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1933 Act File No. 33-31072
1940 Act File No. 811-5876
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 17 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Amendment No. 16 [X]
LORD ABBETT SERIES FUND
Exact Name of Registrant as Specified in Charter
767 FIFTH AVENUE, NEW YORK, N. Y. 10153-0203
Address of Principal Executive Office
Registrant's Telephone Number (212) 848-1800
Lawrence H. Kaplan, Vice President
767 FIFTH AVENUE, NEW YORK, N. Y. 10153
Name and Address of Agent for Service
It is proposed that this filing will become effective (check appropriate box)
x immediately upon filing pursuant to paragraph (b)
- ---------
on April 30, 1999 pursuant to paragraph (b)
- ---------
60 days after filing pursuant to paragraph (a) (1)
- ---------
on (date) pursuant to paragraph (a) (1)
- ---------
75 days after filing pursuant to paragraph (a) (2)
- ---------
on (date) pursuant to paragraph (a) (2) of rule 485
- ---------
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
- --------- previously filed post-effective amendment.
<PAGE>
Lord
Abbett Series Fund
Prospectus
May 1, 1999
[LOGO] FPO
LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
As with all mutual funds, the Securities and Exchange Commission does not
guarantee that the information in this prospectus is accurate or complete,
and it has not judged this fund for investment merit. It is a criminal
offense to state otherwise.
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Table of Contents
The Fund Page
What you should know Goal/Strategy 2
about the fund Main Risks 2
Past Performance 3
Fees and Expenses 3
Your Investment
Information for managing Purchases and Redemptions 4
your fund account Distributions Tax Status 4
Service Agreement 4
Management 5
For More Information
How to learn more Other Investment Techniques 6
about the fund Recent Performance 7
Financial Information
Financial Highlights 8
How to learn more about the Back Cover
fund and other Lord Abbett funds
<PAGE>
GOAL / STRATEGY
The fund's investment objective is long-term growth of capital and income
without excessive fluctuations in market value.
Typically, in choosing stocks, we look for companies using the following
process:
QUANTITATIVE RESEARCH is performed on a universe of large, seasoned U.S.
and multi-national companies to identify those with stocks which we think
represent the best bargains.
FUNDAMENTAL RESEARCH is conducted to assess a company's operating
environment, resources and strategic plans and to determine its prospects
for exceeding the earnings expectations reflected in its stock price.
BUSINESS CYCLE ANALYSIS is used to assess the economic interest-rate
sensitivity of our portfolio. This analysis helps us assess how adding or
deleting stocks changes our portfolio's overall sensitivity to economic
activity and interest rates.
We believe that investors purchase and redeem our shares to meet long-term
financial objectives rather than to try to take advantage of short-term price
fluctuations. If so, their needs are best served by an investment seeking
capital appreciation with less fluctuations in market value than the Standard
& Poor's Composite Index of 500 Stocks ("S&P 500'r' Index"). For this reason,
we try to keep our assets invested in securities that are selling at
reasonable prices and, therefore, we are willing to forego some opportunities
for gains when, in our judgment, they are too risky.
We generally sell a stock when we think it is no longer a bargain, appears
less likely to benefit from the current market and economic environment,
shows deteriorating fundamentals or falls short of our expectations.
We may take a temporary defensive position by investing some of our assets in
short-term debt securities. This could reduce the benefit from any upswing in
the market and prevent the fund from realizing its investment objective.
MAIN RISKS
Our performance may sometimes be lower or higher than that of other types of
funds (such as those emphasizing small-company stocks or growth stocks)
because different types of stocks tend to shift in and out of favor,
depending on market and economic conditions. While there is the risk that an
investment may never reach what we think is its full value, or may go down in
value, our emphasis on large, seasoned company bargain stocks might limit our
downside risk because bargain stocks in theory are already underpriced and in
addition, they tend to be less volatile than small-company stocks. In the
long run, we may produce more modest gains than riskier stock funds as a
trade-off for this potentially lower risk.
While stocks have historically been a leading choice of long-term investors,
they fluctuate in price. The value of your investment in the fund will go up
and down.
An investment in the fund is not a bank deposit. It is not FDIC insured or
government endorsed. It is not a complete investment program. You could lose
money in this fund.
