Lord Abbett
Global o Income Series
Fund o Equity Series
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED JUNE 30, 1996
[Graphic of various currencies]
A globally-diversified
mutual fund with two
portfolios to help you
achieve your goals
[LOGO]
<PAGE>
Report to Shareholders
For the Six Months Ended June 30, 1996
[PHOTO]
/s/Robert S. Dow
ROBERT S. DOW
Chairman
July 12, 1996
- --------------------
We would like to
thank all share-
holders who voted
their proxy ballots.
We are pleased
to announce that,
on June 19, 1996,
shareholders ap-
proved all the
proposals recom-
mended by your
Board of Directors.
- --------------------
- ---------------------------------
Table of Contents
Income Series
About the Income Series 1
Statement of Net Assets 2
Equity Series
About the Equity Series 4
Statement of Net Assets 5
Income and Equity Series
Statements of Operations 9
Statements of Changes in
Net Assets 9
Financial Highlights 10
Notes to Financial Statements 10
- ---------------------------------
About the Income Series
Lord Abbett Global Fund-Income Series completed the first half of its fiscal
year on June 30, 1996 with a per-share net asset value of $8.14. Based on this
net asset value and the monthly dividend of $.05 per share, annualized, the
Series' distribution rate was 7.4%; based on that same day's maximum offering
price of $8.55, the rate was 7.0%. Over the period, the Series produced a total
return (the percent change in net asset value assuming the reinvestment of all
distributions) of -1.5%.
The pick up in economic growth in the U.S. heightened investor concern that the
Federal Reserve would raise short-term interest rates. In response, long-term
U.S. bond rates rose sharply in March and April, which acted to pull up
long-term interest rates, worldwide. The U.S. dollar continued to appreciate
relative to the yen; consequently, your portfolio was positioned to capture the
highest yields available (from high-quality bonds) in currencies that tend to be
stable, relative to the U.S. dollar. In Europe, a weak economy, combined with
high unemployment, caused us to reallocate assets to take advantage of the
better value (and higher yields) offered in Italy and Spain. In Japan, the low
interest-rate environment and currency weakness led us to eliminate our holdings
there in favor of increasing investments in other, higher yielding Pacific Rim
countries, such as New Zealand and Australia.
Going forward, we believe that economic growth in the U.S. will slow later in
the year and in early 1997, thereby enabling your Series' domestic holdings to
perform well. Without the threat of a stronger U.S. economy and commensurate
higher U.S. yields, European countries, as well as Canada, Australia and New
Zealand, should continue to offer attractive yields and price appreciation for
your portfolio.
About the Equity Series
Lord Abbett Global Fund-Equity Series ended the first half of its fiscal year on
June 30, 1996 with a per-share net asset value of $12.79 versus $11.96 six
months ago. On a total return basis, your Series gained 6.9% over the period.
The impact of stronger than expected economic growth in the U.S. (and the
resultant increase in long-term interest rates) was far-reaching. Despite the
fact that worldwide inflation was low and declining, higher long-term interest
rates in the U.S. pushed long interest rates up abroad as well. In addition,
Europe's restrictive monetary policy (put in place to work towards meeting
currency convergence requirements) and lack of global competitiveness acted to
further slow economic growth there.
In Japan, the Central Bank's initiative (which provided low cost money to banks
to help them dig out from bad debts) worked to pull the country out of
recession; as such, our outlook for investment in Japan remains broadly
positive. Your Series continued to find value in some of the same regions
mentioned in our last letter to you: Asia, Latin America, South Africa and other
emerging markets all are attractively priced.
We reduced holdings in the U.S. to about 17% of your portfolio. In particular,
we decreased holdings of cyclical companies (companies whose stock tends to rise
when the economy is expanding and fall when the economy slows) because we
believe the U.S. economy will slow later in the year and in early 1997 and
long-term interest rates will decline. Based on this outlook, we have shifted
assets to more defensive, interest-rate sensitive stocks (such as banks and
insurance companies).
We regret to inform you that Ronald P. Lynch, Chairman of your Fund, passed away
on June 27, 1996. Mr. Lynch had been with the Firm since 1965. He will be sorely
missed. The Board of Directors has elected Robert S. Dow as the new Chairman of
your Fund.
We are pleased Lord Abbett Global Fund is a part of your investment portfolio
and thank you for your continued trust and confidence.
<PAGE>
About Lord Abbett's Income Series
Global Diversification
Our research team seeks to identify the best value in relation to risk by
analyzing economic factors and interest-rate trends in the world's major bond
markets. Investing in many bond markets, versus investing only in the U.S., has
the potential to increase returns and reduce risk. The returns below are not
Income Series returns. There is no guarantee that the Income Series' portfolio
will include all of the countries listed below.
<TABLE>
<CAPTION>
A Comparison of 10-Year Government Bonds, After Currency Translations
10 1/2
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 6 Months Years
Ended Ended
6/30/96 6/30/96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Canada 16.1 8.0 19.0 16.1 5.6 24.1 (0.5) 13.2 (13.6) 26.1 0.04 178.7
France 47.4 20.6 7.3 8.9 19.8 16.4 4.6 17.0 (0.5) 31.3 (0.6) 360.3
Germany 37.6 27.1 (3.0) 5.6 10.5 10.8 6.2 10.6 5.1 27.2 (6.5) 222.0
Japan 36.1 40.4 2.7 (14.4) 3.0 24.2 11.3 30.8 5.5 12.9 (5.4) 252.5
United Kingdom 14.4 46.4 2.3 (3.5) 34.2 14.7 (3.9) 21.4 (5.4) 17.5 1.0 233.3
United States 24.1 (4.6) 8.8 14.0 6.7 17.0 7.3 12.1 (6.7) 23.6 (5.1) 141.3
All figures indicate percentage total returns in U.S. dollars; ( ) signify negative
return. Sources: J.P. Morgan Securities and Goldman Sachs International, Limited.
</TABLE>
Where in the World Are High Yields?
A portfolio which includes high-quality foreign bonds has the opportunity to
search for higher yields around the globe. As shown below, yields on
high-quality bonds vary from country to country. This data does not represent
Income Series performance.
[The following data was presented as a line chart in the printed document]
United States 6.7%
Canada 7.6%
Denmark 7.4%
France 6.5%
Italy 9.4%
Japan 3.3%
Spain 8.8%
United Kingdom 7.9%
Yields to maturity on recently-offered 10-year government bonds. Source: J.P.
Morgan Securities (as of June 30, 1996).
Diversification in High-Quality Global Bonds
In seeking its goal of high income with relative safety, the Income Series
focuses on quality. Using global diversification, the Income Series attempts to
reduce risk while striving to capture high interest rates from quality bonds
around the world. See the Income Series' portfolio of investments in long-term
securities on page 2.
