1940 Act File No. 811-5476
1933 Act File No. 33-20309
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No.10 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Post-Effective Amendment No.9 [X]
LORD ABBETT GLOBAL FUND, INC.
Exact Name of Registrant as Specified in Charter
767 FIFTH AVENUE, NEW YORK, N. Y. 10153-0203
Address of Principal Executive Office
REGISTRANT'S TELEPHONE NUMBER (212) 848-1800
Kenneth B. Cutler, Vice President & Secretary
767 FIFTH AVENUE, NEW YORK, N. Y. 10153
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately on filing pursuant to paragraph (b) of Rule 485
X on May 1, 1997 pursuant to paragraph (b) of Rule
485 60 days after filing pursuant to paragraph (a) (1) of Rule 485
on (date) pursuant to paragraph (a) (1) of Rule 485
75 days after filing pursuant to paragraph (a) (2) of Rule 485
on (date) pursuant to paragraph (a) (2) of Rule 485
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective
amendment
<PAGE>
LORD ABBETT GLOBAL FUND, INC.
FORM N-1A
Cross Reference Sheet
to Rule 481 (a)
Post-Effective Amendment No.10
Form N-1A Location In Prospectus or
ITEM NO. STATEMENT OF ADDITIONAL INFORMATION
1 Cover Page
2 Fee Table
3 (a) Financial Highlights; Performance
3 (b) N/A
3 (c) Performance
3 (d) N/A
4 (a) (i) Cover Page
4 (a) (ii) Investment Objectives and Policies
4 (b) Investment Objectives and Policies
4 (c) Risk Factors
5 (a) Our Management
5 (b) (c) Our Management; Back Cover Page
5 (d) N/A
5 (e) Back Cover Page
5 (f) Our Management
5 (g) N/A
5 A Performance
6 (a) Cover Page
6 (b) (c) (d) N/A
6 (e) Cover Page
6 (f) (g) Dividends, Capital Gains
Distributions and Taxes
6 (h) Cover Page
7 (a) Back Cover Page
7 (b) (c) (d)
(e) (f) Purchases
8 Redemptions
9 N/A
10 Cover Page
11 Cover Page - Table of Contents
12 N/A
13 Investment Objectives and Policies
14 Directors and Officers
15 (a) (b) N/A
15 (c) Directors and Officers
16 (a) (i) Investment Advisory and Other Services
16 (a) (ii) Directors and Officers
16 (a) (iii) Investment Advisory and Other Services
16 (b) Investment Advisory and Other Services
16 (c)(d)(e)(g) N/A
16 (f) Purchases, Redemptions
and Shareholder Services; Directors and Officers
16 (h) Investment Advisory and Other Services
16 (i) N/A
<PAGE>
Form N-1A Location In Prospectus or
ITEM NO. STATEMENT OF ADDITIONAL INFORMATION
17 (a) Portfolio Transactions
17 (b) N/A
17 (c) (d) Portfolio Transactions
17 (e) N/A
18 (a) Cover Page
18 (b) N/A
19 (a) (b) Purchases, Redemptions
and Shareholder Services
19 (c) N/A
20 Taxes
21 (a) Purchases, Redemptions
and Shareholder Services
21 (b) (c) N/A
22 (a) N/A
22 (b) Past Performance
23 Financial Statements
<PAGE>
LORD ABBETT GLOBAL FUND, INC.
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
800-426-1130
Lord Abbett Global Fund, Inc. ("we" or the "Fund"), is a mutual fund comprised
of two distinct investment portfolios, the Equity Series and the Income Series,
each having three classes of shares. These classes, called Class A, B and C
shares, provide investors with different investment options in purchasing shares
of the Fund. See "Purchases" for a description of these choices.
The Equity Series seeks long-term growth of capital and income consistent with
reasonable risk. The production of current income is a secondary consideration
for the Equity Series.
The Income Series seeks high current income consistent with reasonable risk.
Capital appreciation is a secondary consideration for the Income Series. There
can be no assurance that each Series will achieve its objective.
By investing in globally-diversified securities, the Fund offers the opportunity
for investors to take advantage of capital and income growth (in the case of the
Equity Series) and high current income with capital appreciation (in the case of
the Income Series) that may be present, from time to time, in particular
countries throughout the world.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Additional information about
the Fund has been filed with the Securities and Exchange Commission. The
Statement of Additional Information is incorporated by reference into this
Prospectus and may be obtained, without charge, by writing to the Fund or by
calling 800-874-3733. Ask for "Part B of the Prospectus -- the Statement of
Additional Information."
The date of this Prospectus and the date of the Statement of Additional
Information is May 1, 1997.
PROSPECTUS
Investors should read and retain this Prospectus. Shareholder inquiries should
be made in writing to the Fund or by calling 800-821-5129. You can also make
inquiries through your broker-dealer.
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any bank, and the shares are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency. An
investment in the Fund involves risks, including the possible loss of principal.
CONTENTS PAGE
1 Fee Table 2
2 Financial Highlights 3
3 Investment
Objectives and Policies 5
4 Risk Factors 9
5 Purchases 9
6 Shareholder Services 16
7 Our Management 17
8 Dividends, Capital Gains
Distributions and Taxes 18
9 Redemptions 19
10 Performance 19
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
1 FEE TABLE
A summary of each Series' expenses is set forth in the table below. The example
is not a representation of past or future expenses. Actual expenses may be
greater or less than those shown.
<TABLE>
<CAPTION>
EQUITY SERIES
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES(1)
(AS A PERCENTAGE OF OFFERING PRICE)
Maximum Sales Load(2) on Purchases
(See "Purchases") 5.75% None None
Deferred Sales Load(2) (See "Purchases") None 5% if shares are redeemed 1% if shares
before 1st anniversary are redeemed
of purchase, declining before 1st anniversary
to 1% before 6th of purchase
anniversary and
eliminated on and
after 6th anniversary(3)
ANNUAL FUND OPERATING EXPENSES(4)
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees (See "Our Management") 0.75% 0.75% 0.75%
12b-1 Fees (See "Purchases")(1)(2) 0.27% 1.00% 1.00%
Other Expenses (See "Our Management") 0.54% 0.54% 0.54%
Total Operating Expenses 1.56% 2.29% 2.29%
</TABLE>
<TABLE>
<CAPTION>
INCOME SERIES
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES(1)
(AS A PERCENTAGE OF OFFERING PRICE)
Maximum Sales Load(2) on Purchases
(See "Purchases") 4.75% None None
Deferred Sales Load(2) (See "Purchases") None 5% if shares are redeemed 1% if shares
before 1st anniversary are redeemed
of purchase, declining before 1st anniversary
to 1% before 6th of purchase
anniversary and
eliminated on and
after 6th anniversary(3)
ANNUAL FUND OPERATING EXPENSES(4)
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees (See "Our Management") 0.50% 0.50% 0.50%
12b-1 Fees (See "Purchases")(1)(2) 0.29% 1.00% 1.00%
Other Expenses (See "Our Management") 0.29% 0.29% 0.29%
Total Operating Expenses 1.08% 1.79% 1.79%
Example: Assume for each Series an annual return of 5% and there is no change in
the level of expenses described above. For a $1,000 investment, with
reinvestment of all dividends and distributions, you would pay the following
total expenses assuming redemption on the last day of each period indicated.
Equity Series 1 year 3 years 5 years 10 years
Class A shares $73 $104 $138 $233
Class B shares(3) $73 $102 $143 $244
Class C shares $33 $72 $123 $263
Income Series
Class A shares $58 $80 $104 $173
Class B shares(3) $68 $86 $117 $192
Class C shares $28 $56 $97 $211
Example: You would pay the following expenses on the same investment, assuming
no redemption.
Equity Series 1 year 3 years 5 years 10 years
Class A shares $73 $104 $138 $233
Class B shares(3) $23 $72 $123 $244
Class C shares $23 $72 $123 $263
Income Series
Class A shares $58 $80 $104 $173
Class B shares(3) $18 $56 $97 $192
Class C shares $18 $56 $97 $211
<PAGE>
<FN>
(1)Although the Fund does not, with respect to the Class B and Class C shares,
charge a front-end sales charge, investors should be aware that long-term
shareholders may pay, under each Rule 12b-1 plan applicable to the Class B and
Class C shares of the Fund (both of which pay annual 0.25% service and 0.75%
distribution fees), more than the economic equivalent of the maximum front-end
sales charge as permitted by certain rules of the National Association of
Securities Dealers, Inc. Likewise, with respect to Class A shares, investors
should be aware that, over the long term, such maximum may be exceeded due to
the Rule 12b-1 plan applicable to Class A shares which permits the Fund to pay
up to 0.50% in total annual fees, half for service and the other half for
distribution. The 12b-1 fees for the Class A shares have been restated to
reflect the current fees under the recently amended Class A 12b-1 plans.
(2)Sales "load" is referred to as sales "charge," "deferred sales load" is
referred to as "contingent deferred sales charge" (or "CDSC") and "12b-1 fees"
which consist of a "service fee" and a "distribution fee" are referred to by
either or both of these terms where appropriate with respect to Class A, Class B
and Class C shares throughout this Prospectus.
(3)Class B shares will automatically convert to Class A shares on the eighth
anniversary of the purchase of Class B shares.
(4)The annual operating expenses shown in the summary have been restated from
December 31, 1996 fiscal-year amounts to reflect current fees.
The foregoing is provided to give investors a better understanding of the
expenses that are incurred by an investment in a Series.
</FN>
</TABLE>
2 FINANCIAL HIGHLIGHTS
The following financial highlights have been audited by Deloitte & Touche llp,
independent accountants, whose report thereon is incorporated by reference into
the Statement of Additional Information and may be obtained upon request.
<TABLE>
<CAPTION>
EQUITY SERIES
SEPTEMBER 30, 1988
(COMMENCEMENT
PER CLASS A SHARE+ OPERATING YEAR ENDED DECEMBER 31, OF OPERATIONS) TO
PERFORMANCE: 1996 1995 1994 1993 1992 1991 1990 1989 DECEMBER 31, 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $11.96 $11.55 $12.44 $10.48 $10.79 $9.57 $11.09 $9.62 $9.28
INCOME FROM INVESTMENT OPERATIONS
Net investment income .07 .16 .10 .04 .078 .134 .211 .170 .073
Net realized and unrealized
gain (loss) on securities .93 .90 (.1125) 2.635 (.268) 1.276 (1.551) 1.53 .327
TOTAL FROM INVESTMENT OPERATIONS 1.00 1.06 (.0125) 2.675 (.190) 1.410 (1.340) 1.70 .400
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from net investment income (.07) (.17) (.10) (.10) (.12) (.12) (.18) (.12) (.06)
Distributions from net realized gain (.21) (.48) (.7775) (.615) ---- (.07) ---- (.11) ----
Distributions from foreign currency
transactions (.13) ---- ---- ---- ---- ---- ---- ---- ----
NET ASSET VALUE, END OF PERIOD $12.55 $11.96 $11.55 $12.44 $10.48 $10.79 $9.57 $11.09 $9.62
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN* 8.37% 9.19% (0.09)% 26.05% (1.73)% 14.76% (12.13)% 17.73% 4.37%++
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, including waiver 1.52% 1.63% 1.56% 1.68% 1.84% 1.61% 1.45% 1.26% .24%++
Expenses, excluding waiver 1.52% 1.63% 1.56% 1.68% 1.84% 1.61% 1.72% 2.16% 1.06%++
Net investment income .54% 1.31% .79% .70% .76% 1.30% 2.03% 1.52% .93%++
</TABLE>
<TABLE>
<CAPTION>
EQUITY SERIES CLASS B SHARES CLASS C SHARES
PER CLASS SHARE OPERATING AUGUST 1, 1996** TO AUGUST 1, 1996** TO
PERFORMANCE: DECEMBER 31, 1996 DECEMBER 31, 1996
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $12.30 $12.31
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.01) .00
Net realized and unrealized
gain on securities .58 .57
TOTAL FROM INVESTMENT OPERATIONS .57 .57
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from net investment income ---- ----
Dividends from net realized gain (.21) (.21)
Distributions from foreign currency transactions
(.13) (.13)
NET ASSET VALUE, END OF PERIOD $12.53 $12.54
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN* 4.56%++ 4.64%++
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses .83%++ .83%++
Net investment (loss) (.16)%++ (.11)%++
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITY SERIES
SEPTEMBER 30, 1988
SUPPLEMENTAL DATA YEAR ENDED DECEMBER 31, (COMMENCEMENT
- -------------------------------------------------------------------------------------------------------------- OF OPERATIONS) TO
FOR ALL CLASSES: 1996 1995 1994 1993 1992 1991 1990 1989 DECEMBER 31, 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $92,164 $84,731 $83,739 $71,632 $34,332 $36,654 $32,986 $27,692 $7,623
Portfolio turnover rate 81.97% 83.32% 75.39% 197.59% 136.75% 74.83% 76.24% 50.12% 3.86%
Average commissions per share
paid on equity transactions $0.25 $0.33 ------ ------ ------- ------- ------ ------- ------
<FN>
* Total return does not consider the effects of front-end or contingent
deferred sales charges.
** Commencement of offering Class shares.
+ The Fund had only one class of shares prior to August 1, 1996. That class
of shares is now designated Class A shares.
++ Not annualized. See
Notes to Financial Statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INCOME SERIES
YEAR ENDED DECEMBER 31, SEPTEMBER 30, 1988
- -------------------------------------------------------------------------------------------------------------- (COMMENCEMENT
PER CLASS A SHARE+ OPERATING OF OPERATIONS) TO
PERFORMANCE: 1996 1995 1994 1993 1992 1991 1990 1989 DECEMBER 31, 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $8.58 $7.98 $9.02 $8.87 $9.40 $9.13 $9.28 $9.37 $9.53
INCOME FROM INVESTMENT OPERATIONS
Net investment income .53 .77 .65 .76 .808 .877 .940 .998 .233
Net realized and unrealized
gain (loss) on securities (.04) .6138 (.9603) .174 (.288) .316 .059 (.07) (.1028)
TOTAL FROM INVESTMENT OPERATIONS .49 1.3838 (.3103) .934 .520 1.193 .999 .928 .1302
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from net investment income (.61) (.6613) (.6035) (.784) (.840) (.873) (.959) (.998) (.2402)
Distributions from net realized gain ----- ----- --- ----- ----- (.05) ----- (.02) -----
Distribution to shareholders in
excess of net investment income ----- ----- (.1262) ----- ----- ----- ----- ----- -----
Special distributions from foreign
currency transactions (.12) (.1225) ----- ----- (.21 ----- (.19) ----- (.05)
NET ASSET VALUE, END OF PERIOD $8.34 $8.58 $7.98 $9.02 $8.87 $9.40 $9.13 $9.28 $9.37
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN* 6.12% 17.86% (3.40)% 10.78% 5.76% 14.33% 11.88% 10.58% 1.41%++
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, including waiver 1.04% 1.04% 1.02% 1.04% 1.22% 1.30% 1.16% .90% .24%++
Expenses, excluding waiver 1.04% 1.04% 1.02% 1.04% 1.22% 1.30% 1.33% 1.64% .74%++
Net investment income 6.52% 7.60% 7.72% 7.81% 8.50% 9.96% 10.13% 10.41% 2.41%++
</TABLE>
<TABLE>
<CAPTION>
INCOME SERIES CLASS B SHARES CLASS C SHARES
PER CLASS SHARE OPERATING AUGUST 1, 1996** TO JULY 15, 1996** TO
PERFORMANCE: DECEMBER 31, 1996 DECEMBER 31, 1996
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $8.24 $8.14
INCOME FROM INVESTMENT OPERATIONS
Net investment income .23 .21
Net realized and unrealized
gain on securities .22 .37
TOTAL FROM INVESTMENT OPERATIONS .45 .58
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from net investment income (.23) (.26)
Distributions from foreign currency transactions (.12) (.12)
NET ASSET VALUE, END OF PERIOD $8.34 $8.34
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN* 5.58%++ 7.43%++
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses .73%++ .87%++
Net investment income 2.11%++ 2.69%++
</TABLE>
<TABLE>
<CAPTION>
INCOME SERIES
SEPTEMBER 30, 1988
SUPPLEMENTAL DATA YEAR ENDED DECEMBER 31, (COMMENCEMENT
- ------------------------------------------------------------------------------------------------------------ OF OPERATIONS) TO
FOR ALL CLASSES: 1996 1995 1994 1993 1992 1991 1990 1989 DECEMBER 31, 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000)$202,494 $238,291 $249,490 $277,495 $148,137 $101,023 $68,587 $37,470 $8,048
Portfolio turnover rate 621.79% 1,073.69% 1,230.20% 1,559.43% 812.01% 543.90% 613.01% 757.32% 22.62%
<FN>
* Total return does not consider the effects of front- end or contingent
deferred sales charges.
** Commencement of offering Class shares.
+ The Fund had only one class of shares prior to July 12, 1996. That class of
shares is now designated Class A shares.
++ Not annualized.
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
3 INVESTMENT OBJECTIVES AND POLICIES
THE EQUITY SERIES. The investment objective of the Equity Series is long-term
growth of capital and income consistent with reasonable risk. The production of
current income is a secondary consideration for the Equity Series.
The Equity Series believes that the needs of most long-term investors are best
served by capital growth without excessive fluctuations in market value. Fund
management (hereinafter meaning the officers of the Fund on a day-to-day basis
subject to the overall direction of the Fund's Board of Directors with the
advice of Lord, Abbett & Co., hereinafter "Lord Abbett") will try to anticipate
major changes in the world economy and select for the Equity Series domestic and
foreign securities which Fund management believes will benefit most from these
changes. The Equity Series normally invests primarily in common stocks
(including securities convertible into common stocks) of domestic and foreign
companies in sound financial condition that are expected to show above-average
price appreciation. Although the prices of common stocks fluctuate and their
dividends vary, historically, common stocks have appreciated in value and their
dividends have increased when the companies they represent have prospered and
grown. Success in achieving the investment objective of the Equity Series is
dependent upon Fund management's ability to anticipate market changes, as well
as its ability to properly value particular companies. Thus, there is no
assurance that the portfolio investments made by Fund management on behalf of
the Equity Series will attain the results sought.
The Equity Series constantly balances the opportunity for profit against the
risk of loss. In the past, very few industries or economies have continuously
provided the best investment opportunities. The Equity Series' policy is to take
a flexible approach and to adjust the portfolio to reflect changes in the
opportunity for sound investments relative to the risk assumed. Therefore,
domestic and foreign securities judged to be overvalued will be sold and the
proceeds will be reinvested in other securities believed to offer better values.
The Equity Series may also invest in debt securities. While the Equity Series
has no specific rating requirements with respect to the debt securities in which
it invests, it will occasionally be guided by the prospect of a more attractive
risk-adjusted total return from an issuer's debt securities versus its equity
securities. As of the Fund's fiscal year ended December 31, 1996, 7.35% of the
Equity Series' assets were invested in debt securities.
Under normal circumstances, the Equity Series will invest its total assets in
domestic and foreign securities with at least 65% of such assets invested in
equity securities primarily traded in at least three countries, including the
United States. However, this guideline may not be followed for temporary
defensive periods when Fund management believes that it should invest entirely
in domestic securities or in securities primarily traded in fewer than three
foreign countries or in debt securities to a greater extent than 35% of the
total assets of the Equity Series.
THE INCOME SERIES. The investment objective of the Income Series is high current
income consistent with reasonable risk. Capital appreciation is a secondary
consideration for the Income Series.
Under normal market conditions, the Income Series will be invested primarily in
a portfolio of (i) high-quality debt securities issued or guaranteed by U.S. and
foreign governments or their agencies, instrumentalities or political
subdivisions; (ii) high-quality debt securities issued or guaranteed by
supranational organizations, such as the World Bank; (iii) high-quality U.S. and
foreign corporate debt securities including commercial paper; and (iv) debt
obligations of banks and bank holding companies. The high-quality debt
securities described above will consist of those rated at the time of purchase
within one of the two highest grades assigned by Standard & Poor's Ratings
Services ("S&P") or Moody's Investors Service, Inc. ("Moody's") or, if unrated,
judged by Fund management to be of comparable quality. Up to 35% of the Income
Series' total assets may be invested in equity securities and in debt securities
rated below S&P's and Moody's two highest grades but rated at the time of
purchase BBB or better by S&P or Baa or better by Moody's or, if unrated, judged
by Fund management to be of comparable quality. Bonds rated Baa by Moody's or
BBB by S&P are considered medium-grade and have speculative characteristics and
are more sensitive to economic change than higher-rated bonds. A description of
S&P's and Moody's ratings is included in the Appendix to the Statement of
Additional Information. Fundamental economic strength, credit quality, currency
exchange and interest-rate trends will be the principal determinants of the
various country, geographic and industry sector weightings within the Income
Series' portfolio. The Income Series will invest in countries and in currency
denominations where the combination of fixed-income market returns, price
appreciation of fixed-income obligations, equity securities and currency
exchange-rate movements appear to present opportunities for an attractive total
return consistent with the Income Series' investment objective.
<PAGE>
The U.S. Government securities in which the Income Series may invest include
direct obligations of the United States Treasury (such as Treasury bills, notes
and bonds) and obligations issued by United States Government agencies and
instrumentalities, including securities that are supported by the full faith and
credit of the United States (such as Government National Mortgage Association
"GNMA" certificates), securities that are supported by the right of the issuer
to borrow from the United States Treasury (such as securities of the Federal
Home Loan Banks) and securities supported solely by the creditworthiness of the
issuer (such as Federal National Mortgage Association "FNMA" and Federal Home
Loan Mortgage Corporation "FHLMC" securities).
The Income Series may purchase U.S. Government securities on a when-issued basis
and, while awaiting delivery and before paying for them ("settlement"), normally
may invest in short-term U.S. Government securities. The Income Series does not
start earning interest on these when-issued securities until settlement and
often they are sold prior to settlement. While this investment strategy may
contribute significantly to a portfolio turnover rate substantially in excess of
100%, it has little or no transaction costs or adverse tax consequences for the
Income Series. Transaction costs normally do not include brokerage because the
Income Series' fixed-income portfolio transactions usually are on a principal
basis and, at the time of purchase, the Series normally anticipates that any
markups charged will be more than offset by the anticipated economic benefits of
the transaction. During the period between purchase and settlement, the value of
the securities will fluctuate and assets consisting of cash and/or marketable
securities marked to market daily in an amount sufficient to make payment at
settlement will be segregated at our custodian in order to pay for the
commitment. There is a risk that market yields available at settlement may be
higher than yields obtained on the purchase date, which could result in
depreciation of value.
The other debt securities in which the Income Series may invest include, but are
not limited to, domestic and foreign, fixed and floating-rate notes, bonds,
debentures, convertible securities, certificates, warrants, commercial paper,
and principal and interest pass-throughs issued by governments, authorities,
partnerships, corporations, trust companies, banks and bank holding companies,
and banker's acceptances, certificates of deposit, time deposits and deposit
notes issued by domestic and foreign banks.
Under normal circumstances, the Income Series will invest its total assets in
domestic and foreign securities with at least 65% of such assets invested in
long-term debt securities primarily traded in at least three countries,
including the United States. However, this guideline may not be followed for
temporary defensive periods when Fund management believes that it should invest
entirely in domestic securities or in securities primarily traded in fewer than
three foreign countries or in equity or short-term debt securities to a greater
extent than 35% of the total assets of the Income Series. The market prices of
long-term debt securities tend to be more volatile than those of short-term debt
securities when interest rates change.
INVESTMENT POLICIES AND TECHNIQUES COMMON TO BOTH SERIES
Neither Series will be required to sell debt securities which become unrated or
are downgraded after purchase.
Country Diversification and Defensive Position. It is the present
intention of each Series to invest its assets in securities which are primarily
traded in the United Kingdom, Western Europe (Austria, Germany, the Netherlands,
France, Switzerland, Italy, Belgium, Norway, Sweden, Denmark and Spain),
Australia, Canada, the Far East (Japan, Hong Kong, Korea, Singapore, Taiwan and
Thailand), Latin America (Argentina, Brazil, Mexico and Venezuela) and the
United States. However, investments may be made, from time to time, in
securities which are primarily traded in other developed countries. Except for
the guidelines described above with respect to investing in at least three
countries, including the United States, there are no limitations on how much of
each Series' assets can be invested in securities primarily traded in any one
country.
When Fund management believes that one or both Series should assume a temporary
defensive position because of unfavorable investment conditions, the affected
Series may temporarily hold its assets in cash and short-term money market
instruments.
Foreign Currency Hedging Techniques. Each Series may utilize various foreign
currency hedging techniques described below.
<PAGE>
A forward foreign currency contract involves an obligation to purchase or sell a
specific amount of a currency at a set price on a future date. Each Series may
enter into forward foreign currency contracts (but not in excess of the amount a
Series has invested in non-U.S. dollar-denominated securities at the time any
such contract is entered into) in primarily two circumstances. First, when a
Series enters into a contract for the purchase or sale of a security denominated
in a foreign currency, the Series 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 Series 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 of purchase or sale and the
date of settlement.
Second, when Fund management believes that the currency of a particular foreign
country may suffer a decline against the U.S. dollar, a Series may enter into a
forward contract to sell the amount of foreign currency approximating the value
of some or all of a Series' portfolio securities denominated in such foreign
currency or, in the alternative, a Series may use a cross-currency-hedging
technique whereby it enters into such a forward contract to sell another
currency (obtained in exchange for the currency which the portfolio securities
are denominated in if such securities are sold) which it expects to decline in a
similar manner but which has a lower transaction cost. Precise matching of the
forward contract and the value of the securities involved will generally not 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 the contract matures. Each Series intends to enter into such forward
contracts under this second circumstance periodically.
Each Series also may purchase foreign currency put options and write foreign
currency call options on U.S. exchanges or U.S. over-the-counter markets. A put
option gives a Series, 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. The premiums paid for such foreign currency put
options will not exceed 5% of the net assets of a Series.
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. These unlisted options
generally are available on a wider range of currencies, including those of most
of the developed countries mentioned above. Unlisted foreign-currency options
generally are less liquid than listed options and involve the credit risk
associated with the individual issuer.
Unlisted options together with other illiquid securities may comprise no more
than 15% of each Series' net assets.
A foreign currency call option written by a Series gives the purchaser, upon
payment of a premium, the right to purchase from that Series a currency at the
exercise price until the expiration of the option. A Series 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 or cross-hedging (described above) may not exceed 90% of the
value of the securities denominated in such currency (a) invested in by a Series
to cover such call writing or (b) to be crossed.
Limitations imposed by the Internal Revenue Code on regulated investment
companies may restrict each Series' ability to engage in transactions in
options, forward contracts and cross hedges.
The Fund's custodian will segregate cash or liquid high-grade debt securities or
other permitted securities belonging to a Series in an amount not less than that
required by SEC Release 10666 and SEC staff interpretations thereof with respect
to a Series' assets committed to (a) writing options, (b) forward foreign
currency contracts and (c) cross hedges entered into by a Series. If the value
of the securities segregated declines, additional cash or permitted 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 a Series' commitments with respect to
such written options, forward foreign currency contracts and cross hedges.
Neither Series may borrow money, except that (i) each Series may borrow from
banks (as defined in the Act) in amounts up to 33 1/3% of its total assets
(including the amount borrowed), (ii) each Series may borrow up to an additional
5% of its total assets for temporary purposes, and (iii) each Series may obtain
such short-term credit as may be necessary for the clearance of purchases and
sales of portfolio securities.
<PAGE>
Diversification. Each Series intends to meet the diversification rules under
Subchapter M of the Internal Revenue Code. Generally, this requires, at the end
of each quarter of the taxable year, that (a) not more than 25% of each Series'
total assets be invested in any one issuer and (b) with respect to 50% of each
Series' total assets, no more than 5% of each Series' total assets be invested
in any one issuer, except U.S. Government securities. Since under these rules
the Income Series, but not the Equity Series, may invest its assets in the
securities of a limited number of issuers, the value of Income Series'
investments may be more affected by any single adverse economic, political or
regulatory occurrence than in the case of a "diversified" investment company
under the Investment Company Act of 1940, such as the Equity Series.
