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Table of Contents
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The Funds Page
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Information about the goal/ Growth & Income Fund 2
approach, main risks, past International Fund 4
performance, fees and expenses World Bond-Debenture Fund 6
Your Investment
Information for managing Purchases 8
your fund account Opening Your Account 10
Redemptions 11
Distributions and Taxes 11
Services For Fund Investors 12
Sales Charges and Service Fees 13
Management 14
For More Information
How to learn more Other Investment Techniques 15
about the funds Glossary of Shaded Terms 17
Recent Performance 19
Financial Information
Financial highlights of each fund, Growth & Income Fund 20
and dealer compensation International Fund 22
World Bond-Debenture Fund 24
Compensation For Your Dealer 26
How to learn more about the Back Cover
funds and other Lord Abbett funds
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GROWTH & INCOME FUND
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GOAL / APPROACH
The fund's investment objective is long-term growth of capital and
income without excessive fluctuations in market value. Typically, in
choosing stocks, we look for companies using a three-step process:
Quantitative research is performed on a universe of large,
seasoned, U.S. and multinational companies to identify which stocks
we believe represent the best bargains. We or the fund refers to any one
or more of three portfolios of
Fundamental research is conducted to assess a company's operating Lord Abbett Securities Trust
environment, resources and strategic plans and to determine its (the "company"). Each fund
prospects for exceeding the earnings expectations reflected in its operates under the supervision
stock price. of the company's Board with the
advice of Lord, Abbett & Co.
Business cycle analysis is used to assess the economic and ("Lord Abbett"), its investment
interest-rate sensitivity of our portfolio, helping us assess how manager.
adding or deleting stocks changes our portfolio's overall
sensitivity to economic activity and interest rates. About each fund. Each fund is a
professionally managed portfolio
The fund is intended for long-term investors who purchase and redeem shares to of securities purchased with the
meet their own financial requirements rather than to take advantage of price pooled money of investors. They
fluctuations. We believe the needs of such investors will best be served strive to reach their stated
by an investment which has growth characterized by fewer fluctuations in goals, although as with all
market value than the Standard & Poor's Composite Index of 500 stocks funds, they cannot guarantee
("S&P 500'r' Index"). For this reason, the fund tries to keep its assets results.
invested in securities which are selling at reasonable prices in
relation to value and, thus, will forgo some opportunities for gains Large companies are established
when, in our judgment, they are too risky. companies that are considered
"known quantities." Large
We may take a temporary defensive position by investing some of our companies often have the resources
assets in short-term debt securities. This could reduce the benefit from to weather economic shifts,
any upswing in the market and prevent the fund from achieving its though they can be slower to
investment objective. innovate than small companies.
Seasoned companies are usually
MAIN RISKS established companies whose
securities have gained a
While stocks have historically been a leading choice of long-term reputation for quality with the
investors, they fluctuate in price. The value of your investment in the investing public and enjoy
fund will go up and down, which means that you could lose money. Our liquidity in the market.
performance may sometimes be lower or higher than that of other types of
funds (particularly those emphasizing small-company stocks or growth Small companies often are new
stocks) because different types of stocks tend to shift in and out of and less established, with a
favor depending on market and economic conditions. While there is the tendency to be faster-growing
risk that an investment may never reach what we think is its full value, but more volatile and less
or may go down in value, our emphasis on large, seasoned company bargain liquid than large company
stocks could potentially limit our downside risk because bargain stocks stocks.
in theory are already underpriced and large, seasoned company stocks
tend to be less volatile than small company stocks. In the long run, we Bargain stocks are stocks of
may produce more modest gains than riskier stock funds as a trade-off companies that appear
for this potentially lower risk. underpriced according to certain
financial measurements of their
An investment in the fund is not a bank deposit. It is not FDIC-insured intrinsic worth or business
or government endorsed. It is not a complete investment program. You prospects.
could lose money in the fund, but you also have the potential to make
money. Growth Stocks exhibit
faster-than-average gains in
earnings and are expected to
continue profit growth at a high
level, but also tend to be more
volatile than bargain stocks.
You should read this entire
prospectus, including "Other
Investment Techniques," which
concisely describes the other
investment strategies and their
risks used by the fund.
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2 The Funds
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Growth & Income Fund Symbols: Class A - LDFVX
Class B - LGIBX
Class C - GILAX
PAST PERFORMANCE
The information below provides some indication of the risks of investing
in the fund, by showing changes in the fund's performance from calendar
year to calendar year and by showing how the fund's average annual
returns compare with those of a broad measure of market performance.
Past performance is not a
Represented as Bar Chart in Prospectus prediction of future results.
1995 32.3%
1996 18.3%
1997 26.9%
1998 14.6%
Best Quarter: 18.37% Worst Quarter: -11.33%
(i) The dates of inception for
The table below shows a comparison of the fund's class A, B and C each class are:
average annual total return to that of the S&P 500'r' Index. Fund A -7/15/96; B -6/5/97; and C -1/3/94.
returns assume reinvestment of dividends and distributions and payment (ii) Performance for the
of the maximum applicable front-end or deferred sales charge. All unmanaged S&P 500'r' Index
periods end on December 31, 1998. does not reflect
transaction costs or
management fees.
Class 1 Year Inception(i) S&P 500'r'Index(ii) (iii) Represents total return
- ------------------------------------------------------------------ for the period 7/31/96 -
A 8.90% 22.46% 33.33%(iii) 12/31/98, to correspond
- ------------------------------------------------------------------ with class A inception
B 10.08% 15.39% 28.33%(iv) date.
- ------------------------------------------------------------------
C 14.58% 18.22% 24.08%(v) (iv) Represents total return for
- ------------------------------------------------------------------ the period 6/31/97 -
S&P 500'r' Index(ii) 28.74% -- -- 12/31/98, to correspond
- ------------------------------------------------------------------ with class B inception
date.
(v) Represents total return for
the period 12/31/93 -
12/31/98, to correspond
with class C inception
date.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy Management fees are payable to
and hold shares of the fund. Lord Abbett for the funds
- ---------------------------------------------------------------------------- investment management.
Fee table
- ---------------------------------------------------------------------------- 12b-1 fees refer to fees
Class A Class B Class C Class P incurred for activities that are
- ---------------------------------------------------------------------------- primarily intended to result in
Shareholder Fees (Fees paid directly the sale of fund shares and
from your investment) service fees for shareholder
- ---------------------------------------------------------------------------- account service and maintenance.
Maximum Sales Charge on Purchases
(as a % of offering price) 5.75% none none none Other expenses include fees paid
- ---------------------------------------------------------------------------- for miscellaneous items such as
Maximum Deferred Sales Charge transfer agency, legal and share
(See "Purchases") none 5.00%(3) 1.00% none registration fees.
- ----------------------------------------------------------------------------
Annual Fund Operating Expenses (Expenses deducted from fund assets) ----------------------------------
(as a % of average net assets)(1) (1) The annual fund operating
- ---------------------------------------------------------------------------- expenses have been restated
Management Fees (See "Management") 0.75% 0.75% 0.75% 0.75% from fiscal year amounts to
- ---------------------------------------------------------------------------- reflect current fees.
Distribution and Service (12b-1) (2) Because 12b-1 distribution
Fees(2) 0.35% 1.00% 1.00% 0.45% fees (up to: 0.10%- class
- ---------------------------------------------------------------------------- A; 0.75%- classes B and C;
Other Expenses (See "Management") 0.23% 0.23% 0.23% 0.23% and 0.25%- class P) are
- ---------------------------------------------------------------------------- paid out on an on-going
Total Operating Expenses 1.33% 1.98% 1.98% 1.43% basis, over time they will
increase the cost of your
- ---------------------------------------------------------------------------- investment and may cost you
EXPENSE EXAMPLE more than paying other
- ---------------------------------------------------------------------------- types of sales charges.
This example, like that in other funds' prospectuses, assumes a $10,000 Service fees under each
initial investment at maximum sales charge, if any, 5% total return each class's 12b-1 Plan equal up
year and no changes in expenses. You pay the following expenses over the to 0.25%, except 0.20%-
course of each period shown if you sell your shares at the end of the class P.
period, although your actual cost may be higher or lower. The expenses (3) Class B shares will convert
include any applicable contingent deferred sales charges. to class A shares on the
eighth anniversary of your
Share class 1 Year 3 Years 5 Years 10 Years original purchase of class
B shares.
Class A shares $702 $972 $1,262 $2,087
- ---------------------------------------------------
Class B shares(3) $701 $921 $1,267 $2,140
- ---------------------------------------------------
Class C shares $301 $621 $1,067 $2,308
- ---------------------------------------------------
Class P shares $145 $452 $ 782 $1,716
- ----------------------------------------------------
You would pay the following expenses on the same investment, assuming
you kept your shares.
Class A shares $702 $972 $1,262 $2,087
- ----------------------------------------------------
Class B shares(3) $201 $621 $1,067 $2,140
- ----------------------------------------------------
Class C shares $201 $621 $1,067 $2,308
- ----------------------------------------------------
Class P shares $145 $452 $ 782 $1,716
- ----------------------------------------------------
This example is for comparison and is not a representation of the
fund's actual expenses or returns, either past or present.
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The Funds 3
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International Fund
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GOAL / APPROACH
The fund's investment objective is long-term capital appreciation.
Current income is incidental to this objective. The fund may invest in
stocks that do not produce any income. Typically, in choosing stocks, we
look for companies using the following process:
Quantitative research is performed on a universe of foreign companies
which guides selection of companies with strong growth potential that
also sell at attractive prices.