[The following data was presented as a line graphic in the printed version]
Canada 9.10%%
United States 38.11%
Sweden 3.15%
Denmark 3.64%
Netherlands 4.91%
Belgium 2.55%
UK 4.90%
France 2.94%
Spain 5.70%
Germany 8.67%
Italy 10.84%
High Quality of
Long-Term
Portfolio Holdings:
AAA 83.94%
AA 16.06%
1
<PAGE>
Important Information
Lord Abbett Global Fund commenced operations 9/30/88. 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.
Foreign investment risk factors include the potential for less regulation and
liquidity and more volatility than U.S. markets; currency fluctuation;
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. The Fund issues
additional classes of shares, with distinct pricing options. For a full
discussion of the differences in pricing alternatives, please call 800-874-3733
and ask for the Fund's July 15, 1996 prospectus. If used as sales material after
9/30/96, this report must be accompanied by Lord Abbett's Performance Quarterly
for the most recently completed calendar quarter.
Statement of Net Assets June 30, 1996
<TABLE>
<CAPTION>
INCOME SERIES Principal
Amount
Rating: S&P in Local Market Value
Security or Moody's Currency (Notes 1a & 1f)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES 104.33%
- ------------------------------------------------------------------------------------------------------------------------------------
FOREIGN 64.58%
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Australia
4.33%
Commonwealth Bank of Australia 13 3/4% due 9/21/1999 AAA $1,000M $ 892,530
Commonwealth of Australia Treasury 6 1/4% due 3/15/1999 AAA 3,000M 2,249,460
Commonwealth of Australia Treasury 7% due 4/15/2000 AAA 7,650M 5,753,565
Total 8,895,555
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Belgium
2.66%
Kingdom of Belgium Government 7 1/4% due 4/29/2004 AAA 163,500M 5,467,440
- ------------------------------------------------------------------------------------------------------------------------------------
Canada
9.50%
Government of Canada 7% due 12/1/2006 AAA 4,500M 3,134,835
Government of Canada 9% due 6/1/2025 AAA 20,350M 16,382,157
Total 19,516,992
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Denmark
3.80%
Kingdom of Denmark Government 8% due 11/15/2001 AAA 29,000M 5,278,290
Kingdom of Denmark Government 8% due 5/15/2003 AAA 14,000M 2,524,340
Total 7,802,630
---------
- ------------------------------------------------------------------------------------------------------------------------------------
France 3.07%
Republic of France (BTAN) 7 3/4% due 4/12/2000 AAA 30,000M 6,300,300
- ------------------------------------------------------------------------------------------------------------------------------------
Germany
9.04%
Deutschland Bundesrepublic 6 1/4% due 1/4/2024 AAA 3,770M 2,175,705
Deutschland Bundesrepublic 7 1/8% due 12/20/2002 AAA 12,900M 8,919,447
Treuhandanstalt 7 3/4% due 10/1/2002 AAA 10,500M 7,485,345
Total 18,580,497
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Italy
11.31%
Republic of Italy (BTPS) 9 1/2% due 4/15/1999 AA 8,000,000M 5,360,000
Republic of Italy (BTPS) 9 1/2% due 2/1/2006 AA 7,500,000M 4,950,000
Republic of Italy (BTPS) 10 1/2% due 4/1/2000 AA 9,750,000M 6,727,500
Republic of Italy (BTPS) 12% due 9/1/2001 AA 8,500,000M 6,205,000
Total 23,242,500
-----------
- ------------------------------------------------------------------------------------------------------------------------------------
Netherlands 5.12%
Netherlands Government 8 1/4% due 2/15/2007 AAA 15,950M 10,528,117
- ------------------------------------------------------------------------------------------------------------------------------------
New Zealand
1.40%
New Zealand Treasury Bill Zero Coupon due 8/7/1996 AAA 4,238M 2,881,077
- ------------------------------------------------------------------------------------------------------------------------------------
Spain
5.95%
Government of Spain Bonds 7.40% due 7/30/1999 AA 250,000M 1,935,000
Government of Spain Bonds 10.90% due 8/30/2003 AA 311,730M 2,721,403
Government of Spain Bonds 12 1/4% due 3/25/2000 AA 855,000M 7,566,750
Total 12,223,153
-----------
- ------------------------------------------------------------------------------------------------------------------------------------
Sweden 3.29%
Kingdom of Sweden Government 10 1/4% due 5/5/2000 AAA 40,600M 6,751,780
- ------------------------------------------------------------------------------------------------------------------------------------
United Kingdom 5.11%
U.K. Treasury 8 1/2% due 12/7/2005 AAA 6,500M 10,514,465
-----------------------------------------------------------------------------------------------------------------
Total Investments in Foreign Securities (Cost $133,305,895) 132,704,506
-----------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
Statement of Net Assets June 30, 1996
<TABLE>
<CAPTION>
INCOME SERIES Principal
Amount
Rating: S&P in Local Market Value
Security or Moody's Currency (Note 1a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
UNITED STATES 39.75%
Federal Home Loan Mortgage Corporation 7 1/2% due on an
announced basis AAA $ 3,500M $ 3,456,250
Federal National Mortgage Association 6 1/2% due on an
announced basis AAA 3,500M 3,256,094
Federal National Mortgage Association 6 5/8% due 3/21/2006 AAA 5,000M 4,863,281
Federal National Mortgage Association 7% due on an
announced basis AAA 29,000M 28,059,375
Federal National Mortgage Association 8 1/2% due 2/1/2005 AAA 2,450M 2,553,742
Government National Mortgage Association 6 1/2% due on an
announced basis AAA 3,500M 3,235,313
Province of Ontario (US Dollars) 17% due 11/5/2011 AAA 8,045M 8,872,127
U.S. Treasury Bond 10 3/8% due 11/15/2012 AAA 2,650M 3,364,672
U.S. Treasury Note 6 1/4% due 2/15/2003 AAA 5,000M 4,913,281
U.S. Treasury Note 6 3/8% due 3/31/2001 AAA 19,200M 19,122,000
----------
---------------------------------------------------------------------------------------------------------------
Total Investments in United States Securities (Cost $83,406,770) 81,696,135
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Securities (Cost $216,712,665) 214,400,641
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES (4.33)%
- ------------------------------------------------------------------------------------------------------------------------------------
Other Short-term
Assets Investments,
at Market
U.S. Treasury Note 8% due 10/15/1996 (Cost $6,553,320) AAA 6,500M 6,547,734
- ------------------------------------------------------------------------------------------------------------------------------------
Short-term
Investments,
at Cost
Federal Home Loan Bank 4.90% due 7/1/1996 AAA 23,500M 23,490,404
----------
---------------------------------------------------------------------------------------------------------------
Total Short-Term Investments 30,038,138
----------
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Cash 409,019
----------
-------------------------------------------------------------------------------------------------------------------------
Receivable for:
Securities sold 58,672,855
Other 4,159,815
Total Other Assets 93,279,827
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities Payable for:
Securities purchased 100,656,811
Other 1,526,770
Total Liabilities 102,183,581
----------
---------------------------------------------------------------------------------------------------------------
Total Other Assets, Less Liabilities (8,903,754)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets (equivalent to $8.14 a share on 25,230,986 shares of $.001 par value capital stock
100.00% outstanding; authorized, 500,000,000 shares) $205,496,887
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
About Lord Abbett's Equity Series
The Global Perspective Has Provided a World of Opportunity
Global investing can offer the opportunity to participate in those markets which
seem poised for growth. And, importantly, a globally-diversified portfolio
offered increased safety relative to a portfolio of U.S. stocks, exclusively.
