID-SIZED COMPANIES usually have
movements. In addition, growth stocks tend to be more volatile than market capitalizations of roughly
slower-growing stocks. This means that the fund could be more volatile $500 million to $5 billion, but not
than the stock market as a whole. Also, the fund invests primarily in less than $50 million.
mid-sized companies. There will be periods where mid-sized companies do
not perform as well as large or small companies. You should read this entire
prospectus, including "Other
An investment in the fund is not a bank deposit. It is not FDIC-insured Investment Techniques," which
or government-endorsed. It is not a complete investment program. You concisely describes the other
could lose money in this fund, but you also have the potential to make investment strategies and their
money. risks used by the fund.
</TABLE>
4 The Funds
<PAGE>
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GROWTH OPPORTUNITIES FUND
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PAST PERFORMANCE(i)
The information below provides some indication of the risks of
investing in the fund by 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.
[PERFORMANCE GRAPH]
"96" 23.6% Past performance is not a
"97" 30.9% prediction of future results.
"98" 13.3% ---------------------------------
Best Quarter: 29.75% Worst Quarter: -20.70% (i) Because class Y shares are new,
================================================================================ the bar chart and table show
The table below shows a comparison of the fund's class A average annual returns for class A shares. Returns
total return to that of the Russell Mid-Cap Growth Index'r'. Fund returns for class Y shares will be somewhat
assume reinvestment of dividends and distributions and payment of the higher, because class Y shares have
maximum applicable front-end or deferred sales charge. All periods end on lower expenses.
December 31, 1998.
(ii) Performance for the unmanaged
CLASS 1 YEAR INCEPTION(iii) Russell Mid-Cap Growth Index'r'
A(i) 13.35% 21.59% does not reflect transaction costs
or management fees
- -------------------------------------------------------------------------------- (iii) The date of inception of
Russell Mid-Cap Growth Index'r'(ii) 17.86% 18.49%
- -------------------------------------------------------------------------------- (iii) The date of inception of
class A shares is 8/1/95.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you MANAGEMENT FEES are payable to Lord
buy and hold shares of the fund. Abbett for the fund's investment
management.
================================================================================
Fee table OTHER EXPENSES include fees paid
================================================================================ for miscellaneous items such as
CLASS Y transfer agency, legal and share
SHAREHOLDER FEES (Fees paid directly from your investment) registration fees.
- --------------------------------------------------------------------------
Maximum Sales Charge on Purchases (as a % of offering price) none Lord Abbett is currently waiving
- -------------------------------------------------------------------------- the management fee and subsidizing
Maximum Deferred Sales Charge (See "Purchases") none the other expenses of the Growth
- -------------------------------------------------------------------------- Opportunities Fund. Lord Abbett may
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from stop waiving the management fee and
fund assets) (as a % of average net assets) subsidizing other expenses at any
- -------------------------------------------------------------------------- time. Total operating expenses with
Management Fees (See "Management") 0.90% the fee waiver and expense subsidy
- -------------------------------------------------------------------------- for class Y shares are zero
Other Expenses (See "Management") 0.81% percent.
- --------------------------------------------------------------------------
Total Operating Expenses 1.71%
- ---------------------------------------------------------------------------
================================================================================
Expense example
================================================================================
This example, like that in other funds' prospectuses, assumes a $10,000 initial
investment, 5% total return each year and no changes in expenses. You pay the
following expenses over the course of each period shown if you sell your shares
at the end of the period, although your actual cost may be higher or lower. You
also would pay the same expenses, assuming you kept your shares.
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class Y shares $174 $538 $928 $2,022
- -------------------------------------------------------------------------
This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present.
</TABLE>
The Funds 5
<PAGE>
<PAGE>
HIGH YIELD FUND
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GOAL/APPROACH
The fund seeks high current income and the opportunity for capital
appreciation to produce a high total return. Normally, we invest in
lower-rated debt securities, some-times called "junk bonds," which entail
greater risks than investments in higher-rated debt securities. Also, the
fund may invest up to 10% of its assets in foreign securities.
We believe that a high total return (current income and capital
appreciation) may be derived from an actively managed, diversified WE OR THE FUND refers to Lord
security portfolio. Normally, at least 65% of our total assets are in Abbett High Yield Fund, Inc., a
lower-rated debt securities, some of which are convertible into common portfolio of Lord Abbett Securities
stock or have warrants to purchase common stock. We seek unusual values. Trust (the "company") which
In doing so, we use fundamental, bottoms-up research to identify operates under the supervision of
undervalued securities. the company's Board with the advice
of Lord, Abbett & Co. ("Lord
While typically fully invested, we may take a temporary defensive Abbett"), its investment manager.
position in cash and short-term debt securities. This could prevent the
fund from realizing its investment objective. ABOUT THE FUND. This fund is a
professionally managed portfolio
The fund may engage in active and frequent trading of its portfolio primarily holding securities
securities to achieve its principal investment objective and may have a purchased with the pooled money of
portfolio turnover rate greater than 100%. This turnover may increase investors. It strives to reach its
transaction costs, but is not expected to have adverse tax consequences. stated goal, although as with all
funds, it cannot guarantee results.
MAIN RISKS HIGH YIELD DEBT SECURITIES,
commonly known as "junk bonds,"
The lower-rated debt securities in which the fund primarily invests typically pay a higher yield than
involve greater credit risks than do investment grade bonds. In other investment-grade debt securities.
words, some companies whose securities we own may default on principal These bonds have a higher risk of
and/or interest payments after we buy their securities. Companies that default than investment grade bonds
issue high yield debt securities are not as strong financially as those and their prices can be much more
with higher credit ratings. Through portfolio diversification, good volatile.
credit analysis and attention to current developments and trends in
interest rates and economic conditions, we attempt to reduce investment FOREIGN SECURITIES are securities
risk, but losses may occur, meaning that you could lose money. In primarily traded in countries
addition, we attempt to reduce investment risk under a policy requiring outside the United States. These
that at least 20% of our assets must be invested in a combination of securities are not subject to the
investment grade debt securities, U.S. Government securities, and cash same degree of regulation and may
equivalents. be more volatile and less liquid
than securities traded in major
In addition, as with other bond funds, the value of your investment will U.S. markets. Other considerations
change as interest rates fluctuate. When interest rates rise, share value include political and social
is likely to decline. instability, expropriations, higher
transaction costs, currency
Finally, the high yield debt securities market is prone to sudden and fluctuations, nondeductable
sharp changes in prices due to a variety of factors. Changes in economic withholding taxes and different
forecasts, investor psychology, stock market activities and other forces settlement practices.
can cause prices to fluctuate greatly.
You should read this entire
An investment in the fund is not a bank deposit. It is not FDIC-insured prospectus, including "Other
or government-endorsed. It is not a complete investment program. You Investment Techniques," which
could lose money in this fund, buy you also have the potential to make concisely describes the other
money. investment strategies and their
risks used by the fund.
</TABLE>
6 The Funds
<PAGE>
<PAGE>
HIGH YIELD FUND
<TABLE>
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PAST PERFORMANCE
Because the fund is new, no information regarding past performance
is available.
FEES AND EXPENSES
MANAGEMENT FEES are payable to Lord
This table describes the fees and expenses that you may pay if you Abbett for the fund's investment
buy and hold shares of the fund. management.
============================================================================ OTHER EXPENSES include fees paid
Fee table for miscellaneous items such as
============================================================================ transfer agency, legal and share
CLASS Y registration fees.
--------------------------------------
SHAREHOLDER FEES (Fees paid directly from your investment) (i) The annual operating expenses
- ---------------------------------------------------------------------------- are based on estimated expenses for
Maximum Sales Charge on Purchases (as a % of offering price) none the current fiscal year.
- ----------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases") none
- ----------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from
fund assets) (as a % of average net assets)(i)
- ----------------------------------------------------------------------------
Management Fees (See "Management") 0.60%
- ----------------------------------------------------------------------------
Other Expenses (See "Management") 0.25%
- ----------------------------------------------------------------------------
Total Operating Expenses 0.85%
- ----------------------------------------------------------------------------
============================================================================
Expense example
============================================================================
This example, like that in other funds' prospectuses, assumes a $10,000
initial investment, 5% total return each year and no changes in expenses.
You pay the following expenses over the course of each period shown if
you sell your shares at the end of the period, although your actual cost
may be higher or lower. You also would pay the same expenses, assuming
you kept your shares.
SHARE CLASS 1 YEAR 3 YEARS
Class Y shares $87 $271
- ------------------------------------------------------------------------
This example is for comparison and is not a representation of the fund's
actual expenses or returns, either past or present.
</TABLE>
The Funds 7
<PAGE>
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INTERNATIONAL FUND
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GOAL/APPROACH
The fund's investment objective is long-term capital appreciation.
Current income is incidental to this objective. The fund may invest in
stocks that do not produce any income. Typically, in choosing stocks, we
look for companies using the following process:
QUANTITATIVE RESEARCH is performed on a universe of foreign
companies which guides selection of companies with strong growth WE OR THE FUND refers to Lord
potential that also sell at attractive prices. Abbett International Fund, a
portfolio of Lord Abbett Securities
FUNDAMENTAL RESEARCH examines global trends, seeking to identify Trust (the "company") which
developments on an industry-by-industry basis and the strongest operates under the supervision of
and/or best positioned companies ("Best of Breed") within each the company's Board with the advice
global industry. of Lord, Abbett & Co. ("Lord
Abbett"), its investment manager.
VALUATION TECHNIQUES determine the selection of the 40-60 companies
with strong growth potential and attractive share prices that ABOUT THE FUND. This fund is a
collectively form the final portfolio. professionally managed portfolio
primarily holding securities
Limiting the number of holdings ensures their performance is not diluted purchased with the pooled money of
across too many securities. However, investors should be aware that this investors. It strives to reach its
concentration could result in increased volatility. stated goal, although as with all
funds, it cannot guarantee results.
Investments are made in stocks of companies which are in developed or
developing countries. Under normal circumstances, at least 80% of the DEVELOPING COUNTRIES may have
total assets of the fund are invested in stocks of companies in at least higher and more rapidly fluctuating
three different countries outside the United States. inflation rates, a higher demand
for capital investment, a higher
Although the fund intends to invest primarily in stocks of small dependence on export markets for
companies with market capitalization of less than $1 billion listed on their major industries, and a
stock exchanges, it also may invest in stocks of companies traded in greater need to develop basic
over-the-counter markets, as well as stocks of large and middle-sized economic infrastructures than more
companies. developed countries. Also, it may
be more difficult to obtain a
The fund may temporarily reduce its stock holdings for defensive purposes judgment in a court outside the
in response to adverse market conditions and invest in domestic, United States.
Eurodollar and foreign short-term money market instruments. Of course,
this would reduce any benefit from an upswing in the market. SMALL COMPANY STOCKS are stocks of
smaller companies which often are
MAIN RISKS new and less established, with a
tendency to be faster-growing but
The fund sometimes has above-average investment risk compared to the U.S. more volatile and less liquid than
stock market since a large amount of the assets of the fund will be large company stocks.
denominated or traded in foreign currencies. A change in the value of any
foreign currency relative to the U.S. dollar results in changes in the OVER-THE-COUNTER STOCKS are usually
U.S. dollar value of the fund's assets denominated or traded in that those of smaller companies that do
currency. The fund's performance is measured in U.S. dollars, the base not meet the listing requirements
currency of the fund. Also, securities in which the fund invests are of major exchanges. Transactions
usually not subject to the same degree of regulation as domestic are conducted by telephone and
securities and may be more volatile and less liquid than those of major computer network rather than on the
U.S. markets. floor of an exchange.
Lack of liquidity may affect the fund's ability to trade in large blocks LARGE COMPANIES are established
of securities and obtain the best price. There is often less information companies that are considered
available on publicly-traded companies, banks and governments than in the "known quantities." Large companies
U.S., and a lack of uniform accounting standards and practices among often have the resources to weather
countries impairs a direct comparison for stocks and bonds. Also, foreign economic shifts, though they can be
securities may be traded on days when the fund does not value its shares. slower to innovate than small
Thus, share values could be affected on days when an investor cannot buy companies.
or redeem fund shares.
MID-SIZED COMPANIES usually have
An investment in the fund is not a bank deposit. It is not FDIC-insured or market capitalizations of roughly
government endorsed. It is not a complete investment program. You could lose $500 million to $5 billion.
money in the fund, but you also have the potential to make money.
You should read this entire
prospectus, including "Other
Investment Techniques," which
concisely describes the other
investment strategies and their
risks used by the fund.
</TABLE>
8 The Funds
<PAGE>
<PAGE>
INTERNATIONAL FUND
<TABLE>
<S> <C>
PAST PERFORMANCE
The information below provides some indication of the risks of
investing in the fund by showing changes in the fund's performance
with a broad measure of market performance.
[PERFORMANCE CHART] Past performance is not a
prediction of future results.
"98" 15.8% ------------------------------------------
(i) The date of inception of class
Best Quarter: 23.78% Worst Quarter: -18.98% Y shares is 12/30/97.
=========================================================================== (ii) Performance for the unmanaged
MSCI EAFE Index'r' does not reflect
The table below shows a comparison of the fund's class Y average annual transaction costs or management
total return to that of the Morgan Stanley European, Australasia and Far fees.
East Index'r' ("MSCI EAFE Index'r'"). Fund returns assume reinvestment of
dividends and distributions at Net Asset Value. All periods end on
December 31, 1998.
CLASS 1 YEAR INCEPTION(i)
Y 15.80% 16.02%
- ---------------------------------------------------------------------------
MSCI EAFE Index'r'(ii) 20.33% 20.33%
- ---------------------------------------------------------------------------
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you MANAGEMENT FEES are payable to Lord
buy and hold shares of the fund. Abbett for the fund's investment
management.
============================================================================
Fee table OTHER EXPENSES include fees paid
============================================================================ for miscellaneous items such as
transfer agency, legal and share
CLASS Y registration fees.
SHAREHOLDER FEES (Fees paid directly from your investment)
- ---------------------------------------------------------------------------
Maximum Sales Charge on Purchases (as a % of offering price) none
- ---------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases") none
- ---------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from
fund assets) (as a % of average net assets)
- ---------------------------------------------------------------------------
Management Fees (See "Management") 0.75%
- ---------------------------------------------------------------------------
Other Expenses (See "Management") 0.31%
- ---------------------------------------------------------------------------
Total Operating Expenses 1.06%
- ----------------------------------------------------------------------------
============================================================================
Expense example
============================================================================
This example, like that in other funds' prospectuses, assumes a $10,000
initial investment, 5% total return each year and no changes in expenses.
You pay the following expenses over the course of each period shown if
you sell your shares at the end of the period, although your actual cost
may be higher or lower. You also would pay the same expenses, assuming
you kept your shares.
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class Y shares $108 $337 $585 $1,297
- --------------------------------------------------------------------------------
This example is for comparison and is not a representation of the fund's
actual expenses or returns, either past or present.
</TABLE>
The Funds 9
<PAGE>
<PAGE>
LARGE-CAP RESEARCH FUND
<TABLE>
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GOAL/APPROACH
The fund's investment objective is growth of capital and growth of income
consistent with reasonable risk. Normally, we invest in the undervalued
common stocks of large-capitalization companies with outstanding equity
securities having an aggregate market value of at least $1.5 billion.
Current income is not emphasized.
Typically, in choosing stocks, we look for companies using the following
process: WE OR THE FUND refers to Lord
Abbett Large-Cap Research Fund (the
QUANTITATIVE RESEARCH is performed on a universe of large, seasoned "company"), a series of Lord Abbett
U.S. companies to identify those which have stocks that we believe Research Fund. Each fund operates
represent the best bargains. under the supervision of the
company's Board with the advice of
FUNDAMENTAL RESEARCH is conducted to identify current bargain-priced Lord, Abbett & Co. ("Lord Abbett"),
securities among the largest publicly traded companies. its investment manager.
Under normal circumstances, at least 65% of the Large-Cap Research Fund's ABOUT EACH FUND. Each fund is a
total assets will consist of investments made in large companies, professionally managed portfolio of
determined at the time of purchase. securities purchased with the
pooled money of investors. They
We may take a temporary defensive position by investing some of our strive to reach their stated goals,
assets in short-term debt securities. This could reduce the benefit from although as with all mutual funds,
any upswing in the market and prevent the fund from achieving its cannot guarantee results.
investment objective.
BARGAIN STOCKS are stocks of
companies that appear underpriced
MAIN RISKS according to certain financial
measurements of their intrinsic
The companies in which the fund invests will have good prospects for worth or business prospects.
improvement in earnings trends or asset values. The fund will invest in
companies on the basis of the fundamental economic and business factors LARGE COMPANIES are established
which will affect future earnings and which the fund believes are the companies that are considered
primary factors determining the future market valuation of stocks. There "known quantities." Large companies
can be no assurance that stocks selected for our portfolio will often have the resources to weather
appreciate in value or that their dividends will increase or be economic shifts, though they can be
maintained. slower to innovate than small
companies.
At the time of purchase, securities selected for our portfolio may be
largely neglected by the investment community or, if widely followed, SEASONED COMPANIES are usually
they may be out of favor or at least controversial. Our investment established companies whose
portfolio typically will encompass less market risk, and securities have gained a reputation
individual-security risk is managed through broad industry for quality with the investing
diversification. public and enjoy liquidity in the
market.
The fund may invest up to 10% of net assets in foreign securities.
Foreign securities markets may not be subject to the same degree of You should read this entire
regulation as the U.S. markets and may be more volatile and less liquid prospectus, including "Other
than the major U.S. markets. Foreign investments are subject to currency Investment Techniques," which
exposure. Investors should also be aware that the fund has the ability to concisely describes the other
invest in derivatives. investment strategies and their
risks used by the fund.
