Lord Abbett Global
Fund
o Income Series
o Equity Series
1997 ANNUAL REPORT
[TEA AND COFFEE CUPS]
A globally-diversified mutual fund with two
portfolios to help you achieve your goals
[LOGO]
<PAGE>
Report to Shareholders
For the Fiscal Year Ended December 31, 1997
[PHOTO OMITTED]
/s/ ROBERT S. DOW
- ----------------------------------
ROBERT S. DOW
CHAIRMAN
JANUARY 14, 1998
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, 1997. Below is
an overview of each Series' class-specific data.
Income Series Equity Series
- ----------------------------------------------- -----------------------------
Year Ended Year Ended
December 31, 1997 December 31, 1997
- ----------------------------------------------- -----------------------------
Class A Class B Class C Class A Class B Class C
- ----------------------------------------------- -----------------------------
Net asset value $8.09 $8.09 $8.09 $12.08 $12.03 $12.05
Dividends $0.581 $0.523 $0.523 $ 0.33 $ 0.26 $ 0.27
Capital gains -- -- -- $ 1.11 $ 1.11 $ 1.11
Total return* +4.2% +3.5% +3.5% +8.0% +7.2% +7.3%
About the Income Series
During the year, your Series benefited from exposure to high-quality government
issues, particularly in the U.S., Germany and the United Kingdom (U.K.). With
the Federal Reserve Board (the "Fed") on hold and no adjustments to monetary
policy during the latter part of the year, policy makers and market participants
turned their attention primarily to the impact of the Asian currency crisis. The
resulting flight to quality assets affected yields, driving them lower in the
global investment-grade bond markets.
The U.S. dollar remained a strong reserve of value, particularly against the yen
and the German mark. While your Series held U.S. assets averaging about 45% of
the portfolio over the year, exposure to Pacific Rim countries such as Japan,
Australia and New Zealand was reduced or eliminated, reflecting the immediate
impact of the Asian crisis. Core European holdings were increased, as was
exposure to the U.S. market.
We will continue to monitor the Asian markets to determine global investment
opportunities. We anticipate that the U.S. dollar will remain strong in 1998,
and we will maintain a commitment to U.S. and other high-grade global assets.
About the Equity Series
The most notable change in your Series over the year was the shift in country
allocation during the past six months. U.S. holdings were increased to just
under 45% of the portfolio to take advantage of anticipated strong performance
in the U.S. market. We reduced holdings in the Pacific Rim, cutting exposure to
Japan by half, and, as a result, the portfolio was not greatly affected by the
crisis in the Asian markets.
Your Series benefited from a slight overweighting in Continental European
holdings, which performed well as a result of specific stock selection. A hedge
against Japanese currency produced high returns when the yen weakened against
the dollar. Stocks in the financial sector (such as banks) yielded strong
returns, as did consumer noncyclicals (companies whose performance is not tied
to economic growth), and we expect to continue to emphasize these sectors.
We believe that the U.S. economy will continue to exhibit broad-based strength
in the first half of 1998, then slow over the latter part of the year,
reflecting accumulating trade weakness and lesser gains in capital spending.
Inflation should remain relatively steady at a rate of approximately 21 1/42%
over the period. The economic slowdown we are expecting will likely be
accompanied by earnings deceleration, possibly resulting in lower market returns
than investors have received during the last three years. While we remain
watchful of the situation in Asia, the profit outlook is generally favorable in
Europe as key countries experience economic growth.
Thank you for including the Lord Abbett Global Fund as part of your investment
portfolio. We look forward to helping you achieve your financial goals in 1998
and beyond.
* Total return is the percent change in net asset value assuming the
reinvestment of all distributions and does not reflect the deduction of
sales charges.
<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 in the two charts below.
<TABLE>
<CAPTION>
A Comparison of 10-Year Government Bonds, After Currency Translations
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 10 Years
Ended
12/31/97
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Canada 19.0 16.1 5.6 24.1 (0.5) 13.2 (13.6) 26.1 11.3 8.6 168.6
- -------------------------------------------------------------------------------------------------------
France 7.3 8.9 19.8 16.4 4.6 17.0 (0.5) 31.3 4.8 (3.5) 163.5
- -------------------------------------------------------------------------------------------------------
Germany (3.0) 5.6 10.5 10.8 6.2 10.6 5.1 27.2 (0.3) (5.4) 85.7
- -------------------------------------------------------------------------------------------------------
Japan 2.7 (14.4) 3.0 24.2 11.3 30.8 5.5 12.9 (5.9) (4.3) 75.6
- -------------------------------------------------------------------------------------------------------
United Kingdom 2.3 (3.5) 34.2 14.7 (3.9) 21.4 (5.4) 17.5 18.4 11.5 160.1
- -------------------------------------------------------------------------------------------------------
United States 8.8 14.0 6.7 17.0 7.3 12.1 (6.7) 23.6 2.9 11.5 146.4
- -------------------------------------------------------------------------------------------------------
</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 following table was depicted as a bar graphic in the printed material.]
- -----------------------------
United States 5.75%
- -----------------------------
Australia 6.01%
- -----------------------------
Canada 5.53%
- -----------------------------
Denmark 5.66%
- -----------------------------
France 5.35%
- -----------------------------
Germany 5.32%
- -----------------------------
Italy 5.65%
- -----------------------------
Japan 1.95%
- -----------------------------
New Zealand 7.03%
- -----------------------------
South Africa 13.90%
- -----------------------------
Spain 5.60%
- -----------------------------
Sweden 6.00%
- -----------------------------
United Kingdom 6.21%
- -----------------------------
Semi-annual yields to maturity on 10-year government benchmark bonds. Source:
Union Bank of Switzerland (as of December 31, 1997).
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.
Data as of 12/31/97
High Quality of
Long-Term
Portfolio Holdings:
AAA 93.6%
AA 1.9%
BBB 4.5%
[The following table was depicted as a geographical chart in the printed
material.]