This graph does not represent the Equity Series' portfolio.
Diversification Reduced Risk and Increased Returns
[The following data was presented as a line graph in the printed document.]
[INSERT GRAPH DATA]
Derived using returns from June 1970 to June 1996. Source: Morgan Stanley
Capital International.
Over the last ten
years, many foreign
markets have pro-
duced competitive
returns relative to
the U.S., despite the
fact that the U.S.
market reached
new highs over the
past decade
The Benefits of Global Diversification
This performance does not represent Equity Series performance.
[The following data was presented as a line graph in the printed version.]
[INSERT GRAPH DATA]
Average annual stock market returns for the 10 years ended June 30, 1996, as
measured in U.S. dollars. Returns are historical and based on changes in price
and reinvestment of dividends (net of applicable foreign taxes) paid on the
stocks in the indices, and are not meant to portray the future performance of
these markets or the Series. Source: Morgan Stanley Capital International.
Managed to Participate in Global Growth
Portfolio diversification positions the Equity Series to participate in global
opportunities. Twenty-two countries are represented in the Equity Series; see
the portfolio of investments in long-term securities on page 5.
[INSERT GRAPH DATA]
4
<PAGE>
Statement of Net Assets June 30, 1996
<TABLE>
<CAPTION>
EQUITY SERIES Number of Market Value
Security Shares (NoteS 1a & 1f)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES 90.72%
- ------------------------------------------------------------------------------------------------------------------------------------
FOREIGN 75.27%
- ------------------------------------------------------------------------------------------------------------------------------------
Argentina
.25%
Buenos Aires Embotella ADR-Pepsi bottler in Brazil and Argentina 9,000 $ 119,250
YPF ADR-Largest energy company 5,000 112,500
Total 231,750
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Australia
1.66%
AAPC-Manager of hotels in Australia and Asia 759,000 477,411
Australian Gas Light Co.-Gas utility 102,000 424,524
Broken Hill Proprietary-Miner and producer of metals and steel 28,200 389,837
QNI-Major Australian nickel company 125,000 279,375
Total 1,571,147
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Brazil
.74%
Brazilian Investment Trust plc-Closed-end trust investing in
mid-cap Brazilian equities 125,000 148,438
Brazilian Investment Trust plc Warrants 30,000 20,156
CESP (Companhia Energetica de Sao Paulo) ADR+-Electricity generator,
transmitter and distributor in the State of Sao Paulo 20,000 174,063
Telebras ADR-National telecommunications company monopoly 5,000 359,375
Total 702,032
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Canada .81%
Crestbrook Forest Inc.-Canadian lumber and paper producer 10,000 90,625
Lytton Minerals Ltd.-Canadian diamond exploration company 125,000 320,313
Mountain Province-Canadian diamond exploration company 10,000 33,125
New Indigo Resources-Canadian diamond exploration company 20,000 150,000
Repap Enterprises-Canadian pulp and paper producer 45,000 171,563
Total 765,626
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Chile .21%
Compania de Telecommunicaciones de Chile Sponsored ADR+-Major telephone utility 2,000 196,250
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Ecuador .13%
La Cemento Nacional GDR-Largest cement producer 700 126,700
---------
- ------------------------------------------------------------------------------------------------------------------------------------
France
4.80%
Christian Dior-France's principal luxury goods manufacturer 6,460 840,084
Compagne Generale Des Eaux-Major utility conglomerate 9,700 1,082,569
Lafarge Coppee-Cement manufacturer 7,728 467,243
Paribas-Major banking and finance group 11,435 674,722
Pinault Printemps Redoute-One of the principal retailing and
specialist distribution groups in France 2,500 873,915
Saint Gobain-Industrial group 4,450 595,107
Total 4,533,640
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Germany
4.22%
Bilfinger & Berger-Multinational construction company 1,600 672,005
Cewe Color-Photo processing company 1,311 477,494
Jil Sanders-Exclusive women's wear designer and manufacturer 900 593,582
Linde-A diversified engineering group, specializing in forklift trucks 1,200 776,874
Mannesmann-Engineering group 2,250 773,723
Siemens-Europe's leading electrical and electronics company 13,000 695,981
Total 3,989,659
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Hong Kong
4.19%
Amway Asia Pacific Ltd.-A direct seller of household products in China and East Asia 15,500 468,875
Cheung Kong-Property developer 52,000 374,504
Hong Kong Electric-Electric power utility 145,000 442,105
HSBC Holding-Major global bank 50,000 755,750
Hutchison Whampoa-Ports, telecommunications and property conglomerate 78,000 490,776
Sun Hung Kai Properties-Leading property development and investment company 72,000 727,848
Swire Pacific A-Property and aviation conglomerate 82,000 701,838
Total 3,961,696
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Italy
1.99%
ENI-Former state-owned oil and gas company 180,000 896,220
Italcementi-Cement company 52,000 416,572
Italcementi Warrants 12,000 2,268
5
</TABLE>
<PAGE>
Statement of Net Assets June 30, 1996
<TABLE>
<CAPTION>
EQUITY SERIES Number of Market Value
Security Shares (Notes 1a & 1f)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Olivetti-Office and computer equipment company 1,050,000 $ 565,950
Total 1,881,010
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Japan
31.90%
Amada Corp.-Machine tool manufacturer 104,000 1,119,872
Fuji Machine Mfg.-A major manufacturer of automated assembly
machines for electronic parts and components 14,000 394,786
Fuji Photo Film-Major manufacturer of photo-sensitive materials 53,000 1,673,475
Fujikura Cable-Manufacturer of fiber optic cable 78,000 646,308
Hitachi Ltd.-One of Japan's major electrical engineering groups
with operations ranging from computers to electrical power systems 137,000 1,275,196
Kamigumi Co.-Warehouse and harbor transport company 88,000 803,088
Kinden-Japan's second largest electrical-engineering construction company 69,000 1,083,024
Kurimoto Iron-Japan's second largest producer of cast iron, water,
gas and other pipes 105,000 1,216,950
Mitsubishi Electric Corp.-Manufacturer of integrated electrical engineering
and electronic parts 160,000 1,115,520
Mitsui & Company-General trading company 100,000 906,200
Mitsui Fudosan-Real estate company 119,000 1,607,214
Mori Seiki Yen-Machine tool manufacturer 68,000 1,309,340
Nippon Signal-Railway and traffic signal maker 53,000 686,827
Nippon Telephone & Telegraph-Japan's largest telecommunications company 123 911,448
Nippondenso-Electric engineering company 54,000 1,172,826
Nissan Motors-Japan's second, and the world's fourth, largest auto manufacturer 175,000 1,553,825
NKK Corporation-Crude steel and pipe manufacturer 590,000 1,787,700
Nomura Securities-Japan's largest securities firm 63,000 1,230,327
Sanwa Bank-Large commercial bank 34,000 629,850
Sekisui Chemical-Chemical and resin producer 84,000 1,027,236
Senshukai Co.-Leading sales firm that operates on a nonstore basis
and through catalogs 74,000 1,249,342
Shimano Inc.-Manufacturer of bicycle parts and fishing tackle 52,000 930,124
Sumitomo Bank-The nucleus of the Sumitomo Group and one of the
largest banks in Japan 39,000 754,533
Sumitomo Electric Industries-Manufacturer of electric wire and cables 94,000 1,346,832
Sumitomo Forestry-Largest domestic lumber trader and house builder 42,000 613,241
Sumitomo Trust & Banking-One of the leading trust banks in Japan 78,000 1,067,741
