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Table of Contents
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The Fund Page
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What you should know Goal/Approach 2
about the fund Main Risks 2
Past Performance 3
Fees and Expenses 3
Your Investment
Information for managing Purchases 5
your fund account Opening Your Account 7
Redemptions 7
Distributions and Taxes 8
Services For Fund Investors 8
Sales Charges and Service Fees 9
Management 10
For More Information
How to learn more Other Investment Techniques 11
about the fund Glossary of Shaded Terms 13
Recent Performance 14
Financial Information
Financial Highlights 15
Compensation For Your Dealer 17
Back Cover
How to learn more about the
fund and other Lord Abbett funds
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GOAL / APPROACH
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The Fund
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The Alpha Fund seeks long-term capital appreciation. To pursue its
objective, the fund invests in a portfolio of three underlying funds
managed by Lord Abbett.
DEVELOPING GROWTH FUND INTERNATIONAL FUND SMALL-CAP VALUE FUND We or the fund refers to the
Looks for small Fundamental research Looks for companies Lord Abbett Alpha Fund
companies with exciting seeks to identify the that are not closely ("Alpha Fund"), acting as a
prospects, strong strongest and/or best followed, or may fund of funds by investing
management and above- positioned companies currently be out of in the underlying funds. The
average, long-term ("Best of Breed") within favor within the broader fund is a portfolio of Lord
growth potential their industries investment community Abbett Securities Trust (the
Bottom-up stock Portfolio typically Bottom-up stock "company"). The fund
selection focuses on focuses on 40-60 of the selection focuses on operates under the
fundamentals, not events "Best of Breed" companies, fundamentals, not events supervision of its Board
many of which are small with the advice of Lord,
Abbett & Co. ("Lord
Abbett"), its investment
All three underlying funds seek their objectives by investing manager.
primarily in companies which are small-sized, based on the value of
their outstanding stock. The fund decides in which of the underlying About each fund. The fund is
funds and in what amounts it will invest at any particular time. The a professionally managed
fund can change the amounts invested in any or all underlying funds portfolio primarily holding
at any time. As of this prospectus, approximately 40% of the fund's securities purchased with the
assets were in Developing Growth Fund, 30% in International Fund, pooled money ofinvestors.
and 30% in Small-Cap Value Fund. Each underlying fund may take a It strives to reach its stated
temporary defensive position by investing some of its assets in goals, although as with all funds,
short-term debt securities. This could reduce the benefit from any it cannot guarantee results.
upswing in the market and prevent the fund from realizing its
investment objective. Underlying funds currently
consist of:
MAIN RISKS Lord Abbett Developing
Growth Fund ("Developing
Small-Capitalization Stocks. As a result of investing primarily in Growth Fund")
stocks of small-sized companies, the fund will experience periods
when stock prices generally rise or decline. This means that your Lord Abbett Securities
fund investment will fluctuate in value and you could lose money. Trust - International Fund
While small companies offer significant appreciation potential, they ("International Fund") and
generally carry more risk than larger companies. Small companies may
be more limited as to product lines, markets and financial Lord Abbett Research Fund
resources. This may make them more susceptible to business setbacks - Small-Cap Value Fund
or economic downturns. Small companies tend to be more volatile in ("Small-Cap Value Fund")
price and normally have fewer shares outstanding which trade less
frequently than large companies. Therefore, the securities of Best of Breed refers to
smaller companies may be subject to wider price fluctuations. In certain companies, primarily
many instances, the securities of smaller companies are traded over foreign, that the portfolio
the counter. manager thinks are
candidates for the best in
Foreign Securities. Each of the underlying funds may invest in their industries.
securities that trade in foreign countries, and the International
Fund expects that a substantial portion of its assets will be so Fund's Volatility and
invested. These stocks are not subject to the same degree of Balance. The fund's
regulation and may be more volatile and less liquid than securities long-term volatility is
traded in major U.S. markets. This may affect the ability of the expected to approximate that
underlying funds to trade with maximum efficiencies. Foreign of the unmanaged Salomon
portfolio securities may be traded on days when an underlying fund Extended Market Index. Over
does not value them. Thus, share values could be affected on days an time, the fund intends to
investor cannot buy or redeem fund shares. Other risks include less approximate the index's
information on public companies, banks and governments; political balance between foreign and
and social instability; expropriations; higher transaction costs; domestic securities by
currency fluctuations; nondeductable withholding taxes and different varying its investments in
accounting and settlement practices. the underlying funds,
subject to the fund's cash
An investment in the fund is not a bank deposit. It is not flow and desire to avoid
FDIC-insured or government-endorsed. It is not a complete investment excessive capital gains
program. You could lose money in this fund, but you also have the distributions. Past
potential to make money. performance and volatility
of the index do not indicate
future results for the index
or the fund. The fund may
not achieve this level of
volatility, balance, or its
objective.
You should read
this entire prospectus,
including "Other Investment
Techniques," which concisely
describes the other
investment strategies and
their risks used by the
fund.
2 The Fund
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-----------------------
Alpha Fund Symbols: Class A-ALFAX
Class B-ALFBX
Class C-ALFCX
PAST PERFORMANCE
The information below provides some indication of the risks of
investing in the fund by comparing the fund's performance with a
broad measure of market performance.
6% ------------------------------------------------------------------- Past performance is not a
5 -------------------------------5.9%-------------------------------- prediction of future
4 ------------------------------------------------------------------- results.
3 ------------------------------------------------------------------- ---------------------------
2 ------------------------------------------------------------------- (i) The date of inception
1 ------------------------------------------------------------------- for all classes is
0 ------------------------------------------------------------------- 12/29/97.
98
(ii) Performance for the
unmanaged Salomon
BEST QUARTER: 17.97% WORST QUARTER: -21.24% Brothers EMI Index
- -------------------------------------------------------------------------------- does not reflect
The table below shows a comparison of the fund's class A, B and C average annual transaction costs or
total return to that of the Salomon Brothers Extended Market Index ("Salomon management fees.
Brothers EMI Index"). Fund returns assume reinvestment of dividends and
distributions and payment of the maximum applicable front-end or deferred sales (iii) Represents total
charge. All periods end on December 31, 1998. return for the
period 12/31/97-
CLASS 1 YEAR INCEPTION(i) 12/31/98, to
A (0.10)% 0.69% correspond with
- -------------------------------------------------------------------------------- the inception
B 1.14% 1.95% date for all classes.