United States 46.21%
Australia 2.51%
Canada 2.15%
Denmark 6.06%
Ireland 2.13%
Netherlands 1.27%
Germany 10.93%
Italy 7.42%
South Africa 4.82%
Spain 4.42%
Sweden 5.96%
UK 6.12%
Data as of 12/31/97
1
<PAGE>
Important Information
Prior to July 15, 1996, the Income Series had only one class of shares, which is
now designated as Class A shares. Results from periods from July 15, 1996 onward
relate to Class A shares. 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 less regulation and the potential for less 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 3/31/98, 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, 1997
<TABLE>
<CAPTION>
Principal
Amount
Rating*: S&P in Local
Investments or Moody's Currency Market Value
==================================================================================================================================
<S> <C> <C> <C> <C>
Investments in Securities 92.30%
==================================================================================================================================
Foreign 49.65%
==================================================================================================================================
Australia 2.31% Australian Commonwealth Treasury 83/4% due 8/15/2008 AAA $ 4,385M $ 3,442,405
- -----------------------------------------------------------------------------------------------------------------------===========
Canada 1.98% Government of Canada Notes 9% due 6/1/2025 AAA 3,000M 2,953,233
- -----------------------------------------------------------------------------------------------------------------------===========
Denmark 5.60% Denmark Government 7% due 11/15/2007 AAA 34,000M 5,449,010
Denmark Nykredit 7% due 10/1/2029 AA 19,949M 2,878,820
Total 8,327,830
- -----------------------------------------------------------------------------------------------------------------------===========
Germany 10.09% Deutschland Republic Zero Coupon due 7/4/2007 AAA 4,280M 404,400
Deutschland Republic 61/2% due 7/4/2027 AAA 5,000M 3,010,225
Deutschland Republic 73/8% due 1/3/2005 AAA 15,975M 10,030,543
Deutschland Republic 9% due 10/20/2000 AAA 2,520M 1,562,395
Total 15,007,563
- -----------------------------------------------------------------------------------------------------------------------===========
Ireland 1.96% Irish Government 8% due 10/18/2000 AAA 1,900M 2,920,792
- -----------------------------------------------------------------------------------------------------------------------===========
Italy 6.86% Republic of Italy (BTPS) 9% due 11/1/2023 AAA 3,700,000M 2,893,400
Republic of Italy (BTPS) 101/2% due 4/1/2005 AAA 2,000,000M 1,462,000
Republic of Italy (BTPS) 12% due 9/1/2001 AAA 8,450,000M 5,838,950
Total 10,194,350
- -----------------------------------------------------------------------------------------------------------------------===========
Netherlands 1.17% Netherlands Government 83/4% due 1/15/2007 AAA 2,850M 1,739,056
- -----------------------------------------------------------------------------------------------------------------------===========
South Africa 4.45% Development Bank of South Africa Zero Coupon due 12/31/2027 BBB 200,000M 1,122,000
Republic of South Africa 12% due 2/28/2005+ BBB 29,000M 5,500,256
Total 6,622,256
- -----------------------------------------------------------------------------------------------------------------------===========
Spain 4.08% Spanish Government 8.40% due 4/30/2001+ AAA 834,900M 6,074,732
- -----------------------------------------------------------------------------------------------------------------------===========
Sweden 5.51% Kingdom of Sweden SGB 8% due 8/15/2007 AAA 56,500M 8,191,144
- -----------------------------------------------------------------------------------------------------------------------===========
United Kingdom 5.64% U.K. Treasury 10% due 9/8/2003 AAA 4,390M 8,397,824
----------------------------------------------------------------------------------------===========
Total Investments in Foreign Securities (Cost $75,559,158) 73,871,185
- -----------------------------------------------------------------------------------------------------------------------===========
</TABLE>
2
<PAGE>
Statement of Net Assets
INCOME SERIES December 31, 1997
<TABLE>
<CAPTION>
Principal
Amount
Rating*: S&P in Local
Investments or Moody's Currency Market Value
==================================================================================================================================
<S> <C> <C> <C> <C>
United States 42.65%
==================================================================================================================================
Federal National Mortgage Association 61/2%
due on an announced basis AAA $ 17,000M $ 16,787,500
U.S. Treasury Notes 63/8% due 8/15/2027 AAA 3,000M 3,164,531
U.S. Treasury Notes 7% due 7/15/2006 AAA 20,250M 21,860,508
U.S. Treasury Notes 87/8% due 2/15/1999+ AAA 20,000M 20,693,750
U.S. Treasury Strips due 11/15/2021 AAA 4,000M 952,500
Total Investments in United States Securities (Cost $61,994,236) 63,458,789
---------------------------------------------------------------------------------------============
Total Investments in Securities (Cost $137,553,394) 137,329,974
==================================================================================================================================
Other Assets, Less Liabilities 7.70%
==================================================================================================================================
Other Assets
Short-Term Investments Federal Home Loan Mortgage Corporation 15% due 1/14/1998 AAA 16,760M 16,812,375
U.S. Treasury Notes 51/2% due 11/15/1998 AAA 4,400M 4,395,875
Federal Home Loan Bank Discount 43/4% due 1/2/1998 AAA 1,300M 1,299,657
Other (See Note 5) 34,127,929
Total Short-Term Investments (Cost $56,822,925) 56,635,836
---------------------------------------------------------------------------------------============
Cash 233,579
- ----------------------------------------------------------------------------------------------------------------------============
Receivable for: Securities sold 162,403,249
Interest 4,724,801
Capital stock sold 64,314
Total Other Assets 224,061,779
==================================================================================================================================
Liabilities
Payable for: Securities purchased 177,355,833
Distributions 660,225
Capital stock reacquired 189,686
Cash collateral on securities loaned 34,127,929
Other 273,151
Total Liabilities 212,606,824
---------------------------------------------------------------------------------------============
Total Other Assets, Less Liabilities 11,454,955
==================================================================================================================================
Net Assets 100.00% $148,784,929
==================================================================================================================================
Class A Shares-Net asset value
($142,331,542 / 17,586,613 shares outstanding) $8.09
Class B Shares-Net asset value
($1,344,292 / 166,168 shares outstanding) $8.09
Class C Shares-Net asset value
($5,109,095 / 631,205 shares outstanding) $8.09
* Ratings have not been audited by Deloitte &
Touche LLP.
+ Security on loan. See Note 5.
See Notes to Financial Statements.
</TABLE>
3
<PAGE>
About Lord Abbett's Equity Series
Why Invest Internationally?
International investors have a larger choice of exceptional companies to choose
from than investors who concentrate solely on U.S.-based companies.
Percent of the World's Publicly Traded Companies
[The following material was depicted as a pie chart in the printed material.]
Based in the U.S. 50%
Based outside of the U.S. 50%
Source: Morgan Stanley Capital International. Data is as of 12/31/97 and is
based on market capitalization.
