SUPPLEMENT DATED MAY 22, 1995 TO THE CURRENT STATEMENT OF ADDITIONAL INFORMATION
FOR LORD ABBETT GLOBAL FUND, INC.
<PAGE>
INVESTMENT MANAGEMENT
A TRADITION OF PERFORMANCE THROUGH DISCIPLINED INVESTING.
<PAGE>
"We believe that an investment firm worthy of the name fosters a sound
professional relationship between the House and the Client."
<PAGE>
PARTNERSHIP AT LORD, ABBETT & CO.
INDEPENDENCE AND EXCELLENCE
Established in 1929, Lord, Abbett & Co. is guided by a long tradition of
independence and excellence. We are a partnership and all of our partners are
active in the daily management of the Firm. Attributes such as dedication,
accountability, involvement and performance define our organization and and
characterize the way we invest.
Assets under management currently total about $16 billion, consisting of a
family of mutual funds and separately-managed equity, fixed-income and balanced
accounts for corporations, institutions and individuals.
<PAGE>
"THE MOST IMPORTANT
ELEMENT IN SECURING THE FIRMS FUTURE:
ALWAYS PUT THE INVESTOR FIRST."
RONALD P. LYNCH,
MANAGING PARTNER
[Picture]
Seated:
Ronald P. Lynch,
Managing Partner
Standing, left to right:
Thomas S. Henderson,
Partner and Portfolio Manager
Daniel E. Carper,
Partner in charge of Sales and Marketing
Robert S. Dow,
Partner in charge of Fixed Income and Portfolio Manager
<PAGE>
LORD ABBETT'S INVESTMENT PHILOSOPHY
[Picture]
SEATED:
ROBERT S. DOW,
PARTNER IN CHARGE OF FIXED INCOME AND PORTFOLIO MANAGER
STANDING, LEFT TO RIGHT:
ROBERT G. MORRIS,
DIRECTOR OF EQUITY INVESTMENTS
JULIE M. CANNELL,
ASSOCIATE DIRECTOR OF EQUITY RESEARCH
ZANE E. BROWN,
DIRECTOR OF FIXED INCOME AND PORTFOLIO MANAGER
EQUITY MANAGEMENT
For decades, value has been at the heart of our approach to investing. We invest
for the long term in the securities of companies whose earnings potential, cash
flow or net assets are underpriced in the marketplace. Often this means sifting
through companies that are out of favor with Wall Street and the investing
public to identify the best relative values. Our objective is to obtain
above-average total returns consistently, with less volatility than the market.
What distinguishes us as value managers is the investment process used to
find securities that we believe are positioned to benefit from change. This
process combines quantitative, fundamental and economic analysis in the
disciplined selection of securities.
<PAGE>
LORD ABBETT'S INVESTMENT PHILOSPHY
"INVESTING IN SECURITIES THAT ARE UNDERVALUED HAS PRODUCED COMPETITIVE,
CONSISTENT LONG-TERM RETURNS WITH BELOW-MARKET RISK."
ROBERT S. DOW,
PARTNER IN CHARGE OF
FIXED INCOME AND
PORTFOLIO MANAGER
FIXED-INCOME MANAGEMENT
We utilize a total return approach to fixed-income management, with an emphasis
on current income. Maturities and sectors are adjusted to reflect our outlook
for inflation, interest rates, changes in Federal Reserve policy and cyclical
market pressures. Call protection, issuers creditworthiness and prepayment risk
are important considerations in determining intrinsic value. We also believe
bonds can become mispriced for non-economic reasons, which creates
opportunities for value investors.
BALANCED MANAGEMENT
Our balanced portfolios combine our fundamentally-driven, value-oriented equity
management with an actively managed, primarily high-quality, fixed-income
portfolio. The ratio of stocks to bonds is determined at periodic strategy
meetings based on our assessment of the risk-adjusted prospects for both
markets.
<PAGE>
A TALENTED INVESTMENT TEAM
Our investment effort is built on in-house research. We do our own market and
securities analyses and we make our own financial forecasts. On-site plant
inspections and discussions with senior corporate management are an important
part of evaluating the companies currently held in our portfolios as well as
those we are considering for investment. These efforts add perspective on a
companys costs, long-term strategies and the competitive dynamics a company has
within its industry.
Our portfolio managers, research analysts and economist work closely in all
aspects of investment decision making. We currently have a staff of 38
investment professionals, who average 19 years of experience in the business and
8 years of tenure with Lord, Abbett & Co.
<PAGE>
INTERNATIONAL EXPERTISE
"INVESTMENT POTENTIAL SHIFTS THROUGHOUT THE WORLD. GLOBAL INVESTING ALLOWS
INVESTORS TO CAPITALIZE ON GROWTH OPPORTUNITIES ABROAD."
E. WAYNE NORDBERG,
PARTNER AND
PORTFOLIO MANAGER
[Picture]
LEFT TO RIGHT:
E. WAYNE NORDBERG,
PARTNER AND PORTFOLIO MANAGER
ZANE E. BROWN,
DIRECTOR OF FIXED INCOME AND PORTFOLIO MANAGER
BURTON ZWICK,
SENIOR ECONOMIST
We maintain an advisory relationship with Dunedin Fund Managers Limited of
Scotland, which adds a global dimension to our resources. Dunedin and its
predecessors have been managing global investments since 1873.
Dunedin's investment philosophy complements Lord Abbett's: Dunedin's
decision-making process is based on fundamental research, which is applied to
the global markets. Throughout its history, Dunedin has derived its strength and
reputation from its high-quality staff and its record of superior returns.
<PAGE>
CONSISTENCY OF PERFORMANCE
Our performance is the results of a collaborative effort where everyone works
toward a common goal uncommon investment results. We believe that by striving
for consistent performance through our focus on value investing, we will
continually increase the assets we manage. We have not diluted our efforts by
expansion into any other enterprises. Money management is Lord Abbetts only
business.
"TAKING AN INVESTOR
TO HIS OR HER STATED
GOALTHATS OUR DENITION
OF PERFORMANCE."
THOMAS S. HENDERSON,
PARTNER AND
PORTFOLIO MANAGER
[Picture]
LEFT TO RIGHT:
THOMAS S. HENDERSON,
PARTNER AND PORTFOLIO MANAGER
ROBERT G. MORRIS,
DIRECTOR OF EQUITY INVESTMENTS
VICTOR W. PIZZOLATO,
SENIOR SECURITIES TRADER
<PAGE>
LORD, ABBETT & CO.
INVESTMENT
MANAGERS & UNDERWRITERS
SINCE 1929
WE INVITE YOU TO CALL LORD, ABBETT & CO.
800-426-1130
<PAGE>
OUR FAMILY OF FUNDS
LORD, ABBETT & CO.
Investment Management
[P1]
A Tradition of Performance
Through Disciplined Investing
<PAGE>
Founded in 1929, Lord, Abbett & Co. was one of the nation's first mutual
fund managers. While many things have changed since then, we have remained
committed to:
. Putting the investor first - our future depends on it.
. Providing investors with investment options - the Lord Abbett Family of
Funds consists of 25 portfolios to meet a variety of investment needs.
. Working with financial professionals - who provide valuable, informed
advice and help investors select the appropriate funds for their needs.
. Investing with a disciplined, value approach - we believe it is the best
way to achieve competitive returns and reduce portfolio risk.
. Attracting and retaining a qualified staff of investment professionals -
which currently consists of 41 professionals who average 19 years of
industry experience and 9 years of tenure with Lord, Abbett & Co.
This commitment has helped us earn the trust of financial professionals,
mutual fund investors, private investors, corporations and institutions.
"The most important element
[P2] in securing the Firm's future:
Ronald P. Lynch, always put the investor first."
Managing Partner
Ronald P. Lynch,
Managing Partner
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
<S> <C>
About Lord, Abbett & Co............................................... 1
Selecting A Fund...................................................... 3
Fund Data
. Fund Performance............................................. 4
. Growth Funds................................................. 5
. Growth & Income Funds........................................ 6
. Balanced Fund................................................ 6
. Income Funds................................................. 7
. Tax-Free Income Funds........................................ 8
. Limited-Term Income Funds.................................... 12
Service & Flexibility................................................. 13
</TABLE>
<PAGE>
ABOUT
LORD,
ABBETT
WHO INVESTS IN THE LORD ABBETT FAMILY OF FUNDS? & CO.
- -------------------------------------------------------------------------
Number Of
Accounts*
. FIDUCIARIES
Trusts...................................................... 25,810
Custodians for minors....................................... 24,487
Pension, Profit-Sharing, and 401(k) Retirement Plans........ 24,099
457 Retirement & 403(b) Plans............................... 7,975
Estates..................................................... 1,192
. INSTITUTIONS
Accounts held in Broker/Dealer Street Name.................. 170,297
Corporations................................................ 2,410
Charitable & religious organizations........................ 993
Banks, credit unions & other financial organizations........ 982
Clubs & fraternal organizations............................. 330
Cemeteries.................................................. 148
Government Agencies......................................... 104
Colleges & universities..................................... 79
Nursing homes & hospitals................................... 69
. INDIVIDUALS
Single & joint accounts..................................... 200,831
IRAs........................................................ 85,517
-------
TOTAL 545,323
Lord Abbetts current and retired employees and their families have over $175
million invested in the Lord Abbett Family of Funds.
*As of 3/31/95.
Lord Abbett currently manages over
$16 billion for private investors,
corporations and institutions. [G1]
Assets under management
break out as follows:
1
<PAGE>
ABOUT
LORD,
ABBETT
& CO. WHAT MAKES LORD ABBETT DIFFERENT?
-----------------------------------------------------------------
AN INVESTMENT PHILOSOPHY ROOTED IN VALUE
A focus on value investing is the cornerstone of our investment
philosophy. Simply put, value investing is bargain hunting.
What distinguishes Lord, Abbett & Co. from other equity value managers
is our disciplined, three-step investment process used to identify and
invest in bargain-priced securities. Our goal is to provide investors
with portfolios that offer competitive total returns with less
volatility than the market.
OUR DISCIPLINED INVESTMENT PROCESS
. Quantitive Research is performed
to identify the most attractively
priced stocks. These "Targets of
Opportunity" undergo further
analyses.
. Fundamental Research helps . A Macro-Economic/Interest-
assess a company's resources Rate Screen helps portfolio
and determines if, given these managers identify opportunities
resources, a company's afforded by economic or
strategic plan is realistic. interest-rate influences.
In the management of fixed-income portfolios, our goal is total return
with an emphasis on current income. Based on our outlook for inflation,
interest rates and changes in Federal Reserve policy, we look for
undervalued securities. Active portfolio management strategies,
including adjusting maturities and sectors, and analyzing an issuer's
creditworthiness and prepayment risk, help us identify opportunities in
the fixed-income markets.
These same investment disciplines are used to manage our global mutual
funds. Dunedin Fund Managers Limited of Scotland serves as sub-adviser
and adds a global dimension to our resources. Dunedin and its
predecessors have been managing money since 1873.
"Our goal in investing in undervalued
[P3] securities is to produce competitive long-term
returns with reduced market risk."
Robert G. Morris,
Director of Equity Investments
left to right:
Julie M. Cannell,
Associate Director of
Equity Research
Robert G. Morris,
Director of Equity Investments
2
<PAGE>
SELECTING
A FUND
THE LORD ABBETT INVESTMENT SPECTRUM
- -------------------------------------------------------------------
The Lord Abbett Family of Funds consists of 25 portfolios
designed to meet various investment objectives. Shareholders
may reallocate assets among our funds at any time.
<TABLE>
<CAPTION>
GROWTH INCOME
- ------ ------------
Growth Growth & Balanced Income Tax-Free Limited-Term-
Funds Income Funds Fund Funds Income Funds Income Funds
- ------ ------------ -------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Developing Affiliated Fund Investment U.S. Government -National Investment Trust
Growth Fund Trust- Securities Fund -California Limited Duration
Fundamental Balanced -Connecticut U.S. Government
Value Value Fund Series Bond-Debenture -Florida Securities Series
Appreciation Fund -Georgia
Fund -Hawaii U.S. Government
Global Fund- -Michigan Securities Money
Global Fund- Income Series -Minnesota Market Fund
Equity Series -Missouri
-New Jersey
-New York
-Pennsylvania
-Texas
-Washington
</TABLE>
For more complete information on any of these funds, including charges,
risk factors, expenses assumed and fees waived, please contact your
financial adviser or call Lord, Abbett & Co. at 800-874-3733 for a
prospectus. Please read the prospectus carefully before investing.
"Having access to a complete family of funds
gives the professional financial adviser the
flexibility to build an individualized portfolio
from a combination of funds to meet each [P4]
client's unique investment objective."
Daniel E. Carper,
Partner in Charge of Marketing and Sales
left to right:
Stephen I. Allen,
Partner, National Sales
Manager
Daniel E. Carper,
Partner in Charge of
Marketing and Sales
3
<PAGE>
FUND
DATA
FUND PERFORMANCE (AS OF 3/31/95)
--------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Rates of Return at Maximum
Sales Charge for the Periods Ended 3/31/95
------------------------------------------------
Inception 10 Years or
Date Symbol 1 Year 3 Years 5 Years Since Inception
--------- ------ ------ ------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Growth Funds
------------
Developing Growth Fund 10/10/73 LAGWX 6.00% 6.06% 10.89% 7.79%
Value Appreciation Fund 6/28/83 LAVLX 1.20 7.49 9.39 11.74
Global Fund--Equity Series 9/30/88 LAGEX -6.60 6.68 4.70 5.54*
Growth & Income Funds
---------------------
Affiliated Fund 5/14/34 LAFFX 10.00 10.77 9.70 12.68
Fundamental Value Fund 7/8/86 LDFVX 7.20 8.94 9.19 9.70*
Balanced Fund
-------------
Investment Trust--Balanced Series 12/27/94 LABFX** - - - 0.90*+
Income Funds
------------
U.S. Government Securities Fund 9/19/32 LAGVX -1.60 4.28 7.54 9.17++
Bond-Debenture Fund 4/1/71 LBNDX -3.60 6.79 10.71 9.70
Global Fund--Income Series 9/30/88 LAGIX 3.50 6.32 8.85 8.19*
Tax-Free Income Funds
---------------------
National Series 4/2/84 LANSX 0.50 4.86 6.81 9.10
California Fund 9/3/85 LCFIX -0.90 4.40 6.67 7.96*
Connecticut Series 4/1/91 LACTX 0.60 5.31 - 6.55*
Florida Series 9/25/91 LAFLX 0.70 5.52 - 5.27*
Georgia Series 12/27/94 LAGAX** - - - 1.20*+
Hawaii Series 10/28/91 LAHIX 0.80 5.10 - 5.36*
Michigan Series 12/1/92 LAMIX 1.00 - - 4.57*
Minnesota Series 12/27/94 LAMNX** - - - 0.20*+
Missouri Series 5/31/91 LAMOX 0.00 4.86 - 6.47*
New Jersey Series 1/2/91 LANJX 1.10 5.85 - 7.32*
New York Series 4/2/84 LANYX -1.70 4.34 6.55 8.70
Pennsylvania Series 2/3/92 LAPAX 1.20 5.73 - 5.49*
Texas Series 1/20/87 LATIX 1.90 5.25 7.22 7.29*
Washington Series 4/15/92 LAWAX 0.80 - - 5.11*
Limited-Term Income Funds
-------------------------
Investment Trust--Limited Duration
U.S. Government Securities Series 11/4/93 LALDX** -0.40 - - -2.00*
U.S. Government Securities Money
Market Fund 6/27/79 LACXX 4.17 3.01 4.12 5.55
</TABLE>
* Since inception.