An investment in the fund is not a bank deposit. It is not FDIC-insured
or government endorsed. It is not a complete investment program. You
could lose money in the fund, but you also have the potential to make
money.
</TABLE>
10 The Funds
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<PAGE>
LARGE-CAP RESEARCH FUND
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PAST PERFORMANCE
The information below provides some indication of the risks of
investing in the fund by 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.
Past performance is not a
[Awaiting Data] prediction of future results.
-----------------------------------------
=========================================================================== (i) Because class Y shares are new,
The table below shows a comparison of the fund's class A average annual the bar chart and table show
total return to that of the S&P 500'r' Index. Fund returns assume returns for class A shares. Returns
reinvestment of dividends and distributions and payment of the maximum for class Y shares will be somewhat
applicable front-end or deferred sales charge. All periods end on higher, because class Y shares have
December 31, 1998. lower expenses.
CLASS 1 YEAR 5 YEARS 10 YEARS INCEPTION(iii) (ii) Performance for the unmanaged
S&P 500'r' Index does not reflect
A(i) 0.00% 0.00% 0.00% 0.00% transaction costs or management
- ----------------------------------------------------------------------------- fees.
S&P 500'r'Index(ii) 0.00% 0.00% 0.00% --
- ----------------------------------------------------------------------------- (iii) The date of inception of
class A shares is 6/3/92.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you
buy and hold shares of the fund. MANAGEMENT FEES are payable to Lord
Abbett for the fund's investment
============================================================================ management.
Fee table
============================================================================ OTHER EXPENSES include fees paid
for miscellaneous items such as
CLASS Y transfer agency, legal and share
registration fees.
SHAREHOLDER FEES (Fees paid directly from your investment) -------------------------------------
- ---------------------------------------------------------------------------- (1) The annual fund operating
Maximum Sales Charge on Purchases (as a % of offering price) none expenses have been restated from
- ---------------------------------------------------------------------------- fiscal year amounts to reflect
Maximum Deferred Sales Charge (See "Purchases") none current fees.
- ----------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from
fund assets) (as a % of average net assets)
- ----------------------------------------------------------------------------
Management Fees (See "Management") 0.00%
- ----------------------------------------------------------------------------
Other Expenses (See "Management") 0.00%
- ----------------------------------------------------------------------------
Total Operating Expenses 0.00%
- ----------------------------------------------------------------------------
============================================================================
Expense example
============================================================================
This example, like that in other funds' prospectuses, assumes a $10,000
initial investment, 5% total return each year and no changes in expenses.
You pay the following expenses over the course of each period shown if
you sell your shares at the end of the period, although your actual cost
may be higher or lower. You also would pay the same expenses, assuming
you kept your shares.
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class Y 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.
</TABLE>
THE FUNDS 11
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<PAGE>
SMALL-CAP VALUE FUND
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GOAL/APPROACH
The fund seeks long-term capital appreciation. In choosing stocks, we
look for companies using the following process:
QUANTITATIVE RESEARCH is performed on a universe of companies with
market capitalizations ranging between $100 million and $750
million. Valuation criteria include the price of shares in relation
to book value, sales asset value, earnings, dividends and cash flow. WE OR THE FUND refers to Lord
Abbett Small-Cap Value Fund, a
FUNDAMENTAL RESEARCH is conducted to assess the dynamics of each portfolio of Lord Abbett Research
company within its industry and within the economy, by evaluating Fund, Inc. (the "company") which
the company's business strategies in assessing management's ability operates under the supervision of
to execute the strategies and by evaluating the adequacy of a the company's Board with the advice
company's financial management. of Lord, Abbett & Co. ("Lord
Abbett"), its investment manager.
Usually, at least 65% of the fund's total assets will be invested in
common stocks issued by smaller, less well-known companies (with market ABOUT THE FUND. This fund is a
capitalizations of less than $1 billion) selected using fundamental professionally managed portfolio
investment analysis. The fund may invest up to 35% of its total assets in primarily holding securities
the securities of larger companies. Companies in which the fund is likely purchased with the pooled money of
to invest may have more limited product lines, markets or financial investors. It strives to reach its
resources and may lack management depth or experience as compared with stated goal, although as with all
companies with larger market capitalizations. funds, it cannot guarantee results.
While typically fully invested, we may take a temporary defensive LARGE COMPANIES are established
position by investing some of our assets in short-term debt securities. companies that are considered
This could reduce the benefit from any upswing in the market. "known quantities." Large companies
often have the resources to weather
economic shifts, though they can be
MAIN RISKS slower to innovate than small
companies.
Small-company stocks offer significant appreciation potential. However,
small companies tend to be riskier than large companies. Generally, small SMALL-COMPANY STOCKS are stocks of
companies rely on limited product lines and markets, financial resources, smaller companies which often are
or other factors, and this may make them more susceptible to setbacks or new and less established, with a
economic downturns. Small-company stocks tend to be more volatile in tendency to be faster-growing but
price, have fewer shares outstanding and trade less frequently than large more volatile than large company
company stocks. Therefore, small company stocks may be subject to wider stocks.
price fluctuations. Many small-company stocks are traded over the counter
and are not traded in the volume typical of stocks listed on a national You should read this entire
securities exchange. prospectus, including "Other
Investment Techniques," which
An investment in the fund is not a bank deposit. It is not FDIC-insured concisely describes the other
or government-endorsed. It is not a complete investment program. You investment strategies and their
could lose money in this fund, but you also have the potential to make risks used by the fund.
money.
</TABLE>
12 The Funds
<PAGE>
<PAGE>
SMALL-CAP VALUE FUND
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PAST PERFORMANCE
The information below provides some indication of the risks of investing
in the fund by showing changes in the fund's performance with a broad
measure of market performance.
Past performance is not a
[PERFORMANCE GRAPH] prediction of future results.
"98" -7.17% --------------------------------------
Best Quarter: 19.56% Worst Quarter: -24.11% (i) The date of inception of class
Y shares is 12/30/97.
=========================================================================== (ii) Performance for the unmanaged
The table below shows a comparison of the fund's class Y average annual Russell 2000'r' Index does not
total return to that of the Russell 2000'r' Index. Fund returns assume reflect transaction costs or
reinvestment of dividends and distributions and payment of the maximum management fees.
applicable front-end or deferred sales charge. All periods end on
December 31, 1998.
CLASS 1 YEAR INCEPTION(i)
Y -7.17% -6.46%
Russell 2000'r' Index(ii) -2.55% -2.55%
- ---------------------------------------------------------------------------
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you
buy and hold shares of the fund. MANAGEMENT FEES are payable to Lord
Abbett for the fund's investment
============================================================================ management.
Fee table
============================================================================ OTHER EXPENSES include fees paid
for miscellaneous items such as
CLASS Y transfer agency, legal and share
registration fees.
SHAREHOLDER FEES (Fees paid directly from your investment)
- ----------------------------------------------------------------------------
Maximum Sales Charge on Purchases (as a % of offering price) none
- ----------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases") none
- ----------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from
fund assets) (as a % of average net assets)
- ----------------------------------------------------------------------------
Management Fees (See "Management") 0.75%
- ----------------------------------------------------------------------------
Other Expenses (See "Management") 0.24%
- ----------------------------------------------------------------------------
Total Operating Expenses 0.99%
- ----------------------------------------------------------------------------
============================================================================
Expense example
============================================================================
This example, like that in other funds' prospectuses, assumes a $10,000
initial investment, 5% total return each year and no changes in expenses.
You pay the following expenses over the course of each period shown if
you sell your shares at the end of the period, although your actual cost
may be higher or lower. You also would pay the same expenses, assuming
you kept your shares.
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class Y shares $101 $315 $547 $1,215
- ---------------------------------------------------------------------------
This example is for comparison and is not a representation of the fund's
actual expenses or returns, either past or present.
</TABLE>
The Funds 13
<PAGE>
<PAGE>
YOUR INVESTMENT
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PURCHASES
CLASS Y SHARES. Class Y shares are purchased at net asset value ("NAV") with no
sales charge of any kind. The NAV of our shares is calculated every business day
as of the close of the New York Stock Exchange. Our shares are continuously
offered. The offering price is based on NAV per share next determined after we
receive your order submitted in proper form. We reserve the right to withdraw
all or 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 NAV per share is calculated each
requirements. All purchase orders are subject to our acceptance and are not business day at the close of regular
binding until confirmed or accepted in writing. trading on the New York Stock Exchange
("NYSE"). Each fund is open on those
WHO MAY INVEST? Eligible purchasers of Class Y shares include: (i) certain business days when the NYSE is open.
authorized brokers, dealers, registered investment advisers or other financial Purchases and sales of fund shares are
institutions who either (a) have an arrangement with Lord Abbett Distributor in executed at the NAV next determined
accordance with certain standards approved by Lord Abbett Distributor, providing after the fund receives your order. In
specifically for the use of our Class Y shares in particular investment products calculating NAV, securities for which
made available for a fee to clients of such brokers, dealers, registered market quotations are available are
investment advisers or other financial institutions, or (b) charge an advisory valued at those quotations. Securities
consulting or other fee for their services and buy shares for their own accounts for which such quotations are not
or the accounts of their clients ("Mutual Fund Advisory Programs"), (ii) the available are valued at fair value under
trustee or custodian under any deferred compensation or pension or procedures approved by the Board.
profit-sharing plan or payroll deduction IRA established for the benefit of the
employees of any company with an account(s) in excess of $10 million managed by LORD ABBETT DISTRIBUTOR LLC ("Lord
Lord Abbett or its sub-advisors on a private-advisory-account basis, and (iii) Abbett Distributor") acts as agent for
institutional investors, including retirement plans, companies, foundations, the funds to work with investment
trusts, endowments and other entities where the total amount of potential professionals that buy and/or sell
investable assets exceeds $20 million that were not introduced to Lord Abbett by shares of the funds on behalf of their
persons associated with a broker or dealer primarily involved in the retail clients. Generally, Lord Abbett
security business. Additional payments may be made by Lord Abbett out of its own Distributor does not sell fund shares
resources with respect to certain of these sales. directly to investors.
HOW MUCH MUST YOU INVEST? You may buy our shares through any independent
securities dealer having a sales agreement with Lord Abbett Distributor, our
exclusive selling agent. Place your order with your investment dealer or send
the money to the fund you selected (P.O. Box 419100, Kansas City, Missouri
64141). The minimum initial investment is $1 million except for Mutual Fund
Advisory Programs which have no minimum. This offering may be suspended, changed
or withdrawn by Lord Abbett Distributor which reserves the right to reject any
order.
BUYING SHARES THROUGH YOUR DEALER. Orders for shares received by a fund prior to
the close of the NYSE, or received by dealers prior to such close and received
by Lord Abbett Distributor prior to the close of its business day, will be
confirmed at NAV effective at such NYSE close. Orders received by dealers after
the NYSE closes and received by Lord Abbett Distributor in proper form prior to
the close of its next business day are executed at the NAV effective as of the
close of the NYSE on that next business day. The dealer is responsible for the
timely transmission of orders to Lord Abbett Distributor. A business day is a
day on which the NYSE is open for trading.
BUYING SHARES BY WIRE. To open an account, call 800-821-5129 Ext. 34028,
Institutional Trade Dept., to set up your account and to arrange a wire
transaction. Wire to: United Missouri Bank of Kansas City, N.A., Routing
number - 101000695, bank account number: 9878002611, FBO: (account name)
and (your Lord Abbett account number). Specify the complete name of the
fund of your choice, note Class Y shares and include your new
</TABLE>
14 Your Investment
<PAGE>
<PAGE>
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<S> <C>
account number and your name. To add to an existing account, wire to: United
Missouri Bank of Kansas City, N.A., routing number - 101000695, bank account
number: 9878002611, FBO: (account name) and (your Lord Abbett account number).
Specify the complete name of the fund of your choice, note Class Y shares and
include your account number and your name.
IMPORTANT INFORMATION. You may be
REDEMPTIONS subject to a $50 penalty under the
Internal Revenue Code if you do not
BY BROKER. Call your investment professional for directions on how to redeem provide a correct taxpayer
your shares. identification number (Social Security
Number for individuals) or make certain
BY TELEPHONE. To obtain the proceeds of a redemption of $50,000 or less from required certifications. In addition, we
your account, you or your representative can call the fund at 800-821-5129. may be required to withhold from your
account and pay to the U.S. Treasury 31%
BY MAIL. Submit a written redemption request indicating, the name(s) in which of any redemption proceeds and any
the account is registered, the fund's name, the class of shares, your account dividend or distribution from your
number, and the dollar value or number of shares you wish to sell. account.
Include all necessary signatures. If the signer has any Legal Capacity, the ELIGIBLE GUARANTOR is any broker or bank
signature and capacity must be guaranteed by an Eligible Guarantor. Certain that is a member of the Medallion Stamp
other legal documentation may be required. For more information regarding proper Program. Most major securities firms and
documentation call 800-821-5129. banks are members of this program. A
NOTARY PUBLIC IS NOT AN ELIGIBLE
Normally a check will be mailed to the name and address in which the account is GUARANTOR.
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.
BY WIRE. In order to receive funds by wire, our servicing agent must have the
wiring instructions on file. To verify that this feature is in place, call
800-821-5129 Ext. 34028, Institutional Trading Dept. Minimum wire: $1,000.
Your wire redemption request must be received by your fund before the close
of the NYSE for money to be wired on the next business day.
DISTRIBUTIONS AND TAXES
Each fund pays its shareholders dividends from its net investment income, and TAXES ON TRANSACTIONS. The chart at left
distributes any net capital gains that it has realized. Each fund expects to pay also can provide a "rule of thumb" guide
income dividends (quarterly, for the Affiliated Fund; monthly for the High Yield for your potential U.S. federal income
Fund; and semi-annually for the Large-Cap Research Fund) and capital gain tax liability when selling or exchanging
distributions, if any, once a year, usually in December. Your distributions will fund shares. The second row, "Short-term
be reinvested in your fund unless you instruct the fund to pay them to you in capital gains," applies to fund shares
cash. sold within 12 months of purchase. The
third row, "Long-term capital gains,"
The tax status of distributions is the same regardless of how long they have applies to shares held for more than 12
been in the fund or whether distributions are reinvested or paid in cash. In months.
general, distributions are taxable as follows:
Starting January 1, 2001, sales of
================================================================================ securities held for more than five years
FEDERAL TAXABILITY OF DISTRIBUTIONS will be taxed at special lower rates.
Type of Tax rate for taxpayer Tax rate for taxpayer subject
distribution subject to 15% bracket to 28% bracket and above
- --------------------------------------------------------------------------------
INCOME Ordinary
DIVIDENDS 15% income rate
- --------------------------------------------------------------------------------
SHORT-TERM Ordinary
CAPITAL GAINS 15% income rate
- --------------------------------------------------------------------------------
LONG-TERM
CAPITAL GAINS 10% 20%
- --------------------------------------------------------------------------------
Except in tax-advantaged accounts, any sale or exchange of fund shares may be a
taxable event.
</TABLE>
Your Investment 15
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<S> <C>
ANNUAL INFORMATION - Information concerning the tax treatment of dividends and
other distributions will be mailed annually to shareholders. Each fund will also
provide annually to its shareholders information regarding the source of
dividends and distributions of capital gains paid by that fund. Because
everyone's tax situation is unique, you should consult your tax adviser
regarding the treatment of those distributions under the federal, state and
local tax rules that apply to you, as well as the tax consequences of gains or
losses from the redemption or exchange of your shares.
SERVICES FOR FUND INVESTORS
AUTOMATIC SERVICES
We offer the following shareholder services:
TELEPHONE EXCHANGE PRIVILEGE. Class Y shares may be exchanged without a service TELEPHONE TRANSACTIONS. You have this
charge for Class Y shares of any Eligible Fund among the Lord Abbett-sponsored privilege unless you refuse it in
funds. writing. For your security, telephone
transaction requests are recorded. We
ACCOUNT STATEMENTS. Shareholders with the same last name and address will will take measures to verify the
receive quarterly account statements. identity of the caller, such as asking
for your name, account number, social
HOUSEHOLDING. Shareholders with the same last name and address will receive a security or taxpayer identification
single copy of a prospectus and an annual or semi-annual report, unless number and other relevant information.
additional reports are specifically requested in writing to the funds. Each fund will not be liable for
following instructions communicated by
ACCOUNT CHANGES. For any changes you need to make to your account, consult your telephone that it reasonably believes to
investment professional or call the fund at 800-821-5129. be genuine.
SYSTEMATIC EXCHANGE. You or your investment professional can establish a Transactions by telephone may be
schedule of exchanges between the same classes of any Eligible Fund. difficult to implement in times of
drastic economic or market change.
MANAGEMENT
The funds' investment adviser is Lord, Abbett & Co., 767 Fifth Avenue, New York,
NY 10153-0203. Founded in 1929, Lord Abbett manages one of the nation's oldest Exchanges by telephone should not be
mutual fund complexes, with approximately $28 billion in more than 35 mutual used to take advantage of short-term
fund portfolios and other advisory accounts. For more information about the swings in the market. Each fund reserves
services Lord Abbett provides to the funds, see the Statement of Additional the right to limit or terminate this
Information. privilege for any shareholder making
frequent exchanges or abusing the
Each fund pays Lord Abbett a monthly fee based on average daily net assets for privilege and may revoke the privilege
each month. For the fiscal year ended October 31, 1998, the fee paid to Lord for all shareholders upon 60 days'
Abbett was at an annual rate of .31 of 1% for Affiliated Fund, the management written notice.
fee of Growth Opportunities was waived and Lord Abbett subsidized all fund
expenses, and the fee paid to Lord Abbett was at an annual rate of .75 of 1% for
the International Fund. High Yield commenced operations subsequent to the fiscal
year ended November 30, 1998; therefore an annual rate is unavailable. For the
fiscal year ended November 30, 1998 the fee paid to Lord Abbett was at an annual
rate of .75% of 1% for both Large-Cap Research Fund and Small-Cap Value Fund. In
addition, both funds pay all expenses not expressly assumed by Lord Abbett.
