Lord Abbett Series Fund
Growth and Income Series
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED JUNE 30, 1999
[LOGO}
<PAGE>
ROBERT S. DOW
CHAIRMAN
JULY 15, 1999
"... early on, the portfolio's
technology holdings enjoyed
a considerable advance
in share price, enhancing
performance. As these
investments approached
what we believed were their
full value prices, we pared
back the positions ..."
Report to Shareholders
For the Fiscal Year Ended June 30, 1999
Lord Abbett Series Fund --Growth & Income Portfolio completed the first half of
its fiscal year on 6/30/99 and provided a total return of 14.82% for its
shareholders during that period.*
In early 1999 investors remained concerned about the economic instability that
had plagued Asian and South American economies throughout 1998 and the impact
such instability might have on corporate earnings worldwide. As a result,
large-cap growth stocks, often perceived as safe and liquid, continued to
outperform most other equity investments. This trend reversed during the second
quarter of 1999 as Asian and Latin American markets showed signs of improvement,
and investors began to investigate opportunities in small-cap, mid-cap and value
stocks.
The portfolio was well-positioned vis-` a-vis the market during the period under
review. For example, early on, many of the portfolio's technology holdings
enjoyed considerable advances in share price, enhancing performance. As these
investments approached what we believed were their full value prices, we pared
back the positions, investing instead in undervalued cyclical stocks, including
companies in the manufacturing and commodities industries. In April, when
cyclical stocks advanced the portfolio benefited. We reduced the portfolio's
investments in interest-rate-sensitive financial companies, although we
maintained a focus on insurance companies, since such companies continued to
benefit from industry consolidation.**
Although themes in the market may deviate in the short-term, we expect that
cyclical stocks will continue to perform well for the remainder of 1999. Based
on the meaningful steps Japan and other Pacific Rim countries have taken to
stimulate their economies, we believe global economic expansion will slowly
begin. A long-term trend toward falling interest rates and global disinflation
created a valuation gap between growth and value stocks that was historically
wide. During the second quarter we saw that gap begin to narrow. However, at
this time we believe that stock prices for many cyclical companies do not yet
adequately reflect their earnings potential.
* Total return, which is not annualized, is the percent change in net asset
value, assum ing the reinvestment of all distributions.
** The Portfolio is actively managed and is subject to change.
<PAGE>
LORD ABBETT SERIES FUND - GROWTH AND INCOME PORTFOLIO
June 30, 1999
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
Investments Shares Value
- -----------------------------------------------------------------------------------------------------------------------
Investments in Common and Convertible Preferred Stocks 95.34%
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automobiles -1.10%
Ford Motor Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500 $ 197,531
Banks: Money Center -1.94%
Chase Manhattan Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 346,500
Banks: Regional -6.06%
Bank One Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 357,375
Bank of America Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 183,281
Fleet Financial Group, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 266,250
Wells Fargo Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500 277,875
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,084,781
Brokers -1.15%
Morgan Stanley Dean Witter & Co. . . . . . . . . . . . . . . . . . . . . . . . 2,000 205,000
Chemicals -.96%
Rohm & Haas Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 171,500
Communications Services -1.46%
*CBS Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 260,625
Computer: Hardware -6.12%
International Business Machines Corp. . . . . . . . . . . . . . . . . . . . . . 3,600 465,300
*Sun Microsystems Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,500 378,812
*Unisys Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 116,812
Unisys Corp. Conv. Pfd. $3.75 . . . . . . . . . . . . . . . . . . . . . . . . . 2,060 134,158
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,095,082
Computer: Services -4.16%
First Data Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 342,563
*QUALCOMM Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,800 401,800
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 744,363
Computer: Software -1.44%
*Cadence Design System Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000 164,125
*Oracle Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 92,812
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256,937
Containers -.98%
*Owens-Illinois Inc. Conv. Pfd. 4.75% . . . . . . . . . . . . . . . . . . . . . 4,000 176,000
Drugs/Health Care Products -4.16%
American Home Products Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 7,500 431,250
Pharmacia & Upjohn Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,500 312,469
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 743,719
Electric Power -5.92%
Carolina Power & Light Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500 278,281
Duke Energy Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 326,250
FirstEnergy Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,500 263,500
Houston Industries Inc. Conv. Pfd. 7% . . . . . . . . . . . . . . . . . . . . . 1,600 190,800
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,058,831
<PAGE>
LORD ABBETT SERIES FUND - GROWTH AND INCOME PORTFOLIO
June 30, 1999
STATEMENT OF NET ASSETS
Investments Shares Value
- -----------------------------------------------------------------------------------------------------------------------
Electrical Equipment -1.23%
Emerson Electric Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500 $ 220,063
Electronics: Communications -.48%
Comcast Corp. Class A Conv. Pfd. 3.35% due 5/15/2029 . . . . . . . . . . . . . . 1,000 86,500
Electronics: Semiconductors -2.59%
Texas Instruments, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200 464,000
Food -3.49%
Heinz H. J. Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 350,875
Ralston-Ralston-Purina Group . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000 273,938
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 624,813
Health-Care Products -1.36%
Baxter International Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 242,500
Health-Care Services -2.89%
Aetna Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500 313,031
Aetna Inc. Conv. Pfd. $6.25 . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200 89,100