Developing countries may have
Fundamental research examines global trends, seeking to identify higher and more rapidly
developments on an industry-by-industry basis and the strongest and/or fluctuating inflation rates, a
best positioned companies ("Best of Breed") within each global industry. higher demand for capital
investment, a higher dependence
Valuation techniques determine the selection of the 40-60 companies on export markets for their
with strong growth potential and attractive share prices that major industries, and a greater
collectively form the final portfolio. need to develop basic economic
infrastructures than more
Limiting the number of holdings ensures their performance is not diluted developed countries.
across too many securities. However, investors should be aware that this
concentration could result in increased volatility. Over-the-counter stocks are
usually those of smaller
Investments are made in stocks of companies which are in developed or companies that do not meet
developing countries. Under normal circumstances, at least 80% of the listing requirements of major
total assets of the fund are invested in stocks of companies in at least exchanges. Transactions are
three different countries outside the United States. conducted by telephone and
computer network rather than on
Although the fund intends to invest primarily in stocks of small the floor of an exchange.
companies with market capitalization of less than $1 billion listed on
stock exchanges, it may also invest in stocks of companies traded in Best of Breed refers to certain
over-the-counter markets, as well as stocks of large and middle-sized companies, primarily foreign,
companies. that the portfolio manager
thinks are candidates for the
The fund may temporarily reduce its stock holdings for defensive best in their industries.
purposes in response to adverse market conditions and invest in
domestic, Eurodollar and foreign short-term money market instruments. Of Large companies are established
course, this would reduce any benefit from an upswing in the market. companies that are considered
"known quantities." Large
companies often have the
MAIN RISKS resources to weather economic
shifts, though they can be
The fund sometimes has above-average investment risk compared to the slower to innovate than small
U.S. stock market since a large amount of the assets of the fund will be companies.
denominated or traded in foreign currencies. A change in the value of
any foreign currency relative to the U.S. dollar results in changes in Mid-sized companies usually have
the U.S. dollar value of the fund's assets denominated or traded in that market capitalizations of
currency. The fund's performance is measured in U.S. dollars, the base roughly $500 million to $5
currency of the fund. Also, securities in which the fund invests are billion. Small companies are
usually not subject to the same degree of regulation as domestic often new and less established,
securities and may be more volatile and less liquid than those of major with a tendency to be
U.S. markets. faster-growing but more volatile
and less liquid than large
Lack of liquidity may affect the fund's ability to trade in large blocks company stocks.
of securities and obtain the best price. There is often less information
available on publicly-traded companies, banks and governments than in You should read this entire
the U.S., and a lack of uniform accounting standards and practices among prospectus, including "Other
countries impairs a direct comparison for stocks and bonds. Also, Investment Techniques," which
foreign securities may be traded on days when the fund does not value concisely describes the other
its shares. Thus, share values could be affected on days when an investment strategies and their
investor cannot buy or redeem fund shares. risks used by the fund.
An investment in the fund is not a bank deposit. It is not FDIC-insured
or government endorsed. It is not a complete investment program. You
could lose money in the fund, but you also have the potential to make
money.
</TABLE>
4 The Funds
<PAGE>
International Fund Symbols: Class A-LAIEX
Class B-LINBX
Class C-LINCX
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PAST PERFORMANCE
The information below provides some indication of the risks of investing
in the fund, by showing changes in the fund's performance from calendar
year to calendar year and by showing how the fund's average annual
returns compare with those of a broad measure of market performance. Past performance is not a
1997 19.7%
1998 15.5%
Best Quarter 23.70% Worst Quarter -19.01% prediction of future
results.
---------------------------------
The table below shows a comparison of the fund's class A, B and C (i) The dates of inception for
average annual total return to that of Morgan Stanley Capital each class are: A -12/13/96;
International European, Australasia and Far East Index ("MSCI EAFE"). B -6/2/97; and C -6/2/97.
Fund returns assume reinvestment of dividends and distributions and (ii) Performance for the
payment of the maximum applicable front-end or deferred sales charge. unmanaged MSCI EAFE Index
All periods end on December 31, 1998. does not reflect
transaction costs or
management fees.
Class 1 Year Inception(i) MSCI EAFE Index(ii) (iii) Represents total return
A 8.80% 14.03% 10.82%(iii) for the period 12/31/96 -
- ------------------------------------------------------------------------ 12/31/98, to correspond
B 10.12% 12.86% 6.74%(iv) with class A inception
- ------------------------------------------------------------------------ date.
C 14.71% 15.81% 6.74%(iv) (iv) Represents total return for
- ------------------------------------------------------------------------ the period 6/30/97 -
MSCI EAFE Index(ii) 20.33% -- -- 12/31/98, to correspond
- ------------------------------------------------------------------------- with class B and C
inception date.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy
and hold shares of the fund.
Management fees are payable to
- --------------------------------------------------------------------------- Lord Abbett for the fund's
Fee table investment management.
- ---------------------------------------------------------------------------
12b-1 fees refer to fees
Class A Class B Class C Class P incurred for activities that are
primarily intended to result in
Shareholder Fees (Fees paid directly from your investment) the sale of fund shares and
- ---------------------------------------------------------------------------- service fees for shareholder
Maximum Sales Charge on Purchases account service and maintenance.
(as a % of offering price) 5.75% none none none
- ---------------------------------------------------------------------------- Other expenses include fees paid
Maximum Deferred Sales Charge for miscellaneous items such as
(See "Purchases") none 5.00%(3) 1.00% none transfer agency, legal and share
- ---------------------------------------------------------------------------- registration fees.
Annual Fund Operating Expenses (Expenses deducted from fund assets)
(as a % of average net assets)(1) ---------------------------------
- ----------------------------------------------------------------------------
Management Fees (See "Management") 0.75% 0.75% 0.75% 0.75% (1) The annual fund operating
- ---------------------------------------------------------------------------- expenses have been restated
Distribution and Service (12b-1) from fiscal year amounts to
Fees(2) 0.35% 1.00% 1.00% 0.45% reflect current fees.
- ----------------------------------------------------------------------------
Other Expenses (See "Management") 0.31% 0.31% 0.31% 0.31%
- ----------------------------------------------------------------------------
Total Operating Expenses 1.41% 2.06% 2.06% 1.51%
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Expense example (2) Because 12b-1 distribution
- ---------------------------------------------------------------------------- fees (up to: 0.10%- class
This example, like that in other funds' prospectuses, assumes a $10,000 A; 0.75%- classes B and C;
initial investment at maximum sales charge, if any, 5% total return each and 0.25%- class P) are
year and no changes in expenses. You pay the following expenses over the paid out on an on-going
course of each period shown if you sell your shares at the end of the basis, over time they will
period, although your actual cost may be higher or lower. The expenses increase the cost of your
include any applicable contingent deferred sales charges. investment and may cost you
more than paying other
Share class 1 Year 3 Years 5 Years 10 Years types of sales charges.
Class A shares $710 $995 $1,302 $2,171 Service fees under each
- ------------------------------------------------------------------ class's 12b-1 Plan equal up
Class B shares(3) $709 $945 $1,308 $2,225 to 0.25%, except 0.20%-
- ------------------------------------------------------------------ class P.
Class C shares $309 $645 $1,108 $2,391 (3) Class B shares will convert
- ------------------------------------------------------------------ to class A shares on the
Class P shares $153 $477 $824 $1,804 eighth anniversary of your
- ------------------------------------------------------------------ original purchase of class
You would pay the following expenses on the same investment, assuming you kept B shares.
your shares.
Class A shares $710 $995 $1,302 $2,171
- ------------------------------------------------------------------
Class B shares(3) $209 $645 $1,108 $2,225
- ------------------------------------------------------------------
Class C shares $209 $645 $1,108 $2,391
- ------------------------------------------------------------------
Class P shares $153 $477 $824 $1,804
- ------------------------------------------------------------------
This example is for comparison and is not a representation of the
fund's actual expenses or returns, either past or present.
</TABLE>
The Funds 5
<PAGE>
World Bond-Debenture Fund
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GOAL / APPROACH
The fund's investment objective is high current income and the
opportunity for capital appreciation. The fund seeks unusual values,
particularly in lower-rated debt securities, some of which are
convertible into common stocks or have warrants to purchase common
stocks. Typically, in choosing debt securities, we look for companies
using the following process:
Quantitative research is performed to evaluate economic, political and High-yield debt securities or
market factors to uncover value among economic regions and individual "junk bonds" typically pay a
countries. higher yield than
investment-grade bonds. Junk
Fundamental research is used to determine asset allocation strategies bonds have a higher risk of
for high-yield corporate bonds, high-grade corporate and government default than investment grade
issues, equity-related securities, such as convertible bonds and bonds and their prices can be
emerging market debt. much more volatile.
Normally, the fund invests at least 65% of its assets in bonds and/or Warrants are a type of security
debentures. Its total assets will be invested in securities primarily usually issued with a bond that
traded in at least three different countries, including the United entitles the holder to buy a
States. Except for this guideline, there are no limits on how much of proportionate amount of common
the fund's assets may be invested in securities primarily invested in stock at a certain price for a
any one country. The fund will keep at least 20% of its assets in defined period.
investment grade debt securities, U.S. government securities, or cash or
cash equivalents. The fund may invest up to 35% of its assets in equity Bonds are secured debt
securities, and may exceed this limit to avoid a loss on a conversion of obligations of the issuer.
a convertible debt security.
Debentures generally are
unsecured debt obligations of
However, this guideline may not be followed for temporary defensive the issuer.
periods when the fund believes it should invest entirely in domestic
securities or in securities primarily traded in fewer than three such
countries or in short-term debt securities. This could reduce the
benefit from any upswing in the market and prevent the fund from
realizing its investment objective.
MAIN RISKS World Bond-Debenture Fund is a
nondiversified fund. This means
As with other bond funds, the value of your investment will change as the fund may invest a greater
interest rates fluctuate. When interest rates rise, bond prices are portion of its assets in, and
likely to decline, and when interest rates fall, bond prices tend to own a greater amount of, the
rise. voting securities of a single
issuer than a diversified fund.
The market for lower-rated bonds is more limited than for higher-rated This may expose the fund to
bonds and may be less liquid. Market prices of lower-rated bonds may greater risk.
fluctuate more than those of higher-rated bonds, particularly in times
of economic change and stress. Objective pricing data for lower-rated You should read this entire
bonds may be more limited than for higher-rated bonds and valuation of prospectus, including "Other
such securities may be more difficult and require greater reliance upon Investment Techniques," which
judgment. concisely describes the other
investment strategies and their
The risk of default generally is higher among lower-rated bonds, and risks used by the fund.
because of this risk, your investment in the fund could lose money. For
this reason, diversification and the research and analysis performed by
Lord Abbett are especially important in the selection of these bonds.
There is no assurance that losses will not occur.
Also, the foreign securities in which the fund invests are not subject
to the same degree of regulation and may be more volatile and less
liquid than securities traded in major U.S. markets. This affects block
trading. Foreign securities may trade on days when a fund does not value
them so that fund share prices could be affected on days an investor
cannot purchase or sell shares. Other risks include less information on
public companies, banks and governments; political and social
instability; expropriations; higher transaction costs; currency
fluctuations; nondeductable withholding taxes and different accounting
and settlement practices. Finally, because it invests in foreign
securities, the fund faces the risk that unfavorable changes in currency
exchange rates could reduce the fund's share price.