- --------------------------------------------------------------------------------
C 5.36% 6.16% Management fees are payable
- -------------------------------------------------------------------------------- to Lord Abbett for the
Salomon Brothers EMI Index(ii) 5.92% 5.92%(iii) fund's investment
- -------------------------------------------------------------------------------- management. Lord Abbett is
currently waiving the
FEES AND EXPENSES management fee for the fund.
Lord Abbett may stop waiving
This table describes the fees and expenses that you may pay if you the management fee at any
buy and hold shares of the fund. time. Total operating
expenses with the fee waiver
- --------------------------------------------------------------------------------- are 0.35% (class A shares),
Fee Table 1.00% (class B and C
- --------------------------------------------------------------------------------- shares), and .45% (class P
Class A Class B Class C Class P shares).
Shareholder Fees (Fees paid directly from your investment)
- --------------------------------------------------------------------------------- 12b-1 fees refer to fees
Maximum Sales Charge on Purchases incurred for activities that
- --------------------------------------------------------------------------------- are primarily intended to
(as a % of offering price) 5.75% none none none result in the sale of fund
- --------------------------------------------------------------------------------- shares and service fees for
Maximum Deferred Sales Charge (See "Purchases") none 5.00%(3) 1.00% none shareholder account service
- --------------------------------------------------------------------------------- and maintenance.
Annual Fund Operating Expenses (Expenses deducted from fund assets)
(as a % of average net assets)(1) Other expenses include fees
- --------------------------------------------------------------------------------- paid for miscellaneous items
Management Fees (See "Management") 0.50% 0.50% 0.50% 0.50% such as transfer agency,
- --------------------------------------------------------------------------------- legal and share registration
Distribution and Service (12b-1) Fees(2) 0.35% 1.00% 1.00% 0.45% fees. The fund has entered
- --------------------------------------------------------------------------------- into a servicing arrangement
Other Expenses (See "Management") 0.00% 0.00% 0.00% 0.00% with the underlying funds
- --------------------------------------------------------------------------------- under which the underlying
Total Operating Expenses 0.85% 1.50% 1.50% 0.95% funds may bear certain of
- --------------------------------------------------------------------------------- the fund's Other Expenses.
As a result, the fund does
not expect to bear any of
these Other Expenses.
----------------------------
(1) The annual operating
expenses have been restated
from fiscal year amounts to
reflect current fees.
(2) Because 12b-1 distribution
fees (up to: 0.10%- class A;
0.75%-classes B and C; and
0.25%-class P) are paid out
on an on-going basis, over
time they will increase the
cost of your investment and
may cost you more than
paying other types of sales
charges. Service fees under
each class's 12b-1 Plan
equal up to 0.25%, except
0.20%- class P.
(3) Class B shares will convert
to class A shares on the
eighth anniversary of your
original purchase.
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While each class of shares of the Alpha Fund is expected to operate
with the direct total operating expenses shown under "Fees and
Expenses," shareholders in the Alpha Fund bear indirectly the class
Y share expenses of the underlying funds in which the Alpha Fund
invests. The following chart provides the expense ratio for each of
the underlying fund's class Y shares, as well as the percentage of
the Alpha Fund's net assets invested in each underlying fund on
October 31, 1998:
Underlying Funds' % of Alpha Fund
expense ratios net assets
Lord Abbett Developing Growth Fund .70% 30%
- --------------------------------------------------------------------------------
Lord Abbett Small-Cap Value Fund 1.05% 30%
- --------------------------------------------------------------------------------
Lord Abbett International Fund 1.01% 40%
- --------------------------------------------------------------------------------
100%
---------------
Based on these figures, the weighted average class Y share expense
ratio for the underlying funds in which Alpha Fund invests is 0.93%
(the "underlying expense ratio"). This figure is only an
approximation of the Alpha Fund's underlying expense ratio, since
its assets invested in each of the underlying funds changes daily.
- --------------------------------------------------------------------------------
Expense Example
- --------------------------------------------------------------------------------
This example, like that in other funds' prospectuses, assumes a $10,000 initial
investment at maximum sales charge, if any, 5% total return each year and no
changes in expenses. You pay the following expenses over the course of each
period shown if you sell your shares at the end of the period, although your
cost may be higher or lower. The expenses include any applicable contingent
deferred sales charges.
Share class 1 Year 3 Years 5 Years 10 Years
Class A shares $657 $830 $1,019 $1,566
- --------------------------------------------------------------------------------
Class B shares(3) $652 $774 $1,018 $1,617
- --------------------------------------------------------------------------------
Class C shares $252 $474 $818 $1,793
- --------------------------------------------------------------------------------
Class P shares $97 $302 $526 $1,169
- ---------------------------------------------------------------------------------
You would pay the following expenses on the same investment, assuming you kept
your shares.
Class A shares $657 $830 $1,019 $1,566
- ---------------------------------------------------------------------------------
Class B shares(3) $152 $474 $818 $1,617
- ---------------------------------------------------------------------------------
Class C shares $152 $474 $818 $1,793
- ---------------------------------------------------------------------------------
Class P shares $97 $302 $526 $1,169
- ---------------------------------------------------------------------------------
This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present.
See Footnote (3) On Prior Page.
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4 The Fund
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YOUR INVESTMENT
PURCHASES
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This prospectus offers four classes of shares: classes A, B, C and P
(call 800-521-5129 to find out if P shares are available in your
state). Although a fund may have more than one class of shares,
these different classes of shares represent investments in the same NAV per share for each class of
portfolio of securities but are subject to different expenses. Our fund shares is calculated each
shares are continuously offered. The offering price is based on the business day at the close of
Net Asset Value ("NAV") per share next determined after we receive regular trading on the New York
your purchase order submitted in proper form. A front-end sales Stock Exchange ("NYSE"). The
charge is added to the NAV, in the case of the class A shares. There fund is open on those business
is no front-end sales charge, although there is a Contingent days when the NYSE is open.
Deferred Sales Charge in the case of the class B and class C shares, Purchases and sales of fund
as described below. shares are executed at the NAV
next determined after the fund
You should read this section carefully to determine which receives your order. In
class of shares represents the best investment option calculating NAV, securities for
for your particular situation. It may not be suitable for you which market quotations are
to place a purchase order for class B shares of $500,000 or more, or available are valued at those
a purchase order for class C shares of $1,000,000 or more. You quotations. Securities for which
should discuss pricing options with your investment professional. such quotations are not
available are valued at fair
For more information, see "Alternative Sales Arrangements" in the value under procedures approved
Statement of Additional Information. by the Board.