Columbia HCA Healthcare Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 114,063
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516,194
Insurance: Life -2.32%
American General Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,500 414,563
Insurance: Property & Casualty -5.86%
Ace Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500 211,875
Allstate Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 179,375
Aon Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,500 226,875
CIGNA Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 222,500
St. Paul Companies Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500 206,781
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,047,406
Machinery: Diversified -1.55%
Deere & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 277,375
Manufacturing: Diversified -2.83%
Allied Signal Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 126,000
Honeywell Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 289,687
Rockwell International Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 91,125
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 506,812
Natural Gas Diversified: 1.90%
The Coastal Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,500 340,000
Non-Ferrous Metals -1.56%
Alcoa Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 278,437
Office Equipment/Supplies -1.65%
Xerox Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 295,313
Oil and Gas Drilling -.89%
Schlumberger Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 159,219
Oil: Domestic Integrated -1.17%
Atlantic Richfield Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 208,906
<PAGE>
LORD ABBETT SERIES FUND - GROWTH AND INCOME PORTFOLIO
June 30, 1999
STATEMENT OF NET ASSETS
Principal Amount
Investments or Shares Value
- -----------------------------------------------------------------------------------------------------------------------
Oil: International Integrated -7.67%
BP Amoco plc ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,100 $ 227,850
Mobil Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 495,000
Texaco Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,700 230,787
Total Fina S. A. ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500 418,844
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,372,481
Paper and Forest Products -2.26%
International Paper Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 404,000
Pollution Control -2.40%
Waste Management Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 430,000
Printing and Publishing -2.48%
Dow Jones & Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 265,313
Gannett Co., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 178,438
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443,751
Retail: Department Stores & Merchandise -1.78%
*Federated Department Store Inc. . . . . . . . . . . . . . . . . . . . . . . . . 6,000 317,625
Telephone: Long Distance -5.36%
AT& T Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,000 613,938
*MCI WorldCom Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 344,250
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 958,188
Telephone: Regional -6.17%
Alltel Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,500 393,250
Bell Atlantic Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 392,250
SBC Communication Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,500 319,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,104,500
Total Investments (Cost $14,594,395) . . . . . . . . . . . . . . . . . . . 17,053,515
Other Assets, Less Liabilities 4.66%
Short-Term Investments
FC Discount Note 4.49% due 7/1/1999 . . . . . . . . . . . . . . . . . . . . . . $ 95,000 95,000
Prudential Funding Corp. 5 5 /8 % due 7/1/1999 . . . . . . . . . . . . . . . . 680,000 680,000
Total Short-Term Investments (Cost $775,000) . . . . . . . . . . . . . . . . . 775,000
Cash and Receivables, Net of Liabilities . . . . . . . . . . . . . . . . . . . 58,925
Total Other Assets, Less Liabilities . . . . . . . . . . . . . . . . . . . . . 833,925
Net Assets 100.00% . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Equivalent to $23.71 a share; 754,346 shares of $. 001 par value
capital stock outstanding; authorized 50,000,000 shares) . . . . . . . . . . . $ 17,887,440
*Non-income producing security.
See Notes to Financial Statements.
<PAGE>
LORD ABBETT SERIES FUND - GROWTH AND INCOME PORTFOLIO
June 30, 1999
STATEMENT OF OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------------------------
Income
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 552,031
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,400
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 598,431
- -----------------------------------------------------------------------------------------------------------------------
Expenses
Management Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93,785
Professional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,092
Reports to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,795
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,806
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .141,478
- -----------------------------------------------------------------------------------------------------------------------
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . 456,953
- -----------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain from investment transactions . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . 153,407,715
Net change in unrealized appreciation of investments . . . . . . . . . . . . . . . . . .. . . . . . . . . .(119,389,974)
Net realized and unrealized gain on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,017,741
Net Increase in Net Assets Resulting from Operations . . . . . . . . . . . . . . . . . .. . . . . . . . . $ 34,474,694
- -----------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
LORD ABBETT SERIES FUND - GROWTH AND INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended Year Ended
Increase (Decrease) in Net Assets June 30, 1999 December 31, 1998
- -----------------------------------------------------------------------------------------------------------------------
Operations
Net investment income $ 456,953 $ 10,875,399
Net realized gain from investment transactions 153,407,715 34,240,047
Net change in unrealized appreciation of investments (119,389,974) 29,394,800
- -----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 34,474,694 74,510,246
Dividends and distributions to shareholders from:
Net investment income - (10,531,538)
Net realized gain from investment transactions - (33,862,945)
- -----------------------------------------------------------------------------------------------------------------------
Total - (44,394,483)