Lord Abbett uses a team of portfolio managers and analysts acting together to
manage the fund's investments.
AFFILIATED FUND. Thomas Hudson Jr., Partner of Lord Abbett, heads the team, the
senior members of which include Robert Morris, Partner of Lord Abbett, and Eli
Salzman, Portfolio Manager. Messrs. Hudson and Morris each have been with Lord
Abbett since 1982 and 1991, respectively. Mr. Salzman joined Lord Abbett in 1997
and previously was
</TABLE>
16 Your Investment
<PAGE>
<PAGE>
a Vice President with Mutual of America Capital Corp. since 1997 and a Vice
President with Mitchell Hutchins Asset Management, Inc. from 1986 to 1997.
GROWTH OPPORTUNITIES FUND. Stephen J. McGruder, Partner of Lord Abbett, heads
the team, the senior member of which is Frederic D. Ohr. Mr. McGruder has been
with Lord Abbett since 1995. Mr. Ohr joined Lord Abbett in 1998. Prior to
joining Lord Abbett, Mr. McGruder served since October of 1998 as Vice President
of Wafra Investment Advisory Group, a private investment company. Mr. Ohr was an
equity analyst with Ohr Capital Management since September 1997 and before that
he was an equity analyst with Chase Manhattan Bank.
HIGH YIELD FUND. Christopher J. Towle, Partner of Lord Abbett, heads the team,
the senior members of which include Michael Goldstein, Richard Szaro and Thomas
Baade. Messrs. Towle and Szaro joined Lord Abbett in 1988 and 1983,
respectively. Mr. Goldstein has been with Lord Abbett since April 1997. Before
joining Lord Abbett, Mr. Goldstein was a bond trader for Credit Suisse BEA
Associates from August 1992 through April 1997. Mr. Baade joined Lord Abbett in
1998; prior to that he was a credit analyst with Greenwich Street Advisors.
INTERNATIONAL FUND. Lord Abbett has entered into an agreement with Fuji-Lord
Abbett International Ltd. (the "Sub-Adviser"), under which the Sub-Adviser
provides Lord Abbett with advice regarding the International Fund's assets. Lord
Abbett pays the Sub-Adviser a monthly fee equal to one half of Lord Abbett's
fee.
Christopher J. Taylor is Managing Director of the Sub-Adviser and heads the
team, the senior member of which is Simon Steele, U.K. Equity Fund Manager. Mr.
Steele joined Fuji Investment Co. (Europe) Ltd. in 1996 and previously was
responsible for the WH Smith Pension Trust's U.K. Equities, as well as the whole
fund's International Asset allocation. Mr. Taylor has been employed by the
Sub-Adviser and its predecessor companies since 1987.
LARGE-CAP RESEARCH FUND. Robert G. Morris, Partner of Lord Abbett, heads the
team, the senior members of which are W. Thomas Hudson, Jr., Partner of Lord
Abbett, and Eli Salzman. Messrs. Morris and Hudson have been with Lord Abbett
for more than five years. Mr. Salzman joined Lord Abbett in 1997; prior to that
he was a Vice President with Mutual of America Capital Corp. from 1996 to 1997,
and a Vice President at Mitchell Hutchins Asset Management, Inc. from 1986 to
1996.
SMALL-CAP VALUE FUND. Robert P. Fetch, Partner of Lord Abbett, heads the team,
the senior member of which is Gregory M. Macosko. Messrs. Fetch and Macosko
joined Lord Abbett in 1995 and 1996, respectively. Before joining Lord Abbett,
Mr. Fetch was a Managing Director of Prudential Investment Advisors and Mr.
Macosko was an equity analyst with Royce Associates.
Your Investment 17
<PAGE>
<PAGE>
FOR MORE INFORMATION
OTHER INVESTMENT TECHNIQUES
This section describes some of the investment techniques that might be used by
the funds, and their risks.
ADJUSTING INVESTMENT EXPOSURE. Each fund may, but is not required to, use
various strategies to change its investment exposure to adjust to changing
security prices, interest rates, currency exchange rates, commodity prices and
other factors. Each fund may use these transactions to change the risk and
return characteristics of each fund's portfolio. If we judge market conditions
incorrectly or use a strategy that does not correlate well with the fund's
investments, it could result in a loss, even if we intended to lessen risk or
enhance returns. These transactions may involve a small investment of cash
compared to the magnitude of the risk assumed and could produce disproportionate
gains or losses. Also, these strategies could result in losses if the
counterparty to a transaction does not perform as promised.
BORROWING. Each fund may borrow from banks. If a fund borrows money, its share
price may be subject to greater fluctuation until the borrowing is paid off.
Each fund may borrow only for temporary or emergency purposes, and not in an
amount exceeding 331/3% of its total assets.
CLOSED-END INVESTMENT COMPANIES. Each of the Growth Opportunities, International
and Small-Cap Value Funds may invest in shares of closed-end investment
companies if bought in the primary or secondary market with a fee or commission
no greater than the customary broker's commission. The Small-Cap Value Fund may
not invest more than 5% of its assets in closed-end investment companies.
DIVERSIFICATION. Each fund is a diversified fund, which means that with respect
to 75% of its total assets, it will not purchase a security if, as a result,
more than 5% of the fund's total assets would be invested in securities of a
single issuer or the fund would hold more than 10% of the outstanding voting
securities of the issuer.
DEPOSITORY RECEIPTS. The International Fund may invest in Depository Receipts
which are securities, typically issued by a financial institution (a
"depository"), that evidence ownership interests in a security or a pool of
securities issued by a foreign issuer (the "underlying issuer") and deposited
with the depository. Generally, Depository Receipts in registered form are
designed for use in U.S. securities markets and Depository Receipts in bearer
form are designed for use in securities markets outside the United States. The
fund may invest in sponsored and unsponsored Depository Receipts. For purposes
of the International Fund's investment policies, investments in Depository
Receipts will be deemed to be investments in the underlying securities.
EQUITY SECURITIES. The High Yield Fund may also invest up to 20% of its total
assets in equity securities. These include common stocks, preferred stocks,
convertible securities, warrants, and similar instruments. Common stocks, the
most familiar type, represent an ownership interest in a corporation. Although
equity securities have a history of long-term growth in their value, their
prices fluctuate based on changes in a company's financial condition and on
market and economic conditions.
FINANCIAL FUTURES TRANSACTIONS. A financial futures transaction is an
exchange-traded contract to buy or sell a standard quantity and quality of a
financial instrument or index at a specific future date and price. The High
Yield, Growth Opportunities, and International Funds may purchase and sell
futures contracts and options thereon provided that the High Yield Fund may not
invest more than 5% of its assets in such transac-
18 For More Information
<PAGE>
<PAGE>
tions. The Growth Opportunities and International Funds will not enter into any
futures contracts or options thereon, if the aggregate market value of the
securities covered by such contracts exceeds 50% of each such fund's total
assets.
FOREIGN CURRENCY HEDGING TECHNIQUES. Both the International Fund and the
Small-Cap Value Fund may use Foreign Currency Hedging Techniques. Although these
two 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 underlying 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.
FOREIGN SECURITIES. The International Fund invests primarily in foreign
securities; the Growth Opportunities and Small-Cap Value Funds will limit their
investments in foreign securities to 35% of their total assets. The Affiliated
and High Yield Funds will limit their investments in foreign securities to 10%
and 20%, respectively, of their total assets. These securities are not subject
to the same degree of regulation and may be more volatile and less liquid than
securities traded in major U.S. markets. Foreign portfolio securities may trade
on days when a fund does not value them. Fund share prices could be affected on
days an investor cannot purchase or sell shares. Other risks include less
information on public companies, banks and governments; political and social
instability; expropriations; higher transaction costs; currency fluctuations;
nondeductable withholding taxes and different accounting and settlement
practices.
ILLIQUID SECURITIES. These securities include those that are not traded on the
open market or that trade irregularly or in very low volume. They may be
difficult or impossible to sell at the time and price the fund would like. Each
fund may invest up to 15% of its assets in illiquid securities.
INVESTMENT FUNDS. The International Fund may invest (normally not more than 5%
of the fund's total assets) in investment funds. Some emerging countries have
laws and regulations that currently preclude direct foreign investment in the
securities of their companies. However, indirect foreign investment in the
securities of such countries is permitted through investment funds which have
been specifically authorized. If the fund invests in such investment funds, the
fund's shareholders will bear not only their proportionate share of the expenses
of the fund (including operating expenses and the fees of Lord Abbett), but also
will indirectly bear similar expenses of the underlying investment funds.
OPTIONS TRANSACTIONS. A put option on securities gives the purchaser, in return
for a premium, the right, for a specified period of time, to sell the securities
subject to the option to the writer (seller) of the put at the specified
exercise price. The writer of the put option, in return for the premium, has the
obligation, upon exercise of the option, to acquire the securities underlying
the option at the exercise price.
A call option on securities gives the purchaser, in return for a premium paid,
the right for a specified period of time to purchase the securities subject to
the option at a specified price (the "exercise price" or "strike price"). The
writer of a call option, in return for the premium, has the obligation, upon
exercise of the option, to deliver, depending upon the terms of the
For More Information 19
<PAGE>
<PAGE>
option contract, the underlying securities to the purchaser upon receipt of the
exercise price.
Options on stock indices are similar to options on equity securities except
that, rather than the right to take or make delivery of stock at a specified
price, an option on a stock index gives the holder the right, in return for a
premium paid, to receive, upon exercise of the option, an amount of cash if the
closing level of the stock index upon which the option is based is greater than,
in the case of a call, or less than, in the case of a put, the exercise price of
the option. The writer of an index option, in return for a premium, is obligated
to pay the amount of cash due upon exercise of the option.
The writer of a put option might be obligated to purchase underlying securities
for more than their current market value.
When a fund writes a call option, it gives up the potential for gain on the
underlying securities in excess of the exercise price of the option during the
period that the option is open. The Small-Cap, High Yield and Growth
Opportunities Funds may purchase and write put and call options on equity
securities or stock indices that are traded on national securities exchanges.
The Growth Opportunities Fund may purchase foreign currency put options and
write foreign currency call options on national securities exchanges or national
over-the-counter ("OTC") markets. OTC options are generally less liquid and
involve issuer credit risk. The premiums paid for Growth Opportunities foreign
currency put options will not exceed 5% of the net assets of the fund. Unlisted
options, together with other illiquid securities, may comprise no more than 15%
of the Growth Opportunities Fund's net assets. The face value of currency call
option writing or cross-hedging may not exceed 90% of the value of the
securities denominated in such currency (a) invested in by the Growth
Opportunities Fund to cover such call writing or (b) to be crossed.
The Small-Cap Fund and the Growth Opportunities Fund may only write covered put
options to the extent that cover for such options does not exceed 25% of each
fund's net assets. Each fund will not purchase an option if, as a result of such
purchase, more than 20% of its total assets would be invested in premiums for
such options. In addition, the Growth Opportunities Fund may write covered call
options on securities having an aggregate market not to exceed 5% of that fund's
assets.
Each fund will write only "covered" options. The Affiliated and International
Funds will only write "covered" call options on securities having an aggregate
market value not to exceed 10% of the Affiliated Fund's assets or 20% of the
International Fund's assets. The High Yield Fund will only write covered call
options and secured put options on securities having an aggregate market value
not to exceed 25% of the High Yield Fund's assets.
PORTFOLIO SECURITIES LENDING. Each fund may lend securities to broker-dealers
and financial institutions, as a means of earning income. This practice could
result in a loss or delay in recovering a fund's securities, if the borrower
defaults. The Affiliated, High Yield and International Funds will limit their
securities loans to 30% of their total assets, while the Growth Opportunities
and Small-Cap Value Funds will limit their securities loans to 5% of their total
assets.
REPURCHASE AGREEMENTS. Each fund may enter into 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, a fund could lose money.
RIGHTS AND WARRANTS. Each of the Growth Opportunities, International and
Small-Cap Value Funds may invest in rights and warrants to purchase securities.
20 For More Information
<PAGE>
<PAGE>
Rights represent a privilege offered to holders of record of issued securities
(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.
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.
RULE 144A SECURITIES. Each fund may invest in Rule 144A securities, which are
securities determined by the Board to be liquid pursuant to Securities and
Exchange Commission Rule 144A (the "Rule"). Under the Rule, a qualifying
unregistered security may be resold to a qualified institutional buyer without
registration and without regard to whether the seller originally purchased the
security for investment. A substantial part of the lower-rated debt market
consisted of Rule 144A securities, many of which are registered within a few
months of their purchases. Investments in Rule 144A securities initially
determined to be liquid could have the effect of diminishing the level of a
fund's liquidity during periods of decreased market interest in such securities.
STOCK INDEX FUTURES. A stock index futures contract is an agreement in which one
party agrees to deliver to another an amount of cash equal to a specific dollar
amount times the difference between a specific stock index at the close of the
last trading day of the contract and the price at which the agreement is made.
No physical delivery of the underlying stocks in the index is made.
Participation in the options or futures markets involves investment risks and
transaction costs to which the Small-Cap Fund would not be subject absent the
use of these strategies. If the Small-Cap Fund management's prediction of
movement in the direction of the securities markets is inaccurate, the adverse
consequences to the fund may leave it in a worse position than if such
strategies were not used. Risks inherent in the use of options and stock index
futures include (1) dependence on management's ability to predict correctly
movements in the direction of specific securities being hedged or the movement
in stock indices; (2) imperfect correlation between the price of options and
stock index futures and options thereon and movements in the prices of the
securities being hedged; (3) the fact that skills needed to use these strategies
are different from those needed to select portfolio securities; (4) the possible
absence of a liquid secondary market for any particular instrument at any time;
(5) the possible need to defer closing out certain hedged positions to avoid
adverse tax consequences; and (6) daily limits on price variance for a futures
contract or related options imposed by certain futures exchanges and boards of
trade may restrict transactions in such securities on a particular day.
The Small-Cap Fund may not purchase or sell stock index futures if, immediately
after a purchase or sale, more than one-third of its net assets would be hedged.
In addition, except in the case of a call written and held on the same index,
the Small-Cap Fund will write call options on indices or sell stock index
futures only if the amount resulting from the multiplication of the then current
level of the index (or indices) upon which the options or futures contract(s) is
based, the applicable multiplier(s), and the number of futures or options
contracts which would be outstanding would not exceed one-third of the value of
the Small-Cap Fund's net assets.
The Small-Cap Fund's ability to enter into stock index futures and listed
options is limited by certain tax requirements in order to qualify as a
regulated investment company.
For More Information 21
<PAGE>
<PAGE>
<TABLE>
<S> <C>
WHEN-ISSUED OR DELAYED DELIVERY SECURITIES. Each of the International, Small-Cap
Value and Growth Opportunities Funds may purchase or sell securities with
payment and delivery taking place as much as a month or more later. A fund would
do this in an effort to buy or sell the securities at an advantageous price and
yield. The securities involved are subject to market fluctuation and no interest GUARANTEED SIGNATURE. An acceptable form
accrues to the purchaser during the period between purchase and settlement. At of guarantee would be as follows:
the time of delivery of the securities, their market value may be less than the
purchase price. Also, if a fund commits a significant amount of assets to In the case of the estate -
when-issued or delayed delivery transactions, it may increase the volatility of
the fund's portfolio. Robert A. Doe
Executor of the Estate of
John W. Doe
GLOSSARY OF SHADED TERMS
[Date]
ELIGIBLE FUND. An Eligible Fund is any Lord Abbett-sponsored fund offering class
Y shares. SIGNATURE GUARANTEED
MEDALLION GUARANTEED
EURODOLLAR. U.S. currency held in banks outside the United States, mainly in Name of Guarantor
Europe, and commonly used for settling international transactions. Some
securities are issued in Eurodollars--that is, with a promise to pay interest in David R. Levy
dollars deposited in foreign bank accounts. --------------------------
AUTHORIZED SIGNATURE
LEGAL CAPACITY. This term refers to the authority of an individual to act on (960) X9003470
behalf of an entity or other person(s). For example, if a redemption request Securities Transfer Agents
were to be made on behalf of the estate of a deceased shareholder, John W. Doe, Medallion Program 'TM'
by a person (Robert A. Doe) who has the legal capacity to act for the estate of SR
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 In the case of the corporation -
Eligible Guarantor. ABC Corporation
To give another example, if a redemption request were to be made on behalf of Mary B. Doe
the ABC Corporation by a person (Mary B. Doe) who has the legal capacity to act
on behalf of the Corporation, because she is the president of the Corporation, By Mary B. Doe, President
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 [Date]
Guarantor.
SIGNATURE GUARANTEED
MUTUAL FUND ADVISORY PROGRAM. Certain unaffiliated authorized brokers, dealers, MEDALLION GUARANTEED
registered investment advisers or other financial institutions who either (a) Name of Guarantor
have an arrangement with Lord Abbett Distributor in accordance with certain
standards approved by Lord Abbett Distributor, providing specifically for the David R. Levy
use of our shares (and sometimes providing for acceptance of orders for such --------------------------
shares on our behalf) in particular investment products made available for a AUTHORIZED SIGNATURE
fee to clients of such brokers, dealers, registered investment advisers and (960) X9003470
other financial institutions, or (b) charge an advisory, consulting or other fee Securities Transfer Agents
for their services and buy shares for their own accounts or the accounts of Medallion Program 'TM'
their clients. SR
RECENT PERFORMANCE
YEAR 2000 ISSUES. Each fund could be
AFFILIATED FUND. During the past fiscal year, the stock market and the fund adversely affected if the computers used
enjoyed returns above historical averages due to an environment of solid by each fund and their service providers
economic growth, low inflation and strong corporate profit gains. Throughout do not properly process and calculate
most of the period, the portfolio has been evenly diversified, but with a date-related information from and after
moderate overweighting in financial stocks. Furthermore, we have shifted our January 1, 2000.
focus within this group of stocks towards insurance companies, which are
benefiting from industry-wide consolidation and cost-cutting efforts. While year 2000-related computer
problems could have a negative effect on
GROWTH OPPORTUNITIES FUND. During the first half of the fund's fiscal year, each fund, Lord Abbett is working to
stocks performed strongly, followed by sizable downdrafts during the summer avoid such problems and has assurances
months, and a subsequent recovery from late September through November. We from each fund's service providers that
believe much of the volatility 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.
