Lord Abbett Global
Fund
o Income Series
o Equity Series
1996 ANNUAL REPORT
A globally-diversified
mutual fund with two
portfolios to help
you achieve your
goals
[PICTURE OF A GLOBAL CLOCK]
[LOGO]
<PAGE>
Report to Shareholders
For the Fiscal Year Ended December 31, 1996
[PICTURE]
/s/ROBERT S. DOW
- -------------------
ROBERT S. DOW
CHAIRMAN
JANUARY 17, 1997
Table of Contents
Income Series
- -----------------------------------
About the Income Series 1
Statement of Net Assets 2
Equity Series
- -----------------------------------
About the Equity Series 4
Statement of Net Assets 5
Income and Equity Series
- -----------------------------------
Statements of Operations 9
Statements of Changes in
Net Assets 9
Financial Highlights 10
Notes to Financial Statements 11
Lord Abbett Global Fund completed its fiscal year on December 31, 1996. Below is
an overview of each Series' class-specific data as of the close of the year.
<TABLE>
<CAPTION>
Income Series Equity Series
------------------------------------ ------------------------------------
12 Months 12 Months
Ended 8/1/96*- 7/15/96*- Ended
12/31/96 12/31/96 12/31/96 12/31/96 8/1/96* - 12/31/96
--------- ---------- ---------- --------- -------- ----------
Class A Class B Class C Class A Class B Class C
- ------------------------------------------------------------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value $ 8.34 $ 8.34 $ 8.34 $12.55 $12.53 $12.54
Dividends $ 0.73 $ 0.35 $ 0.38 $ 0.20 $ 0.13 $ 0.13
Capital gains $ -- $ -- $ -- $ 0.21 $ 0.21 $ 0.21
Total return** +6.1% +5.6%++ +7.4%++ +8.4% +4.6%++ +4.6%++
</TABLE>
About the Income Series
Over the past year, we concentrated on opportunities in four areas. In Canada,
we increased our holdings of Canadian government bonds to 20%, capturing both
high yield and a favorable exchange rate. In response to subdued economic growth
in Europe, we shifted assets to the high-yield countries of Italy, Spain and
Sweden (roughly doubling our exposure from 9% to 18%), while reducing our
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, we reduced our overweighting in
mortgage-backed securities; at the close of the year, U.S. holdings totaled 28%
of the portfolio.
We anticipate continued positive performance due to the higher yields available
in the European markets, as countries like Italy, Spain and Sweden endeavor to
meet EMU (European Monetary Union) criteria. We also look for continued U.S.
dollar strength against both European and Asian currencies.
About the Equity Series
For most of 1996, the U.S. economy demonstrated stronger than expected growth.
U.S. stock market returns climbed to all-time highs; 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 our U.S. holdings over the course of the year
in favor of more undervalued areas, such as Asia (especially Japan) and Latin
America. In addition, we gradually reduced our holdings in Europe, as many
countries struggled with financial structures put in place to work towards
meeting currency convergence requirements. Lastly, we increased our targeted
weighting in Canada to 5% of the portfolio, as selected banks and natural gas
companies offered attractive values relative to the U.S.
Although we reduced our U.S. holdings over the year, we continued to invest in
financial companies which are sensitive to interest-rate fluctuations (such as
banks) with positive results. Also, we used the market correction in June to add
to our position of technology stocks at attractive prices. Given our outlook for
a reduction in long-term interest rates (as the U.S. economy slows) we believe
the prospects for these stocks are quite good. Going forward, performance will
be driven more by the strength of individual companies' fundamentals rather than
country-specific dynamics.
We are pleased Lord Abbett Global Fund is a part of your investment portfolio
and look forward to helping you attain your financial goals in 1997 and beyond.
* Commencement of offering Class shares.
** Total return is the percent change in net asset value, assuming the
reinvestment of all distributions.
++ Not annualized.
<PAGE>
About Lord Abbett's Income Series
Global Diversification
Our research team seeks to identify the best value in relation to risk by
analyzing economic factors and interest-rate trends in the world's major bond
markets. Investing in many bond markets, versus investing only in the U.S., has
the potential to increase returns and reduce risk. The returns below are not
Income Series returns. There is no guarantee that the Income Series' portfolio
will include all of the countries listed below.
<TABLE>
<CAPTION>
A Comparison of 10-Year Government Bonds, After Currency Translations
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 10 Years
Ended
12/31/96
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Canada 8.0 19.0 16.1 5.6 24.1 (0.5) 13.2 (13.6) 26.1 11.3 221.8
- ------------------------------------------------------------------------------------------------------------------------------------
France 20.6 7.3 8.9 19.8 16.4 4.6 17.0 (0.5) 31.3 4.8 329.6
====================================================================================================================================
Germany 27.1 (3.0) 5.6 10.5 10.8 6.2 10.6 5.1 27.2 (0.3) 222.7
- ------------------------------------------------------------------------------------------------------------------------------------
Japan 40.4 2.7 (14.4) 3.0 24.2 11.3 30.8 5.5 12.9 (5.9) 235.4
====================================================================================================================================
United Kingdom 46.4 2.3 (3.5) 34.2 14.7 (3.9) 21.4 (5.4) 17.5 18.4 285.9
- ------------------------------------------------------------------------------------------------------------------------------------
United States (4.6) 8.8 14.0 6.7 17.0 7.3 12.1 (6.7) 23.6 2.9 147.1
</TABLE>
All figures indicate percentage total returns in U.S. dollars; ( ) signify
negative return. Sources: J.P. Morgan Securities and Goldman Sachs
International, Limited.
Where In The World Are High Yields?
A portfolio which includes high-quality foreign bonds has the opportunity to
search for higher yields around the globe. As shown below, yields on
high-quality bonds vary from country to country. This data does not represent
Income Series performance.
[THE FOLLING TABLE WAS REPRESENTED AS A BAR GRAPH IN THE PRINTED MATERIAL]
United States 6.17%
Canada 6.20%
Denmark 6.44%
France 5.67%
Germany 5.58%
Italy 7.46%
Japan 2.73%
Spain 6.69%
United Kingdom 7.38%
Semi-annual yields to maturity on recently-offered 10-year government bonds.
Source: Union Bank of Switzerland (as of December 31, 1996).
Diversification In High-Quality Global Bonds
In seeking its goal of high income with relative safety, the Income Series
focuses on quality. Using global diversification, the Income Series attempts to
reduce risk while striving to capture high interest rates from quality bonds
around the world. See the Income Series' portfolio of investments in long-term
securities on page 2.
[MAP OMMITTED]
[THE FOLLING TABLE WAS REPRESENTED AS A CHART IN THE PRINTED MATERIAL]
As of
12/31/96
Finland 0.83%
Sweden 9.03%
Denmark 4.23%
Ireland 1.28%
UK 4.61%
France 3.35%
Spain 3.52%
Germany 11.35%
Italy 6.26%
Canada 20.58%
US 28.02%
Australia 6.94%
High Quality of
Long-Term
Portfolio Holdings:
AAA 100.00%
1
<PAGE>
Important Information
The investment return and principal value of a Fund investment will fluctuate so
that shares, on any given day or when redeemed, may be worth more or less than
their original cost. Foreign investment risk factors include the potential for
less regulation and liquidity and more volatility than U.S. markets; currency
fluctuation; potentially less publicly-available information about companies,
banks and governments than for U.S. counterparts; lack of uniform accounting
standards among countries, impairing comparisons; potentially higher transaction
costs and different securities settlement and trading practices. Each Series of
the Fund issues additional classes of shares, with distinct pricing options. For
a full discussion of the differences in pricing alternatives, please call
800-874-3733 and ask for the Fund's current prospectus. If used as sales
material after 3/31/97, this report must be accompanied by Lord Abbett's
Performance Quarterly for the most recently completed calendar quarter.