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 Share classes
requirements. All purchase orders are subject to our acceptance and
are not binding until confirmed or accepted in writing. Class A
normally offered with a front-
- ------------------------------------------------------------------------------ end sales charge
Front-End Sales Charges - Class A Shares Class B
- ------------------------------------------------------------------------------ no front-end sales charge,
To Compute how-ever, a contingent
As a % of As a % of Offering Price deferred sales charge is
Your Investment Offering Price Your Investment Divide NAV by applied to shares sold
- ------------------------------------------------------------------------------ prior to the sixth
Less than $50,000 5.75% 6.10% .9425 anniversary of purchase
- ------------------------------------------------------------------------------ higher annual expenses
$50,000 to $99,999 4.75% 4.99% .9525 than class A shares
- ------------------------------------------------------------------------------ automatically convert
$100,000 to $249,999 3.75% 3.90% .9625 to class A shares after
- ------------------------------------------------------------------------------ eight years
$250,000 to $499,999 2.75% 2.83% .9725 Class C
- ------------------------------------------------------------------------------ no front-end sales charge
$500,000 to $999,999 2.00% 2.04% .9800 higher annual expenses
- ------------------------------------------------------------------------------ than class A shares
$1,000,000 and over No Sales Charge 1.0000 a contingent deferred
- ------------------------------------------------------------------------------ sales charge is applied
to shares sold prior
Reducing Your Class A Front-End Sales Charges. Class A shares may be to the first anniversary of
purchased at a discount if you qualify under either of the purchase
following: Class P
available to certain pension
Rights of Accumulation-- A Purchaser can apply the value (at or retirement plans and
public offering price) of the shares already owned to a new pursuant to a Mutual Fund
purchase of class A shares of any Eligible Fund in order to Advisory Program
reduce the sales charge.
Statement of Intention -- A Purchaser of class A shares can
purchase additional shares of any Eligible Fund over a 13-month
period and receive the same sales charge as if all shares had
been purchased at once. Shares purchased through reinvestment of
dividends or distributions are not included. A statement of
intention can be backdated 90 days. Current holdings under rights
of accumulation can be included in a statement of intention.
For more information on eligibility for these privileges, read the
applicable sections in the attached application.
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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:
purchases of $1 million or more*
purchases by Retirement Plans with at least 100 eligible employees*
purchases under a Special Retirement Wrap Program* *These categories may be subject
to a Contingent Deferred Sales
purchases made with dividends and distributions on class A shares Charge ("CDSC").
of another Eligible Fund
CDSC regardless of class, is not
purchases representing repayment under the loan feature of the charged on shares acquired
Lord Abbett-sponsored prototype 403(b) Plan for class A through reinvestment of
shares dividends or capital gains
distributions and is charged on
purchases by employees of any consenting securities dealer having the original purchase cost or
a sales agreement with Lord Abbett Distributor the current market value of the
shares at the time they are
purchases under a Mutual Fund Advisory Program being sold, whichever is lower.
In addition, repayment of loans
purchases by trustees or custodians of any pension or profit under Retirement Plans and
sharing plan, or payroll deduction IRA for employees of any 403(b) plans will constitute new
consenting securities dealer having a sales agreement with Lord sales for purposes of assessing
Abbett Distributor the CDSC.
See the Statement of Additional Information for a listing of other To determine if a CDSC applies to a
categories of purchasers who qualify for class A share purchases redemption, the fund redeems shares
without a front-end sales charge. in the following order:
1. shares acquired by
Class A Share CDSC. If you buy class A shares under one of the reinvestment of
starred (*) categories listed above and you redeem any of them dividends and capital
within 24 months after the month in which you initially purchased gains
them, the fund normally will collect a CDSC of 1%. 2. shares held for six years or
more (class B) or two years
The class A share CDSC generally will be waived for the following: or more after the month of
purchase (class A) or one
benefit payments such as Retirement Plan loans, hardship year or more (class C)
withdrawals, death, disability, retirement, separation from 3. shares held the longest
service or any excess distribution under Retirement Plans before the sixth anniversary
(documentation may be required) of their purchase (class B)
or before the second
redemptions continuing as investments in another fund anniversary after the month
participating in a Special Retirement Wrap Program of purchase (class A) or
before the first anniversary
of their purchase (class C)
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, Retirement Plans include
according to the following schedule: employer-sponsored retirement
plans under the Internal Revenue
- ------------------------------------------------------------------------------ Code, excluding Individual
Contingent Deferred Sales Charge - Class B Shares Retirement Accounts.
- ------------------------------------------------------------------------------
Lord Abbett Distributor LLC
Anniversary(1) of Contingent Deferred Sales Charge ("Lord Abbett Distributor") acts
the day on which the on redemption (as % of amount as agent for the fund to work
purchase order was accepted subject to charge) with investment professionals
that buy and/or sell shares of
On Before the fund on behalf of their
1st 5.0% clients. Generally, Lord Abbett
- ------------------------------------------------------------------------------ Distributor does not sell fund
1st 2nd 4.0% shares directly to investors.
- ------------------------------------------------------------------------------
2nd 3rd 3.0% Benefit Payment Documentation.
- ------------------------------------------------------------------------------ (class A only)
3rd 4th 3.0%
- ------------------------------------------------------------------------------ under $50,000 - no
4th 5th 2.0% documentation necessary
- ------------------------------------------------------------------------------ over $50,000 - reason
5th 6th 1.0% for benefit payment must
- ------------------------------------------------------------------------------ be received in writing.
on or after the 6th(2) None Use the address indicated
- ------------------------------------------------------------------------------ under "Opening Your
Account."
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(1) For class B and C shares, anniversary is the 365th day subsequent to a
purchase or a prior anniversary, starting with the day of purchase.
(2) Class B shares will automatically convert to class A shares on the
eighth anniversary of the purchase of class B shares.