Toppan Printing-One of the largest commercial printing companies in Japan 95,000 1,387,095
Toshiba Plant Kensetsu-Plant engineer 66,000 644,490
Total 30,144,410
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Malaysia
1.45%
Malaysian Airline System-National airline company 81,000 258,065
Remong Berhad-Diversified conglomerate 247,000 393,965
Sime Darby-Diversified conglomerate 70,000 193,620
Southern Bank-Leading domestic bank 213,500 522,007
Total 1,367,657
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Mexico
.78%
Cementos de Mexico-Largest cement producer 28,000 181,562
Fomento Economico Mexicano ADS+-Mexican brewer and coke bottler 110,000 304,219
Grupo Carso ADS-Mexican conglomerate 18,000 252,844
Total 738,625
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Netherlands
4.81%
ABN Amro-Major commercial bank 14,300 766,509
AKZO-Diversified company in the manufacturing of chemicals, fibers, coatings and
health care products 5,000 598,340
Hagemeyer-Trading group 12,000 853,883
KLM-Airline group 25,000 798,750
Vendex International-Retailing group 26,000 905,268
VNU-Publishing group 40,000 620,280
Total 4,543,030
----------
</TABLE>
6
<PAGE>
Statement of Net Assets June 30, 1996
<TABLE>
<CAPTION>
EQUITY SERIES Number of Market Value
Security Shares (NoteS 1a & 1f)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Singapore
1.97%
Development Bank of Singapore-Leading Singapore bank and financial services company 32,587 $ 406,458
Lend Lease Corp.-Financial services company 27,400 421,466
Singapore Airlines-A national airline company 52,000 549,120
United Overseas Bank-One of the leading bank and financial services companies 50,240 480,696
Total 1,857,740
---------
- ------------------------------------------------------------------------------------------------------------------------------------
South Africa
.91%
Barlow Ltd. Ord-Broad based infrastructure company 40,000 419,000
Reunert Ltd. Ord-Owner of high-tech company specializing in telecommunications,
cables, power, consumer electronics, office equipment and military systems 100,000 442,100
Total 861,100
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Spain
2.08%
Aumar-Construction, maintenance and operation of toll freeways 50,000 645,000
Banco Santander-Leading Spanish bank 14,200 661,905
Fomento Construcciones-Major construction company 8,000 661,000
Total 1,967,905
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Sweden
2.89%
Ericsson (LM) Series B-Telecommunications company 30,000 645,900
Stora Koppabergs Series A-Paper and forest products producer 75,000 988,050
Swede Bank-Banking and financial services company 80,000 1,035,840
Tornet-Real estate company 8,000 63,840
Total 2,733,630
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Switzerland
1.72%
Ciba Geigy-Multinational chemical and pharmaceutical company 430 523,469
Nestle-Europe's largest food company 600 684,442
Roche Holdings-Leading pharmaceutical group 55 419,075
Total 1,626,986
---------
- ------------------------------------------------------------------------------------------------------------------------------------
United Kingdom
7.65%
ASDA Group-National food retailers 175,000 316,225
British Petroleum-Integrated oil company 55,432 485,418
British Telecom-Leading domestic telecommunications group 70,000 375,690
Capital Shopping Centre-Property investment company 101,750 459,300
Dixons Group-High-tech consumer electronics retailer 64,000 525,184
Granada Group-Diversified leisure group owning hotels, motorway services and bars 37,500 501,413
Grand Metropolitan-Food, beverage and retail group 53,000 351,072
Greenalls Group-Operator of public houses, hotels and restaurants 45,000 399,960
McLeod & Russell-Manufacturer of industrial coatings 128,000 339,584
Peninsular and Oriental Steam Navigation Company-Shipping, house building and
property group 38,058 286,919
Reed International-Major European holding company 21,600 360,850
RMC Group-Major supplier of building materials in Europe 25,000 392,850
Royal Bank of Scotland Group-Banking and financial services company 78,000 596,466
Rubicon Group-Diversified engineering group 120,000 353,640
Siebe-Electrical and electronics group 30,000 425,340
SmithKline Beecham Ord-United Kingdom-based pharmaceutical company 43,500 464,580
Tomkins Ord-A diversified industrial company 75,000 282,150
Unigate-Manufacturing and distribution of food and dairy products 50,000 308,700
Total 7,225,341
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Venezuela
.11%
Venprecar CA ADR-Steel (HBI) manufacturer 20,000 107,500
---------
-----------------------------------------------------------------------------------------------------------------
Total Investments in Foreign Securities (Cost $66,130,861) 71,133,434
----------
- ------------------------------------------------------------------------------------------------------------------------------------
UNITED STATES 15.45%
- ------------------------------------------------------------------------------------------------------------------------------------
American Brands Inc.-Consumer products conglomerate 10,000 453,750
Amoco Corp.-Major integrated petroleum and natural gas company with sizable
interests in chemicals 4,000 289,500
AT&T Corp.-Global telecommunications giant 15,000 930,000
BankAmerica Corp.-Major money-center bank 10,000 757,500
Chase Manhattan Corp.-Major money-center bank holding company 7,000 494,375
</TABLE>
7
<PAGE>
Statement of Net Assets June 30, 1996
<TABLE>
<CAPTION>
EQUITY SERIES Number of
Security Shares
or Principal Market Value
Amount (NoteS 1a & 1f)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Cooper Tire & Rubber Company-Major manufacturer of replacement tires and inner tubes
for cars, trucks and buses 35,800 $ 796,550
EMC Corp.-A supplier of high-performance storage devices and related services 20,000 372,500
Equitable of Iowa-A leading provider of individual annuities and insurance 33,000 1,171,500
Exxon Corp.-World's largest integrated oil company 4,500 390,938
Freeport-McMoran Copper & Gold Class B-A copper and gold producer 15,086 480,866
Freeport-McMoran Copper & Gold-Silver Conv. Pfd. Series D 52,000 1,137,500
Freeport-McMoran Copper & Gold-3 1/4% Conv. Pfd. Gold-backed preferred stock 10,000 345,000
General Motors Corp.-Worldwide auto producer 10,000 523,750
Genuine Parts Company-National distributor of automotive replacement parts 8,000 366,000
Goodyear Tire & Rubber Co.-Leading global tire manufacturer 5,000 241,250
Kimberly Clark Corp.-Major producer of consumer and personal care products 3,900 301,275
MCI Communications Corp.-Long-distance telecommunications provider 20,000 512,500
Mobil Corp.-Large international oil company 4,000 448,500
Plantronics, Inc.-Leading supplier of communication headset products and services
to users and providers worldwide 30,000 1,102,500
RJR Nabisco-Diversified food and tobacco producer 10,000 310,000
SAFECO Corp.-Insurance and financial services 10,000 353,750
Seagate Technology Inc. -Manufacturer of computer disk drive equipment 5,000 225,000
Standard Products Co.-Manufactures plastic and rubber products for the automotive
and appliance industries 5,000 116,250
Supervalu Inc.-Second largest U.S. food wholesaler 15,000 472,500
Tambrands Inc.-Manufacturer of feminine health care products 5,000 204,375
The Coastal Corporation-A diversified gas pipeline company 10,000 417,500
Transamerica Corp.-Diversified financial services company 6,000 486,000
Western Resources-Kansas utility 30,000 896,250
Total Investments in United States Securities (Cost $13,210,539) 14,597,379
----------- ----------
---------------------------------------------------------------------------------------------------------------
