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. 27 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Amendment No. 26 [X]
LORD ABBETT RESEARCH FUND
-------------------------
Exact Name of Registrant as Specified in Charter
90 Hudson Street, Jersey City, New Jersey 07302-3973
----------------------------------------------------
Address of Principal Executive Office
Registrant's Telephone Number (800) 201-6984
--------------------------------------------
Lawrence H. Kaplan, Vice President
90 Hudson Street, Jersey City, New Jersey 07302-3973
----------------------------------------------------
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)
- -----------
X on April 1, 2000 pursuant to paragraph (b)
- ----------
60 days after filing pursuant to paragraph (a) (1)
- ----------
on (date) pursuant to paragraph (a) (1)
- ----------
75 days after filing pursuant to paragraph (a) (2)
- ----------
on (date) pursuant to paragraph (a) (2) of rule 485
- ----------
If appropriate, check the following box:
_____ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
1
<PAGE>
Lord Abbett
Research Fund
Large-Cap Series
Small-Cap Value Series
Prospectus
April 1, 2000
[LOGO]
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
Please call 800-821-5129 for further information.
<PAGE>
Table of Contents
The Funds
Information about the goal, Large-Cap Series 2
principal strategy, main risks, Small-Cap Value Series 5
performance, fees and expenses
Your Investement
Information for managing Purchases 8
your Fund account Sales Compensation 11
Opening Your Account 11
Redemptions 12
Distributions and Taxes 12
Services For Fund Investors 13
Management 14
For More Information
How to learn more Other Investment Techniques 15
about the Funds Glossary of Shaded Terms 16
Recent Performance 17
Financial Information
Financial highlights and line Large-Cap Series 19
graph comparison of each Fund, Small-Cap Value Series 21
and broker compensation Compensation For Your Dealer 23
How to learn more about the Back Cover
Funds and other Lord Abbett Funds
<PAGE>
Large-Cap Series
GOAL
The Fund's investment objective is long-term growth of capital and income
without excessive fluctuations in market value.
PRINCIPAL STRATEGY
To pursue this goal, the Fund purchases stocks of large, seasoned, U.S. and
multinational companies which we believe are undervalued. The Fund chooses
stocks using:
o quantitative research to identify which stocks we believe represent
the best bargains
o fundamental research to learn about a company's operating environment,
resources and strategic plans and to assess its prospects for
exceeding earnings expectations
o business cycle analysis to determine how buying or selling securities
changes our overall portfolio's sensitivity to interest rates and
economic conditions
The Fund is intended for investors looking for long-term growth with low
fluctuations in market value. For this reason, we will forgo some
opportunities for gains when, in our judgment, they are too risky. The Fund
tries to keep its assets invested in securities selling at reasonable
prices in relation to value.
While there is the risk that an investment may never reach what we think is
its full value, or may go down in value, our emphasis on large, seasoned
company bargain stocks may limit our downside risk because bargain stocks
in theory are already underpriced and large, seasoned company stocks tend
to be less volatile than small company stocks.
We generally sell a stock when we think it is no longer a bargain, seems
less likely to benefit from the current market and economic environment,
shows deteriorating fundamentals, or falls short of our expectations.
While typically fully invested, at times we may take a temporary defensive
position by investing some of the Fund's assets in short-term debt
securities. This could reduce the benefit from any upswing in the market
and prevent the Fund from achieving its investment objective.
MAIN RISKS
The Fund is subject to the general risks and considerations associated with
equity investing, as well as the particular risks associated with bargain
stocks. The value of your investment will fluctuate in response to
movements in the stock market in general and to the changing prospects of
individual companies in which the Fund invests. Bargain stocks may perform
differently than the market as a whole and other types of stocks, such as
small company stocks and growth stocks. This is because different types of
stocks tend to shift in and out of favor depending on market and economic
conditions. The market may fail to recognize the intrinsic value of
particular bargain stocks for a long time. In addition, if the Fund's
assessment of a company's value or prospects for exceeding earnings
expectations or market conditions is wrong, the Fund could suffer losses or
produce poor performance relative to other funds, even in a rising market.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. The Fund is not a complete investment program and may
not be appropriate for all investors. You could lose money in the Fund.
We or the Fund refers to either the Large-Cap Series or the Small-Cap Value
Series of Lord Abbett Research Fund, Inc. (the "Company").
About each Fund. Each Fund is a professionally managed portfolio of securities
purchased with the pooled money of investors. Each Fund strives to reach its
stated goals, although as with all mutual funds, cannot guarantee results.
Large companies are established companies that are considered "known
quantities." Large companies often have the resources to weather economic
shifts, though they can be slower to innovate than small companies.
Seasoned companies are usually established companies whose securities have
gained a reputation for quality with the investing public and enjoy high
liquidity in the market.
Bargain stocks are stocks of companies that appear under- priced according to
certain financial measurements of their intrinsic worth or business prospects.
Growth stocks are stocks which exhibit faster-than-average gains
in earnings and are expected to continue profit growth at a high level, but also
tend to be more volatile than bargain stocks.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describes the other investment strategies used by the Funds and
their risks.
2 The Funds
<PAGE>
Large-Cap Series Symbols: Class A - LRLCX
Class B - LARBX
Class C - LLRCX
PERFORMANCE
The bar chart and table below provide some indication of the risks of
investing in the Fund by illustrating the variability of the Fund's
returns. Each assumes reinvestment of dividends and distributions. The
Fund's past performance is not necessarily an indication of how the Fund
will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares
from calendar year to calendar year. This chart does not reflect the sales
charges applicable to Class A shares. If the sales charges were reflected,
returns would be less.
- --------------------------------------------------------------------------------
Bar Chart (per calendar year) - Class A Shares
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
1993 - 18.4%
1994 - 6.2%
1995 - 34.8%
1996 - 20.2%
1997 - 23.4%
1998 - 16.2%
1999 - 17.4%
Best Quarter 4th Q `98 18.9% Worst Quarter 3rd Q `98 -12.5%
- --------------------------------------------------------------------------------
The table below shows how the average annual total returns of the Fund's
Class A, B, C and P shares compare to those of a broad-based securities
market index and a more narrowly based index that more closely reflects the
market sectors in which the Fund invests. The Fund's returns reflect
payment of the maximum applicable front-end or deferred sales charges.
- --------------------------------------------------------------------------------
Average Annual Total Returns Through December 31, 1999
- --------------------------------------------------------------------------------
Share Class 1 Year 5 Years Since Inception(1)
Class A shares 10.70% 20.80% 18.15%
- --------------------------------------------------------------------------------
Class B shares 11.59% - 20.41%
- --------------------------------------------------------------------------------
Class C shares 15.88% - 18.96%
- --------------------------------------------------------------------------------
Class P shares - - 5.40%
- --------------------------------------------------------------------------------
S&P 500(R)Index(2) 21.03% 28.54% 21.24%(3)
- --------------------------------------------------------------------------------
29.66%(4)
29.16%(5)
10.99%(6)
- --------------------------------------------------------------------------------
S&P Barra Value Index(2) 12.72% 22.94% 18.14%(3)
21.61%(4)
20.00%(5)
.90%(6)
- --------------------------------------------------------------------------------
(1) The dates of inception for each class are: A - 6/3/92; B - 8/1/96; C -
4/1/97; and P - 4/28/99.
(2) Performance for the unmanaged S&P 500(R) Index and S&P Barra Value Index
does not reflect fees or expenses. The performance of the indices is not
necessarily representative of the Fund's performance.
(3) Represents total return for the period 6/30/92 - 12/31/99, to correspond
with Class A inception date.
(4) Represents total return for the period 8/31/96 - 12/31/99, to correspond
with Class B inception date.
(5) Represents total return for the period 3/31/97 - 12/31/99, to correspond
with Class C inception date.
(6) Represents total return for the period 4/30/99 - 12/31/99, to correspond
with Class P inception date.
The Funds 3
<PAGE>
Large-Cap Series
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Fee Table
- -------------------------------------------------------------------------------------------------------------------
Class A Class B(2) Class C Class P
Shareholder Fees (Fees paid directly from
your investment)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum Sales Charge on Purchases
- -------------------------------------------------------------------------------------------------------------------
(as a % of offering price) 5.75% none none none
- -------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge
(See "Purchases") none(1) 5.00% 1.00%(1) none
- -------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from Fund assets) (as a % of average net assets)(3)
- -------------------------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.75% 0.75% 0.75% 0.75%
- -------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees(4) 0.35% 1.00% 1.00% 0.45%
- -------------------------------------------------------------------------------------------------------------------
Other Expenses 0.36% 0.36% 0.36% 0.36%
- -------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.46% 2.11% 2.11% 1.56%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) A contingent deferred sales charge of 1.00% may be assessed on certain
redemptions of (a) Class A shares made within 24 months following any
purchases made without a sales charge, and (b) Class C shares if they are
redeemed before the first anniversary of their purchase.
(2) Class B shares will convert to Class A shares on the eighth anniversary of
your original purchase of Class B shares.
(3) The annual operating expenses have been restated from fiscal year amounts
to reflect current fees.
(4) Because 12b-1 fees are paid out on an ongoing basis, over time they will
increase the cost of your investment and may cost you more than paying
other types of sales charges.
- --------------------------------------------------------------------------------
Example
- --------------------------------------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. This Example, like that in
other funds' prospectuses, assumes that you invest $10,000 in the Fund at
maximum sales charge, if any, for the time periods indicated and then redeem all
of your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs (including any applicable contingent deferred sales
charges) would be:
Share Class 1 Year 3 Years 5 Years 10 Years
Class A shares $715 $1,010 $1,327 $2,221
- --------------------------------------------------------------------------------
Class B shares $714 $ 961 $1,334 $2,276
- --------------------------------------------------------------------------------
Class C shares $314 $ 661 $1,134 $2,441
- --------------------------------------------------------------------------------
Class P shares $159 $ 493 $850 $1,856
- --------------------------------------------------------------------------------
You would have paid the following expenses if you did not redeem your shares:
Class A shares $715 $1,010 $1,327 $2,221
- --------------------------------------------------------------------------------
Class B shares $214 $ 661 $1,134 $2,276
- --------------------------------------------------------------------------------
Class C shares $214 $ 661 $1,134 $2,441
- --------------------------------------------------------------------------------
Class P shares $159 $ 493 $850 $1,856
- --------------------------------------------------------------------------------
Management fees are payable to Lord, Abbett & Co. ("Lord Abbett") for the Fund's
investment management.
12b-1 fees refer to fees incurred for activities that are primarily intended to
result in the sale of Fund shares and service fees for shareholder account
service and maintenance.
Other expenses include fees paid for miscellaneous items such as shareholder
service fees and professional fees.
4 The Funds
<PAGE>
Small-Cap Value Series
GOAL
The Fund's investment objective is long-term capital appreciation.
PRINCIPAL STRATEGY
To pursue this goal, the Fund invests in smaller, less well-known companies
with market capitalizations of less than $2 billion which we believe the
market undervalues. Under normal circumstances, the Fund will invest at
least 65% of its total assets in the stocks of these companies. The Fund
chooses stocks using:
o quantitative research to identify stocks we believe represent the best
bargains. As part of this process, we may look at the price of a
company's stock in relation to book value, a company's sales, the
value of its assets, its earnings and cash flow
o fundamental research to evaluate a company's operating environment,
resources and strategic plans to assess its prospects for exceeding
earnings expectations
We generally sell a stock when we think it is no longer a bargain, seems
less likely to benefit from the current market and economic environment,
shows deteriorating fundamentals, or falls short of our expectations.
This Fund is intended for investors who are willing to withstand the risk
of short-term price fluctuations in exchange for attractive potential
long-term returns.
While typically fully invested, at times we may take a temporary defensive
position by investing some of the Fund's assets in short-term debt
securities. This could reduce the benefit from any upswing in the market
and prevent the Fund from achieving its investment objective.
MAIN RISKS
The Fund is subject to the general risks and considerations associated with
equity investing, as well as the particular risks associated with value
stocks. The market may fail to recognize the intrinsic value of particular
bargain stocks for a long time. In addition, if the Fund's assessment of a
company's value or prospects for exceeding earnings expectations or market
conditions is wrong, the Fund could suffer losses or produce poor
performance relative to other funds, even in a rising market.
Investing in small companies generally involves greater risks than
investing in the stocks of large companies. Small companies may have less
experienced management and unproven track records. They may rely on limited
product lines and have limited financial resources. Small company stocks
tend to have fewer shares outstanding and trade less frequently than the
stocks of larger companies. As a result, there may be less liquidity in the
prices of small company stocks, subjecting them to greater price
fluctuations than larger company stocks.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. The Fund is not a complete investment program and may
not be appropriate for all investors. You could lose money in the Fund.
Small companies often are younger and less well-established, with a potential to
be faster-growing but often more volatile than large companies.
Large companies are established companies that are considered "known
quantities." Large companies often have the resources to weather economic
shifts, though they can be slower to innovate than small companies.
Value Stocks, also referred to as bargain stocks, are stocks of companies that
appear under- priced according to certain finan- cial measurements of their
intrinsic worth or business prospects.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describes the other investment strategies used by the Funds and
their risks.
The Funds 5
<PAGE>
Small-Cap Value Series Symbols: Class A - LRSCX
Class B - LRSBX
Class C - LSRCX
PERFORMANCE
The bar chart and table below provide some indication of the risks of
investing in the Fund by illustrating the variability of the Fund's
returns. Each assumes reinvestment of dividends and distributions. The
Fund's past performance is not necessarily an indication of how the Fund
will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares
from calendar year to calendar year. This chart does not reflect the sales
charges applicable to Class A shares. If the sales charges were reflected,
returns would be less.
- --------------------------------------------------------------------------------
Bar Chart (per calendar year) - Class A Shares
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
1996 - 30.5%
1997 - 36.7%
1998 - -7.4%
1999 - 8.2%
Best Quarter 2nd Q `99 22.9% Worst Quarter 3rd Q `98 -24.2%
- --------------------------------------------------------------------------------
The table below shows how the average annual total returns of the Fund's
Class A, B, C, and P shares compare to those of a broad-based securities
market index. The Fund's returns reflect payment of the maximum applicable
front-end or deferred sales charges.
- --------------------------------------------------------------------------------
Average Annual Total Returns Through December 31, 1999
- --------------------------------------------------------------------------------
Share Class 1 Year Since Inception(1)
Class A shares 2.00% 13.83%
- --------------------------------------------------------------------------------
Class B shares 2.50% 10.82%
Class C shares 6.43% 9.51%
Class P shares - .55%
- --------------------------------------------------------------------------------
Russell 2000(R)Index(2) 21.26% 13.92%(3)
13.67%(4)
16.58%(5)
10.95%(6)
- --------------------------------------------------------------------------------
(1) The dates of inception for each Class are: A - 12/13/95; B - 11/15/96; C -
4/1/97; and P - 6/23/99.
(2) Performance for the unmanaged Russell 2000(R) Index does not reflect fees
or expenses. The performance of the index is not necessarily representative
of the Fund's performance.
(3) Represents total return for the period 12/31/95 - 12/31/99, to correspond
with Class A inception date.
(4) Represents total return for the period 11/30/96 - 12/31/99, to correspond
with Class B inception date.
(5) Represents total return for the period 3/31/97 - 12/31/99, to correspond
with Class C inception date.
(6) Represents total return for the period 6/30/99 - 12/31/99, to correspond
with Class P inception date.
6 The Funds
<PAGE>
Small-Cap Value Series
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Fee Table
- -----------------------------------------------------------------------------------------------------
Class A Class B(2) Class C Class P
<S> <C> <C> <C> <C>
Shareholder Fees (Fees paid directly from your investment)
- -----------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
(as a % of offering price) 5.75% none none none
- -----------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge
(See "Purchases") none(1) 5.00% 1.00%(1) none
- -----------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from Fund assets) (as a % of average net assets)(3)
- -----------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.75% 0.75% 0.75% 0.75%
- -----------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees(4) 0.35% 1.00% 1.00% 0.45%
- -----------------------------------------------------------------------------------------------------
Other Expenses 0.44% 0.44% 0.44% 0.44%
- -----------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.54% 2.19% 2.19% 1.64%
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) A contingent deferred sales charge of 1.00% may be assessed on certain
redemptions of (a) Class A shares made within 24 months following any
purchases made without a sales charge, and (b) Class C shares if they are
redeemed before the first anniversary of their purchase.
(2) Class B shares will convert to Class A shares on the eighth anniversary of
your original purchase of Class B shares.
(3) The annual operating expenses have been restated from fiscal year amounts
to reflect current fees.
(4) Because 12b-1 fees are paid out on an ongoing basis, over time they will
increase the cost of your investment and may cost you more than paying
other types of sales charges.
- --------------------------------------------------------------------------------
Example
- --------------------------------------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. This Example, like that in
other funds' prospectuses, assumes that you invest $10,000 in the Fund at
maximum sales charge, if any, for the time periods indicated and then redeem all
of your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs (including any applicable contingent deferred sales
charges) would be:
Share Class 1 Year 3 Years 5 Years 10 Years
Class A shares $723 $1,033 $1,366 $2,304
- --------------------------------------------------------------------------------
Class B shares $722 $ 985 $1,375 $2,359
- --------------------------------------------------------------------------------
Class C shares $322 $ 685 $1,175 $2,524
- --------------------------------------------------------------------------------
Class P shares $167 $ 517 $ 892 $1,944
You would have paid the following expenses if you did not redeem your shares:
Class A shares $723 $1,033 $1,366 $2,304
- --------------------------------------------------------------------------------
Class B shares $222 $ 685 $1,175 $2,359
- --------------------------------------------------------------------------------
Class C shares $222 $ 685 $1,175 $2,524
- --------------------------------------------------------------------------------
Class P shares $167 $ 517 $ 892 $1,944
Management fees are payable to Lord Abbett for the Fund's investment management.
12b-1 fees refer to fees incurred for activities that are primarily intended to
result in the sale of Fund shares and service fees for shareholder account
service and maintenance.
Other expenses include fees paid for miscellaneous items such as shareholder
service fees and professional fees.
The Funds 7
<PAGE>
Your Investment
PURCHASES
The Funds offer four classes of shares in this prospectus: Classes A, B, C,
and P, each with different expenses and dividends. You may purchase shares
at the net asset value ("NAV") per share determined after we receive your
purchase order submitted in proper form. A front-end sales charge is
normally added to the NAV in the case of the Class A shares. There is no
front-end sales charge in the case of the Class B, Class C, and Class P
shares, although there may be a contingent deferred sales charge ("CDSC")
on Class B and Class C shares as described below.
You should read this section carefully to determine which class of shares
represents the best investment option for your particular situation. It may
not be suitable for you to place a purchase order for Class B shares of
$500,000 or more or a purchase order for Class C shares of $1,000,000 or
more. You should discuss purchase options with your investment
professional.
For more information, see "Alternative Sales Arrangements" in the Statement
of Additional Information.
We reserve the right to withdraw all or any part of the offering made by
this prospectus or to reject any purchase order. We also reserve the right
to waive or change minimum investment requirements. All purchase orders are
subject to our acceptance and are not binding until confirmed or accepted
in writing.
================================================================================
Share Classes
================================================================================
Class A o normally offered with a front-end sales charge
Class B o no front-end sales charge, however, a CDSC is applied to shares
sold prior to the sixth anniversary of purchase
o higher annual expenses than Class A shares
o automatically convert to Class A shares after eight years
Class C o no front-end sales charge
o higher annual expenses than Class A shares
o a CDSC is applied to shares sold prior to the first anniversary
of purchase
Class P o available to certain pension or retirement plans and pursuant to
a Mutual Fund Fee Based Program
================================================================================
Front-End Sales Charges - Class A Shares
================================================================================
To Compute
As a % of As a % of Offering Price
Your Investment Offering Price Your Investment Divide NAV by
================================================================================
Less than $50,000 5.75% 6.10% .9425
================================================================================
$50,000 to $99,999 4.75% 4.99% .9525
================================================================================
$100,000 to $249,999 3.95% 4.11% .9605
================================================================================
$250,000 to $499,999 2.75% 2.83% .9725
================================================================================
$500,000 to $999,999 1.95% 1.99% .9805
================================================================================
$1,000,000 and over No Sales Charge 1.0000
================================================================================
NAV per share for each class of Fund shares is calculated each business day at
the close of regular trading on the New York Stock Exchange ("NYSE") normally
4:00 p.m. Eastern time. Purchases and sales of Fund shares are executed at the
NAV next determined after the Fund receives your order in proper form. In
calculating NAV, securities for which market quotations are available are valued
at those quotations. Securities for which such quotations are not available are
valued at fair value under procedures approved by the Board of the Company.
CDSC, regardless of class, is not charged on shares acquired through
reinvestment of dividends or capital gains distributions and is charged on the
original purchase cost or the current market value of the shares at the time
they are being sold, which-ever is lower. In addition, repayment of loans under
Retirement Plans and 403(b) Plans will constitute new sales for purposes of
assessing the CDSC.
To minimize the amount of any CDSC, each Fund redeems shares in the following
order:
1. shares acquired by reinvestment of dividends and capital gains (always free
of a CDSC)
2. shares held for six years or more (Class B) or two years or more after the
month of purchase (Class A) or one year or more (Class C)
3. shares held the longest before the sixth anniversary of their purchase
(Class B) or before the second anniversary after the month of purchase
(Class A) or before the first anniversary of their purchase (Class C)
Retirement Plans include employer-sponsored retirement plans under the
Internal Revenue Code, excluding Individual Retirement Accounts.
8 Your Investment
<PAGE>
Reducing Your Class A Front-End Sales Charges. Class A shares may be
purchased at a discount if you qualify under either of the following
conditions:
o Rights of Accumulation -- A Purchaser can apply the value (at public
offering price) of the shares you already own to a new purchase of
Class A shares of any Eligible Fund in order to reduce the sales
charge.
o Letters of Intention -- A Purchaser of Class A shares may purchase
additional shares of any Eligible Fund over a 13-month period and
receive the same sales charge as if you had purchased all shares at
once. Shares purchased through reinvestment of dividends or
distributions are not included. A Letters of Intention can be
backdated 90 days. Current holdings under Rights of Accumulation can
be included in a Letters of Intention.
For more information on eligibility for these privileges, read the
applicable sections in the attached application.
Class A Share Purchases Without A Front-End Sales Charge. Class A shares
may be purchased without a front-end sales charge under any of the
following conditions:
o purchases of $1 million or more *
o purchases by Retirement Plans with at least 100 eligible employees *
o purchases under a Special Retirement Wrap Program *
o purchases made with dividends and distributions on Class A shares of
another Eligible Fund
o purchases representing repayment under the loan feature of the Lord
Abbett- sponsored prototype 403(b) Plan for Class A shares
o purchases by employees of any consenting securities dealer having a
sales agreement with Lord Abbett Distributor
o purchases under a Mutual Fund Fee Based Program
o purchases by trustees or custodians of any pension or profit sharing
plan, or payroll deduction IRA for employees of any consenting
securities dealer having a sales agreement with Lord Abbett
Distributor
o purchases by each Lord Abbett-sponsored fund's Directors or Trustees
(including retired Directors or Trustees), officers of each Lord
Abbett-sponsored fund, employees and partners of Lord Abbett. These
categories of purchasers also include other family members of such
purchasers.
See the Statement of Additional Information for a listing of other
categories of purchasers who qualify for Class A share purchases without a
front-end sales charge.
* These categories may be subject to a CDSC.
Class A Share CDSC. If you buy Class A shares under one of the starred (O)
categories listed above and you redeem any within 24 months after the month
in which you initially purchased them, the Fund will normally collect a
CDSC of 1%.
The Class A share CDSC generally will be waived for the following
conditions:
o benefit payments under Retirement Plans, in connection with loans,
hardship withdrawals, death, disability, retirement, separation from
service or any excess distribution under Retirement Plans
(documentation may be required)
o redemptions continuing as investments in another fund participating in
a Special Retirement Wrap Program
Retirement Plans include employer-sponsored retirement plans under the Internal
Revenue Code, excluding Individual Retirement Accounts.
Lord Abbett offers a variety of Retirement Plans. Call 800-253-7299 for
information about:
o Traditional, Rollover, Roth and Education IRAs
o Simple IRAs, SEP-IRAs, 401(k) and 403(b) accounts
o Defined Contribution Plans
Lord Abbett Distributor LLC ("Lord Abbett Distributor") acts as agent for the
Funds to work with investment professionals that buy and/or sell shares of the
Funds on behalf of their clients. Generally, Lord Abbett Distributor does not
sell Fund shares directly to investors.
Benefit Payment Documentation
(Class A CDSC only)
o under $50,000 - no documentation necessary
o over $50,000 - reason for benefit payment must be received in writing. Use
the address indicated under "Opening Your Account."
Your Investment 9
<PAGE>
Class B Share CDSC. The CDSC for Class B shares normally applies if you
redeem your shares before the sixth anniversary of their initial purchase.