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 stock portfolio
historically has 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
WEIGHTS MS EAFE RISK RETURN
MS USA
100 0 15.12 12.52
90 10 14.48 12.65
80 20 14.00 12.75
70 30 13.71 12.82
60 40 13.62 12.87
50 50 13.73 12.88
40 60 14.03 12.86
30 70 14.52 12.81
20 80 15.18 12.73
10 90 15.98 12.62
0 100 16.91 12.48
Derived using returns from December 1969 to December 1997. Past performance is
no indication of future results. Source: Morgan Stanley Capital International.
Managed to Participate in Global Growth
Portfolio diversification positions the Equity Series to participate in global
opportunities. Eighteen countries were represented in the Equity Series at year
end; see the portfolio of investments in long-term securities on page 5.
[The following table was depicted as a geographical chart in the printed
material.]
United States 46.21%
Mexico 1.05%
Brazil 0.96%
Argentina 0.50%
Sweden 3.27%
Switzerland 4.24%
Denmark 0.71%
Netherlands 3.63%
UK 11.84%
France 5.80%
Spain 0.16%
Germany 5.87%
Italy 1.29%
South Africa 0.28%
Japan 12.42%
Hong Kong 0.92%
Singapore 0.72%
Australia 2.51%
Data as of 12/31/97
4
<PAGE>
Statement of Net Assets
EQUITY SERIES December 31, 1997
<TABLE>
<CAPTION>
Investments Shares Market Value
<S> <C> <C> <C>
=======================================================================================================================
Investments in Securities 98.37%
=======================================================================================================================
Foreign 55.09%
=======================================================================================================================
Argentina .49% Irsa Gdr-Real estate company 5,200 $ 197,600
Telecom Argentina ADR-Large telecommunications company 5,600 199,850
Total -- 397,450
- -------------------------------------------------------------------------------------------------------------==========
Australia 2.31% Amcor Ltd.-Paper and packaging manufacturing 32,000 140,617
Fletcher Challenge Energy-Oil exploration 48,000 168,178
Futuris Corp. Ltd.-Conglomerate 215,000 235,146
Gio Australia Holdings-Insurance/fund management company 102,000 260,497
Goodman Fielder Ltd.-Food processing 165,000 262,085
Lend Lease Corp.-Financial services company 21,400 417,942
Westpac Banking Corp.-Major bank 60,000 383,412
Total -- 1,867,877
- -------------------------------------------------------------------------------------------------------------==========
Brazil .94% Electrobras Preferred ADR-Electric power utility 12,800 323,200
Telebras ADR-National telecommunications company monopoly 3,735 436,527
Total -- 759,727
- -------------------------------------------------------------------------------------------------------------==========
Denmark .70% Den Danske Bank-Largest bank in Denmark 4,250 566,467
- -------------------------------------------------------------------------------------------------------------==========
France 5.70% Compagnie Fin Paribas-Major banking and finance group 8,000 698,357
Pinault Printemps Redoute-One of the principal
retailing and specialist distribution in France 1,550 830,727
Rhone Poulenc Series A-Chemicals and pharmaceuticals manufacturer 22,800 1,025,984
Suez Lyonnaise des Eaux-Water and business services group 10,670 1,186,110
Total SA `B' Shares-Energy and petroleum company 7,945 868,603
Total -- 4,609,781
- -------------------------------------------------------------------------------------------------------------==========
Germany 5.79% Commerzbank-Major bank 27,500 1,069,921
Mannesmann-Engineering group 2,250 1,129,252
Metro-Merchandising company 12,700 450,345
Thyssen-Largest producer of steel in Germany 3,860 823,832
Veba-Conglomerate with involvement in the oil and
electricity industries 17,550 1,194,905
Total -- 4,668,255
- -------------------------------------------------------------------------------------------------------------==========
Hong Kong .91% Guoco Group-Major bank 64,000 156,518
Hong Kong & China Gas Ltd.-Utility company 168,000 325,231
Hutchison Whampoa-Ports, telecommunications and
property conglomerate 40,000 250,888
Total -- 732,637
- -------------------------------------------------------------------------------------------------------------==========
Italy 1.26% ENI-Former state-owned oil and gas company 180,000 1,021,680
- -------------------------------------------------------------------------------------------------------------==========
Japan 12.21% Bank of Tokyo-Mitsubishi Ltd.-Major banks 30,000 412,971
Bridgeston Corp.-Manufacturer of rubber-based products 25,000 541,067
Canon Inc.-Precision equipment manufacturer 12,000 278,984
Canon Sales Co. Inc.-Distributor 20,000 227,898
Citizen Watch Co. Ltd.-Watch manufacturer 29,000 194,059
East Japan Railway-Railroad company 22 99,098
Fuji Machine Manufacturing-A major manufacturer
of automated assembly machines for electronic
parts and components 7,000 168,629
Fuji Photo Film Ltd.-Major manufacturer of photo-
sensitive materials 12,000 458,856
Fujikura Cable Ltd.-Manufacturer of fiber-optic cable 40,000 264,300
Hitachi Ltd.-One of Japan's major electrical
engineering groups with operations ranging
from computers to electrical power systems 65,000 462,300
Industrial Bank of Japan-Major bank 25,000 177,807
Ito Yokado Co.-Diversified retailing operations 2,000 101,713
Matsushita Electric Industrial Co.-Consumer
electronics manufacturer 23,000 335,959
</TABLE>
5
<PAGE>
Statement of Net Assets
EQUITY SERIES December 31, 1997
<TABLE>
<CAPTION>
Shares or
Principal Amount
Investments in Local Currency Market Value
=======================================================================================================================
<S> <C> <C> <C>
Matsushita Electric Works-Manufacturer of electronic components,
principally for the construction industry 30,000 $ 259,254
Mitsui & Company-General trading company 82,000 484,120
Mitsui Fudosan-Real estate company 62,000 597,432
Nichiei Co.-Financial services company 3,600 382,686
Nippon Comsys Corp.-Construction and housing company 22,000 270,877
Nippon Telephone & Telegraph-Japan's largest
telecommunications company 78 668,094
Nissan Motors-Japan's second, and the world's fourth,
largest auto manufacturer 87,000 359,284
Nitto Denko Corp.-Manufacturer of electronic components 20,000 344,142
Ono Pharmaceuticals-Pharmaceutical manufacturer 7,000 135,439
Sankyo Co.-Pharmaceutical manufacturer 8,000 180,483
Sanwa Bank-Large commercial bank 20,000 201,896
Sekisui Chemical-Chemical and resin producer 55,000 278,872
Shiseido Co.-Cosmetic manufacturer 20,000 272,254
STB Cayman Capital Conv. Deb. 0.5% due 10/1/2007
(Sumitomo Trust & Banking-Bank trust) 30,000M 169,770
Sumitomo Electric Industries-Manufacturer of electric
wire and cables 37,000 503,670
Sumitomo Trust & Banking-One of the leading trust banks in Japan 38,000 197,034
Taishe Pharmaceuticals Co.-Pharmaceuticals manufacturer 11,000 280,132
Tokyo Electric Power-Electric utility 12,000 218,416
Toyota Motor Corp.-Automobile manufacturer 12,000 343,224
Total -- 9,870,720
- -------------------------------------------------------------------------------------------------------------==========
Mexico 1.04% Cementos de Mexico ADR-Largest cement producer 17,000 146,094