The Equity Series, as a "diversified" investment company, is prohibited, with
respect to 75% of the value of its total assets, from investing more than 5% of
its total assets in securities of any one issuer other than U.S. Government
securities. For diversification purposes, the identification of an "issuer" will
be determined on the basis of the source of assets and revenues committed to
meeting interest and principal payments of the securities. When the assets and
revenues of a state's political subdivision are separate from those of the state
government creating the subdivision, and the security is backed only by the
assets and revenues of the subdivision, then the subdivision would be considered
the sole issuer. Similarly, if a revenue bond is backed only by the assets and
revenues of a nongovernmental user, then such user would be considered the sole
issuer.
OTHER INVESTMENT TECHNIQUES COMMON TO BOTH SERIES
Each Series intends to utilize, from time to time, one or more of the investment
techniques identified below. It is currently intended 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, Fund management intends to use them to reduce risk and volatility
in the portfolios, although this result cannot be assured.
Covered Call Options. Each Series may write call options on securities it owns,
provided that the securities a Series holds to cover such options do not
represent more than 5% of that 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.
Rights and Warrants. Each Series may invest in rights and warrants to purchase
securities provided that, at the time of the acquisition, its investment in
warrants, valued at the lower of cost or market, would not exceed 5% of the
Series' total assets. Warrants which are not listed on the New York or American
Stock Exchange or a major foreign exchange may not exceed 2% of the Series'
total assets.
Repurchase Agreements. Each Series may enter into repurchase agreements with
respect to a security. A repurchase agreement is a transaction by which a 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. Such repurchase agreement must, at all times, be collateralized by cash or
U.S. Government securities having a value equal to, or in excess of, the value
of the repurchase agreement.
OTHER POLICIES COMMON TO BOTHE SERIES
It is currently intended that no more than 5% of each Series' net assets will be
at risk in the use of any one of the policies identified below.
Closed-end Investment Companies. Each Series may invest in shares of closed-end
investment companies if bought in the primary or secondary market with a fee or
commission no greater than the customary broker's commission. Shares of such
investment companies sometimes trade at a discount or premium in relation to
their net asset value and there may be duplication of fees, for example, to the
extent that a Series and the closed-end investment company both charge a
management fee.
Lending of Portfolio Securities. Each Series may seek to earn income by lending
its portfolio securities if the loan is collateralized and its terms are in
accordance with regulatory requirements.
Each Series' investment objective may not be changed without shareholder
approval of that Series.
PORTFOLIO TURNOVER. The portfolio turnover rate for the fiscal year ended
December 31, 1996 was 81.97% versus 83.32% for the prior fiscal year for the
Equity Series and 621.79% versus 1,073.69% for the prior fiscal year for the
Income Series. The high portfolio turnover rate for the Income Series relates to
substantial trading of U.S. and U.S. agency mortgage-backed securities to take
advantage of value changes among different agencies, coupons and maturities.
Also, there was significant movement of investments from country to country to
take advantage of return differentials.
<PAGE>
4 RISK FACTORS
Investment in the Fund requires consideration of certain factors that are not
normally involved in investments in U.S. securities. Generally, most of the
assets of each Series will be denominated or traded in foreign currencies.
Accordingly, a change in the value of any foreign currency relative to the U.S.
dollar will result in a corresponding change in the U.S. dollar value of a
Series' assets denominated or traded in that currency. The performance of each
Series will be measured in U.S. dollars, the base currency of the Series.
Securities markets of foreign countries in which a Series may invest generally
are not subject to the same degree of regulation as the U.S. markets and may be
more volatile and less liquid than the major U.S. markets. Lack of liquidity may
affect a Series' ability to purchase or sell large blocks of securities and thus
obtain the best price. There may be less publicly-available information on
publicly-traded companies, banks and governments in foreign countries than is
generally the case for such entities in the United States. The lack of uniform
accounting standards and practices among countries impairs the validity of
direct comparisons of valuation measures (such as price/earnings ratios) for
securities in different countries. In addition, a Series may incur costs
associated with currency hedging and the conversion of foreign currency into
U.S. dollars and may be adversely affected by restrictions on the conversion or
transfer of foreign currency. Other considerations include political and social
instability, expropriation, higher transaction costs and different securities
settlement practices. Settlement periods for foreign securities, which are
sometimes longer than those for securities of U.S. issuers, may affect portfolio
liquidity. These different settlement practices may cause missed purchasing
opportunities and/or the loss of interest on money market and debt investments
pending further equity or long-term debt investments. In addition, foreign
securities held by a Series may be traded on days that the Series do not value
their portfolio securities, such as Saturdays and customary business holidays,
and, accordingly, a Series' net asset value may be significantly affected on
days when shareholders do not have access to the Series.
5 PURCHASES
ALTERNATIVE SALES ARRANGEMENTS
CLASSES OF SHARES . The Fund offers investors three different classes of shares.
The different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and will likely have different
share prices. Investors should read this section carefully to determine which
class represents the best investment option for their particular situation.
CLASS A SHARES. If you buy Class A shares, you pay an initial sales charge on
investments of less than $1 million (or on investments for employer-sponsored
retirement plans under the Internal Revenue Code (hereinafter referred to as
"Retirement Plans") with less than 100 eligible employees). If you purchase
Class A shares as part of an investment of at least $1 million (or for
Retirement Plans with at least 100 eligible employees) in shares of one or more
Lord Abbett-sponsored funds, you will not pay an initial sales charge, but if
you redeem any of those shares within 24 months after the month in which you buy
them, you may pay to the appropriate Series a contingent deferred sales charge
("CDSC") of 1%. Class A shares are subject to service and distribution fees that
are currently estimated to total annually approximately .27 of 1% for the Equity
Series and .29 of 1% for the Income Series of the annual net asset value of such
shares. The initial sales charge rates, the CDSC and the Rule 12b-1 Plan
applicable to the Class A shares are described under "General" below.
CLASS B SHARES. If you buy Class B shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the sixth anniversary of
buying them, you will normally pay a CDSC to Lord Abbett Distributor LLC ("Lord
Abbett Distributor"). That CDSC varies depending on how long you own shares.
Class B shares are subject to service and distribution fees at an annual rate of
1% of the annual net asset value of the Class B shares. The CDSC and the Rule
12b-1 Plan applicable to the Class B shares are described under "General" below.
CLASS C SHARES. If you buy Class C shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the first anniversary of
buying them, you will normally pay the applicable Series a CDSC of 1%. Class C
shares are subject to service and distribution fees at an annual rate of 1% of
the annual net asset value of the Class C shares. The CDSC and the Rule 12b-1
Plan applicable to the C shares are described under "General" below.
<PAGE>
WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that a Series is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors that you should
discuss with your financial adviser. Class-specific expenses and the effect of
the different types of sales charges on your investment will affect your
investment results over time. The most important factors are how much you plan
to invest and how long you plan to hold your investment. If your goals and
objectives change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider another class of
shares.
In the following discussion, to help provide you and your financial adviser with
a framework in which to choose a class, we have made some assumptions using a
hypothetical investment in a Series. We used the sales charge rates that apply
to Class A, Class B and Class C shares, and considered the effect of the higher
distribution fees on Class B and Class C expenses (which will affect your
investment return). Of course, the actual performance of your investment cannot
be predicted and will vary, based on a Series' actual investment returns, the
operating expenses borne by each class of shares, and the class of shares you
purchase. The factors briefly discussed below are not intended to be investment
advice, guidelines or recommendations, because each investor's financial
considerations are different. The discussion below of the factors to consider in
purchasing a particular class of shares assumes that you will purchase only one
class of shares and not a combination of shares of different classes.
HOW LONG DO YOU EXPECT TO HOLD YOUR INVESTMENT? While future financial needs
cannot be predicted with certainty, knowing how long you expect to hold your
investment will assist you in selecting the appropriate class of shares. For
example, over time, the reduced sales charges available for larger purchases of
Class A shares may offset the effect of paying an initial sales charge on your
investment, compared to the effect over time of higher class-specific expenses
on Class B or Class C shares for which no initial sales charge is paid. Because
of the effect of class-based expenses, your choice should also depend on how
much you plan to invest.
Investing for the Short Term. If you have a short-term investment horizon (that
is, you plan to hold your shares for not more than six years), you should
probably consider purchasing Class A or Class C shares rather than Class B
shares. This is because of the effect of the Class B CDSC if you redeem before
the sixth anniversary of your purchase, as well as the effect of the Class B
distribution fee on the investment return for that class in the short term.
Class C shares might be the appropriate choice (especially for investments of
less than $100,000), because there is no initial sales charge on Class C shares,
and the CDSC does not apply to amounts you redeem after holding them one year.
However, if you plan to invest more than $100,000 for the short term, then the
more you invest and the more your investment horizon increases toward six years,
the more attractive the Class A share option may become. This is because the
annual distribution fee on Class C shares will have a greater impact on your
account over the longer term than the reduced front-end sales charge available
for larger purchases of Class A shares. For example, Class A might be more
appropriate than Class C for investments of more than $100,000 that you expect
to hold for 5 or 6 years (or more). For investments over $250,000 that you
expect to hold 4 to 6 years (or more), Class A shares may become more
appropriate than Class C shares. If you are investing $500,000 or more, Class A
shares may become more desirable as your investment horizon approaches 3 years
or more.
For most investors who invest $1 million or more or for Retirement Plans with at
least 100 eligible employees, in most cases Class A shares will be the most
advantageous choice, no matter how long you intend to hold your shares. For that
reason, Lord Abbett Distributor normally will not accept purchase orders (i) for
Class B shares of $500,000 or more and for Class C shares of $1,000,000 or more
from a single investor or (ii) for Class B or C shares for Retirement Plans with
at least 100 eligible employees.
Investing for the Longer Term. If you are investing for the longer term (for
example, to provide for future college expenses for your child) and do not
expect to need access to your money for seven years or more, Class B shares may
be an appropriate investment option, if you plan to invest less than $100,000.
If you plan to invest more than $100,000 over the long term, Class A shares will
likely be more advantageous than Class B shares or Class C shares, as discussed
above, because of the effect of the expected lower expenses for Class A shares
and the reduced initial sales charges available for larger investments in Class
A shares under the Fund's Rights of Accumulation.
<PAGE>
Of course, these examples are based on approximations of the effect of current
sales charges and expenses on a hypothetical investment over time, and should
not be relied on as rigid guidelines.
ARE THERE DIFFERENCES IN ACCOUNT FEATURES THAT MATTER TO YOU? Some account
features are available in whole or in part to Class A, Class B and Class C
shareholders. Other features (such as Systematic Withdrawal Plans) might not be
advisable in non-Retirement Plan accounts for Class B shareholders (because of
the effect of the CDSC on the entire amount of a withdrawal if it exceeds 12%
annually) and in any account for Class C shareholders during the first year of
share ownership (due to the CDSC on withdrawals during that year). See
"Systematic Withdrawal Plan" under "Shareholder Services" for more information
about the 12% annual waiver of the CDSC. You should carefully review how you
plan to use your investment account before deciding which class of shares you
buy. For example, the dividends payable to Class B and Class C shareholders will
be reduced by the expenses borne solely by each of these classes, such as the
higher distribution fee to which Class B and Class C shares are subject, as
described below.
HOW DOES IT AFFECT PAYMENTS TO MY BROKER? A salesperson, such as a broker, or
any other person who is entitled to receive compensation for selling Fund shares
may receive different compensation for selling one class than for selling
another class. As discussed in more detail below, such compensation is primarily
paid at the time of sale in the case of Class A and B shares and is paid over
time, so long as shares remain outstanding, in the case of Class C shares. It is
important that investors understand that the primary purpose of the CDSC for the
Class B shares and the distribution fee for Class B and Class C shares is the
same as the purpose of the front-end sales charge on sales of Class A shares: to
compensate brokers and other persons selling such shares. The CDSC, if payable,
supplements the Class B distribution fee and reduces the Class C distribution
fee expenses for a Series and Class C shareholders.
GENERAL
HOW MUCH MUST YOU INVEST. You may buy our shares through any independent
securities dealer having a sales agreement with Lord Abbett Distributor, our
exclusive selling agent. Place your order with your investment dealer or send it
to Lord Abbett Global Fund, Inc. (P.O. Box 419100, Kansas City, Missouri 64141).
The minimum initial investment is $1,000, except for Invest-A-Matic and Div-Move
($250 initial and $50 subsequent minimum) and Individual Retirement Accounts
($250 minimum). For Retirement Plans there is no minimum investment required.
See "Shareholder Services." For information regarding the proper form of a
purchase or redemption order, call the Fund at 800-821-5129. This offering may
be suspended, changed or withdrawn. Lord Abbett Distributor reserves the right
to reject any order. The net asset value of our shares is calculated every
business day as of the close of the New York Stock Exchange ("NYSE") by dividing
net assets by the number of shares outstanding. Securities are valued at their
market value as more fully described in the Statement of Additional Information.
BUYING SHARES THROUGH YOUR DEALER. Orders for shares received by the Fund prior
to the close of the NYSE, or received by dealers prior to such close and
received by Lord Abbett Distributor prior to the close of its business day, will
be confirmed at the applicable public offering price effective at such NYSE
close. Orders received by dealers after the NYSE closes and received by Lord
Abbett Distributor in proper form prior to the close of its next business day
are executed at the applicable public offering price effective as of the close
of the NYSE on that next business day. The dealer is responsible for the timely
transmission of orders to Lord Abbett Distributor. A business day is a day on
which the NYSE is open for trading.
Lord Abbett Distributor may, for specified periods, allow dealers to retain the
full sales charge for sales of shares during such periods, or pay an additional
concession to a dealer who, during a specified period, sells a minimum dollar
amount of our shares and/or shares of other Lord Abbett-sponsored funds. In some
instances, such additional concessions will be offered only to certain dealers
expected to sell significant amounts of shares. Lord Abbett Distributor may,
from time to time, implement promotions under which Lord Abbett Distributor will
pay a fee to dealers with respect to certain purchases not involving imposition
of a sales charge. Additional payments may be paid from Lord Abbett
Distributor's own resources and will be made in the form of cash or, if
permitted, non-cash payments. The non-cash payments will include business
seminars at resorts or other locations, including meals and entertainment, or
the receipt of merchandise. The cash payments will include payment of various
business expenses of the dealer. In selecting dealers to execute portfolio
transactions for the Fund's portfolio, if two or more dealers are considered
capable of obtaining best execution, we may prefer the dealer who has sold our
shares and/or shares of other Lord Abbett-sponsored funds.
<PAGE>
BUYING CLASS A SHARES. The offering price of Class A shares is based on the
per-share net asset value next computed after your order is accepted plus a
sales charge as follows.
EQUITY SERIES SALES CHARGE AS A DEALER'S
PERCENTAGE OF: CONCESSION
AS A TO COMPUTE
NET PERCENTAGE OFFERING
OFFERING AMOUNT OF OFFERING PRICE, DIVIDE
SIZE OF INVESTMENT PRICE INVESTED PRICE NAV BY
- -------------------------------------------------------------------------------
Less than $50,000 5.75% 6.10% 5.00% .9425
- ------------------------------------------------------------------------------
$50,000 to $99,999 4.75% 4.99% 4.00% .9525
- -------------------------------------------------------------------------------
$100,000 to $249,999 3.75% 3.90% 3.25% .9625
- -------------------------------------------------------------------------------
$250,000 to $499,999 2.75% 2.83% 2.25% .9725
- -------------------------------------------------------------------------------
$500,000 to $999,999 2.00% 2.04% 1.75% .9800
- -------------------------------------------------------------------------------
$1,000,000 or more No Sales Charge 1.00%+ 1.0000
INCOME SERIES SALES CHARGE AS A DEALER'S
PERCENTAGE OF: CONCESSION
AS A TO COMPUTE
NET PERCENTAGE OFFERING
OFFERING AMOUNT OF OFFERING PRICE, DIVIDE
SIZE OF INVESTMENT PRICE INVESTED PRICE NAV BY
-------------------------------------------------------------------------------
Less than $50,000 4.75% 4.99% 4.00% .9525
- --------------------------------------------------------------------------------
$50,000 to $99,999 4.75% 4.99% 4.25% .9525
- --------------------------------------------------------------------------------
$100,000 to $249,999 3.75% 3.90% 3.25% .9625
- --------------------------------------------------------------------------------
$250,000 to $499,999 2.75% 2.83% 2.50% .9725
- -------------------------------------------------------------------------------
$500,000 to $999,999 2.00% 2.04% 1.75% .9800
- --------------------------------------------------------------------------------
$1,000,000 or more No Sales Charge 1.00%+ 1.0000
- --------------------------------------------------------------------------------
+AUTHORIZED INSTITUTIONS RECEIVE CONCESSIONS ON PURCHASES MADE BY A RETIREMENT
PLAN OR ANOTHER QUALIFIED PURCHASER WITHIN A 12-MONTH PERIOD (BEGINNING WITH
THE FIRST NET ASSET VALUE PURCHASE) AS FOLLOWS: 1.00% ON PURCHASES OF $5
MILLION, 0.55% OF THE NEXT $5 MILLION, 0.50% OF THE NEXT $40 MILLION AND 0.25%
ON PURCHASES OVER $50 MILLION. SEE "CLASS A RULE 12B-1 PLAN" BELOW.
CLASS A SHARE VOLUME DISCOUNTS. This section describes several ways to qualify
for a lower sales charge when purchasing Class A shares if you inform Lord
Abbett Distributor or the Fund that you are eligible at the time of purchase.
(1) Any purchaser (as described below) may aggregate a Class A share purchase in
the Fund with any share purchases of any other eligible Lord Abbett-sponsored
fund, together with the current value at maximum offering price of any shares in
the Fund and in any eligible Lord Abbett-sponsored funds held by the purchaser.
(Holdings in the following funds are not eligible for the above rights of
accumulation: Lord Abbett Equity Fund ("LAEF"), Lord Abbett Series Fund
("LASF"), any series of Lord Abbett Research Fund not offered to the general
public ("LARF") and Lord Abbett U.S. Government Securities Money Market Fund
("GSMMF"), except for holdings in GSMMF which are attributable to any shares
exchanged from a Lord Abbett-sponsored fund.) (2) A purchaser may sign a
non-binding 13-month statement of intention to invest $50,000 or more in any
shares of the Fund or in any of the above eligible funds. If the intended
purchases are completed during the period, the total amount of your intended
purchases of any shares will determine the reduced sales charge rate for the
Class A shares purchased during the period. If not completed, each Class A share
purchase will be at the sales charge for the aggregate of the actual share
purchases. Shares issued upon reinvestment of dividends or distributions are not
included in the statement of intention. The term "purchaser" includes (i) an
individual, (ii) an individual and his or her spouse and children under the age
of 21 and (iii) a trustee or other fiduciary purchasing shares for a single
trust estate or single fiduciary account (including a pension, profit-sharing,
or other employee benefit trust qualified under Section 401 of the Internal
Revenue Code -- more than one qualified employee benefit trust of a single
employer, including its consolidated subsidiaries, may be considered a single
trust, as may qualified plans of multiple employers registered in the name of a
single bank trustee as one account), although more than one beneficiary is
involved.
CLASS A SHARE NET ASSET VALUE PURCHASES. Our Class A shares may be purchased at
net asset value by our directors, employees of Lord Abbett, employees of our
shareholder servicing agent and employees of any securities dealer having a
sales agreement with Lord Abbett Distributor 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
any national securities trade organization to which Lord Abbett or Lord Abbett
Distributor 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 "directors" and "employees of Lord Abbett" also include
other family members and retired directors and employees. Our Class A shares
also may be purchased at net asset value (a) at $1 million or more, (b) with
dividends and distributions on Class A shares of other Lord Abbett-sponsored
funds, except for dividends and distributions on shares of LARF, LAEF and LASF,
(c) under the loan feature of the Lord Abbett-sponsored prototype 403(b) plan
for Class A share purchases representing the repayment of principal and
interest, (d) by certain authorized brokers, dealers, registered investment
advisers or other financial institutions who have entered into an agreement with
Lord Abbett Distributor in accordance with certain standards approved by Lord
Abbett Distributor, providing specifically for the use of our Class A shares in
particular investment products made available for a fee to clients of such
brokers, dealers, registered investment advisers and other financial
institutions ("mutual fund wrap fee programs"), (e) by employees, partners and
owners of unaffiliated consultants and advisers to Lord Abbett, Lord Abbett
Distributor or
<PAGE>
Lord Abbett-sponsored funds who consent to such purchase if such persons provide
services to Lord Abbett, Lord Abbett Distributor or such funds on a continuing
basis and are familiar with such fund, (f) through Retirement Plans with at
least 100 eligible employees, and (g) 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 Distributor or Lord
Abbett (other than a money market fund), if such redemptions have occurred no
more than 60 days prior to the purchase of our Class A 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
Class A shares pursuant to the purchase option in (g) above. Lord Abbett
Distributor may suspend or terminate the purchase option in (g) above at any
time. We plan to terminate this net asset value transfer privilege in (g) above
on June 1, 1997.
CLASS A RULE 12B-1 PLAN. The Fund has adopted a Class A share Rule 12b-1 Plan on
behalf of each Series (the "A Plans," each, an "A Plan") which authorizes the
payment of fees to authorized institutions (except as to certain accounts for
which tracking data is not available) in order to provide additional incentives
for them (a) to provide continuing information and investment services to their
Class A shareholder accounts and otherwise to encourage those accounts to remain
invested in the Series and (b) to sell Class A shares of the Series. Under the A
Plan, in order to save on the expense of shareholders' meetings and to provide
flexibility to the Board of Directors, the Board, including a majority of the
outside directors who are not "interested persons" of the Fund as defined in the
Investment Company Act of 1940, is authorized to approve annual fee payments
from a Series' Class A assets of up to 0.50 of 1% of the average net asset value
of such assets consisting of distribution and service fees, each at a maximum
annual rate not exceeding 0.25 of 1% (the "Fee Ceiling").
Under the A Plans, the Board has approved payments by the Fund to Lord Abbett
Distributor which uses or passes on to authorized institutions (1) an annual
service fee (payable quarterly) of .25% of the average daily net asset value of
the Class A shares serviced by authorized institutions and (2) a one-time
distribution fee of up to 1% (reduced according to the following schedule: 1% of
the first $5 million, .55% of the next $5 million, .50% of the next $40 million
and .25% over $50 million), payable at the time of sale on all Class A shares
sold during any 12-month period starting from the day of the first net asset
value sale (i) at the $1 million level by authorized institutions, including
sales qualifying at such level under the rights of accumulation and statement of
intention privileges or (ii) through Retirement Plans with at least 100 eligible
employees. In addition, the Board has approved for those authorized institutions
which qualify, a supplemental annual distribution fee equal to 0.10% of the
average daily net asset value of the Class A shares serviced by authorized
institutions that have a satisfactory program for the promotion of such shares
comprising a significant percentage of the Class A assets, with a lower than
average redemption rate. Institutions and persons permitted by law to receive
such fees are "authorized institutions".
Under the A Plans, Lord Abbett Distributor is permitted to use payments received
to provide continuing services to Class A shareholder accounts not serviced by
authorized institutions and, with Board approval, to finance any activity which
is primarily intended to result in the sale of Class A shares. Any such payments
are subject to the Fee Ceiling. Any payments under that Plan not used by Lord
Abbett Distributor in this manner are passed on to authorized institutions.
<PAGE>
Holders of Class A shares on which the 1% sales distribution fee has been paid
may be required to pay such Series on behalf of its Class A shares a CDSC of 1%
of the original cost or the then net asset value, whichever is less, of all
Class A shares so purchased which are redeemed out of the Lord Abbett-sponsored
family of funds on or before the end of the twenty-fourth month after the month
in which the purchase occurred. (Exceptions are made for redemptions by
Retirement Plans due to any benefit payment such as Plan loans, hardship
withdrawals, death, retirement or separation from service with respect to plan
participants or the distribution of any excess contributions.) If the Class A
shares have been exchanged into another Lord Abbett-sponsored fund and are
thereafter redeemed out of the Lord Abbett family of funds on or before the end
of such twenty-fourth month, the charge will be collected for the Series' Class
A shares by the other fund. The Series will collect such a charge for other Lord
Abbett-sponsored funds in a similar situation.
BUYING CLASS B SHARES. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed for
cash before the sixth anniversary of their purchase, a CDSC may be deducted from
the redemption proceeds. That sales charge will not apply to shares purchased by
the reinvestment of dividends or capital gains distributions. The charge will be
assessed on the lesser of the net asset value of the shares at the time of
redemption or the original purchase price. The Class B CDSC is paid to Lord
Abbett Distributor to compensate it for its services rendered in connection with
the distribution of Class B shares, including the payment and financing of sales
commissions. See "Class B Rule 12b-1 Plan" below.
To determine whether the CDSC applies to a redemption, the Fund redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held until the sixth anniversary of
their purchase or later, and (3) shares held the longest before the sixth
anniversary of their purchase.
The amount of the CDSC will depend on the number of years since you invested and
the dollar amount being redeemed, according to the following schedule.
ANNIVERSARY
OF THE DAY ON CONTINGENT DEFERRED
WHICH THE PURCHASE SALES CHARGE ON
ORDER WAS ACCEPTED REDEMPTIONS
(AS % OF AMOUNT
On Before SUBJECT TO CHARGE)
- --------------------------------------------------------------------------------
1st 5.0%
- --------------------------------------------------------------------------------
1st 2nd 4.0%
- --------------------------------------------------------------------------------
2nd 3rd 3.0%
- --------------------------------------------------------------------------------
3rd 4th 3.0%
- --------------------------------------------------------------------------------
4th 5th 2.0%
- --------------------------------------------------------------------------------
5th 6th 1.0%
- --------------------------------------------------------------------------------
on or after the None
6th anniversary
In the table, an "anniversary" is the 365th day subsequent to a purchase or a
prior anniversary. All purchases are considered to have been made on the
business day the purchase was made. See "Buying Shares Through Your Dealer"
above.
If Class B shares are exchanged into the same class of another Lord
Abbett-sponsored fund and the new shares are subsequently redeemed for cash
before the sixth anniversary of the original purchase, the CDSC will be payable
on the new shares on the basis of the time elapsed from the original purchase.
The Series will collect such a charge for other Lord Abbett-sponsored funds in a
similar situation.
WAIVER OF CLASS B SALES CHARGES. The Class B CDSC will not be applied to shares
purchased in certain types of transactions nor will it apply to shares redeemed
in certain circumstances as described below.
The Class B CDSC will be waived for redemptions of shares (i) in connection with
the Systematic Withdrawal Plan and Div-Move services, as described in more
detail under "Shareholder Services" below, (ii) by Retirement Plans due to any
benefit payment such as Plan loans, hardship withdrawals, death, retirement or
separation from service with respect to plan participants or the distribution of
any excess contributions, (iii) in connection with mandatory distributions under
403(b) plans and individual retirement accounts and (iv) in connection with the
death of the shareholder.
CLASS B RULE 12B-1 PLAN. The Fund has adopted a Class B share Rule 12b-1 Plan on
behalf of each Series (the "B Plans", each a "B Plan") under which each Series
periodically pays Lord Abbett Distributor (i) an annual service fee of 0.25 of
1% of the average daily net asset value of the Class B shares and (ii) an annual
distribution fee of 0.75 of 1% of the average daily net asset value of Class B
shares that are outstanding for less than 8 years.
Lord Abbett Distributor uses the service fee to compensate authorized
institutions (except as to certain accounts for which tracking data is not
available) for providing personal services for accounts that hold Class B
shares. Those services are similar to those provided under the A Plan, described
above.
Lord Abbett Distributor pays an up-front payment to authorized institutions
totalling 4%, consisting of 0.25% for service and 3.75% for a sales commission
as described below.
<PAGE>
Lord Abbett Distributor pays the 0.25% service fee to authorized institutions in
advance for the first year after Class B shares have been sold by the authorized
institutions. After the shares have been held for a year, Lord Abbett
Distributor pays the service fee on a quarterly basis. Lord Abbett Distributor
is entitled to retain such service fee payable under the B Plans with respect to
accounts for which there is no authorized institution of record or for which
such authorized institution did not qualify. Although not obligated to do so,
Lord Abbett Distributor may waive receipt from the Series of part or all of the
service fee payments.
The 0.75% annual distribution fee is paid to Lord Abbett Distributor to
compensate it for its services rendered in connection with the distribution of
Class B shares, including the payment and financing of sales commissions.
Although Class B shares
are sold without a front-end sales charge,Lord Abbett Distributor pays
authorized institutions responsible for sales of Class B shares a sales
commission of 3.75% of the purchase price. This payment is made at the time of
sale from Lord Abbett Distributor's own resources. Lord Abbett has made
arrangements to finance these commission payments, which arrangements include
non-recourse assignments by Lord Abbett Distributor to the financing party of
such distribution and CDSC payments concerning Class B shares.