</TABLE>
22 For More Information
<PAGE>
<PAGE>
was due to investors' growing reluctance to bear risk in response to economic
and political uncertainties in Japan, the Pacific Rim, Russia and other emerging
markets, and the impact those uncertainties might have on future U.S. corporate
earnings.
A series of rate cuts initiated by the U.S. Federal Reserve Board helped to ease
investor concern later in the fund's fiscal year. As a more optimistic view of
the global economies emerged, stocks rallied with most sectors participating in
the upswing.
HIGH YIELD FUND. The commencement of operations for this fund was after November
30, 1998. Consequently, there is no recent performance information available for
the fund's most recent fiscal year.
INTERNATIONAL FUND. The fund's investment strategy consisted of holding a
relatively concentrated portfolio, comprised of a restricted number of markets
and stocks on industry-leading companies. The stocks were bought at low
valuation levels, and in line with our investment philosophy, which means that
we used the recent period of market weakness to steadily add to existing
positions.
In addition, the fund was not invested in the emerging and Far Eastern markets,
but was instead concentrated primarily in Europe and Canada. This, in addition
to the fund's superior stock selection, contributed to the last fiscal year's
high performance. Throughout this period, portfolio turnover remained low. We
used new purchase monies to add to our existing holdings during this period. As
a result, there was very little actual change to our list.
LARGE-CAP RESEARCH FUND. Because the fund is new, information regarding recent
performance is not available.
SMALL-CAP VALUE FUND. In a year of challenge for small-cap stocks, our
management team focused on various industry sectors. For example, our
overweighting of companies in the technology and consumer non-cyclical
industries, such as apparel and general retailers, which moved ahead of the
broad market early in the year and then again during the fourth quarter, added
significant value to the portfolio. On the other hand, we reduced our exposure
to industrial companies late in the year when they continued to struggle despite
improved market conditions.
We believe the stage is set for a small-cap rebound now that these companies are
selling at historically low prices relative to larger companies and that our
value approach will enable us to continue to provide attractive long-term
returns relative to our peers.
For More Information 23
<PAGE>
<PAGE>
Affiliated Fund
Financial Information
FINANCIAL HIGHLIGHTS
This table describes the fund's performance for the fiscal period indicated.
"Total return" shows how much your investment in the fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. These Financial Highlights have been audited by Deloitte & Touche
LLP, the fund's independent auditors, in conjunction with their annual audit of
the fund's financial statements. Financial statements for the fiscal year ended
October 31, 1998 and the Independent Auditors' Report thereon appear in the
Annual Report to Shareholders for the fiscal year ended October 31, 1998 and are
incorporated by reference into the Statement of Additional Information, which is
available upon request. Certain information reflects financial results for a
single fund share.
================================================================================
<TABLE>
<CAPTION>
CLASS Y SHARES
--------------------------------
Year Ended October 31,
Per Share Operating Performance: 1998(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF YEAR $15.44
- --------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------
Net investment income .15
- --------------------------------------------------------------------------------
Net realized and unrealized
loss on investments (.89)
- --------------------------------------------------------------------------------
Total from investment operations (.74)
- --------------------------------------------------------------------------------
DISTRIBUTIONS
- --------------------------------------------------------------------------------
Dividends from net investment income (.13)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $14.57
- --------------------------------------------------------------------------------
TOTAL RETURN(b) (4.77)%
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:(c)
- --------------------------------------------------------------------------------
Expenses 0.24%
- --------------------------------------------------------------------------------
Net investment income 1.03%
- --------------------------------------------------------------------------------
================================================================================
<CAPTION>
Year Ended October 31,
--------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES: 1998
<S> <C>
NET ASSETS, END OF YEAR (000) $8,520,603
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 56.49%
- --------------------------------------------------------------------------------
</TABLE>
(a) From March 27, 1998 (commencement of offering) to October 31, 1998.
(b) Total return is not annualized and assumes the reinvestment of all
distributions.
(c) Not annualized.
See Notes to Financial Statements.
24 Financial Information
<PAGE>
<PAGE>
Affiliated Fund
LINE GRAPH COMPARISON
<TABLE>
<S> <C>
Immediately below is a comparison of a $10,000 investment in class A shares to (1) This shows total return which is the
the same investment in the S&P 500'r' Index, assuming reinvestment of all percent change in net asset value,
dividends and distributions. with all dividends and distributions
reinvested for the periods shown
================================================================================ ending October 31, 1998 using the
SEC-required uniform method to
[PERFORMANCE GRAPH] compute total return. Because class
Fiscal Year-end 10/31 Y shares are new, the line graph
The fund (class A shares) at net asset value comparison and the total returns
S&P 500'r' Index(2) shown below that comparison are for
================================================================================ class A shares at net asset value.
Average Annual Total Return Returns for class Y shares will be
For The Periods Ending October 31, 1998 somewhat higher because Y shares
have lower expenses.
1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------- (2) Performance for the unmanaged S&P
Class A(1) 3.90% 15.65% 14.15% 500'r' Index does not reflect
- -------------------------------------------------------------------------------- transaction costs, management fees
or sales charges.
</TABLE>
Financial Information 25
<PAGE>
<PAGE>
Growth Opportunities Fund
LINE GRAPH COMPARISON
<TABLE>
<S> <C>
Immediately below is a comparison of a $10,000 investment in class A shares to (1) This shows total return which is the
the same investment in the Russell Mid-Cap Growth Index'r', assuming percent change in net asset value,
reinvestment of all dividends and distributions. with all dividends and distributions
================================================================================ reinvested for the periods shown
ending October 31, 1998 using the
[PERFORMANCE GRAPH] SEC-required uniform method to
Fiscal Year-end 10/31 compute total return. Because class Y
The fund (class A shares) at net asset value shares are new, the line graph
Russell Mid-Cap Growth Index'r'(2) comparison and the total returns
shown below that comparison are for
================================================================================ class A shares at net asset value.
Average Annual Total Return Returns for class Y shares will be
For The Periods Ending October 31, 1998 somewhat higher because Y shares
LIFE have lower expenses. The class A
share inception date is 8/1/95.
- --------------------------------------------------------------------------------
Class A(1) -4.77%
- -------------------------------------------------------------------------------- (2) Performance for the unmanaged
Russell Mid-Cap Growth Index'r' does
not reflect transaction costs,
management fees or sales charges.
</TABLE>
26 Financial Information
<PAGE>
<PAGE>
International Fund
FINANCIAL HIGHLIGHTS
This table describes the fund's performance for the fiscal periods indicated.
"Total return" shows how much your investment in the fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. These Financial Highlights have been audited by Deloitte & Touche
LLP, the fund's independent auditors, in conjunction with their annual audit of
the fund's financial statements. Financial statements for the fiscal year ended
October 31, 1998 and the Independent Auditors' Report thereon appear in the
Annual Report to Shareholders for the fiscal year ended October 31, 1998 and are
incorporated by reference into the Statement of Additional Information, which is
available upon request. Certain information reflects financial results for a
single fund share.
================================================================================
<TABLE>
<CAPTION>
CLASS Y SHARES
--------------------------------
Year Ended October 31,
Per Share Operating Performance: 1998(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF YEAR $11.28
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------
Net investment income .15(e)
- --------------------------------------------------------------------------------
Net realized and unrealized
gain on investments .98
- --------------------------------------------------------------------------------
Total from investment operations 1.13
- --------------------------------------------------------------------------------
DISTRIBUTIONS
- --------------------------------------------------------------------------------
Dividends from net investment income --
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $12.41
- --------------------------------------------------------------------------------
TOTAL RETURN(b)(c) 10.02%
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:(c)
- --------------------------------------------------------------------------------
Expenses 0.84%
- --------------------------------------------------------------------------------
Net investment income 1.11%
- --------------------------------------------------------------------------------
================================================================================
<CAPTION>
Year Ended October 31,
--------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES: 1998 1997(d)
<S> <C> <C>
NET ASSETS, END OF YEAR (000) $153,033 $37,334
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 20.52% 29.72%
- --------------------------------------------------------------------------------
</TABLE>
(a) From December 30, 1997 (commencement of offering) to October 31, 1998.
(b) Total return is not annualized and assumes the reinvestment of all
distributions.
(c) Not annualized.
(d) From December 30, 1996 to October 31, 1997.
(e) Calculated using average shares outstanding during the period.
See Notes to Financial Statements.
Financial Information 27
<PAGE>
<PAGE>
International Fund
LINE GRAPH COMPARISON
<TABLE>
<S> <C>
Immediately below is a comparison of a $10,000 investment in class Y shares to (1) Performance for the unmanaged MSCI
the same investment in the Morgan Stanley European, Australasia and Far East EAFE Index'r' does not reflect
Index'r' ("MSCI EAFE Index'r'"), assuming reinvestment of all dividends and transaction costs, management fees
distributions. or sales charges.
================================================================================
(2) This shows total return which is the
[PERFORMANCE GRAPH] percent change in net asset value,
Fiscal Year-end 10/31 with all dividends and distributions
The fund (class Y shares) at net asset value reinvested for the periods shown
MSCI EAFE Index 'r'(1) ending October 31, 1998 using the
SEC-required uniform method to
================================================================================ compute total return. The class Y
Average Annual Total Return share inception date is 12/30/97.
For The Periods Ending October 31, 1998
LIFE
- --------------------------------------------------------------------------------
Class Y(2) 10.02%
- --------------------------------------------------------------------------------
</TABLE>
28 Financial Information
<PAGE>
<PAGE>
Large-Cap Research Fund
LINE GRAPH COMPARISON
<TABLE>
<S> <C>
Immediately below is a comparison of a $10,000 investment in class A shares to (1) Performance for the unmanaged S&P
the same investment in the S&P 500'r' Index, assuming reinvestment of all 500'r' Index does not reflect
dividends and distributions. transaction costs, management fees
================================================================================ or sales charges.
(2) This shows total return which is the
================================================================================ percent change in net asset value,
Average Annual Total Return with all dividends and distributions
For The Periods Ending November 30, 1998 reinvested for the periods shown
LIFE ending November 30, 1998 using the
- -------------------------------------------------------------------------------- SEC-required uniform method to
Class A(2) 0.00% compute total return. Because class
- -------------------------------------------------------------------------------- Y shares are new, the line graph
comparison and the total returns
shown below that comparison are for
class A shares at net asset value.
Returns for class Y shares will be
somewhat higher because Y shares
have lower expenses.The class A
share inception date is 6/3/92.
</TABLE>
Financial Information 29
<PAGE>
<PAGE>
Small-Cap Value Fund
FINANCIAL HIGHLIGHTS
This table describes the fund's performance for the fiscal periods indicated.
"Total return" shows how much your investment in the fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. These Financial Highlights have been audited by Deloitte & Touche
LLP, the fund's independent auditors, in conjunction with their annual audit of
the fund's financial statements. Financial statements for the fiscal year ended
November 30, 1998 and the Independent Auditors' Report thereon appear in the
Annual Report to Shareholders for the fiscal year ended November 30, 1998 and
are incorporated by reference into the Statement of Additional Information,
which is available upon request. Certain information reflects financial results
for a single fund share.
================================================================================
<TABLE>
<CAPTION>
CLASS Y SHARES
--------------------------------
Year Ended October 31,
Per Share Operating Performance: 1998(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF YEAR $16.34
- --------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------
Net investment loss (.01)(c)
- --------------------------------------------------------------------------------
Net realized and unrealized loss
on investments (1.93)
- --------------------------------------------------------------------------------
Total from investment operations (1.94)
- --------------------------------------------------------------------------------
DISTRIBUTIONS
- --------------------------------------------------------------------------------
Dividends from net investment income --
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $14.40
- --------------------------------------------------------------------------------
TOTAL RETURN(b) (11.87)%
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:(d)
- --------------------------------------------------------------------------------
Expenses 0.96%
- --------------------------------------------------------------------------------
Net investment loss (0.05)%
- --------------------------------------------------------------------------------
================================================================================
<CAPTION>
Year Ended November 30,
--------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES: 1998 1997
<S> <C> <C>
NET ASSETS, END OF YEAR (000) $515,379 $435,776
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 67.86% 45.24%
- --------------------------------------------------------------------------------
</TABLE>
(a) From December 30, 1997 (commencement of offering) to November 30, 1998.
(b) Total return is not annualized and assumes the reinvestment of all
distributions.
(c) Calculated using average shares outstanding during the period.
(d) Not annualized.
See Notes to Financial Statements.
30 Financial Information
<PAGE>
<PAGE>
Small-Cap Value Fund
LINE GRAPH COMPARISON
<TABLE>
<S> <C>
Immediately below is a comparison of a $10,000 investment in class Y shares to (1) Performance for the unmanaged
the same investment in the Russell 2000'r' Index, assuming reinvestment of all Russell 2000'r' Index does not
dividends and distributions. reflect transaction costs,
================================================================================ management fees or sales charges.
[PERFORMANCE GRAPH]
Fiscal Year-end 11/30
The fund (class Y shares) at net asset value
Russell 2000'r' Index (1) (2) This shows total return which is the
percent change in net asset value,
================================================================================ with all dividends and distributions
Average Annual Total Return reinvested for the periods shown
For The Periods Ending November 30, 1998 ending November 30, 1998 using the
LIFE SEC-required uniform method to
- -------------------------------------------------------------------------------- compute total return. The class Y
Class Y(2) -11.87% share commencement of offering date
- -------------------------------------------------------------------------------- is 12/30/97.
</TABLE>
Financial Information 31
<PAGE>
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
<PAGE>
<TABLE>
<S> <C>
More information on these funds is available free upon request, including the To obtain information:
following:
BY TELEPHONE. Call the funds at:
800-426-1130
ANNUAL/SEMI-ANNUAL REPORT
BY MAIL. Write to the funds at:
Describes the funds, lists portfolio holdings and contains a letter from the The Lord Abbett Family of Funds
fund's manager discussing recent market conditions and each fund's investment 767 Fifth Avenue
strategies. New York, NY 10153-0203
VIA THE INTERNET.
STATEMENT OF ADDITIONAL INFORMATION ("SAI") LORD, ABBETT & CO.
http://www.lordabbett.com
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 Text only versions of fund documents can
reference (is legally considered part of this prospectus). be viewed online or downloaded from:
SEC
http://www.sec.gov
Affiliated Fund
Growth Opportunities Fund You can also obtain copies by visiting
High Yield Fund the SEC's Public Reference Room in
International Fund Washington, DC (phone 800-SEC-0330) or
Large-Cap Research Fund by sending your request and a
Small-Cap Value Fund duplicating fee to the SEC's Public
Reference Section, Washington, DC
The General Motors Building 20549-6009.
767 Fifth Avenue
New York, NY 10153-0203 LAPROSP-Y6-1-599
- -------------------------------------------------------------------------------- (5/99)
SEC file numbers: 811-3, 811-07538, 811-07988, 811-07538, 811-6650, 811-06650
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Lord, Abbett & Co.
Statement of Additional Information May 1, 1999
Lord Abbett Affiliated Fund
Lord Abbett Growth Opportunities Fund
Lord Abbett High Yield Fund
Lord Abbett International Fund
Lord Abbett Small-Cap Value Fund
Large-Cap Research Fund
This Statement of Additional Information is not a Prospectus. A Prospectus for
Class Y shares of the Funds identified below may be obtained from your
securities dealer or from Lord Abbett Distributor LLC ("Lord Abbett
Distributor") at the General Motors Building, 767 Fifth Avenue, New York, New
York 10153-0203. This Statement relates to, and should be read in conjunction
with, the Prospectus dated March 1, 1999. This Statement of Additional
Information, relating to Lord Abbett Affiliated Fund, Inc. ("Affiliated Fund");
Lord Abbett Large-Cap Research Fund ("Large-Cap Research Fund"); Lord Abbett
Small-Cap Fund ("Small-Cap Fund") and Lord Abbett Growth Opportunities Fund
("Growth Opportunities Fund"), of which are series of Lord Abbett Research Fund,
Inc.; Lord Abbett International Fund ("International Fund"), which is a series
of Lord Abbett Securities Trust; and Lord Abbett High Yield Fund ("High Yield
Fund"), which is a series of Lord Abbett Investment Trust, (each individually
"we" or the "Fund", collectively (the "Funds"), may be obtained from your
securities dealer or from Lord Abbett Distributor LLC ("Lord Abbett
Distributor") at The General Motors Building, 767 Fifth Avenue, New York, New
York 10153-0203. This Statement of Additional Information relates to, and should
be read in conjunction with, the Prospectus dated March 1, 1999 (the
"Prospectus").
Our Boards of Directors/Trustees have authority to create and classify shares in
separate series, without further action by shareholders. To date, the Boards of
Directors/Trustees have authorized five classes of shares for each Fund (Class
A, B, C, P and Y). The Board of a Fund will allocate a Fund's shares among its
classes from time to time. All shares of a Fund have equal noncumulative voting
rights and equal rights with respect to dividends, assets and liquidation,
except for certain class-specific expenses. They are fully paid and
nonassessable when issued and have no preemptive or conversion rights. Although
no present plans exist to do so, further classes or series may be added to one
or more of the Funds in the future. The Investment Company Act of 1940, as
amended (the "Act"), requires that where more than one series exists for a Fund,
each series must be preferred over all other series in respect of assets
specifically allocated to such series.