The class B share CDSC generally will be waived under any one of the
following:
benefit payments such as Retirement Plan loans, hardship
withdrawals, death, disability, retirement, separation from
service or any excess contribution or distribution under
Retirement Plans
6 Your Investment
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Eligible Mandatory Distributions under 403(b) Plans and individual
retirement accounts
death of the shareholder (natural person)
redemptions of shares in connection with Div-Move and Systematic
Withdrawal Plans (up to 12% per year) Important Information. You may
be subject to a $50 penalty
See "Systematic Withdrawal Plan" under "Services For Fund Investors" under the Internal Revenue Code
below for more information on CDSCs with respect to class B shares. if you do not provide a correct
taxpayer identification number
Class C Share CDSC. The 1% CDSC for class C shares normally applies (Social Security Number for
if you redeem your shares before the first anniversary of your individuals) or make certain
original purchase. required certifications. In
addition, we may be required to
Class P Shares. Class P shares have lower annual expenses than class withhold from your account and
B and class C shares, no front-end sales charge, and no CDSC. Class pay to the U.S. Treasury 31% of
P shares are currently sold and redeemed at NAV (a) pursuant to a any redemption proceeds and any
Mutual Fund Advisory Program, or (b) to the trustees of, or dividend or distribution from
employer-sponsors with respect to, pension or retirement plans with your account.
at least 100 eligible employees (such as a plan under Section
401(a), 401(k) or 457(b) of the Internal Revenue Code) which engage
an investment professional providing or participating in an
agreement to provide, certain recordkeeping, administrative and/or
sub-transfer agency services to the fund on behalf of the class P
shareholders.
OPENING YOUR ACCOUNT
Minimum initial investment
Regular account $1,000
Individual Retirement Accounts and 403(b)
Plans under the Internal Revenue Code $250
Uniform Gift to Minor Account $250
For Retirement Plans and Mutual Fund Advisory Programs, no minimum
investment is required, regardless of share class.
You may purchase shares through any independent securities dealer
who has a sales agreement with Lord Abbett Distributor or you can
fill out the attached application and send it to the fund at the
address stated below. You should carefully read the paragraph below
entitled "Proper Form" before placing your order to assure your
order will be accepted.
Alpha Fund
P.O. Box 419100
Kansas City, MO 64141
Proper Form. An order submitted directly to the fund must contain:
(1) a completed application, and (2) payment by check. For more
information regarding proper form of a purchase order, call the fund
at 800-821-5129. Payment must be credited in U.S. dollars to our
custodian bank's account.
By Exchange. Telephone the fund at 800-821-5129 to request an
exchange from any eligible Lord Abbett-sponsored fund.
REDEMPTIONS
By Broker. Call your investment professional for directions on how
to redeem your shares.
By Telephone. To obtain the proceeds of a redemption of $50,000 or
less from your account, you or your representative can call the fund
at 800-821-5129.
By Mail. Submit a written redemption request indicating, the name(s)
in which the
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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 Eligible Guarantor is any broker
required. For more information regarding proper documentation call or bank that is a member of the
800-821-5129. Medallion Stamp Program. Most
major securities firms and banks
Normally a check will be mailed to the name and address in which the are members of this program. A
account is registered (or otherwise according to your instruction) notary public is not an eligible
within three business days after receipt of your redemption request. guarantor.
Your account balance must be sufficient to cover the amount being
redeemed or your redemption order will not be processed. Redemption
requests for shares initially purchased by check will not be honored
for up to 15 days, unless we are assured that the check has cleared
earlier.
To determine if a CDSC applies to a redemption, see "Class A share
CDSC," "Class B share CDSC" or "Class C share CDSC."
DISTRIBUTIONS AND TAXES
The fund pays its shareholders dividends from its net investment
income, and distributes any net capital gains that it has realized.
The fund expects to pay such income dividends to shareholders
annually. If a capital gain distribution is declared, it will be
paid annually. Your distributions will be reinvested in your fund
unless you instruct the fund to pay them to you in cash. There are
no sales charges on reinvestments.
The tax status of distributions is the same for all shareholders Taxes on Transactions. The chart
regardless of how long they have been in the fund and whether at left also can provide a "rule
distributions are reinvested or paid in cash. In general, of thumb" guide for your
distributions are taxable as follows: potential U.S. federal income
tax liability when selling or
- ------------------------------------------------------------------------------ exchanging fund shares. The
Federal Taxability Of Distributions second row, "Short-term capital
gains," applies to fund shares
Type of Tax rate for taxpayer Tax rate for taxpayer subject sold within 12 months of
distribution subject to 15% bracket to 28% bracket or above purchase. The third row,
- ------------------------------------------------------------------------------ "Long-term capital gains,"
Income Ordinary applies to shares held for more
dividends 15% income rate than 12 months.
- ------------------------------------------------------------------------------
Short-term Ordinary Starting January 1, 2001, sales of
capital gains 15% income rate securities held for more than five
- ------------------------------------------------------------------------------ years will be taxed at special
Long-term lower rates.
capital gains 10% 20%
- ------------------------------------------------------------------------------
Except in tax-advantaged accounts, any sale or exchange of fund
shares may be a taxable event.
Annual Information - Information concerning the tax treatment of
dividends and other distributions will be mailed to shareholders
each year. Each fund will also provide annually to its shareholders
information regarding the source of dividends and distributions of
capital gains paid by that fund. Because everyone's tax situation is
unique, you should consult your tax adviser regarding the treatment
of those distributions under the federal, state and local tax rules
that apply to you as well as the tax consequences of gains or losses
from the redemption or exchange of your shares.
SERVICES FOR FUND INVESTORS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services
described below. With each service, you select a schedule and
amount, subject to certain restrictions. You can set up most of
these services with your application or by calling 800-821-5129.
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8 Your Investment
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- ------------------------------------------------------------------------------
For investing
Invest-A-Matic You can make fixed, periodic investments ($50 minimum)
(Dollar-cost into your fund account by means of automatic money
averaging) transfers from your bank checking account. See the
attached application for instructions. Lord Abbett offers a variety of
Retirement Plans. Call
Div-Move You can automatically reinvest the dividends and 800-253-7299 for information
distributions from your account into another account in about:
any Eligible Fund ($50 minimum). Traditional, Rollover, Roth
and Education IRAs
For selling shares Simple IRAs, SEP-IRAs, 401(k) and
403(b) accounts
Systematic You can make regular withdrawals from most Lord Abbett Defined Contribution Plans
Withdrawal funds. Automatic cash withdrawals can be paid to you
Plan ("SWP") from your account in fixed or variable amounts. To Telephone Transactions. You have
establish a plan, the value of your shares must be at this privilege unless you refuse
least $10,000, except for Retirement Plans for which it in writing. For your
there is no minimum. Your shares must be in security, telephone transaction
non-certificate form. requests are recorded. We will
take measures to verify the
identity of the caller, such as
Class B shares The CDSC will be waived on redemptions of up to 12% of asking for your name, account
the current net asset value of your account at the time number, social security or
of your SWP request. For class B share redemptions over taxpayer identification number
12% per year, the CDSC will apply to the entire and other relevant information.
redemption. Please contact the fund for assistance in The fund will not be liable for
minimizing the CDSC in this situation. following instructions
communicated by telephone that
it reasonably believes to be
Class B and Redemption proceeds due to a SWP for class B and class genuine.