- -----------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Net proceeds from sales of 489,478 and 6,898,183 shares, respectively 10,770,598 141,925,049
Net asset value 0 and 2,156,014 shares, respectively, issued
in reinvestment of dividends and distributions - 44,394,483
- -----------------------------------------------------------------------------------------------------------------------
Total 10,770,598 186,319,532
- -----------------------------------------------------------------------------------------------------------------------
Cost of 34,326,281 and 728,296 shares reacquired, respectively (741,632,097) (14,598,679)
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
derived from capital share transactions
(net change of (33,836,803) and 8,325,901 shares, respectively) (730,861,499) 171,720,853
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (696,386,805) 201,836,616
- -----------------------------------------------------------------------------------------------------------------------
Net Assets
Beginning of period 714,274,245 512,437,629
End of period* $ 17,887,440 $ 714,274,245
*Including undistributed (distribution in excess of) net investment income of $347,062 and $(109,891), respectively
- -----------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<PAGE>
LORD ABBETT SERIES FUND - GROWTH AND INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Performance: 1999 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.649 $ 19.510 $ 17.022 $ 15.241 $ 12.71 $13.15
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .28(a) .360(a) .393(a) .408 .459 .41
Net realized and unrealized gain
(loss) on investments 2.78 2.149 3.755 2.563 3.332 (.045)
Total from investment operations 3.06 2.509 4.148 2.971 3.791 .365
-------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income - (.325) (.34) (.36) (.36) (.33)
Distributions from net realized gain - (1.045) (1.32) (.83) (.90) (.475)
------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 23.71 $ 20.649 $ 19.510 $ 17.022 $15.241 $12.71
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return 14.82%(b) v 12.82% 24.34% 19.49% 29.82% 2.76%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (000) $17,887 $714,274 $512,438 $303,982 $193,575 $114,608
Ratios to Average Net Assets:
Expenses .40%(b) .51% .52% .52% .52% .59%
Net investment income 1.30%(b) 1.78% 2.02% 2.32% 2.91% 2.97%
Portfolio turnover rate 72.01% 76.62% 43.09% 48.93% 70.30% 68.94%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding during the period.
(b) Not annualized.
See Notes to Financial Statements.
<PAGE>
LORD ABBETT SERIES FUND - GROWTH AND INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
Lord Abbett Series Fund, Inc. (the "Company") is an open-end management
investment company incorporated under Maryland law on August 28, 1989. The
Company currently consists of one active portfolio - Growth and Income Series
(the "Series"). The Series is diversified as defined under the Investment
Company Act of 1940. The Series commenced operations on December 11, 1989.
Shares of the Series are currently issued and redeemed only in connection with
investment in, and payments under, variable annuity contracts issued by life
insurance and insurance related companies. 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) Securities are valued as follows: Portfolio securities listed or admitted to
trading privileges on any national securities exchange are valued at the last
sales price on the principal securities exchange on which such securities are
traded, or, if there is no sale, at the mean between the last bid and asked
prices on such exchange. Securities traded in the over-the-counter market are
valued at the mean between the last bid and asked prices, except that securities
admitted to trading on the NASDAQ National Market System are valued at the last
sales price if it is determined that such price more accurately reflects the
value of such securities. Securities for which market quotations are not
available are valued at fair value under procedures approved by the Board of
Directors. Short-term securities are valued at amortized cost, which
approximates market.
(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) Investment transactions are accounted for on the date that the securities
are purchased or sold (trade date). Realized gains and losses from investment
transactions are calculated on the identified cost basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Interest
income is recorded on the accrual basis.
<PAGE>
LORD ABBETT SERIES FUND - GROWTH AND INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
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 and statistical work. The management fee paid to
Lord Abbett is based on average daily net assets at the rate of .50% per annum.
Certain of the Company's officers and Directors have an interest in Lord Abbett.
The Company has a service agreement which permits it to make payments under
certain circumstances to insurance companies at the annual rate of .25% of the
average daily net asset value of shares of the Company attributable to insurance
companies' variable annuity contract owners.
3. Distributions Distributions from net investment income and net realized gain
from investment transactions, if any, are declared annually. Accumulated
undistributed net realized capital gains at June 30, 1999, for financial
statement purposes, aggregated $2,230,813.
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 gain amounts in accordance with generally
accepted accounting principles.
4. Paid-in-Capital
At June 30, 1999, paid-in-capital aggregated $12,850,445.
5. Purchases and Sales of Securities
Purchases and sales of investment securities (other than short-term investments)
aggregated $27,975,046 and $22,755,703 (excluding redemption in kind),
respectively.
As of June 30, 1999, net unrealized appreciation for federal income tax purposes
for the Company aggregated $2,459,120, of which $2,624,099 related to
appreciated securities and $164,979 related to depreciated securities. For
federal income tax purposes, the identified cost of investments owned at June
30, 1999, was substantially the same as the cost for financial reporting
purposes.
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 the net assets of each fund. The Directors' fees payable
at June 30, 1999, under a deferred compensation plan, were $33,546.
7. Redemption In Kind
On January 8, 1999, the Company incurred a redemption in kind from a separate
account of COVA Financial Services Life Insurance Company (" COVA") in the
amount of 34,287,022 shares. A redemption in kind occurs when a Fund pays a
shareholder with portfolio securities in lieu of cash. The transaction resulted
in a net realized gain for accounting purposes of $151,355,638, which has been
reclassified to paid-in-capital.
LASF-3-699
(8/99)