Statement of Net Assets
INCOME SERIES December 31, 1996
<TABLE>
<CAPTION>
Principal
Amount
Rating*: S&P in Local
Investment or Moody's Currency Market Value
====================================================================================================================================
Investments in Securities 97.28%
====================================================================================================================================
Foreign 70.02%
====================================================================================================================================
<S> <C> <C> <C> <C>
Australia 6.75% Commonwealth Bank of Australia 133/4% due 9/21/1999 AAA $ 1,000M $ 928,720
Commonwealth of Australia Treasury 7% due 4/15/2000 AAA 7,875M 6,325,121
Commonwealth of Australia Treasury 10% due 10/15/2007 AAA 2,600M 2,470,078
Commonwealth of Australia Treasury 12% due 11/15/2001 AAA 4,115M 3,948,919
Total 13,672,838
- -----------------------------------------------------------------------------------------------------------------------=============
Canada 20.02% Government of Canada 7% due 12/1/2006 AAA 2,500M 1,902,950
Government of Canada 8% due 6/1/2027 AAA 24,550M 19,831,736
Government of Canada Notes 9% due 6/1/2025 AAA 21,000M 18,811,800
Total 40,546,486
- -----------------------------------------------------------------------------------------------------------------------=============
Denmark 4.11% Kingdom of Denmark Government 8% due 11/15/2001 AAA 29,800M 5,616,406
Kingdom of Denmark Government 8% due 5/15/2003 AAA 14,420M 2,712,835
Total 8,329,241
- -----------------------------------------------------------------------------------------------------------------------=============
Finland .81% Finnish Government 71/4% due 4/18/2006 AAA 7,000M 1,631,770
- -----------------------------------------------------------------------------------------------------------------------=============
France 3.25% Republic of France (BTAN) 73/4% due 4/12/2000 AAA 30,750M 6,589,725
- -----------------------------------------------------------------------------------------------------------------------=============
Germany 11.04% Bundesrepublic 73/8% due 1/3/2005 AAA 6,400M 4,609,215
Deutschland Bundesrepublic 61/4% due 4/26/2006 AAA 13,975M 9,382,256
Deutschland Bundesrepublic 61/4% due 1/4/2024 AAA 7,000M 4,308,640
Treuhandanstalt 73/4% due 10/1/2002 AAA 5,535M 4,055,661
Total 22,355,772
- -----------------------------------------------------------------------------------------------------------------------=============
Ireland 1.25% Irish Government 8% due 10/18/2000 AAA 1,400M 2,530,290
- -----------------------------------------------------------------------------------------------------------------------=============
Italy 6.09% Republic of Italy (BTPS) 91/2% due 2/1/2001 AAA 7,250,000M 5,220,000
Republic of Italy (BTPS) 101/2% due 4/1/2000 AAA 9,750,000M 7,117,500
Total 12,337,500
- -----------------------------------------------------------------------------------------------------------------------=============
Spain 3.43% Government of Spain (BONDS) 121/4% due 3/25/2000 AAA 419,200M 3,827,295
Government of Spain (BONDS) 8.40% due 4/30/2001 AAA 370,000M 3,115,400
Total 6,942,695
----------------------------------------------------------------------------------------=============
</TABLE>
2
<PAGE>
Statement of Net Assets
INCOME SERIES December 31, 1996
<TABLE>
<CAPTION>
Principal
Amount
Rating*: S&P in Local
Investment or Moody's Currency Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Sweden 8.79% Kingdom of Sweden 8% due 8/15/2007 AAA $ 13,300M $ 2,140,768
Kingdom of Sweden 101/4% due 5/5/2000 AAA 27,400M 4,650,876
Kingdom of Sweden 11% due 1/21/1999 AAA 15,000M 2,475,300
Kingdom of Sweden 13% due 6/15/2001 AAA 45,000M 8,525,700
Total 17,792,644
- -----------------------------------------------------------------------------------------------------------------------=============
United Kingdom 4.48% United Kingdom Treasury 10% due 9/8/2003 AAA 4,670M 9,072,035
- -----------------------------------------------------------------------------------------------------------------------=============
Total Investments in Foreign Securities (Cost $137,105,356) 141,800,996
- -----------------------------------------------------------------------------------------------------------------------=============
United States 27.26%
- -----------------------------------------------------------------------------------------------------------------------=============
Federal Home Loan Mortgage Corporation 63/4% due 8/1/2005 AAA 250M 251,016
Federal Home Loan Mortgage Corporation 71/2% due on an announced basisAAA 4,000M 4,003,750
Federal National Mortgage Association 61/2% due on an announced basis AAA 3,500M 3,338,125
Federal National Mortgage Association 65/8% due 3/21/2006 AAA 5,000M 4,975,000
Federal National Mortgage Association 7% due on an announced basis AAA 7,500M 7,334,766
Federal National Mortgage Association 81/2% due 2/1/2005 AAA 2,700M 2,839,641
Government National Mortgage Association 7% due on an announced basis AAA 3,825M 3,741,926
U.S. Treasury Bond 61/2% due 11/15/2026 AAA 17,145M 16,828,889
U.S. Treasury Bond 63/4% due 8/15/2026 AAA 3,000M 3,022,969
U.S. Treasury Bond 103/8% due 11/15/2012 AAA 3,000M 3,863,906
U.S. Treasury Note 61/4% due 2/15/2003 AAA 5,000M 4,995,312
Total Investments in United States Securities (Cost $55,903,143) 55,195,300
----------------------------------------------------------------------------------------=============
Total Investments in Securities (Cost $193,008,499) 196,996,296
====================================================================================================================================
Other Assets, Less Liabilities 2.72%
====================================================================================================================================
Other Short-Term
Assets Investments, Federal National Mortgage Association 13% due 2/25/1997
at Market (Cost $15,283,320) AAA 15,000M 15,171,094
------------------------------------------------------------------------------------------------------=============
Short-Term
Investments,
at Cost Federal Home Loan Mortgage Corporation 5.70% due 1/2/1997 AAA 5,700M 5,698,195
----------------------------------------------------------------------------------------=============
Total Short-Term Investments 20,869,289
------------------------------------------------------------------------------------------------------=============
Cash 186,268
------------------------------------------------------------------------------------------------------=============
Receivable for:
Securities sold 76,852,884
Other 4,999,638
Total Other Assets 102,908,079
====================================================================================================================================
Liabilities Payable for: Securities purchased 95,667,304
Other 1,742,598
Total Liabilities 97,409,902
----------------------------------------------------------------------------------------=============
Total Other Assets, Less Liabilities 5,498,177
====================================================================================================================================
Net Assets 100.00% $202,494,473
====================================================================================================================================
Class A Shares-Net asset value ($194,715,393 / 23,335,704 shares outstanding) $8.34
Class B Shares-Net asset value ($579,617 / 69,521 shares outstanding) $8.34
Class C Shares-Net asset value ($7,199,463 / 863,282 shares outstanding) $8.34
</TABLE>
* Ratings have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
3
<PAGE>
About Lord Abbett's Equity Series
Why Invest Internationally?
International investors have a larger choice of exceptional companies to choose
from.