** Proposed.
+ Not annualized.
++ Prior to 10/15/85, the Fund invested in both corporate and U.S.
Government securities. Since that date, the Fund has invested in
U.S. Government securities exclusively. Average annual total return
from that date is 8.32%.
Performance results shown above reflect the percent change in
value assuming the reinvestment of all distributions. The results
quoted herein represent past performance which is no indication of
future results. The investment return and principal value of an
investment in the funds will fluctuate so that shares, on any given
day or when redeemed, may be worth more or less than their original
cost. The maximum sales charge is 3.00% for investments under $100,000
in the Limited Duration U.S. Government Securities Series; 5.75% for
investments under $50,000 in any of the growth or growth & income
funds; and 4.75% for investments under $100,000 in the Balanced Series
and in any of the remaining income funds except for the Money Market
Fund (which has no sales charge). See the prospectus of the fund you
are interested in for a discussion of fees waived and expense
subsidies.
4
<PAGE>
FUND
DATA
GROWTH FUNDS
- -------------------------------------------------------------------------
LORD ABBETT DEVELOPING GROWTH FUND Inception: 10/10/73
-------------------------------------------------------------------------
The goal of the Fund is to allow shareholders Average Annual Total
to participate in the future of selected small Returns as of 3/31/95
companies with above-average prospects for growth.
Composition: A portfolio of stocks of small companies.
Goal: To provide you with long-term price appreciation.
Net Assets: $138.9 million
Initial [G2]
Investment: $1,000 minimum; $250 for IRAs
Dividends: Paid or reinvested annually (if declared)
LORD ABBETT VALUE APPRECIATION FUND Inception: 6/28/83
--------------------------------------------------------------------------
The Fund is one of only a few funds that focuses Average Annual Total
on out-of-favor midsized companies (those with Returns as of 3/31/95
market capitalizations of roughly $500 million
to $3 billion).
Composition: A portfolio of undervalued stocks of midsized companies.
Goal: To provide you with growth of capital.
Net Assets: $194.5 million
Initial [G3]
Investment: $1,000 minimum; $250 for IRAs
Dividends: Paid or reinvested annually
LORD ABBETT GLOBAL FUND - EQUITY SERIES Inception: 9/30/88
--------------------------------------------------------------------------
Global diversification gives the Series the Average Annual Total
potential to benefit from favorable economic Returns as of 3/31/95
trends and undervalued securities throughout
the world.
Composition: A portfolio of undervalued stocks from around the world.
Goal: To provide you with long-term growth and income.
Net Assets: $80.6 million
Initial [G4]
Investment: $1,000 minimum; $250 for IRAs
Dividends: Paid or reinvested semi-annually
Country Diversification
on 3/31/95
[G5]
All results are at net asset value. See "Fund Performance" on page 4 for
performance at the applicable maximum sales charge. For a description of
fees waived and expense subsidies, see the prospectus of the fund you are
interested in.
5
<PAGE>
FUND
DATA
GROWTH & INCOME FUNDS
- -------------------------------------------------------------------------
LORD ABBETT'S AFFILIATED FUND Inception: 5/14/34
---------------------------------------------------------------------------
The Fund utilizes a disciplined investment approach Average Annual Total
to identify out-of-favor stocks of large, blue-chip Returns as of 3/31/95
companies.
Composition: A portfolio of undervalued stocks of
large, well-seasoned companies.
Goal: To provide you with long-term growth
of capital and income without excessive
price fluctuations.
Net Assets: $4.4 billion
Initial [G6]
Investment: $250 minimum
Dividends: Paid or reinvested quarterly
LORD ABBETT FUNDAMENTAL VALUE FUND Inception: 7/8/86
---------------------------------------------------------------------------
The Fund invests in out-of-favor stocks of Average Annual Total
large and midsized companies. This policy allows Returns as of 3/31/95
management to look at opportunities in a very
large universe.
Composition: A portfolio of stocks of large and
midsized companies.
Goal: To provide you with growth of capital and income.
Net Assets: $35.6 million
Initial [G7]
Investment: $1,000 minimum; $250 for IRAs
Dividends: Paid or reinvested semi-annually
BALANCED FUND
- -------------------------------------------------------------------------
LORD ABBETT INVESTMENT TRUST--BALANCED SERIES Inception: 12/27/94
---------------------------------------------------------------------------
Composition: A portfolio that combines fundamentally
driven, value-oriented stocks with
actively-managed fixed-income investments. [NEW]
Goal: To provide you with current income and
long-term growth of capital.
Initial
Investment: $1,000 minimum; $250 for IRAs
Dividends: Paid or reinvested monthly
All results are at net asset value. See "Fund Performance" on page 4 for
performance at the applicable maximum sales charge. For a description of
fees waived and expense subsidies, see the prospectus of the fund you are
interested in.
6
<PAGE>
FUND
DATA
INCOME FUNDS
- --------------------------------------------------------------------------
Lord Abbett U.S. Government Securities Fund Inception: 9/19/32
---------------------------------------------------------------------------
Invests exclusively in obligations issued Average Annual Total
or backed by the U.S. Government, its agencies or Returns as of 3/31/95
instrumentalities.
Composition: A portfolio of U.S. Government securities.
Goal: To provide you with high current income.
Net Assets: $3.2 billion
Initial [G8]
Investment: $500 minimum; $250 for IRAs
Dividends: Paid or reinvested monthly
* Prior to 10/15/85, the Fund invested in both corporate and U.S.
Government securities. Since that date, the Fund has invested exclusively
in U.S. Government securities. Average annual total return from that date
is 8.9%.
LORD ABBETT BOND-DEBENTURE FUND Inception: 4/1/71
---------------------------------------------------------------------------
The Fund emphasizes convertible issues and lower Average Annual Total
rated debt. The Fund focuses on the most attractive Returns as of 3/31/95
sectors of the bond market based on Lord Abbetts
judgment with respect to anticipated changes in
interest rates, the economy and the financial markets.
Composition: A portfolio of lower rated corporate bonds, equity-related
securities and high-grade bonds.
Goal: To provide you with high current income and capital growth
to produce high total returns.
Net Assets: $1.0 billion
Initial [G9]
Investment: $1,000 minimum; $250 for IRAs
Dividends: Paid or reinvested monthly Portfolio Composition
on 3/31/95
[G10]
All results are at net asset value. See "Fund Performance" on page 4 for
performance at the applicable maximum sales charge. For a description of
fees waived and expense subsidies, see the prospectus of the fund you are
interested in.
7
<PAGE>
FUND
DATA
INCOME FUNDS (Continued)
---------------------------------------------------------------------
Lord Abbett Global Fund Income Series Inception: 9/30/88
-----------------------------------------------------------------------
The Series seeks high real returns (i.e., yield Average Annual Total
minus inflation) by primarily investing in high- Returns as of 3/31/95
quality debt securities issued or guaranteed by
the U.S. or other foreign governments or their
agencies; high-quality U.S. and foreign
corporate debt and debt obligations of banks and
bank holding companies.
Composition: A portfolio of high-quality international and U.S. debt.
Goal: To provide you with high current income. Although not a
primary objective, the Series also is managed for growth
of capital.
Net Assets: $252.6 million
Initial [G11]
Investment: $1,000 minimum; $250 for IRAs
Dividends: Paid or reinvested monthly
Portfolio quality Country Diversification
on 3/31/95 on 3/31/95
[G12] [G13]
TAX-FREE INCOME FUNDS
- --------------------------------------------------------------------------
Lord Abbett manages several tax-free funds to provide you with high
current income exempt from federal income taxes and, for single-state
portfolios, exemption from state income and/or personal property taxes
(if applicable). All of Lord Abbett's tax-free income funds focus on
high-quality securities.
NATIONAL SERIES INCEPTION: 4/2/84
------------------------------------------------------------------------
Goal: To provide you with income Average Annual Total
exempt from federal income taxes. Returns as of 3/31/95
Net Assets: $655.8 million
Initial [G14]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio quality
on 3/31/95
[G15]
* Includes holdings which are not rated by an independent ratings
service but are, in Lord Abbett's opinion, of comparable quality.
Please see the prospectus of the fund you are interested in for a
description of fees waived and expense subsidies for certain Lord Abbett
tax-free portfolios. All results are at net asset value. A portion of
income derived from tax-free portfolios may be subject to the
Alternative Minimum Tax. See "Fund Performance" on page 4 for
performance at the maximum sales charge and page 12 for important
information.
8
<PAGE>
FUND
DATA
TAX-FREE INCOME FUNDS (Continued)
- --------------------------------------------------------------------------
CALIFORNIA FUND Inception: 9/3/85
---------------------------------------------------------------------------
Goal: To provide you with income Average Annual Total
exempt from federal and Returns as of 3/31/95
California income taxes.
Net Assets: $308.9 million
Initial [G16]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio Quality
on 3/31/95
[G17]
CONNECTICUT SERIES Inception: 4/1/91
---------------------------------------------------------------------------
Goal: To provide you with income
exempt from federal and
Connecticut income taxes.
Net Assets: $111.0 million
Initial [G18]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio Quality
on 3/31/95
[G19]
FLORIDA SERIES Inception: 9/25/91
---------------------------------------------------------------------------
Goal: To provide you with income
free from federal income taxes
with shares free from Florida
personal property tax.
Net Assets: $180.7 million
Initial [G20]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio Quality
on 3/31/95
[G21]
GEORGIA SERIES Inception: 12/27/94
---------------------------------------------------------------------------
Goal: To provide you with income free from
federal and Georgia income taxes. [NEW]
Shares of the Georgia Series are
subject to the Georgia intangibles
tax.
Initial
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly
Please see the prospectus of the fund you are interested in for a
description of fees waived and expense subsidies for certain Lord Abbett
tax-free portfolios. All results are at net asset value. A portion of
income derived from tax-free portfolios may be subject to the Alternative
Minimum Tax. See Fund Performance on page 4 for performance at the maximum
sales charge and page 12 for important information.
9
<PAGE>
FUND
DATA
TAX-FREE INCOME FUNDS (Continued)
- --------------------------------------------------------------------------------
HAWAII SERIES Inception: 10/28/91
---------------------------------------------------------------------
Goal: To provide you with income Average Annual Total
exempt from federal and Returns as of 3/31/95
Hawaii income taxes.
Net Assets: $87.6 million
Initial [G22]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio Quality
on 3/31/95
[G23]
MICHIGAN SERIES Inception: 12/1/92
---------------------------------------------------------------------
Goal: To provide you with income Portfolio Quality
free from federal and Michigan on 3/31/95
income taxes with shares FUND IS
free from Michigan UNDER
personal property tax. 3 YEARS OLD
Net Assets: $49.8 million [G24]
Initial
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly
MINNESOTA SERIES Inception: 12/27/94
---------------------------------------------------------------------
Goal: To provide you with income exempt from federal and
Minnesota income taxes.
Initial [NEW]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly
MISSOURI SERIES Inception: 5/31/91
---------------------------------------------------------------------------
Goal: To provide you with income Average Annual Total
exempt from federal and Returns as of 3/31/95
Missouri income taxes.
Net Assets: $127.2 million [G25]
Initial
Investment: $1,000 minimum Portfolio Quality
Dividends: Paid or reinvested monthly on 3/31/95
[G26]
* Includes holdings which are not rated by an independent ratings service
but are, in Lord Abbett's opinion, of comparable quality.
Please see the prospectus of the fund you are interested in for a
description of fees waived and expense subsidies for certain Lord Abbett
tax-free portfolios. All results are at net asset value. A portion of
income derived from tax-free portfolios may be subject to the Alternative
Minimum Tax. See "Fund Performance" on page 4 for performance at the
maximum sales charge and page 12 for important information.
10
<PAGE>
FUND
DATA
TAX-FREE INCOME FUNDS (Continued)
- --------------------------------------------------------------------------------
NEW JERSEY SERIES Inception: 1/2/91
--------------------------------------------------------------------------
Goal: To provide you with income Average Annual Total
exempt from federal and Returns as of 3/31/95
New Jersey income taxes.
Net Assets: $188.0 million
Initial [G27]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio Quality
on 3/31/95
[G28]
NEW YORK SERIES Inception: 4/2/84
--------------------------------------------------------------------------
Goal: To provide you with income Average Annual Total
exempt from federal, New York Returns as of 3/31/95
State and City income taxes.
Net Assets: $332.9 million
Initial [G29]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio Quality
on 3/31/95
[G30]
PENNSYLVANIA SERIES Inception: 2/3/92
--------------------------------------------------------------------------
Goal: To provide you with income free Average Annual Total
from federal and Pennsylvania Returns as of 3/31/95
income taxes with shares
free from Pennsylvania
personal property tax.
Net Assets: $89.0 million
Initial [G31]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio Quality
on 3/31/95
[G32]
TEXAS SERIES Inception: 1/20/87
--------------------------------------------------------------------------
Goal: To provide you with income Average Annual Total
exempt from federal Returns as of 3/31/95
income taxes.
Net Assets: $101.6 million
Initial [G33]
Investment: $1,000 minimum
Dividends: Paid or reinvested monthly Portfolio Quality
on 3/31/95
[G34]
* Includes holdings which are not rated by an independent ratings service
but are, in Lord Abbetts opinion, of comparable quality.
Please see the prospectus of the fund you are interested in for a
description of fees waived and expense subsidies for certain Lord Abbett
tax-free portfolios. All results are at net asset value. A portion of
income derived from tax-free portfolios may be subject to the Alternative
Minimum Tax. See Fund Performance on page 4 for performance at the
maximum sales charge and page 12 for important information.
11
<PAGE>
FUND
DATA
TAX-FREE INCOME FUNDS (Continued)
---------------------------------------------------------------------------
WASHINGTON SERIES Inception: 4/15/92
------------------------------------------------------------------------
Goal: To provide you with income
exempt from federal Portfolio Quality
income taxes. on 3/31/95
Net Assets: $73.9 million FUND IS
Initial UNDER
Investment: $1,000 minimum 3 YEARS OLD
Dividends: Paid or reinvested monthly [G35]
Limited-Term Income Funds
---------------------------------------------------------------------------
Lord Abbett Investment Trust -
Limited Duration U.S. Government Securities Series Inception: 11/4/93
------------------------------------------------------------------------
The Fund aims for higher total returns than shorter
term instruments, such as Treasury bills. In addition, FUND IS
the Fund strives to provide total returns that outpace UNDER
inflation and shorter term savings vehicles. Unlike a money 3 YEARS OLD
market fund, the Fund does not seek to maintain a stable
share price. The Fund also will not have the income potential
of a fund investing in longer term securities.
Composition: A portfolio of primarily short- and intermediate-duration
U.S. Government securities and high-quality securities.
Goal: To provide you with high income (relative to money market
instruments) with less fluctuation in principal than long-
term U.S. Government securities.