Rule 18f-2 under the Act provides that any matter required to be submitted, by
the provisions of the Act or applicable state law or otherwise, to the holders
of the outstanding voting securities of an investment company such as a Fund
shall not be deemed to have been effectively acted upon unless approved by the
holders of a majority of the outstanding shares of each class or series affected
by such matter. Rule 18f-2 further provides that a class or series shall be
deemed to be affected by a matter unless the interests of each class or series
in the matter are substantially identical or the matter does not affect any
interest of such class or series. However, the Rule exempts the selection of
independent public accountants, the approval of principal distribution contracts
and the election of directors from the separate voting requirements of the Rule.
Shareholder inquiries should be made by writing directly to your Fund or by
calling 800-821-5129. In addition, you can make inquiries through Lord Abbett
Distributor.
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TABLE OF CONTENTS PAGE
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1. Investment Policies 2
2. Directors (Trustees) and Officers 11
3. Investment Advisory and Other Services 16
4. Portfolio Transactions 18
5. Purchases, Redemptions
and Shareholder Services 19
6. Taxes 20
7. Past Performance 21
8. Information About The Funds 22
9. Financial Statements 23
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1.
Investment Policies
Each Fund will not change its investment objective mentioned in the Prospectus
or the following fundamental investment restrictions without shareholder
approval. If a Fund determines that its objective can best be achieved by a
change in any non-fundamental investment policy, strategy or restriction, it
may make such change without shareholder approval by disclosing it in the
Prospectus or Statement of Additional Information.
Fundamental Investment Restrictions. Each Fund may not: (1) borrow money, except
that (i) each Fund may borrow from banks (as defined in the Investment Company
Act of 1940, as amended (the "Act")) in amounts up to 33 1/3% of its total
assets (including the amount borrowed), (ii) each Fund may borrow up to an
additional 5% of its total assets for temporary purposes, (iii) each Fund may
obtain such short-term credit as may be necessary for the clearance of purchases
and sales of portfolio securities and (iv) each Fund may purchase securities on
margin to the extent permitted by applicable law; (2) pledge its assets (other
than to secure borrowings, or to the extent permitted by the Fund's investment
policies as permitted by applicable law); (3) engage in the underwriting of
securities, except pursuant to a merger or acquisition or to the extent that, in
connection with the disposition of its portfolio securities, it may be deemed to
be an underwriter under federal securities laws; (4) make loans to other
persons, except that the acquisition of bonds, debentures or other corporate
debt securities and investment in government obligations, commercial paper,
pass-through instruments, certificates of deposit, bankers acceptances,
repurchase agreements or any similar instruments shall not be subject to this
limitation, and except further that each Fund may lend its portfolio securities,
provided that the lending of portfolio securities may be made only in accordance
with applicable law; (5) buy or sell real estate (except that each Fund may
invest in securities directly or indirectly secured by real estate or interests
therein or issued by companies which invest in real estate or interests therein)
or commodities or commodity contracts (except to the extent each Fund may do so
in accordance with applicable law and without registering as a commodity pool
operator under the Commodity Exchange Act as, for example, with futures
contracts); (6) with respect to 75% of the gross assets of each Fund, buy
securities of one issuer representing more than (i) 5% of each Fund's gross
assets, except securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities or (ii) 10% of the voting securities of such
issuer; (7) invest more than 25% of its assets, taken at market value, in the
securities of issuers in any particular industry (excluding securities of the
U.S. Government, its agencies and instrumentalities); or (8) issue senior
securities to the extent such issuance would violate applicable law.
With respect to the restrictions mentioned herein, compliance therewith will not
be affected by changes in the market value of portfolio securities but will be
determined at the time of purchase or sale of such securities.
Non-Fundamental Investment Restrictions. In addition to the investment
restrictions above which cannot be changed without shareholder approval, each
Fund also is subject to the following non-fundamental investment policies which
may be changed by the Boards of Directors (Trustees) without shareholder
approval. Each Fund may not: (1) borrow in excess of 33 1/3% of its total assets
(including the amount borrowed), and then only as a temporary measure for
extraordinary or emergency purposes; (2) make short sales of securities or
maintain a short position except to the extent permitted by applicable law; (3)
invest knowingly more than 15% of its net assets (at the time of investment) in
illiquid securities, except for securities qualifying for resale under Rule 144A
of the Securities Act of 1933, deemed to be liquid by the Boards of Directors
(Trustees); (4) invest in the securities of other investment companies as
defined under the Act, except as permitted by applicable law; (5) invest in
securities of issuers which, with their predecessors, have a record of less than
three years of continuous operation, if more than 5% of each Fund's total assets
would be invested in such securities (this restriction shall not apply to
mortgaged-backed securities, asset-backed securities or obligations issued or
guaranteed by the U. S. Government, its agencies or instrumentalities);
(6) hold securities of any issuer if more than 1/2 of 1% of the securities of
such issuer are owned beneficially by one or more of each Fund's officers or
directors (trustees) or by one or more partners or members of the Fund's
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 each
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Fund's total assets (included within such limitation, but not to exceed 2%
of each Fund's 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 a Fund's prospectus and statement of additional information, as
they may be amended from time to time; (10) buy from or sell to any of a Fund's
officers, directors (trustees), employees, or its investment adviser or any of a
Fund's officers, directors (trustees), partners or employees, any securities
other than shares of a Fund; (11) with respect to Affiliated Fund, pledge,
mortgage or hypothecate its assets; however, this provision does not apply to
the grant of escrow receipts or the entry into other similar escrow arrangements
arising out of the writing of covered call options; and (12) with respect to
High Yield Fund, invest more than 10% of the market value of its gross assets at
the time of investment in debt securities which are in default as to interest or
principal.
For the year ended October 31, 1998, Affiliated Fund's portfolio turnover rate
was 56.49% versus 46.41% for the prior year. For the year ended November 30,
1998, the Small-Cap Fund's portfolio turnover rate was 67.86% versus 45.24% for
the prior year; and the Large-Cap Research Fund's portfolio turnover rate was
% versus % for the prior year. For the year ended October 31, 1998, the
International Fund's portfolio turnover rate was 20.52% versus 29.72% for the
period December 13, 1996 (commencement of operations) to October 31, 1997. For
the year ended November 30, 1998, the Growth Opportunities Fund's turnover rate
was 136.81% versus 52.86% for the prior year.
With respect to the Affiliated Fund, it has no current intention to do so, but
may invest in financial futures & options on financial futures.
INVESTMENT TECHNIQUES
Lending Portfolio Securities (Affiliated Fund, Growth Opportunities Fund,
International Fund, Large-Cap Research Fund, Small-Cap Fund) The Funds may lend
portfolio securities to registered broker-dealers. These loans may not exceed
30% of total assets. The Funds' loans 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 the loans 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, the Funds may allow to the borrower and/or a
third party that is not affiliated with the Funds and is acting as a "placing
broker" a part of the interest received with respect to the investment of
collateral received for securities loaned. No fee will be paid to affiliated
persons of the Funds.
By lending portfolio securities, the Funds can increase their 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 the
borrower when such U.S. Government Securities are used as collateral. The Funds
will comply with the following conditions whenever they loans 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 must terminate the loan and regain the right to vote the securities.
Rule 144A Securities (Affiliated Fund) We may invest in securities qualifying
for resale to "qualified institutional buyers" under SEC Rule 144A that are
determined by the Board, or by Lord Abbett pursuant to the Board's delegation,
to be liquid securities. The Board will review quarterly the liquidity of the
investments the Fund makes in such
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securities. Investments by the Fund in Rule 144A securities initially determined
to be liquid could have the effect of diminishing the level of the Fund's
liquidity during periods of decreased market interest in such securities among
qualified institutional buyers.
Other Investment Policies (Affiliated Fund and Large-Cap Research Fund) As
stated in the Prospectus, the Fund may write covered call options which are
traded on a national securities exchange with respect to securities in our
portfolio in an attempt to increase income and to provide greater flexibility in
the disposition of portfolio securities. A "call option" is a contract sold for
a price (the "premium") giving its holder the right to buy a specific number of
shares of stock at a specific price prior to a specified date. A "covered call
option" is a call option issued on securities already owned by the writer of the
call option for delivery to the holder upon the exercise of the option. During
the period of the option, the Fund will forgo the opportunity to profit from any
increase in the market price of the underlying security above the exercise price
of the option (to the extent that the increase exceeds our net premium). We also
may enter into "closing purchase transactions" in order to terminate the
obligation to deliver the underlying security (this may result in a short-term
gain or loss). A closing purchase transaction is the purchase of a call option
(at a cost which may be more or less than the premium received for writing the
original call option) on the same security, with the same exercise price and
call period as the option previously written. If the Fund is unable to enter
into a closing purchase transaction, it may be required to hold a security that
it might otherwise have sold to protect against depreciation. The Fund does not
intend to write covered call options with respect to securities with an
aggregate market value of more than 10% of its gross assets at the time an
option is written. This percentage limitation will not be increased without
prior disclosure in the Fund's current Prospectus.
Repurchase Agreements (International Fund) The 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 each Fund have a total value in excess of the value of the
repurchase agreement. The 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 Fund to keep all of its assets at work while retaining
flexibility in pursuit of investments of a longer term nature.
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, the Fund
may incur a loss upon disposition of them. 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 each 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
Fund management acknowledges these risks, it is expected that they can be
controlled through stringent selection criteria and careful monitoring
procedures. Fund management intends to limit repurchase agreements to
transactions with dealers and financial institutions believed by Fund management
to present minimal credit risks. Fund management will monitor creditworthiness
of the repurchase agreement sellers on an ongoing basis.
The Fund will enter into repurchase agreements only with those primary reporting
dealers that report to the Federal Reserve Bank of New York and with the 100
largest United States commercial banks and the underlying securities purchased
under the agreements will consist only of those securities in which the Fund
otherwise may invest.
Warrants (International Fund and Large-Cap Research Fund) Pursuant to Texas
regulations, the Fund will not invest more than 5% of its assets in warrants and
not more than 2% of such value in warrants not listed on the New York or
American Stock Exchanges, except when they form a unit with other securities. As
a matter of operating policy, we will not invest more than 5% of our net assets
in rights.
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Covered Call Options (International Fund and Large-Cap Research Fund) As stated
in the Prospectus, the Fund may write covered call options which are traded on a
national securities exchange with respect to securities in its portfolio in an
attempt to increase its income and to provide greater flexibility in the
disposition of its portfolio securities. A "call option" is a contract sold for
a price (the "premium") giving its holder the right to buy a specific number of
shares of stock at a specific price prior to a specified date. A "covered call
option" is a call option issued on securities already owned by the writer of the
call option for delivery to the holder upon the exercise of the option. During
the period of the option, the Fund forgoes the opportunity to profit from any
increase in the market price of the underlying security above the exercise price
of the option (to the extent that the increase exceeds its net premium). The
Fund may enter into "closing purchase transactions" in order to terminate its
obligation to deliver the underlying security (this may result in a short-term
gain or loss). A closing purchase transaction is the purchase of a call option
(at a cost which may be more or less than the premium received for writing the
original call option) on the same security, with the same exercise price and
call period as the option previously written. If the Fund is unable to enter
into a closing purchase transaction, it may be required to hold a security that
it might otherwise have sold to protect against depreciation. The Fund intends
to write covered call options with respect to securities with an aggregate
market value of more than 5% of its gross assets at the time an option is
written. This percentage limitation will not be increased without prior
disclosure in the current Prospectus.
The Fund's custodian will segregate cash or liquid high-grade debt securities in
an amount not less than that required by Securities and Exchange Commission
("SEC") Release 10666 with respect to the Fund's assets committed to written
covered call options. If the value of the segregated securities declines,
additional cash or debt securities will be added on a daily basis (i.e.,
marked-to-market) so that the segregated amount will not be less than the amount
of the Fund's commitments with respect to such written options.
Financial Futures Contracts (International Fund and Large-Cap Research Fund) The
Fund may enter into contracts for the future delivery of a financial instrument,
such as a security or the cash value of a securities index. This investment
technique is designed primarily to hedge (i.e., protect) against anticipated
future changes in interest rates or market conditions which otherwise might
adversely affect the value of securities which we hold or intend to purchase. A
"sale" of a futures contract means the undertaking of a contractual obligation
to deliver the securities or the cash value of an index called for by the
contract at a specified price during a specified delivery period. A "purchase"
of a futures contract means the undertaking of a contractual obligation to
acquire the securities or cash value of an index at a specified price during a
specified delivery period. At the time of delivery pursuant to the contract,
adjustments are made to recognize differences in value arising from the delivery
of securities which differ from those specified in the contract. In some cases,
securities called for by a futures contract may not have been issued at the time
the contract was written. The Fund will not enter into any futures contracts or
options on futures contracts if the aggregate of the market value of the
securities covered by its outstanding futures contracts and securities covered
by futures contracts subject to the outstanding options written by it would
exceed 50% of its total assets.
Although some financial futures contracts by their terms call for the actual
delivery or acquisition of securities, in most cases, a party will close out the
contractual commitment before delivery without having to make or take delivery
of the security by purchasing (or selling, as the case may be) on a commodities
exchange an identical futures contract calling for delivery in the same month.
Such a transaction, if effected through a member of an exchange, cancels the
obligation to make or take delivery of the securities. All transactions in the
futures market are made, offset or fulfilled through a clearing house associated
with the exchange on which the contracts are traded. The International Fund will
incur brokerage fees when it purchases or sells contracts and will be required
to maintain margin deposits. At the time it enters into a futures contract, it
is required to deposit with its custodian, on behalf of the broker, a specified
amount of cash or eligible securities called "initial margin." The initial
margin required for a futures contract is set by the exchange on which the
contract is traded. Subsequent payments, called "variation margin," to and from
the broker are made on a daily basis as the market price of the futures contract
fluctuates. The costs incurred in connection with futures transactions could
reduce the Fund's return. Futures contracts entail risks. If the investment
adviser's judgment about the general
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direction of interest rates or markets is wrong, the overall performance may be
poorer than if no such contracts had been entered into.
There may be an imperfect correlation between movements in prices of futures
contracts and portfolio securities being hedged. The degree of difference in
price movements between futures contracts and the securities (or securities
indices) being hedged depends upon such things as variations in demand for
futures contracts and securities underlying the contracts and differences
between the liquidity of the markets for such contracts and the securities
underlying them. In addition, the market prices of futures contracts may be
affected by certain factors not directly related to the underlying securities.
At any given time, the availability of futures contracts, and hence their
prices, are influenced by credit conditions and margin requirements. Due to the
possibility of price distortions in the futures market and because of the
imperfect correlation between movements in the prices of securities and
movements in the prices of futures contracts, a correct forecast of market
trends by the investment adviser may not result in a successful hedging
transaction.
Options on Financial Futures Contracts (International Fund and Large-Cap
Research Fund) The Fund may purchase and write call and put options on financial
futures contracts. An option on a futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in a futures
contract at a specified exercise price at any time during the period of the
option. Upon exercise, the writer of the option delivers the futures contract to
the holder at the exercise price. The Fund would be required to deposit with our
custodian initial margin and maintenance margin with respect to put and call
options on futures contracts written by us. Options on futures contracts involve
risks similar to the risks relating to transactions in financial futures
contracts described above. Generally speaking, a given dollar amount used to
purchase an option on a financial futures contract can hedge a much greater
value of underlying securities than if that amount were used to directly
purchase the same financial futures. Should the event that the Fund intends to
hedge (or protect) against not materialize, however, the option may expire
worthless, in which case the Fund would lose the premium paid therefor.
Segregated Accounts (International Fund and Large-Cap Research Fund) To the
extent required to comply with Securities and Exchange Commission Release 10666
and any related SEC policies, when purchasing a futures contract, or writing a
put option, the Fund will maintain in a segregated account at its custodian bank
cash, U.S. Government and other permitted securities to cover its position.
Forward Foreign Currency Contracts (Small-Cap Fund, Growth Opportunities Fund) 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. Each
Fund expects to enter into forward foreign currency contracts in primarily two
circumstances. First, when a 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, each 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, each Fund may enter into a
forward contract to sell the amount of foreign currency approximating the value
of some or all of each Fund's portfolio securities denominated in such foreign
currency or, in the alternative, each Fund may use a cross-hedging technique
whereby it sells another currency which each 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. Each Fund does not intend to enter into such forward
contracts under this second circumstance on a continuous basis.
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Repurchase Agreements (Small-Cap Fund, Growth Opportunities Fund) If each Fund
enters into repurchase agreements as provided in clause (4) of the fundamental
investment restrictions above, it will do so only with those primary reporting
dealers that report to the Federal Reserve Bank of New York and with the 100
largest United States commercial banks and the underlying securities purchased
under the agreements will consist only of those securities in which each Fund
otherwise may invest.
Foreign Currency Hedging Techniques (Small-Cap Fund, Growth Opportunities Fund)
The Funds may utilize various foreign currency hedging techniques, including
forward foreign currency contracts and foreign currency put and call options.
Foreign Currency Put and Call Options (Small-Cap Fund, Growth Opportunities
Fund) The Funds also may 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 Funds, 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. Unlisted foreign
currency options are generally less liquid than listed options and involve the
credit risk associated with the individual issuer. Unlisted options, together
with other illiquid securities, are subject to a limit of 15% of each Funds' net
assets.
A call option written by the Funds gives the purchaser, upon payment of a
premium, the right to purchase from the a currency at the exercise price until
the expiration of the option. The Funds may write call options 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 Funds or in such cross currency (referred to above) to cover
such call writing.