The CDSC declines the longer you own your shares, according to the
following schedule:
================================================================================
Contingent Deferred Sales Charges - Class B Shares
================================================================================
Anniversary(1) of the day on Contingent Deferred Sales Charge
which the purchase order on redemption (as % of amount
was accepted subject to charge)
On Before
================================================================================
1st 5.0%
================================================================================
1st 2nd 4.0%
================================================================================
2nd 3rd 3.0%
================================================================================
3rd 4th 3.0%
================================================================================
4th 5th 2.0%
================================================================================
5th 6th 1.0%
================================================================================
on or after the 6th(2) None
================================================================================
(1) The anniversary is the same calendar day in each respective year after the
date of purchase. For example, the anniversary for shares purchased on
May 1 will be May 1 of each succeeding year.
(2) Class B shares will automatically convert to Class A shares on the eighth
anniversary of the purchase of Class B shares.
The Class B share CDSC generally will be waived under the following
circumstances:
o benefit payments under Retirement Plans in connection with loans,
hardship withdrawals, death, disability, retirement, separation from
service or any excess contribution or distribution under Retirement
Plans
o Eligible Mandatory Distributions under 403(b) Plans and individual
retirement accounts
o death of the shareholder
o redemptions of shares in connection with Div-Move and Systematic
Withdrawal Plans (up to 12% per year)
See "Systematic Withdrawal Plan" under "Services For Fund Investors" below
for more information on CDSCs with respect to Class B shares.
Class C Share CDSC. The 1% CDSC for Class C shares normally applies if you
redeem your shares before the first anniversary of the purchase of such
shares.
Class P Shares. Class P shares have lower annual expenses than Class B and
Class C shares, no front-end sales charge, and no CDSC. Class P shares are
currently sold and redeemed at NAV (a) pursuant to a Mutual Fund Fee Based
Program, or (b) to the trustees of, or employer-sponsors with respect to,
pension or retirement plans with at least 100 eligible employees (such as a
plan under Section 401(a), 401(k) or 457(b) of the Internal Revenue Code)
which engage an investment professional providing or participating in an
agreement to provide certain recordkeeping, administrative and/or
sub-transfer agency services to the Fund on behalf of the Class P
shareholders.
10 Your Investment
<PAGE>
SALES COMPENSATION
As part of its plan for distributing shares, each Fund and Lord Abbett
Distributor pay sales and service compensation to Authorized Institutions
that sell the Funds' shares and service its shareholder accounts.
Sales compensation originates from two sources as shown in the table "Fees
and Expenses": sales charges which are paid directly by shareholders; and
12b-1 distribution fees that are paid out of each Fund's assets. Service
compensation originates from 12b-1 service fees. The total 12b-1 fees
payable with respect to each share class of each Fund are up to .35% of
Class A shares (plus distribution fees of up to 1.00% on certain qualifying
purchases), 1.00% of Class B and C shares, and .45% of Class P shares. The
amounts payable as compensation to Authorized Institutions, such as your
dealer, are shown in the chart at the end of this prospectus. The portion
of such compensation paid to Lord Abbett Distributor is discussed under
"Sales Activities" and "Service Activities." Sometimes we do not pay
compensation where tracking data is not available for certain accounts or
where the Authorized Institution waives part of the compensation. In such
cases, we may not require payment of any otherwise applicable CDSC.
We may pay Additional Concessions to Authorized Institutions from time to
time.
Sales Activities. We may use 12b-1 distribution fees to pay Authorized
Institutions to finance any activity which is primarily intended to result
in the sale of shares. Lord Abbett Distributor uses its portion of the
distribution fees attributable to a Fund's Class A and Class C shares for
activities which are primarily intended to result in the sale of such Class
A and Class C shares, respectively. These activities include, but are not
limited to, printing of prospectuses and statements of additional
information and reports for other than existing shareholders, preparation
and distribution of advertising and sales material, expenses of organizing
and conducting sales seminars, Additional Concessions to Authorized
Institutions, the cost necessary to provide distribution-related services
or personnel, travel, office expenses, equipment and other allocable
overhead.
Service Activities. We may pay Rule 12b-1 service fees to Authorized
Institutions for any activity which is primarily intended to result in
personal service and/or the maintenance of shareholder accounts. Any
portion of the service fees paid to Lord Abbett Distributor will be used to
service and maintain shareholder accounts.
OPENING YOUR ACCOUNT
Minimum initial investment
o Regular Account $1,000
- --------------------------------------------------------------------------------
o Individual Retirement Accounts and
403(b) Plans under the Internal Revenue Code $250
- --------------------------------------------------------------------------------
o Uniform Gift to Minor Account $250
- --------------------------------------------------------------------------------
o Invest-A-Matic $250
- --------------------------------------------------------------------------------
For Retirement Plans and Mutual Fund Fee Based Programs no minimum
investment is required, regardless of share class.
You may purchase shares through any independent securities dealer who has a
sales agreement with Lord Abbett Distributor or you can fill out the
attached application and send it to the Fund you select at the address
stated below. You should carefully read the paragraph below entitled
"Proper Form" before placing your order to ensure that your order will be
accepted.
12b-1 fees are payable regardless of expenses. The amounts payable by a Fund
need not be directly related to expenses. If Lord Abbett Distributor's actual
expenses exceed the fee payable to it, a Fund will not have to pay more than
that fee. If Lord Abbett Distributor's expenses are less than the fee it
receives, Lord Abbett Distributor will keep the full amount of the fee.
Your Investment 11
<PAGE>
Name of Fund
P.O. Box 219100
Kansas City, MO 64121
By Exchange. Telephone the Fund at 800-821-5129 to request an exchange from
any eligible Lord Abbett-sponsored fund.
Proper Form. An order submitted directly to the Fund must contain: (1) a
completed application, and (2) payment by check. When purchases are made by
check, redemption proceeds will not be paid until the Fund or transfer
agent is advised that the check has cleared, which may take up to 15
calendar days. For more information call the Fund at 800-821-5129.
REDEMPTIONS
By Broker. Call your investment professional for instructions on how to
redeem your shares.
By Telephone. To obtain the proceeds of a redemption of $50,000 or less
from your account, you or your representative should call the Fund at
800-821-5129.
By Mail. Submit a written redemption request indicating the name(s) in
which the account is registered, the Fund's name, the class of shares, your
account number, and the dollar value or number of shares you wish to sell.
Include all necessary signatures. If the signer has any Legal Capacity, the
signature and capacity must be guaranteed by an Eligible Guarantor. Certain
other legal documentation may be required. For more information regarding
proper documentation call 800-821-5129.
Normally a check will be mailed to the name(s) and address in which the
account is registered (or otherwise according to your instruction) within
three business days after receipt of your redemption request. Your account
balance must be sufficient to cover the amount being redeemed or your
redemption order will not be processed. Under unusual circumstances, the
Fund may suspend redemptions, or postpone payment for more than seven days,
as permitted by federal securities laws.
To determine if a CDSC applies to a redemption, see "Class A share CDSC,"
"Class B share CDSC," or "Class C share CDSC."
DISTRIBUTIONS AND TAXES
Each Fund normally pays dividends from its net investment income as
follows: semi-annually for Large-Cap Series and annually for Small-Cap
Value Series. Each Fund distributes net capital gains (if any) as capital
gains distributions at least annually. Your distributions will be
reinvested in your Fund unless you instruct the Fund to pay them to you in
cash. There are no sales charges on reinvestments. The tax status of
distributions is the same for all shareholders regardless of how long they
have owned Fund shares or whether distributions are reinvested or paid in
cash.
Except in tax-advantaged accounts, any sale, redemption or exchange of Fund
shares may be taxable to the shareholder.
Information on the tax treatment of distributions, including the source of
dividends and distributions of capital gains by each Fund, will be mailed
to shareholders each year. Because everyone's tax situation is unique, you
should consult your tax adviser regarding the treatment of 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.
Exchange Limitations. Exchanges should not be used to try to take advantage of
short-term swings in the market. Frequent exchanges create higher expenses for
the Fund. Accordingly, the Fund reserves the right to limit or terminate this
privilege for any shareholder making frequent exchanges or abusing the
privilege. The Fund also may revoke the privilege for all shareholders upon 60
days' written notice.
Small Accounts. Our Board may authorize closing any account in which there are
fewer than 25 shares if it is in a Fund's best interest to do so.
Eligible Guarantor is any broker or bank that is a member of the medallion stamp
program. Most major securities firms and banks are members of this program. A
notary public is not an eligible guarantor.
12 Your Investment
<PAGE>
SERVICES FOR FUND INVESTORS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described
below. With each service, you select a schedule and amount, subject to
certain restrictions. You may set up most of these services when filling
out your application or by calling 800-821-5129.
- --------------------------------------------------------------------------------
For investing
Invest-A-Matic You can make fixed, periodic investments ($50 minimum) into
(Dollar-cost your Fund account by means of automatic money transfers from
averaging) your bank checking account. See the attached application for
instructions. Div-Move You can automatically reinvest the
dividends and distributions from your account into another
account in any Eligible Fund ($50 minimum).
For selling shares
Systematic You can make regular withdrawals from most Lord Abbett
Withdrawal Funds. Automatic cash withdrawals will be paid to you from
Plan ("SWP") your account in fixed or variable amounts. To establish a
plan, the value of your shares must be at least $10,000,
except for Retirement Plans for which there is no minimum.
Your shares must be in non-certificate form.
Class B shares The CDSC will be waived on SWP redemptions of up to 12% of
the current net asset value of your account at the time of
your SWP request. For Class B share SWP redemptions over 12%
per year, the CDSC will apply to the entire redemption.
Please contact the Fund for assistance in minimizing the
CDSC in this situation.
Class B and Redemption proceeds due to a SWP for Class B and Class C
C shares shares will be redeemed in the order described under
"Purchases."
- --------------------------------------------------------------------------------
OTHER SERVICES
Telephone Investing. After we have received the attached application
(selecting "yes" under Section 8C and completing Section 7), you may
instruct us by phone to have money transferred from your bank account to
purchase shares of the Fund for an existing account. The Fund will purchase
the requested shares when it receives the money from your bank.
Exchanges. You or your investment professional, may instruct the Fund to
exchange shares of any class for shares of the same class of any Eligible
Fund. Instruction may be provided in writing or by telephone, with proper
identification, by calling 800-821-5129. The Fund must receive instructions
for the exchange before the close of the NYSE on the day of your call in
which case you will get the NAV per share of the Eligible Fund determined
on that day. Exchanges will be treated as a sale for federal tax purposes.
Be sure to read the current prospectus for any Fund into which you are
exchanging.
Reinvestment Privilege. If you sell shares of the Fund, you have a one time
right to reinvest some or all of the proceeds in the same class of any
Eligible Fund within 60 days without a sales charge. If you paid a CDSC
when you sold your shares, you will be credited with the amount of the
CDSC. All accounts involved must have the same registration.
Account Statements. Every Lord Abbett investor automatically receives
quarterly account statements.
Householding. Shareholders with the same last name and address will receive
a single copy of a prospectus and an annual and semi-annual report, unless
additional reports are specifically requested in writing to the Fund.
Telephone Transactions. You have this privilege unless you refuse it in writing.
For your security, telephone transaction requests are recorded. We will take
measures to verify the identity of the caller, such as asking for your name,
account number, social security or taxpayer identification number and other
relevant information. The Fund will not be liable for following instructions
communicated by telephone that it reasonably believes to be genuine.
Transactions by telephone may be difficult to implement in times of drastic
economic or market change.
Your Investment 13
<PAGE>
Account Changes. For any changes you need to make to your account, consult
your investment professional or call the Fund at 800-821-5129.
Systematic Exchange. You or your investment professional can establish a
schedule of exchanges between the same classes of any Eligible Fund.
MANAGEMENT
The Funds' investment adviser is Lord, Abbett & Co., which is located at 90
Hudson Street, Jersey City, NJ 07302-3973. Founded in 1929, Lord Abbett
manages one of the nation's oldest mutual fund complexes, with
approximately $35 billion in more than 40 mutual fund portfolios and other
advisory accounts. For more information about the services Lord Abbett
provides to the Funds, see the Statement of Additional Information.
Lord Abbett is entitled to a fee based on each Fund's average daily net
assets for each month. For the fiscal year ended November 30, 1999, the fee
paid to Lord Abbett was at an annual rate of 0.75 of 1% for both Large-Cap
Series and Small-Cap Value Series.
Lord Abbett uses a team of portfolio managers and analysts acting together
to manage each fund's investments.
Large-Cap Series. The portfolio management team is headed by Robert G.
Morris, W. Thomas Hudson and Eli Salzmann. Messrs. Morris and Hudson,
Partners of Lord Abbett, have been with Lord Abbett for more than five
years. Mr. Salzmann joined Lord Abbett in 1997; before that he was a Vice
President with Mutual of America Capital Corp. from 1996 to 1997, and was a
Vice President at Mitchell Hutchins Asset Management, Inc. from 1986 to
1996.
Small-Cap Value Series. Robert P. Fetch, Partner of Lord Abbett, heads the
Fund's team, the other senior member is Gregory M. Macosko. Mr. Fetch
joined Lord Abbett in 1995; before that, he was was a Managing Director of
Prudential Investment Advisors from 1983 to 1995. Mr. Macosko joined Lord
Abbett in 1996; before that he was an Equity Analyst with Quest Advisory
Service from 1991 to 1996.
14 Your Investment
<PAGE>
For More Information
OTHER INVESTMENT TECHNIQUES
This section describes some of the investment techniques that might be used
by the Funds and their risks.
Adjusting Investment Exposure. Each Fund may, but is not required to, use
various strategies to change its investment exposure to adjust to changing
security prices, interest rates, currency exchange rates, commodity prices
and other factors. These strategies may involve buying or selling
derivative instruments, such as options and futures contracts, swap
agreements including interest rate swaps, caps, floors, collars and rights
and warrants. Each Fund may use these transactions to change the risk and
return characteristics of its 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 a
loss if the counterparty to a transaction does not perform as promised.
Futures Contracts and Options on Futures Contracts. 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. Each Fund may purchase and sell futures contracts
and options thereon. Both the Large-Cap Series and the Small-Cap Value
Series 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 the total assets of the Fund entering into the transaction
A Fund's ability to enter into financial transactions is limited by certain
tax requirements in order to continue to qualify as a regulated investment
company.
Foreign Securities. The Large-Cap Series, and the Small-Cap Value Series
will limit their investments in foreign securities to 10% of their
respective total assets. Foreign markets and the securities traded in them
are not subject to the same degree of regulation as U.S. markets.
Securities clearance and settlement procedures may be different in foreign
countries. There may be less trading volume in foreign markets, subjecting
the securities traded in them to higher price fluctuations. Transaction
costs may be higher in foreign markets. A Fund may hold foreign securities
which trade on days when the Fund does not sell shares. As a result, the
value of the Fund's portfolio securities may change on days an investor may
not purchase or sell Fund shares.
Foreign issuers are generally not subject to similar, uniform accounting,
auditing and financial reporting requirements as U.S. issuers. Foreign
investments may be affected by changes in currency rates or currency
controls. Certain foreign countries may limit a Fund's ability to remove
its assets from the country. With respect to certain foreign countries,
there is a possibility of nationalization, expropriation or confiscatory
taxation, imposition of withholding or other taxes and political or social
instability which could affect investments in those countries.
Options Transactions. The Small-Cap Value Series may purchase and write put
and call options on securities or stock indices that are traded on national
securities exchanges.
A put option gives the buyer of the option the right to sell, and the
seller of the option the obligation to buy, the underlying instrument
during the option period. The Small-Cap
For More Information 15
<PAGE>
Value Series may write only covered put options to the extent that cover
for such options does not exceed 25% of the Fund's net assets. The
Small-Cap Value Series will not purchase an option if, as a result of such
purchase, more than 20% of its net assets would be invested in premiums for
such options.
A call option gives the buyer of the option the right to buy, and the
writer (seller) of the option the obligation to sell, the underlying
instrument. The Small-Cap Value Series and the Large-Cap Series may write
(sell) only "covered" options. This means that the Funds may only sell call
options on securities which the Funds own. 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. Each Fund will only write "covered" call options on securities having
an aggregate market value not to exceed 5% of its gross assets.
Rights and Warrants. Each Fund may invest up to 5% of its assets in rights
and warrants to purchase securities. 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, or 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
after their expiration date.
GLOSSARY OF SHADED TERMS
Additional Concessions. Lord Abbett Distributor may, for specified periods,
allow dealers to retain the full sales charge for sales of shares or may
pay an additional con- cession to a dealer who sells a minimum dollar
amount of our shares and/or shares of other Lord Abbett-sponsored funds. In
some instances, such additional concessions will be offered only to certain
dealers expected to sell significant amounts of shares. Additional payments
may be paid from Lord Abbett Distributor's own resources or from
distribution fees received from a Fund and will be made in the form of cash
or, if permitted, non-cash payments. The non-cash payments will include
business seminars at Lord Abbett's headquarters or other locations,
including meals and entertainment, or the receipt of merchandise. The cash
payments may include payment of various business expenses of the dealer.
In selecting dealers to execute portfolio transactions for a Fund's
portfolio, if two or more dealers are considered capable of obtaining best
execution, we may prefer the dealer who has sold our shares and/or shares
of other Lord Abbett-sponsored funds.
Authorized Institutions. Institutions and persons permitted by law to
receive service and/or distribution fees under a Rule 12b-1 Plan are
"Authorized Institutions." Lord Abbett Distributor is an Authorized
Institution.
Eligible Fund. An Eligible Fund is any Lord Abbett-sponsored fund except
for (1) certain tax-free, single-state funds where the exchanging
shareholder is a resident of a state in which such a Fund is not offered
for sale; (2) Lord Abbett Equity Fund; (3) Lord Abbett Series Fund; (4)
Lord Abbett U.S. Government Securities Money Market Fund ("GSMMF") (except
for holdings in GSMMF which are attributable to any shares exchanged from
the Lord Abbett family of funds). An Eligible Fund also is any
16 For More Information
<PAGE>
Authorized Institution's affiliated money market fund satisfying Lord
Abbett Distributor as to certain omnibus accounts and other criteria.
Eligible Mandatory Distributions. If Class B shares represent a part of an
individual's total IRA or 403(b) investment, the CDSC will be waived only
for that part of a mandatory distribution which bears the same relation to
the entire mandatory distribution as the Class B share investment bears to
the total investment.
Legal Capacity. With respect to a redemption request, if (for example) the
request is on behalf of the estate of a deceased shareholder, John W. Doe,
by a person (Robert A. Doe) who has the legal capacity to act for the
estate of the deceased shareholder because he is the executor of the
estate, then the request must be executed as follows: Robert A.Doe,
Executor of the Estate of John W. Doe. That signature using that capacity
must be guaranteed by an Eligible Guarantor.
Similarly, if (for example) the redemption request is on behalf of the ABC
Corporation by a person (Mary B. Doe) that has the legal capacity to act on
behalf of this corporation, because she is the President of the
corporation, then the request must be executed as follows: ABC Corporation
by Mary B.Doe, President. That signature using that capacity must be
guaranteed by an Eligible Guarantor (see example in right column).
Mutual Fund Fee Based Program. Certain unaffiliated authorized brokers,
dealers, registered investment advisers or other financial institutions
("entities") who either (1) have an arrangement with Lord Abbett
Distributor in accordance with certain standards approved by Lord Abbett
Distributor, providing specifically for the use of our shares (and
sometimes providing for acceptance of orders for such shares on our behalf)
in particular investment products made available for a fee to clients of
such entities, or (2) charge an advisory, consulting or other fee for their
services and buy shares for their own accounts or the accounts of their
clients.
Purchaser. The term "purchaser" includes: (1) an individual, (2) an
individual and his or her spouse and children under the age of 21, and (3)
a trustee or other fiduciary purchasing shares for a single trust estate or
single fiduciary account (including a pension, profit-sharing, or other
employee benefit trust qualified under Section 401 of the Internal Revenue
Code - more than one qualified employee benefit trust of a single employer,
including its consolidated subsidiaries, may be considered a single trust,
as may qualified plans of multiple employers registered in the name of a
single bank trustee as one account), although more than one beneficiary is
involved.
RECENT PERFORMANCE
Large-Cap Series. During 1999, the Fund established and added to positions
in stocks that, in our opinion, were undervalued due to investor sentiment
rather than deteriorating company fundamentals. A number of positions we
established or strengthened in telecommunications, technology and select
financial services companies performed well. A slight increase in long-term
interest rates, brought on in part by a rise in commodity prices, resulted
in markdowns on our electric utility holdings.
Small-Cap Value Series. In April and May many small-cap stocks performed
well, rebounding from their 1998 and first quarter 1999 price levels. This
was generally a result of improving investor sentiment and an increased
interest in the sector, which had become significantly undervalued as a
result of the "flight to quality" that drove investors to large-company
stocks and a period of tax-loss selling that put further pressure on
GUARANTEED SIGNATURE. An acceptable form of guarantee would be as follows:
In the case of the estate --
Robert A. Doe
Executor of the Estate of
John W. Doe
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
[SIGNATURE ILLEGIBLE]
- --------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
In the case of the corporation --
ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
[SIGNATURE ILLEGIBLE]
- --------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
For More Information 17
<PAGE>
small-cap stock prices in 1998. Holdings in the technology and energy
sectors turned in strong performance as the market bounced back. We believe
that select investments in these areas may provide value, given existing
price levels and our current interest rate forecasts.
During the fourth quarter of 1999, we anticipated that the domestic economy
would continue to grow, fueled in part by strong consumer spending. If
recovery in Asia also continues, we anticipate that global economic
expansion is likely in 2000. With the general rise in interest rates we've
experienced since the beginning of 1999, we do not expect inflation to
exceed our earlier forecasts. Given these conditions, we believe that
value stocks will perform well relative to growth stocks. It is important
to note, however, that we work to apply our bottom-up, stock-picking
strategy regardless of market conditions because, in our opinion, over the
long term, a value-oriented, disciplined approach to investing provides the
greatest potential for achieving consistent, above-market returns.
18 For More Information
<PAGE>
Large-Cap Series
Financial Information
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the fiscal periods
indicated. "Total return" shows how much your investment in the Fund would
have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These Financial Highlights have
been audited by Deloitte & Touche LLP, the Fund's independent auditors, in
conjunction with their annual audit of the Fund's financial statements.
Financial statements for the fiscal year ended November 30, 1999 and the
Independent Auditors' Report thereon appear in the Annual Report to
Shareholders for the fiscal year ended November 30, 1999 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 A Shares Class B Shares
Period Ended November 30, Period Ended November 30,
Per Share Operating Performance: 1999 1998 1997 1996 1995 1999 1998 1997 1996(c)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $21.91 $20.08 $17.86 $15.54 $12.79 $21.71 $20.00 $17.83 $15.24
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .08(a) .15(a) .08(a) .270 .42 (.09)(a) --(a)(e) (.06)(a) .12
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------------
gain on investments 3.60 2.45 3.21 3.505 3.44 3.58 2.42 3.20 2.66
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.68 2.60 3.29 3.775 3.86 3.49 2.42 3.14 2.78
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.10) (.06) (.12) (.57) (.29) -- -- (.02) (.19)
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain (.17) (.71) (.95) (.885) (.82) (.17) (.71) (.95) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $25.32 $21.91 $20.08 $17.86 $15.54 $25.03 $21.71 $20.00 $17.83
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(b) 16.99% 13.45% 19.87% 26.25% 32.82% 16.21% 12.56% 18.92% 18.39%(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, including waiver and
reimbursements 1.43% 1.24% 1.52% 0.36% 0.00% 2.11%(f) 2.00% 2.28% 0.59%(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver and
reimbursements 1.43% 1.24% 1.52% 0.96% 1.02% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .33% .74% .42% 2.24% 3.27% (.35)% (.01)% (0.34)% 0.22%(d)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class C Shares Class P Shares
Period Ended November 30, Period Ended November 30,
Per Share Operating Performance: 1999 1998 1997(c) 1999(c)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $21.73 $20.01 $16.90 $25.09
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.09)(a) (.01)(a) (.07)(a) .09
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------------
gain on investments 3.58 2.44 3.18 .21
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.49 2.43 3.11 .30
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain (.17) (.71) -- (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $25.05 $21.73 $20.01 $25.36
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(b) 16.20% 12.61% 18.40%(d) 1.20%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses 2.11%(f) 2.00% 1.54%(d) .92%(f)
Net investment income (loss) (.35)% (.04)% (.37)%(d) .34%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended November 30,
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Data For All Classes: 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Net Assets, end of year (000) $256,003 $143,153 $69,796 $23,592 $7,549
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 60.59% 99.14% 30.81% 62.25% 37.17%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes
reinvestment of all distributions.
(c) Commencement of operations: August 1, 1996 (Class B); April 1, 1997 (Class
C); and April 28, 1999 (Class P).
(d) Not annualized.
(e) Amount less than $.01.
(f) The ratio includes expense paid through an expense offset arrangement.