Net Assets: $7.8 million
Initial
Investment: $1,000 minimum; $250 for IRAs
Dividends: Paid or reinvested monthly
Please see the prospectus of the fund you are interested in for a
description of fees waived and expense subsidies for certain Lord Abbett
portfolios. All results are at net asset value. A portion of income
derived from tax-free portfolios may be subject to the Alternative
Minimum Tax. See Fund Performance on page 4 for performance at the
maximum sales charge.
Each tax-free portfolio may invest up to 20% of its net assets in
residual interest bonds (RIBs). A RIB, sometimes referred to as an
inverse floater, is a debt instrument with a floating or variable
interest rate that moves in the opposite direction of the interest rate
on another security or the value of an index. Changes in the interest
rate on the other security or index inversely affect the residual
interest paid on the RIB, with the result that when interest rates rise,
RIBs give lower interest payments and their values fall faster than
other similar fixed-rate bonds. But when interest rates fall, not only
do RIBs give higher interest payments, their values also rise faster
than other similar fixed-rate bonds. The market for RIBs is relatively
new.
12
<PAGE>
FUND
DATA
LIMITED-TERM INCOME FUNDS (Continued)
- --------------------------------------------------------------------------------
LORD ABBETT U.S. GOVERNMENT SECURITIES
MONEY MARKET FUND Inception: 6/27/79
-------------------------------------------------------------------------
(formerly Lord Abbett Cash Reserve Fund) Average Annual Total
Returns as of 3/31/95
Primarily invests in obligations issued or
backed by the U.S. Government, its agencies
or instrumentalities.
COMPOSITION: A portfolio of short-term U.S. Government securities.
GOAL: To provide you with high current income on your cash
reserves, while preserving capital and maintaining liquidity.
NET ASSETS: $145.6 million
INITIAL [G36]
INVESTMENT: $1,000 minimum; $250 for IRAs
DIVIDENDS: Paid or reinvested monthly
An investment in this Fund is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that the Fund will maintain a
constant net asset value of $1.00 per share. This Fund is managed to
maintain, and has maintained, its stable $1.00 per share price.
All results are at net asset value. For a description of fees waived and
expense subsidies, see the prospectus of the fund you are interested in.
SERVICE &
FEXIBILITY
AT YOUR SERVICE
- --------------------------------------------------------------------------------
DISTRIBUTION OPTIONS:
-------------------------------------------------------------------------
. REINVEST: You can reinvest dividends and capital gains distributions to
purchase additional shares in each Fund. Reinvested dividends and
distributions continue working for you.
. DIVIDEND-MOVE: You can invest dividends ($50 or more) from one fund
into another fund. If no account exists in the second fund, one can be
established by investing $250.
. CASH: You can receive dividends and/or capital gains in cash.
AUTOMATIC INVESTMENT PLANS:
-------------------------------------------------------------------------
. INVEST-A-MATIC (DOLLAR-COST AVERAGING): A set dollar amount ($50 or
more) can be deducted from your bank account and invested in any
fund(s) automatically - monthly, quarterly or semi-annually ($250
minimum initial investment).
. SYSTEMATIC WITHDRAWAL PLAN: A check for a specific dollar amount can be
sent to you (or deposited in your bank account) monthly, quarterly,
semi-annually or annually, from an account with a balance of at least
$10,000.
. SYSTEMATIC EXCHANGE: A set dollar amount of $50 or more can be
automatically exchanged between funds monthly, quarterly, semi-annually
or annually, to dollar-cost average. If no account exists in the second
fund, a $250 initial investment requirement must be met.
13
<PAGE>
SERVICE &
FLEXIBILITY
AT YOUR SERVICE (Continued)
--------------------------------------------------------------------
SHAREHOLDER PRIVILEGES:
--------------------------------------------------------
. Lifetime Discounts or Rights of Accumulation*:
You and your family may qualify for a discount
on purchases of one fund or a combination of
funds based on the total assets you have invested
in the Lord Abbett Family. See the prospectus(es)
for further information.
. Letter of Intention (LOI)*: You and your family
can sign a non-binding 13-month statement of
intention to invest a fixed-dollar amount in the
Family, in order to qualify for the maximum discount.
. Exchange Privileges: You can reposition your
assets by exchanging shares of one fund for
another fund in the Family by calling 800-521-5315.
The exchange privilege can be modified or terminated.
. Account Information: You have access to an
automated telephone information service that
provides data on your fund investments.
. Free Checkwriting Privileges: You can write
checks (bank drafts) for $500 or more. Your
account continues to earn interest until checks
clear. (Applies to Lord Abbett U.S. Government
Securities Money Market Fund only.)
Lord Abbett Retirement Plan Services:
--------------------------------------------------------
Lord Abbett has been a pioneer in the mutual fund
retirement planning market. We have maintained a
structured retirement planning department for over
two decades under the direction of ERISA attorneys.
Lord Abbett offers a full menu of retirement
planning services. IRS-approved sign-up documents
are available for IRA, Rollover IRA, SEP-IRA, 403(b)
and Defined Contribution Retirement Plans. A complete
TurnKey package is available for 401(k) plans.
Reports Provided by the Lord Abbett
Family of Funds:
---------------------------------------------------------
Shareholders receive annual (audited) and semi-annual
reports for their fund(s), and year-to-date statements
reflecting every transaction, current share balance and
the cost basis for purchases made within the year.
* Does not include initial purchases of shares of
Lord Abbett U.S. Government Securities Money Market
Fund purchased without a sales charge.
Additional Information
--------------------------------------------------------------------
If used as sales material after 6/30/95, this
piece must be accompanied by Lord Abbett's
Performance Quarterly for the most recently
completed calendar quarter. Results quoted herein
represent past performance and are no guarantee
of future results.
For additional information and literature
(including a prospectus) for any Lord Abbett
mutual fund, call your financial adviser or Lord,
Abbett & Co. at 800-874-3733. A prospectus
contains important information, including sales
charges, expenses, and a full discussion of risk
factors, and should be read carefully before you
invest.
Lord, Abbett & Co.
Investment Management
The GM Building . 767 Fifth Avenue . New York, NY . 10153-0203
800-426-1130
LAFOFB-40-395
14
<PAGE>
FUND ACTION
THE MUTUAL FUND NEWS REPORT THAT SPARKS IDEAS
WE WERE PLEASED THAT OUR MANAGING
PARTNER RECEIVED THIS HONOR. I WANTED
TO SHARE THIS ARTICLE WITH YOU.
MIKE MCLAUGHLIN
DIRECTOR OF MARKETING
EXCERPTED FROM
VOLUME 6, NUMBER 1,
JANUARY 3, 1995
SPECIAL REPORT:
RONALD P. LYNCH
NAMED FUND LEADER
OF 1994
SPECIAL REPORT: RONALD P. LYNCH
NAMED FUND LEADER OF 1994
1994 was a watershed year for the fund industry. The press fell out of
love with mutual funds. News of INVESCOs insider trading flap, derivatives
debacles, multiple money fund rescues and Fidelity's price reporting snafu
peppered the country's newspapers. It was a year the industry needed a statesman
at its helm. And fortunately it was a year the industry had one. That statesman
was Lord Abbett's managing partner Ron Lynch.
As chairman of the Investment Company Institute, Ron Lynch kept a steady
hand on the industrys tiller throughout a tempestuous 1994. When regulators and
the press began questioning industry ethical standards, Lynch faced the issue
head-on. He quickly assembled a Blue Ribbon Panel to study intra-industry
trading practices and make recommendations for possible improvement. The result?
Accolades from SEC Chairman Arthur Levitt, who praised the industry for its
quick and diligent response.
More importantly, Lynch's actions underscored the industrys dedication to
high ethical standards and fiduciary responsibility. It is because of Lynch's
successful skippering of the industry through rough waters that Fund Action is
naming him the 1994 Fund Leader of the Year.
HE'S A QUIET LEADER WHO LEADS WITH MORAL SUASION.
OPPENHEIMERS JON FOSSEL
Perseverance and consensus building, say friends and associates, are the
qualities that best characterize Lynch. Whether he's forging a business strategy
with his partners at Lord Abbett or piloting the ICI, he gets the job done. And
in getting the job done, he studies all the angles and strives to build a
consensus among constituents. Constructive compromise, not coercion, is Lynch's
stock in trade.
HE PUT ASIDE WHATEVER HIS GROUP OR ANY INDIVIDUAL FUND GROUP MIGHT THINK WAS
BEST FOR THEMSELVES.
BOB GRAHAM OF AIM
Nipping issues in the bud before they become full-blown problems has been
Lynch's modus operandi. And, those who speak for the industry must, like Lynch,
be willing to fight to maintain its integrity.
When INVESCO fired portfolio manager John Kaweske for failing to report
personal trades, the industry faced press reports and congressional inquiries
regarding its ethical standards. Reporters immediately set to work trying to
ferret out similar abuses at other advisory firms. Lynch took a proactive step.
He formed a Blue Ribbon Panel of fund company chiefs. Its mission was to examine
the personal trading issue, and make recommendations that would raise investor
confidence in the industrys ability to police itself.
"We raised the bar so that it is very difficult for abuses to occur," says
Lynch proudly. And what particularly pleases him is that the industry took the
bull by the horns.
The results of the panel exemplify Lynch's talents as a consensus builder.
Panel members represented differing opinions on personal trading within the
industry. Weaving our way around that to get a balance was quite a challenge,
says T.Rowe Price chief Jim Riepe. "Ron's concern was to come up with a solution
that was best for the industry," points out Bob Graham of AIM. "He put aside
whatever his group or any individual fund group might think was best for
themselves." Some have criticized the Blue Ribbon Panel for being too harsh.
Lynch responds, "I'd rather err on the side of being too strict. Riepe agrees:
"It has preempted any harsher reaction by the regulators, by Congress or by the
press."
Colleagues who watched Lynch work with the ICI's Blue Ribbon Panel weren't
surprised by his consensus-building skills. Many had previously observed him
forge a meeting of the minds between the SEC and the industry on Rule 12b-1.
Lynch was vice chairman of the National Association of Securities Dealers group
that revamped the 12b-1 Rule. Lynch boosters suggest that his efforts kept 12b-1
plans from being squelched by an unappreciative SEC.
Back in 1988, the regulators proposed rules to rein in 12b-1 plans. "Our
proposal was greeted with horror by the industry moguls on Wall Street," says
Kathy McGrath, then SEC director of Investment Management.
Lynch decided it would be better for those who were affected by changes in
Rule 12b-1 to do something about it. "I went to the industry and told them that
if we didn't get it done, someone would want to do it for us," he says. The
debate centered around how to rejigger 12b-1 fees so that the industry and the
SEC would accept them. Lynch and others approached the NASD with their proposal
to study the 12b-1 plan problem.
The NASD gave its Investment Companies Committee the thumbs up to
examine 12b-1 fees. Lynch chaired the committee from 1989 to 1991.
In 1990 the Investment Companies Committee announced rule changes of
mind-boggling complexity. The bottom line was that annual sales charges and
service charges paid by a fund to distributors could not exceed 1%. "Our aim was
to get financial parity between front-end and back-end shares," says Lynch. The
industry and the SEC were satisfied.
"HE IS ONE OF THOSE PEOPLE
WHO GETS THINGS DONE."
CHARLIE JOHNSON, FRANKLIN
A key to the success of the 12b-1 issue was Lynch's constant contact with
the SEC. He gave them regular updates on the NASD committees progress. "He's a
wonderful and delightful person to work with," says McGrath. "And he's as
honest as the day is long."
Franklin chief Charlie Johnson, an old friend of Lynch's, worked on the
12b-1 issue with him. "He was very much responsible for grasping the problems
and bringing to fruition the whole 12b-1 Rule that the NASD adopted," says
Johnson. "He is one of those people who gets things done."
Ron Lynch's laundry list of achievements begins before he started his
career at Lord Abbett. First he put himself through Cornell University, where he
received a BS in economics. A short while later, Lynch hooked up with Lord
Abbett. A regional sales manager at 28, he was 10 years younger than any other
professional at the firm. Lynch's first wholesale region covered New England,
New York and Pennsylvania. Lynch then moved to the warmer climes of California
where he headed sales in the West then a relatively untapped market. After eight
years, Lynch returned to New York, but not before he had doubled Lord Abbett's
share of the market out West. When he returned to Lord Abbett in New York, Lynch
was made a senior partner. In 1983, he became managing partner.
When Lynch takes time off from mutual funds, he's fundraising for his alma
mater, Cornell. He's vice chairman of the board of trustees and the chair of the
investment committee, responsible for a $1.8 billion endowment. Lynch has a
special interest in the Cornell University Medical Center, where he's on the
Joint Board and the Board of Overseers.
He and his wife Susan have three sons. The two younger Lynchs are
following in their father's academic footsteps at Cornell. The eldest, Ron Lynch
Jr., has already caught the fund bug. He is a wholesaler for Chase Manhattan's
Vista Funds on the West Coast. -- S.E. Canaday
For more complete information on any Lord Abbett-managed fund, call 800-874-3733
for a prospectus. A prospectus contains information on a fund, including charges
and expenses and should be read carefully before investing in a fund.
LORD, ABBETT & CO.
INVESTMENT MANAGEMENT
A TRADITION OF PERFORMANCE THROUGH DISCIPLINED INVESTING
EXCERPTED FROM FUND ACTION, COPYRIGHT 1995 FUND WORLD, INC. ALL RIGHTS RESERVED.