Percent of the World's Publicly Traded Companies
[THE FOLLING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Based on the U.S. 44%
Based outside of the U.S. 56%
Source: International Finance Corporation Factbook.
The Global Perspective Has Provided A World Of Opportunity
Global investing can offer the opportunity to participate in those markets which
seem poised for growth. And, importantly, a globally-diversified portfolio
offered increased safety relative to a portfolio of U.S. stocks, exclusively.
This graph does not represent the Equity Series' portfolio.
Diversification Reduced Risk and Increased Returns
[THE FOLLING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL]
<PLOT POINTS TO COME>
Derived using returns from December 1969 to December 1996. Source: Morgan
Stanley Capital International.
Managed To Participate In Global Growth
Portfolio diversification positions the Equity Series to participate in global
opportunities. Twenty-three countries are represented in the Equity Series; see
the portfolio of investments in long-term securities on page 5.
[MAP OMMITTED]
[THE FOLLING TABLE WAS REPRESENTED AS A CHART IN THE PRINTED MATERIAL]
As of
12/31/96
Canada 4.07%
US 15.56%
Mexico 1.01%
Brazil 0.83%
Argentina 0.26%
Chile 0.23%
Sweden 2.31%
Switzerland 2.44%
Netherlands 4.52%
UK 8.66%
France 5.95%
Spain 1.92%
Germany 3.35%
Italy 1.26%
South Africa 0.31%
Lebanon 0.81%
Israel 0.81%
Eqypt 0.98%
Malaysia 1.82%
Japan 29.66%
Hong Kong 6.53%
Singapore 2.18%
Australia 3.53%
4
<PAGE>
Statement of Net Assets
EQUITY SERIES December 31, 1996
<TABLE>
<CAPTION>
Investment Shares Market Value
====================================================================================================================================
Investments in Securities and Options 93.18%
====================================================================================================================================
Foreign 77.21%
====================================================================================================================================
<S> <C> <C> <C>
Argentina .24% Irsa ADR-Real estate company 7,000 $ 222,688
- -----------------------------------------------------------------------------------------------------------------------=============
Australia 3.26% AAPC-Manager of hotels in Australia and Asia 676,000 408,304
Australian Gas Light Co.-Gas utility 50,000 284,600
Brambles-Diversified business services 37,000 722,129
Broken Hill Proprietary-Miner and producer of metals and steel 28,200 401,737
Lend Lease Corp.-Financial services company 30,400 589,699
News Corp. Preference-Newspaper, magazine, film and television company 67,000 353,693
QNI-Major Australian nickel company 125,000 251,375
Total 3,011,537
- -----------------------------------------------------------------------------------------------------------------------=============
Brazil .77% Brazilian Investment Trust plc-Closed-end trust investing in
mid-cap Brazilian equities 125,000 140,625
Brazilian Investment Trust plc Warrants 30,000 14,063
Electrobras ADR Class B-Electric power utility 12,800 235,200
Telebras ADR-National telecommunications company monopoly 4,100 315,956
Total 705,844
- -----------------------------------------------------------------------------------------------------------------------=============
Canada 3.76% Bank of Montreal-Canadian bank 15,000 478,125
Canadian National Railway (Partially Paid)-Major Canadian-based
railroad operator 10,000 380,000
Canadian Natural Resources-Canadian natural gas producer 8,000 219,000
Canadian Oil Sands Trust-Royalty trust for heavy-oil production 12,000 180,000
Glenmore Highlands-Mineral exploration company 100,000 775,000
Lytton Minerals Ltd.-Canadian diamond exploration company 125,000 351,563
New Indigo Resources-Canadian diamond exploration company 20,000 155,000
Nova Corp. Of Alberta-Canadian natural gas and petrochemical producer 25,000 218,750
Precision Drilling Corp. Class A-Leading Canadian oil and gas drilling
contractor 10,000 347,500
Repap Enterprises-Canadian pulp and paper producer 130,000 361,563
Total 3,466,501
- -----------------------------------------------------------------------------------------------------------------------=============
Chile .21% Enersis S.A.-Electric power utility 7,200 198,000
- -----------------------------------------------------------------------------------------------------------------------=============
Egypt .91% Suez Cement-Cement company 54,880 836,920
- -----------------------------------------------------------------------------------------------------------------------=============
France 5.51% Christian Dior-France's principal luxury goods manufacturer 6,460 1,041,817
Lyonnaise des Eaux-Water and business services group 10,670 992,779
Paribas-Major banking and finance group 11,435 773,132
Pinault Printemps Redoute-One of the principal retailing and
specialist distribution groups in France 2,500 991,330
Saint Gobain-Industrial group 4,450 629,346
Total S.A. B Shares-Energy and petroleum company 7,945 646,008
Total 5,074,412
- -----------------------------------------------------------------------------------------------------------------------=============
Germany 3.10% Jil Sanders-Exclusive womens wear designer and manufacturer 900 537,663
Linde-A diversified engineering group, specializing in forklift trucks 1,200 732,468
Mannesmann-Engineering group 2,250 974,513
Siemens-Europe's leading electrical and electronics company 13,000 612,014
Total 2,856,658
- -----------------------------------------------------------------------------------------------------------------------=============
Hong Kong 6.04% Amway Asia Pacific Ltd.-A direct seller of household products in
China and East Asia 500 21,187
China Travel H.K.-Tours and hotel operator 624,000 276,432
Cheung Kong-Property developer 69,000 613,341
Citic Pacific-Trading conglomerate 125,000 725,625
HSBC Holding-Major global bank 50,000 1,069,900
Hutchison Whampoa-Ports, telecommunications and property conglomerate 93,000 730,422
Sun Hung Kai Properties-Leading property development and investment company 72,000 882,000
Swire Pacific A-Property and aviation conglomerate 131,000 1,249,085
Total 5,567,992
- -----------------------------------------------------------------------------------------------------------------------=============
</TABLE>
5
<PAGE>
Statement of Net Assets
EQUITY SERIES December 31, 1996
<TABLE>
<CAPTION>
Investment Shares Market Value
====================================================================================================================================
<S> <C> <C> <C>
Israel .75% Blue Square-Diversified retailing 47,000 $ 687,375
- -----------------------------------------------------------------------------------------------------------------------=============
Italy 1.17% ENI-Former state-owned oil and gas company 180,000 923,220
Italcementi-Cement company 27,500 154,000
Total 1,077,220
- -----------------------------------------------------------------------------------------------------------------------=============
Japan 27.44% Amada Corp.-Machine tool manufacturer 104,000 807,352
Asatsu-Advertising company 21,000 666,603
Bank of Tokyo-Major bank 70,000 1,298,220
Best Denki-Electric equipment retailer 45,000 520,155
Fuji Machine Mfg.-A major manufacturer of automated assembly
machines for electronic parts and components 14,000 370,748
Fuji Photo Film-Major manufacturer of photo-sensitive materials 53,000 1,746,403
Fujikura Cable-Manufacturer of fiber optic cable 78,000 624,390
Hankyu Department Stores-Department store retailer 68,000 674,560
Hitachi Ltd.-One of Japan's major electrical engineering groups
with operationsranging from computers to electrical power systems 180,000 1,676,880
Ito Yokado Co.-Diversified retailing operations 25,000 1,086,875
Kajima Corp.-Construction and civil engineering company 85,000 607,070
Kissei Pharmaceutical-Pharmaceutical company 35,000 694,400
Kyocera Corp.-World's largest manufacturer of integrated circuit
ceramic packages 9,000 560,511
Mitsui & Company-General trading company 100,000 810,800