WE OR THE FUND refers to the Growth and Income Portfolio, one of four separate
portfolios of the Lord Abbett Series Fund, Inc. (the "company"). The fund
operates under the supervision of the company's Board, with the advice of Lord,
Abbett & Co.("Lord Abbett"), its investment manager
ABOUT THE FUND. The fund is a professionally managed portfolio primarily holding
securities purchased with the pooled money of investors. It strives to reach its
stated goal, although as with all funds, it cannot guarantee results.
BARGAIN STOCKS are stocks of companies that appear under priced according to
certain financial measurements of their intrinsic worth or business prospects.
GROWTH STOCKS exhibit faster-than-average gains in earnings and are expected to
continue profit growth at a high level, but also tend to be more volatile than
bargain stocks.
SMALL-COMPANY STOCKS are stocks of smaller companies which often are new and
less established, with a tendency to be faster-growing but more volatile than
large company stocks.
LARGE COMPANIES are established companies that are considered "known
quantities." Large companies often have the resources to weather economic
shifts, though they can be slower to innovate than small companies.
SEASONED COMPANIES are usually established companies whose securities have
gained a reputation for quality with the investing public and enjoy liquidity in
the market.
You should read this entire prospectus, including "Other Investment Techniques,"
which concisely describes the other investment strategies, and their risks, used
by the fund.
2 The Fund
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GROWTH & INCOME PORTFOLIO
PAST PERFORMANCE
The information below provides some indication of the risks of investing in
the fund, by showing changes in the fund's class VC shares' performance from
calendar year to calendar year and by showing how the fund's average annual
returns compare with those of a broad measure of market performance. The
returns shown do not reflect insurance company fees and expenses. The
deduction of such fees and expenses (and the compounding effect thereof over
time) may reduce the investors' return. Past performance is not a prediction
of future results.
[BAR CHART]
1990 2.2%
1991 27.0$
1992 15.6%
1993 14.8%
1994 2.8%
1995 29.8%
1996 19.5%
1997 24.4%
1998 12.8%
Best Quarter: 4th Q 91 30.64%
Worst Quarter: 3rd Q 98 (12.24)%
==============================================================================
The table below shows a comparison of the fund's class VC average annual total
return to that of the S&P500'r' Index. Fund returns assume reinvestment of
dividends and distributions. All periods end on December 31, 1998.
<TABLE>
<CAPTION>
Class 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION(i)
<S> <C> <C> <C> <C>
VC 12.82% 17.51% -- 16.17%
- --------------------------------------------------------------------------------------
S&P 500'r' Index(ii) 28.60% 24.05% 19.19% 17.88%(iii)
- --------------------------------------------------------------------------------------
</TABLE>
(i) The date of inception for class VC is: 12/11/89.
(ii) Performance for the unmanaged S&P 500'r' Index does not reflect
transaction costs or management fees.
(iii) This represents total returns for the period 12/31/89 - 12/31/98.
<PAGE>
FEES AND EXPENSES
Lord Abbett may waive its management fee and/or advance other expenses of the
fund. A class must bear the expenses solely attributable to it. For the year
ended December 31, 1998, the expenses borne by the portfolio amounted to
$3,136,549 or .51 of 1% of its average daily net assets.
MANAGEMENT FEES are payable to Lord Abbett for the fund's investment
management.
OTHER EXPENSES include fees paid for miscellaneous items such as professional
fees.
The Fund 3
<PAGE>
Your Investment
PURCHASES AND REDEMPTIONS
This prospectus offers one class of shares: class VC. Shares are currently
only sold to the separate accounts of the insurance companies at Net Asset
Value ("NAV"). Redemptions will be effected by the separate accounts to
meet obligations under the Variable Contracts. Contract owners do not deal
directly with the fund with respect to acquisition or redemption of shares.
In selecting broker/dealers to execute portfolio transactions for the
fund's portfolio, if two or more broker/dealers are considered capable of
best execution, the fund may prefer the broker/dealer who has sold fund
shares through the sale of such Variable Contracts.