Fomento Economico Mexicano ADR-Mexican brewer and cola bottler+ 35,600 280,350
Gruma SA de C.V. Class B-Flour manufacturer 37,740 149,745
Kimberly Clark de Mexico SA Series A-Paper and packaging company 55,000 260,508
Total -- 836,697
- -------------------------------------------------------------------------------------------------------------==========
Netherlands 3.57% Ahold NV-Merchandising company 33,300 869,310
ING Group NV-Banking and insurance company 21,000 885,018
VNU-Publishing group 40,000 1,129,096
Total -- 2,883,424
- -------------------------------------------------------------------------------------------------------------==========
Singapore .71% DBS Land-Real estate company 109,000 167,588
Development Bank of Singapore-Leading Singapore bank and
financial services company 34,587 296,812
United Overseas Bank-One of the leading bank and financial
services companies 20,000 111,442
Total -- 575,842
- -------------------------------------------------------------------------------------------------------------==========
South Africa .27% Rembrandt Group Ltd.-Consumer products conglomerate 30,000 218,844
- -------------------------------------------------------------------------------------------------------------==========
Spain .16% Enersis SA Sponsored ADR-Electric power utility 4,500 129,938
- -------------------------------------------------------------------------------------------------------------==========
Sweden 3.22% Astra Series A-Pharmaceutical company 54,600 948,708
Ericsson (LM) Series B-Telecommunications company 15,700 592,217
Nordbanken Holding-Major bank 186,900 1,060,452
Total -- 2,601,377
- -------------------------------------------------------------------------------------------------------------==========
Switzerland 4.17% Novartis-Pharmaceutical and chemical company 685 1,109,445
Roche Holdings-Leading pharmaceutical group 110 1,090,378
Union Bank of Switzerland-Major bank 810 1,169,084
Total -- 3,368,907
- -------------------------------------------------------------------------------------------------------------==========
United Kingdom 11.64% Anglian Water-Utility company 36,100 481,043
Barclays-Clearing bank 15,000 398,526
British Aerospace-Aerospace manufacturer 13,500 386,656
British Petroleum-Integrated oil company 58,499 770,373
</TABLE>
6
<PAGE>
Statement of Net Assets
EQUITY SERIES December 31, 1997
<TABLE>
<CAPTION>
Investments Shares Market Value
=======================================================================================================================
<S> <C> <C> <C>
British Telecom-Leading domestic telecommunications group 30,000 $ 236,772
Diageo-Diversified company involved in brewing,
distilling and hotels 53,200 488,796
General Electric Company-Electronics group 63,000 413,526
GKN Ord-Engineering company 16,700 342,590
Glaxo Wellcome-Pharmaceutical manufacturer 25,500 603,241
HSBC Holdings plc-Bank 15,000 387,668
Legal & General Group-Insurance company 40,000 345,472
Lloyd TSB Group-Banking company 64,000 827,552
Marks & Spencer-Merchandising company 62,500 615,881
SmithKline Beecham Ord-United Kingdom-based pharmaceutical company 54,000 555,665
Unilever-Food and consumer products manufacturer 52,000 446,118
Vodafone Group-Mobile telephone operator 125,000 912,000
Whitbread and Co.-Brewer and leisure operator 25,900 376,444
Wolseley-Leading distributor of plumbing and bathroom
products in the U.K., France, U.S. and Austria 57,000 452,911
Zeneca Group-Pharmaceutical company 10,500 369,654
Total 9,410,888
------------------------------------------------------------------------------------===========
Total Investments in Foreign Securities (Cost $40,001,636) 44,520,511
=======================================================================================================================
United States 43.28%
=======================================================================================================================
Aetna Inc.-Major multi-line insurer and provider of
managed health plans 5,350 377,509
Air Products & Chemicals Inc.-Industrial gas producer 11,225 923,256
Allstate Corp.-Second largest provider of
personal lines of insurance in the U.S. 6,450 586,144
American Home Products Corp.-Producer of drugs, food
housewares and packaged medicine and medical products 8,200 627,300
Amoco Corp.-Major integrated petroleum and natural gas
company with sizable interests in chemicals 6,025 512,878
Archer-Daniels-Midland Co.-Leading processor and seller
of agricultural commodities 29,865 647,697
Baltimore Gas & Electric Co.-Regional electric utility company 15,575 530,523
BankAmerica Corp.-Major money-center bank 6,725 490,925
BankBoston, N.A.-Leading New England regional bank 3,675 345,220
Bell Atlantic Corp.-Regional telecommunications company 4,400 400,400
BellSouth Corp.-Regional telecommunications company 7,475 420,936
Best Foods (Formerly CPCInternational, Inc.)-Producer
of diversified packaged foods 9,225 996,300
Bristol-Myers Squibb Company-Major worldwide pharmaceutical
and consumer health products company 7,300 690,763
Carolina Power & Light Co.-Regional electric utility company 9,750 413,766
Chase Manhattan Corp.-Major money-center bank holding company 4,600 503,700
Chevron Corp.-Worldwide petroleum company with important
interests in chemicals and minerals 7,825 602,525
Chubb Corp.-Broad-based property and casualty insurance
organization 9,600 726,000
CIGNA Corp.-Multi-line insurance and medical services 3,325 575,433
CINergy Corp.-Supplier of electricity and natural gas in
the midwest 12,850 492,316
Columbia Gas Systems Inc.-Natural gas utility proprietor 6,125 481,195
ConAgra Inc.-Major producer of agricultural and consumer
products 25,000 820,313
Crown Cork & Seal Inc.-Producer of wide variety of steel
and aluminum containers for the food industry 12,400 621,550
Deere & Co.-World's largest manufacturer of farm equipment 17,225 1,004,433
Emerson Electric Co.-Diversified manufacturer of consumer
and industrial electrical components 18,200 1,027,163
Exxon Corp.-World's largest integrated oil company 12,350 755,666
Federal National Mortgage Association-America's largest
supplier of conventional home mortgages 16,300 930,119
First Chicago NBD-Major midwest bank 6,825 569,888
First Union Corp.-Major east coast bank 10,300 527,875
</TABLE>
7
<PAGE>
Statement of Net Assets
EQUITY SERIES December 31, 1997
<TABLE>
<CAPTION>
Shares or
Investments Principal Amount Market Value
=======================================================================================================================
<S> <C> <C> <C>
Ford Motor Co.-World's second largest producer of cars and trucks 7,575 $ 368,808
Fort James Corp.-Producer of paper-based consumer products,
packaging and communication papers 16,250 621,563
Fortune Brands Inc.-Consumer products conglomerate 17,975 666,198
FPL Group-Premier southeast electric utility 9,000 532,688
General Motors Corp.-Worldwide auto producer 9,525 577,453
Harris Corp.-Manufacturer of electronic systems and
communications equipment 11,125 510,359
Heinz H.J. Co.-Domestic packaged foods producer 20,500 1,041,656
Hewlett-Packard Co.-Leading manufacturer of computer
products including printers, servers, workstations and PCs 10,950 684,375
Humana Inc.-Major U.S. provider of managed health plans 20,500 425,375
International Business Machines Corp.-Largest computer manufacturer 6,525 682,270