The distribution fee and CDSC payments described above allow investors to buy
Class B shares without a front-end sales charge while allowing Lord Abbett
Distributor to compensate authorized institutions that sell Class B shares. The
CDSC is intended to supplement Lord Abbett Distributor's reimbursement for the
commission payments it has made with respect to Class B shares and its related
distribution and financing costs. The distribution fee payments are at a fixed
rate and the CDSC payments are of a nature that, during any year, both forms of
payment may not be sufficient to reimburse Lord Abbett Distributor for its
actual expenses. Neither Series is liable for any expenses incurred by Lord
Abbett Distributor in excess of (i) the amount of such distribution fee payments
to be received by Lord Abbett Distributor and (ii) unreimbursed distribution
expenses of Lord Abbett Distributor incurred in a prior plan year, subject to
the right of the Board of Directors or shareholders to terminate a B Plan. Over
the long term, the expenses incurred by Lord Abbett Distributor are likely to be
greater than such distribution fee and CDSC payments. Nevertheless, there exists
a possibility that for a short-term period Lord Abbett Distributor may not have
sufficient expenses to warrant reimbursement by receipt of such distribution fee
payments. Although Lord Abbett Distributor does not intend to make a profit
under the B Plans, a B Plan is considered a compensation plan (i.e.,
distribution fees are paid regardless of expenses incurred) in order to avoid
the possibility of Lord Abbett Distributor not being able to receive
distribution fees because of a temporary timing difference between its incurring
expenses and receipt of such distribution fees.
ATOMATIC CONVERSION OF CLASSB SHARES. On the eighth anniversary of your purchase
of Class B shares, those shares will automatically convert to Class A shares.
This conversion relieves Class B shareholders of the higher annual distribution
fee that applies to Class B shares under the Class B Rule 12b-1 Plan. The
conversion is based on the relative net asset values of the two classes, and no
sales charge or other charge is imposed. When Class B shares convert, any other
Class B shares that were acquired by the reinvestment of dividends and
distributions will also convert to Class A shares on a pro rata basis. The
conversion feature is subject to the continued availability of an opinion of
counsel or of a tax ruling described in "Purchases, Redemptions and Shareholder
Services" in the Statement of Additional Information.
BUYING CLASS C SHARES. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed for
cash before the first anniversary of their purchase, a CDSC of 1% will be
deducted from the redemption proceeds. That reimbursement charge will not apply
to shares purchased by the reinvestment of dividends or capital gains
distributions. The charge will be assessed on the lesser of the net asset value
of the shares at the time of redemption or the original purchase price. The
Class C CDSC is paid to the appropriate Series to reimburse it, in whole or in
part, for the service and distribution fee payments made by the Series at the
time such shares were sold, as described below.
To determine whether the CDSC applies to a redemption, the Series redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held for one year or more and (3) shares
held the longest before the first anniversary of their purchase. If Class C
shares are exchanged into the same class of another Series or Lord
Abbett-sponsored fund and subsequently redeemed before the first anniversary of
their original purchase, the charge will be collected by the other Series or
fund on behalf of such Series' Class C shares. The Series will collect such a
charge for other Lord Abbett-sponsored funds in a similar situation.
<PAGE>
CLASS C 12B-1 PLAN. The Fund has adopted a Class C share Rule 12b-1 Plan on
behalf of each Series (the "C Plans," each a "C Plan") under which (except as to
certain accounts for which tracking data is not available) the Series pays
authorized institutions through Lord Abbett Distributor (1) a service fee and a
distribution fee, at the time shares are sold, not to exceed 0.25 and 0.75 of
1%, respectively, of the net asset value of such shares and (2) at each
quarter-end after the first anniversary of the sale of shares, fees for services
and distribution at annual rates not to exceed 0.25 and 0.75 of 1%,
respectively, of the average annual net asset value of such shares outstanding
(payments with respect to shares not outstanding during the full quarter to be
prorated). These service and distribution fees are for purposes similar to those
mentioned above with respect to the A Plan. Sales in clause (1) exclude shares
issued for reinvested dividends and distributions and shares outstanding in
clause (2) include shares issued for reinvested dividends and distributions
after the first anniversary of their issuance.
6 SHAREHOLDER SERVICES
We offer the following shareholder services:
Telephone Exchange Privilege: Shares may be exchanged, without a service
charge: (a) for shares of the same class of any other Lord Abbett-sponsored fund
except for (i) LAEF, LARF and LASF and (ii) certain tax-free single-state series
where the exchanging shareholder is a resident of a state in which such series
is not offered for sale and (b) for shares of any authorized institution's
affiliated money market fund satisfying Lord Abbett Distributor as to certain
omnibus account and other criteria (together, "Eligible Funds").
You or your representative with proper identification can instruct the Fund to
exchange uncertificated shares (held by the transfer agent) by telephone.
Shareholders have this privilege unless they refuse it in writing. The Fund will
not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine and will employ reasonable procedures to
confirm that instructions received are genuine, including requesting proper
identification and recording all telephone exchanges. Instructions must be
received by the Fund in Kansas City (800-821-5129) prior to the close of the
NYSE to obtain each fund's net asset value per share on that day. Expedited
exchanges by telephone may be difficult to implement in times of drastic
economic or market change. The exchange privilege should not be used to take
advantage of short-term swings in the market. The Fund reserves the right to
terminate or limit the privilege of any shareholder who makes frequent
exchanges. The Fund can revoke the privilege for all shareholders upon 60 days'
prior written notice. A prospectus for the other Lord Abbett-sponsored fund
selected by you should be obtained and read before an exchange. Exercise of the
Exchange Privilege will be treated as a sale for federal income tax purposes
and, depending on the circumstances, a capital gain or loss may be recognized.
Systematic Withdrawal Plan ("SWP"): Except for Retirement Plans for which there
is no such minimum, if the maximum offering price value of your uncertificated
shares is at least $10,000, you may have periodic cash withdrawals automatically
paid to you in either fixed or variable amounts. With respect to Class B shares,
the CDSC will be waived on redemptions of up to 12% per year of the current net
asset value of your account at the time your SWP is established. For Class B
shares (over 12% per year) and C shares, redemption proceeds due to a SWP will
be derived from the following sources in the order listed: (1) shares acquired
by reinvestment of dividends and capital gains, (2) shares held for six years or
more (Class B) or one year or more (Class C); and (3) shares held the longest
before the sixth anniversary of their purchase (Class B) or before the first
anniversary of their purchase (Class C). For Class B share redemptions over 12%
per year, the CDSC will apply to the entire redemption. Therefore, please
contact the Fund for assistance in minimizing the CDSC in this situation.
Shareholders should be careful in establishing a SWP, especially to the extent
that such withdrawals exceed the annual total return for a class, in which case,
the shareholder's original principal will be invaded and, over time, may be
depleted.
Div-Move: You can invest the dividends paid on your account ($50 minimum
investment) 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. Such dividends are not subject to a CDSC. You should read the
prospectus of the other fund before investing.
<PAGE>
Invest-A-Matic: You can make fixed, periodic investments ($50 minimum
investment) into the Fund and/or any Eligible Fund by means of automatic money
transfers from your bank checking account. You should read the prospectus of the
other fund before investing.
Retirement Plans: Lord Abbett makes available retirement plan documents,
including 401(k) plans and custodial agreements for IRAs (Individual Retirement
Accounts, including SIMPLE IRAs and Simplified Employee Pensions), 403(b) plans
and pension and profit-sharing plans.
Householding: A single copy of an annual or semi-annual report will be sent to
an address to which more than one registered shareholder of the Fund with the
same last name has indicated mail is to be delivered, unless additional reports
are specifically requested in writing or by telephone. All correspondence should
be directed to the Lord Abbett Global Fund, Inc. (P.O. Box 419100, Kansas City,
Missouri 64141; 800-821-5129).
7 OUR MANAGEMENT
Our business is managed by our officers on a day-to-day basis under the overall
direction of our Board of Directors with the advice of Lord Abbett. We employ
Lord Abbett as investment manager pursuant to a Management Agreement. Lord
Abbett is solely responsible for advising each Series of the Fund with respect
to portfolio investments. Lord Abbett has been an investment manager for over 67
years and currently manages approximately $22 billion in a family of mutual
funds and other advisory accounts. Lord Abbett provides us with investment
management services and executive and other personnel, pays the remuneration of
our officers and our directors affiliated with Lord Abbett, provides us with
office space and pays for ordinary and necessary office and clerical expenses
relating to research, statistical work and supervision of our portfolios and
certain other costs. Lord Abbett provides similar services to twelve other Lord
Abbett-sponsored funds having various investment objectives and also advises
other investment clients. E. Wayne Nordberg, Executive Vice President of the
Fund and Lord Abbett Partner, serves as portfolio manager of the Equity Series.
Mr. Nordberg has over 35 years of investment experience and joined Lord Abbett
in 1988. Zane E. Brown, Executive Vice President of the Fund and Lord Abbett
Partner and its Director of Fixed Income, serves as portfolio manager of the
Income Series. He is assisted by Timothy W. Horan and Jerald M. Lanzotti. Prior
to joining Lord Abbett in 1992, Mr. Brown was Executive Vice President of
Equitable Capital Management Corporation. He has over 20 years of investment
experience.
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 Equity Series' assets invested in
countries other than the United States (the "foreign assets"). The Sub-Adviser
is controlled by Edinburgh Fund Managers Group plc which indirectly owns 100% of
the outstanding voting stock of the Sub-Adviser. The Sub-Adviser and its
predecessors date back 124 years to 1873 and it manages approximately $10
billion which is invested globally. The Sub-Adviser furnishes Lord Abbett with
advice and recommendations with respect to the foreign assets, including advice
about the allocation of investments among foreign securities markets and foreign
equity and debt securities and, subject to consultation with Lord Abbett, advice
as to cash holdings and what securities in the portfolios of foreign assets
should be purchased, held or disposed of. The Sub-Adviser also gives advice with
respect to foreign currency matters.
Subject to the direction of the Board of Directors, Lord Abbett, in consultation
with the Sub-Adviser, will determine at least quarterly, and more frequently as
Lord Abbett determines, the percentage of the assets of the Equity Series that
shall be allocated (the "Asset Allocation") for investment in the United States
and in foreign markets, respectively.
Under the Management Agreement, the Fund is obligated to pay Lord Abbett a
monthly fee based on average daily net assets for each month at annual rates of
.75 of 1% for the Equity Series and .50 of 1% for the Income Series. For the
fiscal year ended December 31, 1996, Lord Abbett paid the Sub-Adviser a monthly
fee equal to one-half of Lord Abbett's fee as described above with respect to
the Equity Series. For the fiscal year ended December 31, 1996, the fees paid to
Lord Abbett as a percentage of average daily net assets for the Equity and
Income Series were at the annual rate of .75 of 1% and .50 of 1%, respectively.
In addition, the Fund pays all expenses not expressly assumed by Lord Abbett.
The ratios of expenses, including management fee expenses, to average net assets
for the year ended December 31, 1996 for the Equity Series was 1.52% (Class A)
and for the period August 1, 1996 through December 31, 1996 were .83% (Class B)
and .83% (Class C). The ratios of expenses, including management fee expenses,
to average net assets for the year ended December 31, 1996 for the Income Series
was 1.04% (Class A); for the period August 1, 1996 through December 31, 1996 was
.73% (Class B) and for the period July 15, 1996 through December 31, 1996 was
.87% (Class C).
<PAGE>
Each Series is contingently obligated to repay Lord Abbett for any fees and
expenses assumed by Lord Abbett to the extent that such repayments would not in
any year, when added to expenses actually incurred in that year, increase the
Class A share expense ratio above 1.52%, in the case of the Equity Series, or
1.04%, in the case of the Income Series. While the Income Series has repaid its
contingent obligation to Lord Abbett, the entire amount of the contingent
repayment obligation remains outstanding for the Equity Series ($283,550 as of
December 31, 1996). See the Statement of Additional Information.
THE FUND. The Fund is a diversified open-end management company incorporated
under Maryland law on February 23, 1988. Each Series and its Class A, B and C
shares have equal rights as to voting, dividends, assets and liquidation, except
for differences resulting from certain class-specific expenses.
8 DIVIDENDS,CAPITAL GAINS DISTRIBUTIONS AND TAXES
The Equity Series is expected to pay dividends from net investment income
semi-annually. The Income Series is a daily dividend fund that pays dividends
from net investment income monthly. Dividends may be taken in cash or reinvested
in additional shares at net asset value without a sales charge. If you elect a
cash payment (i) a check will be mailed to you as soon as possible after the
monthly reinvestment date or (ii) if you arrange for direct deposit, your
payment will be wired directly to your bank account within one day after the
date on which the dividend is paid.
A long-term capital gains distribution is made by a Series when it has net
profits during the year from sales of securities which a Series has held more
than one year. If a Series realizes net short-term capital gains, they also will
be distributed. Any capital gains distributions are expected to be paid in
December. You may take the distribution in cash or reinvest it in additional
shares at net asset value without a sales charge.
Distributions (taxed as ordinary income) from gains attributable to changes in
exchange rates of foreign currencies will automatically be reinvested in
additional Series shares at net asset value unless a shareholder elects to take
capital gains distributions in cash.
Supplemental dividends and distributions also may be paid in December or
January. Dividends and distributions declared in October, November or December
of any year to shareholders of record as of a date in such a month will be
treated for federal income tax purposes as having been received by shareholders
in that year if they are paid before February 1 of the following year.
We intend to continue to meet the requirements of Subchapter M of the Internal
Revenue Code with respect to each Series. We will try to distribute to
shareholders all our net investment income and net realized capital gains so as
to avoid the necessity of the Fund paying federal income tax. Shareholders,
however, must report dividends and capital gains distributions as taxable
income. Distributions derived from net long-term capital gains which are
designated by a Series as "capital gains dividends" will be taxable to
shareholders as long-term capital gains, whether received in cash or shares,
regardless of how long a taxpayer held the shares. Under current law, net
long-term capital gains are taxed at the rates applicable to ordinary income,
except that the maximum rate for long-term capital gains for individuals is 28%.
Legislation has been proposed that would have the effect of reducing the federal
income tax rate on capital gains. See "Performance" for a discussion of the
Income Series' purchase of high-coupon securities at a premium and the
distributions to shareholders as ordinary income of all interest income on those
securities. This practice increases current income of the Income Series, but may
result in higher taxable income to the Income Series shareholders than other
portfolio management practices.
A Series may be subject to foreign withholding taxes which would reduce the
yield on its investments. Tax treaties between certain countries and the United
States may reduce or eliminate such taxes. Shareholders who are subject to
United States federal income tax may be entitled, subject to certain rules and
limitations, to claim a federal income tax credit or deduction for foreign
income taxes paid by a Series. See the Statement of Additional Information for
additional details.
Shareholders may be subject to a $50 penalty under the Internal Revenue Code and
we may be required to withhold and remit to the U.S. Treasury a portion (31%) of
any redemption or repurchase proceeds (including the value of shares exchanged
to another Lord Abbett-sponsored fund) and of any dividend or distribution on
any account where the payee (shareholder) failed to provide a correct taxpayer
identification number or to make certain required certifications.
<PAGE>
The Fund will inform shareholders of the federal tax status of each dividend and
distribution shortly after the end of each calendar year. Shareholders should
consult their tax advisers concerning applicable state and local taxes as well
as on the tax consequences of gains or losses from the redemption or exchange of
our shares.
9 REDEMPTIONS
To obtain the proceeds of an expedited redemption of $50,000 or less, you or
your representative with proper identification can telephone the Fund. The Fund
will not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine and will employ reasonable procedures to
confirm that instructions received are genuine, including requesting proper
identification, recording all telephone redemptions and mailing the proceeds
only to the named shareholder at the address appearing on the account
registration.
If you do not qualify for the procedures described above, to redeem shares
directly, send your request to Lord Abbett Global Fund, Inc. (P.O. Box 419100,
Kansas City, Missouri 64141) with signature(s) and any legal capacity of the
signer(s) guaranteed by an eligible guarantor, accompanied by any certificates
for shares to be redeemed and other required documentation. We will make payment
of the net asset value of the shares on the date the redemption order was
received in proper form. Payment will be made within three days. The Fund may
suspend the right to redeem shares for not more than seven days (or longer under
unusual circumstances as permitted by federal law). If you have purchased Fund
shares by check and subsequently submit a redemption request, redemption
proceeds will be paid upon clearance of your purchase check, which may take up
to 15 days. To avoid delays you may arrange for the bank upon which a check was
drawn to communicate to the Fund that the check has cleared. Shares also may be
redeemed by the Fund at net asset value through your securities dealer who, as
an unaffiliated dealer, may charge you a fee. If your dealer receives your order
prior to the close of the NYSE and communicates it to Lord Abbett, as our agent,
prior to the close of Lord Abbett's business day, you will receive the net asset
value of the shares being redeemed as of the close of the NYSE on that day. If
the dealer does not communicate such an order to Lord Abbett until the next
business day, you will receive the net asset value as of the close of the NYSE
on that next business day.
Shareholders who have redeemed their shares have a one-time right to reinvest
into another account having the identical registration, in any of the Eligible
Funds, at the then applicable net asset value (i) without the payment of a sales
charge or (ii) with reimbursement for the payment of any CDSC. Such reinvestment
must be made within 60 days of the redemption and is limited to no more than the
dollar amount of the redemption proceeds.
Under certain circumstances and subject to prior written notice, the Fund's
Board of Directors may authorize redemption of all of the shares in any account
in which there are fewer than 25 shares.
Tax-Qualified Plans: For redemptions of $50,000 or less follow normal redemption
procedures. Redemptions over $50,000 must be in writing from the employer,
broker or plan administrator stating the reason for the redemption. The reason
for the redemption must be received by the Fund prior to, or concurrent with,
the redemption request.
10 PERFORMANCE
The Fund ended its fiscal year on December 31, 1996 with net asset values of
$12.55 per share for the Class A shares, $12.53 per share for the Class B shares
and $12.54 per share for the Class C shares of the Equity Series. The net asset
values for the Class A, B and C shares of the Income Series was $8.34 per share
.
Equity Series. For most of fiscal 1996, the U.S. economy demonstrated stronger
than expected growth. U.S. stock market returns climbed to all-time highs;
fiscal 1996 marked the first time that the U.S. stock market outperformed the
European, Asia and Far East Index (EAFE) for six consecutive years.
Against this backdrop, we reduced the Series' U.S. holdings over the course of
the year in favor of securities traded in more undervalued areas, such as Asia
(especially Japan) and Latin America. In addition, the Series gradually reduced
its holdings in Europe, as many countries struggled with financial structures
put into place to work towards meeting currency convergence requirements.
Lastly, the Series increased its targeted weighting in Canadian securities to 5%
of the portfolio, as selected banks and natural gas companies offered attractive
values relative to the U.S.
<PAGE>
Income Series. Over the past fiscal year, the Series concentrated on
opportunities in four areas. In Canada, the Series increased its holdings of
Canadian government bonds to 20%, capturing both high yield and a favorable
exchange rate. In response to subdued economic growth in Europe, the Series
shifted assets to the high-yield countries of Italy, Spain and Sweden (roughly
doubling its exposure from 9% to 18%), while reducing its holdings in core
countries like the Netherlands, Belgium and France in favor of Germany. In the
U.S., against the backdrop of a slowing U.S. economy and unchanged Federal
Reserve policy, the Series reduced its weighting in mortgage-backed securities;
at the close of the year, U.S. holdings totaled 28% of the portfolio.
YIELD AND TOTAL RETURN . Yield and total return data may, from time to time, be
included in advertisements about the Fund. Each class of shares calculates its
"yield" by dividing a Class' annualized net investment income per share during a
recent 30-day period by the maximum public offering price per share on the last
day of that period. The yield of each class will differ because of the different
expenses (including actual 12b-1 fees) of each class of shares. The yield data
represents a hypothetical investment return on the portfolio, and does not
measure an investment return based on dividends actually paid to shareholders.
To show that return, a dividend distribution rate may be calculated. A dividend
distribution rate is calculated by dividing the dividends of a class derived
from net investment income during a stated period by the maximum offering price
on the last day of the period. The yield and dividend distribution rate for
Class A shares reflect the deduction of the maximum initial sales charge, but
may also be shown based on the Fund's net asset value per share. Yields for
Class B and Class C shares do not reflect the deduction of the CDSC.
"Total return" for the one-, five- and ten-year periods represents the average
annual compounded rate of return on an investment of $1,000 in a Class at the
maximum public offering price. When total return is quoted for Class A shares,
it includes the payment of the maximum initial sales charge. When total return
is shown for Class B and Class C shares, it reflects the effect of the
applicable CDSC. Total return also may be presented for other periods or based
on investments at reduced sales charge levels or net asset value. Any quotation
of total return not reflecting the maximum sales charge (front-end, level, or
back-end) would be reduced if such sales charge were used. Quotations of yield
or total return for any period when an expense limitation is in effect will be
greater than if the limitation had not been in effect. See "Past Performance" in
the Statement of Additional Information for a more detailed description.
The Income Series' dividend distribution rate may differ from its SEC yield
primarily because the Income Series may purchase short- and intermediate-term
high-coupon securities at a premium and, consistent with applicable tax
regulations, distribute to shareholders all of the interest income on these
securities without amortizing the premiums. This practice also is used by the
Income Series for financial statement purposes and is in accordance with
generally accepted accounting principles. In other words, the Income Series may
pay more than face value for a security that pays a greater-than-market rate of
interest and then distribute all such interest as dividends. The principal
payable on the security at maturity will equal face value, and so the market
value of the security will gradually decrease to face value, assuming no changes
in the market rate of interest or in the credit quality of the issuer.
Shareholders of the Income Series should recognize that such dividends therefore
will tend to decrease the net asset value per share. Dividends paid from this
interest income are taxable to shareholders at ordinary income rates.
The Income Series may make distributions in excess of net investment income from
time to time to provide more stable dividends. Such distributions could cause
slight decreases in net asset values over time, but historically have not
resulted in a return of capital for tax purposes.
See "Performance" in the Statement of Additional Information for a more detailed
discussion concerning the computation of each Series' total return and yield.
This Prospectus does not constitute an offering in any jurisdiction in which
such offer is not authorized or in which the person making such offer is not
qualified to do so or to anyone to whom it is unlawful to make such offer.
No person is authorized to give any information or to make any representations
not contained in this Prospectus, or in supplemental sales material authorized
by the Fund and no person is entitled to rely upon any information or
representation not contained herein or therein.
<PAGE>
The performance of the Class A shares of each multi-class Series which is shown
in the comparison below will be greater than or less than that shown below for
Class B and Class C shares based on the differences in sales charges and fees
paid by shareholders investing in different classes.
Comparison of change in value of a $10,000 investment in Class A shares of
Equity Series, assuming reinvestment of all dividends and distributions, and the
unmanaged Morgan Stanley World Index.
GLOBAL EQUITY
The The
Fund at Fund at
Net Asset Maximum Offering Morgan Stanley
Date Value Price World Index
9/30/88 10000 9426 10000
12/31/88 10437 9837 11143
12/31/89 12288 11582 13059
12/31/90 10798 10178 10901
12/31/91 12392 11681 12969
12/31/92 12178 11478 12365
12/31/93 15351 14469 15225
12/31/94 15337 14456 16075
12/31/95 16747 15785 19501
12/31/96 18149 17108 22231
Average Annual Total Return
for Class A Shares(3)
1 Year 5 Years Life of Series
2.20% 6.64% 6.72%
Average Annual Total Return
for Class B Shares(4)
Life of Class
(8/1/96-12/31/96)
-0.63%
Average Annual Total Return
for Class C Shares(5)
Life of Class
(8/1/96-12/31/96)
3.65%
G
Comparison of change in value of a $10,000 investment in Class A shares of
Income Series, assuming reinvestment of all dividends and distributions, and the
unmanaged J.P. Morgan Global Government Bond Index.
LOBAL INCOME
The The J.P Morgan
Fund at Fund at Global
Net Asset Maximum Offering Government
Date Value Price Bond Index
9/30/88 10000 9525 10000
12/31/88 10141 9659 10422
12/31/89 11214 10682 11132
12/31/90 12546 11950 12442
12/31/91 14344 13662 14363
12/31/92 15169 14449 15016
12/31/93 16806 16007 16858
12/31/94 16235 15463 17074
12/31/95 19134 18224 19547
12/31/96 20304 19339 20407
Average Annual Total Return
for Class A Shares(3)
1 Year 5 Years Life of Series
1.10% 6.15% 8.32%
Average Annual Total Return
for Class B Shares(4)
Life of Class
(8/1/96-12/31/96)
0.32%
Average Annual Total Return
for Class C Shares(5)
Life of Class
(7/15/96-12/31/96)
6.33%
(1)Data reflects the deduction of the maximum initial sales charge of 5.75% for
the Equity Series and 4.75% for the Income Series applicable to Class A shares.
(2)Performance numbers for the unmanaged Morgan Stanley World and J.P. Morgan
Global Government Bond Indices do not reflect transaction costs or management
fees. An investor cannot invest directly in either Index.
(3)Total return is the percent change in value, after deduction of the maximum
initial sales charge of 5.75% applicable to Class A shares of the Equity Series
and 4.75% applicable to Class A shares of the Income Series, with all dividends
and distributions reinvested for the periods shown ending December 31, 1996
using the SEC-required uniform method to compute such return.
(4) The Class B shares were first offered on August 1, 1996. Performance numbers
are not annualized and reflect the deduction of a 5% CDSC.
(5)The Class C shares were first offered on August 1, 1996 for the Equity Series
and on July 15, 1996 for the Income Series. Performance numbers are not
annualized and reflect the deduction of a 1% CDSC.
<PAGE>
Investment Manager and Underwriter
Lord, Abbett & Co. and Lord Abbett Distributor LLC
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
212-848-1800
Custodian
The Bank of New York
48 Wall Street
New York, New York 10286
Transfer Agent and Dividend
Disbursing Agent
United Missouri Bank of Kansas City, N.A.
Tenth and Grand
Kansas City, Missouri 64141
Shareholder Servicing Agent
DST Systems, Inc.
P.O. Box 419100
Kansas City, Missouri 64141
800-821-5129
Auditors
Deloitte & Touche LLP
Counsel Debevoise & Plimpton Printed in the U.S.A.
<PAGE>
PROSPECTUS 97
May 1, 1997
LORD ABBETT GLOBAL FUND
EQUITY SERIES
INCOME SERIES
<PAGE>
LORD ABBETT
STATEMENT OF ADDITIONAL INFORMATION MAY 1, 1997
LORD ABBETT
GLOBAL FUND, INC.
This Statement of Additional Information is not a Prospectus. A Prospectus for
Lord Abbett Global Fund, Inc. (the "Fund"or "We") may be obtained from your
securities dealer or from Lord Abbett Distributor LLC ("Lord Abbett
Distributor") 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, 1997.
Our Board of Directors has authority to create and classify shares of common
stock in 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 authorized at $0.001 par value. Both Series consist of three
classes (A, B and C). The Board of Directors will allocate these authorized
shares among the classes of each Series from time to time. All shares have equal
noncumulative voting rights and equal rights with respect to dividends, assets
and liquidation, except for certain class-specific expenses. They are fully paid
and nonassessable when issued and have no preemptive or conversion rights.
Although no present plans exist to do so, further series may be added in the
future. The Investment Company Act of 1940, as amended (the "Act"), requires
that where more than one series exists, each series must be preferred over all
other series in respect of assets specifically allocated to such 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 class or series affected
by such matter. Rule 18f-2 further provides that a class or series shall be
deemed to be affected by a matter unless the interests of each class or series
in the matter are substantially identical or the matter does not affect any
interest of such class or series. However, the Rule exempts the selection of
independent public accountants, the approval of a contract with a principal
underwriter and the election of directors from the separate voting requirements
of the Rule.
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 Page
1. Investment 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 18
7. Taxes 19
8. Information About the Fund 20
9. Financial Statements 21
10. Appendix 22
<PAGE>
1.