Financial Information 19
<PAGE>
Large-Cap Series
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in Class A shares
to the same investment in both S&P 500(R) Index and the S&P Barra Value
Index, assuming reinvestment of all dividends and distributions.
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Class A ClassA S&P 500 S&P Barra
NAV MAX Index Value Index
06/03/92 $10,000 $ 9,426 $10,000 $10,000
11/30/92 $10,599 $ 9,991 $10,702 $10,363
11/30/93 $12,478 $11,761 $11,781 $12,303
11/30/94 $13,502 $12,726 $11,903 $12,283
11/30/95 $17,934 $16,905 $16,299 $16,575
11/30/96 $22,642 $21,342 $20,838 $21,127
11/30/97 $27,142 $25,583 $26,777 $26,425
11/30/98 $30,790 $29,022 $33,118 $29,926
11/30/99 $36,023 $33,954 $40,037 $33,652
- --------------------------------------------------------------------------------
Average Annual Total Return At Maximum Applicable
Sales Charge For The Periods Ending November 30, 1999
1 Year 5 Years Life
- --------------------------------------------------------------------------------
Class A(3) 10.30% 20.26% 17.73%
- --------------------------------------------------------------------------------
Class B(4) 11.21% - 19.52%
- --------------------------------------------------------------------------------
Class C(5) 15.20% - 17.84%
- --------------------------------------------------------------------------------
Class P(6) - - 1.20%
- --------------------------------------------------------------------------------
(1) This reflects the deduction of the maximum initial sales charge of 5.75%.
(2) Performance for the unmanaged S&P 500(R) Index and the S&P Barra Value
Index does not reflect any fees or expenses. The performance of the indices
is not necessarily representative of the Fund's performance. Performance
for each index begins on 6/30/92.
(3) This shows total return which is the percent change in value, after
deduction of the maximum initial sales charge of 5.75% applicable to Class
A shares, with all dividends and distributions reinvested for the periods
shown ending November 30, 1999, using the SEC-required uniform method to
compute such return.
(4) The Class B shares were first offered on 8/1/96. Performance reflects the
deduction of a CDSC of 5% (for 1 year) and 3% (life of class).
(5) The Class C shares were first offered on 4/1/97. Performance reflects the
deduction of a CDSC of 1% (for 1 year) and 0% (life of class).
(6) The Class P shares were first offered on 4/28/99. Performance is at net
asset value.
20 Financial Information
<PAGE>
Small-Cap Value Series
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, 1999 and the
Independent Auditors' Report thereon appear in the Annual Report to
Shareholders for the fiscal year ended November 30, 1999 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 A Shares Class B Shares
Period Ended November 30, Period Ended November 30,
Per Share Operating Performance: 1999 1998 1997 1996(a) 1999 1998 1997 1996(b)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.36 $16.56 $12.01 $10.00 $14.20 $16.44 $12.00 $11.67
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.12)(c) (.06)(c) .02(c) .127 (.22)(c) (.17)(c) (.09)(c) .001
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------------
gain (loss) on investments 1.39 (1.85) 4.53 2.658 1.36 (1.82) 4.53 .329
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.27 (1.91) 4.55 2.785 1.14 (1.99) 4.44 .33
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income -- -- -- (.075) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain -- (.29) -- (.700) -- (.25) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.36 $14.36 $16.56 $12.01 $15.34 $14.20 $16.44 $12.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(d) 8.84% (11.71)% 37.89% 28.24%(e) 8.03% (12.27)% 37.00% 2.84%(e)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, including waiver and
reimbursements 1.52%(f) 1.28% 1.17% 0.01%(e) 2.19%(f) 2.00% 1.86% 0.04%(e)
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver and
reimbursements 1.52%(f) 1.28% 1.17% 1.00%(e) 2.19%(f) 2.00% 1.86% 0.07%(e)
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.80)% (0.37)% 0.10% 1.02%(e) (1.48)% (1.09)% (0.56)% 0.01%(e)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class C Shares Class P Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Period Ended November 30, Period Ended November 30,
Per Share Operating Performance: 1999 1998 1997(b) 1999(b)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $14.20 $16.44 $12.81 $16.41
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss(c) (.22) (.17)(c) (0.05)(c) (.06)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------------
gain (loss) on investments 1.36 (1.82) 3.68 (.72)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.14 (1.99) 3.63 (.78)
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net realized gain -- (.25) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.34 $14.20 $16.44 $15.63
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(d) 8.03% (12.27)% 28.34%(e) (4.75)%(e)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses 2.19%(f) 2.00% 1.25%(e) .72%(f)
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss (1.48)%(f) (1.09)% (0.30)%(e) (.41)%(f)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Period Ended November 30,
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Data For All Classes: 1999 1998 1997 1996(a)
<S> <C> <C> <C> <C> <C>
Net Assets, end of period (000) $460,549 $515,379 $435,776 $8,772
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 83.93% 67.86% 45.24% 110.09%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) From commencement of operations: December 13, 1995 (Class A).
(b) Commencement of offering respective class shares: November 15, 1996 (Class
B), April 1, 1997 (Class C) and June 23, 1999 (Class P).
(c) Calculated using average shares outstanding during the period.
(d) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(e) Not annualized.
(f) The ratio includes expenses paid through an expense offset arrangement.
Financial Information 21
<PAGE>
Small-Cap Value Series
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in Class A shares
to the same investment in Russell 2000(R) Index, assuming reinvestment of
all dividends and distributions.
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Class A Class A Russell 2000
NAV MAX Index
12/13/95 $10,000 $ 9,425 $10,000
11/30/96 $12,824 $12,087 $11,352
11/30/97 $17,683 $16,667 $14,010
11/30/98 $15,611 $14,714 $13,082
11/30/99 $16,993 $16,015 $15,132
- --------------------------------------------------------------------------------
Average Annual Total Return At Maximum Applicable
Sales Charge For The Periods Ending November 30, 1999
1 Year Life
- --------------------------------------------------------------------------------
Class A(3) 2.60% 12.61%
- --------------------------------------------------------------------------------
Class B(4) 3.03% 9.14%
Class C(5) 7.03% 7.62%
Class P(6) - -4.75%
- --------------------------------------------------------------------------------
(1) This reflects the deduction of the maximum initial sales charge of 5.75%.
(2) Performance for the unmanaged Russell 2000(R)Index does not reflect any
fees or expenses. The performance of the index is not necessarily
representative of the Fund's performance. Performance for this index begins
on 12/31/95.
(3) This shows total return which is the percent change in value, after
deduction of the maximum initial sales charge of 5.75% applicable to Class
A shares, with all dividends and distributions reinvested for the periods
shown ending November 30, 1999, using the SEC-required uniform method to
compute such return.
(4) The Class B shares were first offered on 11/15/96. Performance reflects the
deduction of a CDSC of 5% (for 1 year) and 3% (life of the Class).
(5) The Class C shares were first offered on 4/1/97. Performance reflects the
deduction of a CDSC of 1% (for 1 year) and 0% (life of Class).
(6) The Class P shares were first offered on 6/23/99. Performance is at net
asset value.
22 Financial Information
<PAGE>
COMPENSATION FOR YOUR DEALER
<TABLE>
<CAPTION>
====================================================================================================================================
FIRST YEAR COMPENSATION
Front-end
sales charge Dealer's
paid by investors concession Service fee(1) Total compensation(2)
Class A investments (% of offering price) (% of offering price) (% of net investment) (% of offering price)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Less than $50,000 5.75% 5.00% 0.25% 5.24%
- ------------------------------------------------------------------------------------------------------------------------------------
$50,000 - $99,999 4.75% 4.00% 0.25% 4.24%
- ------------------------------------------------------------------------------------------------------------------------------------
$100,000 - $249,999 3.95% 3.25% 0.25% 3.49%
- ------------------------------------------------------------------------------------------------------------------------------------
$250,000 - $499,999 2.75% 2.25% 0.25% 2.49%
- ------------------------------------------------------------------------------------------------------------------------------------
$500,000 - $999,999 1.95% 1.75% 0.25% 1.99%
- ------------------------------------------------------------------------------------------------------------------------------------
$1 million or more(3) or Retirement Plan -
100 or more eligible employees(3) or
Special Retirement Wrap Program(3)
- ------------------------------------------------------------------------------------------------------------------------------------
First $5 million no front-end sales charge 1.00% 0.25% 1.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Next $5 million above that no front-end sales charge 0.55% 0.25% 0.80%
- ------------------------------------------------------------------------------------------------------------------------------------
Next $40 million above that no front-end sales charge 0.50% 0.25% 0.75%
- ------------------------------------------------------------------------------------------------------------------------------------
Over $50 million no front-end sales charge 0.25% 0.25% 0.50%
Class B investments(4) Paid at time of sale (% of net asset value)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 3.75% 0.25% 4.00%
Class C investments(4)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.75% 0.25% 1.00%
Class P investments Percentage of average net assets
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION AFTER FIRST YEAR
Class A investments Percentage of average net assets(5)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.25% 0.25%
Class B investments(4)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.25% 0.25%
Class C investments(4)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.75% 0.25% 1.00%
Class P investments
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The service fees for Class A and P shares are paid quarterly. The first
year's service fees on Class B and C shares are paid at the time of sale.
(2) Reallowance concession percentages and service fee percentages are
calculated from different amounts, and therefore may not equal total
compensation percentages if combined using simple addition. Additional
Concessions may be paid to Authorized Institutions, such as your dealer,
from time to time.
(3) Concessions are paid at the time of sale on all Class A shares sold during
any 12-month period starting from the day of the first net asset value
sale. With respect to (a) Class A share purchases at $1 million or more,
sales qualifying at such level under rights of accumulation and Letter of
Intention privileges are included and (b) for Special Retirement Wrap
Programs, only new sales are eligible and exchanges into the Fund are
excluded. Certain purchases of Class A shares are subject to a CDSC.
(4) Class B and C shares are subject to CDSCs.
(5) With respect to Class B, C and P shares, 0.25%, 1.00% and 0.45%,
respectively, of the average annual net asset value of such shares
outstanding during the quarter (including distribution reinvestment shares
after the first anniversary of their issuance) is paid to Authorized
Institutions, such as your dealer. These fees are paid quarterly in
arrears.
Financial Information 23
<PAGE>
More information on these Funds is available free upon request, including:
Annual/Semi-annual Report
Describes the Funds, lists portfolio holdings and contains a letter from
the Funds' manager discussing recent market conditions and each Fund's
investment strategies.
Statement of Additional Information ("SAI")
Provides more details about the Funds and their policies. A current SAI is
on file with the Securities and Exchange Commission ("SEC") and is
incorporated by reference (is legally considered part of this prospectus).
Lord Abbett Research Fund, Inc.
Large-Cap Series
Small-Cap Value Series
90 Hudson Street
Jersey City, NJ 07302-3973
- --------------------------------------------------------------------------------
SEC file number: 811-6650
To obtain information:
By telephone. Call either Fund at:
888-522-2388
By mail. Write to either Fund at:
The Lord Abbett Family of Funds
90 Hudson Street
Jersey City, NJ 07302-3973
Via the Internet.
Lord, Abbett & Co.
www.lordabbett.com
Text only versions of Fund documents can be viewed online or downloaded from:
SEC www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 202-942-8090) or by sending your request and a duplicating
fee to the SEC's Public Reference Section, Washington, DC 20549-6009 or by
sending your request electronically to [email protected].
lARF-1-400
(4/00)
<PAGE>
Lord Abbett
Research Fund
Prospectus
April 1, 2000
Growth Opportunities Fund
[LOGO]
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
Please call 800-821-5129 for further information
<PAGE>
Table of Contents
The Fund
What you should know Goal 2
about the Fund Principal Strategy 2
Main Risks 2
Performance 3
Fees and Expenses 4
Your Investment
Information for managing Purchases 5
your Fund account Sales Compensation 7
Opening Your Account 8
Redemptions 9
Distributions and Taxes 9
Services For Fund Investors 10
Management 11
For More Information
How to learn more Other Investment Techniques 12
about the Fund Glossary of Shaded Terms 13
Recent Performance 14
Financial Information
Financial Highlights 15
Line Graph Comparison 16
Compensation For Your Dealer 17
How to learn more about the Back Cover
Fund and other Lord Abbett Funds
<PAGE>
GOAL
The Fund's investment objective is capital appreciation.
PRINCIPAL STRATEGY
To pursue this goal, we invest primarily in common stocks of mid-sized
companies with market capitalizations between $1 billion and $10 billion.
The Fund uses a growth style of investing which means that we favor
companies that show the potential for strong revenue and earnings growth.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in growth company stocks.
Typically, in choosing stocks, we look for mid-sized companies using:
o quantitative research to identify companies with superior growth
possibilities
o fundamental research to identify companies likely to produce superior
returns over a two to five year time frame, by analyzing the dynamics
in each company within its industry and within the economy
While typically fully invested, at times we may take a temporary defensive
position by investing some of the Fund's assets in cash equivalents. This
could reduce the benefit from any upswing in the market and prevent the
Fund from achieving its investment objective.
MAIN RISKS
The Fund is subject to the general risks and considerations associated with
equity investing. The value of your investment will fluctuate in response
to movements in the stock market in general, and to the changing prospects
of individual companies in which the Fund invests.
The Fund has particular risks associated with growth stocks. Different
types of stocks shift in and out of favor depending on market and economic
conditions Growth companies may grow faster than other companies
which may result in more volatility in their stock prices. In addition, if
the Fund's assessment of a company's potential for growth or market
conditions is wrong, it could suffer losses or produce poor performance
relative to other funds, even in a rising market.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. The Fund is not a complete investment program and may
not be appropriate for all investors. You could lose money in the Fund.
We or the Fund refers to the Lord Abbett Growth Opportunities Fund, a portfolio
of Lord Abbett Research Fund, Inc. (the "Company").
About the Fund. The Fund is a professionally managed portfolio of securities
purchased with the pooled money of investors. It strives to reach its stated
goal although, as with all mutual funds, cannot guarantee results.
Growth stocks exhibit faster-than-average gains in earnings and are expected to
continue profit growth at a high-level. They tend to be more volatile than
slower-growing value stocks.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describes the other investment strategies used by the Fund and
their risks.
2 The Fund
<PAGE>
Growth Opportunities Fund Symbols: Class A - LMGAX
Class B - LMGBX
Class C - LMGCX
PERFORMANCE
The bar chart and table below provide some indication of the risks of
investing in the Fund by illustrating the variability of the Fund's
returns. Each assumes reinvestment of dividends and distributions. The
Fund's past performance is not necessarily an indication of how the Fund
will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares
from calendar year to calendar year. This chart does not reflect the sales
charges applicable to Class A shares. If the sales charges were reflected,
returns would be less.
- --------------------------------------------------------------------------------
Bar Chart (per calendar year) - Class A Shares
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
1996 - 23.7%
1997 - 30.9%
1998 - 13.4%
1999 - 58.0%
Best Quarter 4th Q `99 46.2% Worst Quarter 3rd Q `98 -20.7%
- --------------------------------------------------------------------------------
The table below shows how the average annual total returns of the Fund's
Class A, B, C and P shares compare to those of a broad-based securities
market index and a more narrowly based index that more closely reflects the
market sectors in which the Fund invests. The Fund's returns reflect
payment of the maximum applicable front-end or deferred sales charges.
- --------------------------------------------------------------------------------
Average Annual Total Returns Through December 31, 1999
- --------------------------------------------------------------------------------
Share Class 1 Year Since Inception(1)
Class A shares 49.00% 27.31%
- --------------------------------------------------------------------------------
Class B shares 52.45% 84.41%
Class C shares 56.19% 87.16%
Russell Mid-Cap Growth Index ("RMCG Index")(2) 51.29% 25.23%(3)
64.10%(4)
- --------------------------------------------------------------------------------
S&P Mid-Cap 400 Index(2) 14.72% 20.50%(3)
29.33%(4)
- --------------------------------------------------------------------------------
(1) The date of inception for Class A - 8/1/95; Class B - 10/16/98; and Class C
- 10/19/98. In September of 1998, the Fund's investment philosophy was
amended to provide the Fund the flexibility to pursue capital appreciation
through a growth-oriented strategy.
(2) Performance for the unmanaged RMCG Index and the S&P Mid-Cap 400 Index does
not reflect transaction costs or management fees. The performance of the
indices is not necessarily representative of the Fund's performance.
(3) Represents total return for the period 8/31/95 - 12/31/99, to correspond
with Class A inception date.
(4) Represents total return for the period 10/31/98 - 12/31/99, to correspond
with Class B and Class C inception date.
The Fund 3
<PAGE>
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Fee Table
- -----------------------------------------------------------------------------------------
Class A Class B(2) Class C Class P
<S> <C> <C> <C> <C>
Shareholder Fees (Fees paid directly from your investment)
- -----------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
- -----------------------------------------------------------------------------------------
(as a % of offering price) 5.75% none none none
- -----------------------------------------------------------------------------------------
Maximum Deferred Sales Charge
(see "Purchases") none(1) 5.00% 1.00%(1) none
- -----------------------------------------------------------------------------------------
Annual Fund Operating Expenses
(Expenses deducted from Fund assets)
(as a % of average net assets)(3)
- -----------------------------------------------------------------------------------------
Management Fees (See "Management") 0.90% 0.90% 0.90% 0.90%
- -----------------------------------------------------------------------------------------
Distribution (12b-1) and Service Fees(4) 0.35% 1.00% 1.00% 0.45%
- -----------------------------------------------------------------------------------------
Other Expenses 0.40% 0.40% 0.40% 0.40%
- -----------------------------------------------------------------------------------------
Total Operating Expenses 1.65% 2.30% 2.30% 1.75%
- -----------------------------------------------------------------------------------------
</TABLE>
(1) A contingent deferred sales charge of 1.00% may be assessed on certain
redemptions (a) of Class A shares made within 24 months following any
purchases made without a sales charge, and (b) Class C shares if they are
redeemed before the first anniversary of their purchase.
(2) Class B shares will convert to Class A shares on the eighth anniversary of
your original purchase of Class B shares.
(3) The annual operating expenses have been restated from fiscal year amounts
to reflect current fees.
(4) Because 12b-1 fees are paid out on an ongoing basis, over time they will
increase the cost of your investment and may cost you more than paying
other types of sales charges.
- --------------------------------------------------------------------------------
Example
- --------------------------------------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. This Example, like that in
other funds' prospectuses, assumes that you invest $10,000 in the Fund at
maximum sales charge, if any, for the time periods indicated and then redeem all
of your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs (including any applicable contingent deferred sales
charges) would be:
Share Class 1 Year 3 Years 5 Years 10 Years
Class A shares $733 $1,065 $1,420 $2,417
- --------------------------------------------------------------------------------
Class B shares $733 $1,018 $1,430 $2,473
- --------------------------------------------------------------------------------
Class C shares $333 $ 718 $1,230 $2,636
- --------------------------------------------------------------------------------
Class P shares $178 $ 551 $ 949 $2,062
- --------------------------------------------------------------------------------
You would have paid the following expenses if you did not redeem your shares:
Class A shares $733 $1,065 $1,420 $2,417
- --------------------------------------------------------------------------------
Class B shares $233 $ 718 $1,230 $2,473
- --------------------------------------------------------------------------------
Class C shares $233 $ 718 $1,230 $2,636
- --------------------------------------------------------------------------------
Class P shares $178 $ 551 $ 949 $2,062
Management fees are payable to Lord, Abbett & Co. ("Lord Abbett") for the Fund's
investment management.
12b-1 fees refer to fees incurred for activities that are primarily intended to
result in the sale of Fund shares and service fees for shareholder account
service and maintenance.
Other expenses include fees paid for miscellaneous items such as shareholder
service fees and professional fees.
4 The Fund
<PAGE>
Your Investment
PURCHASES
The Fund offers four classes of shares in this prospectus: Classes A, B ,C,
and P, each with different expenses and dividends. You may purchase shares
at the net asset value ("NAV") per share determined after we receive your
purchase order submitted in proper form. A front-end sales charge is
normally added to the NAV, in the case of the Class A shares. There is no
front-end sales charge in the case of the Class B, Class C, and Class P
shares, although there may be a contingent deferred sales charge ("CDSC")
on Class B and Class C shares as described below.s
You should read this section carefully to determine which class of shares
represents the best investment option for your particular situation. It may
not be suitable for you to place a purchase order for Class B shares of
$500,000 or more or a purchase order for Class C shares of $1,000,000 or
more. You should discuss pricing options with your investment professional.
For more information, see "Alternative Sales Arrangements" in the Statement
of Additional Information.
We reserve the right to withdraw all or any part of the offering made by
this prospectus or to reject any purchase order. We also reserve the right
to waive or change minimum investment requirements. All purchase orders are
subject to our acceptance and are not binding until confirmed or accepted
in writing.
- --------------------------------------------------------------------------------
Share Classes
- --------------------------------------------------------------------------------
Class A o normally offered with a front-end sales charge
Class B o no front-end sales charge, however, a CDSC is applied to shares
sold prior to the sixth anniversary of purchase
o higher annual expenses than Class A shares
o automatically converts to Class A shares after eight years
Class C o no front-end sales charge, however, a CDSC is applied to shares
sold prior to the first anniversary of purchase
o higher annual expenses than Class A shares
Class P o available to certain pension or retirement plans and pursuant to
a Mutual Fund Fee Based Program
- --------------------------------------------------------------------------------
Front-End Sales Charges - Class A Shares
- --------------------------------------------------------------------------------
To Compute
As a % of As a % of Offering Price
Your Investment Offering Price Your Investment Divide NAV by
- --------------------------------------------------------------------------------
Less than $50,000 5.75% 6.10% .9425
- --------------------------------------------------------------------------------
$50,000 to $99,999 4.75% 4.99% .9525
- --------------------------------------------------------------------------------
$100,000 to $249,999 3.75% 3.90% .9605
- --------------------------------------------------------------------------------
$250,000 to $499,999 2.75% 2.83% .9725
- --------------------------------------------------------------------------------
$500,000 to $999,999 2.00% 2.04% .9800
- --------------------------------------------------------------------------------
$1,000,000 and over No Sales Charge 1.0000
- --------------------------------------------------------------------------------
NAV per share for each class of Fund shares is calculated each business day at
the close of regular trading on the New York Stock Exchange ("NYSE"), normally
4:00 p.m. Eastern time. Purchases and sales of Fund shares are executed at the
NAV next determined after the Fund receives your order in proper form. In
calculating NAV, securities for which market quotations are available are valued
at those quotations. Securities for which such quotations are not available are
valued at fair value under procedures approved by the Board of the Company.
Your Investment 5
<PAGE>
Reducing Your Class A Front-End Sales Charges. Class A shares may be
purchased at a discount if you qualify under either of the following
conditions:
o Rights of Accumulation -- A Purchaser can apply the value (at public
offering price) of the shares already owned to a new purchase of Class
A shares of any Eligible Fund in order to reduce the sales charge.
o Letters of Intention -- A Purchaser of Class A shares can purchase
additional shares of any Eligible Fund over a 13-month period and
receive the same sales charge as if you had purchased all shares at
once. Shares purchased through reinvestment of dividends or
distributions are not included. A Letter of Intention can be backdated
90 days. Current holdings under Rights of Accumulation can be included
in a Letter of Intention.
For more information on eligibility for these privileges, read the
applicable sections in the attached application.
Class A Share Purchases Without A Front-End Sales Charge. Class A shares
may be purchased without a front-end sales charge under any of the
following conditions:
o purchases of $1 million or more *
o purchases by Retirement Plans with at least 100 eligible employees *
o purchases under a Special Retirement Wrap Program *
o purchases made with dividends and distributions on Class A shares of
another Eligible Fund
o purchases representing repayment under the loan feature of the Lord
Abbett- sponsored prototype 403(b) Plan for Class A shares
o purchases by employees of any consenting securities dealer having a
sales agreement with Lord Abbett Distributor
o purchases under a Mutual Fund Fee Based Program
o purchases by trustees or custodians of any pension or profit sharing
plan, or payroll deduction IRA for the employees of any consenting
securities dealer having a sales agreement with Lord Abbett
Distributor
o purchases by each Lord Abbett-sponsored fund's Directors or Trustees
(including retired Directors or Trustees), officers of each Lord
Abbett-sponsored fund, employees and partners of Lord Abbett. These
categories of purchasers also include other family members of such
purchasers.
See the Statement of Additional Information for a listing of other
categories of purchasers who qualify for Class A share purchases without a
front-end sales charge.
* These categories may be subject to a CDSC.
Class A Share CDSC. If you buy Class A shares under one of the starred (O)
categories listed above and you redeem any of them within 24 months after
the month in which you initially purchased them, the Fund normally will
collect a CDSC of 1%.
The Class A share CDSC generally will be waived for the following
conditions:
o benefit payments under Retirement Plans in connection with loans,
hardship withdrawals, death, disability, retirement, separation from
service or any excess distribution under Retirement Plans
(documentation may be required)
o redemptions continuing as investments in another fund participating in
a Special Retirement Wrap Program
Retirement Plans include employer-sponsored retirement plans under the Internal
Revenue Code, excluding Individual Retirement Accounts.