International Paper Co.-Producer of paper and forest products 12,425 535,828
Jefferson-Pilot Corp.-Life insurance holding company 5,550 432,206
Kimberly Clark Corp.-Major producer of consumer and
personal care products 17,600 867,900
Mellon Bank Corp.-Regional banking and financial services company 11,525 698,703
Minnesota Mining & Manufacturing Co.-Diversified global
manufacturer of value-added industrial, consumer and
medical products 5,600 459,550
Mobil Corp.-Large international oil company 8,025 579,305
Morton International Inc.-Producer of specialty chemicals and salt 12,275 421,953
Nicor Inc.-Natural gas distributor in Illinois 15,425 650,742
Philip Morris Inc.-Leading tobacco company 19,350 876,797
Raytheon Class A-Diversified aerospace company 607 29,953
SBC Communication Inc.-Regional telecommunications company 6,800 498,100
Seagate Technology Inc.-Manufacturer of computer disk drive
equipment 9,975 192,019
SmithKline Beecham plc ADR-United Kingdom-based
pharmaceutical and clinical laboratory services company 12,475 641,683
Snap-on, Inc.-Manufacturer and distributor of hand tools
and diagnostic equipment for the automotive industry 11,325 494,053
Sonoco Products Co.-Producer of specialty paper and plastic
packaging components 10,250 355,547
St. Jude Medical, Inc.-Leading manufacturer of artificial
heart valves 17,875 545,188
The Coastal Corporation-Diversified gas pipeline and energy
production company 11,675 723,120
Toys R Us Inc.-Discount toy supermarts; department stores 19,425 610,673
Transamerica Corp.-Diversified financial services company 6,200 660,300
VF Corp.-Leading producer of blue jeans and other apparel 11,050 507,609
Washington Mutual-Leading savings and loan company 7,600 484,975
Total Investments in United States Securities (Cost $33,739,744) -- 34,978,742
------------------------------------------------------------------------------------===========
Total Investments in Securities (Cost $73,741,380) -- 79,499,253
=======================================================================================================================
Other Assets, Less Liabilities 1.63%
=======================================================================================================================
Short-Term Investment,
at Cost American Express Credit Corp. 6.25% due 1/2/1998 1,350M 1,350,000
Cash and Receivables,
Net of Liabilities -- (28,925)
------------------------------------------------------------------------------------===========
Total Other Assets, Less Liabilities -- 1,321,075
=======================================================================================================================
Net Assets 100.00%
=======================================================================================================================
Class A Shares-Net asset value
($78,655,428 / 6,512,593 shares outstanding) -- $ 12.08
Class B Shares-Net asset value
($1,339,873 / 111,351 shares outstanding) -- $ 12.03
Class C Shares-Net asset value
($825,027 / 68,478 shares outstanding) -- $ 12.05
</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 unaudited.
+ Restricted security under Rule 144A.
See Notes to Financial Statements.
8
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Year Ended December 31, 1997
---------------------------------
Investment Income Equity Series Income Series
===========================================================================================================================
<S> <C> <C>
Income Interest $ 196,224 $ 12,993,990
Dividends 1,713,765 --
Foreign taxes withheld (139,700) (353,231)
Total income 1,770,289 12,640,759
-------------------------------------------------------------------------------------------------------------
Expenses Management fee 636,532 864,869
12b-1 distribution plan-Class A 234,057 498,360
12b-1 distribution plan-Class B 7,200 10,990
12b-1 distribution plan-Class C 4,525 59,500
Shareholder servicing 238,857 307,197
Custodian 26,000 17,848
Reports to shareholders 40,600 65,259
Professional 17,000 30,000
Registration 36,000 52,000
Directors 3,000 6,000
Miscellaneous 216 19,768
Expenses reimbursed to Manager 62,290 --
Total expenses before reductions 1,306,277 1,931,791
------------------------------
Expense reductions (11,394) (19,550)
Net expenses 1,294,883 1,912,241
-------------------------------------------------------------------------------------------------------------
Net investment income 475,406 10,728,518
-------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions
===========================================================================================================================
Net realized gain (loss) from investment and foreign currency transactions
Proceeds from sales 92,051,947 1,838,099,041
Cost of investments sold 83,408,687 1,838,485,548
-------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 8,643,260 (386,507)
-------------------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and foreign currency holdings (2,530,998) (4,218,698)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment and foreign currency transactions 6,112,262 (4,605,205)
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting From Operations $ 6,587,668 $ 6,123,313
===========================================================================================================================
</TABLE>
See Notes to Financial Statements.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31, 1997
---------------------------------
Increase (Decrease) in Net Assets Equity Series Income Series
====================================================================================================================
<S> <C> <C> <C>
Operations Net investment income $ 475,406 $ 10,728,518
Net realized gain (loss) from investment and foreign currency
transactions 8,643,260 (386,507)
Net unrealized appreciation (depreciation) of investments and
foreign currency holdings (2,530,998) (4,218,698)
Net increase in net assets resulting from operations 6,587,668 6,123,313
------------------------------------------------------------------------------------------------------
Undistributed net investment income included in price of share transactions 5,192 --
- --------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income-Class A (364,730) (10,676,319)
Net investment income-Class B -- (60,905)
Net investment income-Class C (397) (360,770)
Paid-in-capital-Class A -- (1,201,001)
Paid-in-capital-Class B -- (9,781)
Paid-in-capital-Class C -- (38,752)
Net realized gain from investment and foreign currency
transactions-Class A (8,064,753) --
Net realized gain from investment and foreign currency
transactions-Class B (135,059) --
Net realized gain from investment and foreign currency
transactions-Class C (82,246) --
Total distributions (8,647,185) (12,347,528)
------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sales of shares 16,590,094 6,604,979
Net asset value of shares issued to shareholders in reinvestment
of net investment income and realized gain from investment and
foreign currency transactions 8,176,325 5,560,277
Net assets of shares issued in exchange for assets acquired in
tax-free acquisition -- --
Total 24,766,419 12,165,256
------------------------------------------------------------------------------------------------------