An investment in the fund is not a bank deposit. It is not FDIC-insured
or government endorsed. It is not a complete investment program. You
could lose money in the fund, but you also have the potential to make
money.
</TABLE>
6 The Funds
<PAGE>
World Bond-Debenture Fund Symbols: Class A-WBDAX
Class B-WBDBX
Class C-WBDCX
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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.
1998 5.5% Past performance is not a
prediction of future results.
Best Quarter 5.64% Worst Quarter -4.65%
The table below shows a comparison of the fund's class A, B and C (i) The date of inception for
average annual total return to that of the JP Morgan Emerging Market each class is: A
Bond Plus Index ("JPM Emerging Market Index"), the JP Morgan Global -12/18/97; B -12/19/97;
Government Bond Index ("JPM Global Gov't Bond Index") and the Merrill and C -12/19/97.
Lynch High Yield Master II Index ("Merrill Lynch HY Master Index"). Fund (ii) Performance for the
returns assume reinvestment of dividends and distributions and payment unmanaged JPM Emerging
of the maximum applicable front-end or deferred sales charge. All Market Index, JPM Global
periods end on December 31, 1998. Gov't Bond Index and
Merrill Lynch HY Master
Index do not reflect
Class 1 Year Inception(i) transaction costs or
A 0.50% 1.54% management fees.
- --------------------------------------------------------------------- (iii) Represents total return
B 0.76% 1.71% for the period 12/31/97 -
- --------------------------------------------------------------------- 12/31/98, to correspond
C 4.96% 5.80% with class A, B and C
- --------------------------------------------------------------------- inception dates.
JPM Emerging Market Index(ii) (14.35)% (14.35)%(iii)
- --------------------------------------------------------------------- Management fees are payable to
JPM Global Gov't Bond Index(ii) 15.31% 15.31%(iii) Lord Abbett for the fund's
- --------------------------------------------------------------------- investment management. Lord
Merrill Lynch HY Master Index(ii) 3.66% 3.66%(iii) Abbett is currently waiving the
- --------------------------------------------------------------------- management fee for World
FEES AND EXPENSES Bond-Debenture Fund. Lord Abbett
may stop waiving the management
This table describes the fees and expenses that you may pay if you buy fee at any time. Total operating
and hold shares of the fund. expenses with the fee waiver are
0.80% (class A), 1.45% (class B
- ------------------------------------------------------------------------------ and C), and 0.90% (class P).
Fee table
- ------------------------------------------------------------------------------ 12b-1 fees refer to fees
Class A Class B Class C Class P incurred for activities that are
Shareholder Fees (Fees paid directly from your investment) primarily intended to result in
- ------------------------------------------------------------------------------ the sale of fund shares and
Maximum Sales Charge on Purchases service fees for shareholder
(as a % of offering price) 4.75% none none none account service and maintenance.
- ------------------------------------------------------------------------------
Maximum Deferred Sales Charge Other expenses include fees paid
(See "Purchases") none 5.00%(3) 1.00% none for miscellaneous items such as
- ------------------------------------------------------------------------------ transfer agency, legal and share
Annual Fund Operating Expenses (Expenses deducted from fund assets) registration fees.
(as a % of average net assets)(1)
- ------------------------------------------------------------------------------
Management Fees (See "Management") 0.75% 0.75% 0.75% 0.75% -----------------------------------
- ------------------------------------------------------------------------------ (1) The annual fund operating
Distribution and Service expenses have been restated
(12b-1) Fees(2) 0.35% 1.00% 1.00% 0.45% from fiscal year amounts to
- ------------------------------------------------------------------------------ reflect current fees.
Other Expenses (See "Management") 0.45% 0.45% 0.45% 0.45% (2) Because 12b-1 distribution
- ------------------------------------------------------------------------------ fees (up to: 0.10%- class
Total Operating Expenses 1.55% 2.20% 2.20% 1.65% A; 0.75%- classes B and C;
- ------------------------------------------------------------------------------ and 0.25%- class P) are
- ------------------------------------------------------------------------------ paid out on an on-going
Expense example basis, over time they will
- ------------------------------------------------------------------------------ increase the cost of your
investment and may cost you
This example, like that in other funds' prospectuses, assumes a $10,000 more than paying other
initial investment at maximum sales charge, if any, 5% total return each types of sales charges.
year and no changes in expenses. You pay the following expenses over the Service fees under each
course of each period shown if you sell your shares at the end of the class's 12b-1 Plan equal up
period, although your actual cost may be higher or lower. The expenses to 0.25%, except 0.20%-
include any applicable contingent deferred sales charges. class P.
(3) Class B shares will convert
Share class 1 Year 3 Years 5 Years 10 Years to class A shares on the
Class A shares $625 $941 $1,279 $2,235 eighth anniversary of your
- -------------------------------------------------------------------------- original purchase of class
Class B shares(3) $723 $988 $1,379 $2,371 B shares.
- --------------------------------------------------------------------------
Class C shares $323 $688 $1,179 $2,535
- --------------------------------------------------------------------------
Class P shares $168 $520 $897 $1,957
- --------------------------------------------------------------------------
You would pay the following expenses on the same investment, assuming
you kept your shares.
Class A shares $625 $941 $1,279 $2,235
- --------------------------------------------------------------------------
Class B shares(3) $223 $688 $1,179 $2,371
- --------------------------------------------------------------------------
Class C shares $223 $688 $1,179 $2,535
- --------------------------------------------------------------------------
Class P shares $168 $520 $897 $1,957
- --------------------------------------------------------------------------
This example is for comparison and is not a representation of the fund's
actual expenses or returns, either past or present.
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The Funds 7
<PAGE>
Your Investments
<TABLE>
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PURCHASES
This prospectus offers four classes of shares for each fund: classes A,
B, C and P (call 800 521-5129 to find out if P shares are available in
your state). Although each fund has more than one class of shares, these
different classes of shares represent investments in the same portfolio
of securities but are subject to different expenses. Our shares are NAV per share for each class of
continuously offered. The offering price is based on the Net Asset Value fund shares is calculated each
("NAV") per share next determined after we receive your purchase order business day at the close of
submitted in proper form. A front-end sales charge is added to the NAV, regular trading on the New York
in the case of the class A shares. There is no front-end sales charge, Stock Exchange ("NYSE"). Each
although there is a CDSC in the case of the class B and C shares, as fund is open on those business
described below. days when the NYSE is open.
Purchases and sales of fund
You should read this section carefully to determine which class of shares are executed at the NAV
shares represents the best investment option for your particular next determined after the fund
situation. It may not be suitable for you to place a purchase order for receives your order. In
class B shares of $500,000 or more or a purchase order for class C calculating NAV, securities for
shares of $1,000,000 or more. You should discuss pricing options with which market quotations are
your investment professional. available are valued at those
quotations. Securities for which
For more information, see "Alternative Sales Arrangements" in the such quotations are not
Statement of Additional Information. available are valued at fair
value under procedures approved
We reserve the right to withdraw all or any part of the offering made by by the Board.
this prospectus or to reject any purchase order. We also reserve the
right to waive or change minimum investment requirements. All purchase Share classes
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
(Growth & Income Fund and International Fund)
- ----------------------------------------------------------------------- no front-end sales charge,
To Compute however, a contingent deferred
As a % of As a % of Offering Price sales charge is applied to
Your Investment Offering Price Your Investment Divide NAV by shares sold prior to the sixth
- ----------------------------------------------------------------------- anniversary of purchase
Less than $50,000 5.75% 6.10% .9425 higher annual expenses than
- ----------------------------------------------------------------------- class A shares
$50,000 to $99,999 4.75% 4.99% .9525
- ----------------------------------------------------------------------- automatically convert to class A
$100,000 to $249,999 3.75% 3.90% .9625 shares after eight years
- -----------------------------------------------------------------------
$250,000 to $499,999 2.75% 2.83% .9725 Class C
- -----------------------------------------------------------------------
$500,000 to $999,999 2.00% 2.04% .9800 no front-end sales charge
- ----------------------------------------------------------------------- higher annual expenses than
$1,000,000 and over No Sales Charge 1.0000 class A shares
- -----------------------------------------------------------------------
a contingent deferred sales
charge is applied to shares sold
prior to the first anniversary
of purchase
- ------------------------------------------------------------------------
Front-End Sales Charges - Class A Shares Class P
(World Bond-Debenture Fund only)
- ------------------------------------------------------------------------ available to certain pension or
To Compute retirement plans and pursuant to
As a % of As a % of Offering Price a Mutual Fund Advisory Program
Your Investment Offering Price Your Investment Divide NAV by
- ------------------------------------------------------------------------
Less than $50,000 4.75% 4.99% .9525
- ------------------------------------------------------------------------
$50,000 to $99,999 4.75% 4.99% .9525
- ------------------------------------------------------------------------
$100,000 to $249,999 3.75% 3.90% .9625
- ------------------------------------------------------------------------
$250,000 to $499,999 2.75% 2.83% .9725
- ------------------------------------------------------------------------
$500,000 to $999,999 2.00% 2.04% .9800
- ------------------------------------------------------------------------
$1,000,000 and over No Sales Charge 1.0000
- ------------------------------------------------------------------------
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8 Your Investment
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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:
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. * These categories may be
subject to a Contingent Deferred
Statement of Intention -- A Purchaser of class A shares can purchase Sales Charge ("CDSC").
additional shares of any Eligible Fund over a 13-month period and
receive the same sales charge as if all shares were purchased at CDSC regardless of class, is not
once. Shares purchased through reinvestment of dividends or charged on shares acquired
distributions are not included. A statement of intention can be through reinvestment of
backdated 90 days. Current holdings under rights of accumulation can dividends or capital gains
be included in a statement of intention. distributions and is charged on
the original purchase cost or
For more information on eligibility for these privileges, read the applicable the current market value of the
sections in the attached application. shares at the time they are
being sold, whichever is lower.