Mitsui Fudosan Co.-Real estate company 119,000 1,190,715
Mori Seiki Yen-Machine tool manufacturer 7,000 96,607
Murata Manufacturing-Manufacturer of computer components 27,000 896,670
Nippon Telephone & Telegraph-Japan's largest telecommunications company 123 931,545
Nissan Motors-Japan's second, and the world's fourth, largest auto
manufacturer 175,000 1,014,475
NKK Corporation-Crude steel and pipe manufacturer 590,000 1,328,090
Nomura Securities-Japan's largest securities firm 63,000 945,567
Nu Skin Asia Pacific Inc.-Asian cosmetics company 10,000 308,750
Sekisui Chemical-Chemical and resin producer 84,000 847,727
Sumitomo Bank-The nucleus of the Sumitomo Group and one of the largest
banks in Japan 63,000 907,515
Sumitomo Electric Industries-Manufacturer of electric wire and cables 94,000 1,313,556
Sumitomo Trust & Banking-One of the leading trust banks in Japan 100,000 1,000,600
Tokyo Electric Power-Electric utility 24,000 525,840
Tokyo Electron-Electronics company 32,000 979,904
Toyota Motor Corp.-Automobile manufacturer 30,000 861,720
Total 25,294,248
- -----------------------------------------------------------------------------------------------------------------------=============
Lebanon .75% Solidere-Real estate company 60,000 688,124
- -----------------------------------------------------------------------------------------------------------------------=============
Malaysia 1.69% Genting Berhad-Investment holding company with subsidiaries in the
gaming and resort industries 25,000 172,275
MBM Resources-Automobile manufacturer 80,000 171,120
Renong Berhad-Diversified conglomerate 100,000 177,400
Sime Darby Berhad-Diversified conglomerate 35,000 137,935
Southern Bank Berhad-Leading domestic bank 312,250 785,309
Southern Bank Berhad Warrants 9,562 12,230
Telecom Malaysia-Major telecommunications company 11,000 98,021
Total 1,554,290
- -----------------------------------------------------------------------------------------------------------------------=============
Mexico .93% Banacci-Major bank group 93,000 193,998
Cementos de Mexico ADR-Largest cement producer 28,000 203,000
Fomento Economico Mexicano ADR+-Mexican brewer and coke bottler 70,600 238,275
Gruma, S.A. de C.V. Class B-Flour manufacturer 37,000 224,146
Total 859,419
----------------------------------------------------------------------------------------=============
</TABLE>
6
<PAGE>
Statement of Net Assets
EQUITY SERIES December 31, 1996
<TABLE>
<CAPTION>
Investment Shares Market Value
====================================================================================================================================
<S> <C> <C>
Netherlands 4.18% Hagemeyer-Trading group 12,000 $ 958,860
ING-Banking and insurance company 26,400 950,110
Vendex International-Retailing group 26,000 1,111,734
VNU-Publishing group 40,000 835,520
Total 3,856,224
- -----------------------------------------------------------------------------------------------------------------------=============
Singapore 2.02% DBS Land-Real estate company 144,000 529,920
Development Bank of Singapore-Leading Singapore bank and financial
services company 48,587 656,265
United Overseas Bank-One of the leading bank and financial services
companies 60,240 671,556
Total 1,857,741
- -----------------------------------------------------------------------------------------------------------------------=============
South Africa .29% Rembrandt Group Ltd.-Conglomerate 30,000 267,720
- -----------------------------------------------------------------------------------------------------------------------=============
Spain 1.78% Banco de Santander-Leading Spanish bank 14,200 909,112
Repsol S.A.-Oil refining and marketing company 19,000 728,973
Total 1,638,085
- -----------------------------------------------------------------------------------------------------------------------=============
Sweden 2.13% Ericsson (LM) Series B-Telecommunications company 30,000 930,480
Stora Koppabergs Series A-Paper and forest products producer 75,000 1,036,350
Total 1,966,830
- -----------------------------------------------------------------------------------------------------------------------=============
Switzerland 2.26% Nestle-Europe's largest food company 600 643,432
Novartis-Pharmaceutical and chemical company 885 1,012,848
Roche Holdings-Leading pharmaceutical group 55 427,481
Total 2,083,761
- -----------------------------------------------------------------------------------------------------------------------=============
United Kingdom 8.02% ASDA Group-National food retailers 175,000 368,550
Bass plc-Brewing interests and hotels 31,500 442,890
BBA Group-Industrial components manufacturer 58,000 351,596
Beazer Homes-House builder 123,000 406,515
British Petroleum-Integrated oil company 40,499 485,826
British Telecom-Leading domestic telecommunications group 70,000 472,920
Capital Shopping Centre-Property investment company 71,750 449,729
Electro Components-Electronic component manufacturer 51,000 403,512
Granada Group-Diversified leisure group owning hotels, motorway
services and bars 28,000 413,084
McLeod & Russell-Manufacturer of industrial coatings 128,000 362,752
Plasmon-Energy equipment and services 128,000 518,400
RMC Group-Major supplier of building materials in Europe 25,000 427,050
Rubicon Group-Diversified engineering group 120,000 369,960
Siebe-Electrical and electronics group 23,000 426,167
SmithKline Beecham Ord-United Kingdom-based pharmaceutical company 27,500 381,233
Storehouse-Household and infant supply retailer 92,000 406,456
Tomkins-A diversified industrial company 75,000 344,850
Unigate-Manufacturing and distribution of food and dairy products 50,000 355,750
Total 7,387,240
----------------------------------------------------------------------------------------=============
Total Investments in Foreign Securities (Cost $64,275,888) 71,158,829
====================================================================================================================================
United States 15.31%
====================================================================================================================================
Air Products & Chemicals Inc.-Industrial gas producer 5,000 345,625
American Brands Inc.-Consumer products conglomerate 6,000 297,750
BankAmerica Corp.-Major money-center bank 2,000 199,500
Bell Atlantic Corp.-Regional telephone company 3,000 194,250
BellSouth Corp.-Regional telephone company 9,000 363,375
Chase Manhattan Corp.-Major money-center bank holding company 4,000 357,000
CINergy Corp.-Supplier of electricity and natural gas in southwestern
Ohio and adjacent Kentucky and Indiana territories 10,000 333,750
</TABLE>
7
<PAGE>
Statement of Net Assets
EQUITY SERIES December 31, 1996
<TABLE>
<CAPTION>
Investment Shares Market Value
====================================================================================================================================
<S> <C> <C>
Dailey Petroleum Services Co.-Exploration services company 50,000 $ 525,000
Dean Witter, Discover & Co.-Major brokerage and credit card company 7,000 463,750
DTE Energy-Michigan electric utility 10,000 323,750
EMC Corp.-A supplier of high-performance storage devices and related
services 5,000 165,625
Enserch Corp.-A natural gas distributor in Texas 20,000 460,000
Enserch Exploration Inc.-Natural gas producer 20,000 235,000
Equitable of Iowa-A leading provider of individual annuities and insurance 44,000 2,018,500
Freeport-McMoRan Copper & Gold Class B-A copper and gold producer 8,000 239,000
Freeport-McMoRan Copper & Gold-Silver Conv. Pfd. Series D 52,000 884,000
Genuine Parts Company-National distributor of automotive replacement parts 8,000 356,000
Heinz H.J. Co.-Domestic packaged foods producer 10,000 357,500
International Business Machines Corp.-Largest computer maker 2,000 302,000
Jefferson-Pilot Corp.-Life insurance company 4,000 226,500
MCI Communications Corp.-Long distance telecommunications provider 10,000 326,875
Mobil Corp.-Large international oil company 2,000 244,500
Nicor Inc.-Natural gas distributor in Illinois 10,000 357,500