Cost of shares reacquired (34,055,648) (59,650,585)
------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets derived from share transactions (9,289,229) (47,485,329)
------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (11,343,554) (53,709,544)
- --------------------------------------------------------------------------------------------------------------------
Net Assets Beginning of year 92,163,882 202,494,473
------------------------------------------------------------------------------------------------------
End of year+ $ 80,820,328 $ 148,784,929
======================================================================================================
<CAPTION>
Year Ended December 31, 1996
--------------------------------
Increase (Decrease) in Net Assets Equity Series Income Series
===================================================================================================================
<S> <C> <C> <C>
Operations Net investment income $ 492,477 $ 13,928,162
Net realized gain (loss) from investment and foreign currency
transactions 2,557,061 (532,551)
Net unrealized appreciation (depreciation) of investments and
foreign currency holdings 4,234,210 (1,411,128)
Net increase in net assets resulting from operations 7,283,748 11,984,483
-----------------------------------------------------------------------------------------------------
Undistributed net investment income included in price of share transactions (1,917) --
- -------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income-Class A (499,800) (15,524,985)
Net investment income-Class B -- (6,387)
Net investment income-Class C -- (233,299)
Paid-in-capital-Class A -- --
Paid-in-capital-Class B -- --
Paid-in-capital-Class C -- --
Net realized gain from investment and foreign currency
transactions-Class A (2,421,006) (2,767,516)
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)
-----------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sales of shares 19,131,767 9,429,839
Net asset value of shares issued to shareholders in reinvestment
of net investment income and realized gain from investment and
foreign currency transactions 2,759,133 9,798,593
Net assets of shares issued in exchange for assets acquired in
tax-free acquisition -- 7,559,607
Total 21,890,900 26,788,039
-----------------------------------------------------------------------------------------------------
Cost of shares reacquired (18,806,279) (55,925,723)
-----------------------------------------------------------------------------------------------------
Increase (decrease) in net assets derived from share transactions 3,084,621 (29,137,684)
-----------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 7,432,502 (35,796,123)
- -------------------------------------------------------------------------------------------------------------------
Net Assets Beginning of year 84,731,380 238,290,596
-----------------------------------------------------------------------------------------------------
End of year+ $ 92,163,882 $ 202,494,473
=====================================================================================================
</TABLE>
+ Including underdistributed (overdistributed) net investment
income of $48,988 and $(660,620) for the Equity and Income
Series, respectively, as of December 31, 1997 and $710,080 and
$(1,260,840), respectively, for the year ended December 31,
1996. See Notes to Financial Statements.
9
<PAGE>
Financial Highlights
INCOME SERIES
<TABLE>
<CAPTION>
Class A Shares Class B Shares
-------------------------------------------------------- --------------------------
Year Ended December 31, Year Ended 8/1/96(c)
Per Share Operating Performance: 1997 1996 1995 1994 1993 12/31/97 to 12/31/96
================================================================================================= ==========================
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $8.34 $8.58 $7.98 $9.02 $8.87 $8.34 $8.24
- ------------------------------------------------------------------------------------------------- --------------------------
Income from investment operations
Net investment income .51(b) .53 .77 .65 .76 .45(b) .23
Net realized and unrealized
gain (loss) on investments (.18) (.04) .6138 (.9603) .174 (.18) .22
Total from investment operations .33 .49 1.3838 (.3103) .934 .27 .45
- ------------------------------------------------------------------------------------------------- --------------------------
Distributions
Dividends from net investment income (.51) (.61) (.6613) (.6035) (.784) (.46) (.23)
Distributions to shareholders from
paid-in-capital (.07) -- -- (.1262) -- (.06) --
Distributions from foreign currency
transactions -- (.12) (.1225) -- -- -- (.12)
- ------------------------------------------------------------------------------------------------- -----------------------
Net asset value, end of period $8.09 $8.34 $8.58 $7.98 $9.02 $8.09 $8.34
- ------------------------------------------------------------------------------------------------- --------------------------
Total Return(a) 4.23%(c) 6.12% 17.86% (3.40)% 10.78% 3.49% 5.58%(d)
==============================================================================================================================
Ratios to Average Net Assets:
Expenses(e) 1.10% 1.04% 1.04% 1.02% 1.04% 1.78% .73%(d)
Net investment income 6.29% 6.52% 7.60% 7.72% 7.81% 5.57% 2.11%(d)
==============================================================================================================================
<CAPTION>
Class C Shares
--------------------------
Year Ended 7/15/96(c)
Per Share Operating Performance: 12/31/97 to 12/31/96
====================================================================
<S> <C> <C>
Net asset value, beginning of period $8.34 $8.14
- --------------------------------------------------------------------
Income from investment operations
Net investment income .45(b) .21
Net realized and unrealized
gain (loss) on investments (.18) .37
Total from investment operations .27 .58
- --------------------------------------------------------------------
Distributions
Dividends from net investment income (.46) (.26)
Distributions to shareholders from
paid-in-capital (.06) --
Distributions from foreign currency
transactions -- (.12)
- --------------------------------------------------------------------
Net asset value, end of period $8.09 $8.34
- --------------------------------------------------------------------
Total Return(a) 3.48% 7.43%(d)
====================================================================
Ratios to Average Net Assets:
Expenses(e) 1.77% .87%(d)
Net investment income 5.62% 2.69%(d)
====================================================================
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
Supplemental Data For All Classes: 1997 1996 1995 1994 1993
=======================================================================================================
<S> <C> <C> <C> <C> <C>
Net assets, end of year (000) $148,785 $202,494 $238,291 $249,490 $277,495
- -------------------------------------------------------------------------------------------------------
Portfolio turnover rate 616.63% 621.79% 1,073.69% 1,230.20% 1,599.43%
=======================================================================================================
</TABLE>
(a) Total return does not consider the effects of sales loads.