Class A Share Purchases Without A Front-End Sales Charge. Class A shares In addition, repayment of loans
may be purchased without a front-end sales charge under any of the under Retirement Plans and
following: 403(b) plans will constitute new
sales for purposes of assessing
purchases of $1 million or more* the CDSC. To determine if a CDSC
applies to a redemption, the
purchases by Retirement Plans with at least 100 eligible employees* fund redeems shares in the
following order:
purchases under a Special Retirement Wrap Program*
1. shares acquired by
purchases made with dividends and distributions on class A shares of reinvestment of dividends and
another Eligible Fund capital gains
purchases representing repayment under the loan feature of the Lord 2. shares held for six years or
Abbett-sponsored prototype 403(b) plan for class A shares more (class B) or two years or
more after the month of purchase
purchases by employees of any consenting securities dealer having a (class A) or one year or more
sales agreement with Lord Abbett Distributor (class C)
purchases under a Mutual Fund Advisory Program 3. shares held the
longest before the sixth
purchases by trustees or custodians of any pension or profit sharing anniversary of their purchase
plan, or payroll deduction IRA for employees of any consenting (class B) or before the second
securities dealer having a sales agreement with Lord Abbett anniversary after the month of
Distributor purchase (class A) or before the
first anniversary of their
See the Statement of Additional Information for a listing of other purchase (class C)
categories of purchasers who qualify for class A share purchases without
a front-end sales charge.
Retirement Plans include
Class A Share CDSC. If you buy class A shares under one of the starred employer-sponsored retirement
(*) categories listed above and you redeem any of them within 24 months plans under the Internal Revenue
after the month in which you initially purchased them, the fund normally Code, excluding Individual
will collect a CDSC of 1%. Retirement Accounts.
The class A share CDSC generally will be waived for the following: Lord Abbett Distributor LLC
("Lord Abbett Distributor") acts
benefit payments such as Retirement Plan loans, hardship withdrawals, as agent for the funds to work
death, disability, retirement, separation from service or any excess with investment professionals
distribution under Retirement Plans (documentation may be required) that buy and/or sell shares of
the funds on behalf of their
redemptions continuing as investments in another fund participating clients. Generally, Lord Abbett
in a Special Retirement Wrap Program Distributor does not sell fund
shares directly to investors.
Class B Share CDSC. The CDSC for class B shares normally applies if you
redeem your shares before the sixth anniversary of their initial Benefit Payment Documentation.
purchase. The CDSC declines the longer you own your shares, according to (Class A only)
the following schedule:
under $50,000 - no documentation
necessary
over $50,000 - reason for
benefit payment must be received
in writing. Use the address
indicated under "Opening Your
Account."
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Your Investment 9
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- --------------------------------------------------------------------------
Contingent Deferred Sales Charge - Class B Shares
- --------------------------------------------------------------------------
Anniversary(1) of Contingent Deferred Sales Charge
the day on which the on redemption (as % of amount
purchase order was accepted subject to charge) Important Information. You may
- --------------------------------------------------------------------------- be subject to a $50 penalty
On Before under the Internal Revenue Code
- --------------------------------------------------------------------------- if you do not provide a correct
1st 5.0% taxpayer identification number
- --------------------------------------------------------------------------- (Social Security Number for
1st 2nd 4.0% individuals) or make certain
- --------------------------------------------------------------------------- required certifications. In
2nd 3rd 3.0% addition, we may be required to
- --------------------------------------------------------------------------- withhold from your account and
3rd 4th 3.0% pay to the U.S. Treasury 31% of
- --------------------------------------------------------------------------- any redemption proceeds and any
4th 5th 2.0% dividend or distribution from
- --------------------------------------------------------------------------- your account.
5th 6th 1.0%
- ---------------------------------------------------------------------------
on or after the 6th(2) None
- ---------------------------------------------------------------------------
(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
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)
See "Systematic Withdrawal Plan" under "Services For Fund Investors" below for
more information on CDSCs with respect to class B shares.
Class C Share CDSC. The 1% CDSC for class C shares normally applies if
you redeem your shares before the first anniversary of your original
purchase.
Class P Shares. Class P shares have lower annual expenses than class B and class
C shares, no front-end sales charge, and no CDSC. Class P shares are currently
sold and redeemed at NAV (a) pursuant to a Mutual Fund Advisory Program, or (b)
to the trustees of, or employer-sponsors with respect to, pension or retirement
plans with at least 100 eligible employees (such as a plan under Section 401(a),
401(k) or 457(b) of the Internal Revenue Code) which engage an investment
professional providing, or participating in an agreement to provide, certain
recordkeeping, administrative and/or sub-transfer agency services to the fund on
behalf of the class P shareholders.
OPENING YOUR ACCOUNT
MINIMUM INITIAL INVESTMENT
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.
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10 Your Investment
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You may purchase shares through any independent securities dealer who
has a sales agreement with Lord Abbett Distributor or you can fill out
the attached application and send it to the fund you select at the
address stated below. You should carefully read the paragraph below
entitled "Proper Form" before placing your order to assure your order
will be accepted.
Name of Fund
P.O. Box 419100
Kansas City, MO 64141
Proper Form. An order submitted directly to the fund must contain: (1) a
completed application, and (2) payment by check. For more information
regarding proper form of a purchase order, call the fund at
800-821-5129. Payment must be credited in U.S. dollars to our custodian
bank's account.
By Exchange. Telephone the fund at 800-821-5129 to request an exchange
from any eligible Lord Abbett-sponsored fund.
REDEMPTIONS
By Broker. Call your investment professional for directions on how to
redeem your shares.
By Telephone. To obtain the proceeds of a redemption of $50,000 or less
from your account, you or your representative can call the fund at
800-821-5129.
By Mail. Submit a written redemption request indicating, the name(s) in
which the account is registered, the fund's name, the class of shares,
your account number, and the dollar value or number of shares you wish
to sell.
Include all necessary signatures. If the signer has any Legal Capacity, Eligible Guarantor is any broker
the signature and capacity must be guaranteed by an Eligible Guarantor. or bank that is a member of the
Certain other legal documentation may be required. For more information Medallion Stamp Program. Most
regarding proper documentation call 800-821-5129. major securities firms and banks
are members of this program. A
Normally a check will be mailed to the name and address in which the notary public is not an eligible
account is registered (or otherwise according to your instruction) guarantor.
within three business days after receipt of your redemption request.
Your account balance must be sufficient to cover the amount being
redeemed or your redemption order will not be processed. Redemption
requests for shares initially purchased by check will not be honored for
up to 15 days, unless we are assured that the check has cleared earlier.
To determine if a CDSC applies to a redemption, see "Class A share
CDSC," "Class B share CDSC" or "Class C share CDSC."
DISTRIBUTIONS AND TAXES
Each fund pays its shareholders dividends from its net investment income
and distributes any net capital gains that it has realized. Growth and
Income Fund expects to pay its shareholders dividends on investment
income, if any, semi-annually, the International Fund annually, and the
World Bond-Debenture Fund monthly. If a capital gain distribution is
declared, it will be paid annually. Your distributions will be
reinvested in your fund unless you instruct the fund to pay them to you
in cash. There are no sales charges on reinvestments.
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Your Investment 11
<PAGE>
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The tax status of distributions is the same for all shareholders
regardless of how long they have been in the fund or whether
distributions are reinvested or paid in cash. In general, distributions
are taxable as follows:
- ------------------------------------------------------------------- Taxes on Transactions. The chart
Federal Taxability Of Distributions at left also can provide a "rule
of thumb" guide for your
Type of Tax rate for Tax rate for potential U.S. federal income
distribution 15% bracket 28% bracket and above tax liability when selling or
- ------------------------------------------------------------------- exchanging fund shares. The
Income Ordinary Income second row, "Short-term capital
dividends 15% Rate gains," applies to fund shares
- ------------------------------------------------------------------- sold within 12 months of
Short-term Ordinary Income purchase. The third row,
capital gains 15% Rate "Long-term capital gains,"
- ------------------------------------------------------------------- applies to shares held for more
Long-term than 12 months.
capital gains 10% 20%
- ------------------------------------------------------------------- Starting January 1, 2001, sales
Except in tax-advantaged accounts, any sale or exchange of fund shares of securities held for more than
may be a taxable event. five years will be taxed at
special lower rates.
Annual Information -- Information concerning the tax treatment of
dividends and other distributions will be mailed to shareholders each Any gains realized on a fund's
year. Each fund will also provide annually to its shareholders transactions in options and
information regarding the source of dividends and distributions of financial futures will be
capital gains by that fund. Because everyone's tax situation is unique, treated as taxable long- or
you should consult your tax adviser regarding the treatment of those short-term capital gains.
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 Lord Abbett offers a variety of
described below. With each service, you select a schedule and amount, Retirement Plans. Call
subject to certain restrictions. You can set up most of these services 800-253-7299 for information
when filling out your application or by calling 800-821-5129. about:
- --------------------------------------------------------------------------- Traditional, Rollover, Roth
For investing and Education IRAs
Invest-A-Matic You can make fixed, periodic investments ($50 minimum) into Simple IRAs, SEP-IRAs, 401(k)
(Dollar-cost your fund account by means of automatic money transfers and 403(b) accounts
averaging) from your bank checking account. See the attached application
for instructions. Defined Contribution Plans
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 funds.
Withdrawal Automatic cash withdrawals can be paid to you from your account
Plan ("SWP") in fixed or variable amounts. To establish a plan, the value
of your shares must be at least $10,000, except for Retirement
Plans for which there is no minimum. Your shares must be in
non-certificate form.
Class B Shares The CDSC will be waived on redemptions of up to 12% of the
current net asset value of your account at the time of your
SWP request. For class B share redemptions over 12% per year,
the CDSC will apply to the entire redemption. Please contact
the fund for assistance in minimizing the CDSC in this
situation.
Class B and Redemption proceeds due to a SWP for class B and class C
C Shares shares will be redeemed in the order described under
"Contingent Deferred Sales Charges" under "Purchases."