Occidental Petroleum Corp.-Chemical and energy producer 10,000 233,750
Philip Morris Inc.-Leading tobacco company 6,000 675,750
Plantronics, Inc.-Leading supplier of communication headset products and
services to users and providers worldwide 15,000 675,000
Providian Corp.-Financial services company 5,000 256,875
Questar Corp.-Regional natural gas producer in Utah 10,000 367,500
SAFECO Corp.-Insurance and financial services 10,000 394,375
Seagate Technology Inc.-Manufacturer of computer disk drive equipment 10,000 395,000
Standard Products Co.-Manufactures plastic and rubber products for the
automotive and appliance industries 10,000 255,000
The Coastal Corporation-A diversified gas pipeline company 10,000 488,750
Transamerica Corp.-Diversified financial services company 10,000 790,000
Total Investments in United States Securities (Cost $12,849,970) 14,108,750
====================================================================================================================================
Outstanding Put Options Purchased .66%
====================================================================================================================================
Japanese yen expiring 12/22/1997 at(Y)108.5 (Cost $460,350) 13,500,000 607,500
----------------------------------------------------------------------------------------=============
Total Investments in Securities and Options (Cost $77,586,208) 85,875,079
====================================================================================================================================
Other Assets, Less Liabilities 6.82%
====================================================================================================================================
Short-Term Investments, American Express Credit Corp. 5.80% due 11/7/1997 1,975M 1,975,000
at Cost Ford Motor Credit Co. 5.80% due 1/3/1997 2,000M 2,000,000
General Electric CapitalCorp. 6.10% due 1/2/1997 2,800M 2,800,000
Total Short-Term Investments 6,775,000
- -----------------------------------------------------------------------------------------------------------------------=============
Cash and Receivables,
Net of Liabilities (486,197)
----------------------------------------------------------------------------------------=============
Total Other Assets, Less Liabilities 6,288,803
====================================================================================================================================
Net Assets 100.00% $92,163,882
====================================================================================================================================
Class A Shares-Net asset value ($91,656,570 / 7,301,977 shares outstanding) $12.55
Class B Shares-Net asset value ($242,645 / 19,363 shares outstanding) $12.53
Class C Shares-Net asset value ($264,667 / 21,106 shares outstanding) $12.54
</TABLE>
The descriptions of the companies shown in the portfolio, which were obtained
from published reports and other sources believed to be reliable, are
supplemental and are not covered by the Independent Auditors' Report.
+ Restricted security under Rule 144A.
See Notes to Financial Statements.
8
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Year Ended December 31, 1996
------------------------------
Investment Income Equity Series Income Series
====================================================================================================================================
<S> <C> <C> <C>
Income Dividends $ 1,776,150 $ --
Interest 281,097 16,258,770
Foreign taxes withheld (171,272) (70,378)
Total income 1,885,975 16,188,392
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses Management fee 687,595 1,070,586
12b-1 distribution plan-Class A 236,553 524,429
12b-1 distribution plan-Class B 350 1,070
12b-1 distribution plan-Class C 625 35,461
Shareholder servicing 235,000 339,000
Custodian 72,000 70,000
Professional 44,000 66,000
Registration 48,000 40,000
Reports to shareholders 48,000 65,000
Directors 5,000 5,000
Miscellaneous 16,375 43,684
Total expenses 1,393,498 2,260,230
----------------------------------------------------------------------------------------------------------------------
Net investment income 492,477 13,928,162
----------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) on Investments and ForeignCurrencyTransactions
====================================================================================================================================
Net realized gain (loss) from investment and foreign currency transactions
Proceeds from sales 105,828,454 1,853,386,374
Cost of investments sold $103,271,393 1,853,918,925
----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 2,557,061 (532,551)
----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments and foreign currency holdings 4,234,210 (1,411,128)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment and foreign currency transactions 6,791,271 (1,943,679)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting From Operations $ 7,283,748 $ 11,984,483
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31, 1996 Year Ended December 31, 1995
---------------------------- ----------------------------
Equity Income Equity Income
Increase (Decrease) in Net Assets Series Series Series Series
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Operations Net investment income $ 492,477 $ 13,928,162 $ 1,079,606 $ 18,722,617
Net realized gain (loss) from investment and foreign
currency transactions 2,557,061 (532,551) 3,386,066 5,675,438
Net unrealized appreciation (depreciation) of investments
and foreign currency holdings 4,234,210 (1,411,128) 2,793,155 16,480,478
Net increase in net assets resulting from operations 7,283,748 11,984,483 7,258,827 40,878,533
----------------------------------------------------------------------------------------------------------------------
Undistributed net investment income included in price of share transactions (1,917) -- (33,583) --
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income-Class A (499,800) (15,524,985) (1,159,614) (19,419,519)
Net investment income-Class B -- (6,387) -- --
Net investment income-Class C -- (233,299) -- --
Net realized gain from investment and foreign currency
transactions-Class A (2,421,006) (2,767,516) (3,241,931) (3,359,656)
Net realized gain from investment and foreign currency
transactions-Class B (6,410) (8,277) -- --
Net realized gain from investment and foreign currency
transactions-Class C (6,734) (102,458) -- --
Total distributions (2,933,950) (18,642,922) (4,401,545) (22,779,175)
----------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sales of shares 19,131,767 9,429,839 12,580,328 10,404,685
Net asset value of shares issued to shareholders
in reinvestment of net investment income and realized
gain from investment transactions 2,759,133 9,798,593 4,172,873 11,575,339
Net assets of shares issued in exchange for assets
acquired in tax-free acquisition -- 7,559,607 -- --
Total 21,890,900 26,788,039 16,753,201 21,980,024
----------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (18,806,279) (55,925,723) (18,584,662) (51,278,631)
----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets derived from
share transactions 3,084,621 (29,137,684) (1,831,461) (29,298,607)
----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 7,432,502 (35,796,123) 992,238 (11,199,249)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets Beginning of year 84,731,380 238,290,596 83,739,142 249,489,845
----------------------------------------------------------------------------------------------------------------------
End of year+ $92,163,882 $202,494,473 $84,731,380 $238,290,596
======================================================================================================================
</TABLE>
+ Including underdistributed (overdistributed) net investment income of
$710,080 and $(1,260,840), for the Equity and Income Series, respectively,
as of December 31, 1996 and $719,320 and $(206,937), respectively, for the
year ended December 31, 1995. See Notes to Financial Statements.