Total Investments in Securities (Cost $79,341,400) 85,730,813
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES 9.28%
- ------------------------------------------------------------------------------------------------------------------------------------
Other Short-term
Assets Investments,
at Cost
American Express Credit Corp. 5.45% due 7/3/1996 1,175M 1,175,000
Ford Motor Credit Co. 5.43% due 7/5/1996 1,950M 1,950,000
General Electric Capital Corp. 5.35% due 7/1/1996 4,225M 4,225,000
Prudential Funding Corp. 5.00% due 7/2/1996 1,650M 1,650,000
Total 9,000,000
---------
---------------------------------------------------------------------------------------------------------------------------
Cash 96,986
---------
---------------------------------------------------------------------------------------------------------------------------
Receivable for:
Securities sold 12,897,335
Other 481,358
Total Other Assets 22,475,679
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
Payable for:
Securities purchased 13,169,868
Other 533,050
Total Liabilities 13,702,918
---------------------------------------------------------------------------------------------------------------------------
Total Other Assets, Less Liabilities 8,772,761
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00%
(equivalent to $12.79 a share on 7,386,820 shares of $.001 par
value capital stock outstanding; authorized, 500,000,000 shares) $94,503,574
---------------------------------------------------------------------------------------------------------------------------
+ Restricted security under Rule 144A.
++ Non-income producing.
See Notes to Financial Statements.
</TABLE>
8
<PAGE>
Statements of Operations For the Six Months Ended June 30, 1996
<TABLE>
<CAPTION>
Investment Income (Note 1)
Equity Series Income Series
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Income
Dividends $ 1,011,418 --
----------------------------------------------------------------------------------------------------------------
Interest 139,268 $ 8,247,341
----------------------------------------------------------------------------------------------------------------
Foreign taxes withheld (104,933) (70,378)
----------------------------------------------------------------------------------------------------------------
Total income 1,045,753 8,176,963
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
(Note 2) Management fee 343,247 552,000
----------------------------------------------------------------------------------------------------------------
12b-1 distribution plan 125,168 273,702
----------------------------------------------------------------------------------------------------------------
Shareholder servicing 120,000 161,000
----------------------------------------------------------------------------------------------------------------
Custodian 39,000 47,000
----------------------------------------------------------------------------------------------------------------
Audit and legal 24,000 31,000
----------------------------------------------------------------------------------------------------------------
Registration 24,000 13,700
----------------------------------------------------------------------------------------------------------------
Reports to shareholders 21,000 30,000
----------------------------------------------------------------------------------------------------------------
Miscellaneous 27,994 34,321
----------------------------------------------------------------------------------------------------------------
Total expenses 724,409 1,142,723
----------------------------------------------------------------------------------------------------------------
Net investment income 321,344 7,034,240
Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions (Notes 1g & 8)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from securities and foreign currency transactions
Proceeds from sales 51,240,746 1,098,021,050
----------------------------------------------------------------------------------------------------------------
Cost of securities sold 48,207,359 1,101,285,369
----------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 3,033,38 (3,264,319)
- ------------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments and foreign currency holdings
Beginning of period 4,054,661 5,010,293
----------------------------------------------------------------------------------------------------------------
End of period 6,732,744 (2,539,308)
----------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) 2,678,083 (7,549,601)
----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 5,711,470 (10,813,920)
----------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting from Operations $ 6,032,814 $(3,779,680)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1996 December 31, 1995
--------------------------- ---------------------------
Increase (Decrease) in Net Assets Equity Series Income Series Equity Series Income Series
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Operations
Net investment income $ 321,344 $ 7,034,240 $ 1,079,606 $18,722,617
----------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investments and foreign
currency transactions 3,033,387 (3,264,319) 3,386,066 5,675,438
----------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments and
foreign currency holdings 2,678,083 (7,549,601) 2,793,155 16,480,478
----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 6,032,814 (3,779,680) 7,258,827 40,878,533
- ------------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income included in price of shares sold
(reacquired) (Note 1d) 4,508 -- (33,583) --
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from
Net investment income -- (8,165,910) (1,159,614) (19,419,519)
----------------------------------------------------------------------------------------------------------------
Net realized gain from investments and foreign currency
transactions -- -- (3,241,931) (3,359,656)
----------------------------------------------------------------------------------------------------------------
Total distributions -- (8,165,910) (4,401,545) (22,779,175)
- ------------------------------------------------------------------------------------------------------------------------------------
Capital share transactions (Note 4)
Net proceeds from sales of shares 11,727,688 4,441,778 12,580,328 10,404,685
----------------------------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in
reinvestment of net investment income and realized gain
from investments and foreign currency transactions -- 3,516,754 4,172,873 11,575,339
----------------------------------------------------------------------------------------------------------------
Total 11,727,688 7,958,532 16,753,201 21,980,024
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (7,992,816)(28,806,651) (18,584,662) (51,278,631)
----------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets derived from capital share
transactions 3,734,872 (20,848,119) (1,831,461) (29,298,607)
----------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 9,772,194 (32,793,709) 992,238 (11,199,249)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
Beginning of period 84,731,380 238,290,596 83,739,142 249,489,845
----------------------------------------------------------------------------------------------------------------
End of period+ $94,503,574 $205,496,887 $84,731,380 $238,290,596
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Including undistributed (overdistributed) net investment income of $69,304 and
$(4,727,188), respectively, for the six months ended June 30, 1996 and
$(256,548) and $(3,595,518), respectively, for the year ended December 31, 1995.