<PAGE>
GRAPHIC APPENDIX
P1 LORD ABBETT & CO. COMPANY LOGO
P2 PICTURE OF COMPANY CHAIRMAN, RONALD P. LYNCH
G1 PIE CHART - 41.8% EQUITY
38.8% TAXABLE FIXED INCOME
19.4% TAX-FREE FIXED INCOME
P3 PICTURE OF LORD ABBETT PERSONNEL DESCRIBED UNDER PICTURE
P4 PICTURE OF LORD ABBETT PERSONNEL DESCRIBED UNDER PICTURE
G2 BAR GRAPH - 3 YEARS - 8.2%
5 YEARS - 12.2%
10 YEARS - 8.4%
G3 BAR GRAPH - 3 YEARS - 9.6%
5 YEARS - 10.7%
10 YEARS - 12.4%
G4 BAR GRAPH - 3 YEARS - 8.8%
5 YEARS - 6.0%
LIFE - 6.5%
G5 PIE CHART - 29.2% PACIFIC RIM
25.8% USA
18.4% EUROPE
12.5% CASH/EQUIVALENT
11.9% UK
2.1% EMERGING MARKETS
0.1% CANADA
G6 BAR GRAPH - 3 YEARS - 13.0%
5 YEARS - 11.0%
10 YEARS - 13.3%
G7 BAR GRAPH - 3 YEARS - 11.1%
5 YEARS - 10.5%
LIFE - 10.5%
G8 BAR GRAPH - 3 YEARS - 6.1%
5 YEARS - 8.6%
10 YEARS - 9.7%*
G9 BAR GRAPH - 3 YEARS - 8.5%
5 YEARS - 11.8%
10 YEARS - 10.2%
G10 PIE CHART - 65.3% LOWER RATED DEBT
18.5% EQUITY-RELATED SECURITIES
16.2% HIGH-GRADE DEBT
(INCLUDING OTHER ASSETS, LESS LIABILITIES)
G11 BAR GRAPH - 3 YEARS - 8.0%
5 YEARS - 9.9%
LIFE - 9.0%
G12 PIE CHART - 91.5% AAA
8.5% AA
G13 PIE CHART - 43.8% USA
38.7% EUROPE
17.5% FAR EAST
G14 PIE CHART - 67.8% AAA
18.4% AA
7.6% A
6.2% BBB
G15 BAR GRAPH - 3 YEARS - 6.6%
5 YEARS - 7.9%
10 YEARS - 9.6%
G16 PIE CHART - 69.3% AAA
22.4% AA
8.3% A
G17 BAR GRAPH - 3 YEARS - 6.1%
5 YEARS - 7.7%
LIFE - 8.5%
G18 PIE CHART - 61.6% AAA
19.0% AA
16.8% A
2.6% BBB
G19 BAR GRAPH - 3 YEARS - 7.1%
LIFE - 7.9%
G20 PIE CHART - 70.0% AAA
16.4% AA
13.0% A
0.6% BBB
G21 BAR GRAPH - 3 YEARS - 7.3%
LIFE - 6.8%
G22 PIE CHART - 77.9% AAA
12.7% AA
9.4% A
G23 BAR GRAPH - 3 YEARS - 6.9%
LIFE - 6.9%
G24 PIE CHART - 64.4% AAA
14.4% AA
17.0% A
4.2% BBB
G25 PIE CHART - 74.7% AAA
16.0% AA
4.6% A
4.7% BBB
G26 BAR GRAPH - 3 YEARS - 6.6%
LIFE - 7.8%
G27 PIE CHART - 71.0% AAA
17.5% AA
6.2% A
5.3% BBB*
G28 BAR GRAPH - 3 YEARS - 7.6%
LIFE - 8.6%
G29 PIE CHART - 60.9% AAA
14.0% AA
19.6% A
5.5% BBB
G30 BAR GRAPH - 3 YEARS - 6.0%
5 YEARS - 7.6%
10 YEARS - 9.2%
G31 PIE CHART - 70.6% AAA
11.8% AA
14.8% A
2.8% BBB
G32 BAR GRAPH - 3 YEARS - 7.5%
LIFE - 7.2%
G33 PIE CHART - 54.7% AAA
28.9% AA
15.9% A
0.5% BBB*
G34 BAR GRAPH - 3 YEARS - 7.0%
5 YEARS - 8.3%
LIFE - 7.9%
G35 PIE CHART - 81.9% AAA
9.0% AA
9.1% A
G36 BAR GRAPH - 3 YEARS - 3.0%
5 YEARS - 4.1%
10 YEARS - 5.6%
<PAGE>
<PAGE>
LORD ABBETT
STATEMENT OF ADDITIONAL INFORMATION MAY 1, 1995
LORD ABBETT
GLOBAL FUND, INC.
- ------------------------------------------------------------------------------
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from your securities dealer or from Lord, Abbett & Co. at The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. This
Statement relates to, and should be read in conjunction with, the Prospectus
dated May 1, 1995.
The Fund was incorporated under Maryland law on February 23, 1988. The Fund's
Board of Directors has authority to classify its shares of common stock into
separate Series without further action by shareholders. To date, 100,000,000
shares of the Equity Series and 100,000,000 shares of the Income Series have
been designated by the Board of Directors. Although no present plans exist,
further series may be added in the future. The Investment Company Act of 1940
(the "Act") requires that where more than one series exists, each series must be
preferred over all other series with respect to assets specifically allocated to
such series. Unless otherwise stated, use of the word Fund in this Statement of
Additional Information will mean both Series.
Rule 18f-2 under the Act provides that any matter required to be submitted by
the provisions of the Act or applicable state law, or otherwise, to the holders
of the outstanding voting securities of an investment company, such as the Fund,
shall not be deemed to have been effectively acted upon unless approved by the
holders of a majority of the outstanding shares of each Series affected by such
matter. Rule 18f-2 further provides that a Series shall be deemed to be affected
by a matter unless the interests of each Series in the matter are identical or
the matter does not affect any interest of such Series. However, the Rule
exempts from these separate voting requirements the selection of independent
public accountants, the approval of principal distributing contracts and the
election of directors.
Shareholder inquiries should be made by writing directly to the Fund or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
TABLE OF CONTENTS
1. Investment Objectives and Policies 2
2. Directors and Officers 6
3. Investment Advisory and Other Services 8
4. Portfolio Transactions 10
5. Purchases, Redemptions
and Shareholder Services 11
6. Past Performance 16
7. Taxes 17
8. Information About the Fund 18
9. Financial Statements 18
10. Appendix 18
<PAGE>
1.
Investment Objectives and Policies
The Fund's investment objectives and policies are described in the Prospectus
under "Investment Objectives and Policies." In addition to those investment
objectives, each Series is subject to the following investment restrictions
which cannot be changed without approval of a majority of the outstanding shares
of such Series. Neither Series may: (1) sell short securities or buy securities
or evidences of interests therein on margin, although it may obtain short-term
credit necessary for the clearance of purchases of securities; (2) buy or sell
put or call options, although it may buy, hold or sell rights or warrants,
utilize various foreign currency hedging techniques, and it may write covered
call options and enter into closing purchase transactions as discussed below;
(3) borrow money except as a temporary measure for extraordinary or emergency
purposes, and then not in excess of 5% of its net assets at the time of
borrowing; (4) invest knowingly in securities or other assets not readily
marketable at the time of purchase or subject to legal or contractual
restrictions on resale except as described under "Restricted or Not Readily
Marketable Securities" below; (5) act as underwriter of securities issued by
others, unless it is deemed to be one in selling a portfolio security requiring
registration under the Securities Act of 1933, such as those described under
"Restricted or Not Readily Marketable Securities" below; (6) lend money or
securities to any person except that it may enter into short-term repurchase
agreements with sellers of securities it has purchased, and it may lend its
portfolio securities to registered broker-dealers where the loan is 100% secured
by cash or its equivalent as long as it complies with regulatory requirements
and the Fund deems such loans not to expose the Series to significant risk
(investment in repurchase agreements exceeding 7 days and in other illiquid
investments is limited to a maximum of 5% of a Series' assets); (7) pledge,
mortgage or hypothecate its assets; however, this provision does not apply to
permitted borrowing mentioned above or to the grant of escrow receipts or the
entry into other similar escrow arrangements arising out of the writing of
covered call options; (8) buy or sell real estate including limited partnership
interests therein (except securities of companies, such as real estate
investment trusts, that deal in real estate or interests therein), or oil, gas
or other mineral leases, commodities or commodity contracts in the ordinary
course of its business, except such interests and other property acquired as a
result of owning other securities, though securities will not be purchased in
order to acquire any of these interests; (9) invest more than 5% of its gross
assets, taken at market value at the time of investment, in companies (including
their predecessors) with less than three years' continuous operation; (10) buy
securities if the purchase would then cause a Series to have more than 5% of its
gross assets at market value at the time of purchase, invested in securities of
any one issuer, except (i) securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities which may be purchased in any
amounts and (ii) securities issued or guaranteed by foreign governments, their
agencies or instrumentalities which securities (apart from those of any issuer
totalling 5% or less of the Series' gross assets at market value at the time of
purchase) cannot aggregate more than 25% of the Series' gross assets at market
value at the time of purchase; (11) buy voting securities if the purchase would
then cause a Series to own more than 10% of the outstanding voting stock of any
one issuer; (12) own securities in a company when any of its officers, directors
or security holders is an officer or director of the Fund or an officer,
director or partner of our investment manager or Sub-Adviser, if after the
purchase any of such persons owns beneficially more than 1/2 of 1% of such
securities and such persons together own more than 5% of such securities; (13)
concentrate its investments in any particular industry, but if deemed
appropriate for attainment of its investment objective, up to 25% of its gross
assets (at market value at the time of investment) may be invested in any one
industry classification we use for investment purposes; or (14) buy securities
from or sell them to our officers, directors, or employees, or to our investment
adviser or Sub-Adviser or to their partners, directors and employees, other than
capital stock of the Fund.
OTHER INVESTMENTS. Except for the Fund's investment objectives as described in
the Prospectus and the Fund's investment restrictions described above in this
Statement of Additional Information, both under the same heading "Investment
Objectives and Policies," all of the Fund's investment policies and
restrictions, including those described below under this heading applicable to
each Series, can be changed without the approval of a majority of the
outstanding shares of the affected Series.
2
<PAGE>
PORTFOLIO TURNOVER RATE
For the years ended December 31, 1994 and 1993 our portfolio turnover rates were
75.39% and 197.59%, respectively, for the Equity Series and 1,230.20% and
1,599.43%, respectively, for the Income Series.
FOREIGN CURRENCY HEDGING TECHNIQUES
The Fund may utilize various foreign currency hedging techniques described
below, including forward foreign currency contracts and foreign currency put and
call options.
FORWARD FOREIGN CURRENCY CONTRACTS. A forward foreign currency contract involves
an obligation to purchase or sell a specific amount of a specific currency at a
set price at a future date. The Fund expects to enter into forward foreign
currency contracts in primarily two circumstances. First, when the Fund enters
into a contract for the purchase or sale of a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security. By
entering into a forward contract for the purchase or sale of the amount of
foreign currency involved in the underlying security transaction, the Fund will
be able to protect against a possible loss resulting from an adverse change in
the relationship between the U.S. dollar and the subject foreign currency during
the period between the date the security is purchased or sold and the date on
which payment is made or received.
Second, when management believes that the currency of a particular foreign
country may suffer a decline against the U.S. dollar, the Fund may enter into a
forward contract to sell the amount of foreign currency approximating the value
of some or all of the Fund's portfolio securities denominated in such foreign
currency or, in the alternative, the Fund may use a cross-hedging technique
whereby it sells another currency which the Fund expects to decline in a similar
way but which has a lower transaction cost. Precise matching of the forward
contract amount and the value of the securities involved will not generally be
possible since the future value of such securities denominated in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date the forward contract is entered into and the
date it matures. The Fund does not intend to enter into such forward contracts
under this second circumstance on a continuous basis.
FOREIGN CURRENCY PUT AND CALL OPTIONS. The Fund may also purchase foreign
currency put options and write foreign currency call options on U.S. exchanges
or U.S. over-the-counter markets. A put option gives the Fund, upon payment of a
premium, the right to sell a currency at the exercise price until the expiration
of the option and serves to insure against adverse currency price movements in
the underlying portfolio assets denominated in that currency.
Exchange-listed options markets in the United States include several major
currencies, and trading may be thin and illiquid. A number of major investment
firms trade unlisted options which are more flexible than exchange-listed
options with respect to strike price and maturity date. Unlisted options
generally are available in a wider range of currencies, including those of most
of the developed countries mentioned under "Investment Objectives and Policies"
in the Prospectus. Unlisted foreign currency options are generally less liquid
than listed options and involve the credit risk associated with the individual
issuer. Unlisted options are subject to a limit of 5% of each Series' net assets
illiquid securities.
A call option written by the Fund gives the purchaser, upon payment of a
premium, the right to purchase from the Fund a currency at the exercise price
until the expiration of the option. The Fund may write a call option on a
foreign currency only in conjunction with a purchase of a put option on that
currency. Such a strategy is designed to reduce the cost of downside currency
protection by limiting currency appreciation potential. The face value of such
writing may not exceed 90% of the value of the securities denominated in such
currency invested in by the Fund or in such cross currency (referred to above)
to cover such call writing.
3
<PAGE>
INVESTMENT TECHNIQUES
The Fund intends to utilize, from time to time, one or more of the investment
techniques described below, including covered call options, rights and warrants
and repurchase agreements. It is the Fund's current intention that no more than
5% of each Series' net assets will be at risk in the use of any one of such
investment techniques. While some of these techniques involve risk when utilized
independently, the Fund intends to use them to reduce risk and volatility in its
portfolios.
COVERED CALL OPTIONS. Each Series may write call options on securities it owns
(covered "call options"), provided that the securities held to cover such call
options do not represent more than 5% of a Series' net assets. A call option on
stock gives the purchaser of the option, upon payment of a premium to the writer
of the option, the right to call upon the writer to deliver a specified number
of shares of a stock on or before a fixed date at a predetermined price.
The writing of call options will, therefore, involve a potential loss of
opportunity to sell securities at higher prices. In exchange for the premium
received. The writer of a fully collateralized call option gives up the gain
possibility of the underlying stock beyond the call price and continues to have
the downside risk of such securities. In addition, in exchange for the premium
received, the writer of the call gives up the gain possibility of the stock
appreciating above the call price. While an option that has been written is in
force, the maximum profit that may be derived from the optioned stock is the sum
of the premium less brokerage commissions and fees plus the difference between
the strike price of the call and the market price of the underlying security.
Each Series will not use call options on individual equity securities traded on
foreign securities markets.
The Fund's custodian will segregate cash or liquid high-grade debt securities in
an amount not less than that required by SEC Release 10666 with respect to each
Series' assets committed to (a) forward foreign currency contracts and (b) cross
hedges. If the value of the segregated securities declines, additional cash or
debt securities will be added on a daily basis (i.e., marked to market) so that
the segregated amount will not be less than the amount of each Series'
commitments with respect to such forward contracts and cross hedges.
RIGHTS AND WARRANTS. Each Series may invest in rights and warrants to purchase
securities. Included within that amount, but not to exceed 2% of the value of
the Series' net assets, may be warrants which are not listed on the New York
Stock Exchange ("NYSE") or American Stock Exchange.
Rights represent a privilege offered to holders of record of issued securities
to subscribe (usually on a pro-rata basis) for additional securities of the same
class, of a different class, or of a different issuer, as the case may be.
Warrants represent the privilege to purchase securities at a stipulated price
and are usually valid for several years. Rights and warrants generally do not
entitle a holder to dividends or voting rights with respect to the underlying
securities, nor do they represent any rights in the assets of the issuing
company.
Also, the value of a right or warrant may not necessarily change with the value
of the underlying securities and rights and warrants cease to have value if they
are not exercised prior to their expiration date.
REPURCHASE AGREEMENTS. Each Series may enter into repurchase agreements with
respect to a security. A repurchase agreement is a transaction by which the
Series acquires a security and simultaneously commits to resell that security to
the seller (a bank or securities dealer) at an agreed-upon price on an
agreed-upon date. The resale price reflects the purchase price plus an
agreed-upon market rate of interest which is unrelated to the coupon rate or
date of maturity of the purchased security. In this type of transaction, the
securities purchased by the Fund have a total value in excess of the value of
the repurchase agreement. Each Series requires at all times that the repurchase
agreement be collateralized by cash or U.S. Government securities having a value
equal to, or in excess of, the value of the repurchase agreement. Such
agreements permit the Series to keep all of its assets at work while retaining
flexibility in pursuit of investments of a longer-term nature.