9
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A Shares
------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, 1996 December 31, 1995 December 31, 1994 December 31, 1993 December 31, 1992
----------------- ----------------- ------------------ ------------------- -----------------
Per Share Equity Income Equity Income Equity Income Equity Income Equity Income
Operating Performance: Series Series Series Series Series Series Series Series Series Series
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $11.96 $8.58 $11.55 $7.98 $12.44 $9.02 $10.48 $8.87 $10.79 $9.40
- ------------------------------------------------------------------------------------------------------------------------------------
Income from
investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .07 .53 .16 .77 .10 .65 .04 .76 .078 .808
Net realized and unrealized
gain (loss) on
investments .93 (.04) .90 .6138 (.1125) (.9603) 2.635 .174 (.268) (.288)
Total from investment
operations 1.00 .49 1.06 1.3838 (.0125) (.3103) 2.675 .934 (.190) .520
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net
investment income (.07) (.61) (.17) (.6613) (.10) (.6035) (.10) (.784) (.12) (.840)
Dividends from net
realized gain (.21) -- (.48) -- (.7775) -- (.615) -- -- --
Distributions to shareholders
in excess of net investment
income -- -- -- -- -- (.1262) -- -- -- --
Distributions from foreign
currency transactions (.13) (.12) -- (.1225) -- -- -- -- -- (.21)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of
year $12.55 $8.34 $11.96 $8.58 $11.55 $7.98 $12.44 $9.02 $10.48 $8.87
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 8.37% 6.12% 9.19% 17.86% (0.09)% (3.40)% 26.05% 10.78% (1.73)% 5.76%
====================================================================================================================================
Ratios to Average Net Assets:
Expenses 1.52% 1.04% 1.63% 1.04% 1.56% 1.02% 1.68% 1.04% 1.84% 1.22%
Net investment income .54% 6.52% 1.31% 7.60% .79% 7.72% .70% 7.81% .76% 8.50%
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Class C Shares
----------------------- ------------------------
8/1/96(b) 8/1/96(b) 8/1/96(b) 7/15/96(b)
to 12/31/96 to 12/31/96 to 12/31/96 to 12/31/96
----------------------- ------------------------
Per Share Equity Income Equity Income
Operating Performance: Series Series Series Series
========================================================================================================== ========================
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.30 $8.24 $12.31 $8.14
- ---------------------------------------------------------------------------------------------------------- ------------------------
Income from investment operations
- ---------------------------------------------------------------------------------------------------------- ------------------------
Net investment income (loss) (.01) .23 .00 .21
Net realized and unrealized gain on investments .58 .22 .57 .37
Total from investment operations .57 .45 .57 .58
- ---------------------------------------------------------------------------------------------------------- ------------------------
Distributions
Dividends from net investment income -- (.23) -- (.26)
Dividends from net realized gain (.21) -- (.21) --
Distributions from foreign currency transactions (.13) (.12) (.13) (.12)
- ---------------------------------------------------------------------------------------------------------- ------------------------
Net asset value, end of period $12.53 $8.34 $12.54 $8.34
- ---------------------------------------------------------------------------------------------------------- ------------------------
Total Return(a)(c) 4.56% 5.58% 4.64% 7.43%
====================================================================================================================================
Ratios to Average Net Assets(c):
Expenses .83% .73% .83% .87%
Net investment income (loss) (.16)% 2.11% (.11)% 2.69%
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------------------------------------------
Supplemental Data
For All Classes: 1996 1995 1994 1993 1992
=========================================== ================= ================== ================= ===================
Supplemental Data Equity Income Equity Income Equity Income Equity Income Equity Income
For All Classes: Series Series Series Series Series Series Series Series Series Series
=========================================== ================= ================== ================= ===================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets, end of
year (000) $92,164 $202,494 $84,731 $238,291 $83,739 $ 249,490 $71,632 $ 277,495 $ 34,332 $148,137
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover
rate 81.97% 621.79% 83.32% 1,073.69% 75.39% 1,230.20% 197.59% 1,599.43% 136.75% 812.01%
Average commissions
per share paid on
equity transactions $.025 n/a $ .033 n/a n/a n/a n/a n/a n/a n/a
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a)Total return does not consider the effects of sales loads.
(b)Commencement of offering Class shares.
(c)Not annualized. See Notes to Financial Statements.
10
<PAGE>
Notes to Financial Statements
1. Significant Accounting Policies Lord Abbett Global Fund, Inc. (the "Company")
is an open-end management investment company. The Company consists of two
portfolios ("Series")-Lord Abbett Global Fund-Equity Series ("Equity Series")
and Lord Abbett Global Fund-Income Series ("Income Series"). Equity Series is
diversified as defined under the Investment Company Act of 1940. Income Series
is non-diversified. The financial statements have been prepared in conformity
with generally accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the Company. (a)
Market value is determined as follows: Securities listed or admitted to trading
privileges on any securities exchange are valued at the last sales price on the
exchange on which such securities are traded, as of the close of business on the
day the securities are being valued or, lacking any sales, at the latest price
on the basis of current quotations from dealers (as in the case of bonds), from
valuations furnished by an independent pricing service or, in their absence,
fair value as determined under procedures approved by the Board of Directors.
(b) It is the policy of the Company to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income. Therefore, no federal income tax provision is required.
(c) Security transactions are accounted for on the date that the securities are
purchased or sold (trade date). Realized gains and losses from security
transactions are calculated on the identified cost basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend date and interest
is recorded on the accrual basis. Discounts on strips are accrued to maturity
using the constant yield method. Net investment income (other than distribution
and service fees) and realized and unrealized gains or losses are allocated to
each class of shares based upon the relative proportion of net assets at the
beginning of the day. (d) A portion of proceeds from sales and costs of
repurchases of capital shares, equivalent to the amount of distributable net
investment income on the date of the transaction, is credited or charged to
undistributed net investment income. Undistributed net investment income per
share thus is unaffected by sales or repurchases of shares. (e) The Company
enters into forward currency contracts and currency option contracts in order to
hedge its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings. A forward contract is a commitment to purchase or sell a
foreign currency at a future date (usually the security transaction settlement
date) at a negotiated forward rate. A currency option contract gives you the
right, but not the obligation, to purchase or sell a foreign currency at a fixed
price during a specified period. The contracts are valued daily at current
exchange rates or market values (currency option) and any unrealized gain or
loss is included in net unrealized appreciation or depreciation of investment
and foreign currency holdings. The gain or loss, if any, arising from the
difference between the settlement value of the forward contract (or the cost of
the option) and the closing of such contracts, is included as net realized gain
or loss from investment and foreign currency transactions. Risk may arise due to
a change in the value of the foreign currency and as a result of the potential
inability of the counterparts to meet the terms of their contracts. (f) Net
realized gains and losses from foreign currency transactions represent net gains
and losses from sales and maturities of forward currency contracts, disposition
of foreign currencies, currency gains and losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amount of net investment income accrued and the U.S. dollar amount actually
received. The effect of changes in foreign currency exchange rates on
investments in securities is not segregated in the Statements of Operations from
the effect of changes in market prices of those securities. (g) Certain
components of net assets in the prior period have been reclassified to conform
to the current year presentation.
2. Management Fee and Other Transactions With Affiliates The Company has a
management agreement with Lord, Abbett & Co. ("Lord Abbett") pursuant to which
it supplies the Company with investment management services and executive and
other personnel, pays the remuneration of officers, provides office space and
pays for ordinary and necessary office and clerical expenses relating to
research, statistical work and the supervision of the Company's investment
portfolios. Lord Abbett has entered into a sub-advisory agreement with Edinburgh
Fund Managers PLC ("Edinburgh"). Edinburgh furnishes investment advisory
services in connection with the management of the Equity Series' portfolio. Lord
Abbett pays for the cost of Edinburgh's services. The management fee is based on
average daily net assets for each month at the annual rate of .75% for the
Equity Series and .50% for the Income Series.