Investment Policies
FUNDAMENTAL INVESTMENT RESTRICTIONS
We are subject to the following investment restrictions which cannot be changed
without approval of a majority of our outstanding shares. Neither Series may:
(1) borrow money, except that (i) it may borrow from banks (as defined in the
Act) in amounts up to 33 1/3% of its total assets (including the amount
borrowed), (ii) it may borrow up to an additional 5% of its total assets for
temporary purposes, (iii) it may obtain such short-term credit as may be
necessary for the clearance of purchases and sales of portfolio securities and
(iv) it may purchase securities on margin to the extent permitted by applicable
law; (2) pledge its assets (other than to secure borrowings, or to the extent
permitted by the Series' investment policies as permitted by applicable law);
(3) engage in the underwriting of securities, except pursuant to a merger or
acquisition or to the extent that, in connection with the disposition of its
portfolio securities, it may be deemed to be an underwriter under federal
securities laws; (4) make loans to other persons, except that the acquisition of
bonds, debentures or other corporate debt securities and investment in
government obligations, commercial paper, pass-through instruments, certificates
of deposit, bankers acceptances, repurchase agreements or any similar
instruments shall not be subject to this limitation, and except further that
each Series may lend its portfolio securities, provided that the lending of
portfolio securities may be made only in accordance with applicable law; (5) buy
or sell real estate (except that a Series may invest in securities directly or
indirectly secured by real estate or interests therein or issued by companies
which invest in real estate or interests therein) or commodities or commodity
contracts (except to the extent a Series may do so in accordance with applicable
law and without registering as a commodity pool operator under the Commodity
Exchange Act as, for example, with futures contracts); (6) with respect to 75%
of the gross assets of the Equity Series, buy securities of one issuer
representing more than (i) 5% of the Equity Series' gross assets, except
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or (ii) 10% of the voting securities of such issuer; (7)
invest more than 25% of its assets, taken at market value, in the securities of
issuers in any particular industry (excluding securities of the U.S. Government,
its agencies and instrumentalities); or (8) issue senior securities to the
extent such issuance would violate applicable law.
With respect to the restrictions mentioned herein, compliance therewith will not
be affected by changes in the market value of portfolio securities but will be
determined at the time of purchase or sale of such securities.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. In addition to the investment
restrictions above which cannot be changed without shareholder approval, each
Series is also subject to the following non-fundamental investment policies
which may be changed by the Board of Directors without shareholder approval.
Neither Series may: (1) borrow in excess of 5% of its gross assets taken at cost
or market value, whichever is lower at the time of borrowing, and then only as a
temporary measure for extraordinary or emergency purposes; (2) make short sales
of securities or maintain a short position except to the extent permitted by
applicable law; (3) invest knowingly more than 15% of its net assets (at the
time of investment) in illiquid securities, except for securities qualifying for
resale under Rule 144A of the Securities Act of 1933, deemed to be liquid by the
Board of Directors; (4) invest in the securities of other investment companies
except as permitted by applicable law; (5) invest in securities of issuers
which, with their predecessors, have a record of less than three years'
continuous operations, if more than 5% of a Series' total assets would be
invested in such securities (this restriction shall not apply to mortgage-backed
securities, asset-backed securities or obligations issued or guaranteed by the
U. S. Government, its agencies or instrumentalities); (6) hold securities of any
issuer if more than 1/2 of 1% of the securities of such issuer are owned
beneficially by one or more officers or directors of the Fund or by one or more
partners or members of a Series' underwriter or investment adviser if these
owners in the aggregate own beneficially more than 5% of the securities of such
issuer; (7) invest in warrants if, at the time of the acquisition, its
investment in warrants, valued at the lower of cost or market, would exceed 5%
of such Series' total assets (included within such limitation, but not to exceed
2% of such Series' total assets, are warrants which are not listed on the New
York or American Stock Exchange or a major foreign exchange); (8) invest in real
estate limited partnership interests or interests in oil, gas or other mineral
leases, or exploration or other development programs, except that each Series
may invest in securities issued by companies that engage in oil, gas or other
mineral exploration or other development activities; (9) write, purchase or sell
puts, calls, straddles, spreads or combinations thereof, except to the extent
permitted
2
<PAGE>
in the Fund's prospectus and statement of additional information, as they may be
amended from time to time; or (10) buy from or sell to any of its officers,
directors, employees, or its investment adviser or any of its officers,
directors, partners or employees, any securities other than shares of the Fund's
common stock.
The Income Series will be required to meet the diversification rules under
Subchapter M of the Internal Revenue Code.
Although it has no current intention to do so, the Fund may invest in financial
futures and options on financial futures.
PORTFOLIO TURNOVER RATE
For the fiscal years ended December 31, 1996 and 1995 the portfolio turnover
rates were 81.97% and 83.32% for the Equity Series and 621.79% and 1,073.69% for
the Income Series, respectively.
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
3
<PAGE>
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.
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 covered call options on securities
it owns ("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 and any SEC staff
interpretations thereof 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, equity and debt securities
consistent with the Fund's policies and such SEC requirements will be added on a
daily basis (i.e., marked to market) so that the segregated amount will not be
less than the amount of the 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
4
<PAGE>
the purchased security. In this type of transaction, the securities purchased by
the Series 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
each Series to keep all of its assets at work while retaining flexibility in
pursuit of investments of a longer-term nature.
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.
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
5
<PAGE>
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.
2.
Directors and Officers
The following directors are partners of Lord, Abbett & Co. ("Lord Abbett"), 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 twelve 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.
Robert S. Dow, age 52, Chairman and President
E. Wayne Nordberg, age 58, Vice President
The following outside directors are also directors or trustees of the twelve
other Lord Abbett-sponsored funds referred to above.
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 55.
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 66.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America,
a proxy tabulating firm. Age 71.
C. Alan MacDonald
The Marketing Partnership, Inc.
27 Signal Road
Stamford, Connecticut
General Partner, The Marketing Partnership, Inc., a full service marketing
consulting firm. Formerly Chairman and Chief Executive Officer of Lincoln
Snacks, Inc., manufacturer of branded snack foods (1992-1994). Formerly
President and Chief Executive Officer of Nestle Foods Corp, and prior to that,
President and Chief Executive Officer of Stouffer Foods Corp., both subsidiaries
of Nestle SA, Switzerland. Currently serves as Director of Den West Restaurant
Co., J. B. Williams, and Fountainhead Water Company. Age 63.
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 68.
Thomas J. Neff
Spencer Stuart & Associates
277 Park Avenue
New York, New York
Chairman of Spencer Stuart U.S., an executive search consulting firm. Age 59.
The second column of the following table sets forth the compensation accrued for
the Fund's outside directors. The third column sets forth information with
respect to the equity-based benefits accrued for outside directors by the Lord
Abbett- sponsored funds. The fourth column sets forth information with respect
to the retirement plan for outside directors maintained by each of the Lord
Abbett-sponsored funds. The fifth column sets forth the total compensation
payable by such funds to the outside directors. 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, 1996
(1) (2) (3) (4) (5)
<S> <C> <C> <C> <C>
Estimated Annual For Year Ended
Equity-Based Benefits Under December 31, 1996
Benefits Accrued Retirement Plans Total Compensation
Aggregate by the Fund and to be Paid by the Accrued by the Fund and
Compensation Twelve Other Lord Fund and Twelve Twelve Other Lord
Accrued by Abbett-sponsored Other Lord Abbett- Abbett-sponsored
NAME OF DIRECTOR THE FUND1 FUNDS2 SPONSORED FUNDS2 FUNDS3
E. Thayer Bigelow $1,068 $11,563 None $48,200
Stewart S. Dixon $1,036 $22,283 None $46,700
John C. Jansing $1,036 $28,942 $50,000 $46,700
C. Alan MacDonald $1,068 $29,942 None $48,200
Hansel B. Millican, Jr. $1,100 $24,499 None $49,600
Thomas J. Neff $1,039 $15,990 None $46,900
<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. A portion of the 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 of the aggregate compensation payable by the Fund as of December 31,
1996, deemed invested in Fund shares, including dividends reinvested and changes
in net asset value applicable to such deemed investments, were: Mr. Bigelow,
$2,778; Mr. Dixon, $6,188; Mr. Jansing, $8,663; Mr. MacDonald, $6,148; Mr.
Millican, $8,739 and Mr. Neff, $8,620.
2. Each Lord Abbett-sponsored fund has a retirement plan providing that outside
directors may receive annual retirement benefits for life equal to 100% 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. Such retirement plans,
and the deferred compensation plans referred to in footnote one, have been
amended recently to, among other things, enable outside directors to elect to
convert their prospective benefits under the retirement plans to equity-based
benefits under the deferred compensation plans (renamed the equity-based plans
and hereinafter referred to as such). Five of the six outside directors made
such an election. The amounts accrued in column 3 were accrued by the Lord
Abbett-sponsored funds during the fiscal year ended October 31, 1996 with
respect to the equity-based plans.
7
<PAGE>
These accruals were based on the plans as in effect before the recent amendments
and on the fees payable to outside directors of the Fund during the year ended
October 31, 1996. Under the recent amendments, the annual retainer was increased
to $50,000 and the annual retirement benefits were increased from 80% to 100% of
a director's final annual retainer. The amount stated in column 4 would be
payable annually under the retirement plans as recently amended if that director
was to retire at age 72 and the annual retainer payable by the funds was the
same as it is today.
3. This column shows aggregate compensation, including directors 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, 1996.
</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, Brown, Carper, Cutler, Ms. Foster, Messrs. Morris, Noelke, Nordberg and
Walsh are partners of Lord Abbett; the others are employees; Zane E. Brown, age
45, Executive Vice President; E. Wayne Nordberg, age 58, Executive Vice
President; Kenneth B. Cutler, age 64, Vice President and Secretary; Stephen I.
Allen, age 43; Daniel E. Carper, age 45; Daria Foster, age 42; Robert G. Morris,
age 52; Robert Noelke, age 40; Paul A. Hilstad, age 54 (with Lord Abbett since
1995 - formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.); Thomas F. Konop, age 55; A. Edward Oberhaus, age
37; Victor W. Pizzolato, age 64; John J. Walsh, age 61, Vice Presidents; and
Keith F. O'Connor, age 41, Vice President and 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, 1997, 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 ten general partners of Lord Abbett, all of whom are
officers and/or directors of the Fund, are: Stephen I. Allen, Zane E. Brown,
Daniel E. Carper, Kenneth B. Cutler, Robert S. Dow, Daria L. Foster, Robert G.
Morris, Robert J. Noelke, 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 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. For the fiscal years ended December 31, 1995 and 1996 both expense
ratios were 1.04% for the Class A shares of the Income Series. For the period
August 1, 1996 through December 31, 1996, the expense ratio was .73% for the
Class B shares and for the period July 15, 1996 through December 31, 1996, the
expense ratio was .87% for the Class C shares of the Income Series. All
contingent obligations have been repaid to Lord Abbett by the Income Series. For
the fiscal years ended December 31, 1995 and 1996 the expense ratios were 1.63%
and 1.52%, respectively, for the Class A shares of the Equity Series. For the
period August 1, 1996 through December 31, 1996, the expense ratios were .83%
for the Class B and .83% for the Class C shares of the Equity Series.
Accordingly, the Equity Series did not have to make any repayment to Lord Abbett
and the entire amount of its contingent obligation, $283,550, remains
outstanding.
8
<PAGE>
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
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.
There is a Sub-Investment Management Agreement (the "New Agreement") with
respect to the Equity Series between Lord Abbett and Dunedin Fund Managers
Limited (the "Sub-Adviser"), under which the Sub-Adviser provides Lord Abbett
with advice with respect to that portion of the Equity Series' assets invested
in countries other than the United States, as more particularly described in the
Prospectus.
The Sub-Adviser, with offices located at Donaldson House, 97 Haymarket Terrace,
Edinburgh EH12 5HD Scotland, and its predecessors date back 124 years to 1873.
The Sub-Adviser is a subsidiary of Edinburgh Fund Managers Group plc, which
indirectly owns 100% 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 approximately $10 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 (in the
case of the Equity Series) 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 (in the case of the Equity
Series) 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 (in the case of the Equity Series) 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 accountants 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.
The Bank of New York ("BNY"), 48 Wall Street, New York, New York 10286, is the
Fund's custodian. Rules adopted by the Securities & 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 BNY or
its foreign branches, are held by sub-custodians of BNY approved by the Board of
Directors of the Fund in accordance with such rules.
The Sub-Custodians of BNY 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
Maroc; Netherlands: Bank van Haften Labouchere; New Zealand: Anz Banking Group
Ltd.; Norway:
9
<PAGE>
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: Hong Kong 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.
Our policy is to obtain best execution on all our portfolio transactions, which
means that we seek to have purchases and sales of portfolio securities executed
at the most favorable prices, considering all costs of the transaction including
dealer markups and markdowns and any brokerage commissions and taking into
account the full range and quality of the brokers' services. With respect to the
Equity Series, consistent with obtaining best execution, we may pay, as
described below, a higher commission than some brokers might charge on the same
transactions. Our policy with respect to best execution governs the selection of
brokers or dealers and the market in which the transaction is executed. To the
extent permitted by law, we may, if considered advantageous, make a purchase
from or sale to another Lord Abbett-sponsored fund without the intervention of
any broker-dealer.
Broker-dealers are selected on the basis of their professional capability and
the value and quality of their brokerage and research services. Normally, the
selection is made by traders who are officers of the Fund and also are employees
of Lord Abbett. These traders do the trading as well for other accounts --
investment companies (of which they are also officers) and other investment
clients -- managed by Lord Abbett. For foreign securities purchased or sold by
the Equity Series, the selection is made by the Sub-Adviser. They are
responsible for obtaining best execution.
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. When commissions are negotiated, we pay a commission rate that we
believe is appropriate to give maximum assurance that our brokers will provide
us, on a continuing basis, the highest level of brokerage services available.
While we do not always seek the lowest possible commission on particular trades,
we believe that our commission rates are in line with the rates that many other
institutions pay. Our traders are authorized to pay brokerage commissions in
excess of those that other brokers might accept on the same transactions in
recognition of the value of the services performed by the executing brokers,
viewed in terms of either the particular transaction or the overall
responsibilities of Lord Abbett with respect to us and the other accounts they
manage. Such services include 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 and
reliability. Some of our brokers also provide research services at least some of
which are useful to Lord Abbett in their overall responsibilities with respect
to us and the other accounts they manage. Research includes, the furnishing of
analyses and reports concerning issuers, industries, securities, economic
factors and trends, portfolio strategy and the performance of accounts and
trading equipment and computer software packages, acquired from third-part
suppliers, that enable Lord Abbett to access various information bases. Such
services may be used by Lord Abbett in servicing all their accounts, and not all
of such services will necessarily be used by Lord Abbett in connection with
their management of the Fund; conversely, such services furnished in connection
with brokerage of
10
<PAGE>
other accounts managed by Lord Abbett may be used in connection with their
management of the Fund, and not all of such services will necessarily be used by
Lord Abbett in connection with their advisory services to such other accounts.
The Fund has been advised by Lord Abbett that research services received from
brokers cannot be allocated to any particular account, are not a substitute for
Lord Abbett's services but are supplemental to their own research effort and,
when utilized, are subject to internal analysis before being incorporated by
Lord Abbett into their investment process. As a practical matter, it would not
be possible for Lord Abbett to generate all of the information presently
provided by brokers. While receipt of research services from brokerage firms has
not reduced Lord Abbett's normal research activities, the expenses of Lord
Abbett could be materially increased if it attempted to generate such additional
information through its own staff and purchased such equipment and software
packages directly from the suppliers.
No commitments are made regarding the allocation of brokerage business to or
among brokers, and trades are executed only when they are dictated by investment
decisions of the Fund to purchase or sell portfolio securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold our 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 we do, transactions will, to the extent practicable, be allocated among all
participating accounts in proportion to the amount of each order and will be
executed daily until filled so that each account shares the average price and
commission cost of each day. Other clients who direct that their brokerage
business be placed with specific brokers or who invest through wrap accounts
introduced to Lord Abbett by certain brokers may not participate with us in the
buying and selling of the same securities as described above. If these clients
wish to buy or sell the same security as we do, they may have their transactions
executed at times different from our transactions and thus may not receive the
same price or incur the same commission cost as we do.
We will not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from dealers as
consideration for the direction to them of portfolio business.
During the fiscal years ended December 31, 1996, 1995 and 1994, the Fund paid
total commissions to independent broker-dealers of $372,219, $347,151 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
11
<PAGE>
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.
The net asset value per share for the Class B and Class C shares is determined
in the same manner as for the Class A shares (net assets divided by shares
outstanding). Our Class B and Class C shares are sold at net asset value.
The maximum offering prices of each Series' Class A shares on December 31, 1996
were computed as follows:
Equity Income
SERIES SERIES
Net asset value per share (net assets
divided by shares outstanding)...................$12.55 $8.34
Maximum offering price per
share (net asset value divided by
.9425 and .9525, respectively)...................$13.31 $8.75
The Fund has entered into a distribution agreement with Lord Abbett Distributor
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 Distributor'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 with respect to Class A shares as follows:
Equity Series
YEAR ENDED DECEMBER 31,
1996 1995 1994
---- ---- ----
Gross sales charge $ 310,158 $266,247 $540,318
Amount allowed
to dealers $267,318 $245,921 $465,423
-------- -------- --------
Net commissions
received by
Lord Abbett $42,840 $ 20,326 $74,895
======= ======= ======
12
<PAGE>
Income Series
YEAR ENDED DECEMBER 31,
1996 1995 1994
---- ---- ----
Gross sales charge $172,464 $308,511 $1,577,686
Amount allowed
to dealers $148,333 $265,179 $1,357,207
--------- -------- ----------
Net commissions
received by
Lord Abbett $24,131 $ 43,332 $ 220,479
======= ======== ==========
CONVERSION OF CLASS B SHARES. The conversion of Class B shares on the eighth
anniversary of their purchase is subject to the continuing availability of a
private letter ruling from the Internal Revenue Service, or an opinion of
counsel or tax adviser, to the effect that the conversion of Class B shares does
not constitute a taxable event for the holder under Federal income tax law. If
such a revenue ruling or opinion is no longer available, the automatic
conversion feature may be suspended, in which event no further conversions of
Class B shares would occur while such suspension remained in effect. Although
Class B shares could then be exchanged for Class A shares on the basis of
relative net asset value of the two classes, without the imposition of a sales
charge or fee, such exchange could constitute a taxable event for the holder.
CLASS A, B AND C RULE 12B-1 PLANS. As described in the Prospectus, the Fund has
adopted on behalf of each class of each Series, a Distribution Plan and
Agreement pursuant to Rule 12b-1 of the Act: the "A Plans", the "B Plans" and
the "C Plans", respectively. In adopting each Plan and in approving its
continuance, the Board of Directors has concluded that there is a reasonable
likelihood that each Plan will benefit its respective Class and such Class'
shareholders. The expected benefits include greater sales and lower redemptions
of Class shares, which should allow each Class to maintain a consistent cash
flow, and a higher quality of service to shareholders by authorized institutions
than would otherwise be the case. Lord Abbett used all amounts received under
each Plan for payments to dealers for (i) providing continuous services to the
shareholders, such as answering shareholder inquiries, maintaining records, and
assisting shareholders in making redemptions, transfers, additional purchases
and exchanges and (ii) their assistance in distributing shares of each Series.
The fees payable under the A Plan, B Plan and C Plan are described in the
Prospectus. For the fiscal year ended December 31, 1996 fees paid to dealers
under the A Plans for the Equity Series and Income Series were $236,553 and
$524,429, respectively.
For the period August 1, 1996 through December 31, 1996 fees paid to dealers
under the B Plans for the Equity Series and Income Series were $350 and $1,070,
respectively.
For the period August 1, 1996 through December 31, 1996 for the Equity Series
and for the period July 15, 1996 through December 31, 1996 for the Income
Series, fees paid to dealers under the C Plans were $625 and $35,461,
respectively.
Each Plan requires the directors to review, on a quarterly basis, written
reports of all amounts expended pursuant to the Plan and the purposes for which
such expenditures were made. Each Plan shall continue in effect only if its
continuance is specifically approved at least annually by vote of the directors,
including a majority of the directors who are not
13
<PAGE>
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or in any agreements related to the Plan
("outside directors"), cast in person at a meeting called for the purpose of
voting on the Plan. No Plan may be amended to increase materially above the
limits set forth therein the amount spent for distribution expenses thereunder
without approval by a majority of the outstanding voting securities of the
applicable Class and the approval of a majority of the directors, including a
majority of the outside directors. Each Plan may be terminated at any time by
vote of a majority of the outside directors or by vote of a majority of its
Class's outstanding voting securities.
CONTINGENT DEFERRED SALES CHARGES. A Contingent Deferred Sales Charge ("CDSC")
(i) applies regardless of class, (ii) will not apply to shares purchased by the
reinvestment of dividends or capital gains distributions; (iii) will be assessed
on the lesser of the net asset value of the shares at the time of redemption or
the original purchase price and (iv) will not be imposed on the amount of your
account value represented by the increase in net asset value over the initial
purchase price (including increases due to the reinvestment of dividends and
capital gains distributions) and upon early redemption of shares.
CLASS A SHARES. As stated in the Prospectus, subject to certain exceptions, a
CDSC of 1% is imposed with respect to those Class A shares (or Class A shares of
another Lord Abbett-sponsored fund or series acquired through exchange of such
shares) on which the Fund has paid the one-time distribution fee of 1% if such
shares are redeemed out of the Lord Abbett-sponsored family of funds within a
period of 24 months from the end of the month in which the original sale
occurred.
CLASS B SHARES. As stated in the Prospectus, subject to certain exceptions, if
Class B shares (or Class B shares of another Lord Abbett-sponsored fund or
series acquired through exchange of such shares) are redeemed out of the Lord
Abbett-sponsored family of funds for cash before the sixth anniversary of their
purchase, a CDSC will be deducted from the redemption proceeds. The Class B CDSC
is paid to Lord Abbett Distributor to reimburse its expenses, in whole or in
part, for providing distribution-related service to the Fund in connection with
the sale of Class B shares.
To determine whether the CDSC applies to a redemption, the Fund redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held on or after the sixth anniversary
of their purchase, and (3) shares held the longest before such sixth
anniversary.
The amount of the contingent deferred sales charge will depend on the number of
years since you invested and the dollar amount being redeemed, according to the
following schedule
Anniversary of the Day on Contingent Deferred Sales Charge
Which the Purchase Order Was Accepted on Redemptions
(As % of Amount Subject to Charge)
Before the 1st...............................................5.0%
On the 1st, before the 2nd...................................4.0%
On the 2nd, before the 3rd...................................3.0%
On the 3rd, before the 4th...................................3.0%
On the 4th, before the 5th...................................2.0%
On the 5th, before the 6th ..................................1.0%
On or after the 6th anniversary..............................None
In the table, an "anniversary" is the 365th day subsequent to the acceptance of
a purchase order or a prior anniversary. All purchases are considered to have
been made on the business day on which the purchase order was accepted.
CLASS C SHARES. As stated in the Prospectus, subject to certain exceptions, if
Class C shares are redeemed for cash before the first anniversary of their
purchase, the redeeming shareholder will be required to pay to the Fund on
behalf of Class C shares a CDSC of 1% of the lower of cost or the then net asset
value of Class C shares redeemed. If such shares are exchanged into the same
class of another Lord Abbett-sponsored fund and subsequently redeemed before the
14
<PAGE>
first anniversary of their original purchase, the charge will be collected by
the other fund on behalf of the Series' Class C shares.
GENERAL. The percentage (1% in the case of Class A and C shares and 5% through
1% in the case of Class B shares) used to calculate CDSCs described above for
the Class A, Class B and Class C shares is sometimes hereinafter referred to as
the "Applicable Percentage".
With respect to Class A and Class B shares, no CDSC is payable on redemptions by
participants or beneficiaries from employer-sponsored retirement plans under the
Internal Revenue Code for benefit payments due to plan loans, hardship
withdrawals, death, retirement or separation from service and for returns of
excess contributions to retirement plan sponsors. With respect to Class B
shares, no CDSC is payable for redemptions (i) in connection with Systematic
Withdrawal Plan and Div-Move services as described below under those headings,
(ii) in connection with mandatory distribution under 403(b) plans and IRAs and
(iii) in connection with death of the shareholder. In the case of Class A and
Class C shares, the CDSC is received by the Fund and is intended to reimburse
all or a portion of the amount paid by the Fund if the shares are redeemed
before the Fund has had an opportunity to realize the anticipated benefits of
having a long-term shareholder account in the Fund. In the case of Class B
shares, the CDSC is received by Lord Abbett Distributor and is intended to
reimburse its expenses of providing distribution-related service to the Fund
(including recoupment of the commission payments made) in connection with the
sale of Class B shares before Lord Abbett Distributor has had an opportunity to
realize its anticipated reimbursement by having such a long-term shareholder
account subject to the B Plan distribution fee.
The other funds and series which participate in the Telephone Exchange Privilege
(except (a) Lord Abbett U.S. Government Securities Money Market Fund, Inc.
("GSMMF"), (b) certain series of Lord Abbett Tax-Free Income Fund and Lord
Abbett Tax-Free Income Trust for which a Rule 12b-1 Plan is not yet in effect,
and (c) any authorized institution's affiliated money market fund satisfying
Lord Abbett Distributor as to certain omnibus account and other criteria,
hereinafter referred to as an "authorized money market fund" or "AMMF"
(collectively, the "Non-12b-1 Funds")) have instituted a CDSC for each class on
the same terms and conditions. No CDSC will be charged on an exchange of shares
of the same class between Lord Abbett funds or between such funds and AMMF. Upon
redemption of shares out of the Lord Abbett family of funds or out of AMMF, the
CDSC will be charged on behalf of and paid: (i) to the fund in which the
original purchase (subject to a CDSC) occurred, in the case of the Class A and
Class C shares and (ii) to Lord Abbett Distributor if the original purchase was
subject to a CDSC, in the case of the Class B shares. Thus, if shares of a Lord
Abbett fund are exchanged for shares of the same class of another such fund and
the shares of the same class tendered ("Exchanged Shares") are subject to a
CDSC, the CDSC will carry over to the shares of the same class being acquired,
including GSMMF and AMMF ("Acquired Shares"). Any CDSC that is carried over to
Acquired Shares is calculated as if the holder of the Acquired Shares had held
those shares from the date on which he or she became the holder of the Exchanged
Shares. Although the Non-12b-1 Funds will not pay a distribution fee on their
own shares, and will, therefore, not impose their own CDSC, the Non-12b-1 Funds
will collect the CDSC (a) on behalf of other Lord Abbett funds, in the case of
the Class A and Class C shares and (b) on behalf of Lord Abbett Distributor, in
the case of the Class B shares. Acquired Shares held in GSMMF and AMMF which are
subject to a CDSC will be credited with the time such shares are held in GSMMF
but will not be credited with the time such shares are held in AMMF. Therefore,
if your Acquired Shares held in AMMF qualified for no CDSC or a lower Applicable
Percentage at the time of exchange into AMMF, that Applicable Percentage will
apply to redemptions for cash from AMMF, regardless of the time you have held
Acquired Shares in AMMF.
In no event will the amount of the CDSC exceed the Applicable Percentage of the
lesser of (i) the net asset value of the shares redeemed or (ii) the original
cost of such shares (or of the Exchanged Shares for which such shares were
acquired). No CDSC will be imposed when the investor redeems (i) amounts derived
from increases in the value of the account above the total cost of shares being
redeemed due to increases in net asset value, (ii) shares with respect to which
no Lord Abbett fund paid a 12b-1 fee and, in the case of Class B shares, Lord
Abbett Distributor paid no sales charge or service fee (including shares
acquired through reinvestment of dividend income and capital gains
distributions) or (iii) shares which, together with Exchanged Shares, have been
held continuously for 24 months from the end of the month in which the original
sale occurred (in the case of Class A shares); for six years or more (in the
case of Class B
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shares) and for one year or more (in the case of Class C shares). In determining
whether a CDSC is payable, (a) shares not subject to the CDSC will be redeemed
before shares subject to the CDSC and (b) of the shares subject to a CDSC, those
held the longest will be the first to be redeemed.
EXCHANGES. The Prospectus briefly describes the Telephone Exchange Privilege.
You may exchange some or all of your shares of any class for those in the same
class of: (i) Lord Abbett-sponsored funds currently offered to the public with a
sales charge (front-end, back-end or level ), (ii) GSMMF or (iii) AMMF, to the
extent offers and sales may be made in your state. You should read the
prospectus of the other fund before exchanging. In establishing a new account by
exchange, shares of the Series being exchanged must have a value equal to at
least the minimum initial investment required for the other fund into which the
exchange is made.
Shareholders in other Lord Abbett-sponsored funds and AMMF have the same right
to exchange their shares for the corresponding class of each Series' shares.