- ------------------------------------------------------------------------------
</TABLE>
12 Your Investment
<PAGE>
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OTHER SERVICES
Telephone Investing. After we have received the attached application
(selecting "yes" under Section 7C and completing Section 7), you can
instruct us by phone to have money transferred from your bank account to
purchase shares of the fund for an existing account. The fund will Telephone Transactions. You have
purchase the requested shares when it receives the money from your bank. this privilege unless you refuse
it in writing. For your
Telephone Exchanges. You or your investment professional, with proper security, telephone transaction
identification, can instruct your fund by telephone to exchange shares requests are recorded. We will
of any class for shares of the same class of any Eligible Fund by take measures to verify the
calling 800-821-5129. The fund must receive instructions for the identity of the caller, such as
exchange before the close of the NYSE on the day of your call. If you asking for your name, account
meet this requirement, you will get the NAV per share of the Eligible number, social security or
Fund determined on that day. Exchanges will be treated as a sale for taxpayer identification number
federal tax purposes. Be sure to read the current prospectus for any and other relevant information.
fund into which you are exchanging. The funds will not be liable for
following instructions
Reinvestment Privilege. If you sell shares of the fund, you have a one communicated by telephone that
time right to reinvest some or all of the proceeds in the same class of they reasonably believe to be
any Eligible Fund within 60 days without a sales charge. If you paid a genuine.
CDSC when you sold your shares, you will be credited with the amount of
the CDSC. All accounts involved must have the same registration. Transactions by telephone may be
difficult to implement in times
Account Statements. Every Lord Abbett investor automatically receives of drastic economic or market
quarterly account statements. change.
Householding. Shareholders with the same last name and address will Exchanges by telephone should
receive a single copy of a prospectus and an annual or semi-annual not be used to take advantage of
report, unless additional reports are specifically requested in writing short-term swings in the market.
to the fund. The funds reserve the right to
limit or terminate this
Account Changes. For any changes you need to make to your account, privilege for any shareholder
consult your investment professional or call the fund at 800-821-5129. making frequent exchanges or
abusing the privilege and may
Systematic Exchange. You or your investment professional can establish a revoke the privilege for all
schedule of exchanges between the same classes of any Eligible Fund. shareholders upon 60 days'
written notice.
SALES CHARGES AND SERVICE FEES
Sales and Service Compensation. As part of its plan for distributing
shares, each fund and Lord Abbett Distributor pay sales and service
compensation to Authorized Institutions that sell the fund's shares and
service its shareholder accounts.
Sales compensation originates from two sources: sales charges and 12b-1 12b-1 fees are payable
distribution fees that are paid out of each fund's assets. Service regardless of expenses. The
compensation originates from 12b-1 service fees. The 12b-1 fee rates amounts payable by a fund need
vary by share class, according to the Rule 12b-1 plan adopted by each not be directly related to
fund. The sales charges and 12b-1 fees paid by investors are shown in expenses. If Lord Abbett
the class-by-class information under "Fees and Expenses" and Distributor's actual expenses
"Purchases." The portion of these expenses that is paid as sales and exceed the fee payable to it, a
service compensation to Authorized Institutions, such as your dealer, is fund will not have to pay more
shown in the charts at the end of this prospectus. The portion of such than that fee. If Lord Abbett
sales and service compensation paid to Lord Abbett Distributor is Distributor's expenses are less
discussed under "Sales Activities" and "Service Activities." Sometimes than the fee it receives, Lord
we do not pay sales and service compensation where tracking data is not Abbett Distributor will keep the
available for certain accounts or where the Authorized Institution full amount of the fee.
waives part of the compensation.
We may pay Additional Concessions to Authorized Institutions from time
to time.
Sales Activities. We may use 12b-1 distribution fees to pay Authorized
Institutions to finance any activity which is primarily intended to
result in the sale of shares. Lord Abbett Distributor uses its portion
of the distribution fees attributable to a fund's class A and class C
shares for activities which are primarily intended to result in the sale
of such class
</TABLE>
Your Investment 13
<PAGE>
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 funds' investment adviser is Lord, Abbett & Co., 767 Fifth Avenue,
New York, NY 10153-0203. Founded in 1929, Lord Abbett manages one of the
nation's oldest mutual fund complexes, with approximately $28 billion in
more than 35 mutual fund portfolios and other advisory accounts. For
more information about the services Lord Abbett provides to the funds,
see the Statement of Additional Information.
Each fund pays Lord Abbett a monthly fee based on average daily net
assets for each month. For the fiscal year ended October 31, 1998, the
fee paid to Lord Abbett was at an annual rate of .75 of 1% for each the
Growth & Income Fund and International Fund. Lord Abbett has waived its
management fee for the World Bond-Debenture Fund. In addition, the funds
pay all expenses not expressly assumed by Lord Abbett.
Lord Abbett uses teams of portfolio managers and analysts acting
together to manage the funds' investments.
Growth and Income Fund. Robert G. Morris, Partner of Lord Abbett, heads
the team, the senior members of which are W. Thomas Hudson, Jr., Partner
of Lord Abbett, and Eli Salzman. Messrs. Morris and Hudson have been
with Lord Abbett for more than five years. Mr. Salzman joined Lord
Abbett in 1997; prior to that he was a Vice President with Mutual of
America Capital Corp. from 1996 to 1997, and was a Vice President at
Mitchell Hutchins Asset Management, Inc. from 1986 to 1996.
International Fund. Christopher J. Taylor is Managing Director of the
sub-adviser of the fund, Fuji-Lord Abbett International Ltd., of which
Lord Abbett is a minority owner (formerly named Fuji Investment
Management Co. (Europe) Ltd.). Mr. Taylor heads the team, the senior
member of which is Simon Steele, U.K. Equity Fund Manager. Mr. Steele
joined Fuji Investment Co. (Europe) Ltd. in 1996 and previously was
responsible for the WH Smith Pension Trust's U.K. Equities as well as
the whole fund's International Asset allocation. Mr. Taylor has been
employed by the sub-adviser and its predecessor companies since 1987.
World Bond-Debenture Fund. Zane E. Brown, Partner of Lord Abbett, heads
the team, the senior members of which are Christopher J. Towle, Timothy
W. Horan, Jerald M. Lanzotti and Fernando B. Saldanha. Mr. Brown and Mr.
Towle have each been with Lord Abbett for over five years. Mr. Horan
joined Lord Abbett in 1996; prior to that he was a member of Senior
Management at Credit Suisse from 1994-1996. Mr. Lanzotti joined Lord
Abbett in 1996; prior to that he was an Associate in Global Fixed Income
at Deutsche Morgan Grenfell from 1993-1996. Mr. Saldanha joined Lord
Abbett in 1998; prior to that he was a Senior Financial Officer at World
Bank from 1988-1998.
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. The funds 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 a loss if the
counterparty to a transaction does not perform as promised.
Borrowing. Each fund may borrow from banks. If a fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. Each fund may borrow only for temporary or emergency purposes,
and not in an amount exceeding 33 1/3% of its total assets.
Closed-end Investment Companies. Each fund may invest in shares of
closed-end investment companies if bought in the primary or secondary
market with a fee or commission no greater than the customary broker's
commission.
Depository Receipts. The International Fund may invest in Depository
Receipts which are securities, typically issued by a financial
institution (a "depository"), that evidence ownership interests in a
security or a pool of securities issued by a foreign issuer (the
"underlying issuer") and deposited with the depository. Generally,
Depository Receipts in registered form are designed for use in U.S.
securities market and Depository Receipts in bearer form are designed
for use in securities markets outside the United States. The fund may
invest in sponsored and unsponsored Depository Receipts. For purposes of
the International Fund's investment policies, investments in Depository
Receipts will be deemed to be investments in the underlying securities.
Diversification. Growth & Income Fund and International Fund are
diversified funds. This means that with respect to 75% of their total
assets, they will not purchase a security if, as a result, more than 5%
of a fund's total assets would be invested in securities of a single
issuer or the fund would hold more than 10% of the outstanding voting
securities of the issuer.
Equity Securities. These include common stocks, preferred stocks,
convertible securities, warrants, and similar instruments. Common
stocks, the most familiar type, represent an ownership interest in a
corporation. Although equity securities have a history of long-term
growth in their value, their prices fluctuate based on changes in a
company's financial condition and on market and economic conditions.
Foreign Currency Hedging Techniques. Although the International Fund and
World Bond-Debenture Fund 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
For More Information 15
<PAGE>
foreign exchange price movements will be unfavorable for U.S. investors.
Generally, these instruments allow a fund to lock in a specified
exchange rate for a period of time. If the fund's forecast proves to be
wrong, such a hedge may cause a loss. Also, it may be difficult or
impractical to hedge currency risk in many emerging countries. The funds
generally will not enter into a forward contract with a term greater
than one year. Under some circumstances, a fund may commit a substantial
portion or the entire value of its portfolio to the completion of
forward contracts. Although such contracts will be used primarily to
protect the fund from adverse currency movements, their use involves the
risk Lord Abbett will not accurately predict currency movement, and the
fund's return could be reduced.
Foreign Securities. The International Fund and the World Bond-Debenture
Fund may invest all of their assets in foreign securities; the Growth
and Income Fund may invest 10% of its assets in foreign securities.
These securities are not subject to the same degree of regulation and
may be more volatile and less liquid than securities traded in major
U.S. markets. This affects block trading. Foreign portfolio securities
trade on days when a fund does not value them. Fund share prices could
be affected on days an investor cannot purchase or sell shares. Other
risks include less information on public companies, banks and
governments; political and social instability; expropriations; higher
transaction costs; currency fluctuations; nondeductible withholding
taxes and different accounting and settlement practices.
Options and Financial Futures Transactions. The International Fund may
deal in options on securities, and securities indices, and financial
futures transactions, including options on financial futures to increase
or decrease its exposure to changing securities prices or interest rates
or for bona fide hedging purposes. The fund may write (sell) covered
call options and secured put options on up to 25% of its net assets and
may purchase put and call options and purchase and sell futures
contracts provided that no more than 5% of its net assets (at the time
of purchase) may be invested in premiums on such options and initial
margin deposits on such futures contracts.
The International Fund will not enter into any futures contracts, or
options thereon, if the aggregate market value of the securities covered
by futures contracts plus options on such financial futures exceeds 50%
of the fund's total assets.
In addition, the use of options and financial futures transactions to
achieve a fund's investment objective could result in a loss due to
unanticipated market conditions and could increase the volatility of the
fund. These transactions may involve a small investment of cash relative
to the risks assured.
High Yield Debt Securities. The World Bond-Debenture Fund may invest
substantially all of its assets and the Growth & Income Fund may invest
up to 5% of its net assets measured at the time of investment 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.
Illiquid Securities. Each 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.