Lord Abbett offers a variety of Retirement Plans. Call 800-253-7299 for
information about:
o Traditional, Rollover, Roth and Education IRAs
o Simple IRAs, SEP-IRAs, 401(k) and 403(b) accounts
o Defined Contribution Plans
Lord Abbett Distributor LLC ("Lord Abbett Distributor") acts as agent for the
Fund to work with investment professionals that buy and/or sell shares of the
Fund on behalf of their clients. Generally, Lord Abbett Distributor does not
sell Fund shares directly to investors.
Benefit Payment Documentation (Class A CDSC only)
o under $50,000 - no documentation necessary
o over $50,000 - reason for benefit payment must be received in writing. Use
the address indicated under "Opening your Account"
6 Your Investment
<PAGE>
Class B Share CDSC. The CDSC for Class B shares normally applies if you
redeem your shares before the sixth anniversary of their initial purchase.
The CDSC declines the longer you own your shares, according to the
following schedule:
- --------------------------------------------------------------------------------
Contingent Deferred Sales Charges - Class B Shares
- --------------------------------------------------------------------------------
Anniversary(1) of the day on Contingent Deferred Sales Charge
which the purchase order on redemption (as % of amount
was accepted subject to charge)
On Before
- --------------------------------------------------------------------------------
1st 5.0%
- --------------------------------------------------------------------------------
1st 2nd 4.0%
- --------------------------------------------------------------------------------
2nd 3rd 3.0%
- --------------------------------------------------------------------------------
3rd 4th 3.0%
- --------------------------------------------------------------------------------
4th 5th 2.0%
- --------------------------------------------------------------------------------
5th 6th 1.0%
- --------------------------------------------------------------------------------
on or after the 6th(2) None
- --------------------------------------------------------------------------------
(1) The anniversary is the same calendar day in each respective year after the
date of purchase. For example, the anniversary for shares purchased on
May 1 will be May 1 of each succeeding year.
(2) Class B shares will automatically convert to Class A shares on the eighth
anniversary of the purchase of Class B shares.
The Class B share CDSC generally will be waived under the following
circumstances:
o benefit payments under Retirement Plans in connection with loans,
hardship withdrawals, death, disability, retirement, separation from
service or any excess contribution or distribution under Retirement
Plans
o Eligible Mandatory Distributions under 403(b) Plans and individual
retirement accounts
o death of the shareholder
o redemptions of shares in connection with Div-Move and Systematic
Withdrawal Plans (up to 12% per year)
See "Systematic Withdrawal Plan" under "Services For Fund Investors" below
for more information on CDSCs with respect to Class B shares.
Class C Share CDSC. The 1% CDSC for Class C shares normally applies if you
redeem your shares before the first anniversary of the purchase of such
shares.
Class P Shares. Class P shares have lower annual expenses than Class B and
Class C shares, no front-end sales charge, and no CDSC. Class P shares are
currently sold and redeemed at NAV (a) pursuant to a Mutual Fund Fee Based
Program or (b) to the trustees of, or employer-sponsors with respect to,
pension or retirement plans with at least 100 eligible employees (such as a
plan under Section 401(a), 401(k) or 457(b) of the Internal Revenue Code)
which engage an investment professional providing, or participating in an
agreement to provide, certain recordkeeping, administrative and/or
sub-transfer agency services to the Fund on behalf of the Class P
shareholders.
SALES COMPENSATION
As part of its plan for distributing shares, the Fund and Lord Abbett
Distributor pay sales and service compensation to Authorized Institutions
that sell the Fund's shares and service its shareholder accounts.
Sales compensation originates from two sources, as shown in the table "Fees
and Expenses": sales charges which are paid directly by shareholders; and
12b-1 distribution
CDSC, regardless of class, is not charged on shares acquired through
reinvestment of dividends or capital gains distributions and is charged on the
original purchase cost or the current market value of the shares at the time
they are being sold, which-ever is lower. In addition, repayment of loans under
Retirement Plans and 403(b) Plans will constitute new sales for purposes of
assessing the CDSC.
To minimize the amount of any CDSC, the Fund redeems shares in the following
order:
1. shares acquired by reinvestment of dividends and capital gains (always free
of a CDSC)
2. shares held for six years or more (Class B) or two years or more after the
month of purchase (Class A) or one year or more (Class C)
3. shares held the longest before the sixth anniversary of their purchase
(Class B) or before the second anniversary after the month of purchase
(Class A) or before the first anniversary of their purchase (Class C)
investors.
Your Investment 7
<PAGE>
fees that are paid out of the Fund's assets. Service compensation
originates from 12b-1 service fees. The total 12b-1 fees payable with
respect to each share class are .35% of Class A shares, 1.00% of Class B
and Class C shares, and .45% of Class P shares. The amounts payable as
compensation to Authorized Institutions, such as your dealer, are shown in
the chart at the end of this prospectus. The portion of such compensation
paid to Lord Abbett Distributor is discussed under "Sales Activities" and
"Service Activities." Sometimes we do not pay compensation where tracking
data is not available for certain accounts or where the Authorized
Institution waives part of the compensation. In such cases, we may not
require payment of any otherwise applicable CDSC.
We may pay Additional Concessions to Authorized Institutions from time to
time.
Sales Activities. We may use 12b-1 distribution fees to pay Authorized
Institutions to finance any activity which is primarily intended to result
in the sale of shares. Lord Abbett Distributor uses its portion of the
distribution fees attributable to the Fund's Class A and Class C shares for
activities which are primarily intended to result in the sale of such Class
A and Class C shares, respectively. These activities include, but are not
limited to, printing of prospectuses and statements of additional
information and reports for other than existing shareholders, preparation
and distribution of advertising and sales material, expenses of organizing
and conducting sales seminars, Additional Concessions to Authorized
Institutions, the cost necessary to provide distribution-related services
or personnel, travel, office expenses, equipment and other allocable
overhead.
Service Activities. We may pay 12b-1 service fees to Authorized
Institutions for any activity which is primarily intended to result in
personal service and/or the maintenance of shareholder accounts. Any
portion of the service fees paid to Lord Abbett Distributor will be used to
service and maintain shareholder accounts.
OPENING YOUR ACCOUNT
MINIMUM INITIAL INVESTMENT
o Regular Account $1,000
- --------------------------------------------------------------------------------
o Individual Retirement Accounts and
403(b) Plans under the Internal Revenue Code $250
- --------------------------------------------------------------------------------
o Uniform Gift to Minor Account $250
- --------------------------------------------------------------------------------
o Invest-A-Matic $250
- --------------------------------------------------------------------------------
For Retirement Plans and Mutual Fund Fee Based Programs no minimum
investment is required, regardless of share class.
You may purchase shares through any independent securities dealer who has a
sales agreement with Lord Abbett Distributor or you can fill out the
attached application and send it to the Fund at the address stated below.
You should carefully read the paragraph below entitled "Proper Form" before
placing your order to ensure that your order will be accepted.
Lord Abbett Growth Opportunities Fund
P.O. Box 219100
Kansas City, MO 64121
Proper Form. An order submitted directly to the Fund must contain: (1) a
completed application, and (2) payment by check. When purchases are made by
check, redemption proceeds will not be paid until the Fund or transfer
agent is advised that the check has cleared, which may take up to 15
calendar days. For more information call the Fund at 800-821-5129.
8 Your Investment
<PAGE>
By Exchange. Telephone the Fund at 800-821-5129 to request an exchange from
any eligible Lord Abbett-sponsored fund.
REDEMPTIONS
By Broker. Call your investment professional for instructions on how to
redeem your shares.
By Telephone. To obtain the proceeds of a redemption of $50,000 or less
from your account, you or your representative should call the Fund at
800-821-5129.
By Mail. Submit a written redemption request indicating the name(s) in
which the account is registered, the Fund's name, the class of shares, your
account number, and the dollar value or number of shares you wish to sell.
Include all necessary signatures. If the signer has any Legal Capacity, the
signature and capacity must be guaranteed by an Eligible Guarantor. Certain
other legal documentation may be required. For more information regarding
proper documentation call 800-821-5129.
Normally a check will be mailed to the name(s) and address in which the
account is registered (or otherwise according to your instruction) within
three business days after receipt of your redemption request. Your account
balance must be sufficient to cover the amount being redeemed or your
redemption order will not be processed. Under unusual circumstances, the
Fund may suspend redemptions, or postpone payment for more than seven days,
as permitted by federal securities laws.
To determine if a CDSC applies to a redemption, see "Class A share CDSC,"
"Class B share CDSC" or "Class C share CDSC."
DISTRIBUTIONS AND TAXES
The Fund normally pays dividends from its net investment income annually
and distributes net capital gains (if any) as "capital gains distributions"
annually. Your distributions will be reinvested in the Fund unless you
instruct the Fund to pay them to you in cash. There are no sales charges on
reinvestments. The tax status of distributions is the same for all
shareholders regardless of how long they have owned Fund shares or whether
distributions are reinvested or paid in cash.
Except in tax-advantaged accounts, any sale, redemption or exchange of Fund
shares may be taxable to the shareholder.
Information on the tax treatment of distributions, including the source of
dividends and distributions of capital gains by the Fund, will be mailed to
shareholders each year. Because everyone's tax situation is unique, you
should consult your tax adviser regarding the treatment of 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 redemptions or exchanges
of your shares.
Exchange Limitations. Exchanges should not be used to try to take advantage of
short-term swings in the market. Frequent exchanges create higher expenses for
the Fund. Accordingly, the Fund reserves the right to limit or terminate this
privilege for any shareholder making frequent exchanges or abusing the
privilege. The Fund also may revoke the privilege for all shareholders upon 60
days' written notice.
Small Accounts. Our Board may authorize closing any account in which there are
fewer than 25 shares if it is in the Fund's best interest to do so.
Eligible Guarantor is any broker or bank that is a member of the medallion stamp
program. Most major securities firms and banks are members of this program. A
notary public is not an eligible guarantor.
Your Investment 9
<PAGE>
SERVICES FOR FUND INVESTORS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described
below. With each service, you select a schedule and amount, subject to
certain restrictions. You may set up most of these services when filling
out your application or by calling 800-821-5129.
- --------------------------------------------------------------------------------
For investing
Invest-A-Matic You may make fixed, periodic investments ($50 minimum) into
(Dollar-cost your Fund account by means of automatic money transfers from
averaging) your bank checking account. See the attached application for
instructions.
Div-Move You may automatically reinvest the dividends and
distributions from your account into another account in any
Eligible Fund ($50 minimum).
For selling shares
Systematic You can make regular withdrawals from most Lord Abbett
Withdrawal funds. Automatic cash withdrawals will be paid to you from
Plan ("SWP") your account in fixed or variable amounts. To establish a
plan, the value of your shares must be at least $10,000,
except for Retirement Plans for which there is no minimum.
Class B shares The CDSC will be waived on redemptions of up to 12% of the
current net asset value of your account at the time of your
SWPrequest. For Class B share redemptions over 12% per year,
the CDSC will apply to the entire redemption. Please contact
the Fund for assistance in minimizing the CDSC in this
situation.
Class B and Redemption proceeds due to a SWP for Class B and Class C
C shares shares will be redeemed in the order described under "CDSC"
under "Purchases."
- --------------------------------------------------------------------------------
OTHER SERVICES
Telephone Investing. After we have received the attached application
(selecting "yes" under Section 8C and completing Section 7), you may
instruct us by phone to have money transferred from your bank account to
purchase shares of the Fund for an existing account. The Fund will purchase
the requested shares when it receives the money from your bank.
Exchanges. You or your investment professional may instruct the Fund to
exchange shares of any class for shares of the same class of any Eligible
Fund. Instruction may be provided in writing or by telephone, with proper
identification, by calling 800-821-5129. The Fund must receive instructions
for the exchange before the close of the NYSE on the day of your call, in
which case you will get the NAV per share of the Eligible Fund determined
on that day. Exchanges will be treated as a sale for federal tax purposes.
Be sure to read the current prospectus for any Fund into which you are
exchanging.
Reinvestment Privilege. If you sell shares of the Fund, you have a one-time
right to reinvest some or all of the proceeds in the same class of any
Eligible Fund within 60 days without a sales charge. If you paid a CDSC
when you sold your shares, you will be credited with the amount of the
CDSC. All accounts involved must have the same registration.
Account Statements. Every Lord Abbett investor automatically receives
quarterly account statements.
Householding. Shareholders with the same last name and address will receive
a single copy of a prospectus and an annual and semi-annual report, unless
additional reports are specifically requested in writing to the Fund.
Telephone Transactions. You have this privilege unless you refuse it in writing.
For your security, telephone transaction requests are recorded. We will take
measures to verify the identity of the caller, such as asking for your name,
account number, social security or taxpayer identification number and other
relevant information. The Fund will not be liable for following instructions
communicated by telephone that it reasonably believes to be genuine.
Transactions by telephone may be difficult to implement in times of drastic
economic or market change.
10 Your Investment
<PAGE>
Account Changes. For any changes you need to make to your account, consult
your investment professional or call the Fund at 800-821-5129.
Systematic Exchange. You or your investment professional can establish a
schedule of exchanges between the same classes of any Eligible Fund.
MANAGEMENT
The Fund's investment adviser is Lord, Abbett & Co., 90 Hudson Street,
Jersey City, NJ 07302-3973. Founded in 1929, Lord Abbett manages one of the
nation's oldest mutual fund complexes, with approximately $35 billion in
more than 40 mutual fund portfolios and other advisory accounts. For more
information about the services Lord Abbett provides to the Fund, see the
Statement of Additional Information.
Lord Abbett is entitled to a management fee at an annual rate of .90% of 1%
of the Fund's average daily net assets. The fee is calculated and payable
monthly. For the fiscal year ended November 30, 1999, Lord Abbett waived
its management fee and subsidized a portion of the other expenses. The Fund
pays all expenses not expressly assumed by Lord Abbett.
Lord Abbett uses teams of portfolio managers and analysts acting together
to manage the Fund's investments. Stephen J. McGruder, Partner of Lord
Abbett, heads the Fund's team, the other senior member is Frederic D. Ohr.
Mr. McGruder has been with Lord Abbett since 1995. Before joining Lord
Abbett, Mr. McGruder served as Vice President of Wafra Investment Advisory
Group, a private investment advisory company, from 1988 to 1995. Mr. Ohr
joined Lord Abbett in 1998. Before joining Lord Abbett, Mr. Ohr was a Vice
President and Senior Analyst with Chase Asset Management from 1991 to 1998.
Your Investment 11
<PAGE>
For More Information
OTHER INVESTMENT TECHNIQUES
This section describes some of the investment techniques that might be used
by the Fund and their risks.
Adjusting Investment Exposure. The Fund may, but is not required to, use
various strategies to change its investment exposure to adjust to changing
security prices, interest rates, currency exchange rates, commodity prices
and other factors. These strategies may involve buying or selling
derivative instruments, such as options and futures contracts, currency
exchange contracts, indexed securities, and rights and warrants. The Fund
may use these transactions to change the risk and return characteristics of
its 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.
Foreign Securities. The Fund may invest up to 10% of its assets in foreign
securities. Foreign markets and the securities traded in them are not
subject to the same degree of regulation as U.S. markets. Securities
clearance and settlement procedures may be different in foreign countries.
There may be less trading volume in foreign markets, subjecting the
securities traded in them to higher price fluctuations. Transaction costs
may be higher in foreign markets. The Fund may hold foreign securities
which trade on days when the Fund does not sell shares. As a result, the
value of the Fund's portfolio securities may change on days an investor may
not purchase or sell Fund shares.
Foreign issuers are generally not subject to similar, uniform accounting,
auditing and financial reporting requirements as U.S. issuers. Foreign
investments may be affected by changes in currency rates or currency
controls. Certain foreign countries may limit a Fund's ability to remove
its assets from the country. With respect to certain foreign countries,
there is a possibility of nationalization, expropriation or confiscatory
taxation, imposition of withholding or other taxes, and political or social
instability which could affect investments in those countries.
Options Transactions. The Fund may purchase and write put and call options
on securities or stock indices that are traded on national securities
exchanges.
A put option gives the buyer of the option the right to sell, and the
seller of the option the obligation to buy, the underlying instrument
during the option period. The Fund may write only covered put options to
the extent that cover for such options does not exceed 25% of the Fund's
net assets. The Fund will not purchase an option if, as a result of such
purchase, more than 20% of its net assets would be invested in premiums for
such options.
A call option gives the buyer of the option the right to buy, and the
writer (seller) of the option the obligation to sell, the underlying
instrument. The Fund may write (sell) only "covered" options. This means
that the Fund may only sell call options on securities which the Fund owns.
When the 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 Fund may write covered call
options on securities having an aggregate market not to exceed 5% of its
assets.
12 For More Information
<PAGE>
Risks of Options Transactions. Transactions in options involve additional
risk of loss. Loss may result from a lack of correlation between changes in
the value of these derivative instruments and the Fund's assets being
hedged, the potential illiquidity of the markets for derivative
instruments, or the risks arising from margin requirements and related
leverage factors associated with such transactions. The use of these
investment techniques also involves the risk of loss if the portfolio
managers are incorrect in their expectation of fluctuations in securities
prices. In addition, the loss that may be incurred by the Fund in entering
into futures contracts and in writing call options on futures is
potentially unlimited and may exceed the amount of the premium received.
GLOSSARY OF SHADED TERMS
Additional Concessions. Lord Abbett Distributor may, for specified periods,
allow dealers to retain the full sales charge for sales of shares, or may
pay an additional concession to a dealer who sells a minimum dollar amount
of our shares and/or shares of other Lord Abbett-sponsored funds. In some
instances, such additional concessions will be offered only to certain
dealers expected to sell significant amounts of shares. Additional payments
may be paid from Lord Abbett Distributor's own resources or from
distribution fees received from the Fund and will be made in the form of
cash or, if permitted, non-cash payments. The non-cash payments will
include business seminars at Lord Abbett's headquarters or other locations,
including meals and entertainment, or the receipt of merchandise. The cash
payments may include payment of various business expenses of the dealer.
In selecting dealers to execute portfolio transactions for the Fund's
portfolio, if two or more dealers are considered capable of obtaining best
execution, we may prefer the dealer who has sold our shares and/or shares
of other Lord Abbett-sponsored funds.
Authorized Institutions. Institutions and persons permitted by law to
receive service and/or distribution fees under a Rule 12b-1 plan are
"authorized institutions." Lord Abbett Distributor is an Authorized
Institution.
Eligible Fund. An Eligible Fund is any Lord Abbett-sponsored fund except
for: (1) certain tax-free, single-state funds where the exchanging
shareholder is a resident of a state in which such fund is not offered for
sale; (2) Lord Abbett Equity Fund; (3) Lord Abbett Series Fund; and (4)
Lord Abbett U.S. Government Securities Money Market Fund ("GSMMF") (except
for holdings in GSMMF which are attributable to any shares ex-changed from
the Lord Abbett family of funds). An Eligible Fund also is any Authorized
Institution's affiliated money market fund satisfying Lord Abbett
Distributor as to certain omnibus accounts and other criteria.
Eligible Mandatory Distributions. If Class B shares represent a part of an
individual's total IRA or 403(b) investment, the CDSC will be waived only
for that part of a manda-tory distribution which bears the same relation to
the entire mandatory distribution as the Class B share investment bears to
the total investment.
Legal Capacity. This term refers to the authority of an individual to act
on behalf of an entity or other person(s). For example, if a redemption
request were to be made on behalf of the estate of a deceased shareholder,
John W. Doe, by a person (Robert A. Doe) who has the legal capacity to act
for the estate of the deceased shareholder because he is the executor of
the estate, then the request must be executed as follows: Robert A. Doe,
Executor of the Estate of John W. Doe. That signature using that capacity
must be by an Eligible Guarantor.
For More Information 13
Similarly, if (for example) a redemption request is made on behalf of the
ABC Corporation by a person (Mary B. Doe) who has the legal capacity to act
on the behalf of the Corporation, because she is the president of the
Corporation, the request must be executed as follows: ABC Corporation by
Mary B. Doe, President. That signature using that capacity must be
guaranteed by an Eligible Guarantor (see example in right column).
Mutual Fund Fee Based Program. Certain unaffiliated authorized brokers,
dealers, registered investment advisers or other financial institutions
("entities") who either (1) have an arrangement with Lord Abbett
Distributor in accordance with certain standards approved by Lord Abbett
Distributor, providing specifically for the use of our shares (and
sometimes providing for acceptance of orders for such shares on our behalf)
in particular investment products made available for a fee to clients of
such entities, or (2) charge an advisory consulting or other fee for their
services and buy shares for their own accounts or the accounts of their
clients.
Purchaser. The term "purchaser" includes: (1) an individual; (2) an
individual and his or her spouse and children under the age of 21; and (3)
a trustee or other fiduciary purchasing shares for a single trust estate or
single fiduciary account (including a pension, profit-sharing, or other
employee benefit trust qualified under Section 401 of the Internal Revenue
Code - more than one qualified employee benefit trust of a single employer,
including its consolidated subsidiaries, may be considered a single trust,
as may qualified plans of multiple employers registered in the name of a
single bank trustee as one account), although more than one beneficiary is
involved.
RECENT PERFORMANCE
The stock market rebounded sharply in the fourth quarter of 1999 with
stocks of small- and mid-sized growth companies asserting their leadership
versus large company growth stocks. Despite their strong fourth quarter
rally, small- and mid-cap stocks remained relatively cheap on a
price-to-earnings basis, often trading at a discount to large-cap stocks.
In addition, the average small- and mid-cap growth company offered higher
rates of expected earnings growth than the average large-cap company,
confirming the opportunities that exist in this segment of the market.
During 1999, we focused on increasing portfolio diversification both across
and within sectors. The Fund's investments in technology companies
continued to be significant positive contributors. The Fund's technology
holdings included companies from many diverse areas, such as
telecommunications services, software developers, and select equipment
manufacturers. We increased our emphasis on technology-related companies,
all of which turned out strong performances during the fourth quarter. The
ever-increasing demand for wireless communication services and products and
increased broadband access has benefited several of the portfolio's major
holdings.
Stock performance for many companies in the financial and healthcare
services sectors continued to be disappointing, but the Fund was not hurt
significantly, as our weightings in these sectors has been relatively
moderate. While healthcare services companies continued to suffer from
government and managed care-mandated price reductions, select
pharmaceutical companies entered into a new era of profitability as new
products were introduced to the market.
GUARANTEED SIGNATURE. An acceptable form of guarantee would be as follows:
In the case of the estate --
Robert A. Doe
Executor of the Estate of
John W. Doe
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
[SIGNATURE ILLEGIBLE]
- --------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
In the case of the corporation --
ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
[SIGNATURE ILLEGIBLE]
- --------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
14 For More Information
<PAGE>
Financial Information
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the fiscal periods
indicated. "Total return" shows how much your investment in the Fund would
have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These Financial Highlights have
been audited by Deloitte & Touche LLP, the Fund's independent auditors, in
conjunction with their annual audit of the Fund's financial statements.
Financial statements for the fiscal year ended November 30, 1999 and the
Independent Auditors' Report thereon appear in the Annual Report to
Shareholders for the fiscal year ended November 30, 1999 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 A Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Period Ended November 30,
Per Share Operating Performance: 1999 1998 1997 1996 1995(c)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.58 $16.18 $12.84 $10.18 $10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .04(e) .15 .23 .30 .10
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------------
gain on investments 6.27 .09 3.39 2.50 .08
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 6.31 .24 3.62 2.80 .18
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income -- (.37) (.28) (.12) --
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain -- (3.47) -- (.02) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $18.89 $12.58 $16.18 $12.84 $10.18
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(b) 50.04% 5.71% 28.90% 27.81% 1.80%(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, including waiver and reimbursements .41% 0.02% .00% .00% 0.00%(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver and reimbursements 1.64% 1.60% 1.58% 2.39% 1.20%(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .25% 1.14% 1.69% 2.67% 1.04%(d)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Class C Shares
Period Ended November 30, Period Ended November 30,
Per Share Operating Performance: 1999 1998(c) 1999 1998(c)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.57 $10.41 $12.59 $10.70
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (.06)(e) --(a) (.06)(e) --(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------------------------------------------------------------
gain on investments 6.27 2.16 6.23 1.89
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 6.21 2.16 6.17 1.89
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $18.78 $12.57 $18.76 $12.59
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(b) 49.32% 20.75%(d) 49.01% 17.66%(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, including waiver and reimbursements 1.07% 0.13%(d) 1.07% 0.13%(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver and reimbursements 2.30% 0.34%(d) 2.30% 0.34%(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.40%) (0.08)%(d) (.40%) (0.10)%(d)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Period Ended November 30,
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Data For All Classes: 1999 1998 1997 1996 1995(c)
<S> <C> <C> <C> <C> <C>
Net Assets, end of year (000) $59,647 $4,723 $1,672 $1,462 $968
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 104.87% 136.81% 52.86% 30.78% 1.55%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Amount less than $.01.