Exchanges are based on relative net asset values on the day instructions are
received by the Fund in Kansas City if the instructions are received prior to
the close of the NYSE in proper form. No sales charges are imposed except in the
case of exchanges out of GSMMF or AMMF (unless a sales charge (front-end,
back-end or level) was paid on the initial investment in a Lord Abbett-sponsored
fund). Exercise of the exchange privilege will be treated as a sale for federal
income tax purposes, and, depending on the circumstances, a gain or loss may be
recognized. In the case of an exchange of shares that have been held for 90 days
or less where no sales charge is payable on the exchange, the original sales
charge incurred with respect to the exchanged shares will be taken into account
in determining gain or loss on the exchange only to the extent such charge
exceeds the sales charge that would have been payable on the acquired shares had
they been acquired for cash rather than by exchange. The portion of the original
sales charge not so taken into account will increase the basis of the acquired
shares.
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as a means for taking advantage of
short-term swings in the market, and we reserve the right to terminate or limit
the privilege of any shareholder who makes frequent exchanges. We can revoke or
modify the privilege for all shareholders upon 60 days' prior notice. "Eligible
Funds" are AMMF and other Lord Abbett-sponsored funds which are eligible for the
exchange privilege, except Lord Abbett Series Fund ("LASF") which offers its
shares only in connection with certain variable annuity contracts, Lord Abbett
Equity Fund ("LAEF") which is not issuing shares, and series of Lord Abbett
Research Fund not offered to the general public ("LARF").
STATEMENT OF INTENTION. Under the terms of the Statement of Intention to invest
$50,000 or more over a 13-month period as described in the Prospectus, shares of
a Lord Abbett-sponsored fund (other than shares of LAEF, LASF, LARF, GSMMF and
AMMF, unless holdings in GSMMF and AMMF are attributable to shares exchanged
from a Lord Abbett-sponsored fund offered with a front-end, back-end or level
sales charge) currently owned by you are credited as purchases (at their current
offering prices on the date the Statement is signed) toward achieving the stated
investment and reduced initial sales charge for Class A shares. Class A shares
valued at 5% of the amount of intended purchases are escrowed and may be
redeemed to cover the additional sales charge payable if the 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.
RIGHTS OF ACCUMULATION. As stated in the Prospectus, purchasers (as defined in
the Prospectus) may accumulate their investment in Lord Abbett-sponsored funds
(other than LAEF, LARF, LASF, GSMMF, and AMMF unless holdings in GSMMF or AMMF
are attributable to shares exchanged from a Lord Abbett-sponsored fund offered
with a front-end, back-end or level sales charge) so that a current investment,
plus the purchaser's holdings valued at the current maximum offering price,
reach a level eligible for a discounted sales charge for Class A shares.
NET ASSET VALUE PURCHASES OF CLASS A SHARES. As stated in the Prospectus, our
Class A shares may be purchased at net asset value by our directors, employees
of Lord Abbett, employees of our shareholder servicing agent and employees of
any securities dealer having a sales agreement with Lord Abbett who consents to
such purchases or by the director or custodian under any pension or
profit-sharing plan or Payroll Deduction IRA established for the benefit of such
persons or for the benefit of employees of any national securities trade
organization to which Lord Abbett belongs or any company with an account(s) in
excess of $10 million managed by Lord Abbett on a private-advisory-account
basis.
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For purposes of this paragraph, the terms "directors" and "employees" include a
trustee's or employee's spouse (including the surviving spouse of a deceased
director or employee). The terms "our directors" and "employees of Lord Abbett"
also include other family members and retired directors and employees.
Our Class A shares also may be purchased at net asset value (a) at $1 million or
more, (b) with dividends and distributions from Class A shares of other Lord
Abbett-sponsored funds, except for LARF, LAEF and LASF, (c) under the loan
feature of the Lord Abbett-sponsored prototype 403(b) plan for share purchases
representing the repayment of principal and interest, (d) by certain authorized
brokers, dealers, registered investment advisers or other financial institutions
who have entered into an agreement with Lord Abbett Distributor in accordance
with certain standards approved by Lord Abbett Distributor, providing
specifically for the use of our shares in particular investment products made
available for a fee to clients of such brokers, dealers, registered investment
advisers and other financial institutions, ("mutual fund wrap fee program"), (e)
by employees, partners and owners of unaffiliated consultants and advisors to
Lord Abbett, Lord Abbett Distributor or Lord Abbett-sponsored funds who consent
to such purchase if such persons provide service to Lord Abbett, Lord Abbett
Distributor or such funds on a continuing basis and are familiar with such
funds, (f) through Retirement Plans with at least 100 eligible employees, (g)
our Class A 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 Class A shares
pursuant to the purchase option in (g) above. Lord Abbett may suspend, change or
terminate this purchase option in (g) above at any time. We plan to terminate
this net asset value transfer privilege in (g) on June 1, 1997. Shares are
offered at net asset value to these investors for the purpose of promoting
goodwill with employees and others with whom Lord Abbett Distributor and/or the
Fund has business relationships.
REDEMPTIONS. A redemption order is in proper form when it contains all of the
information and documentation required by the order form or supplementally by
Lord Abbett Distributor or the 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 6 month's prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
DIV-MOVE. Under the Div-Move service described in the Prospectus, you can invest
the dividends paid on your account of any class into an existing account of the
same class in any other Eligible Fund. The account must be either your account,
a joint account for you and your spouse, a single account for your spouse, or a
custodial account for your minor child under the age of 21. You should read the
prospectus of the other fund before investing.
INVEST-A-MATIC. The Invest-A-Matic method of investing in the 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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SYSTEMATIC WITHDRAWAL PLANS. The Systematic Withdrawal Plan ("SWP") also is
described in the Prospectus. You may establish a SWP if you own or purchase
uncertificated shares having a current offering price value of at least $10,000.
Lord Abbett prototype retirement plans have no such minimum. With respect to a
SWP for Class B shares, the CDSC will be waived for redemptions of 12% or less
per year. For redemptions over 12% per year, the CDSC will apply to the entire
redemption. Therefore, please contact the Fund for assistance in minimizing the
CDSC in this situation. With respect to Class C shares, the CDSC will be waived
on and after the first anniversary of their purchase. The SWP involves the
planned redemption of shares on a periodic basis by receiving either fixed or
variable amounts at periodic intervals. Since the value of shares redeemed may
be more or less than their cost, gain or loss may be recognized for income tax
purposes on each periodic payment. Normally, you may not make regular
investments at the same time you are receiving systematic withdrawal payments
because it is not in your interest to pay a sales charge on new investments when
in effect a portion of that new investment is soon withdrawn. The minimum
investment accepted while a withdrawal plan is in effect is $1,000. The SWP may
be terminated by you or by us at any time by written notice.
RETIREMENT PLANS. The Prospectus indicates the types of retirement plans for
which Lord Abbett provides forms and explanations. Lord Abbett makes available
the retirement plan forms, including 401(k) plans and custodial agreements for
IRAs (Individual Retirement Accounts, including SIMPLE IRAs and Simplified
Employee Pensions), 403(b) plans and qualified pension and profit-sharing plans.
The forms name Investors Fiduciary Trust Company as custodian except in the case
of 401 (k) plans 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 for each
Class of shares 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 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.
In calculating total returns for Class A shares, the current maximum sales
charge of 5.75%in the case of the Equity Series and 4.75% in the case of the
Income Series (as a percentage of the offering price) is deducted from the
initial investment (unless the return is shown at net asset value). For Class B
shares of each Series, the payment of the applicable CDSC (5.0% prior to the
first anniversary of purchase, 4.0% prior to the second anniversary of purchase,
3.0% prior to the third and fourth anniversaries of purchase, 2.0% prior to the
fifth anniversary of purchase, 1.0% prior to the sixth anniversary of purchase
and no CDSC on and after the sixth anniversary of purchase) is applied to each
Series' investment result for that class for the time period shown (unless the
total return is shown at net asset value). For Class C shares of each Series,
the 1.0% CDSC is applied to each Series' investment result for that class for
the time period shown prior to the first anniversary of purchase (unless the
total return is shown at net asset value). Total returns also assume that all
dividends and capital gains distributions during the period are reinvested at
net asset value per share, and that the investment is redeemed at the end of the
period.
Using the computation method described above, the Fund's average annual
compounded rates of total return for the last one and five year period and
life-of-the-Series period ending on December 31, 1996 for the Equity Series were
as follows: 2.20%, 6.64% and 6.72% for the Fund's Class A shares, respectively.
For the period August 1, 1996 to December 31, 1996 the average annual compounded
rates of total return for the Class B shares was -0.63% (not
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annualized). For the period August 1, 1996 to December 31, 1996 the average
annual compounded rates of total return for Class C shares was 3.65% (not
annualized).
Using the computation method described above, the Fund's average annual
compounded rates of total return for the last one and five year period and
life-of-the-series period ending on December 31, 1996 for the Income Series were
as follows: 1.10%, 6.15% and 8.32% for the Fund's Class A shares, respectively.
For the period August 1, 1996 to December 31, 1996 the average annual compounded
rates of total return for the Class B shares was 0.32% (not annualized). For the
period July 15, 1996 to December 31, 1996 the average annual compounded rates of
total return for Class C shares was 6.33% (not annualized).
Our yield quotation is based on a 30-day period ended on a specified date,
computed by dividing our net investment income per share earned during the
period by our maximum offering price per share on the last day of the period.
This is determined by finding the following quotient: take each Class' dividends
and interest earned during the period minus its expenses accrued for the period
and divide by the product of (i) the average daily number of such Class' shares
outstanding during the period that were entitled to receive dividends and (ii)
such Class' 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. Yield for the Class A shares reflects the deduction of the
maximum initial sales charge, but may also be shown based on such Class' net
asset value per share. Yields for Class B and C shares do not reflect the
deduction of the CDSC. For the 30-day period ended December 31, 1996, the yield
for the Class A, B and C shares of the Income Series were 4.54%, 4.06% and
3.98%, respectively.
These figures represent past performance, and an investor should be aware that
the investment return and principal value of an investment in the Fund will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost. Therefore, there is no assurance that this performance
will be repeated in the future.
7.
Taxes
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
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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 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
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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, 1996 and the
report of Deloitte & Touche LLP, independent accountants, on such financial
statements contained in the 1996 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.
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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
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.
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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-0CCC-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.
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PART C OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Part B - Statement of Net Assets at December 31, 1996.
Statement of Operations for the year ended December 31,
1996. Statements of Changes in Net Assets for the year
ended December 31, 1995 and 1996. Financial Highlights for
the Period September 30, 1988 (commencement of operations)
- December 31, 1988 and each of six separate fiscal years
ended December 31, 1996.
(b) Exhibits -
99.B1 Articles of Amendment**
99.B6 Form of Distribution Agreement**
99.B7 Amended Equity-Based Plans for Non-Interested
Person Directors/Trustees of Lord Abbett Funds*
99.B11 Consent of Deloitte & Touche*
99.B15 Rule 12b-1 Plans and Agreements for Class A, Class
B and Class C shares*
99.B18 Form of Plan entered into by Registrant pursuant to
Rule 18f-3.*
Ex. 16 Computation of Performance and Yield*
Ex. 27 Financial Data Schedule*
* Filed herewith.
** Previously Filed
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
Item 26. NUMBER OF RECORD HOLDERS OF SECURITIES
As of April 4, 1997
Equity Series - 9,992 (Class A) Income Series - 10,379 (Class A)
442 (Class B) 60 (Class B)
251 (Class C) 289 (Class C)
Item 27. INDEMNIFICATION
Registrant is incorporated under the laws of the State of Maryland
and is subject to Section 2-418 of the Corporations and
Associations Article of the Annotated Code of the State of
Maryland controlling the indemnification of directors and
officers. Since Registrant has its executive offices in the State
of New York, and is qualified as a foreign corporation doing
business in such State, the persons covered by the foregoing
statute may also be entitled to and subject to the limitations of
the indemnification provisions of Section 721-726 of the New York
Business Corporation Law.
The general effect of these statutes is to protect officers,
directors and employees of Registrant against legal liability and
expenses incurred by reason of their positions with the
Registrant. The statutes provide for indemnification for liability
for proceedings not brought on behalf of the corporation and for
those brought on behalf of the corporation, and in each case place
conditions under which indemnification will be permitted,
including requirements that the officer, director or employee
acted in good faith. Under certain conditions, payment of expenses
in advance of final disposition may be permitted. The By-Laws
1
<PAGE>
of Registrant, without limiting the authority of Registrant to
indemnify any of its officers, employees or agents to the extent
consistent with applicable law, makes the indemnification of its
directors mandatory subject only to the conditions and limitations
imposed by the above-mentioned Section 2-418 of Maryland Law and
by the provisions of Section 17(h) of the Investment Company Act
of 1940 as interpreted and required to be implemented by SEC
Release No. IC-11330 of September 4, 1980.
In referring in its By-Laws to, and making indemnification of
directors subject to the conditions and limitations of, both
Section 2-418 of the Maryland Law and Section 17(h) of the
Investment Company Act of 1940, Registrant intends that conditions
and limitations on the extent of the indemnification of directors
imposed by the provisions of either Section 2-418 or Section 17(h)
shall apply and that any inconsistency between the two will be
resolved by applying the provisions of said Section 17(h) if the
condition or limitation imposed by Section 17(h) is the more
stringent. In referring in its By-Laws to SEC Release No. IC-11330
as the source for interpretation and implementation of said
Section 17(h), Registrant understands that it would be required
under its By-Laws to use reasonable and fair means in determining
whether indemnification of a director should be made and
undertakes to use either (1) a final decision on the merits by a
court or other body before whom the proceeding was brought that
the person to be indemnified ("indemnitee") was not liable to
Registrant or to its security holders by reason of willful
malfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office ("disabling
conduct") or (2) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the
indemnitee was not liable by reason of such disabling conduct, by
(a) the vote of a majority of a quorum of directors who are
neither "interested persons" (as defined in the 1940 Act) of
Registrant nor parties to the proceeding, or (b) an independent
legal counsel in a written opinion. Also, Registrant will make
advances of attorneys' fees or other expenses incurred by a
director in his defense only if (in addition to his undertaking to
repay the advance if he is not ultimately entitled to
indemnification) (1) the indemnitee provides a security for his
undertaking, (2) Registrant shall be insured against losses
arising by reason of any lawful advances, or (3) a majority of a
quorum of the non- interested, non-party directors of Registrant,
or an independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts, that
there is reason to believe that the indemnitee ultimately will be
found entitled to indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expense incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
In addition, Registrant maintains a directors' and officers'
errors and omissions liability insurance policy protecting
directors and officers against liability for breach of duty,
negligent act, error or omission committed in their capacity as
directors or officers. The policy contains certain exclusions,
among which is exclusion from coverage for active or deliberate
dishonest or fraudulent acts and exclusion for fines or penalties
imposed by law or other matters deemed uninsurable.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Lord, Abbett & Co. acts as investment advisor for twelve, other
open-end investment companies (of which it is principal
underwriter for thirteen) and as investment adviser to
approximately 5,700 private accounts.
2
<PAGE>
Other than acting as directors and/or officers of open-end
investment companies managed by Lord, Abbett & Co., none of Lord,
Abbett & Co.'s partners has, in the past two fiscal years, engaged
in any other business, profession, vocation or employment of a
substantial nature for his own account or in the capacity of
director, officer, employee, partner or trustee of any entity
except as follows:
John J. Walsh
Trustee
The Brooklyn Hospital Center
100 Parkside Avenue
Brooklyn, N.Y.
Item 29. PRINCIPAL UNDERWRITER
(a) Lord Abbett Affiliated Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett U.S. Government Securities Money Market Fund Inc.
Lord Abbett Series Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Tax-Free Income Trust
Lord Abbett Securities Trust
Lord Abbett Investment Trust
Lord Abbett Research Fund, Inc.
INVESTMENT ADVISER
American Skandia Trust (Lord Abbett Growth and Income
Portfolio)
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
BUSINESS ADDRESS(1) WITH REGISTRANT
Robert S. Dow Chairman and President
Kenneth B. Cutler Vice President & Secretary
Stephen I. Allen Vice President
Zane E. Brown Vice President
Daniel E. Carper Vice President
Daria L. Foster Vice President
Robert G. Morris Vice President
Robert J. Noelke Vice President
E. Wayne Nordberg Vice President
John J. Walsh Vice President
(1) Each of the above has a principal business address
767 Fifth Avenue, New York, NY 10153
(c) Not applicable
3
<PAGE>
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Registrant maintains the records required by Rules 31a -
1(a) and (b) and 31a - 2(a) at its main office.
Lord, Abbett & Co. maintains the records required by Rules
31a - 1(f) and 31a - 2(e) at its main office.
Certain records such as canceled stock certificates and
correspondence may be physically maintained at the main
office of the Registrant's Transfer Agent, Custodian, or
Shareholder Servicing Agent within the requirements of
Rule 31a-3.
Item 31. MANAGEMENT SERVICES
None
Item 32. UNDERTAKINGS
The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's
latest annual report to shareholders, upon request and
without charge.
The registrant undertakes, if requested to do so by the
holders of at least 10% of the registrant's outstanding
shares, to call a meeting of shareholders for the purpose
of voting upon the question of removal of a director or
directors and to assist in communications with other
shareholders as required by Section 16(c).
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all the requirements
for effectiveness of this Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Registration Statement
and/or any amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on the
30th day of April 1997.
LORD ABBETT GLOBAL FUND, INC.
By /S/ ROBERT S. DOW
Robert S. Dow, Chairman
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
NAME TITLE DATE
- ----- ----- ----
Chairman, President
/s/ Robert S. Dow & Director April 30, 1997
/s/ Keith F. O'Connor Vice President & April 30, 1997
Treasurer
/s/ E. Wayne Nordberg Director April 30, 1997
/s/ E. Thayer Bigelow Director April 30, 1997
/s/ Stewart S. Dixon Director April 30, 1997
/s/ John C. Jansing Director April 30, 1997
/s/ C. Alan MacDonald Director April 30, 1997
/s/ Hansel B. Millican, Jr. Director April 30, 1997
/s/ Thomas J. Neff Director April 30, 1997
EQUITY-BASED PLANS FOR NON-INTERESTED
PERSON DIRECTORS AND TRUSTEES OF LORD ABBETT FUNDS
(As Amended and Restated as of September 1, 1996)
1. PURPOSE.
The purpose of these Equity-Based Plans for Non- Interested
Person Directors and Trustees (collectively, the "Equity-Based Plans" and
separately, an "Equity-Based Plan"), which were initially called the Deferred
Compensation Plan for Non-Interested Person Directors and Trustees of Lord
Abbett Funds, is to provide eligible directors and trustees of each investment
company referred to on Schedule I that has adopted an Equity-Based Plan and any
other investment company sponsored and managed by Lord, Abbett & Co. that adopts
an Equity-Based Plan (collectively, the "Companies" and separately, a "Company")
with the opportunity to defer the receipt of compensation earned by them as
directors and trustees in lieu of receiving payment of such compensation
currently and to give them to the extent of such deferred compensation and other
compensation a pecuniary interest in the investment performance of the
Companies. The Plans constitute a separate Plan of each Company.
<PAGE>
2. ELIGIBILITY.
Any member of the Board of Trustees (if a Company is a trust)
and any member of the Board of Directors (if a Company is a corporation) of a
Company (the "Board") who is not an "interested person" of such Company as such
term is defined in the Investment Company Act of 1940 (an "Independent Board
Member") shall be eligible to participate in the Plan of such Company. 3.
AMOUNTS OF DEFERRALS.
(a) ACCRUED PENSION PLAN DEFERRALS. The "Retirement Plan for
Non-Interested Person Directors and Trustees of Lord Abbett Funds" (the "Pension
Plan") has been amended, effective October 16, 1996, to provide that Independent
Board Members may elect to receive equity-based benefits under the Equity-Based
Plans in lieu of retirement benefits under the Pension Plan. Any Independent
Board Member who makes such an election by the close of business on November 29,
1996 shall not be entitled to retirement benefits under the Pension Plan, but
shall have his Account (as defined in section 4) for each Company increased, as
of November 29, 1996, through credit of an amount equal to the value of such
Independent Board Member's retirement benefits under such Company's Pension Plan
(prior to giving effect to
<PAGE>
such amendment) as accrued to such date to reflect the terms
of the Pension Plan.
(b) MANDATORY DEFERRALS. Each Independent Board Member who
makes the election referred to in the foregoing section 3(a) by the close of
business on November 29, 1996, and each Independent Board Member who becomes an
Independent Board Member after such date, shall defer receipt of such amount, if
any, of the compensation earned by such Independent Board Member for serving as
a member of the Board or as a member of any committee (or subcommittee of such
committee) of the Board of which such Independent Board Member from time to time
may be a member as may be specified with respect to such Independent Board
Member from time to time by resolution of the Independent Board Members.
(c) OPTIONAL DEFERRALS. In addition to the above deferrals an
Independent Board Member may elect to defer receipt of all or a specified
portion of any other compensation (including fees for attending meetings) earned
by such Independent Board Member by notice to the Companies. Expenses of
attending meetings of the Board, committees of the Board or subcommittees of
such committees may not be deferred.
<PAGE>
4. EQUITY-BASED ACCOUNTS.
A deferred compensation equity-based account (the "Account")
shall be established by each Company in the name of each Independent Board
Member. Any amounts credited to an Account pursuant to section 3(a) will be
credited as of the close of business on November 29, 1996. Any compensation
earned by an Independent Board Member during any year and deferred pursuant to
section 3(b) will be credited to such Independent Board Member's Account on a
quarterly basis on the last days of March, June, September and December of such
year. Any compensation deferred by an Independent Board Member pursuant to
section 3(c) will be credited to such Independent Board Member's Account on the
date such compensation otherwise would have been payable to such Independent
Board Member. 5. ACCOUNT INVESTMENT.
(a) TREATMENT OF CREDIT AMOUNTS. Any amounts credited at any
time to an Independent Board Member's Account established by a Company shall be
deemed invested in a number of shares, which shall be class A shares if such
Company has multiple classes of shares, of such Company's Common Stock equal to
the quotient of (i) the amount credited to the Independent Board Member's
Account divided
<PAGE>
by (ii) the Net Asset Value per share as of the date such amount is so credited.
The Net Asset Value per share shall be determined as set forth in the Company's
Articles of Incorporation. If such Company has more than one series, the amount
credited to the Independent Board Member's Account shall be allocated between or
among the series on the same basis as the compensation being deferred is charged
to the series (or, in the case of an amount credited pursuant to section 3(a),
on the same basis as the amount thereof was charged to the series).
(b) MERGERS, ETC. In the event that the Company shall pay a
stock dividend on, or split up, combine, reclassify or substitute other
securities by merger, consolidation or otherwise for its outstanding shares, the
number of shares credited to the Independent Board Member's Account shall be
adjusted to preserve rights substantially proportionate to the rights held
immediately prior to such event.
(c) DISTRIBUTIONS. On each payable date of a dividend or
capital gains distribution declared by the Board of a Company, the Account will
be credited with the number of full and fractional shares of the Company or
series that the shares of such Company or series deemed to be held in
<PAGE>
the Account would have purchased if such dividend or
distribution had been reinvested at the Net Asset Value on
the investment date established by the Board with respect to
such dividend or distribution.
6. MANNER OF ELECTING OPTIONAL DEFERRALS; PAYMENT
ELECTIONS.
(a) NOTICE. Each Independent Board Member who participates in
a Plan shall complete, sign and file with the Companies for which he is an
Independent Board Member a Notice of Election (the "Notice") in one or more of
the forms attached hereto as Exhibits A, B and C. The Notice shall include, as
appropriate:
(i) the amount, if any, of compensation to be deferred
under section 3(c);
(ii) the time or times of payment of any amounts credited and deferred under
sections 3(a) and (b) and of any amounts deferred under section 3(c);
(iii) the manner of payment of any amounts credited and deferred under
sections 3(a) and (b) and of any amounts deferred under section 3(c)
(I.E., in a lump sum or in a number of annual installments); and
<PAGE>
(iv) any beneficiary designated pursuant to section 9(b) and the manner of
payment to such designated beneficiary.
(b) DATE OF FIRST PAYOUT OF OPTIONAL DEFERRALS UNDER SECTION
3(C). With respect to amounts deferred pursuant to section 3(c), each
Independent Board Member shall have the right in the Notice to elect to defer
the receipt of such deferred compensation until any one of the following events,
which such Independent Board Member shall specify in the Notice:
(i) the first business day of January following the
year in which such Independent Board Member ceases
to be an Independent Board Member of the
Companies;
(ii) the date such Independent Board Member specifically chooses
(but not earlier than the January 1 of the second calendar
year following the calendar year in which such election is
made); or
(iii) the date on which some specific future event occurs which is
not within the Independent Board Member's control.
<PAGE>
(c) DATE OF FIRST PAYOUT OF AMOUNTS CREDITED AND DEFERRED
UNDER SECTION 3(A) AND (B). With respect to amounts credited to an Account and
deferred under sec tions 3(a) and (b), each Independent Board Member shall defer
the receipt of such amounts until any one of the following dates or events,
which such Independent Board Member shall specify in the Notice:
(i) the first business day of January following the
year in which such Independent Board Member ceases
to be an Independent Board Member of the
Companies;
(ii) the later of the first business day of January following the
year in which such Independent Board Member turns 65 and
January 1 of the second calendar year following the calendar
year in which such election is made;
(iii) the later of the first business day of January following the
year in which such Independent Board Member retires from his
or her principal occupation and January 1 of the second
calendar year following the calendar year in which such
election is made; and
<PAGE>
(iv) the first business day of a month not earlier than
the earliest of the dates referred to in (i), (ii)
and (iii) above.
(d) FAILURE TO DESIGNATE. If an Independent Board Member who
participates in a Plan fails to designate in his Notice a time or date as of
which payment of his Account (or any part of his Account) shall commence,
payment of such amount shall commence as of the date set forth in (b)(i) above
(unless the Independent Board Member files an amended Notice in compliance with
section 8(b) selecting a different distribution date). If an Independent Board
Member fails to designate in his Notice the manner of distribution to apply to
his Account (or any part of his Account), such Account shall be distributed in a
lump sum (unless the Independent Board Member files an amended Notice in
compliance with section 8(b) selecting a different method of distribution).
(e) DISSOLUTION, ETC. Deferrals under this Plan which are
deemed invested in shares of a Company (or series of a Company) shall be
distributed upon the dissolution, liquidation or winding up of the Company (or
other termination of the series), whether voluntary or involuntary; or the
voluntary sale, conveyance or transfer
<PAGE>
of all or substantially all of a Company's (or a series') assets (unless the
obligations of the Company or the series shall have been assumed by another
investment company or another series of an investment company); or the merger of
a Company into another trust or corporation or its consolidation with one or
more other trusts or corporations (unless the obligations of the Company are
assumed by such surviving entity and such surviving entity is another investment
company).
(f) HARDSHIP. Upon application by an Independent
Board Member and a determination by the Compensation and
Nominating Committees of the Boards that the Independent
Board Member has suffered a severe and unanticipated
financial hardship, the Administrator shall distribute to
the Independent Board Member, in a single lump sum, an
amount equal to the lesser of the amount needed by the
Independent Board Member to meet the hardship (pro-rata
among the Accounts), or the balance of the Independent Board
Member's Accounts.
7. EFFECTIVE DATE AND DURATION OF DEFERRAL ELECTIONS.
(a) ELECTION IRREVOCABLE. Except as provided in
sections 7(b) and 8(a), any election by an Independent Board
Member or nominee for election as an Independent Board
<PAGE>
Member to defer compensation pursuant to section 3(c) shall be irrevocable from
and after the date on which such person's Notice is filed with the Companies.
Elections to defer compensation pursuant to section 3(c) shall be effective to
defer an Independent Board Member's compensation as follows:
(i) As to any Independent Board Member in office on
the effective date of the Plans who files a Notice
no later than 60 days after such effective date,
the Notice shall be effective to defer any
compensation which may be deferred pursuant to
section 3(c) and is earned by such Independent
Board Member after the date of the filing of the
Notice;
(ii) As to any nominee for the office of trustee or
director who has not previously served as an
Independent Board Member and who files a Notice
prior to his election as an Independent Board
Member, such election to defer compensation
pursuant to section 3(c) shall be effective to
defer any compensation which may be deferred
pursuant to section 3(c) and is earned by such
<PAGE>
nominee after his election as an Independent Board
Member; and
(iii) As to any other Independent Board Member, the
election to defer compensation pursuant to sec
tion 3(c) shall be effective to defer any
compensation which may be deferred pursuant to
section 3(c) and is earned from and after January
1 of the calendar year next succeeding the year in
which the Notice is filed.