Investment Funds. The International Fund may invest (normally not more
than 5% of the fund's total assets) in investment funds. Some emerging
countries have laws and regulations that currently preclude direct
foreign investment in the securities of their
16 For More Information
<PAGE>
companies. However, indirect foreign investment in the securities of
such countries is permitted through investment funds which have been
specifically authorized. If the fund invests in such investment funds,
the fund's shareholders will bear not only their proportionate share of
the expenses of the fund (including operating expenses and the fees of
Lord Abbett), but also will indirectly bear similar expenses of the
underlying investment funds.
Investment Grade Debt Securities. These are debt securities which are
rated in one of the four highest grades assigned by Moody's Investors
Service, Inc., Standard & Poor's Ratings Services or Fitch Investors
Service, or are unrated but determined by Lord Abbett to be equivalent
in quality.
Portfolio Securities Lending. Each fund may lend securities to
broker-dealers and financial institutions, as a means of earning income.
This practice could result in a loss or delay in recovering a fund's
securities, if the borrower defaults. Each fund will limit its
securities loans to 33 1/3% of its total assets.
Repurchase Agreements. Each fund may enter into Repurchase Agreements.
In a Repurchase Agreement, a fund buys a security at one price from a
broker-dealer or financial institution and simultaneously agrees to sell
the same security back to the same party at a higher price in the
future. If the other party to the agreement defaults or becomes
insolvent, a fund could lose money.
U.S. Government Securities. These are obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities.
When-Issued or Delayed Delivery Transactions. Each 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 an effort to buy or sell
the securities at an advantageous price and yield. The securities
involved are subject to market fluctuation and no interest 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 the 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.
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.
For More Information 17
<PAGE>
<TABLE>
<S> <C>
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; and
(4) Lord Abbett U.S. Government Securities Money Market Fund ("GSMMF")
(except for holdings in GSMMF which are attributable to any shares
exchanged from the Lord Abbett family of funds). An Eligible Fund also
is any Authorized Institution's affiliated money market fund satisfying
Lord Abbett Distributor as to certain omnibus account and other
criteria.
Eligible Mandatory Distributions. If class B shares represent a part of
an individual's total IRA or 403(b) investment, the CDSC will be waived
only for that part of a mandatory distribution which bears the same
relation to the entire mandatory distribution as the B share investment
bears to the total investment.
Eurodollar. U.S. currency held in banks outside the United States,
mainly in Europe, and commonly used for settling international
transactions. Some securities are issued in Eurodollars--that is, with a
promise to pay interest in dollars deposited in foreign bank accounts.
Legal Capacity. This term refers to the authority of an individual to Guaranteed signature. An acceptable
act on behalf of an entity or other person(s). For example, if a form of guarantee would be as
redemption request were to be made on behalf of the estate of a deceased follows:
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 In the case of the estate -
the executor of the estate, then the request must be executed as Robert A. Doe
follows: Robert A. Doe, Executor of the Estate of John W. Doe. That Executor of the Estate of
signature using that capacity must be guaranteed by an Eligible John W. Doe
Guarantor.
To give another example, if a redemption request were to be made on [Date]
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 SIGNATURE GUARANTEED
the president of the corporation, the request must be executed as MEDALLION GUARANTEED
follows: ABC Corporation by Mary B. Doe, President. That signature using Name of Guarantor
that capacity must be guaranteed by an Eligible Guarantor. [signature illegible]
--------------------------------
Mutual Fund Advisory Program. Certain unaffiliated authorized brokers, (960) X9003470
dealers, registered investment advisers or other financial institutions SECURITIES TRANSFER AGENTS
who either (a) have an arrangement with Lord Abbett Distributor in MEDALLION PROGRAM'TM'
accordance with certain standards approved by Lord Abbett Distributor, SR
providing specifically for the use of our shares (and sometimes
providing for acceptance of orders for such shares on our behalf) in In the case of the corporation -
particular investment products made available for a fee to clients of ABC Corporation
such broker-dealers, registered investment advisers and other financial
institutions, or (b) charge an advisory consulting or other fee for Mary B. Doe
their services and buy shares for their own accounts or the accounts of By Mary B. Doe, President
their clients.
[Date]
Purchaser. The term "purchaser" includes: (i) an individual; (ii) an
individual and his or her spouse and children under the age of 21; and SIGNATURE GUARANTEED
(iii) a trustee or other fiduciary purchasing shares for a single trust MEDALLION GUARANTEED
estate or single fiduciary account (including a pension, profit-sharing, Name of Guarantor
or other employee benefit trust qualified under Section 401 of the [signature illegible]
Internal Revenue Code -- more than one qualified employee benefit trust --------------------------------
of a single employer, including its consolidated subsidiaries, may be (960) X9003470
considered a single trust, as may qualified plans of multiple employers SECURITIES TRANSFER AGENTS
registered in the name of a single bank trustee as one account), MEDALLION PROGRAM'TM'
although more than one beneficiary is involved. SR
Special Retirement Wrap Program. This is 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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 Year 2000 Issues. Each fund
could be adversely affected if
Growth and Income Fund. While anticipating a slowing of corporate the computers used by each fund
earnings might move stock prices lower during the second half of the and their service providers do
fund's fiscal year, investor concern over economic problems abroad not properly process and
resulted in significant declines across nearly all equity sectors. The calculate date-related
fund's value approach to stock selection did not spare it from declining information from and after
during the stock market downturn. January 1, 2000.
The economy continues to slow, and the financial markets have shown While year 2000-related computer
increased volatility over concerns regarding earnings shortfalls and problems could have a negative
evidence of a global credit crunch. However, our expectation for the effect on each fund, Lord Abbett
U.S. economy at this time is not recession, but rather that we have is working to avoid such
reached an inflection point of slower growth. Consumer activity problems and has assurances from
continues to provide support for growth with gains in job creation, each fund's service providers
income and spending. Business spending is an area of greater concern. that they are taking similar
Recession abroad is likely to reduce exports and have a flattening steps. However, because the
effect on corporate profit growth. Overall, gross domestic product is problem is unprecedented and
likely to grow at an annual rate of approximately 1.5 - 2.0% during the efforts to identify and fix any
next 6 to 12 months. U.S. interest rates have fallen, reflecting slowing problems are ongoing, we don't
growth and continuing low inflation. As the fund's new fiscal year know whether these efforts will
begins, the market is still anticipating some additional easing by the be successful. Accordingly, each
Federal Reserve, a view with which we concur. In sum, it is our view fund may be adversely affected.
that the underpinnings of sound equity markets remain in place, and the
price declines of the third quarter created more opportunities for
long-term investors.
International Fund. During the fund's fiscal year, its investment
strategy of holding a relatively concentrated portfolio of
industry-leading companies bought at low valuation levels means that we
have utilized the recent period of market weakness to steadily add to
existing positions.
In addition, the fund was not invested in the emerging and Far Eastern
markets, but was instead concentrated primarily in Europe and Canada.
This, in addition to the fund's superior stock selection, contributed to
the last fiscal year's high performance. Throughout this period,
portfolio turnover remained low. We used new purchase monies to add to
our existing holdings during this period. As a result, there was very
little actual change to our list. Throughout this period, portfolio
turnover remained low.
World Bond-Debenture Fund. A further slowdown in the Asian economies
spread deflationary pressures to the rest of the world, setting the
stage for the lower global interest rates and increased currency
volatility. Even the U.S. economy which has served as the engine for
global economic growth over the last eight years, began to show signs of
a slow-down. Against this backdrop, new governments, taking office in
both developed and developing countries have been working to promote
growth and reduce unemployment. In this environment, the fund has
endeavored to capture value across a variety of asset classes while
limiting the downside risk from volatile markets. High-quality assets
tended to outperform during much of the most recent fiscal year as
markets discounted the prospect of lower rates in a flight to quality.
The fund -- with its limited exposure to emerging market -- was able to hold
its own in a falling market by maintaining exposure to the U.S. and
European high-yield markets as well as to high-grade markets. However,
as difficulties in various emerging markets become resolved, a prudent
reassessment of investment opportunities in such markets will be
required.
For More Information 19
<PAGE>
Growth & Income Fund
Financial Information
FINANCIAL HIGHLIGHTS
This table describes the fund's performance for the fiscal periods indicated.
"Total return" shows how much your investment in the fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. These Financial Highlights have been audited by Deloitte & Touche
LLP, the fund's independent auditors, in conjunction with their annual audit of
the fund's financial statements. Financial statements for the fiscal year ended
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 on request. Certain information reflects financial results for a
single fund share.
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Class A Shares
-----------------------------------------------------
Year Ended October 31,
Per Share Operating Performance: 1998 1997 1996(a)
<S> <C> <C> <C>
Net asset value, beginning of period $8.79 $7.09 $6.50
- ---------------------------------------------------------------------------------
Income from investment operations
- ---------------------------------------------------------------------------------
Net investment income .057 .093 .028
- ---------------------------------------------------------------------------------
Net realized and unrealized
gain on investments .928 1.781 .589
- ---------------------------------------------------------------------------------
Total from investment operations .985 1.874 .617
- ---------------------------------------------------------------------------------
Distributions
- ---------------------------------------------------------------------------------
Dividends from net investment income (.035) (.099) (.027)
- ---------------------------------------------------------------------------------
Distributions from net realized gain (.590) (.075) --
- ---------------------------------------------------------------------------------
Net asset value, end of period $9.15 $8.79 $7.09
- ---------------------------------------------------------------------------------
Total Return(b) 11.97% 26.78% 12.10%(d)
- ---------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ---------------------------------------------------------------------------------
Expenses 1.22% 1.29% 0.39%(d)
- ---------------------------------------------------------------------------------
Net investment income 0.88% 1.15% 0.40%(d)
- ---------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Class C Shares
--------------------------------------------------------------------
Year Ended October 31, Year Ended October 31,
--------------------------------------------------------------------
Per Share Operating Performance: 1998 1997(a) 1998 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $8.80 $8.20 $8.80 $7.09 $6.04 $5.07 $5.00
- --------------------------------------------------------------------------------------------------------------------
Income from investment operations
- --------------------------------------------------------------------------------------------------------------------
Net investment income --(c) --(c) .011 .032 .0949 .12 .089
- --------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on securities .92 .60 .889 1.790 1.0986 .97 .041
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations .92 .60 .900 1.822 1.1935 1.09 .130
- --------------------------------------------------------------------------------------------------------------------
Distributions
- --------------------------------------------------------------------------------------------------------------------
Dividends from net investment income -- -- -- (.037) (.1035) (.12) (.06)
- --------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain (.590) -- (.590) (.075) (.04) -- --
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.13 $8.80 $9.11 $8.80 $7.09 $6.04 $5.07
- --------------------------------------------------------------------------------------------------------------------
Total Return(b) 11.17% 7.19%(d) 10.94% 26.24% 20.02% 21.83% 2.62%(d)
- --------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- --------------------------------------------------------------------------------------------------------------------
Expenses, including waiver 1.98% 0.86%(d) 1.98% 2.05% 1.55% 1.16% 0.61%(d)
- --------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver 1.98% 0.86%(d) 1.98% 2.05% 2.01% 1.91% 1.94%(d)
- --------------------------------------------------------------------------------------------------------------------
Net investment income 0.09% 0.01%(d) 0.12% 0.39% 1.36% 2.06% 2.03%(d)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31,
---------------------------------------------------------------
Supplemental Data For All Classes: 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $165,904 $142,992 $113,962 $32,770 $9,160
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 45.83% 36.37% 23.84% 23.17% 31.95%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(a) From commencement of operations for each class of shares: July 15, 1996
(class A); June 5, 1997 (class B); and January 3, 1994 (class C).