C shares C shares will be C shares redeemed in the order
described under "Contingent Deferred Sales Charges"
under "Purchases."
Transactions by telephone may be
- ------------------------------------------------------------------------------ difficult to implement in times
OTHER SERVICES of drastic economic or market
change.
Telephone Investing. After we have received the attached application
(selecting "yes" under Section 7C and completing Section 7), you can Exchanges by telephone should
instruct us by phone to have money transferred from your bank not be used to take advantage of
account to purchase shares of the fund for an existing account. The short-term swings in the market.
fund will purchase the requested shares when it receives the money The fund reserves the right to
from your bank. limit or terminate this
privilege for any shareholder
Telephone Exchanges. You or your investment professional, with making frequent exchanges or
proper identification, can instruct your fund by telephone to abusing the privilege and may
exchange shares of any class for shares of the same class of any revoke the privilege for all
Eligible Fund by calling 800-821-5129. The fund must receive shareholders upon 60 days'
instructions for the exchange before the close of the NYSE on the written notice.
day of your call. If you meet this requirement, you will get the NAV
per share of the Eligible Fund determined on that day. Exchanges
will be treated as a sale for federal tax purposes. Be sure to read
the current prospectus for any fund into which you are exchanging.
Reinvestment Privilege. If you sell shares of the fund, you have a
one time right to reinvest some or all of the proceeds in the same
class of any Eligible Fund within 60 days without a sales charge. If
you paid a CDSC when you sold your shares, you will be credited with
the amount of the CDSC. All accounts involved must have the same
registration.
Account Statements. Every Lord Abbett investor automatically
receives quarterly account statements.
Householding. Shareholders with the same last name and address will
receive a single copy of a prospectus and an annual or semi-annual
report, unless additional reports are specifically requested in writing
to the fund.
Account Changes. For any changes you need to make to your account,
consult your investment professional or call the fund at
800-821-5129.
Systematic Exchange. You or your investment professional can
establish a schedule of exchanges between the same classes of any
Eligible Fund.
SALES CHARGES AND SERVICE FEES
Sales and Service Compensation. As part of its plan for distributing
shares, each fund and Lord Abbett Distributor pay sales and service
compensation to Authorized
</TABLE>
Your Investment 9
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<TABLE>
<CAPTION>
<S> <C>
Institutions that sell the fund's shares and service its shareholder
accounts.
Sales compensation originates from two sources: sales charges and
12b-1 distribution fees that are paid out of the fund's assets.
Service compensation originates from 12b-1 service fees. The 12b-1
fee rates vary by share class, according to the Rule 12b-1 plan
adopted by the fund. The sales charges and 12b-1 fees paid by 12b-1 fees are payable
investors are shown in the class-by-class information under "Fees regardless of expenses. The
and Expenses" and "Purchases." The portion of these expenses that is amounts payable by a fund need
paid as sales and service compensation to Authorized Institutions, not be directly related to
such as your dealer, is shown in the chart at the end of this expenses. If Lord Abbett
prospectus. The portion of such sales and service compensation paid Distri-butor's actual expenses
to Lord Abbett Distributor is discussed under "Sales Activities" and exceed the fee payable to it, a
"Service Activities." Sometimes we do not pay sales and service fund will not have to pay more
compensation where tracking data is not available for certain than that fee. If Lord Abbett
accounts or where the Authorized Institution waives part of the Distributor's expenses are less
compensation. than the fee it receives, Lord
Abbett Distributor will keep the
We may pay Additional Concessions to Authorized Institutions from full amount of the fee.
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 Rule 12b-1 service fees to Authorized
Institutions for any activity which is primarily intended to result
in personal service and/or the maintenance of shareholder accounts.
Any portion of the service fees paid to Lord Abbett Distributor will
be used to service and maintain shareholder accounts.
MANAGEMENT
The fund's investment adviser is Lord, Abbett & Co., 767 Fifth
Avenue, New York, NY 10153-0203. Founded in 1929, Lord Abbett
manages one of the nation's oldest mutual fund complexes, with
approximately $28 billion in more than 35 mutual fund portfolios and
other advisory accounts. For more information about the services
Lord Abbett provides to the fund, see the Statement of Additional
Information.
Under the Management Agreement, the fund is obligated
to pay Lord Abbett a monthly fee, based on average daily net assets
at the annual rate of .50 of 1% for allocating the Alpha Fund's
assets among the underlying funds. However, because Lord Abbett
expects to waive this fee for the current fiscal year of the fund,
the effective fee payable as a percentage of average net assets is
expected to be at the annual rate of zero percent.
Lord Abbett uses a team of portfolio managers and analysts acting
together to manage the fund's investments. Robert G. Morris, Partner
of Lord Abbett, heads the team, which includes the Senior Managers
of three underlying funds: Steven J. McGruder, Developing Growth
Fund; Christopher J. Taylor, International Fund; and Robert P.
Fetch, Small-Cap Value Fund. Mr. Morris has been with Lord Abbett
for more than five years. Mr McGruder joined Lord Abbett in 1995;
prior to then he was a Vice President of Wafra Investment Advisory
Group, a private investment company, from 1988-1995. Christopher J.
Taylor has been employed by Fuji-Lord Abbett International Ltd., the
sub-adviser of the fund of which Lord Abbett is a minority owner,
and its predecessor companies since 1987. Robert P. Fetch, Partner
of Lord Abbett, has been with Lord Abbett since 1995; prior to that
he was a Managing Director of Prudential Investment Advisors from
1983 to 1995.
</TABLE>
10 Your Investment
<PAGE>
FOR MORE INFORMATION
OTHER INVESTMENT TECHNIQUES
This section describes some of the investment techniques that might be
used by the underlying funds, and their risks.