(b) Total return does not consider the effects of sales loads and assumes
reinvestment of all distributions.
(c) Commencement of operations: August 1, 1995 (Class A); October 16, 1998
(Class B); and October 19, 1998 (Class C).
(d) Not annualized.
(e) Calculated using average shares outstanding during period.
Financial Information 15
<PAGE>
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in Class A shares
to the same investment in the RMCG Index and the S&P Mid-Cap 400 Index,
assuming reinvestment of all dividends and distributions.
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Class A Class A RMCG S&P Mid Cap
NAV MAX Index 400 Index
09/01/95 10000 9425 10000 10000
11/30/95 10180 9595 10524 11963
11/30/96 13011 12263 12581 14208
11/30/97 16772 15808 14962 18109
11/30/98 17729 16709 16189 19992
11/30/99 26600 25071 23040 21518
================================================================================
Average Annual Total Return At Maximum Applicable
Sales Charge For The Periods Ending November 30, 1999
1 Year Life
- --------------------------------------------------------------------------------
Class A(3) 41.40% 23.62%
- --------------------------------------------------------------------------------
Class B(4) 44.32% 68.92%
- --------------------------------------------------------------------------------
Class C(5) 48.01% 72.15%
- --------------------------------------------------------------------------------
(1) This reflects the deduction of the maximum initial sales charge of 5.75%.
(2) Performance for each of the unmanaged indices does not reflect any fees or
expenses. The performance of each of the indices begins on 8/01/95.
(3) This shows total return which is the percent change in value, after
deduction of the maximum initial sales charge of 5.75% applicable to Class
A shares, with all dividends and distributions reinvested for the periods
shown ending November 30, 1999, using the SEC-required uniform method to
compute such return. In September of 1998, the Fund's investment philosophy
was amended to provide the Fund the flexibility to pursue capital
appreciation through a growth-oriented strategy.
(4) The Class B shares were first offered on 10/15/98. Performance reflects the
deduction of a CDSC of 5% (for 1 year) and 3% (for the life of the class).
(5) The Class C shares were first offered on 10/15/98. Performance reflects the
deduction of a CDSC of 1% (for 1 year) and 0% (for the life of the class).
16 Financial Information
<PAGE>
COMPENSATION FOR YOUR DEALER
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FIRST YEAR COMPENSATION
Front-end
sales charge Dealer's
paid by investors concession Service fee(1) Total compensation(2)
Class A investments (% of offering price) (% of offering price) (% of net investment) (% of offering price)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Less than $50,000 5.75% 5.00% 0.25% 5.24%
- ------------------------------------------------------------------------------------------------------------------------------------
$50,000 - $99,999 4.75% 4.00% 0.25% 4.24%
- ------------------------------------------------------------------------------------------------------------------------------------
$100,000 - $249,999 3.95% 3.25% 0.25% 3.49%
- ------------------------------------------------------------------------------------------------------------------------------------
$250,000 - $499,999 2.75% 2.25% 0.25% 2.49%
- ------------------------------------------------------------------------------------------------------------------------------------
$500,000 - $999,999 1.95% 1.75% 0.25% 2.00%
- ------------------------------------------------------------------------------------------------------------------------------------
$1 million or more(3) or Retirement Plan -
100 or more eligible employees(3) or
Special Retirement Wrap Program(3)
- ------------------------------------------------------------------------------------------------------------------------------------
First $5 million no front-end sales charge 1.00% 0.25% 1.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Next $5 million above that no front-end sales charge 0.55% 0.25% 0.80%
- ------------------------------------------------------------------------------------------------------------------------------------
Next $40 million above that no front-end sales charge 0.50% 0.25% 0.75%
- ------------------------------------------------------------------------------------------------------------------------------------
Over $50 million no front-end sales charge 0.25% 0.25% 0.50%
- ------------------------------------------------------------------------------------------------------------------------------------
Class B investments(4) Paid at time of sale (% of net asset value)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 3.75% 0.25% 4.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Class C investments(4)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.75% 0.25% 1.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Class P investments Percentage of average net assets
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION AFTER FIRST YEAR
Class A investments Percentage of average net assets(5)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.25% 0.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Class B investments(4)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.25% 0.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Class C investments(4)
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.75% 0.25% 1.00%
Class P investments
- ------------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The service fees for Class A and P shares are paid quarterly. The first
year's service fees on Class B and C shares are paid at the time of sale.
(2) Reallowance/concession percentages and service fee percentages are
calculated from different amounts, and therefore may not equal total
compensation percentages if combined using simple addition. Additional
Concessions may be paid to Authorized Institutions, such as your dealer,
from time to time.
(3) Concessions are paid at the time of sale on all Class A shares sold during
any 12-month period starting from the day of the first net asset value
sale. With respect to (a) Class A share purchases at $1 million or more,
sales qualifying at such level under rights of accumulation and Letter of
Intention privileges are included and (b) for Special Retirement Wrap
Programs, only new sales are eligible and exchanges into the Fund are
excluded. Certain purchases of Class A shares are subject to a CDSC.
(4) Class B and C shares are subject to CDSCs.
(5) With respect to Class B, C and P shares, 0.25%, 1.00% and 0.45%,
respectively, of the average annual net asset value of such shares
outstanding during the quarter (including distribution reinvestment shares
after the first anniversary of their issuance) is paid to Authorized
Institutions, such as your dealer. These fees are paid quarterly in
arrears.
Financial Information 17
<PAGE>
More information on the Fund is available free upon request, including the
following:
ANNUAL/SEMI-ANNUAL REPORT
Describes the Fund, lists portfolio holdings and contains a letter from the
Fund's manager discussing recent market conditions and the Fund's
investment strategies.
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
Provides more details about the Fund and its policies. A current SAI is on
file with the Securities and Exchange Commission ("SEC") and is
incorporated by reference (is legally considered part of this prospectus).
Lord Abbett Growth Opportunities Fund
90 Hudson Street
Jersey City, NJ 07302-3973
--------------------------
SEC file number: 811-6650
To obtain information:
By telephone. Call the Fund at:
800-426-1130
By mail. Write to the Fund at:
The Lord Abbett Family of Funds
90 Hudson Street
Jersey City, NJ 07302-3973
Via the Internet.
Lord, Abbett & Co.
www.lordabbett.com
Text only versions of Fund
documents can be viewed
online or downloaded from:
SEC
www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 202-942-8090) or by sending your request and a duplicating
fee to the SEC's Public Reference Section, Washington, DC 20549-6009 or by
sending your request electronically to [email protected].
LAGOF-1-400
(4/00)
<PAGE>
LORD ABBETT
Statement of Additional Information April 1, 2000
Lord Abbett Research Fund, Inc.
Large-Cap Series
Lord Abbett Growth Opportunities Fund
Small-Cap Value Series
This Statement of Additional Information is not a Prospectus. A Prospectus
may be obtained from your securities dealer or from Lord Abbett Distributor LLC
("Lord Abbett Distributor") located at 90 Hudson Street, Jersey City, New
Jersey, 07302-3973. The Lord Abbett Growth Opportunities Fund is a separate
Prospectus. This Statement of Additional Information relates to, and should be
read in conjunction with, the Prospectuses dated April 1, 2000.
Shareholder inquiries should be made by directly writing to a Fund or by calling
800-821-5129. The Annual Reports to Shareholders are available without charge,
upon request by calling that number. In addition, you can make inquiries through
your dealer.
TABLE OF CONTENTS PAGE
1. Investment Policies 2
2. Directors and Officers 11
3. Investment Advisory and Other Services 15
4. Portfolio Transactions 16
5. Purchases, Redemptions
and Shareholder Services 18
6. Past Performance 26
7. Taxes 27
8. Information About The Company 29
9. Financial Statements 29
1
<PAGE>
Lord Abbett Research Fund, Inc. (the "Company") was incorporated in Maryland on
April 6, 1992, as a diversified open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"). The
Company has three funds, Large-Cap Series, Lord Abbett Growth Opportunities
Fund ("Growth Opportunities Fund"), and Small-Cap Value Series (individually,
"we" or the "Fund") (collectively, the "Funds") which are offered in this
Statement of Additional Information. The Large-Cap Series, the Small-Cap Value
Series and the Growth Opportunities Fund each have five classes of shares (A, B,
C, P and Y). Only shares of classes A, B, C, and P are offered by this Statement
of Additional Information. All classes of shares have equal noncumulative voting
rights and equal rights with respect to dividends, assets and liquidation,
except for certain class-specific expenses. They are fully paid and
nonassessable when issued and have no preemptive or conversion rights.
1.
Investment Policies
Fundamental Investment Restrictions. Each Fund is subject to the following
fundamental investment restrictions which cannot be changed without the approval
of the holders of a majority of a Fund's respective shares.
Each Fund may not:
(1) borrow money, except that (i) each Fund may borrow from banks (as
defined in the Act) in amounts up to 33 1/3% of its total assets
(including the amount borrowed), (ii) 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 Funds' investment policies as permitted by applicable
law);
(3) engage in the underwriting of securities, except pursuant to a merger
or acquisition or to the extent that, in connection with the
disposition of its portfolio securities, it may be deemed to be an
underwriter under federal securities laws;
(4) make loans to other persons, except that the acquisition of bonds,
debentures or other corporate debt securities and investment in
government obligations, commercial paper, pass-through instruments,
certificates of deposit, bankers acceptances, repurchase agreements or
any similar instruments shall not be subject to this limitation, and
except further that each Fund may lend its portfolio securities,
provided that the lending of portfolio securities may be made only in
accordance with applicable law;
(5) buy or sell real estate (except that 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) own more than 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.
Compliance with the investment restrictions in this Section will be determined
at the time of purchase or sale of the portfolio investment.
2
<PAGE>
Non-Fundamental Investment Restrictions. In addition to policies in the
Prospectus and the investment restrictions above which cannot be changed without
shareholder approval, each Fund is also subject to the following non-fundamental
investment policies which may be changed by the Board of Directors without
shareholder approval.
Each Fund may not:
(1) borrow in excess of 33 1/3% of its total assets (including the amount
borrowed), and then only as a temporary measure for extraordinary or
emergency purposes;
(2) make short sales of securities or maintain a short position except to
the extent permitted by applicable law;
(3) invest knowingly more than 15% of its net assets (at the time of
investment) in illiquid securities, except for securities qualifying
for resale under Rule 144A of the Securities Act of 1933 ("Rule
144A"), deemed to be liquid by the Board of Directors;
(4) invest in the securities of other investment companies as defined in
the Act, except as permitted by applicable law;
(5) invest in securities of issuers which, with their predecessors, have a
record of less than three years' 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 the officers
or directors of the Company or by one or more partners or members of
the Funds' underwriter or investment adviser if these owners in the
aggregate own beneficially more than 5% of the securities of such
issuer;
(7) invest in warrants if, at the time of the acquisition, its investment
in warrants, valued at the lower of cost or market, would exceed 5% of
each Fund's total assets (included within such limitation, but not to
exceed 2% of each Fund's total assets, are warrants that are not
listed on the New York or American Stock Exchange or a foreign
exchange);
(8) invest in real estate limited partnership interests or interests in
oil, gas or other mineral leases, or exploration or development
programs, except that each Fund may invest in securities issued by
companies that engage in oil, gas or other mineral exploration or
development activities;
(9) write, purchase or sell puts, calls, straddles, spreads or
combinations thereof, except to the extent permitted in its
Prospectuses and Statements of Additional Information, as they may be
amended from time to time; or
(10) buy from or sell to any of its officers, directors, employees, or its
investment adviser or any of its officers, directors, partners or
employees, any securities other than shares.
Portfolio Turnover. For the fiscal year ended November 30, 1999, the portfolio
turnover rate was 60.59% for the Large-Cap Series; 83.93% for Small-Cap Value
Series; and 104.87% for Growth Opportunities Fund.
3
<PAGE>
INVESTMENT TECHNIQUES
Each Fund intends to use, from time to time, one or more of the investment
techniques described below, including lending portfolio securities, repurchase
agreements, warrants and covered call options. While some of these techniques
involve risk when used independently, each Fund intends to use them to reduce
risk and volatility in its portfolios.
Closed-end Investment Companies. Each Fund may invest in shares of closed-end
investment companies if it pays a fee or commission no greater than the
customary broker's commission. Shares of investment companies sometimes trade at
a discount or premium to their net asset value. Also, there may be duplication
of fees if a Fund and the closed-end investment company both charge a management
fee. No more than 5% of each Fund's gross assets may be invested in closed-end
investment companies.
Call Options On Stock. Each Fund may, from time to time, write call options on
their portfolio securities. Each Fund may write only call options which are
"covered," meaning that a 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, each 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 a Fund writes a call option, the
purchaser of the option has the right to buy (and a Fund has the obligation to
sell) the underlying security at the exercise price throughout the term of the
option. The amount paid to a Fund by the purchaser of the option is the
"premium." Each Funds' obligation to deliver the underlying security against
payment of the exercise price would terminate either upon expiration of the
option or earlier if the a 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. Each Fund does
not intend to write covered call options with respect to securities with an
aggregate market value of more than 5% of their gross assets at the time an
option is written. This percentage limitation will not be increased without
prior disclosure in our current prospectus.
Each 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, a Fund is
required to comply with the rules of The Options Clearing Corporation and the
various exchanges with respect to collateral requirements. Each 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 a Fund for writing the option.
Generally, each 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 a Fund's
net asset value occasioned by such declines in market value. Except as part of
the "sell discipline" described below, a 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 a Fund to write call options is as part of a "sell discipline."
If each 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, a 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, each 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
investment adviser, the market price of a stock is overvalued and it should be
sold, each 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 a 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, a Fund would, in effect, have increased the selling
price of the stock. A 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.
4
<PAGE>
Debt Securities. Each Fund may invest in bonds or other debt securities.
However, not more than 5% of its assets will be invested in high yield debt
securities. High-yield debt securities or "junk bonds" are rated BB/Ba or lower
and typically pay a higher yield than investment grade debt securities. These
bonds have a higher risk of default than investment grade bonds, and their
prices can be much more volatile.
Financial Futures Contracts. The Large-Cap Series and the Growth Opportunities
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 a Fund holds or intends 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. A 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 either's outstanding futures
contracts and securities covered by futures contracts subject to the outstanding
options written by the Fund entering into the contract 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 clearinghouse associated
with the exchange on which the contracts are traded. A Fund will incur brokerage
fees when they purchase or sell contracts and will be required to maintain
margin deposits. At the time they enter into a futures contract, it is required
to deposit with the 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 our return.
Futures contracts entail risks. If the investment adviser's judgment about the
general 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.
Foreign Currency Hedging Techniques. The Small-Cap Value Series and Growth
Opportunities Fund may also use foreign currency hedging techniques. Although
they do not normally engage in extensive currency hedging, they may use forward
foreign currency contracts and options thereon 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 a 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. Under some
circumstances, a Fund may commit a substantial portion of its portfolio to the
completion of forward contracts. Although such contracts will be used primarily
to protect a Fund from adverse currency movements, their use involves the risk
that Lord Abbett will not accurately predict currency movement, and a Fund's
return could be reduced.
Foreign Currency Put And Call Options. The Small-Cap Value Series and the Growth
Opportunities Fund 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 a Fund, upon payment of a premium, the right to sell
a currency at the exercise price until the expiration of the option and serves
to insure against adverse currency price movements in the underlying portfolio
assets denominated in that currency.
5
<PAGE>
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. The premiums paid for such
currency put options will not exceed 5% of the net assets of a Fund. Unlisted
options, together with other illiquid securities, are subject to a limit of 15%
of a Fund's net assets. The face value of such currency call option writing or
cross-hedging may not exceed 90% of the value of the securities denominated in
such currency, and invested in to cover such call writing or to be crossed.
A call option written by a Fund gives the purchaser, upon payment of a premium,
the right to purchase from a Fund a currency at the exercise price until the
expiration of the option. A Fund may write a call option on a foreign currency
only in conjunction with a purchase of a put option on that currency. Such a
strategy is designed to reduce the cost of downside currency protection by
limiting currency appreciation potential. The face value of such writing may not
exceed 90% of the value of the securities denominated in such currency invested
in by a Fund or in such cross currency (referred to above) to cover such call
writing.
Each Fund's custodian will segregate cash or permitted securities belonging to
the Fund in an amount not less than that required by SEC Release 10666 and
related policies with respect to the Fund's assets committed to (a) writing
options, (b) forward foreign currency contracts and (c) cross hedges entered
into by the Fund. 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 Fund's
commitments with respect to such written options, forward foreign currency
contracts and cross hedges.
Forward Foreign Currency Contracts. A forward foreign currency contract involves
an obligation to purchase or sell a specific amount of a specific currency at a
set price at a future date. The Small-Cap Value Series and the Growth
Opportunities Fund expect to enter into forward foreign currency contracts in
primarily two circumstances. First, when either 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, a 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 the investment adviser believes that the currency of a particular
foreign country may suffer a decline against the U.S. dollar, a Fund may enter
into a forward contract to sell the amount of foreign currency approximating the
value of some or all of a Fund's portfolio securities denominated in such
foreign currency or, in the alternative, a Fund may use a cross-hedging
technique whereby it sells another currency which a 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. A Fund does not intend to enter into such forward contracts
under this second circumstance on a regular basis.
Illiquid Securities. Each Fund may invest in 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.
Lending Of Portfolio Securities. Although each Fund has no current intention of
doing so, each may seek to earn income by lending portfolio securities. Under
present regulatory policies, such loans may be made to member firms of the New
York Stock Exchange ("NYSE") and are required to be secured continuously by
collateral consisting of cash, cash equivalents, or United States Treasury bills
maintained in an amount at least equal to the market value of the securities
loaned. Each Fund will have the right to call a loan and obtain the securities
loaned at any time upon five days' notice. During the existence of a loan we
will receive the income earned on investment of collateral. The aggregate value
of the securities loaned will not exceed 5% of the value of a Fund's gross
assets.
6
<PAGE>
Limitations On The Purchases And Sales Of Stock Options, Options On Stock
Indices And Stock Index Futures. The Small-Cap Value Series may write put and
call options on stocks only if they are covered, and such options must remain
covered so long as the Small-Cap Value Series is obligated as a writer. The Fund
will not (a) write puts having an aggregate exercise price greater than 25% of
its 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.
Options And Financial Futures Transactions. The Large-Cap Series and the Growth
Opportunities Fund may engage in options and financial futures transactions in
accordance with their investment objective and policies. Although each Fund is
not currently employing such options and financial futures transactions, they
may engage in such transactions in the future if it appears advantageous to the
investment adviser to do so, in order to cushion the effects of fluctuating
interest rates and adverse market conditions. The use of options and financial
futures, and possible benefits and attendant risks, are discussed below, along
with information concerning certain other investment policies and techniques. 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. A
Fund would be required to deposit with the custodian initial margin and
maintenance margin with respect to put and call options on futures contracts
written by a Fund. 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 it intends to hedge (or protect) against not
materialize, however, the option may expire worthless, in which case a Fund
would lose the premium paid therefor.
Put Options On Stock. The Small-Cap Value Series 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 Small-Cap Value Series has cash or other reserves available for investment
as a result of sales of Fund shares or, more importantly, because the investment
adviser believes a more defensive and less fully invested position is desirable
in light of market conditions. If the investment adviser 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 Small-Cap
Value Series 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 Small-Cap Value Series for the stock. The price
of the stock may decline by an amount in excess of the premium, in which event
the Small-Cap Value Series 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 a put option of the same series 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.
The Small-Cap Value Series may only write covered put options to the extent that
cover for such options does not exceed 25% of its net assets. The Small-Cap
Value Series 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.
Repurchase Agreements. Each Fund may enter into repurchase agreements with
respect to a security. A repurchase agreement is a transaction by which a
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. Each Fund requires at all times that the repurchase
agreement be collateralized by cash or U.S. Government securities having a value
equal to, or in excess of, the value of the repurchase agreement. Such
agreements permit each Fund to keep all of its assets at work while retaining
flexibility in pursuit of investments of a longer term nature.
7
<PAGE>
The use of repurchase agreements involves certain risks. For example, if the
seller of the agreement defaults on its obligation to repurchase the underlying
securities at a time when the value of these securities has declined, 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 the Fund and are
therefore subject to sale by the trustee in bankruptcy. Even though the
repurchase agreements may have maturities of seven days or less, they may lack
liquidity, especially if the issuer encounters financial difficulties. While
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.
Rights And Warrants. Each Fund may invest in rights and warrants to
purchase securities, including warrants which are not listed on the NYSE or
American Stock Exchange in an amount not to exceed 5% of the value of the Fund's
gross assets. Each 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, each Fund will not invest more than 5% of its net
assets in rights.
Rights represent a privilege offered to holders of record of issued securities
to subscribe (usually on a pro rata basis) for additional securities of the same
class, of a different class or of a different issuer, as the case may be.
Warrants represent the privilege to purchase securities at a stipulated price
and are usually valid for several years. Rights and warrants generally do not
entitle a holder to dividends or voting rights with respect to the underlying
securities nor do they represent any rights in the assets of the issuing
company.
Also, the value of a right or warrant may not necessarily change with the value
of the underlying securities and rights and warrants cease to have value if they
are not exercised prior to their expiration date.
Risks Of Transactions In Stock Options. 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 series. Although the Small-Cap Value Series 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 Small-Cap
Value Series, 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. The Small-Cap Value Series' 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 Small-Cap Value
Series' 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 Small-Cap Value Series
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.
8
<PAGE>
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 Small-Cap Value Series 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 Small-Cap Value Series. It is the
Small-Cap Value Series' 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.
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 Small-Cap Value
Series will not purchase or sell any index option contract unless and until, in
the investment adviser'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.
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
consists of Rule 144A securities, many of which are registered within a few
month 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 period of decreased market interest in such securities.
Segregated Accounts. To the extent required to comply with Securities and
Exchange Commission Release 10666 and subsequent interpretation thereof by the
Commission or its staff, when purchasing a futures contract, or writing a put
option, the Large-Cap Series and the Growth Opportunities Fund will maintain in
a segregated account at the custodian bank in liquid high grade debt
obligations, such as cash and U.S. Government Securities to cover its position.
Segregated Accounts. If the Small-Cap Value Series 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 Small-Cap Value Series has
not written a stock call option and which has not been hedged by the Small-Cap
Value Series by the sale of stock index futures. Such securities will include
stocks which represent at least 50% of the weighting of the industry or market
segment index and will represent at least 50% of the Small-Cap Value Series'
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 Small-Cap Value Series
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 Small-Cap Value Series writes a call on an index which is in-the-money
at the time the call is written, it 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 Value Series' 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 Small-Cap Value Series
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 Small-Cap Value Series 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 described in this paragraph. In instances involving the
purchase of stock index futures contracts by the Small-Cap Value Series, an
amount of cash or permitted securities equal to the market value of the futures
contracts will be deposited in a segregated account with 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.
9
<PAGE>
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 Small-Cap Value Series' commodity futures or commodity
options transactions constitute bona fide hedging transactions within the
meaning of the CFTC's regulations. The Small-Cap Value Series will use stock
index futures and options on futures as described herein in a manner consistent
with this requirement.
Short Sales. The Small-Cap Value Series may make short sales of securities or
maintain a short position, provided that at all times when a short position is
open the Fund owns an equal amount of such securities or securities convertible
into or exchangeable, without payment of any further consideration, for an equal
amount of the securities of the same issuer as the securities sold short. The
Small-Cap Value Series does not intend to have more than 5% of its net assets
(determined at the time of the short sale) subject to short sales against the
box.
Special Risks Of Writing Calls On Indices. 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 Small-Cap Value
Series 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 Small-Cap Value Series' 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 Small-Cap Value Series in the opposite direction
to the market would be likely to occur for only a short period or to a small
degree.
Unless the Small-Cap Value Series has other liquid assets that are sufficient to
satisfy the exercise of a call, the Small-Cap Value Series 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 Small-Cap Value Series 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 Small-Cap Value Series 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
Small-Cap Value Series is able to sell stocks in its portfolio. As with stock
options, the Small-Cap Value Series 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 Small-Cap Value Series 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 Small-Cap Value Series has
written is "covered" by an index call held by the Small-Cap Value Series with
the same strike price, the Small-Cap Value Series 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 Small-Cap Value Series exercises the call it holds or the time
the Small-Cap Value Series 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. If the Small-Cap Value
Series 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 Small-Cap
Value Series 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 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.
10
<PAGE>
Stock Index Futures. The Small-Cap Value Series 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 Small-Cap Value
Series' 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 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 Small-Cap Value Series' net assets.
Stock Index Options. Except as describe below, the Small-Cap Value Series 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 Small-Cap Value Series writes a call option on a
broadly-based stock market index, the Fund 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.