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Amount less than $0.01.
(d) Not annualized.
See Notes to Financial Statements.
20 Financial Information
<PAGE>
Growth & Income Fund
<TABLE>
<S> <C>
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in class C
shares to the same investment in the S&P 500(R) Index, assuming
reinvestment of all dividends and distributions.
Year Fund at NAV S&P 500 Index
1994 10,262 10,360 (1) This shows total return
1995 12,502 13,096
1996 15,006 16,250
1997 18,943 21,466
1998 21,015 26,190 applicable to class C
- -------------------------------------------------------------------- shares, with all dividends
Average Annual Total Return at Maximum Applicable and distributions
Sales Charge for the Periods Ending October 31, 1998 reinvested for the periods
shown ending October 31,
1 Year 10 Years (or Life) 1998, using the
- -------------------------------------------------------------------- SEC-required uniform method
Class A(3) 5.50% 19.32% to compute such return.
- -------------------------------------------------------------------- (2) Performance for the
Class B(3) 6.72% 9.75% unmanaged S&P 500(R) Index
- -------------------------------------------------------------------- does not reflect
Class C(4) 10.94% 16.63% transaction costs,
- -------------------------------------------------------------------- management fees or sales
charges. Performance for
this index begins on
12/31/93.
(3) The class A and B shares
were first offered on
7/15/96 and 6/5/97,
respectively. For class B
shares, performance
reflects the deduction of a
CDSC of 4% (for 1 year) and
3% (life of class).
(4) The class C shares were
first offered on 1/3/94.
Performance is at net asset
value.
</TABLE>
Financial Information 21
<PAGE>
International Fund
FINANCIAL HIGHLIGHTS
This table describes the fund's performance for the fiscal periods
indicated. "Total return" shows how much your investment in the fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These Financial Highlights
have been audited by Deloitte & Touche LLP, the fund's independent
auditors, in conjunction with their annual audits 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
Year Ended October 31,
-------------------------------------
Per Share Operating Performance: 1998 1997(a)
<S> <C> <C>
Net asset value, beginning of period $10.86 $9.42
- ------------------------------------------------------------------------------
Income from investment operations
- ------------------------------------------------------------------------------
Net investment income .11(d) .07
- ------------------------------------------------------------------------------
Net realized and unrealized
- ------------------------------------------------------------------------------
gain on investments and foreign
- ------------------------------------------------------------------------------
currency holdings 1.45 1.37
- ------------------------------------------------------------------------------
Total from investment operations 1.56 1.44
- ------------------------------------------------------------------------------
Distributions
- ------------------------------------------------------------------------------
Dividends from net investment income (.03) --
- ------------------------------------------------------------------------------
Net asset value, end of period $12.39 $10.86
- ------------------------------------------------------------------------------
Total Return(b) 14.36% 15.21%(c)
- ------------------------------------------------------------------------------
Ratios to Average Net Assets:
- ------------------------------------------------------------------------------
Expenses 1.31% 1.23%(c)
- ------------------------------------------------------------------------------
Net investment income 0.80% 0.41%(c)
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Class B Shares Class C Shares
-------------------------------------------------
Year Ended October 31, Year Ended October 31,
-------------------------------------------------
Per Share Operating Performance: 1998 1997(a) 1998 1997(a)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.83 $10.26 $10.83 $10.26
- --------------------------------------------------------------------------------------------------
Income from investment operations
- --------------------------------------------------------------------------------------------------
Net investment income (loss) .02(d) (.03) .02(d) (.03)
- --------------------------------------------------------------------------------------------------
Net realized and unrealized
- --------------------------------------------------------------------------------------------------
gain on investments and foreign
- --------------------------------------------------------------------------------------------------
currency holdings 1.43 .60 1.43 .60
- --------------------------------------------------------------------------------------------------
Total from investment operations 1.45 .57 1.45 .57
- --------------------------------------------------------------------------------------------------
Distributions
- --------------------------------------------------------------------------------------------------
Dividends from net investment income -- -- -- --
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $12.28 $10.83 $12.28 $10.83
- --------------------------------------------------------------------------------------------------
Total Return(b) 13.39% 5.56%(c) 13.39% 5.56%(c)
- --------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- --------------------------------------------------------------------------------------------------
Expenses 2.03% 0.87%(c) 2.05% 0.87%(c)
- --------------------------------------------------------------------------------------------------
Net investment income (loss) 0.18% (0.46)%(c) 0.12% (0.46)%(c)
- ----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Year Ended October 31,
------------------------------------------
Supplemental Data For All Classes: 1998 1997
<S> <C> <C>
Net assets, end of period (000) $153,033 $37,334
- -------------------------------------------------------------------------------
Portfolio turnover rate 20.52% 29.72%
- -------------------------------------------------------------------------------
</TABLE>
(a) From commencement of operations for each class of shares: December
13, 1996 (class A), June 2, 1997 (class B), and June 2, 1997
(class C).
(b) Total return does not consider the effects of sales loads and
assumes the reinvestment of all distributions.
(c) Not annualized.
(d) Calculated using average shares outstanding during the period. See
Notes to Financial Statements.
22 Financial Information
<PAGE>
International Fund
<TABLE>
<S> <C>
LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in class A
shares to the same investment in MSCI EAFE Index, assuming reinvestment
of all dividends and distributions.
Year Fund at NAV Fund at Max MSCI EAFE Index
Offering Price
12/31/96 10,047 9,470 10,000
1/31/97 10,174 9,590 9,652
2/28/97 10,609 10,000 9,812
3/31/97 10,673 10,060 9,850
4/30/97 10,662 10,050 9,905
5/31/97 10,938 10,310 10,551
6/30/97 11,224 10,580 11,136
7/31/97 11,245 10,600 11,319
8/31/97 10,874 10,250 10,475
9/30/97 11,553 10,890 11,064
10/31/97 11,521 10,860 10,217
11/30/97 11,325 10,675 10,114
12/31/97 12,027 11,336 10,205
1/31/98 12,558 11,837 10,675
2/28/98 13,601 12,820 11,362
3/31/98 14,877 14,023 11,715
4/30/98 15,514 14,624 11,809
5/31/98 16,003 15,085 11,755
6/30/98 15,610 14,714 11,847
7/31/98 15,631 14,734 11,970
8/31/98 13,398 12,629 10,489
9/30/98 12,643 11,918 10,170
10/31/98 13,175 12,419 11,233
(1) Reflects the deduction of
- ----------------------------------------------------------------------------- the maximum initial sales
Fund's Average Annual Total Return at Maximum Applicable charge of 5.75%.
Sales Charge for the Periods Ending October 31, 1998 (2) This shows total return
which is the percent change
1 Year 10 Years (or Life) in value, after deduction
- ----------------------------------------------------------------------------- of the maximum initial
Class A(2) 7.90% 12.19% sales charge of 5.75%
- ----------------------------------------------------------------------------- applicable to class A
Class B(4) 8.85% 10.32% shares, with all dividends
- ----------------------------------------------------------------------------- and distributions
Class C(5) 13.39% 13.55% reinvested for the periods
- ----------------------------------------------------------------------------- shown ending October 31,
1998, using the
SEC-required uniform method
to compute such return.
(3) Performance for the
unmanaged MSCI EAFE Index
does not reflect
transaction costs,
management fees or sales
charges. Performance for
this index begins on
12/31/96.
(4) The class B shares were
first offered on 6/2/97.
Performance reflects the
deduction of a CDSC of 4%
(for 1 year) and 3% (life
of the class).
(5) The class C shares were
first offered on 6/2/97.
Performance is at net asset
value.
</TABLE>
Financial Information 23
<PAGE>
World Bond-Debenture Fund
FINANCIAL HIGHLIGHTS
This table describes the fund's performance for the fiscal periods indicated.
"Total return" shows how much your investment in the fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. These Financial Highlights have been audited by Deloitte & Touche
LLP, the fund's independent auditors, in conjunction with their annual audits 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
Year Ended October 31,
--------------------------------------------------
Per Share Operating Performance: 1998(a) 1998(a) 1998(a)
<S> <C> <C> <C>
Net asset value, beginning of period $10.00 $10.00 $10.00
- --------------------------------------------------------------------------------------------------
Income from investment operations
- --------------------------------------------------------------------------------------------------
Net investment income .511 .406 .395
- --------------------------------------------------------------------------------------------------
Net realized and unrealized
- --------------------------------------------------------------------------------------------------
loss on investments and foreign
- --------------------------------------------------------------------------------------------------
currency holdings (.425) (.372) (.361)
- --------------------------------------------------------------------------------------------------
Total from investment operations .086 .034 .034
- --------------------------------------------------------------------------------------------------
Distributions
- --------------------------------------------------------------------------------------------------
Dividends from net investment income (.426) (.384) (.384)
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $9.66 $9.65 $9.65
- --------------------------------------------------------------------------------------------------
Total Return(b)(c) 0.75% 0.24% 0.24%
- --------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:(c)
- --------------------------------------------------------------------------------------------------
Expenses, including waiver 0.55% 1.28% 1.28%
- --------------------------------------------------------------------------------------------------
Expenses, excluding waiver 1.20% 1.93% 1.93%
- --------------------------------------------------------------------------------------------------
Net investment income 7.08% 6.67% 6.62%
- --------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Year Ended October 31,
-----------------------------------
Supplemental Data For All Classes: 1998(a)
<S> <C>
Net assets, end of period (000) $10,134
- -------------------------------------------------------------------------------
Portfolio turnover rate 159.14%
- -------------------------------------------------------------------------------
</TABLE>
(a) From commencement of operations for each class of shares: December 18, 1997
(class A), December 19, 1997 (class B), and December 19, 1997 (class C).