Adjusting Investment Exposure. Each underlying fund may, but is not
required to, use various strategies to change its investment exposure to
adjust to changing security prices, interest rates, currency exchange
rates, commodity prices and other factors. Each underlying fund may use
one or more of the following strategies: options and futures contracts,
short sales of securities, and rights and warrants. The underlying fund
may use these transactions to change the risk and return characteristics
of each fund's portfolio. If we judge market conditions incorrectly or
use a strategy that does not correlate well with the fund's investments,
it could result in a loss, even if we intended to lessen risk or enhance
returns. These transactions may involve a small investment of cash
compared to the magnitude of the risk assumed and could produce
disproportionate gains or losses. Also, these strategies could
result in losses if the counterparty to a transaction does not perform
as promised.
Borrowing. Each underlying fund may borrow from banks. If a fund borrows
money, its share price may be subject to greater fluctuation until the
borrowing is paid off. Each fund may borrow only for temporary or
emergency purposes, and not in an amount exceeding 33 1/3% of its total
assets.
Developing Growth Fund. The investment objective of the Developing
Growth Fund is long-term growth of capital through a diversified
and actively-managed portfolio consisting of developing growth
companies, many of which are traded over the counter. In pursuing
Developing Growth Fund's objective, it invests primarily in the common
stocks of companies with long-range growth potential, particularly
smaller companies that Lord Abbett believes to be in the developing
growth phase.
Lord Abbett views the developing growth phase as a period of swift
development, when growth occurs at a rate rarely equaled by established
companies in their mature years. Developing Growth Fund focuses on
companies which it believes are strongly positioned in this phase. Of
course, because the actual growth of a company cannot be foreseen, Lord
Abbett may not always be correct in its judgments about which phase a
company is in at a particular time.
Diversification. Each underlying fund is a diversified fund. This means
that as to 75% of its total assets, it will not purchase a security if,
as a result, more than 5% of the fund's total assets would be invested in
securities of a single issuer or the underlying fund would hold more
than 10% of the outstanding voting securities of the issuer.
Foreign Currency Hedging Techniques. Both the International Fund and the
Small-Cap Value Fund may use Foreign Currency Hedging Techniques.
Although these two funds do not normally engage in extensive currency
hedging, they may use currency forwards and options to hedge the risk to
the portfolio if they expect that foreign exchange price movements will
be unfavorable for U.S. investors. Generally, these instruments allow a
fund to lock in a specified exchange rate for a period of time. If the
fund's forecast proves to be wrong, such a hedge may cause a loss. Also,
it may be difficult or impractical to hedge currency risk in many
emerging countries. The underlying funds generally will not enter into a
forward contract with a term greater than one year. Under some
circumstances, a fund may commit a substantial portion or the entire
value of its portfolio to the
For More Information 11
Page>
completion of forward contracts. Although such contracts will be used
primarily to attempt to protect the fund from adverse currency
movements, their use involves the risk Lord Abbett will not accurately
predict currency movements, and the fund's return could be reduced.
High Yield Debt Securities. The Small-Cap Value Fund may invest in high
yield debt securities although it will not invest more than 5% of its
assets measured at the time of investment in them. 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.
Illiquid Securities. Each underlying fund may invest up to 15% of its
assets 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. International Fund. The investment objective of the
International Fund
is long-term capital appreciation. Current income is incidental to
the International Funds objective and the fund may invest in securities
that do not produce any income. The fund may invest in securities of
companies domiciled in developed countries and in developing countries,
including common and preferred stocks, convertible securities, rights
and awards to purchase common stocks. Normally, at least 80% of the
total assets of this fund will be invested in equity securities
of companies that are domiciled in at least three different countries
outside the United States. Although the International Fund invests
primarily in equity securities of companies with market capitalization
of less than $1 billion, it may also invest in large and middle
capitalization securities.
Portfolio Securities Lending. Each underlying fund may lend securities
to broker-dealers and financial institutions, as a means of earning
income. This practice could result in a loss or delay in recovering a
fund's securities if the borrower defaults. Each underlying fund will
limit its securities loans to 33 1/3% of its total assets.
Repurchase Agreements. Both the International Fund and the Small-Cap
Value Fund may enter into repurchase agreements. In a repurchase
agreement, a fund buys a security at one price from a broker-dealer
or financial institution and simultaneously agrees to sell the
same security back to the same party at a higher price in the
future. If the other party to the agreement defaults or becomes
insolvent, the fund could lose money.
Short-Term Fixed-Income Securities. Each underlying fund is authorized
to invest temporarily in certain short-term fixed income securities.
Such securities may be used to invest uncommitted cash balances, to
maintain liquidity to meet shareholder redemptions, or to take a
temporary defensive position against market declines. These securities
include: obligations of the U.S. government and its agencies and
instrumentalities; commercial paper, bank certificates of deposit, and
bankers' acceptances; and repurchase agreements collateralized by these
securities.
Small-Cap Value Fund. The Small-Cap Value Fund's investment objective is
long-term capital appreciation. This fund invests primarily in equity
securities which it believes to be undervalued. In doing so, the
Small-Cap Value Fund usually invests in smaller companies which may be
out of favor with or not closely followed by investors, and sometimes
offer substantial appreciation potential. The production of income is of
incidental importance, and the fund may buy securities that do not
produce any income. Up to 35% of the fund's net assets may be invested in
securities that are traded in foreign countries.
12 For More Information
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<CAPTION>
<S> <C>
When-Issued or Delayed Delivery Transactions. Both the International
Fund and Small-Cap Value Fund may purchase or sell securities with
payment and delivery taking place as much as a month or more later. A
fund would do this in effort to buy or sell the securities at an
advantageous price and 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 a fund commits a significant amount of assets to when-issued or
delayed delivery transactions, it may increase the volatility of that
fund's net asset value.
GLOSSARY OF SHADED TERMS
Additional Concessions. Lord Abbett Distributor may, for specified
periods, allow dealers to retain the full sales charge for sales of
shares or may pay an additional concession to a dealer who sells a
minimum dollar amount of our shares and/or shares of other Lord
Abbett-sponsored funds. In some instances, such additional concessions
will be offered only to certain dealers expected to sell significant
amounts of shares. Additional payments may be paid from Lord Abbett
Distributor's own resources or from distribution fees received from a
fund and will be made in the form of cash or, if permitted, non-cash
payments. The non-cash payments will include business seminars at Lord
Abbett's headquarters or other locations, including meals and
entertainment, or the receipt of merchandise. The cash payments may
include payment of various business expenses of the dealer.