When-Issued or Delayed Delivery Securities. The Small-Cap Value Series and the
Growth Opportunities Fund may purchase or sell securities with payment and
delivery taking place as much as a month or more later. The Fund may do this in
an effort to buy or sell the securities at an advantageous price or yield. The
securities involved are subject to market fluctuation and no interest accrues to
the purchaser during the period between purchase and settlement. At the time of
delivery of the securities, their market value may be less than the purchase
price. Also, if the Fund commits a significant amount of assets to when-issued
or delayed delivery transactions, it may increase the volatility of its net
asset value.
2.
Directors And Officers
The Company's Board of Directors is responsible for the management of the
business and affairs of each Fund.
The following director is a partner of Lord, Abbett & Co. ("Lord Abbett"), 90
Hudson Street, Jersey City, New Jersey 07302-3973. He has been associated with
Lord Abbett for over five years and is also an officer, director, or trustee of
thirteen other Lord Abbett-sponsored funds.
*Robert S. Dow, age 54, Chairman and President
Mr. Dow is an "interested person" as defined in the Act.
The following outside directors are also directors or trustees of thirteen other
Lord Abbett-sponsored funds referred to above.
E. Thayer Bigelow, Director
245 Park Avenue, Suite 2414
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 58.
William H.T. Bush, Director
Bush-O'Donnell & Co., Inc.
101 South Hanley Road, Suite 1025
St. Louis, Missouri
Co-founder and Chairman of the Board of financial advisory firm of
Bush-O'Donnell & Company. Age 61.
11
<PAGE>
Robert B. Calhoun, Jr., Director
Monitor Clipper Partners
650 Madison Avenue, 9th Floor
New York, New York
Managing Director of Monitor Clipper Partners (since 1997) and President of The
Clipper Group L.P., both private equity investment funds (since 1990). Age 57.
Stewart S. Dixon, Director
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon (since 1990). Age 69.
John C. Jansing, Director
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 74.
C. Alan MacDonald, Director
415 Round Hill Road
Greenwich, Connecticut
Currently involved in golf development management on a consultancy basis (since
1999). Formerly, Managing Director of The Directorship Group Inc., a consultancy
in board management and corporate governance (1997-1999). Prior to that, 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 66.
Hansel B. Millican, Jr., Director
Rochester Button Company
1328 Broadway (Suite 816)
New York, New York
President and Chief Executive Officer of Rochester Button Company (since 1991).
Currently serves as Director of Polyvision. Age 71.
Thomas J. Neff, Director
Spencer Stuart
277 Park Avenue
New York, New York
Chairman of Spencer Stuart, an executive search consulting firm. Currently
serves as a Director of Ace, Ltd. (NYSE). Age 62.
The second column of the following table sets forth the compensation accrued by
the Company for outside directors/trustees. The third column sets forth
information with respect to the pension or retirement benefits accrued by all
Lord Abbett-sponsored funds for outside directors/trustees. The fourth column
sets forth the total compensation paid by all Lord Abbett-sponsored funds to the
outside directors/trustees, and amounts payable but deferred at the option of
the director/trustee, but does not include amounts accrued under the third
column. 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/trustee or officer.
12
<PAGE>
<TABLE>
<CAPTION>
For the Fiscal Year Ended November 30, 1999
(1) (2) (3) (4)
Pension or For Year Ended
Retirement Benefits December 31, 1998
Accrued by the Total Compensation
Aggregate Company and Paid by the Company and
Compensation Thirteen Other Lord Thirteen Other Lord
Accrued by Abbett-sponsored Abbett-sponsored
Name of Director the Company/1 Funds/2 Funds/3
- ---------------- ------------- ------- -----
<S> <C> <C> <C>
E. Thayer Bigelow $ $17,622 $57,720
William H.T. Bush $ $15,846 $58,000
Robert B. Calhoun, Jr. $ $12,276 $57,000
Stewart S. Dixon $ $32,420 $58,500
John C. Jansing $ $41,108/4 $57,250
C. Alan MacDonald $ $26,763 $57,500
Hansel B. Millican, Jr. $ $37,822 $57,500
Thomas J. Neff $ $20,313 $59,660
</TABLE>
1. Outside directors'/trustees' fees, including attendance fees for board and
committee meetings, are allocated among all Lord Abbett-sponsored funds
based on the net assets of each fund. A portion of the fees payable by the
Company to its outside directors/trustees may be deferred at the option of
a director/trustee under a plan that deems the deferred amounts to be
invested in shares of the Company for later distribution to the
directors/trustees.
The amounts of the aggregate compensation payable by the Large-Cap Series
as of November 30, 1999 deemed invested in Company shares, including dividends
reinvested and changes in net asset value applicable to such deemed investments,
were: Mr. Bigelow, $1,062; Mr. Calhoun, $626; Mr. Dixon, $509; Mr. Jansing,
$852; Mr. MacDonald, $462; Mr. Millican, $1,474; Mr. Bush, $23; and Mr. Neff,
$1,187. If the amounts deemed invested in Company shares were added to each
director's actual holdings of Company shares as of November 30, 1999, each would
own, the following: Mr. Bigelow, $1,062; Mr. Calhoun, $626; Mr. Dixon,
$3,928.74; Mr. Jansing, $37,014.10; Mr. MacDonald, $462; Mr. Millican, $1,474;
Mr. Bush, $23; and Mr. Neff, $1,187.
The amounts of the aggregate compensation payable by the Growth
Opportunities Fund as of November 30, 1999 deemed invested in Company shares,
including dividends reinvested and changes in net asset value applicable to such
deemed investments, were: Mr. Bigelow, $32; Mr. Calhoun, $31; Mr. Dixon, $0; Mr.
Jansing, $30; Mr. MacDonald, $0; Mr. Millican, $31; and Mr. Neff, $310. If the
amounts deemed invested in Company shares were added to each director's actual
holdings of Company shares as of November 30, 1999, each would own, the
following: Mr. Bigelow, $32; Mr. Calhoun, $31 Mr. Dixon, $0; Mr. Jansing,
$14,958.72; Mr. MacDonald, $0; Mr. Millican, $31; and Mr. Neff, $310.
The amounts of the aggregate compensation payable by the Small-Cap Value
Series as of November 30, 1999 deemed invested in Company shares, including
dividends reinvested and changes in net asset value applicable to such deemed
investments, were: Mr. Bigelow, $3,090; Mr. Calhoun, $2,084; Mr. Dixon, $158;
Mr. Jansing, $2,503; Mr. MacDonald, $482; Mr. Millican, $2,713; Mr. Bush, $82;
and Mr. Neff, $2,713. If the amounts deemed invested in Company shares were
added to each director's actual holdings of Company shares as of November 30,
1999, each would own, the following: Mr. Bigelow, $3,090; Mr. Calhoun, $2,084;
Mr. Dixon, $158; Mr. Jansing, $2,503; Mr. MacDonald, $482; Mr. Millican, $2,713;
Mr. Bush, $82; and Mr. Neff, $2,713.
2. The amounts in Column 3 were accrued by the Lord Abbett-sponsored funds for
the 12 months ended November 30, 1999.
3. The fourth column 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, 1999, including
fees directors/trustees have chosen to defer, but does not include amounts
accrued under the equity-based plans and shown in Column 3.
13
<PAGE>
4. The equity-based plans superseded a previously approved retirement plan for
all directors/trustees. Directors had the option to convert their accrued
benefits under the retirement plan. All of the then current outside
directors/trustees except one made such election. Mr. Jansing chose to
continue to receive benefits under the retirement plan which provides that
outside directors (trustees) may receive annual retirement benefits for
life equal to their final annual retainer following retirement at or after
age 72 with at least ten years of service. Thus, if Mr. Jansing were to
retire and the annual retainer payable by the funds were the same as it is
today, he would receive annual retirement benefits of $50,000.
Except where indicated, the following executive officers of the Company have
been associated with Lord Abbett for over five years. Of the following, Messrs.
Brown, Carper, Fetch, Hilstad, Hudson, McGruder, Morris, Towle, and Walsh are
partners of Lord Abbett; the others are employees. None have received
compensation from the Company.
Executive Vice Presidents:
Robert P. Fetch, age 47.
W. Thomas Hudson, Jr., age 58.
Robert G. Morris, age 55.
Stephen J. McGruder, age 56 (with Lord Abbett since 1995; formerly Vice
President of Wafra Investment Advisory Group).
Eli M. Salzmann, age 36 (with Lord Abbett since 1997, formerly a Portfolio
Manager, Analyst at Mutual of America from 1996 to 1997, prior thereto Vice
President at Mitchell Hutchins Asset Management).
Vice Presidents:
Joan Binstock, age 46 (with Lord Abbett since 1999, formerly Chief Operating
Officer of Morgan Grenfell from 1996 to 1999, prior thereto Principal of Ernst &
Young LLP).
Zane E. Brown, age 48.
Daniel E. Carper, age 48.
Paul A. Hilstad, age 57 (with Lord Abbett since 1995; formerly Senior Vice
President and General Counsel of American Capital Management & Research, Inc.).
Lawrence H. Kaplan, age 43 (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.).
Gregory M. Macosko, age 53 (with Lord Abbett since 1996; formerly Portfolio
Manager and Analyst at Royce Associates).
A. Edward Oberhaus, age 40.
Tracie E. Richter, age 32 (with Lord Abbett since 1999, formerly Vice President
- - Head of Fund Administration of Morgan Grenfell from 1998 to 1999,
Vice President of Bankers Trust from 1996 to 1998, prior thereto Tax Associates
of Goldman Sachs);
John J. Walsh, age 64.
Treasurer:
Donna M. McManus, age 39, (with Lord Abbett since 1996, formerly a Senior
Manager at Deloitte & Touche LLP).
14
<PAGE>
The Funds' By-Laws provide that they shall not hold an annual meeting of
stockholders in any year unless one or more matters are required to be acted on
by stockholders under the Act, or unless called by a majority of the Board of
Directors or by stockholders holding at least one quarter of the stock of a
Fund's outstanding shares and entitled to vote at the meeting. When any such
annual meeting is held, the stockholders will elect directors and vote on the
approval of the independent auditors of the Funds.
As of March 23, 2000 our officers and directors, as a group, owned more than 1%
of the Large-Cap Series' outstanding shares. As of the same date, there was one
record holder of 5% or more of the Large-Cap Series' outstanding shares:
Edward Jones & Co. 49.8%.
ATTN: Mutual Fund
Shareholder Accounting
201 Progress Way
Maryland Hts. MO 63043
As of March 23, 2000, our officers and directors, as a group, owned less than 1%
of the Growth Opportunities Fund's outstanding shares. As of the same date,
there were two record holders of 5% or more of the Growth Opportunities Fund's
outstanding shares:
Edward Jones & Co. 48.1%.
MLPF& S 7.8%
f/b/o its Customers
4800 Deer Lake Dr.
Jacksonville, FL
As of March 23, 2000, our officers and directors, as a group, owned less than 1%
of the Small-Cap Value Series' outstanding shares. As of the same date, there
were two record holder of 5% or more of the Small-Cap Value Series' outstanding
shares:
Edward Jones & Co. 20.3%
MLPF&S 36.6%
3.
Investment Advisory And Other Services
As described under "Management" in the Prospectus, Lord Abbett is the Company's
investment manager. Eight of the general partners of Lord Abbett are officers
and/or directors of the Company and are identified as follows: Zane E. Brown,
Daniel E. Carper, Robert S. Dow, Robert P. Fetch, Paul A. Hilstad, W. Thomas
Hudson, Stephen J. McGruder, Robert G. Morris, and John J. Walsh.
The other general partners of Lord Abbett who are neither officers nor directors
of the Company are: Stephen I. Allen, John E. Erard, Daria L. Foster, Robert I.
Gerber, Michael B. McLaughlin, Robert J. Noelke, Mark R. Pennington, and
Christopher J. Towle. The address of each partner is 90 Hudson Street, Jersey
City, New Jersey 07302-3973.
The services performed by Lord Abbett are described under "Management" in the
Prospectus. Under the Management Agreement, each 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 Large-Cap Series' and Small-Cap Value Series' and
.90 of 1% of Growth Opportunities Fund's average daily net assets. In addition
we are 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.
15
<PAGE>
For the fiscal years ended November 1999, 1998, and 1997, Lord Abbett received
$1,498,289, $768,547, and $334,394, respectively, in management fees with
respect to the Large-Cap Series.
For the fiscal year ended November 30, 1997, the management fee was .75 of 1%
and was waived by Lord Abbett with respect to the Growth Opportunities Fund and,
except for this waiver, would have amounted to $10,844. On September 15, 1998,
the Fund's shareholders voted to raise the management fee to .90 of 1%. This fee
was also waived. The management fee for the fiscal years ended November 30, 1999
and 1998, except for this waiver, would have amounted to $159,804 and
$16,316, respectively.
For the fiscal years ended November 30, 1999, 1998, and 1997, Lord Abbett
received $3,562,324, $4,270,210, and $1,075,019, respectively in management fees
with respect to Small-Cap Value Series.
Each Fund pays all expenses not expressly assumed by Lord Abbett, including,
without limitation, 12b-1 expenses, outside directors'/trustees' 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.
Lord Abbett Distributor LLC, a New York limited liability company ("Lord Abbett
Distributor"), and a subsidiary of Lord Abbett, 90 Hudson Street, Jersey City,
New Jersey 07302, serves as the principal underwriter for the Funds.
The Bank of New York ("BNY"), 48 Wall Street, New York, New York, is the
Company's custodian. In accordance with the requirements of Rule 17f-5, the
Company's directors have approved arrangements permitting the Funds' foreign
assets not held by BNY or its foreign branches to be held by certain qualified
foreign banks and depositories.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10128, are
the independent auditors of the Company and must be approved at least annually
by our Board of Directors to continue in such capacity. Deloitte & Touche LLP
perform audit services for the Funds including the examination of financial
statements included in our Annual Report to Shareholders.
United Missouri Bank of Kansas City, N.A., Tenth and Grand, Kansas City,
Missouri, acts as the transfer agent and dividend disbursing agent for the
Funds.
4.
Portfolio Transactions
The Company's policy is to obtain best execution on all our portfolio
transactions, which means that it seeks 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, each Fund may pay, as described below,
a higher commission than some brokers might charge on the same transaction. 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 Company 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.
16
<PAGE>
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
Funds; conversely, such services furnished in connection with brokerage on other
accounts managed by Lord Abbett may be used in connection with their management
of the Funds, and not all of such services will necessarily be used by Lord
Abbett in connection with their advisory services to such other accounts. The
Funds have been advised by Lord Abbett that research services received from
brokers cannot be allocated to any particular account, are not a substitute for
Lord Abbett's services but are supplemental to their own research effort and,
when utilized, are subject to internal analysis before being incorporated by
Lord Abbett into their investment process. As a practical matter, it would not
be possible for Lord Abbett to generate all of the information presently
provided by brokers. While receipt of research services from brokerage firms has
not reduced Lord Abbett's normal research activities, the expenses of Lord
Abbett could be materially increased if it attempted to generate such additional
information through its own staff and purchased such equipment and software
packages directly from the suppliers.
No commitments are made regarding the allocation of brokerage business to or
among brokers, and trades are executed only when they are dictated by investment
decisions of the Lord Abbett-sponsored funds to purchase or sell portfolio
securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold the Lord
Abbett-sponsored funds' shares and/or shares of other Lord Abbett-sponsored
funds may be preferred. When, in the opinion of the investment adviser, two or
more brokers (either directly or through their correspondent clearing agents)
are in a position to obtain the best price and execution, preference may be
given to brokers who have sold shares of a Fund or who have provided investment
research, statistical, or other related services to the investment adviser.
If other clients of Lord Abbett buy or sell the same security at the same time
as a Lord Abbett-sponsored fund does, 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 a Lord Abbett-sponsored fund 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 a Lord Abbett-sponsored fund does.
For the fiscal years ended November 30, 1997, 1998 and 1999 we paid total
commissions to independent broker-dealers of $88,234, $321,279 and $395,908
for the Large-Cap Series, respectively. For the fiscal years ended November 30,
1997, 1998, and 1999, we paid total commissions to independent broker-dealers of
$1,812,425, $1,564,340 and $1,492,501, respectively, for the Small-Cap Value
Series. For the fiscal years ended November 30, 1997, 1998, and 1999, we paid
total commissions to independent broker-dealers of $3,687, $12,741 and $91,960
for the Growth Opportunities Fund, respectively.
17
<PAGE>
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.
The Company 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 Funds' 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.
For each class of shares the net asset value will be determined by taking the
net asset value and dividing by the shares outstanding).
The maximum offering price of Class A shares of each Fund on November 30, 1999
was computed as follows:
<TABLE>
<CAPTION>
Small-Cap Growth
Large-Cap Value Opportunities
Net asset value per share (net assets
<S> <C> <C> <C>
divided by shares outstanding) $25.32 $15.63 $18.89
Maximum offering price per share
(net asset value divided by .9425) $26.86 $16.58 $20.04
</TABLE>
The Company on behalf of the Funds has entered into a distribution agreement
with Lord Abbett Distributor, under which Lord Abbett Distributor is obligated
to use its best efforts to find purchasers for the shares of the Funds, and to
make reasonable efforts to sell the shares so long as, in Lord Abbett
Distributor's judgment, a substantial distribution can be obtained by reasonable
efforts.
For the last three fiscal years Lord Abbett, as the Funds' principal
underwriter, received net commissions after allowance of a portion of the sales
charge to independent dealers with respect to Class A shares as follows:
Large-Cap Series
Year Ended November 30,
1999 1998 1997
---- ---- ----
Gross sales charge $1,988,420 $1,508,922 $1,005,548
Amount allowed to dealers $1,696,099 $1,294,173 $ 864,739
---------- ---------- ----------
Net commissions received
by Lord Abbett $292,321 $214,749 $ 140,809
-------- -------- ----------
18
<PAGE>
Small-Cap Value Series
Year Ended November 30
1999 1998 1997
---- ---- ----
Gross sales charge $392,031 $3,448,187 $7,021,169
Amount allowed to dealers $335,370 $2,980,530 $6,026,914
-------- ---------- ----------
Net commissions received
by Lord Abbett $ 56,661 $467,657 $ 994,255
-------- --------- ----------
Growth Opportunities Fund
Year Ended November 30
1999 1998
---- ----
Gross sales charge $809,755 $29,725
Amount allowed to dealers $687,962 $25,363
-------- -------
Net commissions received
by Lord Abbett $121,793 $ 4,362
-------- -------
Conversion Of Class B Shares. The conversion of Class B shares on the eighth
anniversary of their purchase is subject to the continuing availability of a
private letter ruling from the Internal Revenue Service, or an opinion of
counsel or tax adviser, to the effect that the conversion of Class B shares does
not constitute a taxable event for the holder under Federal income tax law. If
such a revenue ruling or opinion is no longer available, the automatic
conversion feature may be suspended, in which event no further conversions of
Class B shares would occur while such suspension remained in effect. Although
Class B shares could then be exchanged for Class A shares on the basis of
relative net asset value of the two classes, without the imposition of a sales
charge or fee, such exchange could constitute a taxable event for the holder.
Alternative Sales Arrangements
Classes of Shares. The Funds offer investors four different classes of shares in
this Statement of Additional Information. The different classes of shares
represent investments in the same portfolio of securities but are subject to
different expenses and will likely have different share prices. Investors should
read this section carefully to determine which class represents the best
investment option for their particular situation.
Class A Shares. If you buy Class A shares you pay an initial sales charge,
unless your purchase meets one of the following conditions: (i) your purchase is
for $1 million or more in one or more Lord Abbett-sponsored funds; (ii) you
purchase through an employer-sponsored retirement plan (a "Retirement Plan")
with at least 100 eligible employees under the Internal Revenue Code (which
excludes Individual Retirement Accounts); or (iii) you purchase through a
"special retirement program" which is a certain type program sponsored by an
institution or other entity permitted to receive service and/or distribution
fees under a Rule 12b-1 Plan (an "Authorized Institution"). The program must
also have one or more characteristics distinquishing it, in the opinion of Lord
Abbett Distributor, from a Mutual Fund Fee Based Program. Such characteristics
include, among other things, the fact that an Authorized Institution does not
charge its clients any fee of a consulting or advisory nature that is
economically equivalent to the distribution fee under the Class A 12b-1 Plan and
the fact that the program relates to participant-directed Retirement Plans.
However, if you meet a condition which allows you to purchase Class A shares
without an initial sales charge, but you redeem any of those shares within 24
months after the month in which you buy them, you pay the Fund a contingent
deferred sales charge ("CDSC") of 1%. There is an exception to the CDSC for
redemptions under a special retirement wrap program. Class A shares of the
Large-Cap Research Fund are subject to service and distribution fees that are
currently estimated to total annually approximately .23 of 1% of the annual net
asset value of the Class A shares. Class A shares of the Growth Opportunities
Fund are subject to service and distribution fees that are currently estimated
to total annually approximately 0.28 of 1% of the annual net asset value of the
Class A shares. Class A shares of the Small-Cap Value Fund are subject to
service and distribution fees that are currently estimated to total annually
approximately .31 of 1% of the annual net asset value of the Class A shares. The
initial sales charge rates, the CDSC and the Rule 12b-1 plan applicable to the
Class A shares are described in the sections below.
19
<PAGE>
Class B Shares. If you buy Class B shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the sixth anniversary of
buying them, you will normally pay a CDSC to Lord Abbett Distributor. That CDSC
varies depending on how long you own your shares. Class B shares are subject to
service and distribution fees at an annual rate of 1% of the annual net asset
value of the Class B shares. The CDSC and the Rule 12b-1 plan applicable to the
Class B shares are described in the sections below.
Class C Shares. If you buy Class C shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the first anniversary of
buying them, you will normally pay a Fund a CDSC of 1%. Class C shares are
subject to service and distribution fees at an annual rate of 1% of the annual
net asset value of the Class C shares. The CDSC and the Rule 12b-1 plan
applicable to the C shares are described in the sections below.
Class P Shares. If you buy Class P shares, you pay no sales charge at the time
of purchase, and if you redeem your shares you pay no CDSC. Class P shares are
subject to service and distribution fees at an annual rate of .45 of 1% of the
average daily net asset value of the Class P shares. The Rule 12b-1 plan
applicable to the Class P shares is described in the section below. Class P
shares are available to a limited number of investors.
Which Class Of Shares Should You Choose? Once you decide which Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial adviser. The Funds' class-specific expenses and the
effect of the different types of sales charges on your investment will affect
your investment results over time. The most important factors are how much you
plan to invest and how long you plan to hold your investment. If your goals and
objectives change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider another class of
shares.
In the following discussion, to help provide you and your financial adviser with
a framework in which to choose a class, we have made some assumptions using a
hypothetical investment in the Funds. We used the sales charge rates that apply
to Class A, Class B and Class C, and considered the effect of the higher
distribution fees on Class B and Class C expenses (which will affect your
investment return). Of course, the actual performance of your investment cannot
be predicted and will vary, based on a Fund's actual investment returns, the
operating expenses borne by each class of shares, and the class of shares you
purchase. The factors briefly discussed below are not intended to be investment
advice, guidelines or recommendations, because each investor's financial
considerations are different. The discussion below of the factors to consider in
purchasing a particular class of shares assumes that you will purchase only one
class of shares and not a combination of shares of different classes.
How Long Do You Expect To Hold Your Investment? While future financial needs
cannot be predicted with certainty, knowing how long you expect to hold your
investment will assist you in selecting the appropriate class of shares. For
example, over time, the reduced sales charges available for larger purchases of
Class A shares may offset the effect of paying an initial sales charge on your
investment, compared to the effect over time of higher class-specific expenses
on Class B or Class C shares for which no initial sales charge is paid. Because
of the effect of class-based expenses, your choice should also depend on how
much you plan to invest.
Investing For The Short Term. If you have a short-term investment horizon (that
is, you plan to hold your shares for not more than six years), you should
probably consider purchasing Class A or Class C shares rather than Class B
shares. This is because of the effect of the Class B CDSC if you redeem before
the sixth anniversary of your purchase, as well as the effect of the Class B
distribution fee on the investment return for that class in the short term.
Class C shares might be the appropriate choice (especially for investments of
less than $100,000), because there is no initial sales charge on Class C shares,
and the CDSC does not apply to amounts you redeem after holding them one year.
However, if you plan to invest more than $100,000 for the short term, then the
more you invest and the more your investment horizon increases toward six years,
the more attractive the Class A share option may become. This is because the
annual distribution fee on Class C shares will have a greater impact on your
account over the longer term than the reduced front-end sales charge available
for larger purchases of Class A shares. For example, Class A might be more
appropriate than Class C for investments of more than $100,000 expected to be
held for 5 or 6 years (or more). For investments over $250,000 expected to be
held 4 to 6 years (or more), Class A shares may become more appropriate than
Class C. If you are investing $500,000 or more, Class A may become more
desirable as your investment horizon approaches 3 years or more.