The Funds' custodian will segregate cash or permitted securities belonging to
the Funds in an amount not less than that required by SEC Release 10666 and
related policies with respect to the Funds' assets committed to (a) writing
options, (b) forward foreign currency contracts and (c) cross hedges entered
into by the Funds. If the value of the securities segregated declines,
additional cash or debt securities will be added on a daily basis (i.e., marked
to market), so that the segregated amount will not be less than the amount of
the Funds' commitments with respect to such written options, forward foreign
currency contracts and cross hedges.
Stock Options, Options on Stock Indices and Stock Index Futures (Small-Cap Fund)
The Fund may write put and call options on stocks only if they are covered, and
such options must remain covered so long as the Fund is obligated as a writer.
The Fund will not (a) write puts having an aggregate exercise price greater than
25% of the Fund's total net assets; or (b) purchase (i) put options on stocks
not held in the Fund's portfolio, (ii) put options on stock indices or (iii)
call options on stocks or stock indices if, after any such purchase, the
aggregate premiums paid for such options would exceed 20% of the Fund's total
net assets.
Call Options on Stock (Small-Cap Fund) The Fund may, from time to time, write
call options on its portfolio securities. The Fund may write only call options
which are "covered," meaning that the Fund either owns the underlying security
or has an absolute and immediate right to acquire that security, without
additional cash consideration, upon conversion or exchange of other securities
currently held in its portfolio. In addition, the Fund will not permit the call
to become uncovered prior to the expiration of the option or termination through
a closing purchase transaction as described below. If the Fund writes a call
option, the purchaser of the option has the right to buy (and the Fund has the
obligation to sell) the underlying security at the exercise price throughout the
term of the option. The amount paid to
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the Fund by the purchaser of the option is the "premium." The Fund's obligation
to deliver the underlying security against payment of the exercise price would
terminate either upon expiration of the option or earlier if the Fund were to
effect a "closing purchase transaction" through the purchase of an equivalent
option on an exchange. There can be no assurance that a closing purchase
transaction can be effected. The Fund does not intend to write covered call
options with respect to securities with an aggregate market value of more than
5% of its gross assets at the time an option is written. This percentage
limitation will not be increased without prior disclosure in our current
prospectus.
The Fund would not be able to effect a closing purchase transaction after it had
received notice of exercise. In order to write a call option, the Fund is
required to comply with the rules of The Options Clearing Corporation and the
various exchanges with respect to collateral requirements. The Fund may not
purchase call options except in connection with a closing purchase transaction.
It is possible that the cost of effecting a closing purchase transaction may be
greater than the premium received by the Fund for writing the option.
Generally, the Fund intends to write listed covered call options during periods
when it anticipates declines in the market values of portfolio securities
because the premiums received may offset to some extent the decline in the
Fund's net asset value occasioned by such declines in market value. Except as
part of the "sell discipline" described below, the Fund will generally not write
listed covered call options when it anticipates that the market values of its
portfolio securities will increase.
One reason for the Fund to write call options is as part of a "sell discipline."
If the Fund decides that a portfolio security would be overvalued and should be
sold at a certain price higher than the current price, it could write an option
on the stock at the higher price. Should the stock subsequently reach that price
and the option be exercised, the Fund would, in effect, have increased the
selling price of that stock, which it would have sold at that price in any
event, by the amount of the premium. In the event the market price of the stock
declined and the option were not exercised, the premium would offset all or some
portion of the decline. It is possible that the price of the stock could
increase beyond the exercise price; in that event, the Fund would forego the
opportunity to sell the stock at that higher price. In addition, call options
may be used as part of a different strategy in connection with sales of
portfolio securities. If, in the judgment of the Fund Management, the market
price of a stock is overvalued and it should be sold, the Fund may elect to
write a call option with an exercise price substantially below the current
market price. As long as the value of the underlying security remains above the
exercise price during the term of the option, the option will, in all
probability, be exercised, in which case the Fund will be required to sell the
stock at the exercise price. If the sum of the premium and the exercise price
exceeds the market price of the stock at the time the call option is written,
the Fund would, in effect, have increased the selling price of the stock. The
Fund would not write a call option in these circumstances if the sum of the
premium and the exercise price were less than the current market price of the
stock.
Put Options on Stock (Small-Cap Fund) The Fund may also write listed put
options. If the Fund writes a put option, it is obligated to purchase a given
security at a specified price at any time during the term of the option.
Writing listed put options is a useful portfolio investment strategy when the
Fund has cash or other reserves available for investment as a result of sales of
Fund shares or, more importantly, because Fund Management believes a more
defensive and less fully invested position is desirable in light of market
conditions. If the Fund Management wishes to invest its cash or reserves in a
particular security at a price lower than current market value, it may write a
put option on that security at an exercise price which reflects the lower price
it is willing to pay. The buyer of the put option generally will not exercise
the option unless the market price of the underlying security declines to a
price near or below the exercise price. If the Fund writes a listed put, the
price of the underlying stock declines and the option is exercised, the premium,
net of transaction charges, will reduce the purchase price paid by the Fund for
the stock. The price of the stock may decline by an amount in excess of the
premium, in which event the Fund would have foregone an opportunity to purchase
the stock at a lower price.
If, prior to the exercise of a put option, the Fund determines that it no longer
wishes to invest in the stock on which the put option had been written, the Fund
may be able to effect a closing purchase transaction on an exchange by
purchasing
8
<PAGE>
<PAGE>
a put option of the same Fund as the one which it has previously written. The
cost of effecting a closing purchase transaction may be greater than the premium
received on writing the put option and there is no guarantee that a closing
purchase transaction can be effected.
Stock Index Options (Small-Cap Fund) Except as describe below, the Fund will
write call options on indices only if on such date it holds a portfolio of
stocks at least equal to the value of the index times the multiplier times the
number of contracts. When the Fund writes a call option on a broadly-based stock
market index, it will segregate or put into escrow with its custodian, or pledge
to a broker as collateral for the option, one or more "qualified securities"
with a market value at the time the option is written of not less than 100% of
the current index value times the multiplier times the number of contracts.
Segregated Accounts (Small-Cap Fund) If the Fund has written an option on an
industry or market segment index, it will segregate or put into escrow with its
custodian, or pledge to a broker as collateral for the option, at least ten
"qualified securities," which are securities of an issuer in such industry or
market segment, with a market value at the time the option is written of not
less than 100% of the current index value times the multiplier times the number
of contracts. A "qualified security" is an equity security which is listed on a
national securities exchange or listed on the National Association of Securities
Dealers Automated Quotation System against which the Fund has not written a
stock call option and which has not been hedged by the Fund by the sale of stock
index futures. Such securities will include stocks which represent at least 50%
of the weighing of the industry or market segment index and will represent at
least 50% of the Fund's holdings in that industry or market segment. No
individual security will represent more than 25% of the amount so segregated,
pledged or escrowed. If at the close of business on any day the market value of
such qualified securities so segregated, escrowed or pledged falls below 100% of
the current index value times the multiplier times the number of contracts, the
Fund will so segregate, escrow or pledge an amount in cash, Treasury bills or
other high-grade short-term obligations equal in value to the difference. In
addition, when the Fund writes a call on an index which is in-the-money at the
time the call is written, the Fund will segregate with its custodian or pledge
to the broker as collateral cash, equity securities, non-investment grade debt,
short term U.S. Government securities or other high-grade short-term debt
obligations equal in value to the amount by which the call is in-the-money times
the multiplier times the number of contracts. Any amount segregated pursuant to
the foregoing sentence may be applied to the Small-Cap Fund's obligation to
segregate additional amounts in the event that the market value of the qualified
securities falls below 100% of the current index value times the multiplier
times the number of contracts. However, if the Fund holds a call on the same
index as the call written where the exercise price of the call held is equal to
or less than the exercise price of the call written or greater than the exercise
price of the call written if the difference is maintained by the Fund in cash,
equity securities, non-investment grade debt, treasury bills or other high-grade
short-term obligations in a segregated account with its custodian, it will not
be subject to the requirements describe in this paragraph. In instances
involving the purchase of stock index futures contracts by the Fund, an amount
of cash or permitted securities equal to the market value of the futures
contracts will be deposited in a segregated account with the its custodian
and/or in a margin account with a broker to collateralize the position and
thereby insure that the use of such futures are unleveraged.
Under regulations of the Commodity Exchange Act, investment companies registered
under the Act are exempt from the definition of "commodity pool operator,"
provided all of the Fund's commodity futures or commodity options transactions
constitute bona fide hedging transactions within the meaning of the CFTC's
regulations. The Fund will use stock index futures and options on futures as
described herein in a manner consistent with this requirement.
Stock Index Futures (Small-Cap Fund) The Fund will engage in transactions in
stock index futures contracts as a hedge against changes resulting from market
conditions in the values of securities which are held in the Fund's portfolio or
which it intends to purchase. The Fund will engage in such transactions when
they are economically appropriate for the reduction of risks inherent in the
ongoing management of the Fund. The Fund may not purchase or sell stock index
futures if, immediately thereafter, more than one-third of its net assets would
be hedged and, in addition, except as described above in the case of a call
written and held on the same index, will write call options on indices or sell
stock index futures only if the amount resulting from the multiplication of the
then current level of the index (or indices) upon
9
<PAGE>
<PAGE>
which the option or future contract(s) is based, the applicable multiplier(s),
and the number of futures or options contracts which would be outstanding, would
not exceed one-third of the value of the Fund's net assets.
RISK FACTORS
Risk Factors (Affiliated Fund) As stated in the Prospectus, the Fund may invest
no more than 5% of its net assets (at the time of investment) in lower-rated,
high-yield bonds. In general, the market for lower-rated, high-yield bonds is
more limited than the market for higher-rated bonds, and because trading in such
bonds may be thinner and less active, the market prices of such bonds may
fluctuate more than the prices of higher-rated bonds, particularly in times of
market stress. In addition, while the market for high-yield, corporate debt
securities has been in existence for many years, the market in recent years
experienced a dramatic increase in the large-scale use of such securities to
fund highly-leveraged corporate acquisitions and restructurings. Accordingly,
past experience may not provide an accurate indication of future performance of
the high-yield bond market, especially during periods of economic recession.
Other risks which may be associated with lower-rated, high-yield bonds include
their relative insensitivity to interest-rate changes; the exercise of any of
their redemption or call provisions in a declining market which may result in
their replacement by lower-yielding bonds; and legislation, from time to time,
which may adversely affect their market. Since the risk of default is higher
among lower-rated, high-yield bonds, Lord Abbett's research and analyses are an
important ingredient in the selection of such bonds. Through portfolio
diversification, good credit analysis and attention to current developments and
trends in interest rates and economic conditions, investment risk can be
reduced, although there is no assurance that losses will not occur. The Fund
does not have any minimum rating criteria applicable to the fixed-income
securities in which it invests.
Risks of Transactions in Stock Options (Small-Cap Fund) Writing options involves
the risk that there will be no market in which to effect a closing transaction.
An option position may be closed out only on an exchange which provides a
secondary market for an option of the same Fund. Although the Fund will
generally write only those options for which there appears to be an active
secondary market, there is no assurance that a liquid secondary market on an
exchange will exist for any particular option, or at any particular time, and
for some options no secondary market on an exchange may exist. If the Fund, as a
covered call option writer, is unable to effect a closing purchase transaction
in a secondary market, it will not be able to sell the underlying security until
the option expires or it delivers the underlying security upon exercise.
Risks of Options on Indices (Small-Cap Fund) The Fund's purchase and sale of
options on indices will be subject to risks described above under "Risk of
Transactions in Stock Options". In addition, the distinctive characteristics of
options on indices create certain risks that are not present with stock options.
Because the value of an index option depends upon movements in the level of the
index rather than the price of a particular stock, whether the Fund will realize
a gain or loss on the purchase or sale of an option on an index depends upon
movements in the level of stock prices in the stock market generally or in an
industry or market segment rather than movements in the price of a particular
stock. Accordingly, successful use by the Fund of options on indices would be
subject to the investment adviser's ability to predict correctly movements in
the direction of the stock market generally or of a particular industry. This
requires different skills and techniques than predicting changes in the price of
individual stocks.
Index prices may be distorted if trading of certain stocks included in the index
is interrupted. Trading in the index option also may be interrupted in certain
circumstances, such as if trading were halted in a substantial number of stocks
included in the index. If this occurred, the Fund would not be able to close out
options which it had purchased or written and, if restrictions on exercise were
imposed, may be unable to exercise an option it holds, which could result in
substantial losses to the Fund. It is the Fund's policy to purchase or write
options only on indices which include a number of stocks sufficient to minimize
the likelihood of a trading halt in the index.
10
<PAGE>
<PAGE>
Trading in index options commenced in April 1983 with the S&P 100 option
(formerly called the CBOE 100). Since that time a number of additional index
option contracts have been introduced including options on industry indices.
Although the markets for certain index option contracts have developed rapidly,
the markets for other index options are still relatively illiquid. The ability
to establish and close out positions on such options will be subject to the
development and maintenance of a liquid secondary market. It is not certain that
this market will develop in all index option contracts. The Fund will not
purchase or sell any index option contract unless and until, in Fund
management's opinion, the market for such options has developed sufficiently
that such risk in connection with such transactions in no greater than such risk
in connection with options on stocks.
Special Risks of Writing Calls on Indices (Small-Cap Fund) Because exercises of
index options are settled in cash, a call writer cannot determine the amount of
its settlement obligations in advance and, unlike call writing on specific
stocks, cannot provide in advance for, or cover, its potential settlement
obligations by acquiring and holding the underlying securities. However, the
Fund will write call options on indices only under the circumstances described
above under "Limitations on the Purchases and Sales of Stock Options, Options on
Stock Indices and Stock Index Futures."
Price movements in the Fund's portfolio probably will not correlate precisely
with movements in the level of the index and, therefore, the Fund bears the risk
that the price of the securities held may not increase as much as the index. In
such event the Fund would bear a loss on the call which is not completely offset
by movements in the price of the Fund's portfolio. It is also possible that the
index may rise when the Fund's portfolio of stocks does not rise. If this
occurred, the Fund would experience a loss on the call which is not offset by an
increase in the value of its portfolio and might also experience a loss in its
portfolio. However, because the value of a diversified portfolio will, over
time, tend to move in the same direction as the market, movements in the value
of the Fund in the opposite direction to the market would be likely to occur for
only a short period or to a small degree.
Unless the Fund has other liquid assets that are sufficient to satisfy the
exercise of a call, the Fund would be required to liquidate portfolio securities
in order to satisfy the exercise. Because an exercise must be settled within
hours after receiving the notice of exercise, if the Fund fails to anticipate an
exercise, it may have to borrow (in amounts not exceeding 20% of the Fund's
total assets) pending settlement of the sale of securities in its portfolio and
would incur interest charges thereon.
When the Fund has written a call, there is also a risk that the market may
decline between the time the call is written and the time the Fund is able to
sell stocks in its portfolio. As with stock options, the Fund will not learn
that an index option has been exercised until the day following the exercise
date but, unlike a call on stock where the Fund would be able to deliver the
underlying securities in settlement, the Fund may have to sell part of its stock
portfolio in order to make settlement in cash, and the price of such stocks
might decline before they can be sold. This timing risk makes certain strategies
involving more than one option substantially more risky with index options than
with stock options. For example, even if an index call which the Fund has
written is "covered" by an index call held by the Fund with the same strike
price, the Fund will bear the risk that the level of the index may decline
between the close of trading on the date the exercise notice is filed with the
clearing corporation and the close of trading on the date the Fund exercises the
call it holds or the time the Fund sells the call which in either case would
occur no earlier than the day following the day the exercise notice was filed.
Special Risks of Purchasing Puts and Calls on Indices (Small-Cap Fund) If the
Fund holds an index option and exercises it before final determination of the
closing index value for that day, it runs the risk that the level of the
underlying index may change before closing. If such a change causes the
exercised option to fall out-of-the-money, the Fund will be required to pay the
difference between the closing index value and the exercise price of the option
(times the applicable multiple) to the assigned writer. Although the Fund may be
able to minimize this risk by withholding exercise instructions until just
before the daily cut off time or by selling rather than exercising an option
when the index level is close to the exercise price it may not be possible to
eliminate this risk entirely because the cut
11
<PAGE>
<PAGE>
off times for index options may be earlier than those fixed for other types of
options and may occur before definitive closing index values are announced.
2.
Board Members and Officers
The following board member 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,
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 Executive Officer of
Courtroom Television Network (1997 - 1998). Formerly, President and Chief
Executive Officer of Time Warner Cable Programming, Inc. (1991 - 1997). Prior to
that, President and Chief Operating Officer of Home Box Office, Inc.
Age 57.
William H. T. Bush
Bush-O'Donnell & Co., Inc.
101 South Hanley Road, Suite 1025
St. Louis, Missouri
Co-founder and Chairman of the Board of the financial advisory firm of
Bush-O'Donnell & Company. Age 60.
Robert B. Calhoun, Jr.
Monitor Clipper Partners
650 Madison Avenue, 9th Floor
New York, New York
Managing Director of Monitor Clipper Partners and President of The Clipper Group
L.P., both private equity investment funds. Age 56.
Stewart S. Dixon
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon. Age 68.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
12
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<PAGE>
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 73.
C. Alan MacDonald
Directorship Inc.
8 Sound Shore Drive
Greenwich, Connecticut
Managing Director of Directorship Inc., a consultancy in board management and
corporate governance. Formerly, General Partner of the Marketing Partnership,
Inc., a full service marketing consulting firm (1994 - 1997). Prior to that,
Chairman and Chief Executive Officer of Lincoln Snacks, Inc., manufacturer of
branded snack foods (1992 - 1994). His career spans 36 years at Stouffers and
Nestle with 18 of the years as Chief Executive Officer. Currently serves as
Director of DenAmerica Corp., J.B. Williams Company, Inc., Fountainhead Water
Company and Exigent Diagnostics. Age 65.