See Notes to Financial Statements.
9
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Six Months Year Ended Year Ended Year Ended Year Ended Year Ended
Ended June 30, 1996 December 31, 1995 December 31, 1994 December 31, 1993 December 31, 1992 December 31, 1991
------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Per Share
Operating Equity Income Equity Income Equity Income Equity Income Equity Income Equity Income
Performance: Series Series Series Series Series Series Series Series Series Series Series Series
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset
value,
beginning
of period $11.96 $ 8.58 $11.55 $ 7.98 $12.44 $ 9.02 $10.48 $ 8.87 $10.79 $ 9.40 $ 9.57 $ 9.13
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from
investment
operations
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment
income .04+ .26+ .16 .77 .10 .65 .04 .76 .078 .808 .134 .877
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net realized and
unrealized
gain (loss) on
investments .79 (.3946) .90 .6138 (.1125) (.9603) 2.635 .174 (.268) (.288) 1.276 .316
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from
investment
operations .83 (.1346) 1.06 1.3838 (.0125) (.3103) 2.675 .934 (.190) .520 1.410 1.193
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions
Dividends from
net
investment
income -- (.3054) (.17) (.6613) (.10) (.6035) (.10) (.784) (.12) (.840) (.12) (.873)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Dividends from
net
realized
gain -- -- (.48) -- (.7775) -- (.615) -- -- -- (.07) (.05)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions to
shareholders
in excess of net
investment income -- -- -- -- -- (.1262) -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Special
distributions
from foreign
currency
transactions -- -- -- (.1225) -- -- -- -- -- (.21) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset
value,
end of period $12.79 $ 8.14 $11.96 $ 8.58 $11.55 $ 7.98 $12.44 $ 9.02 $10.48 $ 8.87 $10.79 $ 9.40
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Return* 6.94%+ (1.54)%+ 9.19% 17.86% (0.09)% (3.40)% 26.05% 10.78% (1.73)% 5.76% 14.76% 14.33%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Ratios/Supplemental
Data:
Net assets,
end of
period (000) $94,505 $205,497 $84,731 $238,291 $83,739 $249,490 $71,632 $277,495 $34,332 $148,137 $36,654 $101,023
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Ratios to Average
Net Assets:
Expenses
.79%+ .52%+ 1.63% 1.04% 1.56% 1.02% 1.68% 1.04% 1.84% 1.22% 1.61% 1.30%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment
income .35%+ 3.19%+ 1.31% 7.60% .79% 7.72% .70% 7.81% .76% 8.50% 1.30% 9.96%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Portfolio
turnover
rate 34.11% 373.07% 83.32% 1,073.69 75.39% 1,230.20% 197.59% 1,599.43% 136.75% 812.01% 74.83% 543.90%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
</TABLE>
* Total return does not consider the effects of sales loads.
+ Not annualized.
See Notes to Financial Statements.
Notes to Financial Statements
1. Significant Accounting Policies
The Company is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The following is a summary
of significant accounting policies consistently followed by the Company. The
policies are in conformity with generally accepted accounting principles.
(a) Market value is determined as follows: Securities listed or admitted to
trading privileges on any securities exchange are valued at the last sales price
on the exchange on which such securities are traded, as of the close of business
on the day the securities are being valued or, lacking any sales, at the latest
price on the basis of current quotations from dealers (as in the case of bonds),
from valuations furnished by an independent pricing service or, in their
absence, fair value as determined under procedures approved by the Board of
Directors; such procedures require the use of estimates. (b) It is the policy of
the Company to meet the requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute all of its taxable income in
taxable distributions. Therefore, no federal income tax provision is required.
(c) Security transactions are accounted for on the date that the securities are
purchased or sold (trade date). Dividend income and distributions to
shareholders are recorded on the ex-dividend date and interest is recorded on
the accrual basis. Discounts on strips are accrued to maturity using the
constant yield method. (d) A portion of proceeds from sales and costs of
repurchases of capital shares, equivalent to the amount of distributable net
investment income on the date of the transaction, is credited or charged to
undistributed income. Undistributed net investment income per share thus is
unaffected by sales or repurchases of shares. (e) The Company enters into
forward currency contracts to hedge its exposure to changes in foreign currency
exchange rates on its foreign portfolio holdings. A forward contract is a
commitment to purchase or sell a foreign currency at a future date (usually the
security transaction settlement date) at a negotiated forward rate. The
contracts are valued daily at current exchange rates and any unrealized gain or
loss is included in net unrealized appreciation or depreciation of investments
and foreign currency holdings. The gain or loss, if any,
10
<PAGE>
arising from the difference between the settlement value of the forward contract
and the closing of such contract, is included in net realized gain or loss from
securities and foreign currency transactions. Risks may arise due to changes in
the value of the foreign currency and as a result of the potential inability of
the counterparties to meet the terms of their contracts.
(f) Foreign Currency Translation: Effective January 1, 1994, the Fund adopted
Statement of Position (SOP) 93-4: Foreign Currency Accounting and Financial
Statement Presentation for Investment Companies. In accordance with this SOP,
reported net realized gains and losses from foreign currency transactions
represent net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses realized
between the trade and settlement dates on securities transactions, and the
differences between the amount of net investment income accrued and the U.S.
dollar amount actually received. Further, as permitted under the SOP, the
effects of changes in foreign currency exchange rates on investments in
securities are not segregated in the Statement of Operations from the effects of
changes in market prices of those securities. (g) Certain amounts of the
components of net assets in prior periods have been reclassified to conform the
presentation of such components to that reported in the current period.