4
<PAGE>
The use of repurchase agreements involves certain risks. For example, if the
seller of the agreement defaults on its obligation to repurchase the underlying
securities at a time when the value of these securities has declined, a Series
may incur a loss upon their disposition. If the seller of the agreement becomes
insolvent and subject to liquidation or reorganization under the Bankruptcy Code
or other laws, a bankruptcy court may determine that the underlying securities
are collateral not within the control of the Series and are therefore subject to
sale by the trustee in bankruptcy. Even though the repurchase agreements may
have maturities of seven days or less, they may lack liquidity, especially if
the issuer encounters financial difficulties. While the Series acknowledges
these risks, it is expected that they can be controlled through stringent
selection criteria and careful monitoring procedures. Each Series intends to
limit repurchase agreements to transactions with dealers and financial
institutions believed by the Series to present minimal credit risks. Each Series
will monitor creditworthiness of the repurchase agreement sellers on an ongoing
basis.
RESTRICTED OR NOT READILY MARKETABLE SECURITIES
No more than 5% of the value of each Series may be invested in securities with
legal or contractual restrictions on resale (restricted securities), other than
repurchase agreements, and in securities which are not readily marketable
(including restricted securities, repurchase agreements with maturities of more
than seven days and over-the-counter options).
LENDING PORTFOLIO SECURITIES
Each Series may lend its portfolio securities to registered broker-dealers.
These loans, if and when made, may not exceed 15% of each Series' total assets.
Each Series' lending of securities will be collateralized by cash or marketable
securities issued or guaranteed by the U.S. Government or its agencies ("U.S.
Government securities") or other permissible means. The cash or instruments
collateralizing each Series' lending of securities will be maintained at all
times in an amount at least equal to the current market value of the loaned
securities. From time to time, a Series may allow a part of the interest
received with respect to the investment of collateral to be paid to the borrower
and/or a third party that is not affiliated with the Series and is acting as a
"placing broker." No fee will be paid to affiliated persons of a Series.
By lending portfolio securities, a Series can increase its income by continuing
to receive interest on the loaned securities as well as by either investing the
cash collateral in permissible investments, such as U.S. Government securities,
or obtaining yield in the form of interest paid by a borrower when such U.S.
Government securities are used as collateral. Each Series will comply with the
following conditions whenever it lends securities: (i) the Series must receive
at least 100% collateral from the borrower; (ii) the borrower must increase the
collateral whenever the market value of the securities loaned rises above the
level of the collateral; (iii) the Series must be able to terminate the loan at
any time; (iv) the Series must receive reasonable compensation with respect to
the loan, as well as any dividends, interest or other distributions on the
loaned securities; (v) the Series may pay only reasonable fees in connection
with the loan; and (vi) voting rights on the loaned securities may pass to the
borrower, except that if a material event adversely affecting the investment in
the loaned securities occurs, the Fund's Board of Directors must terminate the
loan and regain the right to vote the securities.
INCOME SERIES ONLY
WHEN-ISSUED TRANSACTIONS
As stated in the Prospectus, the Income Series may purchase portfolio securities
on a when-issued basis. When-issued transactions involve a commitment by the
Income Series to purchase securities, with payment and delivery ("settlement")
to take place in the future, in order to secure what is considered to be an
advantageous price or yield at the time of entering into the transaction. When
the Income Series enters into a when-issued purchase, it becomes obligated to
purchase securities and it assumes all the rights and risks attendant to
ownership of a security, although settlement occurs at a later date. The value
of fixed-income securities to be delivered in the future will fluctuate as
interest rates vary. At the time the Income Series makes the commitment to
purchase a security on a when-issued basis, it will record the transaction and
reflect the liability for the purchase and the value of the security in
determining its net asset value. The Income Series generally has the ability to
close out a purchase obligation on or before the settlement date, rather than
take delivery of the security. Under no circumstances will settlement for such
securities take place more than 120 days after the purchase date.
5
<PAGE>
2.
Directors and Officers
The following directors are partners of Lord, Abbett & Co., The General Motors
Building, 767 Fifth Avenue, New York, New York 10153-0203. They have been
associated with Lord Abbett for over five years and are also officers and/or
directors or trustees of the fifteen other Lord Abbett-sponsored funds. They are
"interested persons" as defined in the Act, and as such, may be considered to
have an indirect financial interest in the Rule 12b-1 Plan described in the
Prospectus.
Ronald P. Lynch, age 59, President and Chairman
Thomas S. Henderson, age 63, Vice President
The following outside directors are also directors or trustees of the fifteen
other Lord Abbett-sponsored funds referred to above except for Lord Abbett
Research Fund, Inc., of which only Messrs. Millican and Neff are directors.
E. Thayer Bigelow
Time Warner Cable
300 First Stamford Place
Stamford, Connecticut
President and Chief Executive Officer of Time Warner Cable Programming, Inc.
Formerly President and Chief Operating Officer of Home Box Office, Inc. Age 53.
Stewart S. Dixon
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon. Age 64.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 69.
C. Alan MacDonald
The Marketing Partnership, Inc.
27 Signal Road
Stamford, Connecticut
General Partner, The Marketing Partnership, Inc., a full service marketing
consulting firm that specializes in strategic planning and customer specific
marketing. Formerly Acquisition Consultant, The Noel Group, a private consulting
firm (1994). Formerly Chairman and Chief Executive Officer of Lincoln Foods,
Inc., manufacturer of branded snack foods (1992- 1994). Formerly President and
Chief Executive Officer of Nestle Foods Corporation, a subsidiary of Nestle S.A.
(Switzerland). Age 61.
6
<PAGE>
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 65.
Thomas J. Neff
Spencer Stuart & Associates
277 Park Avenue
New York, New York
President of Spencer Stuart & Associates, an executive search consulting firm.
Age 57.
The second column of the following table sets forth the compensation accrued for
the Fund's outside directors. The third and fourth columns set forth information
with respect to the retirement plans for outside directors maintained by the
Lord Abbett-sponsored funds. The fifth column sets forth the total compensation
payable by such funds to the outside directors. The information provided is for
the fiscal year ended December 31, 1994. No director of the Fund associated with
Lord Abbett and no officer of the Fund received any compensation from the Fund
for acting as a director or officer.
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
(1) (2) (3) (4) (5)
Pension or Estimated Annual
Retirement Benefits Benefits Upon
Accrued as Expenses Retirement Proposed Total Compensation
by the Fund to be Paid by the Fund Accrued by the Fund and
Aggregate and Fifteen Other and Fifteen Other Fifteen Other Lord
Compensation Lord Abbett-sponsored Lord Abbett-sponsored Abbett-sponsored
Name of Director from the Fund (1) Funds (2) Funds(2) Funds (3)
---------------- ----------------- --------------------- ---------------------- ------------------------
<S> <C> <C> <C> <C>
E. Thayer Bigelow 4 $243 None $33,600 $8,400
Thomas F. Creamer 5 $907 $27,578 $33,600 $29,650
Stewart S. Dixon $1,209 $22,595 $33,600 $43,600
John C. Jansing $1,178 $28,636 $33,600 $42,500
C. Alan MacDonald $1,151 $27,508 $33,600 $41,500
Hansel B. Millican, Jr. $1,158 $24,842 $33,600 $41,750
Thomas J. Neff $1,142 $16,214 $33,600 $41,200
<FN>
1. Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on net
assets of each fund. Fees payable by the Fund to its outside directors are
being deferred under a plan that deems the deferred amounts to be invested
in shares of the Fund for later distribution to the directors. The amounts
accrued by the Fund for the year ended December 31, 1994, are as set forth
after each outside Director's name above. The total amount accrued for each
outside Director since the beginning of his tenure with the Fund, together
with dividends reinvested and changes in net asset value applicable to such
deemed investments, were as follows as of December 31, 1994: Mr. Bigelow,
$243; Mr. Creamer, $4,606; Mr. Dixon, $5,021; Mr. Jansing, $4,976; Mr.
MacDonald, $4,990; Mr. Millican, $5,022; and Mr. Neff, $4,992.
2. Each Lord Abbett-sponsored fund has a retirement plan providing that
outside directors will receive annual retirement benefits for life equal to
80% of their final annual retainers following retirement at or after age 72
with at least 10 years of service. Each plan also provides for a reduced
benefit upon early retirement under certain circumstances, a pre-retirement
death benefit and actuarially reduced joint-and-survivor spousal benefits.
The amounts stated, except in the case of Mr. Creamer, would be payable
annually under such retirement plans if the director were to retire at age
72 and the annual retainers payable by such funds were the same as they are
today. The amounts accrued in column 3 were accrued by the Lord
Abbett-sponsored funds during the fiscal year ended December 31, 1994 with
respect to the retirement benefits in column 4.
7
<PAGE>
3. This column shows aggregate compensation, including director's fees and
attendance fees for board and committee meetings, of a nature referred to
in footnote one, accrued by the Lord Abbett-sponsored funds during the year
ended December 31, 1994.
4. Mr. Bigelow was elected a director of the Fund on October 19, 1994.
5. Mr. Creamer retired as a director of the Fund effective September 21, 1994.
The stated amount of his retirement income (column 4) is the annual amount
payable to him by the Lord Abbett-sponsored funds before reduction for a
joint-and-survivor spousal benefit.
</FN>
</TABLE>
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Allen, Carper, Cutler, Dow, Henderson, Nordberg and Walsh are partners of Lord
Abbett; the others are employees: Kenneth B. Cutler, age 62, Vice President and
Secretary; E. Wayne Nordberg, age 57, Executive Vice President; Zane E. Brown,
age 44, Executive Vice President; Stephen I. Allen, age 41, Daniel E. Carper
age, 43, Robert S. Dow, age 50, Thomas S. Henderson, age 63, John J. Walsh, age
58, Jeffery H. Boyd, age 38 (with Lord Abbett since 1994 - formerly partner in
the law firm of Robinson & Cole), John J. Gargana, Jr., age 63, Thomas F. Konop,
age 53, Victor W. Pizzolato, age 62, Vice Presidents; and Keith F. O'Connor, age
39, Treasurer.
The Fund's By-Laws provide that the Fund shall not hold an annual meeting of its
stockholders in any year unless one or more matters are required to be acted on
by stockholders under the Investment Company Act of 1940, as amended (the
"Act"), or unless called by a majority of the Board of Directors or by
stockholders holding at least one quarter of the stock of the Fund outstanding
and entitled to vote at the meeting. When any such annual meeting is held, the
stockholders will elect directors and vote on the approval of the independent
auditors of the Fund.
As of April 1, 1995, our officers and directors, as a group, owned less than 1%
of our outstanding shares.
3.
Investment Advisory and Other Services
As described under "Our Management" in the Prospectus, Lord Abbett is the Fund's
investment manager. The eight general partners of Lord Abbett, all of whom are
officers and/or directors of the Fund, are: Stephen I. Allen, Daniel E. Carper,
Kenneth B. Cutler, Robert S. Dow, Thomas S. Henderson, Ronald P. Lynch, E. Wayne
Nordberg and John J. Walsh. The address of each partner is The General Motors
Building, 767 Fifth Avenue, New York, New York 10153- 0203.
The services performed by Lord Abbett are described in the prospectus under "Our
Management" in the Prospectus. Under the Management Agreement, we pay Lord
Abbett a monthly fee, based on average daily net assets for each month, at the
annual rate of .75 of 1% for the Equity Series and .50 of 1% for the Income
Series. Notwithstanding the above, Lord Abbett may, but is not required to,
waive its fee or directly pay all or any portion of the expenses of either
Series not expressly assumed by Lord Abbett under the Management Agreement. Each
Series is contingently obligated through October 31, 1998 (or the earlier
termination of the Management Agreement) to repay its respective fees and
expenses voluntarily waived or paid by Lord Abbett to the extent such repayments
would not in any year, when added to expenses actually incurred in that year,
increase the expense ratio above 1.5%, in the case of the Equity Series, or
1.3%, in the case of the Income Series. The expense ratios for the Income Series
for fiscal 1993 and 1994 were 1.04% and 1.02%, respectively. All contingent
obligations have been repaid to Lord Abbett by the Income Series. The expense
ratios for the Equity Series were 1.68% and 1.56% during fiscal 1993 and 1994,
respectively. Accordingly, that Series did not have to make any repayment to
Lord Abbett and the entire amount of its contingent obligation, $283,550,
remains outstanding.
We pay all expenses not expressly assumed by Lord Abbett, including without
limitation 12b-1 expenses, outside directors' fees and expenses, association
membership dues, legal and auditing fees, taxes, transfer and dividend
disbursing agent fees, shareholder servicing costs, expenses relating to
shareholder meetings, expenses of preparing, printing and mailing stock
8
<PAGE>
<PAGE>
certificates and shareholder reports, expenses of registering our shares under
federal and state securities laws, expenses of preparing, printing and mailing
prospectuses to existing shareholders, insurance premiums, brokerage and other
expenses connected with executing portfolio transactions.
The State of California limits operating expenses (including management fees but
excluding taxes, interest, extraordinary expenses and brokerage commissions) to
2 1/2% of average annual net assets up to $30,000,000, 2% of the next
$70,000,000 of such assets and 1 1/2% of such assets in excess of $100,000,000.
This expense limitation is a condition of registration of investment company
shares in that state and has been modified pursuant to an order of the State
Securities Commissioner in its application to the Fund. The expense limitation
as modified applies so long as our shares are registered for sale in that state.
Lord Abbett has entered into an agreement with Dunedin Fund Managers Limited
(the "Sub-Adviser"), under which the Sub- Adviser provides Lord Abbett with
advice with respect to that portion of the Fund's assets invested in countries
other than the United States, as more particularly described in the Prospectus.
The Sub-Adviser, with offices located at Dunedin House, 25 Ravelston Terrace,
Edinburgh EH4 3EX Scotland, and its predecessors date back 122 years to 1873.
The Sub-Adviser is controlled by the Bank of Scotland, which indirectly owns a
majority of the Sub-Adviser's outstanding voting stock. The Sub-Adviser provides
international investment research and advisory services to private and
institutional clients, investment trusts, pension clients and unit trusts both
in the United Kingdom and overseas. The Sub-Adviser currently manages about $8
billion, and its investment and administrative staffs have substantial global
investment management experience.
Securities held by either Series of the Fund may also be held by other funds or
investment advisory clients for which Lord Abbett or the Sub-Adviser or their
affiliates provide investment advice. Because of different investment objectives
or other factors, a particular security may be bought for one or more funds or
clients when one or more other funds or clients are selling the same security.
If opportunities for purchase or sale of securities by Lord Abbett or the
Sub-Adviser for the Fund or for other funds or clients for which they render
investment advice arise for consideration at or about the same time,
transactions in such securities will be made insofar as feasible for the
respective funds or clients in a manner deemed equitable to all of them. To the
extent that transactions on behalf of more than one client of Lord Abbett, the
Sub-Adviser or their affiliates may increase the demand for securities being
purchased or the supply of securities being sold, there may be an adverse effect
on price.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281 are
the independent auditors of the Fund and must be approved at least annually by
our Board of Directors to continue in such capacity. They perform audit services
for the Fund including the examination of financial statements included in our
annual report to shareholders.
Morgan Guaranty Trust Company of New York ("Morgan"), 60 Wall Street, New York,
New York 10005, is the Fund's custodian. Rules adopted by the Securities and
Exchange Commission under the Act permit the Fund to maintain its foreign assets
in the custody of certain eligible foreign banks and securities depositories.
The Fund's portfolio securities and cash, when invested in foreign securities
and not held by Morgan or its foreign branches, are held by sub-custodians of
Morgan approved by the Board of Directors of the Fund in accordance with such
rules.