Hansel B. Millican, Jr.
Rochester Button Company
1328 Broadway (Suite 816)
New York, New York
President and Chief Executive Officer of Rochester Button Company. Age 70.
Thomas J. Neff
Spencer Stuart
277 Park Avenue
New York, New York
Chairman of Spencer Stuart, an executive search consulting firm. Currently
serves as Director of Ace, Ltd. (NYSE). Age 61.
13
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<PAGE>
For the Fiscal Year Ended October 31, 1998 - Affiliated Fund
For the Fiscal Year Ended November 30, 1998 - Research Fund-Small-Cap Fund,
Growth Opportunities Fund
For the Fiscal Year Ended November 30, 1998 - Investment Trust -High Yield Fund
For the Fiscal Year Ended October 31, 1998 - Securities Trust -
International Fund
The following table sets forth the compensation accrued for each Fund's
outside directors/trustees.
<TABLE>
<CAPTION>
Aggregate
Name of Director Compensation Accrued by each Fund(1)
- ---------------- ----------------------------------------
Affiliated Research Investment Securities
Fund Fund Trust Trust
---------- -------- ---------- ----------
<S> <C> <C> <C> <C>
E. Thayer Bigelow $24,154 $00 $00,000 $000
William H. T. Bush* $ 6,971 $0 $0 $0
Robert B. Calhoun** $ 9,506 $0 $0 $0
Stewart S. Dixon $23,766 $000 $00,000 $000
John C. Jansing(4) $23,449 $000 $00,000 $000
C. Alan MacDonald $23,440 $000 $00,000 $000
Hansel B. Millican, Jr. $23,449 $000 $00,000 $000
Thomas J. Neff $23,871 $000 $00,000 $000
</TABLE>
*Elected as of August 13, 1998
**Elected as of June 17, 1998
The following table sets forth information with respect to the equity-based
benefits accrued for outside directors/trustees by the Lord Abbett-sponsored
funds.
<TABLE>
<CAPTION>
Name of Director Pension or Retirement Benefits
- ---------------- Accrued by each Fund and All Other
Lord Abbett-sponsored Funds(2)
----------------------------------
<S> <C>
E. Thayer Bigelow $17,068
William H.T. Bush* $0
Robert B. Calhoun** $0
Stewart S. Dixon $32,190
John C. Jansing(4) $45,085
C. Alan MacDonald $30,703
Hansel B. Millican, Jr. $37,747
Thomas J. Neff $19,853
</TABLE>
14
<PAGE>
<PAGE>
The following table sets forth the total compensation payable by such funds to
the outside director/trustees. No director/trustee of the funds associated with
Lord Abbett and no officer of the funds received any compensation from the funds
for acting as a director or officer.
<TABLE>
<CAPTION>
Name of Director For Year Ended October 31, 1998
- ---------------- Total Compensation Accrued by each Fund and
Twelve Other Lord Abbett-sponsored Funds(3)
-------------------------------------------
<S> <C>
E. Thayer Bigelow $57,400
William H.T. Bush* $27,500
Robert B. Calhoun** $33,500
Stewart S. Dixon $56,500
John C. Jansing(4) $55,500
C. Alan MacDonald $55,000
Hansel B. Millican, Jr. $55,500
Thomas J. Neff $56,500
</TABLE>
1. Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on the
net assets of each fund. A portion of the fees payable by each Fund to its
outside directors is being deferred under a plan that deems the deferred
amounts to be invested in shares of the Fund for later distribution to the
directors. The amount of aggregate compensation payable by each Fund as of
its 1998 fiscal year-end deemed invested in Fund shares includes dividends
reinvested and changes in net asset value applicable to such deemed
investments.
2. The amounts were accrued by the Lord Abbett-sponsored funds for the 12 months
ended October 31, 1998 with respect to the equity based plans established for
independent directors in 1996. This plan supercedes a previously approved
retirement plan for all future directors. Directors participating in the
retirement plan had the option to convert their accrued benefits under the
plan. All of the outside directors except one made such an election.
3. This table shows aggregate compensation, including directors/trustees 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 as
of each of their respective 1998 fiscal year ends deemed invested in Fund
shares, including dividends reinvested and changes in net asset value
applicable to such deemed investments were:
<TABLE>
<CAPTION>
Aggregate
Name of Director Compensation Accrued by each Fund(1)
- ---------------- ---------------------------------------------
Affiliated Small-Cap Growth International
Fund Value Fund Opportunities Fund
----------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
E. Thayer Bigelow
William H. T. Bush*
Robert B. Calhoun**
Stewart S. Dixon
John C. Jansing(4)
C. Alan MacDonald
Hansel B. Millican, Jr.
Thomas J. Neff
</TABLE>
15
<PAGE>
<PAGE>
If the amounts deemed invested in Fund shares were added to each
director/trustee's actual holdings of Fund shares as of October 31, 1998, each
would own the following shares:
<TABLE>
<CAPTION>
Affiliated Small-Cap Growth International
Fund Value Fund Opportunities Fund
----------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
E. Thayer Bigelow
William H.T. Bush*
Robert B. Calhoun**
Stewart S. Dixon
John C. Jansing(4)
C. Alan MacDonald
Hansel B. Millican, Jr.
Thomas J. Neff
</TABLE>
For Research Fund-Small-Cap Fund and Growth Opportunities Fund, the amounts
of the aggregate compensation payable by the Fund as of November 30, 1998
deemed invested in Fund shares, including dividends reinvested and changes in
net asset value applicable to such deemed investments, were: Mr. Bigelow,
$000; Mr. Dixon, $000; Mr. Jansing, $000; Mr. MacDonald, $000; Mr. Millican,
$000; and Mr. Neff, $000. If the amounts deemed invested in Fund shares were
added to each director's actual holdings of Fund shares as of November 30,
1998 each would own, the following: Mr. Bigelow, 000 shares; Mr. Dixon, 000
shares; Mr. Jansing, 000 shares; Mr. MacDonald, 000 shares; Mr. Millican, 000
shares; and Mr. Neff, 000 shares.
For Investment Trust-High Yield Fund, the amounts of aggregate compensation
payable by the Fund as of November 30, 1998 deemed invested in Fund shares,
including dividends reinvested and changes in net asset value applicable to
such deemed investments, were: Mr. Bigelow, $000,000; Mr. Dixon, $000,000;
Mr. Jansing, $000,000; Mr. MacDonald, $000,000; Mr. Millican, $000,000; and
Mr. Neff, $000,000. If the amounts deemed invested in Fund shares were added
to each director's actual holdings of Fund shares as of November 30, 1998,
each would own, the following: Mr. Bigelow, 000,000 shares; Mr. Dixon,
000,000 shares; Mr. Jansing, 000,000 shares; Mr. MacDonald, 000,000 shares;
Mr. Millican, 000,000 shares; and Mr. Neff, 000,000 shares.
For Securities Trust-International Fund, the amounts of the aggregate
compensation payable by the Fund as of October 31, 1998 deemed invested in
Fund shares, including dividends reinvested and changes in net asset value
applicable to such deemed investments, were: Mr. Bigelow, $000,000; Mr.
Dixon, $000,000; Mr. Jansing, $000,000; Mr. MacDonald, $000,000; Mr.
Millican, $000,000; and Mr. Neff, $000,000. If the amounts deemed invested in
Fund shares were added to each director's actual holdings of Fund shares as
of October 31, 1998, each would own, the following: Mr. Bigelow, 000,000
shares; Mr. Dixon, 000,000 shares; Mr. Jansing, 000,000 shares; Mr.
MacDonald, 000,000 shares; Mr. Millican, 000,000 shares; and Mr. Neff,
000,000 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 each Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Brown, Fetch, Carper, Gerber, Hilstad, Hudson, McGruder, Morris, and Walsh are
partners of Lord Abbett; the others are employees:
Executive Vice Presidents:
Zane E. Brown, age 47 (International Fund )
16
<PAGE>
<PAGE>
Robert P. Fetch, age 46 (Small-Cap Fund and Large-Cap Research Fund) (with Lord
Abbett since 1995 - formerly Managing Director at Prudential Investment Advisors
from 1983 to 1995)
Robert I. Gerber, age 44 (High Yield Fund) (with Lord Abbett since 1997 -
formerly Senior Portfolio Manager at Sanford Bernstein & Co. from 1992 - 1997)
W. Thomas Hudson, Jr. age 57 (Affiliated Fund )
Robert G. Morris, age 54 (Small-Cap Fund, Growth Opportunities Fund,
International Fund, High Yield Fund and Large-Cap Research Fund)
Stephen J. McGruder, age 55 (Growth Opportunities Fund and Large-Cap Research
Fund) (with Lord Abbett since 1995 formerly Vice President of Wafra Securities
from 1988 to 1995)
Vice Presidents:
Paul A. Hilstad, age 56, Vice President and Secretary (all Funds) (with Lord
Abbett since 1995 - formerly Senior Vice President and General Counsel of
American Capital Management & Research, Inc.)
Zane E. Brown, age 47 (Small-Cap Fund and Large-Cap Research Fund)
Daniel E. Carper, age 47 (all Funds)
Timothy Horan, age 44 (International Fund) (with Lord Abbett since 1996-
formerly Senior Manager at Credit Suisse from 1994 to 1995; prior thereto Vice
President at Aubrey G. Lanston & Co. from 1992 to 1994)
Lawrence H. Kaplan, age 43, Vice President and Assistant Secretary (all Funds)
(with Lord Abbett since 1997 - formerly Vice President and Chief Counsel of
Salomon Brothers Asset Management Inc from 1995 to 1997; prior thereto Senior
Vice President, Director and General Counsel of Kidder Peabody Asset Management,
Inc.)
Jerald Lanzotti, age 31 (International Fund)
Gregory M. Macosko, age 51 (Small-Cap Fund and Large-Cap Research Fund) (with
Lord Abbett since 1997 - formerly Analyst with Royce Associates from 1991 to
1997)
Robert Morris, age 54 (Affiliated Fund)
A. Edward Oberhaus III, age 39 (all Funds)
Keith F. O'Connor, age 43 (all Funds)
Fernando Saldanha, age 45 (International Fund) (with Lord Abbett since 1998 -
formerly Economist and Senior Financial Officer of World Bank (IBRO) from 1988
to 1998)
Eli Salzman, age 34 (Affiliated Fund) (with Lord Abbett since 1997 - formerly
Vice President of Mutual of America Capital Corp.; prior thereto Vice President
of Mitchell Hutchins Asset Mgt. from 1986 to 1996)
Christopher J. Towle, age 41 (International Fund)
John J. Walsh, age 62 (all Funds); and
17
<PAGE>
<PAGE>
Treasurer:
Donna M. McManus, age 38, Treasurer (all Funds) (with Lord Abbett since 1996 -
formerly a Senior Manager at Deloitte & Touche LLP).
As of February 12, 1998, our officers and directors owned as a group less than
1% of each Fund's shares. As of February 12, 1999, there were no record holders
of 5% or more of the Fund's outstanding shares.
The Funds' By-Laws provide that each Fund shall not hold a 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 (Trustees) or
by shareholders holding at least one quarter of the stock of each Fund
outstanding and entitled to vote at the meeting.
3.
Investment Advisory and Other Services
As described under "Management" in the Prospectus, Lord Abbett is the investment
manager of the Funds. Ten of the general partners of Lord Abbett are officers
and/or board members of the Funds, as follows: Zane E. Brown; Daniel E. Carper;
Robert S. Dow; Robert P. Fetch; Robert I. Gerber; Paul A. Hilstad; W. Thomas
Hudson; Stephen J. McGruder; Robert G. Morris; Christopher J. Towle; and John J.
Walsh.
The other general partners who are neither officers nor directors of the Funds
are Stephen Allen, John E. Erard, Daria L. Foster, Michael B. McLaughlin, R.
Mark Pennington, and Robert J. Noelke. The address of each partner is The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203.
The services performed by Lord Abbett are described in the Prospectus under
"Management." Under its Management Agreement, Affiliated Fund pays Lord Abbett a
monthly fee, based on average daily net assets for each month, at the annual
rate of .5 of 1% of the portion of its net assets not in excess of $200,000,000;
.4 of 1% of the portion in excess of $200,000,000, but not in excess of
$500,000,000; .375 of 1% of the portion in excess of $500,000,000, but not in
excess of $700,000,000; .35 of 1% of the portion in excess of $700,000,000, but
not in excess of $900,000,000; and .3 of 1% of the portion in excess of
$900,000,000.
Under its Management Agreement:
Small-Cap Fund is obligated to pay Lord Abbett a monthly fee, based on average
daily net assets for each month, at the annual rate of .75 of 1% of the
Small-Cap Fund's average daily net assets.
Growth Opportunities Fund is obligated to pay Lord Abbett a monthly fee, based
on average daily net assets for each month, at the annual rate of .90 of 1% of
the Fund's average daily net assets. On September 15, 1998, the Fund's
shareholders voted to raise the management fee to .90 of 1%.
International Fund is obligated to pay Lord Abbett a monthly fee, based on
average daily net assets for each month, at the annual rate of .75 of 1%.
The following is a summary of the Management Fee for the 1998, 1997 and 1996
fiscal years of the funds:
<TABLE>
<CAPTION>
Gross Management Management
Fund Fiscal Year Management Fees Fees Waived Fees Paid
---- ----------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
Affiliated Fund 1998 $26,317,934 $0 $26,317,934
1997 $22,192,209 $0 $22,192,209
1996 $17,683,694 $0 $17,683,694
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Small-Cap Fund 1998 $4,270,210 $0 $4,270,210
1997 $1,075,019 $0 $1,075,019
1996 $ 24,461 $24,461 $0
Large-Cap 1998
Research 1997
Fund 1996
Growth 1998 $ 16,316 $16,316 $0
Opportunities 1997 $ $ $
Fund 1996 $ 8,249 $ $
International 1998 $ 700,368 $0 $700,368
Fund 1997 $ 127,715 $0 $127,715
</TABLE>
Lord Abbett has entered into an agreement with Fuji-Lord Abbett International
Ltd. ("the Sub-Adviser"), under which the Sub-Adviser provides Lord Abbett with
advice with respect to the International Fund's assets. The Sub-Adviser is
controlled by Fuji Investment Management Co. (Tokyo). Fuji Bank Limited of
Tokyo, Japan ("Fuji Bank") directly owned 40% of the outstanding voting stock of
the Sub-Adviser. Fuji Investment Management Co. (Tokyo) is an affiliate of Fuji
Bank. Lord Abbett owns approximately 27% of such outstanding voting stock. As of
November 30, 1998, the Sub-Adviser manages approximately $[915] million, which
is invested globally. The Sub-Adviser furnishes Lord Abbett with advice and
recommendations with respect to the International Portfolio's assets, including
advice about the allocation of investments among foreign securities markets and
foreign equity and debt securities markets and foreign equity and debt
securities and, subject to consultation with Lord Abbett, advice as to cash
holdings and what securities in the portfolio should be purchased, held or
disposed of. The Sub-Adviser also gives advice with respect to foreign currency
matters. Lord Abbett is obligated to pay the Sub-Adviser a monthly fee, based on
average daily net assets for each month, at the annual rate of .375 of 1%. For
the fiscal year ended October 31, 1998 and for the period December 13, 1996
(commencement of operations) to October 31, 1997, the fees paid to the
Sub-Adviser by Lord Abbett were $350,184 and $63,857, respectively.
Each Fund's fee is allocated among all of its classes based on each's
proportionate share of such daily net assets.
In addition, each Fund is obligated to pay all expenses not expressly assumed by
Lord Abbett, including, without limitation, 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.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281 are
the independent auditors for each Fund and must be approved at least annually by
each Fund's Board of Directors (Trustees) to continue in such capacity. They
perform audit services for each Fund including the audits of financial
statements included in each Fund's annual report to shareholders.
The Bank of New York ("BNY"), 48 Wall Street, New York, New York 10268, is each
Fund's custodian. In accordance with the requirements of Rule 17f-5, each Fund's
directors (trustees) have approved arrangements permitting each Fund's foreign
assets not held by BNY or its foreign branches to be held by certain qualified
foreign banks and depositories.
The Sub-Custodians of BNY are:
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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
Our policy is to obtain best execution on all our portfolio transactions, which
means that we seek to have purchases and sales of portfolio securities executed
at the most favorable prices, considering all costs of the transaction including
brokerage commissions and dealer markups and markdowns and taking into account
the full range and quality of the brokers' services. Consistent with obtaining
best execution, we generally pay, as described below, a higher commission than
some brokers might charge on the same transactions. Our policy with respect to
best execution governs the selection of brokers or dealers and the market in
which the transaction is executed. To the extent permitted by law, we may, if
considered advantageous, make a purchase from or sale to another Lord
Abbett-sponsored fund without the intervention of any broker-dealer.
Broker-dealers are selected on the basis of their professional capability and
the value and quality of their brokerage and research services. Normally, the
selection is made by traders who are officers of the Fund and also are employees
of Lord Abbett. These traders do the trading as well for other accounts --
investment companies (of which they are also officers) and other investment
clients -- managed by Lord Abbett. They are responsible for obtaining best
execution.
We pay a commission rate that we believe is appropriate to give maximum
assurance that our brokers will provide us, on a continuing basis, the highest
level of brokerage services available. While we do not always seek the lowest
possible commissions on particular trades, we believe that our commission rates
are in line with the rates that many other institutions pay. Our traders are
authorized to pay brokerage commissions in excess of those that other brokers
might accept on the same transactions in recognition of the value of the
services performed by the executing brokers, viewed in terms of either the
particular transaction or the overall responsibilities of Lord Abbett with
respect to us and the other accounts they manage. Such services include showing
us trading opportunities including blocks, a willingness and ability to take
positions in securities, knowledge of a particular security or market proven
ability to handle a particular type of trade, confidential treatment, promptness
and reliability.