2. Management Fee and Other Transactions With Affiliates
Lord, Abbett & Co. received a management fee of $343,247 from the Equity Series
and $552,000 from the Income Series for which it provided the Company with
investment management services and executive and other personnel, paid the
remuneration of officers, provided office space and paid for ordinary and
necessary office and clerical expenses relating to research, statistical work
and the supervision of the Company's investment portfolios. Lord Abbett has
entered into a sub-advisory agreement with Edinburgh Fund Managers PLC
("Edinburgh"); Edinburgh furnishes investment advisory services in connection
with the management of the Equity Series' portion of the Company. Lord Abbett
pays for the cost of Edinburgh's services. The management fee paid to Lord,
Abbett & Co. is based on average daily net assets for each month at the annual
rate of .75 of 1% for the Equity Series and the annual rate of .50 of 1% for the
Income Series. The Company has a Rule 12b-1 Plan providing for (a) the payment
of a service fee to dealers at the annual rate of .25% of the average daily net
asset value of shares sold and (b)a one-time 1% distribution fee, at the time of
sale, on shares sold at net asset value of $1 million or more. Lord, Abbett &
Co. may waive its management fee and pay or reimburse the Fund for certain of
its other expenses. Any such fees waived or expenses paid are subject to
repayment by each Series pursuant to a formula based on the expense ratio of
each Series until October 31, 1998 or the termination of the Management
Agreement, whichever is earlier. Since inception through December 31, 1994,
Lord, Abbett & Co. waived management fees of $221,260 and assumed expenses of
$62,290 for the Equity Series. For the Income Series, all management fees waived
and expenses assumed pursuant to the aforementioned formula have been repaid.
Lord, Abbett & Co. received the following commissions on sales of capital stock
of the Company after concessions were paid to authorized distributors:
<TABLE>
<CAPTION>
Lord, Abbett & Co. Distributors'
Series Commissions Concessions
<S> <C> <C>
- --------------------------------------------------------------------------------
Equity $25,448 $166,079
- --------------------------------------------------------------------------------
Income $18,521 $112,924
- --------------------------------------------------------------------------------
</TABLE>
Certain of the Company's officers and directors have an interest in Lord, Abbett
& Co.
3. Distributions
Net realized gain from securities and foreign currency transactions is declared
in December and distributed to shareholders in January. At June 30, 1996,
accumulated net realized capital gain (loss) for financial reporting purposes,
which is substantially the same as for federal income tax purposes, aggregated
$3,996,132 for the Equity Series and accumulated net realized loss aggregated
$22,495,018 for the Income Series. The Income Series had a capital loss
carryforward as of December 31, 1995 of approximately $20,000,000 expiring in
2002. Accordingly, no capital gain distribution is expected to be paid to
shareholders until net gains have been realized in excess of such amount.
Income and capital gains distributions are determined in accordance with income
tax regulations which may differ from methods used to determine the
corresponding income and capital gains amounts in accordance with generally
accepted accounting principles. These differences are primarily caused by
differences in the timing of recognition of certain components of income,
expense or capital gain. Where such differences are permanent in nature, they
are reclassified in the Sources of Net Assets based upon their ultimate
characterization for federal income tax purposes. Any such reclassifications
will have no effect on net assets, results of operations or net asset value of
either Series. A dividend from net investment income is paid to Equity Series
shareholders semi-annually and to Income Series shareholders monthly.
4. Capital Share Transactions
Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
Six Months Year Ended
Ended June 30, 1996 December 31, 1995
--------------------------- --------------------------------
Equity Income Equity Income
Series Series Series Series
<S> <C> <C> <C> <C>
- ------------------------------------------------------ ------- ------- --------- ---------
Sales of shares 947,431 531,265 1,071,166 1,228,622
- ------------------------------------------------------ ------- ------- --------- ---------
Shares issued to share-
holders in reinvestment
of net investment income
and realized gain from
securities transactions -- 427,761 348,579 1,361,451
- ------------------------------------------------------ ------- ------- --------- ---------
Total 947,431 959,026 1,419,745 2,590,073
- ------------------------------------------------------ ------- ------- --------- ---------
Shares reacquired (643,651) (3,497,736) (1,584,676) (6,086,496)
- ------------------------------------------------------ ------- ------- --------- ---------
Increase (decrease) in shares 303,780 (2,538,710) (164,931) (3,496,423)
- ------------------------------------------------------ ------- ------- --------- ---------
</TABLE>
5. Capital Paid In
At June 30, 1996, capital paid in was $83,705,394 for the Equity Series and
$230,787,761 for the Income Series.
6. Purchases and Sales of Securities
(a) During the six months ended June 30, 1996, purchases and sales, exclusive of
investments in short-term securities and foreign currency transactions, were
$29,845,032 and $29,240,746, respectively, for the Equity Series and
$862,199,452 and $915,269,376, respectively, for the Income Series. Security
gains and losses are computed on the identified cost basis. As of June 30, 1996,
unrealized appreciation and depreciation of investments based on cost for
federal income tax purposes were $9,120,013 and $2,730,600, respectively, for
the Equity Series and $2,780,873 and $5,098,485, respectively, for the Income
Series. The cost of investments for federal income tax purposes is substantially
the same as that used for financial reporting purposes. (b)At June 30, 1996, the
Equity Series and the Income Series had outstanding forward currency contracts
to sell foreign currencies as follows:
11
<PAGE>
EQUITY SERIES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Value at
Foreign Currency Settlement Date Current
Sell Contracts Receivable Value Appreciation
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Japanese Yen, expiring 8/23/96 $12,600,000 $12,256,669 $343,331
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME SERIES
- ------------------------------------------------------------------------------------------------------------------------------------
Value at
Foreign Currency Settlement Date Current Appreciation
Sell Contracts Receivable Value (Depreciation)
- ------------------------------------------------------------------------------------------------------------------------------------
Canadian Dollars, expiring 8/26/96 $ 5,000,000 $ 4,983,658 $ 16,342
- ------------------------------------------------------------------------------------------------------------------------------------
Deutsche Marks, expiring 8/28/96 $28,650,000 $28,888,038 $(238,038)
$33,650,000 $33,871,696 $(221,696)
----------- ----------- ---------
</TABLE>
7. Directors' Remuneration
The Directors of the Company associated with Lord, Abbett & Co. and all officers
of the Company receive no compensation from the Company for acting as such.