(b) Calculated using average shares outstanding during the period.
(c) Commencement of offering respective Class shares.
(d) Not annualized.
(e) The ratios for 1997 include expenses paid through an expense offset
arrangement.
See Notes to Financial Statements.
EQUITY SERIES
<TABLE>
<CAPTION>
Class A Shares Class B Shares
--------------------------------------------------------- ---------------------------
Year Ended December 31, Year Ended 8/1/96(c)
Per Share Operating Performance: 1997 1996 1995 1994 1993 12/31/97 to 12/31/96
================================================================================================== ===========================
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.55 $11.96 $11.55 $12.44 $10.48 $12.53 $12.30
- -------------------------------------------------------------------------------------------------- ---------------------------
Income from investment operations
Net investment income .07(b) .07 .16 .10 .04 (.02)(b) (.01)
Net realized and unrealized
gain (loss) on investments .90 .93 .90 (.1125) 2.635 .89 .58
Total from investment operations .97 1.00 1.06 (.0125) 2.675 .87 .57
- -------------------------------------------------------------------------------------------------- ---------------------------
Distributions
Dividends from net investment income (.06) (.07) (.17) (.10) (.10) -- --
Dividends from net realized gain .(1.11) (.21) (.48) (.7775) (.615) (1.11) (.21)
Distributions from foreign currency
transactions (.27) (.13) -- -- -- (.26) (.13)
- -------------------------------------------------------------------------------------------------- ---------------------------
Net asset value, end of period $12.08 $12.55 $11.96 $11.55 $12.44 $12.03 $12.53
- --------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 7.99%(c) 8.37% 9.19% (.09)% 26.05% 7.19% 4.56%(d)
================================================================================================================================
Ratios to Average Net Assets:
Expenses(e) 1.51% 1.52% 1.63% 1.56% 1.68% 2.23% .83%(d)
Net investment income .57% .54% 1.31% .79% .70% (.16)% (.16)%(d)
<CAPTION>
Class C Shares
----------------------------
Year Ended 7/15/96(c)
Per Share Operating Performance: 12/31/97 to 12/31/96
======================================================================
<S> <C> <C>
Net asset value, beginning of period $12.54 $12.31
- ----------------------------------------------------------------------
Income from investment operations
Net investment income (.01)(b) --
Net realized and unrealized
gain (loss) on investments .90 .57
Total from investment operations .89 .57
- ----------------------------------------------------------------------
Distributions
Dividends from net investment income (.01) --
Dividends from net realized gain (1.11) (.21)
Distributions from foreign currency
transactions (.26) (.13)
- ----------------------------------------------------------------------
Net asset value, end of period $12.05 $12.54
- ----------------------------------------------------------------------
Total Return(a) 7.34% 4.64%(d)
======================================================================
Ratios to Average Net Assets:
Expenses(e) 2.14% .83%(d)
Net investment income (.06)% (.11)%(d)
======================================================================
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
Supplemental Data For All Classes: 1997 1996 1995 1994 1993
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Net assets, end of year (000) $80,820 $92,164 $84,731 $83,739 $71,632
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 99.05% 81.97% 83.32% 75.39% 197.59%
Average commissions per share paid on equity transactions $.028 $.025 $.033 n/a n/a
====================================================================================================================================
</TABLE>
(a) Total return does not consider the effects of sales loads.
(b) Calculated using average shares outstanding during the period.
(c) Commencement of offering respective Class shares.
(d) Not annualized.
(e) The ratios for 1997 include expenses paid through an expense offset
arrangement.
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, or,
lacking any sales, at the latest price on the basis of current quotations from
dealers, or from valuations furnished by an independent pricing service.
Securities for which market quotations are not available are valued at 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
income 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) For the Equity Series, 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) The Company may write call
options on securities it owns. Premiums received by the Company upon writing
covered call options are included in the Company's statement of net assets as an
asset and an equivalent liability. The liability is adjusted daily to the market
value of the options written. If an option expires, or if the Company enters
into a closing purchase transaction, the Company realizes a gain or, if the cost
of a closing purchase transaction exceeds the premium originally received, a
loss, and the liability related to the option is extinguished. If an option is
exercised, the proceeds of the sale of the underlying investment are increased
by the premium originally received when the option was written.
2. Management Fee and Other Transactions With Affiliates The Company has a
management agreement with Lord, Abbett & Co. ("Lord Abbett") pursuant to which
Lord Abbett 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, (2) a one-time distribution fee of up to 1% on
certain qualifying purchases and (3) 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. As of December 31, 1997, all management fees waived and expenses
reimbursed pursuant to the aforementioned formula have been either accrued by
each Series or forgiven by Lord Abbett. 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 $29,407 $170,647
- --------------------------------------------------------------------------------
Income $10,558 $ 65,169
- --------------------------------------------------------------------------------
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, 1997, accumulated net realized capital gain (loss) for financial
reporting purposes aggregated $199,335 for Equity Series and $(25,034,351) for
Income Series. The Income Series had a capital loss carryforward as of December
31, 1997 of approximately $25,030,000, of which $19,900,000 expires in 2002,
$4,450,000 expires in 2004 and $680,000 expires in 2005. 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.