The Sub-Custodians of Morgan are:
Euro-Clear (a transnational securities depository); Australia: ANZ Banking
Group; Austria: Creditanstalt-Bankverein; Canada: Canadian Imperial Bank of
Commerce; Chile: Citibank, N.A.; Czech Republic: Ceskoslovenska Obchodni Banka;
Denmark: Den Danske Bank; Finland: Union Bank of Finland; Germany: J.P. Morgan
GmbH; Greece: National Bank of Greece S.A.; Hong Kong, Indonesia, Philippines,
Taiwan and Thailand: Hong Kong & Shanghai Banking Corp.; Hungary: Citibank
Budapest Rt; India: Hong Kong and Shanghai Banking Corporation; Ireland: Allied
Irish Banks, PLC; Israel: Bank Leumi LE-Israel B.M.; Japan: The Fuji Bank, Ltd.;
Jordan: Citibank, N.A.; Korea: Bank of Seoul; Luxembourg: Banque Internationale
A Luxembourg, S.A.; Mexico: Citibank, N.A.; Morocco: Banque Commerciale du
9
<PAGE>
Maroc; Netherlands: Bank van Haften Labouchere; New Zealand: Anz Banking Group
Ltd.; Norway: Den Norske Bank; Pakistan: Citibank, N.A.; Peru: Citibank, N.A.;
Poland: Bank Handlowy w Warszawie S.A.; Portugal: Banco Espirito Santo E
Comercial de Lisboa; Malaysia, Singapore: Development Bank of Singapore; South
Africa: The First National Bank of Southern Africa; Sri Lanka: Hongkong and
Shanghai Banking Corporation; Sweden: Skandinaviska Enskilda Banken;
Switzerland: Bank Leu; Turkey: Citibank, N.A.; Venezuela: Citibank, N.A.
4.
Portfolio Transactions
With respect to the Income Series, purchases and sales of portfolio securities
usually will be principal transactions and normally such securities will be
purchased directly from the issuer or from an underwriter or market maker for
the securities. Therefore, the Income Series usually will pay no brokerage
commissions for such purchases. Purchases from underwriters of portfolio
securities will include a commission or concession paid by the issuer to the
underwriter and purchases from dealers serving as market makers will include a
dealer's markup. Principal transactions, including riskless principal
transactions, are not afforded the protection of the safe harbor in Section 28
(e) of the Securities Exchange Act of 1934.
The Fund's policy is to have purchases and sales of portfolio securities
executed at the most favorable prices, considering all costs of the transaction
including brokerage commissions and dealer markups and markdowns, consistent
with obtaining the best execution, except to the extent that we may pay a higher
commission as described below. This policy governs the selection of brokers or
dealers and the market in which the transaction is executed. To the extent
permitted by law, the Fund may, if considered advantageous, make a purchase from
or sale to another Lord Abbett-sponsored fund without the intervention of any
broker-dealer.
The Fund selects broker-dealers on the basis of their professional capability
and the value and quality of their brokerage and research services. Normally,
for domestic assets, the selection is made by the Fund's traders who are
officers of the Fund and also are employees of Lord Abbett. For foreign assets,
the selection is made by the Sub-Adviser. The Fund's traders do the trading as
well for other accounts--investment companies (of which they are also officers)
and other investment clients -- managed by Lord Abbett. They are responsible
for the negotiation of prices and commissions.
In transactions on stock exchanges in the United States, commissions are
negotiated, whereas on many foreign stock exchanges commissions are fixed. In
the case of securities traded in the foreign and domestic over-the-counter
markets, there is generally no stated commission, but the price usually includes
an undisclosed commission or markup. Purchases from underwriters of newly-issued
securities for inclusion in the Fund's portfolios usually will include a
concession paid to the underwriter by the issuer and purchases from dealers
serving as market makers will include the spread between the bid and asked
prices. The Fund may select a broker-dealer who may receive a commission for
portfolio transactions exceeding the amount another broker would have charged
for the same transaction if the Fund's traders determine that such amount is
reasonable in relation to the value of the brokerage and research services
performed by the executing broker viewed in terms of either the particular
transaction or the broker's overall responsibilities with respect to the Fund
and other accounts managed by Lord Abbett. Brokerage services may include such
factors as showing the Fund trading opportunities including blocks, willingness
and ability to take positions in securities, knowledge of a particular security
or market, proven ability to handle a particular type of trade, confidential
treatment, promptness, reliability and quotation and pricing services. Research
may include the furnishing of analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy and the
performance of accounts. Such research may be used by Lord Abbett in servicing
all their accounts, and not all of such research will necessarily be used by
Lord Abbett in connection with their services to the Fund; conversely, research
furnished in connection with brokerage of other accounts managed by Lord Abbett
may be used in connection with their services to the Fund, and not all of such
research will necessarily be used by Lord Abbett in connection with their
services to such other accounts. The Fund has been advised by Lord Abbett that,
although such research is often useful, no dollar value can be ascribed to it
nor can it be accurately ascribed or allocated to any account and it is not a
substitute for services provided by them to us; nor does it materially reduce or
10
<PAGE>
otherwise affect the expenses incurred by Lord Abbett in the performance of such
services. The Fund makes no commitments regarding the allocation of brokerage
business to or among dealers.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold the Fund's shares
and/or shares of other Lord Abbett-sponsored funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as the Fund does, transactions will, to the extent practicable, be allocated
among all participating accounts in proportion to the amount of each order and
will be executed daily until filled so that each account shares the average
price and commission cost of each day.
The Fund will not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for the Fund's benefit or otherwise) from
broker-dealers as consideration for the direction to them of portfolio business.
During the fiscal years ended December 31, 1992, 1993 and 1994, the Fund paid
total commissions to independent dealers of $304,255, $414,077 and $392,126
respectively.
5.
Purchases, Redemptions
and Shareholder Services
The Fund values its portfolio securities at their market values as of the close
of the NYSE. Market value will be determined as follows: securities listed or
admitted to trading privileges on any national or foreign securities exchange
are valued at the last sales price on the principal securities exchange on which
such securities are traded, or, if there is no sale on that day, at the mean
between the last bid and asked prices, or, in the case of bonds, in the
over-the-counter market if, in the judgment of the Fund's officers, that market
more accurately reflects the market value of the bonds. Over-the-counter
securities that are not traded on the NASDAQ National Market System are valued
at the mean between the last bid and asked price. Securities for which market
quotations are not available are valued at fair market value under procedures
approved by the Board of Directors.
Information concerning how each Series values its shares for the purchase and
redemption or repurchase of its shares is briefly described in the Prospectus
under "Purchases" and "Redemptions", respectively.
As disclosed in the Prospectus, each Series calculates its net asset value and
is otherwise open for business on each day that the NYSE is open for trading.
The NYSE is closed on Saturdays and Sundays and the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas.
All assets and liabilities expressed in foreign currencies will be converted
into United States dollars at the mean between the buying and selling rates of
such currencies against United States dollars last quoted by any major bank. If
such quotations are not available, the rate of exchange will be determined in
accordance with policies established by the Board of Directors of the Fund. The
Board of Directors will monitor, on an ongoing basis, the Fund's method of
valuation.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each business day in New York. In addition, European or Far Eastern
securities trading generally or in a particular country or countries may not
take place on all business days in New York. Furthermore, trading takes place in
various foreign markets on days which are not business days in New York and on
which the Series' net asset values are not calculated. Such calculation does not
take place contemporaneously with the determination of the prices of the
majority of the portfolio securities used in such calculation. Events affecting
the values of portfolio securities that occur between the time their prices are
determined and the close of the NYSE will not be reflected in the Series'
calculation of net asset values unless the Fund's Directors determine that the
particular event would materially affect net asset value, in which case an
adjustment will be made.
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The maximum offering prices of each Series' shares on December 31, 1994 were
computed as follows:
EQUITY INCOME
SERIES SERIES
------ ------
Net asset value per share (net assets
divided by shares outstanding) $11.55 $7.98
Maximum offering price per
share (net asset value divided by
.9425 and .9525, respectively)............ $12.25 $8.38
The Fund has entered into a distribution agreement with Lord Abbett under which
Lord Abbett is obligated to use its best efforts to find purchasers for the
shares of the Fund and to make reasonable efforts to sell Fund shares, so long
as, in Lord Abbett's judgment, a substantial distribution can be obtained by
reasonable efforts.
For the last three fiscal years Lord Abbett, as the Fund's principal
underwriter, received net commissions after allowance of a portion of the sales
charge to independent dealers as follows:
Equity Series
YEAR ENDED DECEMBER 31,
-----------------------
1994 1993 1992
---- ---- ----
Gross sales charge $540,318 $847,572 $227,453
Amount allowed
to dealers $465,423 $731,682 $197,112
-------- -------- --------
Net commissions
received by
Lord Abbett $ 74,895 $115,890 $30,341
======== ======== =======
Income Series
YEAR ENDED DECEMBER 31,
-----------------------
1994 1993 1992
---- ---- ----
Gross sales charge $1,577,68 $5,648,094 $2,546,984
Amount allowed
to dealers $1,357,207 $4,826,957 $2,182,169
---------- ---------- ----------
Net commissions
received by
Lord Abbett $ 220,479 $ 821,137 $ 364,815
========== ========== ==========
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As described in the Prospectus, the Fund has adopted a Distribution Plan and
Agreement (the "Plan") pursuant to Rule 12b-1 of the Act. In adopting the Plan
and in approving its continuance, the Board of Directors has concluded that
there is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. The expected benefits include greater sales and lower redemptions
of Fund shares, which should allow the Fund to maintain a consistent cash flow,
and a higher quality of service to shareholders by dealers than would otherwise
be the case. During the last fiscal year, the Fund accrued or paid through Lord
Abbett to dealers $187,306 for the Equity Series and $694,074 for the Income
Series under the Plan. Lord Abbett uses all amounts received under the Plan for
payments to dealers for (i) providing continuous services to the Fund's
shareholders, such as answering shareholder inquiries, maintaining records and
assisting shareholders in making redemptions, transfers, additional purchases
and exchanges and (ii) their assistance in distributing shares of the Fund.
The Plan requires the Board of Directors to review, on a quarterly basis,
written reports of all amounts expended pursuant to the Plan and the purpose for
which such expenditures were made. The Plan shall continue in effect only if its
continuance is specifically approved at least annually by vote of the Fund's
Board of Directors and of the Fund's directors who are not interested persons of
the Fund and who have no direct or indirect financial interest in the operation
of the Plan or in any agreements related to the Plan ("outside directors"), cast
in person at a meeting called for the purpose of voting on such Plan and
agreements. The Plan may not be amended to increase materially the amount spent
for distribution expenses without approval by a majority of the Fund's
outstanding voting securities and the approval of a majority of the directors,
including a majority of the Fund's outside directors. The Plan may be terminated
at any time by vote of a majority of the Fund's outside directors or by vote of
a majority of the Fund's outstanding voting securities.
As stated in the Prospectus, a 1% contingent deferred reimbursement charge
("CDRC") is imposed with respect to those Fund shares (or shares of another Lord
Abbett-sponsored fund or series acquired through exchange of such shares) on
which the Fund has paid the one-time 1% 12b-1 sales distribution fee if such
shares are redeemed out of the Lord Abbett-sponsored family of funds within 24
months from the end of the month in which the original sale occurred.
No CDRC is payable on redemptions by tax-qualified plans under section 401 of
the Internal Revenue Code for benefit payments due to plan loans, hardship
withdrawals, death, retirement or separation from service with respect to plan
participants. The CDRC is received by the Fund and is intended to reimburse all
or a portion of the amount paid by the Fund if the shares are redeemed before
the Fund has had an opportunity to realize the anticipated benefits of having a
large, long-term shareholder account in the Fund. Shares of a fund or series on
which such 1% sales distribution fee has been paid may not be exchanged into a
fund or series with a Rule 12b-1 plan for which the payment provisions have not
been in effect for at least one year.
The other Lord Abbett-sponsored funds and series which participate in the
Telephone Exchange Privilege (except Lord Abbett U.S. Government Securities
Money Market Fund, Inc. ("GSMMF") and certain series of Lord Abbett Tax-Free
Income Fund, Inc. and Lord Abbett Tax-Free Income Trust for which a Rule 12b-1
Plan is not yet in effect (collectively, the "Series")) have instituted a CDRC
on the same terms and conditions. No CDRC will be charged on an exchange of
shares between Lord Abbett funds. Upon redemption out of the Lord Abbett family
of funds the CDRC will be charged on behalf of and paid to the fund in which the
original purchase (subject to a CDRC) occurred. Thus, if shares of a Lord Abbett
fund are exchanged for shares of another such fund and the shares tendered
("Exchanged Shares") are subject to a CDRC, the CDRC will carry over to the
shares being acquired, including GSMMF ("Acquired Shares"). Any CDRC that is
carried over to Acquired Shares is calculated as if the holder of the Acquired
Shares had held those shares from the date on which he or she became the holder
of the Exchanged Shares. Although GSMMF and the Series will not pay a 1% sales
distribution fee on $1 million purchases of their own shares, and will therefore
not impose their own CDRC, GSMMF will collect the CDRC on behalf of other Lord
Abbett funds. Acquired shares held in GSMMF which are subject to a CDRC will be
credited with the time such shares are held in that fund.
In no event will the amount of the CDRC exceed 1% of the lesser of (i) the net
asset value of the shares redeemed or (ii) the original cost of such shares (or
of the Exchanged Shares for which such shares were acquired). No CDRC will be
imposed when the investor redeems (i) amounts derived from increases in the
value of the account above the total cost of shares being redeemed due to
increases in net asset value, (ii) shares with respect to which no Lord Abbett
fund paid a 1% sales distribution fee on issuance (including shares acquired
through reinvestment of dividend income and capital gains distributions) or
(iii) shares which, together with Exchanged Shares, have been held continuously
for 24 months from the end of the month in which the original sale occurred. In
determining whether a CDRC is payable,
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<PAGE>
(a) shares not subject to the CDRC will be redeemed before shares subject to the
CDRC and (b) of shares subject to a CDRC, those held the longest will be the
first to be redeemed.
Under the terms of the Statement of Intention to invest $50,000 ($100,000 in the
case of the Income Series) or more over a 13-month period as described in the
Prospectus, shares of Lord Abbett-sponsored funds (other than shares of Lord
Abbett Equity Fund ("LAEF"), Lord Abbett Series Fund ("LASF"), Lord Abbett
Research Fund if not offered to the general public ("LARF"), and GSMMF, unless
holdings in GSMMF are attributable to shares exchanged from a Lord
Abbett-sponsored fund offered with a sales charge or from a fund in the Lord
Abbett Counsel Group) currently owned by you are credited as purchases (at their
current offering prices on the date the Statement is signed) toward achieving
the stated investment. Shares valued at 5% of the amount of intended purchases
are escrowed and may be redeemed to cover the additional sales charge payable if
the Statement is not completed. The Statement of Intention is neither a binding
obligation on you to buy, nor on the Fund to sell, the full amount indicated.