20
<PAGE>
For most investors who invest $1 million or more or for Retirement Plans with at
least 100 eligible employees or for investments pursuant to a special retirement
wrap program, in most cases Class A shares will be the most advantageous choice,
no matter how long you intend to hold your shares. For that reason, it may not
be suitable for you to place a purchase order for Class B shares of $500,000 or
more or a purchase order for Class C shares of $1,000,000 or more. In addition,
it may not be suitable for you to place an order for Class B or C shares for a
Retirement Plan with at least 100 eligible employees or for a special retirement
wrap program. You should discuss this with your financial advisor.
Investing for the Longer Term. If you are investing for the longer term (for
example, to provide for future college expenses for your child) and do not
expect to need access to your money for seven years or more, Class B shares may
be an appropriate investment option, if you plan to invest less than $100,000.
If you plan to invest more than $100,000 over the long term, Class A shares will
likely be more advantageous than Class B shares or Class C shares, as discussed
above, because of the effect of the expected lower expenses for Class A shares
and the reduced initial sales charges available for larger investments in Class
A shares under a Fund's Rights of Accumulation.
Of course, these examples are based on approximations of the effect of current
sales charges and expenses on a hypothetical investment over time, and should
not be relied on as rigid guidelines.
Are There Differences In Account Features That Matter To You? Some account
features are available in whole or in part to Class A, Class B and Class C
shareholders. Other features (such as Systematic Withdrawal Plans) might not be
advisable in non-Retirement Plan accounts for Class B shareholders (because of
the effect of the CDSC on the entire amount of a withdrawal if it exceeds 12%
annually) and in any account for Class C shareholders during the first year of
share ownership (due to the CDSC on withdrawals during that year). See
"Systematic Withdrawal Plan" under "Shareholder Services" in the Prospectus for
more information about the 12% annual waiver of the CDSC. You should carefully
review how you plan to use your investment account before deciding which class
of shares you buy. For example, the dividends payable to Class B and Class C
shareholders will be reduced by the expenses borne solely by each of these
classes, such as the higher distribution fee to which Class B and Class C shares
are subject, as described below.
How Does It Affect Payments To My Broker? A salesperson, such as a broker, or
any other person who is entitled to receive compensation for selling Fund shares
may receive different compensation for selling one class than for selling
another class. As discussed in more detail below, such compensation is primarily
paid at the time of sale in the case of Class A and B shares and is paid over
time, so long as shares remain outstanding, in the case of Class C shares. It is
important that investors understand that the primary purpose of the CDSC for the
Class B shares and the distribution fee for Class B and Class C shares is the
same as the purpose of the front-end sales charge on sales of Class A shares: to
compensate brokers and other persons selling such shares. The CDSC, if payable,
supplements the Class B distribution fee and reduces the Class C distribution
fee expenses for the Fund and Class C shareholders.
Rule 12b-1 Plans
Class A, B, C, and P. As described in the Prospectus, the Company has adopted a
Distribution Plan and Agreement pursuant to Rule 12b-1 of the Act for each of
the four Classes: the "A Plan," the "B Plan," the "C Plan," and the "P Plan,"
respectively. In adopting each Plan and in approving its continuance, the Board
of Directors has concluded that there is a reasonable likelihood that each Plan
will benefit its respective Class and such Class's shareholders. The expected
benefits include greater sales and lower redemptions of Class shares, which
should allow each Class to maintain a consistent cash flow, and a higher quality
of service to shareholders by authorized institutions than would otherwise be
the case. Lord Abbett uses all amounts received under each Plan as described in
the Prospectus and for payments to dealers for (i) providing continuous services
to the shareholders, such as answering shareholder inquiries, maintaining
records, and assisting shareholders in making redemptions, transfers, additional
purchases and exchanges and (ii) their assistance in distributing shares of the
Company.
21
<PAGE>
The fees payable under the A Plan, B Plan, C Plan, and P Plan are described in
the Prospectus. For the fiscal year ended November 30, 1999, the fees paid to
dealers under the A Plan for the Large-Cap Series was $459,880; for the Growth
Opportunities Fund $45,762; and for the Small-Cap Value Series $676,312.
For the fiscal year ended November 30, 1999, the fee paid to dealers under the B
Plan for the Large-Cap Series was $534,727; for the Growth Opportunities Fund
$23,804; and for the Small-Cap Value Series $1,733,727.
For the fiscal year ended November 30, 1999, the fee paid to dealers under the C
Plan for the Large-Cap Series was $123,491; for the Growth Opportunities Fund
$18,664; and for the Small-Cap Value Series $528,749.
Each Plan requires the Board of Directors to review, on a quarterly basis,
written reports of all amounts expended pursuant to the Plan and the purposes
for which such expenditures were made. Each Plan shall continue in effect only
if its continuance is specifically approved at least annually by vote of the
directors, including a majority of the Directors who are not interested persons
of the Fund and who have no direct or indirect financial interest in the
operation of the Plan or in any agreements related to the Plan ("outside
directors"), cast in person at a meeting called for the purpose of voting on the
Plan. No Plan may be amended to increase materially above the limits set forth
therein the amount spent for distribution expenses thereunder without approval
by a majority of the outstanding voting securities of the applicable Class and
the approval of a majority of the directors, including a majority of the outside
directors. Each Plan may be terminated at any time by vote of a majority of the
outside directors or by vote of a majority of its class outstanding voting
securities.
Contingent Deferred Sales Charges. A Contingent Deferred Sales Charge ("CDSC")
applies upon early redemption of shares, regardless of class, and: (i) will be
assessed on the lesser of the net asset value of the shares at the time of
redemption or the original purchase price and (ii) will not be imposed on the
amount of your account value represented by the increase in net asset value over
the initial purchase price (including increases due to the reinvestment of
dividends and capital gains distributions) and upon early redemption of shares.
Class A Shares. As stated in the Prospectus, a CDSC of 1% is imposed with
respect to those Class A shares (or Class A shares of another Lord
Abbett-sponsored fund or Fund acquired through exchange of such shares) on which
a Fund has paid the one-time distribution fee of 1% if such shares are redeemed
out of the Lord Abbett-sponsored family of funds within a period of 24 months
from the end of the month in which the original sale occurred.
Class B Shares. As stated in the Prospectus, if Class B shares (or Class B
shares of another Lord Abbett-sponsored fund or Fund acquired through exchange
of such shares) are redeemed out of the Lord Abbett-sponsored family of funds
for cash before the sixth anniversary of their purchase, a CDSC will be deducted
from the redemption proceeds. The Class B CDSC is paid to Lord Abbett
Distributor to reimburse its expenses, in whole or in part, for providing
distribution-related service in connection with the sale of Class B shares.
To determine whether the CDSC applies to a redemption, each Fund redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions; (2) shares held on or after the sixth anniversary
of their purchase; and (3) shares held the longest before such sixth
anniversary.
The amount of the CDSC charge will depend on the number of years since you
invested and the dollar amount being redeemed, according to the following
schedule:
<TABLE>
<CAPTION>
Anniversary of the Day on Contingent Deferred Sales Charge
Which the Purchase Order Was Accepted on Redemptions (As % of Amount Subject to Charge)
<S> <C>
Before the 1st....................................................... 5.0%
On the 1st, before the 2nd........................................... 4.0%
On the 2nd, before the 3rd........................................... 3.0%
On the 3rd, before the 4th........................................... 3.0%
On the 4th, before the 5th........................................... 2.0%
On the 5th, before the 6th........................................... 1.0%
On or after the 6th anniversary...................................... None
</TABLE>
22
<PAGE>
In the table, an "anniversary" is the same calendar day in each respective year
after the date of purchase. All purchases are considered to have been made on
the business day on which the purchase order was accepted.
Class C Shares. As stated in the Prospectus, subject to certain exceptions, if
Class C shares are redeemed for cash before the first anniversary of their
purchase, the redeeming shareholder will be required to pay to a Fund on behalf
of Class C shares a CDSC of 1% of the lower of cost or the then net asset value
of Class C shares redeemed. If such shares are exchanged into the same class of
another Lord Abbett-sponsored fund and subsequently redeemed before the first
anniversary of their original purchase, the charge will be collected by the
other fund on behalf of a Fund's Class C shares.
General. Each percentage (1% in the case of Class A and C shares and 5% through
1% in the case of Class B shares) used to calculate CDSC's for the Class A,
Class B, and Class C shares is sometimes hereinafter referred to as the
"Applicable Percentage."
With respect to Class A and Class B shares, no CDSC is payable on redemptions by
participants or beneficiaries from employer-sponsored retirement plans under the
Internal Revenue Code for benefit payments due to plan loans, hardship
withdrawals, death, retirement or separation from service and for returns of
excess contributions to retirement plan sponsors. With respect to Class A shares
purchased pursuant to a special retirement wrap program, no CDSC is payable on
redemptions which continue as investments in another fund participating in the
program. With respect to Class B shares, no CDSC is payable for redemptions (i)
in connection with Systematic Withdrawal Plan and Div-Move services as described
below under those headings, (ii) in connection with mandatory distribution under
403(b) plans and IRAs and (iii) in connection with death of the shareholder. In
the case of Class A and Class C shares, the CDSC is received by the applicable
Fund and is intended to reimburse all or a portion of the amount paid by the
Fund if the shares are redeemed before the Fund has had an opportunity to
realize the anticipated benefits of having a long-term shareholder account in
the Fund. In the case of Class B shares, the CDSC is received by Lord Abbett
Distributor and is intended to reimburse its expenses of providing
distribution-related service to the Fund (including recoupment of the commission
payments made) in connection with the sale of Class B shares before Lord Abbett
Distributor has had an opportunity to realize its anticipated reimbursement by
having such a long-term shareholder account subject to the B Plan distribution
fee.
The other funds that participate in the Telephone Exchange Privilege (except (a)
Lord Abbett U.S. Government Securities Money Market Fund, Inc. ("GSMMF"), (b)
certain funds of Lord Abbett Tax-Free Income Fund and Lord Abbett Tax-Free
Income Trust for which a Rule 12b-1 Plan is not yet in effect, and (c) any
authorized institution's affiliated money market fund satisfying Lord Abbett
Distributor as to certain omnibus account and other criteria, hereinafter
referred to as an "authorized money market fund" or "AMMF" (collectively, the
"Non-12b-1 Funds") have instituted a CDSC for each class on the same terms and
conditions. No CDSC will be charged on an exchange of shares of the same class
between Lord Abbett funds or between such funds and AMMF. Upon redemption of
shares out of the Lord Abbett family of funds or out of AMMF, the CDSC will be
charged on behalf of and paid: (i) to the fund in which the original purchase
(subject to a CDSC) occurred, in the case of the Class A and Class C shares and
(ii) to Lord Abbett Distributor if the original purchase was subject to a CDSC,
in the case of the Class B shares. Thus, if shares of a Lord Abbett fund are
exchanged for shares of the same class of another such fund and the shares of
the same class tendered ("Exchanged Shares") are subject to a CDSC, the CDSC
will carry over to the shares of the same class being acquired, including GSMMF
and AMMF ("Acquired Shares"). Any CDSC that is carried over to Acquired Shares
is calculated as if the holder of the Acquired Shares had held those shares from
the date on which he or she became the holder of the Exchanged Shares. Although
the Non-12b-1 Funds will not pay a distribution fee on their own shares, and
will, therefore, not impose their own CDSC, the Non-12b-1 Funds will collect the
CDSC (a) on behalf of other Lord Abbett funds, in the case of the Class A and
Class C shares and (b) on behalf of Lord Abbett Distributor, in the case of the
Class B shares. Acquired Shares held in GSMMF and AMMF which are subject to a
CDSC will be credited with the time such shares are held in GSMMF but will not
be credited with the time such shares are held in AMMF. Therefore, if your
Acquired Shares held in AMMF qualified for no CDSC or a lower Applicable
Percentage at the time of exchange into AMMF, that Applicable Percentage will
apply to redemptions for cash from AMMF, regardless of the time you have held
Acquired Shares in AMMF.
23
<PAGE>
In no event will the amount of the CDSC exceed the Applicable Percentage of the
lesser of: (i) the net asset value of the shares redeemed; or (ii) the original
cost of such shares (or of the Exchanged Shares for which such shares were
acquired). No CDSC will be imposed when the investor redeems: (i) amounts
derived from increases in the value of the account above the total cost of
shares being redeemed due to increases in net asset value; (ii) shares with
respect to which no Lord Abbett fund paid a 12b-1 fee and, in the case of Class
B shares, Lord Abbett Distributor paid no sales charge or service fee (including
shares acquired through reinvestment of dividend income and capital gains
distributions); or (iii) shares which, together with Exchanged Shares, have been
held continuously for 24 months from the end of the month in which the original
sale occurred (in the case of Class A shares), for six years or more (in the
case of Class B shares) and for one year or more (in the case of Class C
shares). In determining whether a CDSC is payable: (a) shares not subject to the
CDSC will be redeemed before shares subject to the CDSC; and (b) of the shares
subject to a CDSC, those held the longest will be the first to be redeemed.
Exchanges. The Prospectus briefly describes the Telephone Exchange Privilege.
You may exchange some or all of your shares of any class for those in the same
class of: (i) Lord Abbett-sponsored funds currently offered to the public with a
sales charge (front-end, back-end or level ); (ii) GSMMF; or (iii) AMMF, to the
extent offers and sales may be made in your state. You should read the
prospectus of the other Fund before exchanging. In establishing a new account by
exchange, shares of the Fund being exchanged must have a value equal to at least
the minimum initial investment required for the other fund into which the
exchange is made.
Shareholders in other Lord Abbett-sponsored funds and AMMF have the same right
to exchange their shares for the corresponding class of each Series' shares.
Exchanges are based on relative net asset values on the day instructions are
received by the Fund in Kansas City if the instructions are received prior to
the close of the NYSE in proper form. No sales charges are imposed except in the
case of exchanges out of GSMMF or AMMF (unless a sales charge (front-end,
back-end or level) was paid on the initial investment in a Lord Abbett-sponsored
fund). Exercise of the exchange privilege will be treated as a sale for federal
income tax purposes, and, depending on the circumstances, a gain or loss may be
recognized. In the case of an exchange of shares that have been held for 90 days
or less where no sales charge is payable on the exchange, the original sales
charge incurred with respect to the exchanged shares will be taken into account
in determining gain or loss on the exchange only to the extent such charge
exceeds the sales charge that would have been payable on the acquired shares had
they been acquired for cash rather than by exchange. The portion of the original
sales charge not so taken into account will increase the basis of the acquired
shares.
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as a means for taking advantage of
short-term swings in the market, and we reserve the right to terminate or limit
the privilege of any shareholder who makes frequent exchanges. We can revoke or
modify the privilege for all shareholders upon 60 days' prior notice. "Eligible
Funds" are AMMF and other Lord Abbett-sponsored funds which are eligible for the
exchange privilege, except Lord Abbett Series Fund ("LASF") which offers its
shares only in connection with certain variable annuity contracts, and Lord
Abbett Equity Fund ("LAEF") which is not issuing shares. The exchange privilege
will not be available with respect to any otherwise "Eligible Funds" the shares
of which are not available to new investors of the type requesting the exchange.
Letter of Intention. Under the terms of the Letter of Intention, as described in
the Prospectus, you may invest $50,000 or more over a 13-month period in shares
of a Lord Abbett-sponsored fund (other than shares of LAEF, LASF, LARF, GSMMF
and AMMF, unless holdings in GSMMF and AMMF are attributable to shares exchanged
from a Lord Abbett-sponsored fund offered with a front-end, back-end or level
sales charge). Shares currently owned by you are credited as purchases (at their
current offering prices on the date the Statement is signed) toward achieving
the stated investment and reduced initial sales charge for Class A shares. Class
A shares valued at 5% of the amount of intended purchases are escrowed and may
be redeemed to cover the additional sales charge payable if the Letter is not
completed. The Letter of Intention is neither a binding obligation on you to
buy, nor on a Fund to sell, the full amount indicated.
Rights Of Accumulation. As stated in the Prospectus, purchasers (as defined in
the Prospectus) may accumulate their investment in Lord Abbett-sponsored funds
(other than LAEF, LARF, LASF, GSMMF, and AMMF unless holdings in GSMMF or AMMF
are attributable to shares exchanged from a Lord Abbett-sponsored fund offered
with a front-end, back-end or level sales charge) so that a current investment,
plus the purchaser's holdings valued at the current maximum offering price,
reach a level eligible for a discounted sales charge for Class A shares.
Net Asset Value Purchases Of Class A Shares. As stated in the Prospectus, our
Class A shares may be purchased at net asset value by our directors, employees
of Lord Abbett, employees of our shareholder servicing agent and employees of
any securities dealer having a sales agreement with Lord Abbett who consents to
such purchases or by the director or custodian under any pension or
profit-sharing plan or Payroll Deduction IRA established for the benefit of such
persons or for the benefit of employees of any national securities trade
organization to which Lord Abbett belongs or any company with an account(s) in
excess of $10 million managed by Lord Abbett on a private-advisory-account
basis. For purposes of this paragraph, the terms "directors" and "employees"
include a trustee's or employee's spouse (including the surviving spouse of a
deceased director or employee). The terms "our directors" and "employees of Lord
Abbett" also include retired directors/trustees and employees and other family
members thereof.
24
<PAGE>
Our Class A shares also may be purchased at net asset value: (a) at $1 million
or more; (b) with dividends and distributions from Class A shares of other Lord
Abbett-sponsored funds, except for LARF, LAEF and LASF; (c) under the loan
feature of the Lord Abbett-sponsored prototype 403(b) plan for share purchases
representing the repayment of principal and interest; (d) by certain authorized
brokers, dealers, registered investment advisers or other financial institutions
who have entered into an agreement with Lord Abbett Distributor in accordance
with certain standards approved by Lord Abbett Distributor, providing
specifically for the use of our shares in particular investment products made
available for a fee to clients of such brokers, dealers, registered investment
advisers and other financial institutions, ("mutual fund advisory program"); (e)
by employees, partners and owners of unaffiliated consultants and advisors to
Lord Abbett, Lord Abbett Distributor or Lord Abbett-sponsored funds who consent
to such purchase if such persons provide service to Lord Abbett, Lord Abbett
Distributor or such funds on a continuing basis and are familiar with such
funds; (f) through Retirement Plans with at least 100 eligible employees; (g) in
connection with a merger, acquisition or other reorganization; and (h) through a
"special retirement wrap program" sponsored by an authorized institution showing
one or more characteristics distinguishing it, in the opinion of Lord Abbett
Distributor from a mutual fund advisory program. Such characteristics include,
among other things, the fact that an authorized institution does not charge its
clients any fee of a consulting or advisory nature that is economically
equivalent to the distribution fee under Class A 12b-1 Plan and the fact that
the program relates to a participant-directed Retirement Plan. Shares are
offered at net asset value to these investors for the purpose of promoting
goodwill with employees and others with whom Lord Abbett Distributor and/or the
Funds have business relationships.
Redemptions. A redemption order is in proper form when it contains all of the
information and documentation required by the order form or supplementally by
Lord Abbett Distributor or the Funds to carry out the order. The signature(s)
and any legal capacity of the signer(s) must be guaranteed by an Eligible
Guarantor, which is any broker or bank that is a member of the medallion stamp
program. See the Prospectus for expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Directors may authorize redemption of all of the shares in any
account in which there are fewer than 25 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
is necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least 6 month's prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
Div-Move. Under the Div-Move service described in the Prospectus, you can invest
the dividends paid on your account of any class into an existing account of the
same class in any other Eligible Fund. The account must be either your account,
a joint account for you and your spouse, a single account for your spouse, or a
custodial account for your minor child under the age of 21. You should read the
prospectus of the other fund before investing.
Invest-A-Matic. The Invest-A-Matic method of investing in the Funds and/or any
other Eligible Fund is described in the Prospectus. To avail yourself of this
method you must complete the application form, select the time and amount of
your bank checking account withdrawals and the funds for investment, include a
voided, unsigned check and complete the bank authorization.
Systematic Withdrawal Plans. The Systematic Withdrawal Plan ("SWP") also is
described in the Prospectus. You may establish a SWP if you own or purchase
uncertificated shares having a current offering price value of at least $10,000.
Lord Abbett prototype retirement plans have no such minimum. With respect to a
SWP for Class B shares, the CDSC will be waived on redemptions of up to 12% per
year of the current net asset value of your account at the time the SWP is
established. For Class B shares redemptions over 12% per year, the CDSC will
apply to the entire redemption. Therefore, please contact the Funds for
assistance in minimizing the CDSC in this situation. With respect to Class C
shares, the CDSC will be waived on and after the first anniversary of their
purchase. The SWP involves the planned redemption of shares on a periodic basis
by receiving either fixed or variable amounts at periodic intervals. Since the
value of shares redeemed may be more or less than their cost, gain or loss may
be recognized for income tax purposes on each periodic payment. Normally, you
may not make regular investments at the same time you are receiving systematic
withdrawal payments because it is not in your interest to pay a sales charge on
new investments when in effect a portion of that new investment is soon
withdrawn. The minimum investment accepted while a withdrawal plan is in effect
is $1,000. The SWP may be terminated by you or by us at any time by written
notice.
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<PAGE>
Retirement Plans. The Prospectus indicates the types of retirement plans for
which Lord Abbett provides forms and explanations. Lord Abbett makes available
the retirement plan forms, including 401(k) plans and custodial agreements for
IRAs (Individual Retirement Accounts, including Simple IRAs and Simplified
Employee Pensions), 403(b) plans and qualified pension and profit-sharing plans.
The forms name Investors Fiduciary Trust Company as custodian and contain
specific information about the plans, excluding 401(k) plans. Explanations of
the eligibility requirements, annual custodial fees and allowable tax advantages
and penalties are set forth in the relevant plan documents. Adoption of any of
these plans should be on the advice of your legal counsel or qualified tax
adviser.
6.
Past Performance
Each Fund computes the average annual compounded rate of total return for each
class during specified periods that would equate the initial amount invested to
the ending redeemable value of such investment by adding one to the computed
average annual total return, raising the sum to a power equal to the number of
years covered by the computation and multiplying the result by one thousand
dollars, which represents a hypothetical initial investment. The calculation
assumes deduction of the maximum sales charge (as described in the next
paragraph) from the initial amount invested and reinvestment of all income
dividends and capital gains distributions on the reinvestment dates at net asset
value. The ending redeemable value is determined by assuming a complete
redemption at the end of the period(s) covered by the average annual total
return computation.
In calculating total returns for Class A shares, the current maximum sales
charge of 5.75% (as a percentage of the offering price) is deducted from the
initial investment (unless the return is shown at net asset value). For Class B
shares, the payment of the applicable CDSC (5.0% prior to the first anniversary
of purchase, 4.0% prior to the second anniversary of purchase, 3.0% prior to the
third and fourth anniversaries of purchase, 2.0% prior to the fifth anniversary
of purchase, 1.0% prior to the sixth anniversary of purchase and no CDSC on and
after the sixth anniversary of purchase) is applied to a Fund's investment
result for that class for the time period shown (unless the total return is
shown at net asset value). For Class C shares, the 1.0% CDSC is applied to a
Fund's investment result for that class for the time period shown prior to the
first anniversary of purchase (unless the total return is shown at net asset
value). Total returns also assume that all dividends and capital gains
distributions during the period are reinvested at net asset value per share, and
that the investment is redeemed at the end of the period.
Using the computation described above, the following table indicates the average
annual compounded rates of total return for each Fund, per class, for one year,
five years, ten years, or since inception where applicable. Past performance is
not indicative of future results.
Since
1 Year 5 Year 10 Year Inception
------ ------ ------- ---------
Large-Cap Series
Class A shares 10.30% 20.26% - 17.73% (11/30/95)
Class B shares 11.21% - - 19.52% (08/01/96)
Class C shares 15.20% - - 17.84% (04/01/97)
Class P shares - 7.45% (04/28/99)
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<PAGE>
Small-Cap Value Series
Class A shares 2.60% - - 12.61% (12/13/95)
Class B shares 3.03% - - 9.14% (11/15/96)
Class C shares 7.03% - 7.62% (04/01/97)
Class P shares - 4.75% (06/23/99)
Growth Opportunities
Class A shares 41.40% - - 23.62% (08/01/95)
Class B shares 44.32% - - 68.92% (10/16/98)
Class C shares 48.01% - - 72.15% (10/19/98)
Class P shares - - - -
Each Fund's yield quotation for each class is based on a 30-day period ended on
a specified date, computed by dividing such Fund's net investment income per
share earned during the period by such Fund's maximum offering price per share
on the last day of the period. This is determined by finding the following
quotient: take the class' dividends and interest earned during the period minus
its expenses accrued for the period and divide by the product of : (i) the
average daily number of class shares outstanding during the period that were
entitled to receive dividends; and (ii) the Fund's maximum offering price 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. Yield for
the Class A shares reflects the deduction of the maximum initial sales charge,
but may also be shown based on the Fund's net asset value per share. Yields for
Class B and Class C shares do not reflect the deduction of the CDSC.
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.
7.