4. Capital The Equity Series has authorized 500 million shares of $.001 par
value capital stock designated as follows: Class A-465 million shares,
11
<PAGE>
Class B-15 million shares and Class C-20 million shares. The Income Series has
authorized 500 million shares of $.001 par value capital stock designated as
follows: Class A-450 million shares, Class B-30 million shares and Class C-20
million shares. At December 31, 1997, paid-in-capital amounted to $74,814,132
for Equity Series and $175,147,837 for Income Series. Transactions in shares of
capital stock were as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1997
- ---------------------------------------------------------------------------------------
Equity Series Income Series
Class A Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales of shares 1,095,651 $ 14,481,551 604,529 $ 4,878,516
Shares issued to share-
holders in reinvestment
of net investment income
and realized gain from
investment transactions 674,542 7,961,767 658,101 5,308,446
Total 1,770,193 22,443,318 1,262,630 10,186,962
- ---------------------------------------------------------------------------------------
Shares reacquired (2,559,577) (33,537,757) (7,011,721) (56,584,653)
Decrease in shares (789,384) $(11,094,439) (5,749,091) $(46,397,691)
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1996
- ---------------------------------------------------------------------------------------
Equity Series Income Series
Class A Shares Amount Shares 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
and realized gain from
investment transactions 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, 1997
- ---------------------------------------------------------------------------------------
Equity Series Income Series
Class B Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales of shares 105,825 $1,394,310 118,462 $955,629
Shares issued to share-
holders in reinvestment
of net investment income
and realized gain from
investment transactions 11,349 133,462 5,007 40,318
Total 117,174 1,527,772 123,469 995,947
- ---------------------------------------------------------------------------------------
Shares reacquired (25,186) (338,740) (26,822) (215,805)
Increase in shares 91,988 $1,189,032 96,647 $780,142
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
August 1, 1996
(Commencement of Offering Class B Shares)
Year Ended 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
and realized gain from
investment transactions 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>
Year Ended December 31, 1997
- ---------------------------------------------------------------------------------------
Equity Series Income Series
Class C Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales of shares 54,661 $714,233 95,470 $ 770,834
Shares issued to share-
holders in reinvestment
of net investment income
and realized gain from
investment transactions 6,879 81,096 26,224 211,513
Total 61,540 795,329 121,694 982,347
- ---------------------------------------------------------------------------------------
Shares reacquired (14,168) (179,151) (353,771) (2,850,127)
Increase (decrease) in shares 47,372 $616,178 (232,077) $(1,867,780)
- ---------------------------------------------------------------------------------------
</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 IncomeSeries
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
and realized gain from
investment transactions 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 The Income Series loans its portfolio
securities to brokers. As of December 31, 1997, the market value of securities
on loan to brokers was $32,261,183 for which the Income Series has obtained
collateral aggregating $34,491,536, consisting of cash and U.S. Treasury
securities. During the year ended December 31, 1997, purchases and sales of
investment securities, exclusive of short-term investments, were $79,563,860 and
$89,848,747, respectively, for the Equity Series and $965,257,163 and
$1,010,195,143, respectively, for the Income Series. As of December 31, 1997,
net unrealized appreciation (depreciation), unrealized appreciation and
unrealized depreciation of investments based on cost for federal income tax
purposes were as follows:
Net Unrealized
Appreciation Unrealized Unrealized
Series (Depreciation) Appreciation Depreciation
- --------------------------------------------------------------------------------
Equity $5,757,873 $10,288,827 $(4,530,954)
Income $ (410,509) $ 2,050,479 $(2,460,988)
The cost of investments for federal income tax purposes is substantially the
same as that used for financial reporting purposes.
At December 31, 1997, the Income Series had outstanding forward currency
contracts to sell and buy foreign currencies as follows:
Value at Unrealized
Foreign Currency Settlement Date Current Appreciation
Sell Contracts Receivable Value (Depreciation)
- ----------------------------------------------------------------------------
Australian Dollars,
expiring 3/24/98 $ 3,265,500 $ 3,261,200 $ 4,300
- ----------------------------------------------------------------------------
Deutsche Marks,
expiring 3/11/98 to 4/14/98 $39,574,653 $39,320,010 $254,643
- ----------------------------------------------------------------------------
South African Rands,
expiring 3/4/98 $ 2,417,621 $ 2,434,841 $(17,220)
- ----------------------------------------------------------------------------
British Pounds,
expiring 2/17/98 $ 5,890,850 $ 5,745,250 $145,600
- ----------------------------------------------------------------------------
Total $51,148,624 $50,761,301 $387,323
- ----------------------------------------------------------------------------
Value at
Foreign Currency Settlement Date Current Unrealized
Buy Contracts Payable Value Depreciation
- ----------------------------------------------------------------------------
Deutsche Marks,
expiring 1/14/98 to 1/30/98 $15,045,586 $14,400,835 $(644,751)
- ----------------------------------------------------------------------------
Transactions in call options written during the year ended December 31, 1997 for
the Income Series were as follows:
Number Premiums
of Contracts Received
- -------------------------------------------------------------------------------
Options written 4 $ 154,638
- -------------------------------------------------------------------------------
Options expired (4) $(154,638)
- -------------------------------------------------------------------------------
Options outstanding at December 31, 1997 -- $ --
- -------------------------------------------------------------------------------
12
<PAGE>
Notes to Financial Statements
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.
Directors' fees payable at December 31, 1997, under a deferred compensation
plan, were $53,000.
7. The Company has entered into an arrangement with its transfer agent whereby
credits realized as a result of uninvested cash balances were used to reduce a
portion of each Series' expenses. 8. 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.
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, 1997,
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, 1997 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, 1997, 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 6, 1998
Copyright (C) 1998 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.
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
<PAGE>
Investing in the
Lord Abbett
Family of Funds
- --------------------------------------------------------------------------------
GROWTH
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INCOME
- --------------------------------------------------------------------------------
Aggressive Growth Funds Growth & Balanced Fund
Growth Fund Income Funds
Developing Global Fund- Affiliated Fund Balanced Series
Growth Fund Equity Series
Growth &
International Income Series
Series
Research Fund-
Mid-Cap Large-Cap
Value Fund Series
Research Fund-
Small-Cap
Series*
- --------------------------------------------------------------------------------
GROWTH
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INCOME
- --------------------------------------------------------------------------------
Income Funds Tax-Free Money
Income Funds Market Fund
Bond-Debenture o National U.S. Government
Fund o California Securities
o Connecticut Money Market
Global Fund- o Florida Fund**+
Income Series o Georgia
o Hawaii
Limited Duration o Michigan
U.S. Government o Minnesota
Securities Series** o Missouri
o New Jersey
U.S. Government o New York
Securities Series** o Pennsylvania
o Texas
o Washington
Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe your investment professional 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 investment professional 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 investment professional can diversify your
investments between equity and income funds.
Flexibility. As your investment goals change, your investment professional 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 invest-ment professional 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
* Lord Abbett intends to close Lord Abbett Research Fund-Small-Cap Series to
new investors in the first half of 1998. For more information, call Lord
Abbett Distributor LLC at 800-426-1130.
** 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.
[LOGO](R) LORD ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
Lord Abbett Distributor LLC
- ------------------------------------------------------------ LAG-2-1297
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203 (2/98)