As stated in the Prospectus, purchasers (as defined in the Prospectus) may
accumulate their investment in Lord Abbett- sponsored funds (other than LAEF,
LARF, LASF, and GSMMF, unless holdings in GSMMF are attributable to shares
exchanged from a Lord Abbett-sponsored fund offered with a front-end sales
charge or from Lord Abbett Counsel Group) so that a current investment, plus the
purchaser's holdings valued at the current maximum offering price, reach a level
eligible for a discounted sales charge.
As stated in the Prospectus, the Series' shares may be purchased at net asset
value by our directors, employees of Lord Abbett or the Sub-Adviser, employees
of our shareholder servicing agent and employees of any securities dealer having
a sales agreement with Lord Abbett who consents to such purchases or by the
trustee or custodian under any pension or profit-sharing plan or Payroll
Deduction IRA established for the benefit of such persons or for the benefit of
employees of any national securities trade organization to which Lord Abbett
belongs or any company with an account(s) in excess of $10 million managed by
Lord Abbett on a private-advisory-account basis. For purposes of this paragraph,
the terms "directors" and "employees" include a director's or employee's spouse
(including the surviving spouse of a deceased director or employee). The terms
"our directors" and "employees of Lord Abbett or the Sub-Adviser" also include
other family members and retired directors and employees.
Our shares also may be purchased at net asset value (a) at $1 million or more,
(b) with dividends and distributions from other Lord Abbett-sponsored funds,
except for LARF, LAEF, LASF and Lord Abbett Counsel Group, (c) under the loan
feature of the Lord Abbett-sponsored prototype 403(b) plan for share purchases
representing the repayment of principal and interest, (d) by certain authorized
brokers, dealers, registered investment advisers or other financial institutions
who have entered into an agreement with Lord Abbett in accordance with certain
standards approved by Lord Abbett, providing specifically for the use of our
shares in particular investment products made available for a fee to clients of
such brokers, dealers, registered investment advisers and other financial
institutions, and (e) by employees, partners and owners of unaffiliated
consultants and advisors to Lord Abbett or Lord Abbett-sponsored funds who
consent to such purchase if such persons provide service to Lord Abbett or such
funds on a continuing basis and are familiar with such funds. Shares are offered
at net asset value to these investors for the purpose of promoting goodwill with
employees and others with whom Lord Abbett and/or the Fund have business
relationships.
Our shares also may be purchased at net asset value, subject to appropriate
documentation, through a securities dealer where the amount invested represents
redemption proceeds from shares ("Redeemed Shares") of a registered open-end
management investment company not distributed or managed by Lord Abbett (other
than a money market fund), if such redemption has occurred no more than 60 days
prior to the purchase of our shares, the Redeemed Shares were held for at least
six months prior to redemption and the proceeds of redemption were maintained in
cash or a money market fund prior to purchase. Purchasers should consider the
impact, if any, of contingent deferred sales charges in determining whether to
redeem shares for subsequent investment in our shares. Lord Abbett may suspend,
change or terminate this purchase option at any time.
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<PAGE>
Our shares may be issued at net asset value in exchange for the assets, subject
to possible tax adjustment, of a personal holding company or an investment
company. There are economies of selling efforts and sales-related expenses with
respect to offers to these investors and those referred to above.
The Prospectus briefly describes the Telephone Exchange Privilege. You may
exchange some or all of your shares for those of Lord Abbett-sponsored funds
currently offered to the public with a sales charge and GSMMF, to the extent
offers and sales may be made in your state. You should read the prospectus of
the other fund before exchanging. In establishing a new account by exchange,
shares of the Fund being exchanged must have a value equal to at least the
minimum initial investment required for the fund into which the exchange is
made.
Shareholders in such other funds have the same right to exchange their shares
for the Fund's shares. Exchanges are based on relative net asset values on the
day instructions are received by the Fund in Kansas City if the instructions are
received prior to the close of the NYSE in proper form. No sales charges are
imposed except in the case of exchanges out of GSMMF (unless a sales charge was
paid on the initial investment). Exercise of the exchange privilege will be
treated as a sale for federal income tax purposes, and, depending on the
circumstances, a gain or loss may be recognized. In the case of an exchange of
shares that have been held for 90 days or less where no sales charge is payable
on the exchange, the original sales charge incurred with respect to the
exchanged shares will be taken into account in determining gain or loss on the
exchange only to the extent such charge exceeds the sales charge that would have
been payable on the acquired shares had they been acquired for cash rather than
by exchange. The portion of the original sales charge not so taken into account
will increase the basis of the acquired shares.
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as a means for taking advantage of
short-term swings in the market, and we reserve the right to terminate or limit
the privilege of any shareholder who makes frequent exchanges. We can revoke or
modify the privilege for all shareholders upon 60 days' prior notice. "Eligible
Funds" are other Lord Abbett-sponsored funds which are eligible for the exchange
privilege, except LASF which offers its shares only in connection with certain
variable annuity contracts, LAEF which is not issuing shares, LARF if not
offered to the general public and Lord Abbett Counsel Group.
A redemption order is in proper form when it contains all of the information and
documentation required by the order form or supplementally by Lord Abbett or the
Fund to carry out the order. The signature(s) and any legal capacity of the
signer(s) must be guaranteed by an eligible guarantor. See the Prospectus for
expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Directors may authorize redemption of all of the shares in any
account in which there are fewer than 25 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least six months prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
Under the Div-Move service described in the Prospectus, you can invest the
dividends paid on your account into an existing account in any other Eligible
Fund. The account must be either your account, a joint account for you and your
spouse, a single account for your spouse, or a custodial account for your minor
child under the age of 21. You should read the prospectus of the other fund
before investing.
The Invest-A-Matic method of investing in the Fund and/or any other Eligible
Fund is described in the Prospectus. To avail yourself of this method you must
complete the application form, selecting the time and amount of your bank
checking account withdrawals and the funds for investment, include a voided,
unsigned check and complete the bank authorization.
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<PAGE>
The Systematic Withdrawal Plan (the "SWP") also is described in the Prospectus.
You may establish a SWP if you own or purchase uncertificated shares having a
current offering price value of at least $10,000. Lord Abbett prototype
retirement plans have no such minimum. The SWP involves the planned redemption
of shares on a periodic basis by receiving either fixed or variable amounts at
periodic intervals. Since the value of shares redeemed may be more or less than
their cost, gain or loss may be recognized for income tax purposes on each
periodic payment. Normally, you may not make regular investments at the same
time you are receiving systematic withdrawal payments because it is not in your
interest to pay a sales charge on new investments when in effect a portion of
that new investment is soon withdrawn. The minimum investment accepted while a
withdrawal plan is in effect is $1,000. The SWP may be terminated by you or by
us at any time by written notice.
The Prospectus indicates the types of retirement plans for which Lord Abbett
provides forms and explanations. Lord Abbett makes available the retirement plan
forms and custodial agreements for IRAs (Individual Retirement Accounts
including Simplified Employee Pensions), 403(b) plans and qualified pension and
profit-sharing plans, including 401(k) plans. The forms name Investors Fiduciary
Trust Company as custodian and contain specific information about the plans.
Explanations of the eligibility requirements, annual custodial fees and
allowable tax advantages and penalties are set forth in the relevant plan
documents. Adoption of any of these plans should be on the advice of your legal
counsel or qualified tax adviser.
6.
Past Performance
Each Series computes the average annual compounded rate of total return during
specified periods that would equate the initial amount invested to the ending
redeemable value of such investment by adding one to the computed average annual
total return, raising the sum to a power equal to the number of years covered by
the computation and multiplying the result by one thousand dollars, which
represents a hypothetical initial investment. The calculation assumes deduction
of the maximum sales charge from the initial amount invested and reinvestment of
all income dividends and capital gains distributions on the reinvestment dates
at prices calculated as stated in the Prospectus. The ending redeemable value is
determined by assuming a complete redemption at the end of the period(s) covered
by the average annual total return computation.
Using the method to compute average annual compounded total return described
below, the one-year, five-year and life-of- Series total annual returns for
these periods ended December 31, 1994 for the Equity Series amounted to -5.90%,
3.30% and 6.08% respectively, and for the Income Series -8.00%, 6.64% and 7.22%,
respectively. The redeemable values were $941, $1,176 and $1,446, respectively,
for the Equity Series and $920, $1,379 and $1,546, respectively, for the Income
Series.
The Income Series' yield quotation is based on a 30-day period ended on a
specific date, computed by dividing the Series' net investment income per share
earned during the period by the Series' maximum offering price per share on the
last day of the period. This is determined by finding the following quotient:
take the Series' dividends and interest earned during the period minus its
expenses accrued for the period and divide by the product of (i) the average
daily number of Fund shares outstanding during the period that were entitled to
receive dividends and (ii) the Series' maximum offering price per share on the
last day of the period. To this quotient add one. This sum is multiplied by
itself five times. Then one is subtracted from the product of this
multiplication and the remainder is multiplied by two. For the 30-day period
ended December 31, 1994, the Income Series yield was 6.53%.
These figures represent past performance, and an investor should be aware that
the investment return and principal value of a Series investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. Therefore, there is no assurance that this performance will
be repeated in the future.
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<PAGE>
7.
Taxes
The value of any shares redeemed by a Series or repurchased or otherwise sold
may be more or less than a shareholder's tax basis in the shares at the time the
redemption, repurchase or sale is made. Any gain or loss will generally be
taxable for federal income tax purposes. Any loss realized on the sale,
redemption or repurchase of Series shares which a shareholder has held for six
months or less will be treated for tax purposes as a long-term capital loss to
the extent of any capital gains distributions which were received with respect
to such shares. Losses on the sale of stock or securities are not deductible if,
within a period beginning 30 days before the date of the sale and ending 30 days
after the date of the sale, the taxpayer acquires stock or securities that are
substantially identical.
Each Series of the Fund will be subject to a 4% non-deductible excise tax on
certain amounts not distributed (and not treated as having been distributed) on
a timely basis in accordance with a calendar year distribution requirement. Each
Series intends to distribute to shareholders each year an amount adequate to
avoid the imposition of such excise tax.
Dividends paid by the Series will qualify for the dividends-received deduction
for corporations to the extent that they are derived from dividends paid by
domestic corporations.
As described in the Prospectus, the Series may be subject to withholding taxes
and other taxes imposed by foreign countries. If, at the close of any fiscal
year, more than 50% of the assets of either Series of the Fund consist of stock
or securities of foreign corporations, such Series may elect to treat foreign
income taxes paid by the Series as having been paid directly by its
shareholders. If a Series qualifies for and makes such an election, the
shareholders of such Series will be required to (i) include in ordinary gross
income (in addition to taxable dividends actually received) their pro rata share
of foreign income taxes paid by such Series and (ii) treat such pro rata share
as foreign income taxes paid by them. Such shareholders may then use such pro
rata portion of foreign income taxes as foreign tax credits, subject to
applicable limitations, or, alternatively, deduct them in computing their
taxable income. Shareholders who do not itemize deductions for federal income
tax purposes will not be entitled to deduct their pro rata portion of foreign
taxes paid by a Series, although such shareholders will be required to include
their share of such taxes in gross income. Shareholders who claim a foreign tax
credit for foreign taxes paid by a Series may be required to treat a portion of
dividends received from such Series as separate category income for purposes of
computing the limitations on the foreign tax credit. Tax-exempt shareholders
will ordinarily not benefit from this election. Each year that a Series
qualifies for and makes the election described above, its shareholders will be
notified of the amount of (i) each shareholder's pro rata share of foreign
income taxes paid by such Series and (ii) the portion of dividends which
represents income from each foreign country.
Forward foreign currency contracts, foreign currency put and call options and
other investment techniques and practices which the Series may utilize, as
described above under "Investment Objectives and Policies," may create
"straddles" for United States federal income tax purposes and may affect the
character and timing of the recognition of gains and losses by a Series. Such
hedging transactions may increase the amount of short-term capital gain realized
by such Series, which is taxed as ordinary income when distributed to
shareholders. Limitations imposed by the Internal Revenue Code on regulated
investment companies may restrict each Series' ability to engage in transactions
in options and forward contracts.
Gains and losses realized by a Series on certain transactions, including sales
of foreign debt securities and certain transactions involving foreign currency,
will be treated as ordinary income or loss for federal income tax purposes to
the extent, if any, that such gains or losses are attributable to changes in
exchange rates for foreign currencies. Accordingly, distributions taxable as
ordinary income will include the net amount, if any, of such foreign exchange
gains and will be reduced by the net amount, if any, of such foreign exchange
losses.
If a Series purchases shares in certain foreign investment entities, called
"passive foreign investment companies," that Series may be subject to United
States federal income tax on a portion of any "excess distribution" or gain from
the disposition of
17
<PAGE>
such shares, even if such income is distributed as a taxable dividend by the
Series to its shareholders. Additional charges in the nature of interest may be
imposed on either the Series or its shareholders with respect to deferred taxes
arising from such distributions or gains. If the Series were to invest in a
passive foreign investment company with respect to which the Series elected to
make a "qualified electing fund" election, in lieu of the foregoing
requirements, the Series might be required to include in income each year a
portion of the ordinary earnings and net capital gains of the qualified electing
fund, even if such amount were not distributed to the Series.
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to United States persons (United States citizens or residents and
United States domestic corporations, partnerships, trusts and estates). Each
shareholder who is not a United States person should consult his tax adviser
regarding the U.S. and foreign tax consequences of the ownership of shares of a
Series, including a 30% (or lower treaty rate) United States withholding tax on
dividends representing ordinary income and net short-term capital gains, and the
applicability of United States gift and estate taxes to non-United States
persons who own Series shares.
8.
Information About the Fund
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment accounts. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Fund's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security 7 days
before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account
considers a trade or trades in such security, from profiting on trades of the
same security within 60 days and from trading on material and non-public
information. The Code imposes certain similar requirements and restrictions on
the independent directors and trustees of each Lord Abbett- sponsored mutual
fund to the extent contemplated by the recommendations of the Advisory Group. 9.
Financial Statements
The financial statements for the fiscal year ended December 31, 1994 and the
report of Deloitte & Touche LLP, independent auditors, on such financial
statements contained in the 1994 Annual Report to Shareholders of Lord Abbett
Global Fund, Inc. are incorporated herein by reference to such financial
statements and report in reliance upon the authority of Deloitte & Touche LLP as
experts in auditing and accounting.
Appendix
Moody's Investors Service, Inc.'s Corporate Bond Ratings
Aaa - Bonds which are rated Aaa are judged to be of the best quality and carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are unlikely to impair the fundamentally strong position of such
issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
18
<PAGE>
protection may not be as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance and
other terms of the contract over any long period of time may be small.
Caa - Bonds that are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds that are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C - Bonds that are rated C are the lowest-rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Standard & Poor's Corporation's Corporate Bond Ratings
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong and in the majority of instances they
differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
BB-B-CCC-CC-C - Debt rated BB, B, CCC, CC and C is regarded as having
predominately speculative characteristics with respect to capacity to pay
interest and repay principal. BB indicates the least degree of speculation and
CCC the highest. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes such payments will
be made during such grace period. The D rating also will be used upon the filing
of a bankruptcy petition if debt service payments are jeopardized.
19
<PAGE>
GLOBAL FUND
EQUITY SERIES
GLOBAL INVESTING ISN'T AS
FOREIGN AS YOU MAY THINK.