The Company has Rule 12b-1 plans and agreements (the "Class A, Class B and Class
C Plans") with Lord Abbett Distributor LLC ("Distributor"), an affiliate of Lord
Abbett. The Company makes payments to Distributor which uses or passes on such
payments to authorized institutions. Pursuant to the Class A Plan, the Company
pays Distributor (1) an annual service fee of 0.25% of the average daily net
asset value of Class A shares and (2) a one-time distribution fee of up to 1% on
certain qualifying purchases and a supplemental annual distribution fee of 0.10%
of the average daily net asset value of Class A shares serviced by certain
qualifying institutions. Pursuant to the Class B Plan, the Company pays
Distributor an annual service and distribution fee of 0.25% and 0.75%,
respectively, of the average daily net asset value of the Class B shares.
Pursuant to the Class C Plan, the Company pays Distributor (1) a service fee and
a distribution fee, at the time such shares are sold, not to exceed 0.25% and
0.75%, respectively, of the net asset value of such shares sold and (2) at each
quarter-end after the first anniversary of the sale of such shares, a service
fee and a distribution fee at an annual rate not to exceed 0.25% and 0.75%,
respectively, of the average annual net asset value of such shares outstanding.
Lord Abbett may waive its management fee or reimburse each Series for certain of
its other expenses. Any such fees waived or expenses reimbursed are subject to
repayment by each Series pursuant to a formula based on the expense ratio of
each Series until October 31, 1998 or the termination of the management
agreement, whichever is earlier. As of 12/31/96, management fees waived and
other expenses reimbursed and not repaid by Equity Series amounted to $283,550.
For Income Series, all management fees waived and expenses reimbursed pursuant
to the aforementioned formula have been repaid. Distributor received the
following commissions on sales of Class A shares of the Company after
concessions were paid to authorized dealers:
Lord Abbett Dealers'
Series Commissions Concessions
- --------------------------------------------------------------------
Equity $42,840 $267,318
- --------------------------------------------------------------------
Income $24,131 $148,333
- --------------------------------------------------------------------
Certain of the Company's officers and directors have an interest in Lord Abbett.
3. Distributions Dividends from net investment income are declared semi-annually
for Equity Series and daily for Income Series. Distributions from net realized
gain from investment and foreign currency transactions are declared annually. At
December 31, 1996, accumulated net realized capital gain (loss) for financial
reporting purposes aggregated $109,428 for Equity Series and $(24,334,067) for
Income Series. The Income Series had a capital loss carryforward as of December
31, 1996 of approximately $24,300,000, of which $20,100,000 expires in 2002 and
$4,200,000 expires in 2004. Accordingly, no capital gain distribution is
expected to be paid to shareholders until net gains have been realized in excess
of such amount.
Income and capital gains distributions are determined in accordance with income
tax regulations which may differ from methods used to determine the
corresponding income and capital gains amounts in accordance with generally
accepted accounting principles.
11
<PAGE>
Notes to Financial Statements
4. Capital The Equity Series has authorized 65 million shares of $.001 par value
capital stock designated Class A, 15 million shares of $.001 par value capital
stock designated Class B and 20 million shares of $.001 par value capital stock
designated Class C. The Income Series has authorized 50 million shares of $.001
par value capital stock designated Class A, 30 million shares of $.001 par value
capital stock designated Class B and 20 million shares of $.001 par value
capital stock designated Class C. At December 31, 1996, paid in capital amounted
to $83,055,503 for Equity Series and $224,213,809 for Income Series.
Transactions in shares of capital stockwere as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1996
----------------------------------------------------------
Equity Series IncomeSeries
Class A Shares Amount Share Amount
- ------------------------------------------------------- ----------------------------
<S> <C> <C> <C> <C>
Sales of shares 1,491,466 $18,591,308 1,002,952 $8,346,570
Shares issued to share-
holders in reinvestment
of net investment income 218,914 2,746,014 1,155,234 9,582,418
Total 1,710,380 21,337,322 2,158,186 17,928,988
- ------------------------------------------------------- ----------------------------
Shares reacquired (1,491,443) (18,764,209) (6,592,178) (54,647,236)
Increase (decrease)
in shares 218,937 $2,573,113 (4,433,992) $(36,718,248)
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1995
----------------------------------------------------------
Equity Series Income Series
Shares Amount Shares Amount
- ------------------------------------------------------- ----------------------------
<S> <C> <C> <C> <C>
Sales of shares 1,071,166 $12,580,328 1,228,622 $10,404,685
Shares issued to share-
holders in reinvestment
of net investment income 348,579 4,172,873 1,361,451 11,575,339
Total 1,419,745 16,753,201 2,590,073 21,980,024
- ------------------------------------------------------- ----------------------------
Shares reacquired (1,584,676) (18,584,662) (6,086,496) (51,278,631)
Decrease in shares (164,931) $(1,831,461) (3,496,423) $(29,298,607)
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Period August 1, 1996
(Commencement of Offering Class B Shares
to December 31, 1996)
----------------------------------------------------------
Equity Series Income Series
Class B Shares Amount Shares Amount
- ------------------------------------------------------- ----------------------------
<S> <C> <C> <C> <C>
Sales of shares 20,863 $267,552 68,234 $574,870
Shares issued to share-
holders in reinvestment
of net investment income 510 6,386 1,287 10,787
Total 21,373 273,938 69,521 585,657
- ------------------------------------------------------- ----------------------------
Shares reacquired (2,010) (26,432) -- --
Increase in shares 19,363 $247,506 69,521 $585,657
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
August 1, 1996 July 15, 1996
(Commencement of (Commencement of
Offering Class C Shares) Offering Class C Shares)
to December 31, 1996 to December 31, 1996
-------------------------------------------------------------
Equity Series Income Series
Class C Shares Amount Shares Amount
- ------------------------------------------------------- ----------------------------
<S> <C> <C> <C> <C>
Sales of shares 21,789 $272,907 60,986 $508,399
Shares issued to share-
holders in reinvestment
of net investment income 537 6,733 24,561 205,388
Shares issued to share-
holders in exchange for
assets acquired in
tax-free acquisition -- -- 928,927 7,559,607
Total 22,326 279,640 1,014,474 8,273,394
- ------------------------------------------------------- ----------------------------
Shares reacquired (1,220) (15,638) (151,192) (1,278,487)
Increase in shares 21,106 $264,002 863,282 $6,994,907
- ---------------------------------------------------------------------------------------
</TABLE>
5. Purchases and Sales of Investments During the year ended December 31, 1996,
purchases and sales of investment securities, exclusive of short-term
investments, were $70,399,436 and $71,226,700, respectively, for the Equity
Series and $1,358,985,109 and $1,443,787,210, respectively, for the Income
Series. As of December 31, 1996, net unrealized appreciation, unrealized
appreciation and unrealized depreciation of investments based on cost for
federal income tax purposes were as follows:
Net Unrealized Unrealized Unrealized
Series Appreciation Appreciation Depreciation
- --------------------------------------------------------------------------------
Equity $ 8,288,871 $13,502,445 $ 5,213,574
Income $ 3,875,571 $ 4,955,903 $ 1,080,332
The cost of investments for federal income tax purposes is substantially the
same as that used for financial reporting purposes. At December 31, 1996, the
Income Series had outstanding forward currency contracts to sell foreign
currencies as follows:
INCOME SERIES
- --------------------------------------------------------------------------------
Value at
Foreign Currency Settlement Date Current
Sell Contracts Receivable Value Depreciation
- --------------------------------------------------------------------------------
Deutsche Marks,
expiring 2/10/1997 to 4/3/1997 $52,776,926 $53,101,736 $324,810
- --------------------------------------------------------------------------------
6. Directors' Remuneration The Directors of the Company associated with Lord
Abbett and all officers of the Company receive no compensation from the Company
for acting as such. Outside Directors' fees and retirement costs are allocated
among all funds in the Lord Abbett group based on net assets of each fund. A
portion of the directors' fees accrued has been deemed invested in shares of the
Company under a deferred compensation plan contemplating future payment of the
value of those shares. As of December 31, 1996, the aggregate amount in
Directors' accounts maintained under the plan was $46,270.