(b) CONTINUANCE OF NOTICES. Any election to
----------------------
defer compensation pursuant to section 3(c) made by an Independent Board Member
shall continue in effect unless and until the Company is notified in writing by
such Independent Board Member prior to the end of any calendar year that he
wishes to terminate such election or modify the amount of compensation deferred
pursuant to such election. Any such revocation or modification shall be
effective only with re spect to compensation earned after the calendar year in
which such amended Notice is filed with the Company. Upon receipt by the Company
from an Independent Board Member of such an amended Notice, the applicable
portion of compensation earned by such Independent Board Member from and after
January 1 of the calendar year succeeding the day
<PAGE>
on which such Notice was received shall be paid currently and no longer deferred
as provided in the Plan. However, any amounts in such Independent Board Member's
Account on such January 1 and any amount which the Independent Board Member
thereafter defers shall continue to be payable in accordance with the Notice (or
Notices) pursuant to which it was deferred except as provided in section 8(a).
(c) SUBSEQUENT NOTICE. An Independent Board
Member who has filed a Notice to terminate deferment of
compensation may thereafter again file a Notice to
participate pursuant to section 6 hereof effective for the
calendar year subsequent to the calendar year in which he
files the new Notice.
8. CHANGES IN FORM AND TIMING OF PAYMENT OF DEFERRED
AMOUNTS.
An Independent Board Member may elect to change the timing and
manner of any distribution election with respect to any or all amounts deferred
and credited with respect to the Independent Board Member under the Plans by
filing an amended Notice with the Companies
(a) prior to the calendar year in which the
Independent Board Member ceases to be an Independent
Board Member of the Companies, and
<PAGE>
(b) by a date such that at least one full
calendar year elapses between
(i) the date as of which such amended Notice is
filed and
(ii) each of
(A) the date as of which a distribution
would otherwise have commenced and
(B) the date as of which such distribution
will commence under such amended Notice.
No such amended Notice shall, however, provide for payment of an amount credited
under section 3(a) or 3(b) earlier than permitted in accordance with section
6(c), except as provided in section 9(b). 9. PAYMENT OF AMOUNTS CREDITED TO
ACCOUNTS.
(a) MANNER OF PAYMENT. An Account established by a Company for
an Independent Board Member will be paid in a lump sum or in installments, or
both, as specified in his Notice or amended Notice, and at the time or times
specified in the Notice or amended Notice. If installments are elected by an
Independent Board Member, such installments shall be paid in cash and the amount
of the first cash payment shall be a fraction of the then value of the portion
of such Account to be paid in installments, the numerator of
<PAGE>
which is one, and the denominator of which is the total number of installments.
The amount of each subsequent cash payment shall be a fraction of the then value
of such portion of such Account remaining after the prior payment, the numerator
of which is one and the denominator of which is the total number of installments
elected minus the number of installments previously paid. If a lump sum is
elected, payment shall be made in the full and fractional shares of the Company
(and of any series of such Company) in which the portion of such Independent
Board Member's Account to be paid in a lump sum is deemed invested.
(b) PAYMENT TO BENEFICIARY. In the event of an Independent
Board Member's death before he has received payment of all amounts in an Account
established by a Company for such Independent Board Member, the value of such
Account shall be paid to the beneficiary designated in such Independent Board
Member's Notice or, if no such beneficiary is designated, to such Independent
Board Member's estate, in accordance with the provisions of the Equity-Based
Plans. Any beneficiary so designated by an Independent Board Member may be
changed at any time by notice in writing from such Independent Board Member to
the Companies. Payments to a beneficiary shall be made in a lump sum or in
installments,
<PAGE>
or both, as specified in the Independent Board Member's Notice or amended
Notice. If a lump sum is elected, payment shall be made as soon as reasonably
possible in the full and fractional shares of the Company (and of any series of
such Company) in which such Account is deemed invested. If installments are
elected, such installments shall be paid in cash in amounts determined as
provided in section 9(a). If an Independent Board Member fails to designate in a
Notice or amended Notice on file with the Companies at the time of his death the
manner of distribution to his designated beneficiary, any distribution to such
beneficiary (or if no such beneficiary is designated, to his estate) shall be
made in a lump sum. 10. PRIOR DEFERRALS.
Notwithstanding anything else contained herein to the
contrary, if an Independent Board Member who is eligible to participate in a
Plan under section 2 hereof has deferred any compensation under any arrangement
in effect prior to the establishment of such Plan (i) such Independent Board
Member shall be deemed to be a participant in such Plan, (ii) the amount
credited for the benefit of such Independent Board Member under such arrangement
as of December 31, 1992 shall be credited to such Independent Board Member's
Account
<PAGE>
under such Plan as of January 1, 1993 and (iii) the provisions of such Plan
shall apply to such Independent Board Member and to the amount described in
subclause (ii) above as though such amount had been deferred under the terms of
such Plan. Elections under sections 6 or 8 by an Independent Board Member
subject to the provisions of this section 10 shall govern any amounts described
in this section. 11. STATEMENTS OF ACCOUNT.
Each Company will furnish each Independent Board Member with a
statement setting forth the value of such Independent Board Member's Account
under that Company's Plan and the value of each portion of the Account that
relates to amounts deferred under each subsection of section 3 as of the end of
each calendar year and all credits to and payments from such Account during such
year. Such statements will be furnished no later than 60 days after the end of
each calendar year. 12. RIGHTS IN ACCOUNTS.
Credits to Accounts and any shares purchased by the Companies
to help satisfy the contractual obligations with respect to such Accounts shall
remain part of the general assets of the Companies, shall at all times be the
<PAGE>
sole and absolute property of the Companies and shall in no event be deemed to
constitute a fund, trust or collateral security for the payment of the deferred
compensation to which Independent Board Members are entitled from such Accounts.
The right of any Independent Board Member or his designated beneficiary or
estate to receive future payment of deferred compensation under the provisions
of the Plans shall be an unsecured claim against general assets of the
Companies, if any, available at the time of payment.
13. NON-ASSIGNABILITY.
Neither any Independent Board Member, his designated
beneficiary nor his estate, nor any other person shall have the right to
encumber, pledge, sell, assign or transfer the right to receive payments under
the Plans, except by will or by the laws of descent and distribution. All such
payments and the right thereto are expressly declared to be non-assignable. 14.
ADMINISTRATION.
The Equity-Based Plans shall be administered by one or more
officers of the Companies appointed by the Compensation and Nominating
Committees of the Boards (the "Administrator"). All Notices and amendments shall
be filed with the Administrator and the Administrator shall be
<PAGE>
responsible for maintaining records of all Accounts and for
furnishing the annual statements of account provided for in
section 11. The Administrator shall also have the general
authority to interpret, construe and implement provisions of
the Plans. Any determination by such officer(s) shall be
binding on the Independent Board Member and shall be final
and conclusive.
15. AMENDMENT OR TERMINATION.
The Equity-Based Plans may at any time be amended,
modified or terminated by the Board. However, no amendment,
modification or termination shall adversely affect any
Independent Board Member's rights in respect of amounts
theretofore credited to his Accounts.
16. EFFECTIVE DATE.
The Equity-Based Plans shall be effective as of January 1,
1993, and any amendments hereto shall be effective on the date of adoption
thereof by the Boards or as otherwise provided in such amendments. The Deferred
Compensation Plans in the form previously adopted by the Companies or the
arrangements of the Companies for deferred compensation in effect prior to the
establishment of the Equity-Based Plans, as the case may be, shall remain in
effect until January 1, 1993.
<PAGE>
SCHEDULE I
Funds Adopting the Equity-Based Plans
for Non-Interested Person Directors
AND TRUSTEES OF LORD ABBETT FUNDS
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Affiliated Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Series Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett Securities Trust
Lord Abbett Investment Trust
Lord Abbett Research Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Tax-Free Income Trust
Lord Abbett U.S. Government Securities Money
Market Fund, Inc.
<PAGE>
[For use by new Board members or EXHIBIT A
by Board members who are not
currently deferring compensation]
INDEPENDENT BOARD MEMBERS OF
LORD, ABBETT & CO.-SPONSORED FUNDS
Notice of Election
UNDER THE EQUITY-BASED PLANS
Effective for compensation that I earn as an Independent Board Member
of each Lord Abbett-sponsored Fund in the future after I become an Independent
Board Member or after the calendar year in which this Notice of Election is
filed with the Companies if I am already an Independent Board Member, I hereby
elect under section 6(a) and, if I am not already an Independent Board Member,
section 6(c) of the Equity-Based Plans, as follows:
A. Optional deferrals pursuant to section
3(C) OF THE EQUITY-BASED PLANS.
1. AMOUNT DEFERRED:
(a) All compensation that I may defer
pursuant to section 3(c) of the Equity-
Based Plans
(b) $ per month (pro rated
among all Funds and series on the basis
of such compensation)
(c) Other:
2. PERIOD OF ELECTION:
<PAGE>
Subject to my further election to change or terminate this
election, my deferred election under item 1 shall continue:
(a) Until I cease to be an Independent Board
Member
(b) Until
[specify date or event]
3. TIME OF PAYMENT:
(a) The first business day of January
following the year in which I cease to
be an Independent Board Member
(b) The first business day of (not earlier than
January 1 of the second calendar year
following the calendar year in which this
Notice of Election is filed with the
Companies):
[specify month/year]
(c) The date of the following specific event
which is not within my control:
4. NUMBER OF PAYMENTS:
(a) Entire amount in a lump sum
(b) In annual installments
calculated as provided in section 9(a)
of the Equity-Based Plans
(c) With the consent of the Companies, as
follows:
B. Mandatory deferrals pursuant to section 3(b) of the
EQUITY-BASED PLANS (NEW INDEPENDENT BOARD MEMBERS ONLY).
<PAGE>
1. TIME OF PAYMENT:
(a) The first business day of January
following the year in which I cease
to be an Independent Board Member
(b) The later of the first business day of
January following the year in which I turn
65 and January of the second calendar year
following the calendar year in which this
Notice of Election is filed with the
Companies
(c) The later of the first business day of
January following the year in which I retire
from my principal occupation and January of
the second calendar year following the
calendar year in which this Notice of
Election is filed with the Companies
(d) The first business day of (which day
cannot be earlier than the earliest of
(a), (b) and (c) above):
[specify month/year]
2. NUMBER OF PAYMENTS:
(a) Entire amount in a lump sum
(b) In annual installments
calculated as provided in section 9(a)
of the Equity-Based Plans
(c) With the consent of the Companies, as
follows:
C. DESIGNATION OF BENEFICIARY:
<PAGE>
I hereby designate * as my beneficiary to receive all payments in the
event of my death before payments in full hereunder have been made. In
the event that the said beneficiary predeceases me, I hereby designate
* as beneficiary instead.
Benefits payable to my designated beneficiary shall be paid in
accordance with section 9(b) of the Equity- Based Plans, as follows:
(a) Entire amount in a lump sum
(b) In annual installments
calculated as provided in section 9(a) of the
Equity-Based Plans
(c) In the event I have elected pursuant to A4(b) or
B2(b) above to receive annual installments but such
installments have not been paid in full, such
installments shall be continued and paid to my
designated beneficiary
<PAGE>
(d) With the consent of the Companies, as
follows:
Name:
Date:
* If more than one beneficiary is to be designated, add a page listing the
beneficiaries and specify the percentage of each payment to be received by each
beneficiary.
<PAGE>
[For use on or prior to EXHIBIT B
November 29, 1996 by Board
members who wish to convert
their retirement benefit
to an equity-based benefit]
INDEPENDENT BOARD MEMBERS OF
LORD, ABBETT & CO.-SPONSORED FUNDS
Notice of Election to Receive Benefits
under the Equity-Based Plans in
LIEU OF BENEFITS UNDER THE RETIREMENT PLAN
1. Election to Receive Benefits
UNDER THE EQUITY-BASED PLANS:
____ I hereby elect (A) pursuant to section 3(a) of the
-
Equity-Based Plans and Article III of the
Retirement Plan to receive benefits under sections
3(a) and 3(b) of the Equity-Based Plans in lieu of
retirement benefits under the Retirement Plan and
(B) pursuant to sections 6(a) and 6(c) of the
-
Equity-Based Plans as follows with respect to such
benefits:
2. TIME OF PAYMENT:
(a) The first business day of January
following the year in which I cease to
be an Independent Board Member
(b) The later of the first business day of
January following the year in which I turn 65
and January 1, 1998
(c) The later of the first business day of
January following the year in which I retire
from my principal occupation and January 1,
1998
<PAGE>
____ (d) The first business day of (which day cannot
be earlier than the earliest of (a), (b) and
(c) above):
[specify month/year]
3. NUMBER OF PAYMENTS:
(a) Entire amount in a lump sum
(b) In annual installments
calculated as provided in section 9(a) of the
Equity-Based Plans
(c) With the consent of the Companies, as
follows:
4. DESIGNATION OF AND PAYMENTS TO BENEFICIARY:
I hereby designate * as my beneficiary to receive payments of the
benefits under Sections 3(a) and 3(b) of the Equity-Based Plans in the
event of my death before payments of such benefits have been made in
full. In the event that the said beneficiary predeceases me, I hereby
designate ___________________* as beneficiary instead.
Benefits payable to my designated beneficiary shall be paid in
accordance with section 9(b) of the Equity- Based Plans, as follows:
(a) Entire amount in a lump sum
(b) In annual installments
calculated as provided in section 9(a) of the
Equity-Based Plans
(c) In the event I have elected pursuant to 3(b) above to
receive annual installments but such installments
have not been paid in full, such
<PAGE>
installments shall be continued and paid to
my designated beneficiary
(d) With the consent of the Companies, as
follows:
Name:
Date: November , 1996
* If more than one beneficiary is to be designated, add a page listing the
beneficiaries and specify the percentage of each payment to be received by each
beneficiary.
<PAGE>
[For use by Board members EXHIBIT C
who wish to change a
prior election]
INDEPENDENT BOARD MEMBERS OF
LORD ABBETT & CO.-SPONSORED FUNDS
Amended Notice of Election
UNDER THE EQUITY-BASED PLANS
I hereby elect pursuant to section 7(b) or 7(c) and section 8 of the
Equity-Based Plans to change all prior Notices of Election I have filed with the
Companies as follows:
A. Optional deferrals pursuant to section
3(C) OF THE EQUITY-BASED PLANS.
1. AMOUNT DEFERRED:
Effective for compensation earned as an Independent Board
Member of each Lord Abbett- sponsored Fund after the calendar
year in which this Amended Notice of Election is filed with
the Companies, I hereby elect to defer under section 3(c) of
the Equity-Based Plans:
___ (a) All compensation that I may defer
pursuant to section 3(c) of the Equity-
Based Plans
___ (b) $_____________ per month (pro rated
among all Funds and series on the basis
of such compensation)
___ (c) Other: ____________________________
___ (d) None
<PAGE>
2. PERIOD OF ELECTION:
Subject to my further election to change or terminate this
election, my deferred election under item 1 shall continue:
___ (a) Until I cease to be an Independent
Board Member
___ (b) Until _____________________________
[specify date or event]
Effective for ALL amounts deferred under section 3(c) of the
Equity-Based Plans, including any amounts previously deferred,
I hereby elect as follows:
3. TIME OF PAYMENT:
___ (a) The first business day of January
following the year in which I cease
to be an Independent Board Member
___ (b) The first business day of (which
day cannot be earlier than the
January 1 of the second calendar
year following the calendar year in
which this Amended Notice of
Election is filed with the
Companies):________________________
[specify month/year]
___ (c) The date of the following specific event
which is not within my control:
4. NUMBER OF PAYMENTS:
___ (a) Entire amount in a lump sum
<PAGE>
___ (b) In _____ annual installments calculated
as provided in section 9(a) of the
Equity-Based Plans
___ (c) With the consent of the Companies,
as follows:_______________________
---------------
B. Mandatory deferrals pursuant to section
3(B) OF THE EQUITY-BASED PLANS.
1. TIME OF PAYMENT:
(a) The first business day of January
following the year in which I cease to
be an Independent Board Member
(b) The later of the first business day of
January following the year in which I turn
65 and January of the second calendar year
following the calendar year in which this
Amended Notice of Election is filed with the
Companies
(c) The later of the first business day of
January following the year in which I retire
from my principal occupation and January of
the second calendar year following the
calendar year in which this Amended Notice
of Election is filed with the Companies
(d) The first business day of (which day
cannot be earlier than the earliest of
(a), (b) and (c) above):
[specify month/year]
2. NUMBER OF PAYMENTS:
(a) Entire amount in a lump sum
<PAGE>
(b) In annual installments
calculated as provided in section 9(a)
of the Equity-Based Plans
(c) With the consent of the Companies, as
follows:
C. DESIGNATION OF BENEFICIARY:
I hereby revoke any prior beneficiary designation I may have made under
the Equity-Based Plans, and I hereby designate ___________________* as
my beneficiary to receive payments in the event of my death before
payments in full hereunder have been made. In the event that the said
beneficiary predeceases me, I hereby designate ____________________* as
beneficiary instead.
Benefits payable to my designated beneficiary shall be paid in
accordance with section 9(b) of the Equity- Based Plans, as follows:
(a) Entire amount in a lump sum
(b) In annual installments
calculated as provided in section 9(a) of the
Equity-Based Plans
(c) In the event I have elected pursuant to A4(b) or
B2(b) above to receive annual installments but such
installments have not been paid in full, such
installments shall be continued and paid to my
designated beneficiary
(d) With the consent of the Companies, as
follows:
I understand that this Amended Notice of Election shall be valid with
respect to changes in the timing or number of payments only if it is filed with
the Company (i) prior to
<PAGE>
the calendar year in which I cease to be an Independent Board Member, (ii) by a
date such that one full calendar year elapses between the filing of this Amended
Notice with the Companies and the date my distribution would otherwise have
commenced under my prior Notice of Election and (iii) by a date such that one
full calendar year elapses between the filing of this Amended Notice with the
Companies and the date my distribution will commence under this Amended Notice
of Election. My prior Notice of Election shall be effective to the extent this
Amended Notice of Election is invalid and to the extent no entry is made under
any of the above items.
--------------------------
Name:
Date: _____________________
* If more than one beneficiary is to be designated, add a page listing the
beneficiaries and specify the percentage of each payment to be received by each
beneficiary.
CONSENT OF INDEPENDENT AUDITORS
Lord Abbett Global Fund, Inc.:
We consent to the incorporation by reference in Post-Effective Amendment No. 10
to Registration Statement No. 33-20309 of our report dated February 12, 1997
appearing in the annual report to shareholders and to the reference to us under
the caption "Financial Highlights" in the Prospectus and to the references to us
under the captions "Investment Advisory and Other Services" and "Financial
Statements" in the Statement of Additional Information, both of which are part
of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
New York, New York
April 30, 1997
Rule 12b-1 Distribution Plan and Agreement
LORD ABBETT GLOBAL FUND, INC. -- EQUITY SERIES -- CLASS A SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July
12, 1996 by and between LORD ABBETT GLOBAL FUND, INC., a Maryland corporation
(the "Fund"), on behalf of its EQUITY SERIES (the "Series"), and LORD ABBETT
DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"); and
the Distributor is the exclusive selling agent of the Fund's shares of capital
stock, including the Series' Class A shares (the "Shares") pursuant to the
Distribution Agreement between the Fund and the Distributor, dated as of the
date hereof (the "Distribution Agreement").
WHEREAS, the Fund desires to adopt a Distribution Plan and
Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule
12b-1 under the Act, pursuant to which the Series may make certain payments to
the Distributor to be used by the Distributor or paid to institutions and
persons permitted by applicable law and/or rules to receive such payments
("Authorized Institutions") in connection with sales of Shares and/or servicing
of accounts of shareholders holding Shares.
WHEREAS, the Fund's Board of Directors has determined that
there is a reasonable likelihood that the Plan will benefit the Series and the
holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and
of other good and valuable consideration, receipt of which is hereby
acknowledged, it is agreed as follows:
1. The Fund hereby authorizes the Distributor to enter into
agreements with Authorized Institutions (the "Agreements") which may provide for
the payment to such Authorized Institutions of distribution and service fees
which the Distributor receives from the Series in order to provide additional
incentives to such Authorized Institutions (I) to sell Shares and (II) to
provide continuing information and investment services to their accounts holding
Shares and otherwise to encourage their accounts to remain invested in the
Shares.
2. The Fund also hereby authorizes the Distributor to use
payments received hereunder from the Series in order to (A) finance any activity
which is primarily intended to result in the sale of Shares and (B) provide
continuing information and investment services to shareholder accounts not
serviced by Authorized Institutions
<PAGE>
receiving a service fee from the Distributor hereunder and otherwise to
encourage such accounts to remain invested in the Shares; PROVIDED that (I) any
payments referred to in the foregoing clause (a) shall not exceed the
distribution fee permitted to be paid at the time under paragraph 3 of this Plan
and shall be authorized by the Board of Directors of the Fund by a vote of the
kind referred to in paragraph 10 of this Plan and (II) any payments referred to
in clause (b) shall not exceed the service fee permitted to be paid at the time
under paragraph 3 of this Plan.
3. The Series is authorized to pay the Distributor hereunder
for remittance to Authorized Institutions and/or use by the Distributor pursuant
to this Plan (A) service fees and (B) distribution fees, each at an annual rate
not to exceed .25 of 1% of the average annual net asset value of Shares
outstanding. The Board of Directors of the Fund shall from time to time
determine the amounts, within the foregoing maximum amounts, that the Series may
pay the Distributor hereunder. Any such fees (which may be waived by the
Authorized Institutions in whole or in part) may be calculated and paid
quarterly or more frequently if approved by the Board of Directors of the Fund.
Such determinations and approvals by the Board of Directors shall be made and
given by votes of the kind referred to in paragraph 10 of this Plan. Payments by
holders of Shares to the Series of contingent deferred reimbursement charges
relating to distribution fees paid by the Series hereunder shall reduce the
amount of distribution fees for purposes of the annual 0.25% distribution fee
limit. The Distributor will monitor the payments hereunder and shall reduce such
payments or take such other steps as may be necessary to assure that (I) the
payments pursuant to this Plan shall be consistent with Article III, Section 26,
subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. with respect to investment companies
with asset-based sales charges and service fees, as the same may be in effect
from time to time and (II) the Series shall not pay with respect to any
Authorized Institution service fees equal to more than .25 of 1% of the average
annual net asset value of Shares sold by (or attributable to Shares or shares
sold by) such Authorized Institution and held in an account covered by an
Agreement.
4. The net asset value of the Shares shall be determined as
provided in the Articles of Incorporation of the Fund. If the Distributor waives
all or a portion of the fees which are to be paid by the Series hereunder, the
Distributor shall not be deemed to have waived its rights under this Agreement
to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief
Financial Officer, is hereby authorized to direct the disposition of monies paid
or payable by the Series hereunder and shall provide to the Fund's Board of
Directors, and the directors shall review at least quarterly, a written report
of the amounts so expended pursuant to this Plan and the purposes for which such
expenditures were made.
<PAGE>
6. Neither this Plan nor any other transaction between the
parties hereto pursuant to this Plan shall be invalidated or in any way affected
by the fact that any or all of the directors, officers, shareholders, or other
representatives of the Fund are or may be "interested persons" of the
Distributor, or any successor or assignee thereof, or that any or all of the
directors, officers, partners, members or other representatives of the
Distributor are or may be "interested persons" of the Fund, except as may
otherwise be provided in the Act.
7. The Distributor shall give the Fund the benefit of the
Distributor's best judgment and good faith efforts in rendering services under
this Plan. Other than to abide by the provisions hereof and render the services
called for hereunder in good faith, the Distributor assumes no responsibility
under this Plan and, having so acted, the Distributor shall not be held liable
or held accountable for any mistake of law or fact, or for any loss or damage
arising or resulting therefrom suffered by the Fund, the Series or any of the
shareholders, creditors, directors, or officers of the Fund; provided however,
that nothing herein shall be deemed to protect the Distributor against any
liability to the Fund or the Series' shareholders by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
hereunder, or by reason of the reckless disregard of its obligations and duties
hereunder.
8. This Plan shall become effective upon the date hereof, and
shall continue in effect for a period of more than one year from that date only
so long as such continuance is specifically approved at least annually by a vote
of the Board of Directors of the Fund, including the vote of a majority of the
directors who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of this Plan or in any agreement
related to this Plan, cast in person at a meeting called for the purpose of
voting on such renewal.
9. This Plan may not be amended to increase materially the
amount to be spent by the Series hereunder above the maximum amounts referred to
in paragraph 3 of this Plan without a shareholder vote in compliance with Rule
12b-1 and Rule 18f-3 under the Act as in effect at such time, and each material
amendment must be approved by a vote of the Board of Directors of the Fund,
including the vote of a majority of the directors who are not "interested
persons" of the Fund and who have no direct or indirect financial interest in
the operation of this Plan or in any agreement related to this Plan, cast in
person at a meeting called for the purpose of voting on such amendment.
Amendments to this Plan which do not increase materially the amount to be spent
by the Series hereunder above the maximum amounts referred to in paragraph 3 of
this Plan may be made pursuant to paragraph 10 of this Plan.
10. Amendments to this Plan other than material amendments of
the kind referred to in the foregoing paragraph 9 may be adopted by a vote of
the Board of
<PAGE>
Directors of the Fund, including the vote of a majority of the directors who are
not "interested persons" of the Fund and who have no direct or indirect
financial interest in the operation of this Plan or in any agreement related to
this Plan. The Board of Directors of the Fund may, by such a vote, interpret
this Plan and make all determinations necessary or advisable for its
administration.
11. This Plan may be terminated at any time without the
payment of any penalty (A) by the vote of a majority of the directors of the
Fund who are not "interested persons" of the Fund and have no direct or indirect
financial interest in the operation of this Plan or in any agreement related to
the Plan, or (B) by a shareholder vote in compliance with Rule 12b-1 and Rule
18f-3 under the Act as in effect at such time. This Plan shall automatically
terminate in the event of its assignment.
12. So long as this Plan shall remain in effect, the selection
and nomination of those directors of the Fund who are not "interested persons"
of the Fund are committed to the discretion of such disinterested directors. The
terms "interested persons," "assignment" and "vote of a majority of the
outstanding voting securities" shall have the same meanings as those terms are
defined in the Act.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and on its behalf by its duly authorized
representative as of the date first above written.
LORD ABBETT GLOBAL FUND, INC.
By: /S/ KENNETH B. CUTLER
Vice President
ATTEST:
/S/ THOMAS F. KONOP
Assistant Secretary
LORD ABBETT DISTRIBUTOR LLC
By: LORD, ABBETT & CO.
Managing Member
By: /S/ KENNETH B. CUTLER
A Partner
<PAGE>
Rule 12b-1 Distribution Plan and Agreement
LORD ABBETT GLOBAL FUND, INC. -- INCOME SERIES -- CLASS A SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July
12, 1996 by and between LORD ABBETT GLOBAL FUND, INC., a Maryland corporation
(the "Fund"), on behalf of its INCOME SERIES (the "Series"), and LORD ABBETT
DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"); and
the Distributor is the exclusive selling agent of the Fund's shares of capital
stock, including the Series' Class A shares (the "Shares") pursuant to the
Distribution Agreement between the Fund and the Distributor, dated as of the
date hereof (the "Distribution Agreement").
WHEREAS, the Fund desires to adopt a Distribution Plan and
Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule
12b-1 under the Act, pursuant to which the Series may make certain payments to
the Distributor to be used by the Distributor or paid to institutions and
persons permitted by applicable law and/or rules to receive such payments
("Authorized Institutions") in connection with sales of Shares and/or servicing
of accounts of shareholders holding Shares.
WHEREAS, the Fund's Board of Directors has determined that
there is a reasonable likelihood that the Plan will benefit the Series and the
holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and
of other good and valuable consideration, receipt of which is hereby
acknowledged, it is agreed as follows:
1. The Fund hereby authorizes the Distributor to enter into
agreements with Authorized Institutions (the "Agreements") which may provide for
the payment to such Authorized Institutions of distribution and service fees
which the Distributor receives from the Series in order to provide additional
incentives to such Authorized Institutions (I) to sell Shares and (II) to
provide continuing information and investment services to their accounts holding
Shares and otherwise to encourage their accounts to remain invested in the
Shares.