In selecting dealers to execute portfolio transactions for a fund's
portfolio, if two or more dealers are considered capable of obtaining
best execution, we may prefer the dealer who has sold our shares and/or
shares of other Lord Abbett-sponsored funds. Guaranteed signature. An
acceptable form of guarantee
Authorized Institutions. Institutions and persons permitted by law to would be as follows:
receive service and/or distribution fees under a Rule 12b-1 plan are
"authorized institutions." Lord Abbett Distributor is an Authorized In the case of the estate -
Institution.
Robert A. Doe
Eligible Fund. An Eligible Fund is any Lord Abbett-sponsored fund except Executor of the Estate of
for certain tax-free, single-state funds where the exchanging John W. Doe
shareholder is a resident of a state in which such a fund is not offered
for sale; Lord Abbett Equity Fund; Lord Abbett Series Fund; Lord Abbett [Date]
U.S. Government Securities Money Market Fund ("GSMMF") (except for
holdings in GSMMF which are attributable to any shares exchanged from SIGNATURE GUARANTEED
the Lord Abbett family of funds). An Eligible Fund also is any MEDALLION GUARANTEED
Authorized Institutions affiliated money market fund satisfying Lord NAME OF GUARANTOR
Abbett Distributor as to certain omnibus account and other criteria. [signature illegible]
-------------------------
Eligible Mandatory Distributions. If class B shares represent a part of AUTHORIZED SIGNATURE
an individual's total IRA or 403(b) investment, the CDSC will be waived (960) X9003470
only for that part of a mandatory distribution which bears the same SECURITIES TRANSFER AGENTS
relation to the entire mandatory distribution as the B share investment MEDALLION PROGRAM'TM'
bears to the total investment. SR
In the case of the corporation -
Legal Capacity. With respect to a redemption request, if (for example) ABC Corporation
the request is on behalf of the estate of a deceased shareholder, John Mary B. Doe
W. Doe, by a person (Robert A. Doe) who has the legal capacity to act By Mary B. Doe, President
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, [Date]
Executor of the Estate of John W. Doe. That signature using that
capacity must be guaranteed by an Eligible Guarantor. SIGNATURE GUARANTEED
MEDALLION GUARANTEED
Similarly, if (for example) the redemption request is on behalf of the NAME OF GUARANTOR
ABC Corporation by a person (Mary B. Doe) that has the legal capacity to [signature illegible]
act on behalf of this corporation, -------------------------
AUTHORIZED SIGNATURE
(960) X9003470
SECURITIES TRANSFER AGENTS
MEDALLION PROGRAM'TM'
SR
</TABLE>
For More Information 13
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<TABLE>
<CAPTION>
<S> <C>
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.
Mutual Fund Advisory Program. Certain unaffiliated authorized brokers,
dealers, registered investment advisers or other financial institutions
who either (a) have an arrangement with Lord Abbett Distributor in
accordance with certain standards approved by Lord Abbett Distributor,
providing specifically for the use of our shares (and sometimes
providing for acceptance of orders for such shares on our behalf) in
particular investment products made available for a fee to clients of
such brokers, dealers, registered investment advisers and other
financial institutions, or (b) charge an advisory, consulting or other
fee for their services and buy shares for their own accounts or the
accounts of their clients.
Purchaser. The term "purchaser" includes: (i) an individual, (ii) an
individual and his or her spouse and children under the age of 21 and
(iii) a trustee or other fiduciary purchasing shares for a single trust
estate or single fiduciary account (including a pension, profit-sharing,
or other employee benefit trust qualified under Section 401 of the
Internal Revenue Code--more than one qualified employee benefit trust
of a single employer, including its consolidated subsidiaries, may be
considered a single trust, as may qualified plans of multiple employers
registered in the name of a single bank trustee as one account),
although more than one beneficiary is involved.
Special Retirement Wrap Program. A program sponsored by an authorized
institution showing one or more characteristics distinguishing it, in
the opinion of Lord Abbett Distributor from a Mutual Fund 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 the class A 12b-1 Plan and the fact that the
program relates to participant-directed Retirement Plans.
RECENT PERFORMANCE
Concern over economic problems abroad made investors reluctant to take Year 2000 Issues. Each fund
risk, pushing stock prices down in most sectors. Small-cap stocks, which could be adversely affected if
are generally less liquid than mid-cap and large-cap stocks, under the computers used by each fund
performed most other asset classes. The fund declined moderately amid and their service providers do
difficult market conditions. More recently, the Federal Reserve Board not properly process and
moved to lower interest rates to restore investor confidence, and calculate date-related
small-company stocks have rallied. However, relative to most information from and after
large-company stocks, small-caps remain meaningfully undervalued. We January 1, 2000.
view this as a unique opportunity to invest in select small companies.
Furthermore, we anticipate that continued intervention by the Federal While year 2000-related computer
Reserve will create an environment in which small-cap stocks can perform problems could have a negative
well. effect on the fund, Lord Abbett
is working to avoid such problems
and has assurances from the fund's
service providers that they are
taking similar steps. However,
because the problem is
unprecedented, we don't know
whether these efforts will be
successful. Accordingly, the
fund may be adversely affected.
</TABLE>
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 October 31, 1998 and the
Independent Auditors' Report thereon appear in the Annual Report to
Shareholders for the fiscal year ended October 31, 1998 and are
incorporated by reference into the Statement of Additional Information,
which is available upon request. Certain information reflects financial
results for a single fund share.
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares
-------------- -------------- --------------
Period Ended October 31,
------------------------------------------------------------
<S> <C> <C> <C>
Per Share Operating Performance: 1998(b) 1998(b) 1998(b)
Net asset value, beginning of period $13.52 $13.52 $13.52
- -----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
- -----------------------------------------------------------------------------------------------------------------------
Net investment loss (.03)(d) (.11)(d) (.11)(d)
- -----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
- -----------------------------------------------------------------------------------------------------------------------
loss on investments and foreign
- -----------------------------------------------------------------------------------------------------------------------
currency holdings (.58) (.56) (.55)
- -----------------------------------------------------------------------------------------------------------------------
Total from investment operations (.61) (.67) (.66)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.91 $12.85 $12.86
- -----------------------------------------------------------------------------------------------------------------------
Total Return(c) (4.51)% (4.96)% (4.88)%
- -----------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:(c)
- -----------------------------------------------------------------------------------------------------------------------
Expenses, including waiver 0.21% 0.83% (0.82)%
- -----------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver 0.63% 1.26% 1.24%
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.18)% (0.81)% (0.82)%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Period Ended October 31,
------------------------------------------------------------
<S> <C>
Supplemental Data For All Classes: 1998
Net assets, end of period (000) $106,279
- -----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 0.01%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return does not reflect the deduction of front-end or contingent
deferred sales charges.