Spring 1994
[P1 - Picture of woman in super market
checking label of product]
<PAGE>
THERE ARE MANY GLOBAL COMPANIES THAT ARE NOT WELL KNOWN TO
AMERICAN CONSUMERS, BUT WE CAN THINK OF SOME WHOSE
PRODUCTS ARE SURPRISINGLY FAMILIAR.
- --------------------------------------------------------------------------------
WHAT DO ALL OF THESE BRAND NAMES HAVE IN COMMON?
Alpo(R) Green Giant(R) Magnavox(R) Geritol(R)
Pillsbury Allerest(R) Doan's(R) Maalox(R)
Burger King(R) Norelco(R) Aquafresh(R) Nintendo(R)
. They are quality brand names popular with American
consumers;
. They are all produced or owned by companies
headquartered in foreign countries; and,
. The companies that manufacture them are overlooked by
many American investors.
----------------------------------------------------------
All brand names listed are produced or owned by companies
that are held in Lord Abbett Global Fund - Equity Series
as of 12/31/93 (the Fund's fiscal year-end). The companies
that produce/own these brand names and their percentage in
the Fund's portfolio as of 12/31/93 follow: Grand
Metropolitan (Alpo(R), Burger King(R), Pillsbury, Green
Giant(R)), .88%; SmithKline Beecham (Aquafresh(R),
Geritol(R)), .38%; Ciba Geigy (Allerest(R), Doan's(R)),
.76%; Philips Electronics (Magnavox(R), Norelco(R)), .68%;
Rhone Poulenc (Maalox(R)), .63%; and Nintendo Co. Ltd.
(Nintendo(R)), .45%. The Fund is a managed portfolio and
holdings are subject to change. As of 12/31/93, the Fund
was diversified in 139 securities.
- --------------------------------------------------------------------------------
YOU SPEND GLOBALLY, DO YOU INVEST GLOBALLY?
If you're like many Americans, much of what you consume is
produced by foreign-owned companies. This isn't too
surprising, because:
. 60% of all publicly-traded companies in the world have
headquarters outside the U.S.
- --------------------------------------------------------------------------------
WHY DO PEOPLE INVEST ONLY IN AMERICA?
Despite their behavior as consumers, many American
investors ignore the global markets, even though:
. Foreign stocks have outperformed American stocks over
the past 10 1/2 years.
ARE YOU LIMITING YOUR INVESTMENT POTENTIAL? YOU MAY BE, IF
YOU INVEST ONLY IN THE U.S.
[Line Graph appears depicting the information provided below]
Morgan Stanley
World Index S&P 500
-------------- --------
6/83 $100,000 $100,000
12/83 103,893 100,267
12/84 109,892 106,558
12/85 155,793 140,396
12/86 222,471 166,601
12/87 259,764 175,347
12/88 321,977 204,368
12/89 377,340 269,021
12/90 314,998 260,696
12/91 374,761 339,971
12/92 357,298 365,838
12/93 439,937 402,638
- --Morgan Stanley
World Index Morgan Stanley World Index and the S&P 500 are unmanaged
(in U.S. Dollars) indices, and their performance is not indicative of the
==S&P 500 Fund's performance. An investor cannot invest directly in
an index. There is no assurance that foreign stocks will
outperform U.S. stocks in the future. For performance
information on the Fund, call Lord, Abbett & Co. at
800-426-1130.
<PAGE>
- --------------------------------------------------------------------------------
PARTICIPATE IN POTENTIAL GROWTH AROUND THE WORLD WITH LORD ABBETT
GLOBAL FUND - EQUITY SERIES AND BENEFIT FROM:
POTENTIALLY HIGHER RETURNS THROUGH DIVERSIFICATION.
Lord Abbett Global Fund -- Equity Series invests in the
three major economic centers of the world: the Americas,
Europe and Asia. Global diversification gives the Fund the
potential to benefit from favorable economic trends and
undervalued securities throughout the world. Fund
management believes that opportunities exist in:
1. THE AMERICAS
. In the U.S., the impetus to economic growth has
shifted from consumption to capital spending and
exports.
. Ten years of corporate restructuring, downsizing
and production automation has transformed the U.S.
into the low cost manufacturing base among its
major competitors (Europe and Japan).
. The emerging markets of Mexico, Chile and
Argentina offer growth potential due, in part, to
economic reforms and stringent fiscal policies.
2. EUROPE
. Continental Europe's industrial integration and
restructuring offer investors unique profit
opportunities.
. The interest-rate sensitive sector, in particular,
may benefit from declining interest rates as
Europe struggles to escape recession.
3. ASIA
. These economies feature high savings rates,
rapidly growing consumer incomes, strong family
and educational-system structures and low social
welfare costs.
. A rapidly growing standard of living, low capital
costs, low inflation and favorable tax structures
should encourage a high rate of industrial
development.
Common stocks will fluctuate in value. Global investing
considerations include the risk of: currency fluctuations;
political and social instability; in some areas, the risk
of expropriation; higher transaction costs and different
securities settlement practices. See the Fund's prospectus
for a more detailed discussion of risk factors.
THE LORD ABBETT - DUNEDIN CONNECTION.
EXPERIENCED GLOBAL Lord, Abbett & Co. has been managing investment portfolios
MANAGEMENT since 1929. Value investing -- the strategy of investing
in securities which are believed to be undervalued
relative to their assets, cash flow or earnings -- has
guided Lord, Abbett & Co.'s investment decisions for
decades.
Sub-adviser, Dunedin Fund Managers, works with Lord Abbett
to find value and opportunity around the world. Dunedin
maintains offices in Japan, Scotland and Chicago and,
together with its predecessors, has been managing global
investments since 1873.
- --------------------------------------------------------------------------------
GLOBAL INVESTING NOW...FOR THE FUTURE
Why invest globally? Given that over 70% of global output
of goods and services occurs outside the U.S., maybe it
makes sense to include some foreign companies in your
investment portfolio.
<PAGE>
- --------------------------------------------------------------------------------
You Work Hard. Your Portfolio Should Work Harder.
WITH GLOBAL Before the New York Stock Exchange (NYSE) opens in the
DIVERSIFICATION, U.S., the London markets have been at work for six hours.
YOU CAN TAKE When the NYSE closes, it's 10 a.m. in Tokyo. A global
ADVANTAGE OF portfolio can participate in investment opportunities 24
INVESTMENT hours a day.
OPPORTUNITIES 24
HOURS A DAY Invest in Lord Abbett Global Fund -- Equity Series and
benefit from the ownership of some world-class companies.
For more information about Lord Abbett Global Fund --
Equity Series, including charges and expenses, please call
your financial adviser or Lord, Abbett & Co. at 800-874-
3733 for a prospectus. Please read the prospectus
carefully before investing.
Information about the Fund, including price, dividend and
performance history can be obtained by calling
800-426-1130.
Lord, Abbett & Co. Investment Managers and Underwriters
767 Fifth Avenue, New York, NY 10153-0203
LAG-6E-1294
<PAGE>
GLOBAL FUND
INCOME SERIES
"BY INVESTING IN LORD ABBETT GLOBAL FUND'S INCOME
SERIES, I HOPE TO BENEFIT FROM THE MANY GLOBAL
INVESTMENT OPPORTUNITIES AVAILABLE."
Spring 1994
[P1 - Picture of a globe piggy bank with child inserting a quarter]
<PAGE>
- --------------------------------------------------------------------------------
INVESTOR CONCERN: SHORT-TERM U.S. INTEREST RATES REMAIN NEAR 30-YEAR LOWS
3 REASONS WHY 1. Low U.S. interest rates.
THE ENVIRONMENT
IS RIGHT FOR 2. Higher foreign rates on quality issues.
GLOBAL INVESTING
3. Lord Abbett Global Fund -- Income Series' investors
may be in a good position to realize capital
appreciation from a drop in intermediate and long bond
rates overseas.
- --------------------------------------------------------------------------------
GLOBAL DIVERSIFICATION PROVIDED HIGHER INCOME
As shown below, a portfolio which included high-quality
foreign bonds produced more income than a portfolio of
U.S. bonds. The real rate of return on U.S. bonds (yield
minus domestic inflation) was among the lowest of the
world's major bond markets.
<TABLE>
<CAPTION>
UNITED
U.S.A. KINGDOM CANADA ITALY DENMARK FRANCE SPAIN JAPAN
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Yield/(1)/ 5.79% 6.23% 6.64% 8.66% 6.13% 5.64% 8.10% 3.03%
- - Domestic Inflation 2.70% 1.40% 1.90% 4.00% 1.50% 2.20% 4.70% 0.90%
- ----------------------------------------------------------------------------------------------------------------------
= REAL RETURN 3.09% 4.83% 4.74% 4.66% 4.63% 3.44% 3.40% 2.13%
</TABLE>
/(1)/ Yields to maturity on recently-offered ten-year
government bonds. Data as of 12/31/93.
Sources: J.P. Morgan Securities and Goldman Sachs
International, Limited.
Data on this page does not represent Income Series
performance. There is no guarantee that performance
depicted herein will be repeated in the future, or that
the Income Series' portfolio will include all of the
countries shown. See opposite page for Fund performance.
- --------------------------------------------------------------------------------
GOING GLOBAL PROVIDED BETTER TOTAL RETURNS
Only once in the last ten years have U.S. bonds been the
strongest performers.
A COMPARISON OF 10-YEAR GOVERNMENT BONDS, AFTER CURRENCY
TRANSLATIONS INTO U.S. DOLLARS
<TABLE>
<CAPTION>
10 Years
Ended
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 12/31/93
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CANADA 8.9 15.8 16.1 8.0 19.0 16.1 5.6 24.1 (0.5) 13.2 222.5
- --------------------------------------------------------------------------------------------------------------------------
FRANCE 11.9 43.8 47.4 20.6 7.3 8.9 19.8 16.4 4.6 17.0 470.4
- --------------------------------------------------------------------------------------------------------------------------
GERMANY 2.5 38.0 37.6 27.1 (3.0) 5.6 10.5 10.8 6.2 10.6 264.4
- --------------------------------------------------------------------------------------------------------------------------
JAPAN 6.8 37.5 36.1 40.4 2.7 (14.4) 3.0 24.2 11.3 30.8 359.4
- --------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM (12.7) 43.4 14.4 46.4 2.3 (3.5) 34.2 14.7 (3.9) 21.4 271.7
- --------------------------------------------------------------------------------------------------------------------------
U.S.A. 14.5 26.6 24.1 (4.6) 8.8 14.0 6.7 17.0 7.3 12.1 219.6
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
In 1987 the total return on U.S. bonds was -4.6%; the
average return for the six countries listed above was
+23.0%.
All figures indicate percentage total returns in U.S.
dollars; ( ) signify negative return.
Sources: J.P. Morgan Securities and Goldman Sachs
International, Limited.
<PAGE>
- --------------------------------------------------------------------------------
INVESTOR SOLUTION: GO GLOBAL!
3 REASONS TO GO 1. QUALITY
GLOBAL WITH LORD
ABBETT GLOBAL The Income Series invests only in quality bonds, while it
FUND -- INCOME seeks to capture high returns around the world.
SERIES
HIGH QUALITY OF LONG-TERM PORTFOLIO HOLDINGS
------------------------------------------
73.3% AAA
-----------
[G1- Pie chart depicting information at left] 23.8% AA
-----------
2.9% A
Portfolio quality as of 12/31/93
2. DIVERSIFICATION
The Income Series at year-end had holdings in 13
countries.
INVESTMENTS BY COUNTRY AS OF 12/31/93
----------------------------------
47.2% EUROPE
-----------------
27.3% U.S.A.
--------------
9.2% UNITED KINGDOM
[G1- Pie chart depicting information at left] ------------
5.8% CANADA
-----------
2.9% JAPAN
-----------
2.4% AUSTRALIA
-----------
5.2% CASH AND
EQUIVALENTS
3. PERFORMANCE
The Income Series produced positive total returns/(2)/
every calendar year since its inception in 1988. These
figures represent past performance which is no indication
of future results. The investment return and principal
value of a Fund investment will fluctuate so that shares,
on any given day or when redeemed, may be worth more or
less than their original cost.
<TABLE>
<CAPTION>
SEC-REQUIRED
AVERAGE ANNUAL RATES
OF TOTAL RETURN
YEARLY RATES (AT MAXIMUM SALES
OF TOTAL RETURN/(2)/ CHARGE OF 4.75%)
(AT NET ASSET VALUE) AS OF 3/31/94
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1989 +10.6% Life of Fund
1990 +11.9% (inception: 9/30/88) +8.10%
1991 +14.3% 5 Years +8.93%
1992 + 5.8% 1 Year -4.10%
1993 +10.8%
Average Annual Total Return
(from inception (9/30/88)
through 12/31/93) +10.4%
</TABLE>
/(2)/ Total return reflects the percent change in net
asset value assuming the reinvestment of all
distributions. If the sales charge was reflected,
the performance quoted would be reduced.
<PAGE>
Assets: $277.5 million
Established: 1988
Dividends: Declared daily; paid monthly
Capital Gains: Once a year, if any
Average Portfolio Maturity: 8.6 years
Minimum Initial Investment: $1,000; $250 for IRAs
----------------------------------------------------------
Established in 1929, Lord, Abbett & Co. has over 60 years
of investment experience and manages over $16 billion in a
family of mutual funds and private advisory accounts. In
analyzing the global markets, the Firm works together with
sub-adviser Dunedin Fund Managers Limited of Scotland to
manage the Income Series. Dunedin's investment philosophy
complements Lord Abbett's: Dunedin attempts to invest in
securities whose values are not fully recognized by
others. Dunedin and its predecessors have been managing
global investments since 1873.
PORTFOLIO MANAGERS:
. Zane E. Brown is director of Lord, Abbett & Co.'s fixed-
income area and serves as portfolio manager for the
Global Fund's Income Series. Mr. Brown earned his MBA in
investment management from Colorado State University. He
has over 17 years of investment experience.
. Mark Wauton heads the fixed-income desk for Dunedin Fund
Managers Limited of Scotland. In addition to portfolio
management of the Income Series, Mr. Wauton manages
corporate and pension fund assets in the international
bond and currency markets. He studied estate management
at Reading University and subsequently graduated from
The Royal Military Academy Sandhurst. Mr. Wauton has
over 7 years of industry experience and is a member of
Dunedin's investment policy group.
----------------------------------------------------------
Performance reflects appropriate Rule 12b-1 Plan expenses
from commencement of the Plan. Tax consequences are not
reflected. Futures and options have not been used. A
current prospectus which contains more complete
information about the Fund, including charges, expenses
and foreign risk factors, can be obtained by calling your
financial adviser or Lord, Abbett & Co. at 800-874-3733.
An investor should read the prospectus carefully before
investing. Such foreign risk factors include the potential
for less regulation and liquidity and more volatility than
U.S. markets; potentially less publicly-available
information about companies, banks and governments than
for U.S. counterparts; lack of uniform accounting
standards among countries, impairing comparisons;
potentially higher transaction costs and different
securities settlement and trading practices.
If used after 6/30/94, this piece must be accompanied by
Lord Abbett's Performance Quarterly for the most recently
completed calendar quarter.
Lord, Abbett & Co. Investment Managers and Underwriters
The General Motors Building . 767 Fifth Avenue . New York,
NY 10153-0203
LAG-6I-1293