7. Acquisition On July 12, 1996, Income Series acquired the net assets of Lord
Abbett Securities Trust-Global Income Trust (the "Trust") pursuant to a plan of
reorganization approved by the Trust's shareholders on June 19, 1996. The
acquisition was accomplished by a tax-free exchange of 928,927 shares of newly
issued Class C shares for 1,631,867 shares of the Trust valued at $7,559,607 in
the aggregate on July 12, 1996. The aggregate net assets of the Income Series
and the Trust immediately before the acquisition were $204,257,984 and
$7,559,607 (including $48,406 of net unrealized depreciation and $110,517 of
accumulated net realized losses), respectively.
8. Proxy Results (unaudited) The Company's shareholders voted on the following
proposals at the Annual Meeting of Shareholders held on June 19, 1996. Each
Director was elected and all other proposals were approved. The description of
each proposal and the results of the shareholder vote are as follows:
Election of Directors For Withheld
- --------------------------------------------------------------------------------
Ronald P. Lynch 28,472,152 313,848
Robert S. Dow 28,466,753 319,247
Thomas S. Henderson 28,472,756 313,244
E. Thayer Bigelow 28,443,479 342,521
Stewart S. Dixon 28,469,000 317,000
John C. Jansing 28,443,894 342,106
C. Alan MacDonald 28,452,160 333,840
Hansel B. Millican, Jr 28,464,165 317,835
Thomas J. Neff 28,468,128 317,872
- --------------------------------------------------------------------------------
12
<PAGE>
Notes to Financial Statements
<TABLE>
<CAPTION>
For Against Abstain Non-Vote
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ratification of Deloitte & Touche LLP as independent
public accountants 27,842,989 179,233 763,778 --
Approval of certain changes in fundamental investment
policies and restrictions
Income Series 15,253,851 844,701 1,110,279 5,874,600
Equity Series 4,170,683 229,512 271,574 1,030,800
Approval of new Distribution Plan and Agreement
Income Series 15,097,464 993,821 1,117,546 5,874,600
Equity Series 4,042,547 319,859 309,363 1,030,800
Approval of an amendment to the Articles of
Incorporation authorizing the creation of classes and
series of shares and confirming that the Directors
may impose contingent deferred sales charges on certain
redemptions of new classes of shares
Income Series 15,577,346 941,772 1,162,135 5,402,178
Equity Series 4,258,280 240,285 301,379 902,625
Approval of (1) a new Sub-Investment Management
Agreement between Lord Abbett and Dunedin and
(2) payment to Dunedin of sub-advisory fees for
the period from March 19, 1996 through the date of
shareholder approval of the new Sub-Investment
Management Agreement
Equity Series 5,158,437 193,642 303,564 46,926
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Independent Auditors' Report
The Board of Directors and Shareholders,
Lord Abbett Global Fund, Inc.:
We have audited the accompanying statements of net assets of the Equity Series
and the Income Series of Lord Abbett Global Fund, Inc. as of December 31, 1996,
the related statements of operations and of changes in net assets and the
financial highlights for each of the periods presented. These financial
statements and the financial highlights are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1996 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Equity Series
and the Income Series of Lord Abbett Global Fund, Inc. at December 31, 1996, the
results of their operations, the changes in their net assets and the financial
highlights for the periods presented in conformity with generally accepted
accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
New York, New York
February 12, 1997
Our Management
Board of Directors
Robert S. Dow
E. Wayne Nordberg
E. Thayer Bigelow*+
Stewart S. Dixon*
John C. Jansing*
C. Alan MacDonald*+
Hansel B. Millican, Jr.*+
Thomas J. Neff*
* Outside Director
+ Audit Committee
Investment Manager and
Underwriter
Lord, Abbett & Co. and
Lord Abbett Distributor LLC
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
212-848-1800
Sub-Adviser
Edinburgh Fund Managers PLC
Donaldson House
97 Haymarket Terrace
Edinburgh, Scotland EH12 5HD
Custodian
The Bank of New York
New York, NY
Transfer Agent
United Missouri Bank of
Kansas City, N.A.
Shareholder Servicing Agent
DST Systems, Inc.
P.O. Box 419100
Kansas City, MO 64141
800-821-5129
Auditors
Deloitte & Touche LLP
New York, NY
Counsel
Debevoise & Plimpton
New York, NY
Copyright (C) 1997 by Lord Abbett Global Fund, Inc.
767 Fifth Avenue, New York, NY 10153-0203
This publication, when not used for the general information of shareholders of
Lord Abbett Global Fund, Inc., is to be distributed only if preceded or
accompanied by a current prospectus which includes information concerning each
Series' investment objective and policies, sales charges and other matters.
There is no guarantee that the forecasts contained within this publication will
come to pass.
All rights reserved. Printed in the U.S.A.
<PAGE>
Investing in the
Lord Abbett
Family of Funds
<TABLE>
<CAPTION>
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GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
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INCOME
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Growth & Balanced Income Tax-Free Money
Growth Funds Funds Income Funds Fund Funds Income Funds Market Fund
Developing Global Fund- Affiliated Fund Balanced Series Bond-Debenture o National U.S. Government
Growth Fund Equity Series Fund o California Securities
Growth & o Connecticut Money Market
International Mid-Cap Income Series Global Fund- o Florida Fund*+
Series Value Fund Income Series o Georgia
Research Fund- o Hawaii
Research Fund- Large-Cap Limited Duration o Michigan
Small-Cap Series U.S. Government o Minnesota
Series Securities Series* o Missouri
o New Jersey
U.S. Government o New York
Securities Series* o Pennsylvania
o Texas
o Washington
</TABLE>
Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe your financial adviser provides value in helping you identify and
understand your investment objectives and, ultimately, offering fund
recommendations suitable for your individual needs.
This publication, when used as sales literature, is to be distributed only if
preceded or accompanied by a current prospectus for Lord Abbett Global Fund.
For more complete information about any other Lord Abbett fund, including
charges and expenses, call your financial adviser or Lord Abbett Distributor LLC
at 800-874-3733 for a prospectus. Read it carefully before investing.
When you invest in a family of funds, you benefit from:
Diversification. You and your financial adviser can diversify your investments
between equity and income funds.
Flexibility. As your investment goals change, your financial adviser can help
you reallocate your portfolio.
As an investor in the Lord Abbett Family of Funds, you have access to 28
portfolios designed to meet a variety of investment needs. While you may
reallocate your assets among our funds at any time, we recommend speaking with
your financial adviser to help you customize your investment plan.
Numbers to Keep Handy
For Shareholder Account or
Statement Inquiries:
800-821-5129
For Literature:
800-874-3733
For More Information:
800-426-1130
Visit our Web site:
http://www.lordabbett.com
* An investment in this Fund is neither insured nor guaranteed by the U.S.
Government.
+ There can be no assurance that this Fund will be able to maintain a stable
net asset value of $1.00 per share. This Fund is managed to maintain, and
has maintained, its stable $1.00 per share price.
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[LOGO] LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
LORD ABBETT DISTRIBUTOR LLC
- ------------------------------------------------------------ LAG-2-1296
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203 (2/97)