(b) From commencement of operations for each class of shares: December 29, 1997.
(c) Not annualized.
(d) Calculated using average shares outstanding during the period.
See Notes to Financial Statements.
Financial Information 15
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<TABLE>
<CAPTION>
<S> <C>
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in
class A shares to the same investment in the Salomon Brothers
EMI Index, assuming reinvestment of all dividends and distributions.
Year Fund at NAV Fund at Max Salomon EMI
Offering Price Index
12/29/97 10,000 9,428 - (1) Reflects the deduction of
12/31/97 10,081 9,505 10,000
1/31/98 10,185 9,603 10,068 the maximum initial sales
2/28/98 10,991 10,363 10,821 charge of 5.75%.
3/31/98 11,627 10,962 11,304
4/30/98 11,886 11,206 11,383 (2) Performance for the
5/31/98 11,709 11,039 11,175 unmanaged Salomon
6/30/98 11,494 10,837 11,040 Brothers EMI Index does
7/31/98 10,851 10,230 10,592 not reflect transaction
8/31/98 8,876 8,368 8,907 costs, management fees or
9/30/98 9,053 8,536 9,138 sales charges.
10/31/98 9,549 9,003 9,697 Performance for this
index begins on 12/31/97.
(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 October 31, 1998
using the SEC-required
uniform method to compute
such return.
(4) The class B shares were
first offered on 12/29/97.
Performance reflects the
deduction of a CDSC of 4%
(for 1 year) and 3% (for
life of the class).
(5) The class C shares were
first offered on
12/29/97. Performance is
at net asset value.
</TABLE>
- ----------------------------------------------------------
Average Annual Total Return at Maximum Sales Charge
for the Periods Ending October 31, 1998
<TABLE>
<CAPTION>
Life
- ----------------------------------------------------------
<S> <C>
Class A(3) (10.00)%
- ----------------------------------------------------------
Class B(4) (9.71)%
- ----------------------------------------------------------
Class C(5) (5.83)%
- ----------------------------------------------------------
</TABLE>
16 Financial Information
Page>
COMPENSATION FOR YOUR DEALER
FIRST YEAR COMPENSATION
<TABLE>
<CAPTION>
Front-end
sales charge Dealers
paid by investors concession Service fee(1) Total compensation(2)
Class A investments (% of offering price) (% of offering price) (% of net investment) (% of offering price)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 5.75% 5.00% 0.25% 5.24%
$ 50,000 - $ 99,999 4.75% 4.00% 0.25% 4.24%
$100,000 - $249,999 3.75% 3.25% 0.25% 3.49%
$250,000 - $499,999 2.75% 2.25% 0.25% 2.49%
$500,000 - $999,999 2.00% 1.75% 0.25% 2.00%
$1 million or more(3) or Retirement Plan - 100 or more
eligible employees(3) or Special Retirement Wrap Program(3)
First $5 million no front-end sales charge 1.00% 0.25% 1.25%
Next $5 million above that no front-end sales charge 0.55% 0.25% 0.80%
Next $40 million above that no front-end sales charge 0.50% 0.25% 0.75%
Over $50 million no front-end sales charge 0.25% 0.25% 0.50%
Class B investments Paid at time of sale (% of net asset value)
All amounts no front-end sales charge 3.75% 0.25% 4.00%
Class C investments
All amounts no front-end sales charge 0.75% 0.25% 1.00%
Class P investments Percentage of average net assets
All amounts no front-end sales charge 0.25% 0.20% 0.45%
ANNUAL COMPENSATION AFTER FIRST YEAR
Class A investments
All amounts no front-end sales charge none 0.25% 0.25%
Class B investments Percentage of average net assets(4)
All amounts no front-end sales charge none 0.25% 0.25%
Class C investments
All amounts no front-end sales charge 0.75% 0.25% 1.00%
Class P investments
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The service fee for class A and P shares is paid quarterly. The first years
service fee on class B and C shares is paid at the time of sale.
(2) Reallowance/concession percentages and service fee percentages are
calculated from different amounts, and therefore may not equal total
compensation percentages if combined using simple addition. Additional
Concessions may be paid to Authorized Institutions, 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 statement
of intention privileges are included and (b) for Special Retirement Wrap
Programs, only new sales are eligible and exchanges into the fund are
excluded.
(4) With respect to class B, C and P shares, 0.25%, 1.00% and 0.45%,
respectively, of the average annual net asset value of such shares
outstanding during the quarter (including distribution reinvestment shares
after the first anniversary of their issuance) is paid to Authorized
Institutions, such as your dealer. These fees are paid quarterly in
arrears.
Financial Information 17
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More information on this fund is available free upon
request, including the following:
ANNUAL/SEMI-ANNUAL REPORT To obtain information:
Describes the fund, lists portfolio holdings and contains a By telephone. Call the fund at:
letter from the fund's manager discussing recent market 800-426-1130
conditions and the funds investment strategies.
By mail. Write to the fund at:
STATEMENT OF ADDITIONAL INFORMATION ("SAI") The Lord Abbett Family of Funds
767 Fifth Avenue
Provides more details about the fund and its policies. A New York, NY 10153-0203
current SAI is on file with the Securities and Exchange
Commission ("SEC") and is incorporated by reference (is Via the Internet. Text only
legally considered part of this prospectus). versions of fund documents
can be viewed online or
downloaded from:
Lord, Abbett & Co.
http://www.lordabbett.com
SEC
http://www.sec.gov
You can also obtain copies by
visiting the SEC's Public
Reference Room in Washington, DC
(phone 800-SEC-0330) or by
sending your request and a
duplicating fee to the SEC's
Public Reference Section,
Washington, DC 20549-6009.
LAALPH-1-399
(3/99)
Alpha Fund
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
SEC file number: 811-7538
</TABLE>
<PAGE>
LORD
ABBETT Alpha Fund
PROSPECTUS
March 1, 1999
[LOGO LORD, ABBETT & CO.]
As with all mutual funds, the Securities and Exchange Commission does
not guarantee that the information in this prospectus is accurate or
complete, and it has not judged this fund for its investment merit. It
is a criminal offense to state otherwise.
Class P shares of the fund are neither offered to the general public
nor available in all states. Please call 800-821-5129 for further
information.
STATEMENT OF DIFFERENCES
The trademark symbol shall be expressed as.........................'TM'