2. The Fund also hereby authorizes the Distributor to use
payments received hereunder from the Series in order to (A) finance any activity
which is primarily intended to result in the sale of Shares and (B) provide
continuing information and investment services to shareholder accounts not
serviced by Authorized Institutions
<PAGE>
receiving a service fee from the Distributor hereunder and otherwise to
encourage such accounts to remain invested in the Shares; PROVIDED that (I) any
payments referred to in the foregoing clause (a) shall not exceed the
distribution fee permitted to be paid at the time under paragraph 3 of this Plan
and shall be authorized by the Board of Directors of the Fund by a vote of the
kind referred to in paragraph 10 of this Plan and (II) any payments referred to
in clause (b) shall not exceed the service fee permitted to be paid at the time
under paragraph 3 of this Plan.
3. The Series is authorized to pay the Distributor hereunder
for remittance to Authorized Institutions and/or use by the Distributor pursuant
to this Plan (A) service fees and (B) distribution fees, each at an annual rate
not to exceed .25 of 1% of the average annual net asset value of Shares
outstanding. The Board of Directors of the Fund shall from time to time
determine the amounts, within the foregoing maximum amounts, that the Series may
pay the Distributor hereunder. Any such fees (which may be waived by the
Authorized Institutions in whole or in part) may be calculated and paid
quarterly or more frequently if approved by the Board of Directors of the Fund.
Such determinations and approvals by the Board of Directors shall be made and
given by votes of the kind referred to in paragraph 10 of this Plan. Payments by
holders of Shares to the Series of contingent deferred reimbursement charges
relating to distribution fees paid by the Series hereunder shall reduce the
amount of distribution fees for purposes of the annual 0.25% distribution fee
limit. The Distributor will monitor the payments hereunder and shall reduce such
payments or take such other steps as may be necessary to assure that (I) the
payments pursuant to this Plan shall be consistent with Article III, Section 26,
subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. with respect to investment companies
with asset-based sales charges and service fees, as the same may be in effect
from time to time and (II) the Series shall not pay with respect to any
Authorized Institution service fees equal to more than .25 of 1% of the average
annual net asset value of Shares sold by (or attributable to Shares or shares
sold by) such Authorized Institution and held in an account covered by an
Agreement.
4. The net asset value of the Shares shall be determined as
provided in the Articles of Incorporation of the Fund. If the Distributor waives
all or a portion of the fees which are to be paid by the Series hereunder, the
Distributor shall not be deemed to have waived its rights under this Agreement
to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief
Financial Officer, is hereby authorized to direct the disposition of monies paid
or payable by the Series hereunder and shall provide to the Fund's Board of
Directors, and the directors shall review at least quarterly, a written report
of the amounts so expended pursuant to this Plan and the purposes for which such
expenditures were made.
<PAGE>
6. Neither this Plan nor any other transaction between the
parties hereto pursuant to this Plan shall be invalidated or in any way affected
by the fact that any or all of the directors, officers, shareholders, or other
representatives of the Fund are or may be "interested persons" of the
Distributor, or any successor or assignee thereof, or that any or all of the
directors, officers, partners, members or other representatives of the
Distributor are or may be "interested persons" of the Fund, except as may
otherwise be provided in the Act.
7. The Distributor shall give the Fund the benefit of the
Distributor's best judgment and good faith efforts in rendering services under
this Plan. Other than to abide by the provisions hereof and render the services
called for hereunder in good faith, the Distributor assumes no responsibility
under this Plan and, having so acted, the Distributor shall not be held liable
or held accountable for any mistake of law or fact, or for any loss or damage
arising or resulting therefrom suffered by the Fund, the Series or any of the
shareholders, creditors, directors, or officers of the Fund; provided however,
that nothing herein shall be deemed to protect the Distributor against any
liability to the Fund or the Series' shareholders by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
hereunder, or by reason of the reckless disregard of its obligations and duties
hereunder.
8. This Plan shall become effective upon the date hereof, and
shall continue in effect for a period of more than one year from that date only
so long as such continuance is specifically approved at least annually by a vote
of the Board of Directors of the Fund, including the vote of a majority of the
directors who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of this Plan or in any agreement
related to this Plan, cast in person at a meeting called for the purpose of
voting on such renewal.
9. This Plan may not be amended to increase materially the
amount to be spent by the Series hereunder above the maximum amounts referred to
in paragraph 3 of this Plan without a shareholder vote in compliance with Rule
12b-1 and Rule 18f-3 under the Act as in effect at such time, and each material
amendment must be approved by a vote of the Board of Directors of the Fund,
including the vote of a majority of the directors who are not "interested
persons" of the Fund and who have no direct or indirect financial interest in
the operation of this Plan or in any agreement related to this Plan, cast in
person at a meeting called for the purpose of voting on such amendment.
Amendments to this Plan which do not increase materially the amount to be spent
by the Series hereunder above the maximum amounts referred to in paragraph 3 of
this Plan may be made pursuant to paragraph 10 of this Plan.
10. Amendments to this Plan other than material amendments of
the kind referred to in the foregoing paragraph 9 may be adopted by a vote of
the Board of
<PAGE>
Directors of the Fund, including the vote of a majority of the directors who are
not "interested persons" of the Fund and who have no direct or indirect
financial interest in the operation of this Plan or in any agreement related to
this Plan. The Board of Directors of the Fund may, by such a vote, interpret
this Plan and make all determinations necessary or advisable for its
administration.
11. This Plan may be terminated at any time without the
payment of any penalty (A) by the vote of a majority of the directors of the
Fund who are not "interested persons" of the Fund and have no direct or indirect
financial interest in the operation of this Plan or in any agreement related to
the Plan, or (B) by a shareholder vote in compliance with Rule 12b-1 and Rule
18f-3 under the Act as in effect at such time. This Plan shall automatically
terminate in the event of its assignment.
12. So long as this Plan shall remain in effect, the selection
and nomination of those directors of the Fund who are not "interested persons"
of the Fund are committed to the discretion of such disinterested directors. The
terms "interested persons," "assignment" and "vote of a majority of the
outstanding voting securities" shall have the same meanings as those terms are
defined in the Act.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and on its behalf by its duly authorized
representative as of the date first above written.
LORD ABBETT GLOBAL FUND, INC.
By: /S/ KENNETH B. CUTLER
Vice President
ATTEST:
/S/ THOMAS F. KONOP
Asistant Secretary
LORD ABBETT DISTRIBUTOR LLC
By: LORD, ABBETT & CO.
Managing Member
By: /S/ KENNETH B. CUTLER
A Partner
<PAGE>
Rule 12b-1 Distribution Plan and Agreement
Lord Abbett Global Fund, Inc.
Class B Shares
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by
and between LORD ABBETT GLOBAL FUND, INC., a Maryland Corporation (the "Fund"),
and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the
"Distributor").
WHEREAS, the Fund is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"); and
the Distributor is the exclusive selling shares of capital stock including the
Fund's Class B shares (the "Shares") pursuant to the Distribution Agreement
between the Fund and the Distributor, dated as of the date hereof, and
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement
(the "Plan") with the Distributor, as permitted by Rule 12b-1 under the Act,
pursuant to which the Fund may make certain payments to the Distributor (a) to
help reimburse the Distributor for the payment of sales commissions to
institutions and persons permitted by applicable law and/or rules to receive
such payments ("Authorized Institutions") in connection with sales of Shares and
(b) for use by the Distributor in rendering service to the Fund, including
paying and financing the payment of sales commissions, service fees, and other
costs of distributing and selling Shares as provided in paragraph 3 of this
Plan, and
WHEREAS, the Fund's Board of Directors has determined that there is a
reasonable likelihood that the Plan will benefit the Fund and the holders of the
Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other
good and valuable consideration, receipt of which is hereby acknowledged, it is
agreed as follows:
1. The Fund hereby authorizes the Distributor to enter into agreements
with Authorized Institutions (the "Agreements") which may provide for the
payment to such Authorized Institutions of (a) sales commissions (particularly
those paid or financed with payments received hereunder) and (b) service fees
received hereunder in order to provide incentives to such Authorized
Institutions (i) to sell Shares and (ii) to provide continuing information and
investment services to their accounts holding Shares and otherwise to encourage
their accounts to remain invested in the Shares, respectively. The Distributor
may, from time to time, waive or defer payment of some fees payable at the time
of the sale of Shares provided for under paragraph 2 hereof.
2. Subject to possible reductions as provided below in this paragraph
2, the Fund periodically, as determined by the Fund's Board of Directors (in the
manner contemplated in paragraph 11), shall pay to the Distributor fees (a) for
services, at an annual rate not to exceed .25 of 1% of the average annual net
asset value of Shares outstanding and (b) for distribution, at an annual rate
not to exceed .75 of 1% of the average annual net asset value of Shares
outstanding. Payments will be based on Shares outstanding during any such
period. Shares outstanding include Shares issued for reinvested dividends and
distributions. The Board of Directors of the Fund shall from time to time
determine the amounts, within the foregoing maximum amounts, that the Fund
1
<PAGE>
may pay the Distributor hereunder. Such determinations by the Board of Directors
shall be made by votes of the kind referred to in paragraph 11 of this Plan. The
service fees mentioned in this paragraph are for the purposes mentioned in
clause (b) (ii) of paragraph 1 of this Plan and the distribution fees mentioned
in this paragraph are for the purposes mentioned in clause (b) (i) of paragraph
1 of this Plan. The Distributor will monitor the payments hereunder and shall
reduce such payments or take such other steps as may be necessary to assure that
(x) the payments pursuant to this Plan shall be consistent with Article III,
Section 26, subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. with respect to investment
companies with asset-based sales charges and service fees as the same may be in
effect from time to time and (y) the Fund shall not pay with respect to any
Authorized Institution service fees equal to more than .25 of 1% of the average
annual net asset value of Shares sold by (or attributable to shares sold by)
such Authorized Institution and held in an account covered by an Agreement.
3. The Distributor may use amounts received as distribution fees
hereunder from the Fund to engage directly or indirectly in financing any
activity which is primarily intended to result in the sale of Shares including,
but not limited to: (a) paying and financing the payment of commissions or other
payments relating to selling or servicing efforts and (b) paying interest,
carrying, or any other financing charges on any unreimbursed distribution or
other expense incurred in a prior fiscal year of the Fund whether or not such
charges and unreimbursed distribution or other expense are determined to be a
legal obligation of the Fund, in whole or in part, by the Fund's Board of
Directors. The Fund's Board of Directors (in the manner contemplated in
paragraph 11 of this Plan) shall approve the timing, categories and calculation
of any payments under this paragraph 3.
4.1. The Fund will pay each person which has acted as Distributor of
Shares its Allocable Portion (as such term is defined in paragraphs 13.1 through
13.3) of the distribution fees with respect to Shares of the Fund in
consideration of its services as principal underwriter for the Shares of the
Fund. The distribution agreement pursuant to which a person acts or acted as
principal underwriter of the Shares is referred to as the "Applicable
Distribution Agreement". Such person shall be paid its Allocable Portion of such
distribution fees notwithstanding such person's termination as Distributor of
the Shares, such payments to be changed or terminated only (i) as required by a
change in applicable law or a change in accounting policy adopted by the
Investment Companies Committee of the AICPA and approved by FASB that results in
a determination by the Fund's independent accountants that any sales charges in
respect of such Fund, which are not contingent deferred sales charges and which
are not yet due and payable, must be accounted for by such Fund as a liability
in accordance with GAAP, each after the effective date of this Plan and
restatement; (ii) if in the sole discretion of the Board of Directors, after due
consideration of such factors as they considered relevant, including the
transactions contemplated in any purchase and sale agreement entered into
between the Fund's Distributor and any commission financing entity, the Board of
Directors determines (in the manner contemplated in paragraph 12), in the
exercise of its fiduciary duty, that this Plan and the payments thereunder must
be changed or terminated, notwithstanding the effect this action might have on
the Fund's ability to offer and sell Shares; or (iii) in connection with a
Complete Termination of this Plan, it being understood that for this purpose a
Complete Termination of this Plan occurs only if this Plan is terminated and the
Fund has discontinued the distribution of Shares or other back-end load or
substantially similar classes of shares; it being
2
<PAGE>
understood that such does not include Class C shares, I.E., those sold with a
level load. The services rendered by a Distributor for which that Distributor is
entitled to receive its Allocable Portion of the distribution fee shall be
deemed to have been completed at the time of the initial purchase of the Shares
(as defined in the Applicable Distribution Agreement) (whether of that Fund or
another fund) taken into account in computing that Distributor's Allocable
Portion of the distribution fee.
4.2. The obligation of the Fund to pay the distribution fee shall
terminate upon the termination of this Plan in accordance with the terms hereof.
4.3. The right of a Distributor to receive payments hereunder may be
transferred by that Distributor (but not the distribution agreement itself or
that Distributor's obligations thereunder) in order to raise funds which may be
useful or necessary to perform its duties as principal underwriter, and any such
transfer shall be effective upon written notice from that Distributor to the
Fund. In connection with the foregoing, the Fund is authorized to pay all or
part of the distribution fee and/or contingent deferred sales charges with
respect to Shares (upon the terms and conditions set forth in the then current
Fund prospectus) directly to such transferee as directed by that Distributor.
4.4. As long as this Plan is in effect, the Fund shall not change the
manner in which the distribution fee is computed (except as may be required by a
change in applicable law or a change in accounting policy adopted by the
Investment Companies Committee of the AICPA and approved by FASB that results in
a determination by the Fund's independent accountants that any distribution fees
which are not yet due and payable, must be accounted for by such Fund as a
liability in accordance with GAAP).
5. The net asset value of the Shares shall be determined as provided in
the Articles of Incorporation of the Fund. If the Distributor waives all or a
portion of fees which are to be paid by the Fund hereunder, the Distributor
shall not be deemed to have waived its rights under this Agreement to have the
Fund pay such fees in the future.
6. The Secretary of the Fund, or in his absence the Chief Financial
Officer, is hereby authorized to direct the disposition of monies paid or
payable by the Fund hereunder and shall provide to the Fund's Board of
Directors, and the Board of Directors shall review, at least quarterly, a
written report of the amounts so expended pursuant to this Plan and the purposes
for which such expenditures were made. Over the long-term the expenses incurred
by the Distributor for engaging directly or indirectly in financing any activity
which is primarily intended to result in the sale of Shares are likely to be
greater then the distribution fees receivable by the Distributor hereunder.
Nevertheless, there exists the possibility that for a short-term period the
Distributor may not have a sufficient amount of such expenses to warrant
reimbursement by receipt of such distribution fees. Although the Distributor
undertakes not to make a profit under this Plan, the Plan will be considered a
compensation plan (i.e. distribution fees will be paid regardless of expenses
incurred) in order to avoid the possibility of the Distributor not being able to
receive such distribution fees because of a temporary timing difference between
its incurring such expenses and the receipt of such distribution fees.
7. Neither this Plan nor any other transaction between the Fund
and the Distributor, or
3
<PAGE>
any successor or assignee thereof, pursuant to this Plan shall be invalidated or
in any way affected by the fact that any or all of the directors, officers,
shareholders, or other representatives of the Fund are or may be "interested
persons" of the Distributor, or any successor or assignee thereof, or that any
or all of the directors, officers, partners, members or other representatives of
the Distributor are or may be "interested persons" of the Fund, except as
otherwise may be provided in the Act.
8. The Distributor shall give the Fund the benefit of the Distributor's
best judgment and good faith efforts in rendering services under this Plan.
Other than to abide by the provisions hereof and render the services called for
hereunder in good faith, the Distributor assumes no responsibility under this
Plan and, having so acted, the Distributor shall not be held liable or held
accountable for any mistake of law or fact, or for any loss or damage arising or
resulting therefrom suffered by the Fund or any of its shareholders, creditors,
directors or officers; provided however, that nothing herein shall be deemed to
protect the Distributor against any liability to the Fund or the Fund's
shareholders by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties hereunder, or by reason of the reckless disregard
of its obligations and duties hereunder.
9. This Plan shall become effective on the date hereof, and shall
continue in effect for a period of more than one year from such date only so
long as such continuance is specifically approved at least annually by a vote of
the Board of Directors of the Fund, including the vote of a majority of the
directors who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of this Plan or in any agreement
related to this Plan, cast in person at a meeting called for the purpose of
voting on such renewal.
10. This Plan may not be amended to increase materially the amount to
be spent by the Fund hereunder without the vote of a majority of its outstanding
voting securities and each material amendment must be approved by a vote of the
Board of Directors of the Fund, including the vote of a majority of the
directors who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of this Plan or in any agreement
related to this Plan, cast in person at a meeting called for the purpose of
voting on such amendment.
11. Amendments to this Plan other than material amendments of the kind
referred to in the foregoing paragraph 10 of this Plan may be adopted by a vote
of the Board of Directors of the Fund, including the vote of a majority of the
directors who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of this Plan or in any agreement
related to this Plan. The Board of Directors of the Fund may, by such a vote,
interpret this Plan and make all determinations necessary or advisable for its
administration.
12. This Plan may be terminated at any time without the payment of any
penalty by (a) the vote of a majority of the directors of the Fund who are not
"interested persons" of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreement related to this Plan,
or (b) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under
the Act as in effect at such time. This Plan shall automatically terminate in
the event of its assignment.
13.1. For purposes of this Plan, the Distributor's "Allocable
Portion" of the distribution fee shall be 100% of such distribution fees unless
or until the Fund uses a principal underwriter other
4
<PAGE>
than the Distributor. Thereafter the Allocable Portion shall be the portion of
the distribution fee attributable to (i) Shares of the Fund sold by the
Distributor before there is a new principal underwriter, plus (ii) Shares of the
Fund issued in connection with the exchange of Shares of another Fund in the
Lord, Abbett Family of Funds, plus (iii) Shares of the Fund issued in connection
with the reinvestment of dividends and capital gains.
13.2. The Distributor's Allocable Portion of the distribution fees and
the contingent deferred sales charges arising with respect to Shares taken into
account in computing the Distributor's Allocable Portion shall be limited under
Article III, Sections 26(b) and (d) or other applicable regulations of the
National Association of Securities Dealers, Inc. (the "NASD") as if the Shares
taken into account in computing the Distributor's Allocable Portion themselves
constituted a separate class of shares of the Fund.
13.3. The services rendered by the Distributor for which the
Distributor is entitled to receive the Distributor's Allocable Portion of the
distribution fees shall be deemed to have been completed at the time of the
initial purchase of the Shares (or shares of another Fund in the Lord Abbett
Family of Funds) taken into account in computing the Distributor's Allocable
Portion. In addition, the Fund will pay to the Distributor any contingent
deferred sales charges imposed on redemption of Shares (upon the terms and
conditions set forth in the then current Fund prospectus) taken into account in
computing the Distributor's Allocable Portion of the distribution fees.
Notwithstanding anything to the contrary in this Plan, the Distributor shall be
paid its Allocable Portion of the distribution fees regardless of the
Distributor's termination as principal underwriter of the Shares of the Fund, or
any termination of this Agreement other than in connection with a Complete
Termination (as defined in paragraph 4.1) of the Plan as in effect on the date
of execution of Distribution Agreement with the new Distributor. Except as
provided in paragraph 4.1 and in the preceding sentence, the Fund's obligation
to pay the distribution fees to the Distributor shall be absolute and
unconditional and shall not be subject to any dispute, offset, counterclaim or
defense whatsoever (it being understood that nothing in this sentence shall be
deemed a waiver by the Fund of its right separately to pursue any claims it may
have against the Distributor and to enforce such claims against any assets of
the Distributor (other than the assets represented by the Distributor's rights
to be paid its Allocable Portion of the distribution fees and to be paid the
contingent deferred sales charges).
14. So long as this Plan shall remain in effect, the selection and
nomination of those directors of the Fund who are not "interested persons" of
the Fund are committed to the discretion of such disinterested directors. The
terms "interested persons," "assignment" and "vote of a majority of the
outstanding voting securities" shall have the same meaning as those terms are
defined in the Act.
5
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and on its behalf by its duly authorized representative
as of the date first above written.
LORD ABBETT GLOBAL FUND, INC.
By: /s/ Robert S. Dow
President
ATTEST:
/s/ Paul A. Hilstad
Assistant General Counsel
LORD ABBETT DISTRIBUTOR LLC
By: /s/ Kenneth B. Cutler
General Counsel
6
<PAGE>
Rule 12b-1 Distribution Plan and Agreement
Lord Abbett Global Fund, Inc. -- Equity Series -- Class C Shares
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July
12, 1996 by and between LORD ABBETT GLOBAL FUND, Inc., a Maryland corporation
(the "Fund"), on behalf of its EQUITY series (the "Series"), and LORD ABBETT
DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"); and
the Distributor is the exclusive selling agent of the Fund's shares of capital
stock, including the Series' Class C shares (the "Shares") pursuant to the
Distribution Agreement between the Fund and the Distributor, dated as of the
date hereof, and
WHEREAS, the Fund desires to adopt a Distribution Plan and
Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule
12b-1 under the Act, pursuant to which the Series may make certain payments to
the Distributor for payment to institutions and persons permitted by applicable
law and/or rules to receive such payments ("Authorized Institutions") in
connection with sales of Shares and for use by the Distributor as provided in
paragraph 3 of this Plan, and
WHEREAS, the Fund's Board of Directors has determined that
there is a reasonable likelihood that the Plan will benefit the Series and the
holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and
of other good and valuable consideration, receipt of which is hereby
acknowledged, it is agreed as follows:
1. The Fund hereby authorizes the Distributor to enter into
agreements with Authorized Institutions (the "Agreements") which may provide for
the payment to such Authorized Institutions of distribution and service fees
which the Distributor receives from the Series in order to provide incentives to
such Authorized Institutions (I) to sell Shares and (II) to provide continuing
information and investment services to their accounts holding Shares and
otherwise to encourage their accounts to remain invested in the Shares. The
Distributor may, from time to time, waive or defer payment of some fees payable
at the time of the sale of Shares provided for under paragraph 2 hereof.
2. Subject to possible reduction as provided below in this
paragraph 2, the Series shall pay to the Distributor fees (I) at the time of
sale of Shares (A) for
<PAGE>
services, not to exceed .25 of 1% of the net asset value of the Shares sold and
(B) for distribution, not to exceed .75 of 1% of the net asset value of the
Shares sold; and (II) at each quarter-end after the first anniversary of the
sale of Shares (A) for services, at an annual rate not to exceed .25 of 1% of
the average annual net asset value of Shares outstanding for one year or more
and (B) for distribution, at an annual rate not to exceed .75 of 1% of the
average annual net asset value of Shares outstanding for one year or more. For
purposes of clause (ii) above, (A) Shares issued pursuant to an exchange for
Class C shares of another series of the Fund or another Lord Abbett-sponsored
fund (or for shares of a fund acquired by the Fund) will be credited with the
time held from the initial purchase of such other shares when determining how
long Shares mentioned in clause (ii) have been outstanding and (B) payments will
be based on Shares outstanding during any such quarter. Sales in clause (i)
above exclude Shares issued for reinvested dividends and distributions, and
Shares outstanding in clause (ii) above include Shares issued for reinvested
dividends and distributions which have been outstanding for one year or more.
The Board of Directors of the Fund shall from time to time determine the
amounts, within the foregoing maximum amounts, that the Series may pay the
Distributor hereunder. Such determinations by the Board of Directors shall be
made by votes of the kind referred to in paragraph 10 of this Plan. The service
fees mentioned in this paragraph are for the purposes mentioned in clause (ii)
of paragraph 1 of this Plan and the distribution fees mentioned in this
paragraph are for the purposes mentioned in clause (i) of paragraph 1 and the
second sentence of paragraph 3 of this Plan. The Distributor will monitor the
payments hereunder and shall reduce such payments or take such other steps as
may be necessary to assure that (X) the payments pursuant to this Plan shall be
consistent with Article III, Section 26, subparagraphs (d)(2) and (5) of the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
with respect to investment companies with asset-based sales charges and service
fees as the same may be in effect from time to time and (Y) the Series shall not
pay with respect to any Authorized Institution service fees equal to more than
.25 of 1% of the average annual net asset value of Shares sold by (or
attributable to shares sold by) such Authorized Institution and held in an
account covered by an Agreement.
3. The Distributor may use amounts received as distribution
fees hereunder from the Series to finance any activity which is primarily
intended to result in the sale of Shares including, but not limited to,
commissions or other payments relating to selling or servicing efforts. Without
limiting the generality of the foregoing, the Distributor may apply up to 10 of
the total basis points authorized by the Fund's Board of Directors designated as
the distribution fee referred to in clause (ii)(b) of paragraph 2 to expenses
incurred by the Distributor if such expenses are primarily intended to result in
the sale of Shares. The Fund's Board of Directors (in the manner contemplated in
paragraph 10 of this Plan) shall approve the timing, categories and calculation
of any payments under this paragraph 3 other than those referred to in the
foregoing sentence.
<PAGE>
4. The net asset value of the Shares shall be determined as
provided in the Articles of Incorporation of the Fund. If the Distributor waives
all or a portion of fees which are to be paid by the Series hereunder, the
Distributor shall not be deemed to have waived its rights under this Agreement
to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief
Financial Officer, is hereby authorized to direct the disposition of monies paid
or payable by the Series hereunder and shall provide to the Fund's Board of
Directors, and the Board of Directors shall review, at least quarterly, a
written report of the amounts so expended pursuant to this Plan and the purposes
for which such expenditures were made.
6. Neither this Plan nor any other transaction between the
parties hereto pursuant to this Plan shall be invalidated or in any way affected
by the fact that any or all of the directors, officers, shareholders, or other
representatives of the Fund are or may be "interested persons" of the
Distributor, or any successor or assignee thereof, or that any or all of the
directors, officers, partners, members or other representatives of the
Distributor are or may be "interested persons" of the Fund, except as otherwise
may be provided in the Act.
7. The Distributor shall give the Fund the benefit of the
Distributor's best judgment and good faith efforts in rendering services under
this Plan. Other than to abide by the provisions hereof and render the services
called for hereunder in good faith, the Distributor assumes no responsibility
under this Plan and, having so acted, the Distributor shall not be held liable
or held accountable for any mistake of law or fact, or for any loss or damage
arising or resulting therefrom suffered by the Fund, the Series or any of the
shareholders, creditors, directors or officers of the Fund; provided however,
that nothing herein shall be deemed to protect the Distributor against any
liability to the Fund or the Series' shareholders by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
hereunder, or by reason of the reckless disregard of its obligations and duties
hereunder.
8. This Plan shall become effective on the date hereof, and
shall continue in effect for a period of more than one year from such date only
so long as such continuance is specifically approved at least annually by a vote
of the Board of Directors of the Fund, including the vote of a majority of the
directors who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of this Plan or in any agreement
related to this Plan, cast in person at a meeting called for the purpose of
voting on such renewal.
9. This Plan may not be amended to increase materially
the amount to be spent by the Series hereunder without the vote of a majority of
its outstanding voting securities and each material amendment must be approved
by a vote of the Board of
<PAGE>
Directors of the Fund, including the vote of a majority of the directors who are
not "in terested persons" of the Fund and who have no direct or indirect
financial interest in the operation of this Plan or in any agreement related to
this Plan, cast in person at a meeting called for the purpose of voting on such
amendment.
10. Amendments to this Plan other than material amendments of
the kind referred to in the foregoing paragraph 9 of this Plan may be adopted by
a vote of the Board of Directors of the Fund, including the vote of a majority
of the directors who are not "interested persons" of the Fund and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement related to this Plan. The Board of Directors of the Fund may, by such
a vote, interpret this Plan and make all determinations necessary or advisable
for its administration.
11. This Plan may be terminated at any time without the
payment of any penalty by (A) the vote of a majority of the directors of the
Fund who are not "interested persons" of the Fund and have no direct or indirect
financial interest in the operation of this Plan or in any agreement related to
this Plan, or (B) by a shareholder vote in compliance with Rule 12b-1 and Rule
18f-3 under the Act as in effect at such time. This Plan shall automatically
terminate in the event of its assignment.
12. So long as this Plan shall remain in effect, the selection
and nomination of those directors of the Fund who are not "interested persons"
of the Fund are committed to the discretion of such disinterested directors. The
terms "interested persons," "assignment" and "vote of a majority of the
outstanding voting securities" shall have the same meaning as those terms are
defined in the Act.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and on its behalf by its duly authorized
representative as of the date first above written.
LORD ABBETT GLOBAL FUND, INC.