Taxes
Each Fund intends to elect and to qualify for special tax treatment
afforded regulated investment companies under the Internal Revenue Code of 1986
(the "Code"). If it so qualifies, each Fund (but not its shareholders) will be
relieved of federal income taxes on the amount it timely distributes to share-
holders. If in any taxable year a Fund does not qualify as a regulated
investment company, all of its taxable income will be taxed to the Fund at
regular corporate rates.
Each Fund contemplates declaring as dividends substantially all of its net
investment income. Dividends paid by a Fund from its investment income and
distributions of its net realized long-term capital gains are taxable to its
shareholders as ordinary income and capital gains, respectively, whether such
dividendeds or distributions are received in cash or reinvested in additional
shares of the Fund. Each Fund will send its shareholders annual information
concerning the tax treatment of dividends and other distributions.
Upon a sale, exchange or redemption of shares of a Fund, a shareholder will
recognize short- or long-term capital gain or loss, depending upon the
shareholder's holding period in the Fund's shares. However, if a shareholder's
holding period in his shares is six month or less, any capital loss realized
from a sale or exchange of such shares must be treated as long-term capital loss
to the extent of dividends classified as "capital gains dividends" received with
respect to such shares. The maximum tax rates applicable to net capital gains
recognized by individuals and other non-corporate taxpayers are (i) the same as
ordinary income rates for capital assets held for one year or less and (ii) 20%
for capital assets held for more than one year. Capital gains or losses
recognized by corporate shareholders are subject to tax at the ordinary income
tax rates applicable to corporations.
27
<PAGE>
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.
Some shareholders may be subject to a 31% withholding tax on reportable
dividends, capital gains distributions and redemption payments ("backup
withholding"). Generally, shareholders subject to backup withholding will be
those for whom a certified taxpayer identification number is not on file with
the Fund or who, to the Fund's knowledge, have furnished an incorrect number.
When establishing an account, an investor must certify under penalties of
perjury that such number is correct and that he or she is not otherwise subject
to backup withholding.
The writing of call options and other investment techniques and practices which
the Funds may utilize may affect the character and timing of the recognition of
gains and losses. Such transactions may increase the amount of short-term
capital gain realized by the Funds, which is taxed as ordinary income when
distributed to shareholders.
The Funds may be subject to foreign withholding taxes, which would reduce the
yield on their investments. It is generally expected that Fund shareholders who
are subject to United States federal income tax will not be entitled to claim a
federal income tax credit or deduction for foreign income taxes paid by a Fund.
Each Fund will be subject to a 4% non-deductible 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.
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. Corporate shareholders must have held their shares in a Fund for
more than 45 days to qualify for the deduction on dividends paid by the Fund.
Gain and loss realized by a Fund on certain transactions, including sales of
foreign debt securities and certain transactions involving foreign currency,
will be treated as ordinary income or loss for federal income tax purposes to
the extent, if any, that such gain or loss is 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
gain and will be reduced by the net amount, if any, of such foreign exchange
loss.
If a Fund purchases shares in certain foreign investment entities called
"passive foreign investment companies," the Fund may be subject to United States
federal income tax on a portion of any "excess distribution" or gain from the
disposition of such shares, even if such income is distributed as a taxable
dividend by the Fund to its shareholders. Additional charges in the nature of
interest may be imposed on the Fund in respect of deferred taxes arising from
such distributions or gains. If a Fund were to make a "qualified electing fund"
election with respect to its investment in a passive foreign investment company,
in lieu of the foregoing requirements, such Fund might be required to include in
income each year a portion of the ordinary earnings and net capital gains of the
passive foreign investment company, even if such amount were not distributed to
such Fund. Alternatively, if a Fund were to make a "mark-to-market" election
with respect to its investment in a passive foreign investment company, gain or
loss with respect to the investment would be considered realized at the end of
each taxable year of the Fund even if the Fund continued to hold the investment,
and would be treated as ordinary income or loss to the Fund.
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to United States persons (United States citizens or residents and
United States domestic corporations, partnerships, trusts and estates.) Each
shareholder who is not a United States person should consult his tax adviser
regarding the U.S. and foreign tax consequences of the ownership of shares of a
Fund, including the applicable rate of U.S. withholding tax on dividends
representing ordinary income and net short-term capital gains, and the
applicability of U.S. gift and estate taxes.
28
<PAGE>
8.
Information About the Company
The directors, trustees and officers of Lord Abbett-sponsored 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 Company'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 fund to the extent
contemplated by the recommendations of such Advisory Group.
Rule 18f-2 under the Investment Company Act, as amended (the "Act"), provides
that any matter required to be submitted, by the provisions of the Act or
applicable state law, or otherwise, to the holders of the outstanding voting
securities of an investment company such as the Fund shall not be deemed to have
been effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each class affected by such matter. Rule 18f-2 further
provides that a class shall be deemed to be affected by a matter unless the
interests of each class in the matter are substantially identical or the matter
does not affect any interest of such class. However, the Rule exempts the
selection of independent public accountants, the approval of a contract with a
principal underwriter and the election of directors from its separate voting
requirements.
9.
Financial Statements
The financial statements for the fiscal year ended November 30, 1999 with
respect to Large-Cap Series; Small-Cap Value Series, and Lord Abbett Growth
Opportunities Fund,-and the reports of Deloitte & Touche LLP, independent
auditors, on such financial statements contained in the 1999 Annual Reports to
Shareholders of the Lord Abbett Research Fund, Inc. are incorporated herein by
reference to such financial statements and reports in reliance upon the
authority of Deloitte & Touche LLP as experts in auditing and accounting.
29
<PAGE>
PART C
OTHER INFORMATION
This Post-Effective Amendment No. 27 (the "Amendment") to the Lord Abbett
Research Fund, Inc.'s (the "Registrant") Registration Statement relates to
Large-Cap Series, Lord Abbett Growth Opportunities Fund, and Small-Cap Value
Series (collectively the "Funds") - Classes A, B, C, and P.
The other series and classes of shares of the Registrant are listed below and
are offered by the Prospectus and Statements of Additional Information in Parts
A and B, respectively, of the Post-Effective Amendments tot he Registrant's
Registration Statement 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 Amendment listed below, and pursuant to
Rule 485 (d) under the Securities Act of 1933, does not affect the effectiveness
of such Post-Effective Amendment.
Post-Effective
Amendment
---------
Large-Cap Series 26
Lord Abbett
Growth Opportunities 26
Small-Cap Value Series 26
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) Consent to Legal Opinion. Filed herewith.
(j) Consent of Independent Auditors. Filed herewith.
(k) Omitted Financial Statements. Incorporated by reference to the
Registrant's Annual Report to Shareholders, dated November 30, 1999 on
Form N-30D (Accession No. 0000887194-00-000002).
(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. Incorporated by reference to the Registrant's
Form N-SAR filed 1/31/2000 (Accession No. 0000887194-00-000001).
(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.
(p) Code of Ethics. Filed herewith.
2
<PAGE>
Item 24 Persons Controlled by or Under Common Control with the Fund
None.
Item 25 Indemnification
All Directors, 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 Directors, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of
expense incurred or paid by a Director, officer or controlling
person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such Director,
officer or controlling person in connection with the
securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question 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 Directors' and officers'
errors and omissions liability insurance policy protecting
Directors and officers against liability for breach of duty,
negligent act, error or omission committed in their capacity
as 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 November 30, 1999. Other than acting as
directors, trustees, 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.
Investment Advisor
American Skandia Trust (Lord Abbett Growth & Income Portfolio)
Item 27 Principal Underwriters
(a) Lord Abbett Distributor LLC serves as the principal
underwriter for the Funds. Lord Abbett Distributor LLC also
serves as principal underwriter for thirteen of the Lord
Abbett-sponsored funds as listed below.
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.
3
<PAGE>
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
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
Business Address (1) with Registrant
Robert S. Dow Chairman and President
Paul A. Hilstad Vice President & Secretary
Robert P. Fetch Executive Vice President
W. Thomas Hudson, Jr. Executive 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
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,
Michael McLaughlin, Robert J. Noelke, and R. Mark Pennington,
and Christopher J. Towle.
Each of the above has a principal business address:
90 Hudson Street, Jersey City, New Jersey 07302-3973
(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.
4
<PAGE>
The registrant undertakes, if requested to do so by the
holders of at least 10% of the registrant's outstanding
shares, to call a meeting of shareholders for the purpose of
voting upon the question of removal of a director or directors
and to assist in communications with other shareholders as
required by Section 16(c) of the Investment Company Act of
1940, as amended.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Fund certifies that it meets all of the
requirements for effectiveness of this registration statement under Rule 485 (b)
under the Securities Act and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Jersey City, and State of New Jersey on the 31th day of March, 2000.
BY: /s/ Lawrence H. Kaplan
----------------------
Lawrence H. Kaplan
Vice President
BY: /s/ Donna M. McManus
----------------------
Donna M. McManus
Treasurer
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 date indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
Chairman, President
/s/Robert S. Dow* and Director/Trustee 3/31/00
- ------------------ ----------------------------------- -----------
Robert S. Dow
/s/E. Thayer Bigelow* Director/Trustee 3/31/00
- --------------------------- ----------------------------------- -----------
E. Thayer Bigelow
/s/ William H.T. Bush* Director/Trustee 3/31/00
- --------------------------- ----------------------------------- -----------
William H. T. Bush
/s/Robert B. Calhoun* Director/Trustee 3/31/00
- --------------------------- ----------------------------------- -----------
Robert B. Calhoun
/s/Stewart S. Dixon* Director/Trustee 3/31/00
- --------------------------- ----------------------------------- -----------
Stewart S. Dixon
/s/John C. Jansing* Director/Trustee 3/31/00
- --------------------------- ----------------------------------- -----------
John C. Jansing
C. Alan MacDonald* Director/Trustee 3/31/00
- --------------------------- ----------------------------------- -----------
C. Alan MacDonald
/s/ Hansel B. Millican, Jr.* Director/Trustee 3/31/00
- ----------------------------- ----------------------------------- -----------
Hansel B. Millican, Jr.
/s/ Thomas J. Neff* Director/Trustee 3/31/00
- --------------------------- ----------------------------------- -----------
Thomas J. Neff
</TABLE>
6
<PAGE>
March 27, 2000
Lord Abbett Research Fund, Inc.
90 Hudson Street
Jersey City, NJ 07302-3972
Dear Sirs:
You have requested our opinion in connection with your filing of Amendment
No. 27 to the Registration Statement on Form N-1A (the "Amendment") under the
Investment Company Act of 1940, as amended, of Lord Abbett Research Fund, Inc.,
a Maryland corporation (the "Company"), and in connection therewith your
registration of the following shares of capital stock, with a par value of $.001
each, of the Company (collectively, the "Shares"): Lord Abbett Growth
Opportunities Fund (Classes A, B, C, and P); Small-Cap Value Series (Classes A,
B, C, and P); and Large-Cap Series (Classes A, B, C, and P).
We have examined and relied upon originals, or copies certified to our
satisfaction, of such company records, documents, certificates and other
instruments as in our judgment are necessary or appropriate to enable us to
render the opinion set forth below.
We are of the opinion that the Shares issued in the continuous offering
have been duly authorized and, assuming the issuance of the Shares for cash at
net asset value and receipt by the Company of the consideration therefor as set
forth in the Amendment and that the number of shares issued does not exceed the
number authorized, the Shares will be validly issued, fully paid and
nonassessable.
We express no opinion as to matters governed by any laws other than the
Title 2 of the Maryland Code. We consent to the filing of this opinion solely in
connection with the Amendment. In giving such consent, we do not hereby admit
that we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
WILMER, CUTLER & PICKERING
By: /s/ Marianne K. Smythe
Marianne K. Smythe, a partner
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Post-Effective
Amendment No. 27 to Registration Statement No.33-47641 of Lord Abbett Research
Fund, Inc. on Form N-1A of our report dated January 28, 2000, appearing in the
annual report to shareholders of Lord Abbett Research Fund - Growth
Opportunities Fund for the year ended November 30, 1999, and to the references
to us under the captions "Financial Highlights" in the Prospectus and
"Investment Advisory and Other Services" and "Financial Statements" in the
Statement of Additional Information, both of which are part of such Registration
Statement.
DELOITTE & TOUCHE LLP
New York, New York
March 28, 2000
LORD, ABBETT & CO.
LORD ABBETT-SPONSORED FUNDS
AND
LORD ABBETT DISTRIBUTOR LLC
CODE OF ETHICS
I. Statement of General Principles
The personal investment activities of any officer, director, trustee or
employee of the Lord Abbett-sponsored Funds (the Funds) or any partner or
employee of Lord, Abbett & Co. (Lord Abbett) will be governed by the following
general principles: (1) Covered Persons have a duty at all times to place first
the interests of Fund shareholders and, in the case of employees and partners of
Lord Abbett, beneficiaries of managed accounts; (2) all securities transactions
by Covered Persons shall be conducted consistent with this Code and in such a
manner as to avoid any actual or potential conflict of interest or any abuse of
an individual's position of trust and responsibility; and (3) Covered Persons
should not take inappropriate advantage of their positions with Lord Abbett or
the Funds.
II. Specific Prohibitions
No person covered by this Code, shall purchase or sell a security, except
an Excepted Security, if there has been a determination to purchase or sell such
security for a Fund (or, in the case of any employee or partner of Lord, Abbett,
for another client of Lord Abbett), or if such a purchase or sale is under
consideration for a Fund (or, in the case of an employee or partner of Lord
Abbett, for another client of Lord Abbett), nor may such person have any
dealings in a security that he may not purchase or sell for any other account in
which he has Beneficial Ownership, or disclose the information to anyone, until
such purchase, sale or contemplated action has either been completed or
abandoned.
III. Obtaining Advance Approval
Except as provided in Sections V and VI of this Code, all proposed
transactions in securities (privately or publicly owned) by Covered Persons,
except transactions in Excepted Securities, should be approved consistent with
the provisions of this Code in advance by one of the partners of Lord Abbett. In
order to obtain approval, the Covered Person must send their request via e-mail
to Isabel Herrera, or in her absence, Chrissy DeCicco, who will obtain a
partner's approval. After approval has been obtained, the Covered Person may act
on it within the next seven business days, unless he sooner learns of a
contemplated action by Lord Abbett. After the seven business days, or upon
hearing of such contemplated action, a new approval must be obtained.
Furthermore, in addition to the above requirements, partners and employees
directly involved must disclose information they may have concerning securities
they may want to purchase or sell to any portfolio manager who might be
interested in the securities for the portfolios they manage.
IV. Reporting and Certification Requirements; Brokerage Confirmations
(1) Except as provided in Sections V and VI of this Code, within 10 days
following the end of each calendar quarter each Covered Person must file
with Ms. Herrera a signed Security Transaction Reporting Form. The form
must be signed and filed whether or not any security transaction has been
effected. If any transaction has been effected during the quarter for the
Covered Person's account or for any account in which he has a direct or
indirect Beneficial Ownership, it must be reported. Excepted from this
reporting requirement are transactions effected in any accounts over which
the Covered Person has no direct or indirect influence or control and
transactions in Excepted Securities. Ms. Herrera is responsible for
reviewing these transactions promptly and must bring any apparent violation
to the attention of the General Counsel of Lord Abbett.
(2) Each employee and partner of Lord Abbett will upon commencement of
employment and annually thereafter disclose all personal securities
holdings and annually certify that: (i) they have read and understand this
Code and recognize they are subject hereto; and (ii) they have complied
with the requirements of this Code and disclosed or reported all securities
transactions required to be disclosed or reported pursuant to the
requirements of this Code.
(3) Each employee and partner of Lord Abbett will direct his brokerage firm to
send copies of all confirmations and all monthly statements directly to Ms.
Herrera.
(4) Each employee and partner of Lord Abbett who has a Fully-Discretionary
Account (as defined in Section VI) shall disclose all pertinent facts
regarding such Account to Lord Abbett's General Counsel upon commencement
of employment. Each such employee or partner shall thereafter annually
certify on the prescribed form that he or she has not and will not exercise
any direct or indirect influence or control over such Account, and has not
discussed any potential investment decisions with such independent
fiduciary in advance of any such transactions.
V. Special Provisions Applicable to Outside Directors and Trustees of theFunds
The primary function of the Outside Directors and Trustees of the Funds is
to set policy and monitor the management performance of the Funds' officers and
employees and the partners and employees of Lord Abbett involved in the
management of the Funds. Although they receive complete information as to actual
portfolio transactions, Outside Directors and Trustees are not given advance
information as to the Funds' contemplated investment transactions.
An Outside Director or Trustee wishing to purchase or sell any security
will therefore generally not be required to obtain advance approval of his
security transactions. If, however, during discussions at Board meetings or
otherwise an Outside Director or Trustee should learn in advance of the Funds'
current or contemplated investment transactions, then advance approval of
transactions in the securities of such company(ies) shall be required for a
period of 30 days from the date of such Board meeting. In addition, an Outside
Director or Trustee can voluntarily obtain advance approval of any security
transaction or transactions at any time.
No report described in Section IV (1) will be required of an Outside
Director or Trustee unless he knew, or in the ordinary course of fulfilling his
official duties as a director or trustee should have known, at the time of his
transaction, that during the 15-day period immediately before or after the date
of the transaction (i.e., a total of 30 days) by the Outside Director or Trustee
such security was or was to be purchased or sold by any of the Funds or such a
purchase or sale was or was to be considered by a Fund. If he makes any
transaction requiring such a report, he must report all securities transactions
effected during the quarter for his account or for any account in which he has a
direct or indirect Beneficial Ownership interest and over which he has any
direct or indirect influence or control. Each Outside Director and Trustee will
direct his brokerage firm to send copies of all confirmations of securities
transactions to Ms. Herrera, and annually make the certification required under
Section IV(2)(i) and (ii). Outside Directors' and Trustees' transactions in
Excepted Securities are excepted from the provisions of this Code.
It shall be prohibited for an Outside Director or Trustee to (i) trade on
material non-public information, or (ii) trade in options with respect to
securities covered by this Code without advance approval from Lord Abbett. Prior
to accepting an appointment as a director of any company, an Outside Director or
Trustee will advise Lord Abbett and discuss with Lord Abbett's Managing Partner
whether accepting such appointment creates any conflict of interest or other
issues.
If an Outside Director or Trustee, who is a director or an employee of, or
consultant to, a company, receives a grant of options to purchase securities in
that company (or an affiliate), neither the receipt of such options, nor the
exercise of those options and the receipt of the underlying security, requires
advance approval from Lord Abbett. Further, neither the receipt nor the exercise
of such options and receipt of the underlying security is reportable by such
Outside Director or Trustee. Finally, neither the receipt nor the exercise of
such options shall be considered "trading in options" within the meaning of the
preceding paragraph of this Section V.
VI. Additional Requirements relating to Partners and Employees of Lord Abbett
It shall be prohibited for any partner or employee of Lord Abbett:
(1) To obtain or accept favors or preferential treatment of any kind or gift or
other thing having a value of more than $100 from any person or entity that
does business with or on behalf of the investment company---no partner or
employee shall have any ownership interest in a brokerage firm;
(2) to trade on material non-public information or otherwise fail to comply
with the Firm's Statement of Policy and Procedures on Receipt and Use of
Inside Information adopted pursuant to Section 15(f) of the Securities
Exchange Act of 1934 and Section 204A of the Investment Advisers Act of
1940;
(3) to trade in options with respect to securities covered under this Code;
(4) to profit in the purchase and sale, or sale and purchase, of the same (or
equivalent) securities within 60 calendar days (any profits realized on
such short-term trades shall be disgorged to the appropriate Fund or as
otherwise determined);
(5) to trade in futures or options on commodities, currencies or other
financial instruments, although the Firm reserves the right to make rare
exceptions in unusual circumstances which have been approved by the Firm in
advance;
(6) to engage in short sales or purchase securities on margin;
(7) to buy or sell any security within seven business days before or after any
Fund (or other Lord Abbett client) trades in that security (any profits
realized on trades within the proscribed periods shall be disgorged to the
Fund (or the other client) or as otherwise determined);
(8) to subscribe to new or secondary public offerings, even though the offering
is not one in which the Funds or Lord Abbett's advisory accounts are
interested;
(9) to become a director of any company without the Firm's prior consent and
implementation of appropriate safeguards against conflicts of interest.
In connection with any request for approval, pursuant to Section III of
this Code, of an acquisition by partners or employees of Lord Abbett of any
securities in a private placement, prior approval will take into account, among
other factors, whether the investment opportunity should be reserved for any of
the Funds and their shareholders (or other clients of Lord Abbett) and whether
the opportunity is being offered to the individual by virtue of the individual's
position with Lord Abbett or the Funds. An individual's investment in
privately-placed securities will be disclosed to the Managing Partner of Lord
Abbett if such individual is involved in consideration of an investment by a
Fund (or other client) in the issuer of such securities. In such circumstances,
the Fund's (or other client's) decision to purchase securities of the issuer
will be subject to independent review by personnel with no personal interest in
the issuer.
If a spouse of a partner or employee of Lord Abbett who is a director or an
employee of, or a consultant to, a company, receives a grant of options to
purchase securities in that company (or an affiliate), neither the receipt nor
the exercise of those options requires advance approval from Lord Abbett or
reporting. Any subsequent sale of the security acquired by the option exercise
by that spouse would require advance approval and is a reportable transaction.
Advance approval is not required for transactions in any account of a
Covered person if the Covered Person has no direct or indirect influence or
control ( a "Fully-Discretionary Account"). A Covered person will be deemed to
have "no direct or indirect influence or control" over an account only if : (i)
investment discretion for the account has been delegated to an independent
fiduciary and such investment discretion is not shared with the employee, (ii)
the Covered Person certifies in writing that he or she has not and will not
discuss any potential investment decisions with such independent fiduciary
before any transaction and (iii) the General Counsel of Lord Abbett has
determined that the account satisfies these requirements. Transaction in
Fully-Discretionary Accounts by an employee or partner of Lord Abbett are
subject to the post-trade reporting requirements of this Code.
VII. Enforcement
The Secretary of the Funds and General Counsel for Lord Abbett (who may be
the same person) each is charged with the responsibility of enforcing this Code,
and may appoint one or more employees to aid him in carrying out his enforcement
responsibilities. The Secretary shall implement a procedure to monitor
compliance with this Code through a periodic review of personal trading records
provided under this Code against transactions in the Funds and managed
portfolios. The Secretary shall bring to the attention of the Funds' Audit
Committees any apparent violations of this Code, and the Audit Committees shall
determine what action shall be taken as a result of such violation. The record
of any violation of this Code and any action taken as a result thereof, which
may include suspension or removal of the violator from his position, shall be
made a part of the permanent records of the Audit Committees of the Funds. The
Secretary shall also prepare an annual report to the directors or trustees of
the Funds that (a) summarizes Lord Abbett's procedures concerning personal
investing, including the procedures followed by partners in determining whether
to give approvals under Section III and the procedures followed by Ms. Herrera
in determining pursuant to Section IV whether any Funds have determined to
purchase or sell a security or are considering such a purchase or sale, and any
changes in those procedures during the past year, and (b) identifies any
recommended changes in the restrictions imposed by this Code or in such
procedures with respect to the Code and any changes to the Code based upon
experience with the Code, evolving industry practices or developments in the
regulatory environment.
The Audit Committee of each of the Funds and the General Counsel of Lord
Abbett may determine in particular cases that a proposed transaction or proposed
series of transactions does not conflict with the policy of this Code and exempt
such transaction or series of transactions from one or more provisions of this
Code.
VIII. Definitions
"Covered Person" means any officer, director, trustee, director or trustee
emeritus or employee of any of the Funds and any partner or employee of Lord
Abbett. (See also definition of "Beneficial Ownership.")
"Excepted Securities" are shares of the Funds, bankers' acceptances, bank
certificates of deposit, commercial paper, shares of registered open-end
investment companies and U.S. Government securities.
"Outside Directors and Trustees" are directors and trustees who are not
"interested persons" as defined in the Investment Company Act of 1940.
"Security" means any stock, bond, debenture or in general any instrument
commonly known as a security and includes a warrant or right to subscribe to or
purchase any of the foregoing and also includes the writing of an option on any
of the foregoing.
"Beneficial Ownership" is interpreted in the same manner as it would be
under Section 16 of the Securities Exchange Act of 1934 and Rule 16a-1
thereunder. Accordingly, "beneficial owner" includes any Covered Person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has or shares a direct or indirect pecuniary interest
(i.e. the ability to share in profits derived from such security) in any equity
security, including:
(i) securities held by a person's immediate family sharing the same house
(with certain exceptions);
(ii) a general partner's interest in portfolio securities held by a general
or limited partnership;
(iii) a person's interest in securities held in trust as trustee, beneficiary
or settlor, as provided in Rule 16a-8(b); and
(iv) a person's right to acquire securities through options, rights or other
derivative securities.
"Gender/Number" whenever the masculine gender is used herein, it includes
the feminine gender as well, and the singular includes the plural and the plural
includes the singular, unless in each case the context clearly indicates
otherwise.