Some of these brokers also provide research services at least some of which are
useful to Lord Abbett in their overall responsibilities with respect to us and
the other accounts they manage. Research includes the furnishing of analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts and trading equipment and
computer software packages, acquired from third-party suppliers, that enable
Lord Abbett to access various information bases. Such services may be used by
Lord Abbett in servicing all their accounts, and not all of such services will
necessarily be used by Lord Abbett in connection with their management of the
Fund; conversely, such services furnished in connection with brokerage on other
accounts managed by Lord Abbett may be used in connection with their management
of the Fund, and not all of such services will necessarily be used by Lord
Abbett in connection with their advisory services to such other accounts. We
have been advised by Lord Abbett that research services received form brokers
cannot be allocated to any particular account, are not a substitute for Lord
Abbett's services but are supplemental to their own research effort and, when
utilized, and are subject to internal analysis
20
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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.
For the fiscal years ended October 31, 1998, 1997 and 1996, Affiliated Fund paid
total commissions to independent dealers of $80,000,000, $7,681,037 and
$5,897,259, respectively.
For the period December 13, 1995 (commencement of operations) to November 30,
1996, the year ended November 30, 1997, and the year ended November 30, 1998,
the Small-Cap Fund paid total commissions to independent broker-dealers of
$45,266, $1,812,425 and $______, respectively.
For the period December 13, 1996 (commencement of operations) through October
31, 1997 and the fiscal year ended October 31, 1998, International Fund paid
total commissions to independent broker-dealers of $108,270 and $_____,
respectively.
For the fiscal year ended October 31, 1998, 1997 and 1996, Growth Opportunities
Fund paid total commissions to independent broker-dealers of $_____, $______ and
$______, respectively.
5.
Purchases, Redemptions
and Shareholder Services
Information concerning how we value our shares for the purchase and redemption
of our shares is contained in the Prospectus under "Purchases" and
"Redemptions," respectively.
As disclosed in the Prospectus, we calculate our net asset value as of the close
of the New York Stock Exchange ("NYSE") on each day that the NYSE is open for
trading by dividing our total net assets by the number of shares outstanding at
the time of calculation. 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.
21
<PAGE>
<PAGE>
Each Fund values its portfolio securities at market value as of the close of the
NYSE. Market value will be determined as follows: securities listed or admitted
to trading privileges on the New York or American Stock Exchange or on the
NASDAQ National Market System are valued at the last sales price, or, if there
is no sale on that day, at the mean between the last bid and asked prices, or,
in the case of bonds, in the over-the-counter market if, in the judgment of the
Fund's officers, that market more accurately reflects the market value of the
bonds. Over-the-counter securities not traded on the NASDAQ National Market
System are valued at the mean between the last bid and asked prices. Securities
for which market quotations are not available are valued at fair market value
under procedures approved by the Board of Directors (Trustees).
The net asset value per share for the Class Y shares will be determined by
taking Class Y shares net assets and dividing by shares outstanding. Our Class Y
shares will be offered at net asset value.
Each Fund has entered into a distribution agreement with Lord Abbett Distributor
LLC, a New York limited liability company ("Lord Abbett Distributor") and
subsidiary of Lord Abbett under which Lord Abbett Distributor is obligated to
use its best efforts to find purchasers for the shares of each 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.
Class Y Share Exchanges. The Prospectus describes the Telephone Exchange
Privilege. You may exchange some or all of your Y shares for Y shares of any
Lord Abbett-sponsored funds currently offering Class Y shares to the public.
Currently those other funds consist of Lord Abbett Investment Trust - Core Fund,
Strategic Core Fund, Bond-Debenture Fund, Developing Growth Fund, and Mid-Cap
Value Fund.
Redemptions. A redemption order is in proper form when it contains all of the
information and documentation required by the order form or supplementally by
Lord Abbett Distributor or the 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 each Prospectus for expedited redemption procedures.
The right to redeem and receive payment, as described in each 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 (Trustees) may authorize redemption of all of the shares
in any account in which there are fewer than 25 shares (Affiliated Fund,
Small-Cap Fund, Growth Opportunities Fund, and High Yield Fund), and 60 shares
(International Fund). 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.
6.
Taxes
The value of any shares redeemed by each Fund or repurchased or otherwise sold
may be more or less than your tax basis in the shares at the time of
disposition. Any gain will generally be taxable for federal income tax purposes.
Any loss realized on the disposition of a Fund's shares which you have held for
six months or less will be treated for tax purposes as a long-term capital loss
to the extent of any "capital gains distributions" which you received with
respect to such shares. Losses on the sale of shares are not deductible if,
within a period beginning 30 days before the date of the sale and ending 30 days
after the date of the sale, the taxpayer acquires shares that are substantially
identical.
Each Fund will be subject to a four-percent nondeductible excise tax on certain
amounts not distributed or treated as having been distributed on a timely basis
each calendar year. Each Fund intends to distribute to shareholders each year an
amount adequate to avoid the imposition of such excise tax.
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The writing of call options and other investment techniques and practices which
a Fund may utilize may create "straddles" for United States federal income tax
purposes and may affect the character and timing of the recognition of gains and
losses by each Fund. Such 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 a Fund's ability to engage in
transactions in options.
Each Fund may be subject to foreign withholding taxes which would reduce the
yield on its investments. It is generally expected that shareholders of a Fund
who are subject to United States federal income tax will not be entitled to
claim a federal income tax credit or deduction for foreign income taxes paid by
such Fund. However, if at the close of any fiscal year, more than 50% of the
assets of a fund consist of stock or securities of foreign corporations, the
Fund may elect to treat foreign income taxes paid by the Fund as having been
paid directly by its shareholder. If a Fund makes such an election, the
shareholders of the 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 the 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 the
Series, although such shareholders will still 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 the dividends
received from the 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 the Fund
and (ii) the portion of dividends which represents income from each foreign
country.
Gains and losses realized by each 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 either Fund purchases shares in certain foreign investment entities, called
"passive foreign investment companies," it may be subject to United States
federal income tax on a portion of any "excess distribution" or gain from the
disposition of such shares, even if such income is distributed as a taxable
dividend by the Fund to its shareholders. Additional charges in the nature of
interest may be imposed on either the Fund or its shareholders in respect to
deferred taxes arising from such distributions or gains.
If a Fund were to invest in a passive foreign investment company with respect to
which a Fund elected to make a "qualified electing fund" election, in lieu of
the foregoing requirements, the Fund might be required to include in income each
year a portion of the ordinary earnings and net capital gains of the qualified
electing fund, even if such amount were not distributed to a Fund.
Dividends paid by a Fund will qualify for the dividends-received deduction for
corporations to the extent they are derived from dividends paid by domestic
corporations.
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to United States persons (United States citizens or residents and
United States domestic corporations, partnerships, trusts and estates). Each
shareholder who is not a United States person should consult his tax advisor
regarding 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 gift
and estate taxes to non-United States persons who own Fund shares.
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7.
Past Performance
Each Fund computes the annual compounded rate of total return for Class Y shares
during specified periods that would equate the initial amount invested to the
ending redeemable value of such investment by adding one to the computed average
annual total return, raising the sum to a power equal to the number of years
covered by the computation and multiplying the result by one thousand dollars,
which represents a hypothetical initial investment. The calculation assumes
deduction of no sales charge from the initial amount invested and reinvestment
of all income dividends and capital gains distributions on the reinvestment
dates at prices calculated as stated in each Prospectus. The ending redeemable
value is determined by assuming a complete redemption at the end of the
period(s) covered by the annual total return computation.
In calculating total returns for Class Y shares no sales charge is deducted from
the initial investment and the return is shown at net asset value. Total returns
also assume that all dividends and capital gains distributions during the period
are reinvested at net asset value per share, and that the investment is redeemed
at the end of the period.
Class Y share performance. Using the computation method described above,
Affiliated Fund's total return for Class Y shares for the period from inception
(March 27, 1998) to October 31, 1998 was (4.77)%. For the period from inception
(December 30, 1997) to November 30, 1998, the total return for the Small-Cap
Fund was 6.50%. For the period from inception (December 30, 1997) to October 31,
1998, the total return for the International Fund was 10.02% (not annualized).
Our yield quotation for Class Y shares is based on a 30-day period ended on a
specified date, computed by dividing the net investment income per share earned
during the period by the net asset value per share of such class on the last day
of the period. This is determined by finding the following quotient: take the
dividends and interest earned during the period for the class minus its expenses
accrued for the period and divide by the product of (i) the average daily number
of Class shares outstanding during the period that were entitled to receive
dividends and (ii) the net asset value per share of such class 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. Yields for Class Y shares do not reflect the
deduction of any sales charge.
These figures represent past performance, and an investor should be aware that
the investment return and principal value of a Fund's investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. Therefore, there is no assurance that this performance will
be repeated in the future.
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8.
Information About the Funds
Affiliated Fund is a Maryland Corporation formed in 1934. Small-Cap Fund,
Large-Cap Research Fund and Growth Opportunities Fund are series of Lord Abbett
Research Fund, Inc., a Maryland corporation organized in 1992. The International
Fund is a series of Lord Abbett Securities Trust, a Delaware business trust
organized in 1993. The High Yield Fund is a series of Lord Abbett Investment
Trust, a Delaware business trust organized in 1993.
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment accounts. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Fund's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security 7 days
before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account
considers a trade or trades in such security, prohibiting profiting on trades of
the same security within 60 days and 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 such Advisory Group.
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9.
Financial Statements
The financial statements for the fiscal year ended October 31, 1998, and the
reports of Deloitte & Touche LLP, independent auditors, on such financial
statements contained in the 1998 Annual Report to Shareholders of Lord Abbett
Affiliated Fund, Inc. are incorporated herein by reference to such financial
statements and report in reliance upon the authority of Deloitte & Touche LLP as
experts in auditing and accounting.
The financial statements for the fiscal year ended November 30, 1998, and the
report thereon of Deloitte & Touche LLP, independent auditors, on such financial
statements contained in the 1998 Annual Report to Shareholders of the Lord
Abbett Research Fund, Inc. (which includes Small-Cap Fund, Growth Opportunities
Fund, formerly, Mid-Cap Fund and Large-Cap Research Fund), are incorporated
herein by reference to such financial statements and report in reliance upon the
authority of Deloitte & Touche LLP as experts in auditing and accounting.
The financial statements for the fiscal year ended October 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
Securities Trust (which includes International Fund) are incorporated herein by
reference to such financial statements and report in reliance upon the authority
of Deloitte & Touche LLP as experts in auditing and accounting.
The financial statements for the fiscal year ended November 30, 1998 and the
report thereon of Deloitte & Touche LLP, independent auditors, on such financial
statements contained in the 1998 Annual Report to Shareholders of the Lord
Abbett Investment Trust (which includes High Yield Fund) are incorporated 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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PART C OTHER INFORMATION
This Post-Effective Amendment No. 24 to the Registrant's Registration Statement
relates only to Growth Opportunities Fund, Large-Cap Research Fund and Small-Cap
Research Fund -- Class Y Shares.
The Post-Effective Amendment No. 23 to the Registrant's Registration Statement
related only to Large-Cap Research Fund, Growth Opportunities Fund, and
Small-Cap Value Fund -- classes A, B, C and P.
The Post-Effective Amendment No. 22 (the "Amendment") to the Registrant's
Registration Statement related only to Large-Cap Research Fund, Growth
Opportunities Fund, Small-Cap Value Fund -- classes A, B, C, and P.
The other series and classes of shares of the Registrant are listed below and
are offered by the Prospectuses and Statements of Additional Information in
Parts A and B, respectively, of the Post-Effective Amendments to the
Registrant's Registration Statements as identified. The following are separate
series and/or classes of shares of the Registrant. This Amendment does not
relate to, amend or otherwise affect the Prospectuses and Statements of
Additional Information contained in the prior Post-Effective Amendments listed
below, and pursuant to Rule 485(d) under the Securities Act of 1933, does not
affect the effectiveness of such Post-Effective Amendments.
POST-EFFECTIVE
AMENDMENT NOS.
Growth Opportunities Fund -- Y shares 19; 20
Small-Cap Value Fund -- Y shares 19; 20
Item 23 Exhibits
(a) Articles of Incorporation. Incorporated by reference to
Post-Effective Amendment No. 4 to the Registration Statement on
Form N-1A filed on 3/31/95.
(b) By-Laws. Incorported by reference to Post-Effective Amendment No.
21 to the Registration Statement on Form N-1A filed on 1/29/99.
(c) Instruments Defining Rights of Security Holders. Incorporated by
Reference.
(d) Investment Advisory Contracts. Management Agreement. Incorporated
by reference to Post-Effective Amendment No. 4 to the
Registration Statement on Form N-1A filed on 3/31/95.
(e) Underwriting Contracts. Incorporated by reference to
Post-Effective Amendment No. 4 to the Registration Statement on
Form N-1A filed on 3/31/95.
(f) Bonus or Profit Sharing Contracts. Incorporated by reference to
Post-Effective Amendment No. 7 to the Registration Statement on
Form N-1A to the Lord Abbett Equity Fund (File No. 811- 7538)
filed on 9/22/94. .
(g) Custodian Agreements. Incorporated by Reference.
(h) Other Material Contracts. Incorporated by Reference.
(i) Legal Opinion. Incorporated by reference to Post-Effective
Amendment No. 4 to the Registration Statement on Form N-1A filed
on 3/31/95.
(j) Other Opinions. Consent of Independent Auditors.
(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. 12 to the Registration Statement on Form N-1A filed
on 3/31/97.
(n) Financial Data Schedule. Filed herewith.
(o) Rule 18f-3 Plan. Incorporated by reference to Post-Effective
Amendment No. 12 to the Registration Statement on Form N-1A filed
on 3/31/97
1
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Item 24 Persons Controlled by or Under Common Control with the Fund
None.
Item 25 Indemnification
All Trustees, officers, employees and agents of Registrant are to be
indemnified as set forth in Section 4.3 of Registrant's Declaration of
Trust.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to Trustees, 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 Trustee, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Trustee, 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 of 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 Trustees' and officers' errors and
omissions liability insurance policy protecting Trustees and officers
against liability for breach of duty, negligent act, error or omission
committed in their capacity as Trustees 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 adviser for twelve other
investment companies (of which it is principal underwriter for
thirteen) and as investment adviser to approximately 8,300 private
accounts as of September 30, 1998. Other than acting as trustees,
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 Underwriters
(a) Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett Series Fund, Inc.
Lord Abbett U.S. Government Money Market Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Tax-Free Income Trust
Lord Abbett Affiliated Fund, Inc.
Lord Abbett Investment Trust
Lord Abbett Securities Trust
2
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Investment Advisor
American Skandia Trust (Lord Abbett Growth & Income Portfolio)
(b) The partners of Lord, Abbett & Co. are:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address(1) with Registrant
------------------- ---------------------
<S> <C>
Robert S. Dow Chairman and President
Paul A. Hilstad Vice President & Secretary
Robert P. Fetch Executuive Vice President
Stephen J. McGruder Executive Vice President
Robert G. Morris Executive Vice President
Daniel E. Carper Vice President
Zane E. Brown Vice President
John J. Walsh Vice President
</TABLE>
The other general partners of Lord, Abbett & Co. who are neither
officers nor directors of the Registrant are Stephen I. Allen, John E.
Erard, Daria L. Foster, Robert I. Gerber, Thomas W. Hudson, Jr.,
Michael McLaughlin, Robert J. Noelke, and R. Mark Pennington, and
Christopher J. Towle.
Each of the above has a principal business address:
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 cancelled stock certificates and
correspondence may be physically maintained at the main office of the
Registrant's Transfer Agent, Custodian, or Shareholder Servicing Agent
within the requirements of Rule 31a-3.
Item 29 Management Services
None
Item 30 Undertakings
The Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
The registrant undertakes, if requested to do so by the holders of at
least 10% of the registrant's 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) of the Investment Company
Act of 1940, as amended.
3
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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 29th day of
March, 1999.
BY: /s/ Lawrence H. Kaplan
______________________
Lawrence H. Kaplan
Vice President
4
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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.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
Chairman, President
/s/Robert S. Dow* and Director/Trustee March 29, 1999
_____________________________ ________________________
Robert S. Dow
/s/ E. Thayer Bigelow* Director/Trustee March 29, 1999
_____________________________ ________________________
E. Thayer Bigelow
/s/William H. T. Bush* Director/Trustee March 29, 1999
_____________________________ ________________________
William H. T. Bush
/s/Robert B. Calhoun, Jr.* Director/Trustee March 29, 1999
_____________________________ ________________________
Robert B. Calhoun, Jr.
/s/Stewart S. Dixon* Director/Trustee March 29, 1999
_____________________________ ________________________
Stewart S. Dixon
/s/John C. Jansing* Director/Trustee March 29, 1999
_____________________________ ________________________
John C. Jansing
/s/C. Alan MacDonald* Director/Trustee March 29, 1999
_____________________________ ________________________
C. Alan MacDonald
/s/Hansel B. Millican, Jr.* Director/Trustee March 29, 1999
_____________________________ ________________________
Hansel B. Millican, Jr.
/s/Thomas J. Neff* Director/Trustee March 29, 1999
_____________________________ ________________________
Thomas J. Neff
</TABLE>
*BY: /s/ Lawrence H. Kaplan
______________________
Lawrence H. Kaplan
Attorney-in-Fact
5
STATEMENT OF DIFFERENCES
The trademark symbol shall be expressed as................ 'TM'
The registered trademark symbol shall be expressed as..... 'r'
<PAGE>