By: /s/ Kenneth B. Cutler
Vice President
ATTEST:
/s/ Thomas F. Konop
Assistant Secretary
LORD ABBETT DISTRIBUTOR LLC
By: Lord, Abbett & Co.
Managing Member
By: /s/ Kenneth B. Cutler
A Partner
<PAGE>
Rule 12b-1 Distribution Plan and Agreement
Lord Abbett Global Fund, Inc. -- Income Series -- Class C Shares
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July
12, 1996 by and between LORD ABBETT GLOBAL FUND, Inc., a Maryland corporation
(the "Fund"), on behalf of its INCOME series (the "Series"), and LORD ABBETT
DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"); and
the Distributor is the exclusive selling agent of the Fund's shares of capital
stock, including the Series' Class C shares (the "Shares") pursuant to the
Distribution Agreement between the Fund and the Distributor, dated as of the
date hereof, and
WHEREAS, the Fund desires to adopt a Distribution Plan and
Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule
12b-1 under the Act, pursuant to which the Series may make certain payments to
the Distributor for payment to institutions and persons permitted by applicable
law and/or rules to receive such payments ("Authorized Institutions") in
connection with sales of Shares and for use by the Distributor as provided in
paragraph 3 of this Plan, and
WHEREAS, the Fund's Board of Directors has determined that
there is a reasonable likelihood that the Plan will benefit the Series and the
holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and
of other good and valuable consideration, receipt of which is hereby
acknowledged, it is agreed as follows:
1. The Fund hereby authorizes the Distributor to enter into
agreements with Authorized Institutions (the "Agreements") which may provide for
the payment to such Authorized Institutions of distribution and service fees
which the Distributor receives from the Series in order to provide incentives to
such Authorized Institutions (I) to sell Shares and (II) to provide continuing
information and investment services to their accounts holding Shares and
otherwise to encourage their accounts to remain invested in the Shares. The
Distributor may, from time to time, waive or defer payment of some fees payable
at the time of the sale of Shares provided for under paragraph 2 hereof.
2. Subject to possible reduction as provided below in this
paragraph 2, the Series shall pay to the Distributor fees (I) at the time of
sale of Shares (A) for
<PAGE>
services, not to exceed .25 of 1% of the net asset value of the Shares sold and
(B) for distribution, not to exceed .75 of 1% of the net asset value of the
Shares sold; and (II) at each quarter-end after the first anniversary of the
sale of Shares (A) for services, at an annual rate not to exceed .25 of 1% of
the average annual net asset value of Shares outstanding for one year or more
and (B) for distribution, at an annual rate not to exceed .75 of 1% of the
average annual net asset value of Shares outstanding for one year or more. For
purposes of clause (ii) above, (A) Shares issued pursuant to an exchange for
Class C shares of another series of the Fund or another Lord Abbett-sponsored
fund (or for shares of a fund acquired by the Fund) will be credited with the
time held from the initial purchase of such other shares when determining how
long Shares mentioned in clause (ii) have been outstanding and (B) payments will
be based on Shares outstanding during any such quarter. Sales in clause (i)
above exclude Shares issued for reinvested dividends and distributions, and
Shares outstanding in clause (ii) above include Shares issued for reinvested
dividends and distributions which have been outstanding for one year or more.
The Board of Directors of the Fund shall from time to time determine the
amounts, within the foregoing maximum amounts, that the Series may pay the
Distributor hereunder. Such determinations by the Board of Directors shall be
made by votes of the kind referred to in paragraph 10 of this Plan. The service
fees mentioned in this paragraph are for the purposes mentioned in clause (ii)
of paragraph 1 of this Plan and the distribution fees mentioned in this
paragraph are for the purposes mentioned in clause (i) of paragraph 1 and the
second sentence of paragraph 3 of this Plan. The Distributor will monitor the
payments hereunder and shall reduce such payments or take such other steps as
may be necessary to assure that (X) the payments pursuant to this Plan shall be
consistent with Article III, Section 26, subparagraphs (d)(2) and (5) of the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
with respect to investment companies with asset-based sales charges and service
fees as the same may be in effect from time to time and (Y) the Series shall not
pay with respect to any Authorized Institution service fees equal to more than
.25 of 1% of the average annual net asset value of Shares sold by (or
attributable to shares sold by) such Authorized Institution and held in an
account covered by an Agreement.
3. The Distributor may use amounts received as distribution
fees hereunder from the Series to finance any activity which is primarily
intended to result in the sale of Shares including, but not limited to,
commissions or other payments relating to selling or servicing efforts. Without
limiting the generality of the foregoing, the Distributor may apply up to 10 of
the total basis points authorized by the Fund's Board of Directors designated as
the distribution fee referred to in clause (ii)(b) of paragraph 2 to expenses
incurred by the Distributor if such expenses are primarily intended to result in
the sale of Shares. The Fund's Board of Directors (in the manner contemplated in
paragraph 10 of this Plan) shall approve the timing, categories and calculation
of any payments under this paragraph 3 other than those referred to in the
foregoing sentence.
<PAGE>
4. The net asset value of the Shares shall be determined as
provided in the Articles of Incorporation of the Fund. If the Distributor waives
all or a portion of fees which are to be paid by the Series hereunder, the
Distributor shall not be deemed to have waived its rights under this Agreement
to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief
Financial Officer, is hereby authorized to direct the disposition of monies paid
or payable by the Series hereunder and shall provide to the Fund's Board of
Directors, and the Board of Directors shall review, at least quarterly, a
written report of the amounts so expended pursuant to this Plan and the purposes
for which such expenditures were made.
6. Neither this Plan nor any other transaction between the
parties hereto pursuant to this Plan shall be invalidated or in any way affected
by the fact that any or all of the directors, officers, shareholders, or other
representatives of the Fund are or may be "interested persons" of the
Distributor, or any successor or assignee thereof, or that any or all of the
directors, officers, partners, members or other representatives of the
Distributor are or may be "interested persons" of the Fund, except as otherwise
may be provided in the Act.
7. The Distributor shall give the Fund the benefit of the
Distributor's best judgment and good faith efforts in rendering services under
this Plan. Other than to abide by the provisions hereof and render the services
called for hereunder in good faith, the Distributor assumes no responsibility
under this Plan and, having so acted, the Distributor shall not be held liable
or held accountable for any mistake of law or fact, or for any loss or damage
arising or resulting therefrom suffered by the Fund, the Series or any of the
shareholders, creditors, directors or officers of the Fund; provided however,
that nothing herein shall be deemed to protect the Distributor against any
liability to the Fund or the Series' shareholders by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
hereunder, or by reason of the reckless disregard of its obligations and duties
hereunder.
8. This Plan shall become effective on the date hereof, and
shall continue in effect for a period of more than one year from such date only
so long as such continuance is specifically approved at least annually by a vote
of the Board of Directors of the Fund, including the vote of a majority of the
directors who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of this Plan or in any agreement
related to this Plan, cast in person at a meeting called for the purpose of
voting on such renewal.
9. This Plan may not be amended to increase materially
the amount to be spent by the Series hereunder without the vote of a majority
of its outstanding voting securities and each material amendment must be
approved by a vote of the Board of
<PAGE>
Directors of the Fund, including the vote of a majority of the directors who are
not "in terested persons" of the Fund and who have no direct or indirect
financial interest in the operation of this Plan or in any agreement related to
this Plan, cast in person at a meeting called for the purpose of voting on such
amendment.
10. Amendments to this Plan other than material amendments of
the kind referred to in the foregoing paragraph 9 of this Plan may be adopted by
a vote of the Board of Directors of the Fund, including the vote of a majority
of the directors who are not "interested persons" of the Fund and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement related to this Plan. The Board of Directors of the Fund may, by such
a vote, interpret this Plan and make all determinations necessary or advisable
for its administration.
11. This Plan may be terminated at any time without the
payment of any penalty by (A) the vote of a majority of the directors of the
Fund who are not "interested persons" of the Fund and have no direct or indirect
financial interest in the operation of this Plan or in any agreement related to
this Plan, or (B) by a shareholder vote in compliance with Rule 12b-1 and Rule
18f-3 under the Act as in effect at such time. This Plan shall automatically
terminate in the event of its assignment.
12. So long as this Plan shall remain in effect, the selection
and nomination of those directors of the Fund who are not "interested persons"
of the Fund are committed to the discretion of such disinterested directors. The
terms "interested persons," "assignment" and "vote of a majority of the
outstanding voting securities" shall have the same meaning as those terms are
defined in the Act.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and on its behalf by its duly authorized
representative as of the date first above written.
LORD ABBETT GLOBAL FUND, INC.
By:Kenneth B. Cutler
Vice President
ATTEST:
Thomas F. Konop
Assistant Secretary
LORD ABBETT DISTRIBUTOR LLC
By: LORD, ABBETT & CO.
Managing Member
By: Kenneth B. Cutler
A Partner
Amended and Restated Plans as of May 1,1997
Pursuant to Rule 18f-3(d)
under the Investment Company Act of 1940
(As adopted August 15, 1996)
Rule 18f-3 (the "Rule") under the Investment Company Act of 1940, as
amended (the "1940 Act"), requires that the Board of Directors or Trustees of an
investment company desiring to offer multiple classes pursuant to the Rule adopt
a plan setting forth the separate arrangement and expense allocation of each
class, and any related conversion features or exchange privileges. This document
constitutes an amended and restated plan (individually, a "Plan" and
collectively, the "Plans") of each of the investment companies, or series
thereof, listed on Schedule A attached hereto (each, a "Fund"). The Plan of any
Fund is subject to amendment by action of the Board of Directors or Trustees
(the "Board") of such Fund and without the approval of shareholders of any
class, to the extent permitted by law and by the governing documents of such
Fund.
The Board, including a majority of the non-interested Board members,
has determined that the following separate arrangement and expense allocation,
and the related conversion features, if any, and exchange privileges, of each
class of each Fund are in the best interest of each class of each Fund
individually and each Fund as a whole.
1. CLASS DESIGNATION. Shares of all Funds except Lord Abbett Series Fund, Inc.
shall be divided into Class A shares, Class B shares, Class C and Pension Class
shares as indicated for each Fund on Schedule A attached hereto. In the case of
the Lord Abbett Series Fund - Growth & Income Portfolio, shares shall be divided
into Variable Contract Class shares and Pension Class shares as indicated on
Schedule A.
2. SALES CHARGES AND DISTRIBUTION AND SERVICE FEES.
(a) INITIAL SALES CHARGE. Class A shares will be traditional front-end
sales charge shares, offered at their net asset value ("NAV") plus a sales
charge in the case of each Fund as described in such Fund's prospectus as from
time to time in effect.
Class B shares, Class C shares, Variable Contract Class shares and
Pension Class shares will be offered at their NAV without an initial sales
charge.
(b) SERVICE AND DISTRIBUTION FEES. In respect of the Class A shares,
Class B shares, Class C shares, Variable Contract Class shares and Pension Class
shares, each Fund will pay service and/or distribution fees under plans from
time to time in effect adopted for such classes pursuant to Rule 12b-1 under the
1940 Act (each, a "12b-1 Plan").
Pursuant to a 12b-1 Plan with respect to the Class A shares, if
effective, each Fund will generally pay (i) at the time such shares are sold, a
one-time distribution fee of up to 1% of the NAV of the shares sold in the
amount of $1 million or more, including sales qualifying at such level under the
rights of accumulation and statement of intention privileges, or to retirement
plans with 100 or more eligible employees, as described in the Fund's prospectus
as from time to time in effect, (ii) a
<PAGE>
continuing distribution fee at an annual rate of 0.10% of the average daily NAV
of the Class A share accounts of dealers who meet certain sales and redemption
criteria, and (iii) a continuing service fee at an annual rate not to exceed
0.25% of the average daily NAV of the Class A shares. The Board will have the
authority to increase the distribution fees payable under such 12b-1 Plan by a
vote of the Board, including a majority of the independent directors thereof, up
to an annual rate of 0.25% of the average daily NAV of the Class A shares. The
effective dates of various of the 12b-1 Plans for the Class A shares are based
on achievement by the Funds of specified total net assets for the Class A shares
of such Funds.
Pursuant to a 12b-1 Plan with respect to the Class B shares, if
effective, each Fund will generally pay a continuing annual fee of up to 1% of
the average annual NAV of such shares then outstanding (each fee comprising .25%
in service fee and .75% in distribution fee).
Pursuant to a 12b-1 Plan with respect to the Class C shares, if
effective, each Fund will generally pay a one-time service and distribution fee
at the time such shares are sold of up to 1% of their NAV and a continuing
annual fee, commencing 12 months after the first anniversary of such sale, of up
to 1% of the average annual NAV of such shares then outstanding (each fee
comprising .25% in service fees and .75% in distribution fees).
Pursuant to a 12b-1 plan with respect to the Variable Contract Class,
if operational, the Growth & Income Portfolio will generally pay a continuing
annual fee of up to .15% of the average annual NAV of such shares then
outstanding to reimburse an insurance company for its expenditure related to the
distribution of such shares which expenditures are not also reimbursable
pursuant to fees paid under the variable contract issued by such insurance
company.
Pursuant to a 12b-1 Plan with respect to the Pension Class, if
operational, the Growth & Income Portfolio will generally pay a continuing
annual fee of .45% of the average annual NAV of such shares then outstanding.
The Board will have the authority to increase the distribution fees payable
under such 12b-1 Plan by a vote of the Board, including a majority of the
independent directors thereof, up to an annual rate of 0.75% of the average
daily NAV of such shares (consisting of distribution and service fees, at
maximum annual rates not exceeding 0.50 and 0.25 of 1%, respectively).
(c) CONTINGENT DEFERRED SALES CHARGES ("CDSC"). Subject to some
exceptions, Class A shares subject to the one-time sales distribution fee of up
to 1% under the Rule 12b-1 Plan for the Class A shares will be subject to a CDSC
equal to 1% of the lower of the cost or the NAV of such shares if the shares are
redeemed for cash on or before the end of the twenty-fourth month after the
month in which the shares were purchased.
Class B shares will be subject to a CDSC ranging from 5% to 1% of the
lower of the cost or the NAV of the shares, if the shares are redeemed for cash
before the sixth anniversary of their purchase. The CDSC for the Class B shares
may be waived for certain transactions. Class C shares will be subject to a CDSC
equal to 1% of the lower of the cost or the NAV of the shares if the shares are
redeemed for cash before the first anniversary of their purchase.
Neither the Variable Contract Class nor the Pension Class shares will
be subject to a CDSC.
<PAGE>
3. CLASS-SPECIFIC EXPENSES. The following expenses shall be allocated, to the
extent such expenses can reasonably be identified as relating to a particular
class and consistent with Revenue Procedure 96-47, on a class-specific basis:
(a) fees under a 12b-1 Plan applicable to a specific class (net of any CDSC paid
with respect to shares of such class and retained by the Fund) and any other
costs relating to implementing or amending such Plan, including obtaining
shareholder approval of such Plan or any amendment thereto; (b) transfer and
shareholder servicing agent fees and shareholder servicing costs identifiable as
being attributable to the particular provisions of a specific class; (c)
stationery, printing, postage and delivery expenses related to preparing and
distributing materials such as shareholder reports, prospectuses and proxy
statements to current share holders of a specific class; (d) Securities and
Exchange Commission registration fees incurred by a specific class; (e) Board
fees or expenses identifiable as being attributable to a specific class; (f)
fees for outside accountants and related expenses relating solely to a specific
class; (g) litigation expenses and legal fees and expense relating solely to a
specific class; (h) expenses incurred in connection with shareholders meetings
as a result of issues relating solely to a specific class and (i) other expenses
relating solely to a specific class, provided, that advisory fees and other
expenses related to the management of a Fund's assets (including custodial fees
and tax-return preparation fees) shall be allocated to all shares of such Fund
on the basis of NAV, regardless of whether they can be specifically attributed
to a particular class. All common expenses shall be allocated to shares of each
class at the same time they are allocated to the shares of all other classes.
All such expenses incurred by a class of shares will be charged directly to the
net assets of the particular class and thus will be borne on a pro rata basis by
the outstanding shares of such class. For all Funds, with the exception of
Series Fund - Growth & Income Portfolio, Blue Sky expenses will be treated as
common expenses. In the case of Series Fund - Growth & Income Portfolio, Blue
Sky expenses will be allocated entirely to the Pension Class, as the Variable
Contract Class of Series Fund Growth & Income Portfolio has no Blue Sky
expenses.
4. INCOME AND EXPENSE ALLOCATIONS. Income, realized and unrealized capital gains
and losses and expenses not allocated to a class as provided above shall be
allocated to each class on the basis of the net assets of that class in relation
to the net assets of the Fund, except that, in the case of each daily dividend
Fund, income and expenses shall be allocated on the basis of relative net assets
(settled shares).
5. DIVIDENDS AND DISTRIBUTIONS. Dividends and Distributions paid by a Fund on
each class of its shares, to the extent paid, will be calculated in the same
manner, will be paid at the same time, and will be in the same amount, except
that the amount of the dividends declared and paid by a particular class may be
different from that paid by another class because of expenses borne exclusively
by that class.
6. NET ASSET VALUES. The NAV of each share of a class of a Fund shall be
determined in accordance with the Articles of Incorporation or Declaration of
Trust of such Fund with appropriate adjustments to reflect the allocations of
expenses, income and realized and unrealized capital gains and losses of such
Fund between or among its classes as provided above.
7. CONVERSION FEATURES. The Class B shares will automatically convert to Class A
shares 8 years after the date of purchase. Such conversion will occur at the
relative NAV per share of each Class without the imposition of any sales charge,
fee or other charge. When Class B shares convert, any
<PAGE>
other Class B shares that were acquired by the shareholder by the reinvestment
of dividends and distributions will also convert to Class A shares on a pro rata
basis. The conversion of Class B shares to Class A shares after 8 years is
subject to the continuing availability of a private letter ruling from the
Internal Revenue Service or an opinion of counsel to the effect that the
conversion does not constitute a taxable event for the Class B shareholder under
Federal income tax law. If such a revenue ruling or opinion is no longer
available, the automatic conversion feature may be suspended, in which event no
further conversions of Class B shares would occur while such suspension remained
in effect.
Subject to amendment by the Board, Class A shares and Class C shares
shall not be subject to any automatic conversion feature.
8. EXCHANGE PRIVILEGES. Except as set forth in a Fund's prospectus as from time
to time in effect, shares of any class of such Fund may be exchanged, at the
holder's option, for shares of the same class of another Fund, or other Lord
Abbett-sponsored fund or series thereof, without the imposition of any sales
charge, fee or other charge.
Each Plan is qualified by and subject to the terms of the then current
prospectus for the applicable Fund; provided, however, that none of the terms
set forth in any such prospectus shall be inconsistent with the terms contained
herein. The prospectus for each Fund contains additional information about that
Fund's classes and its multiple-class structure.
Each Plan is being adopted for a Fund with the approval of, and all
material amendments thereto must be approved by, a majority of the Board of such
Fund, including a majority of the Board who are not interested persons of the
Fund.
<PAGE>
The Lord Abbett - Sponsored Funds
ESTABLISHING MULTI-CLASS STRUCTURES
CLASSES
Lord Abbett Affiliated Fund, Inc. A, B, C, P
Lord Abbett Bond-Debenture Fund, Inc. A, B, C, P*
Lord Abbett Developing Growth Fund, Inc. A, B, C, P*
Lord Abbett Mid-Cap Value Fund, Inc. A, B, C, P*
Lord Abbett Global Fund, Inc.
Equity Series A, B, C, P*
Income Series A, B, C, P*
Lord Abbett Investment Trust
Balanced Series A, C
Limited Duration U.S. Government
Securities Series A, C
U.S. Government Securities Series A, B, C, P*
Lord Abbett Securities Trust
Growth & Income Trust A, B, C, P*
International Series A, B, C, P*
Lord Abbett Tax-Free Income Fund, Inc.
California Series A, C
National Series A, B, C
New York Series A, C
Lord Abbett Tax-Free Income Trust
Florida Series A, C
Lord Abbett U.S. Government Securities
Money Market Fund, Inc. A, B, C
Lord Abbett Research Fund, Inc.
Large-Cap Series A, B, C, P*
Small-Cap Series A, B, C, P*
Lord Abbett Series Fund
Growth & Income Portfolio Variable Contract Class
Growth & Income Portfolio Pension Class
* Pursuant to authority granted by the Board of Directors to the appropriate
officers of the funds, these classes and their related plans (12b-1 and 18f-3)
will commence operations upon Blue Sky and SEC clearance in the discretion of
such officers.
EXHIBIT 16
Lord Abbett Global Fund, Inc.
(Equity Series)
Post Effective Amendment No. 10 on Form N-1A
Class A shares
Results of a $1,000 investment reflecting the maximum sales charge (5.75) and
the reinvestment of all distributions:
FISCAL YEAR ENDING DECEMBER 31, 1996
P(1+T)N = ERV
1 YEAR 5 YEARS LIFE OF SERIES
------ -------- --------------
$1,022 $1,379 $1,710
P = 1,000 P= 1,000 P= 1,000
N = 1 N= 5 N= 8.25
ERV =1,022 ERV =1,379 ERV= 1,710
T = Average annual total return
1,000 (1+T) = 1,022 1,000 (1+T)5 = 1,379 1000[1+T]8.25 = 1,710
(1+T) = 1,022 (1+T)5 = 1,379 [1+T]8.25 = 1,710
------ ------ -----
1,000 1,000 1,000
1+T = 1,022 1+T = [1,379].20 [1+T] = [1,710]0.1212
----- ------- -------
1,000 [1,000] [1,000]
T = [1,022] - 1 T = [1,379]20 -1 T = [1,710]0.1212
------- ------- -------
[1,000] [1,000] [1,000] -1
T = 2.20% T = 6.64% T = 6.72%
*The Fund's Equity Series commenced operations on 9/30/88
<PAGE>
Lord Abbett Global Fund, Inc.
(Equity Series)
Post Effective Amendment No. 10 on Form N-1A
Class B shares
Results of a $1,000 investment reflecting a 5% contingent deferred sales
charge and the reinvestment of all distributions:
FISCAL YEAR ENDING DECEMBER 31, 1996
P(1+T)N = ERV
Life of Class
--------------
$994
P = 1,000
ERV = 994
T = Average annual total return
1000[1+T] = 994
[1+T] = 994
-----
1,000
[1+T] = [994]
-------
[1,000]
T = [994]
-------
[1,000]
T = -60%
*The Fund's Equity Series Class B shares commenced operations on 8/1/96
<PAGE>
Lord Abbett Global Fund, Inc.
(Equity Series)
Post Effective Amendment No. 10 on Form N-1A
Class C shares
Results of a $1,000 investment reflecting a 1% contingent deferred sale charge
and the reinvestment of all distributions:
FISCAL YEAR ENDING DECEMBER 31, 1996
P(1+T)N = ERV
Life of Class
--------------
$1,037
P = 1,000
ERV = 1,037
T = Average annual total return
1000[1+T] = 1,037
[1+T] = 1,037
-----
1,000
[1+T] = [1,037]
-------
[1,000]
T = [1,037]
-------
[1,000]
T = 3.70%
*The Fund's Equity Series Class C shares commenced operations on 8/1/96
<PAGE>
Lord Abbett Global Fund, Inc.
(Income Series)
Post Effective Amendment No. 10 on Form N-1A
Results of a $1,000 investment reflecting the maximum sales charge (4.75) and
the reinvestment of all distributions:
FISCAL YEAR ENDING DECEMBER 31, 1996
P(1+T)N = ERV
1 YEAR 5 YEARS LIFE OF SERIES
------ -------- --------------
$1,011 $1,348 $1,934
P = 1,000 P= 1,000 P= 1,000
N = 1 N= 5 N= 8.25
ERV = 1,011 ERV =1,348 ERV= 1,934
T = Average annual total return
1,000 (1+T) = 1,011 1,000 (1+T)5 = 1,348 1000[1+T]8.25 = 1,934
(1+T) = 1,011 (1+T)5 = 1,348 [1+T]8.25 = [1,934]
----- ------ -------
1,000 1,000 1,000
1+T = 1,011 1+T= [1,348].20 [1+T] = [1,934].1212
----- ------- -------
1,000 [1,000] [1,000]
T = [1,011] - 1 T = [1,348].20 -1 T = [1,934].1212
------ ------- -------
[1,000] [1,000] [1,000] -1
T = 1.10% T = 6.15% T = 8.32%
*The Fund's Income Series commenced operations on 9/30/88
<PAGE>
Lord Abbett Global Fund, Inc.
(Income Series)
Post Effective Amendment No. 10 on Form N-1A
Class B shares
Results of a $1,000 investment reflecting a 5% contingent deferred sales
charge and the reinvestment of all distributions:
FISCAL YEAR ENDING DECEMBER 31, 1996
P(1+T)N = ERV
Life of Class
--------------
$1,03
P = 1,000
ERV = 1,003
T = Average annual total return
1000[1+T] = 1,003
[1+T] = 1,003
-----
1,000
1+T = 1,003 - 1
-------
1,000
T = [1,003]
-------
[1,000]
T = 0.30%%
*The Fund's Income Series Class B shares commenced operations on 8/1/96
<PAGE>
Lord Abbett Global Fund, Inc.
(Income Series)
Post Effective Amendment No. 10 on Form N-1A
Class C shares
Results of a $1,000 investment reflecting a 1% contingent deferred sales
charge and the reinvestment of all distributions:
FISCAL YEAR ENDING DECEMBER 31, 1996
P(1+T)N = ERV
Life of Class
--------------
$1,063
P = 1,000
ERV = 1,063
T = Average annual total return
1000[1+T] = 1,063
[1+T] = 1,063
-----
1,000
1+T = 1,063
-------
[1,000]
T = [1,063]
-------
[1,000]
T = 6.30%
*The Fund's Income Series Class C shares commenced operations on 7/15/96
<PAGE>
Calculation of yield appearing in the Statement of Additional Information for
Lord Abbett Global Fund-(Class A shares) Income Series Post-Effective Amendment
No.10 on Form N-1A
YIELD FORMULA
YEAR ENDEDDECEMBER 31, 1996
YIELD = 2[(A-B +1)6-1] = 4.51%
cd
Where: a = Fund dividends and interest earned during the period in the
amount of $946,272
b = Fund expenses accrued for the period (net of reimbursements)
in the amount of $162,009
c = the average daily number of Series shares outstanding during
the period that were entitled to receive dividends were
23,873,067
d = the maximum offering price per Series share on the last day
of the period was $8.76
<PAGE>
Calculation of yield appearing in the Statement of Additional Information for
Lord Abbett Global Fund- (Class B shares)Income Series Post-Effective
Amendment No.10 on Form N-1A
YIELD FORMULA
YEAR ENDED DECEMBER 31, 1996
YIELD = 2[(A-B +1)6-1] = 4.06 %
cd
Where: a = Fund dividends and interest earned during the period in the
amount of $2,206
b = Fund expenses accrued for the period (net of reimbursements)
in the amount of $693
c = the average daily number of Series shares outstanding during
the period that were entitled to receive dividends were
56,047
d = the maximum offering price per Series share on the last day
ofthe period was $8.34
<PAGE>
Calculation of yield appearing in the Statement of Additional Information for
Lord Abbett Global Fund -(Class C shares) Income Series Post-Effective
Amendment No.10 on Form N-1A
YIELD FORMULA
YEAR ENDEDDECEMBER 31, 1996
YIELD = 2[(A-B +1)6-1] = 3.98 %
cd
Where: a = Fund dividends and interest earned during the period in the
amount of $33,995
b = Fund expenses accrued for the period (net of reimbursements)
in the amount of $10,420
c = the average daily number of Series shares outstanding during
the period that were entitled to receive dividends were
858,646
d = the maximum offering price per Series share on the last day
of the period was $8.34
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000829901
<NAME> LORD ABBETT GLOBAL FUND, INC.
<SERIES>
<NUMBER> 011
<NAME> EQUITY SERIES - CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 77586208
<INVESTMENTS-AT-VALUE> 85875079
<RECEIVABLES> 521768
<ASSETS-OTHER> 600432
<OTHER-ITEMS-ASSETS> 6775000
<TOTAL-ASSETS> 93772279
<PAYABLE-FOR-SECURITIES> 901980
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 706416
<TOTAL-LIABILITIES> 1608396
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 83055503
<SHARES-COMMON-STOCK> 7301977
<SHARES-COMMON-PRIOR> 7083040
<ACCUMULATED-NII-CURRENT> 0
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