Outside Directors' fees, including attendance fees for board and committee
meetings, and outside Directors' retirement costs, are allocated among all funds
in the Lord Abbett group based on net assets of each fund. The direct
remuneration accrued during the period for outside Directors of the Company as a
group was $2,915 (exclusive of expenses), a portion of which has been deemed
invested in shares of the Company under a deferred compensation plan
contemplating future payment of the value of those shares. As of June 30, 1996,
the aggregate amount in Directors' accounts maintained under the plan was
$51,762. Retirement costs accrued during the period amounted to $2,004.
8. Subsequent Event
On July 12, 1996, the Fund acquired the net assets of Lord Abbett Securities
Trust-Global Income Trust in exchange for 925,947 shares of newly-issued Class C
shares. Also, on June 19, 1996, the Fund's shareholders approved the issuance of
both Class B and Class C shares. There was no impact on the net asset value of
the Fund's previously issued shares, which will now be designated as Class A
shares.
Our Management
Board of Directors
Robert S. Dow
Thomas S. Henderson
E. Thayer Bigelow*
Stewart S. Dixon*
John C. Jansing*
C. Alan MacDonald*
Hansel B. Millican, Jr.*
Thomas J. Neff*
* Outside Director
+ Audit Committee
Investment Manager and
Underwriter
Lord, Abbett & Co. and
Lord Abbett Distributor LLC
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
212-848-1800
Sub-Adviser
Edinburgh Fund Managers PLC
Donaldson House
97 Haymarket Terrace
Edinburgh, Scotland EH12 5HD
Custodian
The Bank of New York
New York, NY
Transfer Agent
United Missouri Bank of
Kansas City, N.A.
Shareholder Servicing Agent
DST Systems, Inc.
P.O. Box 419100
Kansas City, MO 64141
800-821-5129
Auditors
Deloitte & Touche LLP
New York, NY
Counsel
Debevoise & Plimpton
New York, NY
Copyright (C) 1996 by Lord Abbett Global Fund, Inc.
767 Fifth Avenue, New York, NY 10153-0203
This publication, when not used for the general information of shareholders of
Lord Abbett Global Fund, Inc., is to be distributed only if preceded or
accompanied by a current prospectus which includes information concerning each
Series' investment objective and policies, sales charges and other matters.
There is no guarantee that the forecasts contained within this publication will
come to pass.
All rights reserved. Printed in the U.S.A.
12
<PAGE>
Lord, Abbett & Co.
A Tradition of Performance Through
Disciplined
Investing
FPO
Stewart S. Dixon, Director
Lord Abbett Global Fund
[PHOTO]
(left to right)
Zane E. Brown, director of fixed
income and portfolio manager--
Lord Abbett Global Fund--Income Series
E. Wayne Nordberg, partner and
portfolio manager--Lord Abbett
Global Fund--Equity Series
A successful long-term track record is
evidence of a successful investment
strategy. For decades we, at Lord,
Abbett & Co., have believed that
investing with a disciplined, value
approach is the best way to achieve
competitive returns and reduce portfolio
risk. This commitment and the dedication
of our team of 48 investment
professionals have helped us earn the
trust of financial professionals and
investors for over 65 years.
About Your
Fund's
Board of
Directors
The Securities and Exchange Commission
(SEC) views the role of the independent
Board of Directors as one of the most
important components in overseeing a
mutual fund. The Board of Directors
watches over your Fund's general
operations and represents your
interests. Board members review and
approve every contract between your Fund
and Lord, Abbett & Co. (the Fund's
investment manager) and Lord Abbett
Distributor LLC (the Fund's
underwriter). They meet regularly to
review a wide variety of information and
issues regarding your Fund. Every member
of the Board possesses extensive
business experience; Lord Abbett Global
Fund's shareholders are indeed fortunate
to have a group of independent directors
with diverse backgrounds to provide a
variety of viewpoints in the oversight
of their Fund. Below, we feature one of
our independent directors, Stewart S.
Dixon.
Stewart S. Dixon, Director
Lord Abbet Global Fund
[PHOTO]
An alumnus of Yale University, Mr. Dixon
also holds a law degree from the
University of Michigan, and has
practiced law for nearly 40 years. He
was one of the founding partners of the
firm of Wildman, Harrold, Allen & Dixon
(Chicago) in 1967, where he practices in
the areas of corporate/securities;
anti-trust; and estate planning.
He serves as a director of Ortho
S.A. Sprague Memorial Institute and as a
trustee of the Chicago Historical
Society. He has served as a director of
Children's Memorial Hospital, the Infant
Welfare Society and the Chicago
Zoological Society. He has been an
independent director for all of Lord
Abbett's funds since 1976.
<PAGE>
Investing in the
Lord Abbett
Family of Funds
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Growth & Balanced Income Tax-Free Money
Growth Fund Funds Income Funds Fund Funds Income Funds Market Fund
Developing Mid-Cap Affiliated Fund Balanced Series U.S. Government o National U.S. Government
Growth Fund Value Fund Securities Series* o California Securities
Growth & o Connecticut Money Market
Global Fund- Income Series Bond-Debenture o Florida Fund*+
Equity Series Fund o Georgia
Research Fund- o Hawaii
Large-Cap Global Fund- o Michigan
Series Income Series o Minnesota
o Missouri
Limited Duration o New Jersey
U.S. Government o New York
Securities Series* o Pennsylvania
o Texas
o Washington
</TABLE>
Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe your financial adviser provides value in helping you identify and
understand your investment objectives and, ultimately, offering fund
recommendations suitable for your individual needs.
This publication, when used as sales literature, is to be distributed only if
preceded or accompanied by a current prospectus for Lord Abbett Global Fund.
For more complete information about any other Lord Abbett fund, including
charges and expenses, call your financial adviser or Lord Abbett Distributor LLC
at 800-874-3733 for a prospectus. Read it carefully before investing.
When you invest in a family of funds, you benefit from:
Diversification. You and your financial adviser can diversify your investments
between equity and income funds.
Flexibility. As your investment goals change, your financial adviser can help
you reallocate your portfolio.
As an investor in the Lord Abbett Family of Funds, you have access to 26
portfolios designed to meet a variety of investment needs. While you may
reallocate your assets among our funds at any time, we recommend speaking with
your financial adviser to help you customize your investment plan.
* An investment in this Fund is neither insured nor guaranteed by the U.S.
Government.
+ There can be no assurance that this Fund will be able to maintain a stable
net asset value of $1.00 per share. This Fund is managed to maintain, and
has maintained, its stable $1.00 per share price.
Numbers to Keep Handy
For Literature: 800-874-3733
For Account Information: 800-821-5129
For Fund Information: 800-426-1130
[LOGO] LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
Lord ABBETT Distributor LLC
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