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Not annualized. See Notes to Financial Statements.
24 Financial Information
<PAGE>
World Bond-Debenture Fund
<TABLE>
<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 JP Morgan Emerging Market Index,
and the JP Morgan Global Gov't Bond Index and the Merrill Lynch HY
Master Index, assuming reinvestment of all dividends and distributions.
Year Fund at NAV Fund at Max JP Morgan Merrill JP Morgan
Offering Price Emerging HY Global
12/31/97 10,110 9,629 10,000 10,000 10,000 (1) Reflects the deduction of
1/31/98 10,280 9,790 9,980 10,159 10,100
2/28/98 10,510 10,010 10,265 10,201 10,175
3/31/98 10,610 10,105 10,521 10,297 10,099
4/30/98 10,690 10,181 10,546 10,342 10,254
5/31/98 10,540 10,037 10,186 10,404 10,298
6/30/98 10,510 10,010 9,892 10,458 10,327
7/31/98 10,704 10,194 9,960 10,524 10,355
8/31/98 9,721 9,259 7,098 9,993 10,641
9/30/98 10,022 9,544 7,792 10,019 11,197
10/31/98 10,075 9,596 8,296 9,805 11,448 the maximum initial sales
charge of 4.75%.
(2) This shows total return
which is the percent change
- ----------------------------------------------------------------------- in value, after deduction
Average Annual Total Return at Maximum Applicable of the maximum initial
Sales Charge for the Periods Ending October 31, 1998 sales charge of 4.75%
applicable to class A
10 Years (or Life) shares, with all dividends
- ----------------------------------------------------------------------- and distributions
Class A(2) (4.00)% reinvested for the periods
- ----------------------------------------------------------------------- shown ending October 31,
Class B(4) (4.77)% 1998, using the
- ----------------------------------------------------------------------- SEC-required uniform method
Class C(5) (0.76)% to compute such return.
- ----------------------------------------------------------------------- (3) Performance for the
unmanaged JP Morgan
Emerging Market Index, the
JP Morgan Global Gov't Bond
Index, and the Merrill
Lynch HY Master Index do
not reflect transaction
costs, management fees or
sales charges. These three
indices chosen to compare
to the fund's performance
have elements of three
categories: high-yield
corporate debt,
equity-related securities
and high-grade debt. Since
there is no one index
combining all three in the
same annual blend as the
fund's portfolio, these
three separate indices may
not be a valid comparison
for the fund. Performance
for the three indices
begins on 12/31/97.
(4) The class B shares were
first offered on 12/18/97.
For class B shares,
performance reflects the
deduction of a CDSC of 4%
(for 1 year) and 3% (life
of class).
(5) The class C shares were
first offered on 12/18/97.
Performance is at net asset
value.
</TABLE>
Financial Information 25
<PAGE>
COMPENSATION FOR YOUR DEALER -- Growth & Income Fund / International Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
FIRST YEAR COMPENSATION
Front-end
sales charge Dealer's
paid by investors concession Service fee(1) Total compensation(2)
Class A investments (% of offering price) (% of offering price) (% of net investment) (% of offering price)
<S> <C> <C> <C> <C>
Less than $50,000 5.75% 5.00% 0.25% 5.24%
- ------------------------------------------------------------------------------------------------------------------------------
$50,000 - $99,999 4.75% 4.00% 0.25% 4.24%
- ------------------------------------------------------------------------------------------------------------------------------
$100,000 - $249,999 3.75% 3.25% 0.25% 3.49%
- ------------------------------------------------------------------------------------------------------------------------------
$250,000 - $499,999 2.75% 2.25% 0.25% 2.49%
- ------------------------------------------------------------------------------------------------------------------------------
$500,000 - $999,999 2.00% 1.75% 0.25% 2.00%
- ------------------------------------------------------------------------------------------------------------------------------
$1 million or more(3) or Retirement Plan - 100 or more
eligible employees(3) or Special Retirement Wrap Program(3)
- ------------------------------------------------------------------------------------------------------------------------------
First $5 million no front-end sales charge 1.00% 0.25% 1.25%
- ------------------------------------------------------------------------------------------------------------------------------
Next $5 million above that no front-end sales charge 0.55% 0.25% 0.80%
- ------------------------------------------------------------------------------------------------------------------------------
Next $40 million above that no front-end sales charge 0.50% 0.25% 0.75%
- ------------------------------------------------------------------------------------------------------------------------------
Over $50 million no front-end sales charge 0.25% 0.25% 0.50%
- ------------------------------------------------------------------------------------------------------------------------------
Class B investments Paid at time of sale (% of net asset value)
- ------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 3.75% 0.25% 4.00%
- ------------------------------------------------------------------------------------------------------------------------------
Class C investments
- ------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.75% 0.25% 1.00%
- ------------------------------------------------------------------------------------------------------------------------------
Class P investments Percentage of average net assets
- ------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION AFTER FIRST YEAR
<S> <C> <C> <C> <C>
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
year's service fee on class B and C shares is paid at the time of sale.
(2) Reallowance/concession percentages and service fee percentages are
calculated from different amounts, and therefore may not equal total
compensation percentages if combined using simple addition. Additional
Concessions may be paid to Authorized Institutions, 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.
26 Financial Information
<PAGE>
COMPENSATION FOR YOUR DEALER -- World Bond-Debenture Fund
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
FIRST YEAR COMPENSATION
Front-end
sales charge Dealer's
paid by investors concession Service fee(1) Total compensation(2)
Class A investments (% of offering price) (% of offering price) (% of net investment) (% of offering price)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.00% 0.25% 4.24%
- ----------------------------------------------------------------------------------------------------------------------------------
$50,000 - $99,999 4.75% 4.25% 0.25% 4.49%
- ----------------------------------------------------------------------------------------------------------------------------------
$100,000 - $249,999 3.75% 3.25% 0.25% 3.49%
- ----------------------------------------------------------------------------------------------------------------------------------
$250,000 - $499,999 2.75% 2.50% 0.25% 2.74%
- ----------------------------------------------------------------------------------------------------------------------------------
$500,000 - $999,999 2.00% 1.75% 0.25% 2.00%
- ----------------------------------------------------------------------------------------------------------------------------------
$1 million or more(3) or Retirement Plan - 100 or more
eligible employees(3) or Special Retirement Wrap Program(3)
First $5 million no front-end sales charge 1.00% 0.25% 1.25%
- ----------------------------------------------------------------------------------------------------------------------------------
Next $5 million above that no front-end sales charge 0.55% 0.25% 0.80%
- ----------------------------------------------------------------------------------------------------------------------------------
Next $40 million above that no front-end sales charge 0.50% 0.25% 0.75%
- ----------------------------------------------------------------------------------------------------------------------------------
Over $50 million no front-end sales charge 0.25% 0.25% 0.50%
- ----------------------------------------------------------------------------------------------------------------------------------
Class B investments Paid at time of sale (% of net asset value)
- ----------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 3.75% 0.25% 4.00%
- ----------------------------------------------------------------------------------------------------------------------------------
Class C investments
- ----------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.75% 0.25% 1.00%
- ----------------------------------------------------------------------------------------------------------------------------------
Class P investments Percentage of average net assets
- ----------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION AFTER FIRST YEAR
<S> <C> <C> <C> <C>
Class A investments
- --------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.25% 0.25%
- --------------------------------------------------------------------------------------------------------------------------------
Class B investments Percentage of average net assets(4)
- --------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge none 0.25% 0.25%
- --------------------------------------------------------------------------------------------------------------------------------
Class C investments
- --------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.65% 0.25% 0.90%
- --------------------------------------------------------------------------------------------------------------------------------
Class P investments
- --------------------------------------------------------------------------------------------------------------------------------
All amounts no front-end sales charge 0.25% 0.20% 0.45%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The service fee for class A and P shares is paid quarterly. The first
year's service fee on class B and C shares is paid at the time of sale.
(2) Reallowance/concession percentages and service fee percentages are
calculated from different amounts, and therefore may not equal total
compensation percentages if combined using simple addition. Additional
Concessions may be paid to Authorized Institutions, 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%, 0.90% and 0.45%,
respectively, of the average annual net asset value of such shares
outstanding during the quarter (including distribution reinvestment shares
after the first anniversary of their issuance) is paid to Authorized
Institutions, such as your dealer. These fees are paid quarterly in
arrears.
Financial Information 27
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
<TABLE>
<S> <C>
More information on these funds is available free upon request,
including:
ANNUAL/SEMI-ANNUAL REPORT To obtain information:
Describes the funds, lists portfolio holdings and contains a letter By telephone. Call the funds at:
from the funds' manager discussing recent market conditions and the 800-426-1130
funds' investment strategies.
By mail. Write to:
STATEMENT OF ADDITIONAL INFORMATION ("SAI") The Lord Abbett Family of Funds
767 Fifth Avenue
Provides more details about the funds and their policies. A current New York, NY 10153-0203
SAI is on file with the Securities and Exchange Commission ("SEC")
and is incorporated by reference (is legally considered part of this Via the Internet. Text only
prospectus). versions of fund documents
can be viewed online or
downloaded from:
Growth & Income Fund
International Fund Lord, Abbett & Co.
World Bond-Debenture Fund http://www.lordabbett.com
The General Motors Building SEC
767 Fifth Avenue http://www.sec.gov
New York, NY 10153-0203
---------------------------- You can also obtain copies by
SEC file number: 811-7358 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.
LST-1-399
(3/99)
</TABLE>
<PAGE>
Lord Growth & Income Fund
Abbett International Fund
World Bond-Debenture 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 International Fund are currently offered by
this prospectus. Class P shares of the Growth & Income Fund and
World Bond-Debenture Fund are neither offered to the general public
as of the date of this prospectus nor are available in all states.
Please call 800-821-5129 for further information.
STATEMENT OF DIFFERENCES
The trademark symbol shall be expressed as.................................'TM'
The registered trademark symbol shall be expressed as.......................'r'