DISTRIBUTIONS TAX STATUS
All dividends and distributions are distributed to the shareholders and
will be payable in shares or cash at the election of shareholders. The
insurance companies, with respect to shares held by their separate
accounts, have elected, and intend to continue to elect, to receive
dividends and distributions in shares. Dividends and distributions are made
at such frequency and in such amount as to assure compliance with the
Internal Revenue Code.
It is the intention of the fund to cause the portfolio to qualify, and for
the year ended December 31, 1998, it did qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code. The fund
distributes all of its net income and gains to its shareholders (including
the separate accounts). The portfolio is treated as a separate entity for
federal income tax purposes and, therefore, the investments and results of
the portfolio are determined separately for purposes of determining whether
the portfolio qualifies as a "regulated investment company" and for
purposes of determining net ordinary income (or loss) and net realized
capital gains (or losses).
SERVICE AGREEMENT
Insurance companies will be compensated up to .25 of 1% to service and
maintain shareholder accounts. The services provided may include providing
information periodically to Variable Contract owners showing the number of
shares of the fund held through the Variable Contract; responding to
Variable Contract owners' inquiries relating to the services performed by
the insurance company; forwarding shareholder communications from the fund,
including proxies, shareholder reports, annual and semi-annual financial
statements as well as dividend, distribution and tax notices to Variable
Contract owners, if required by law; and such other similar services as the
fund may reasonably request on behalf of a portfolio, from time to time, to
the extent the insurance company is permitted to do so under federal and
state statutes, rules and regulations.
NAV per share for each class of fund shares is calculated each business day
at the close of regular trading on the New York Stock Exchange ("NYSE").
The fund is open on those business days when the NYSE is open. Purchases
and sales of fund shares are executed at the NAV next determined after the
fund receives your order. In calculating NAV, securities for which market
quotations are available are valued at those quotations. Securities for
which such quotations are not available are valued at fair value under
procedures approved by the Board.
VARIABLE CONTRACTS - usually variable annuities or variable life insurance
- - allow all contract holders to invest a portion of the premiums in mutual
funds in order to take advantage of fluctuations in the stock market.
4 Your Investment
<PAGE>
MANAGEMENT
The fund's investment adviser is Lord, Abbett & Co., 767 Fifth Avenue, New
York, NY 10153-0203. Founded in 1929, Lord Abbett manages one of the
nation's oldest mutual fund complexes, with over $30 billion in more than
35 mutual fund portfolios and other advisory accounts. For more information
about the services Lord Abbett provides to the funds, see the Statement of
Additional Information.
The fund pays Lord Abbett a monthly fee based on average daily net assets
for each month. For the fiscal year ended December 31, 1998, the fee paid
to Lord Abbett was at an annual rate of .50 of 1%. In addition, the fund
pays all expenses not expressly assumed by Lord Abbett.
Lord Abbett uses a team of portfolio managers and analysts acting together
to manage the fund's investments. Thomas Hudson Jr., Partner of Lord
Abbett, heads the fund's team, the other senior members of which are Robert
G. Morris, Partner of Lord Abbett, and Eli M. Salzman. Messrs. Hudson and
Morris have been with Lord Abbett for more than five years. Mr. Salzman
joined Lord Abbett in 1997; prior to that he was a Vice President with
Mutual of America Capital Corp from 1996 to 1997 and a Vice President with
Mitchell Hutchins Asset Management, Inc. from 1986 to 1996.
Your Investment 5
<PAGE>
For More Information
OTHER INVESTMENT TECHNIQUES
This section describes some of the investment techniques that might be used
by the fund and their risks. It is the fund's current intention that no
more than 5% of the portfolio's net assets will be at risk in the use of
any one of the policies identified below.
ADJUSTING INVESTMENT EXPOSURE. The fund may, but is not required to, use
various strategies to change its investment exposure to adjust to changing
security prices, interest rates, currency exchange rates, commodity prices
and other factors. The fund may use these strategies to change the risk and
return characteristics of the fund's portfolio. If we judge market
conditions incorrectly or use a strategy that does not correlate well with
the fund's investments, it could result in a loss, even if we intended to
lessen risk or enhance returns. These strategies may involve a small
investment of cash compared to the magnitude of the risk assumed and could
produce disproportionate gains or losses. Also, these strategies could
result in losses if the counterparty to a transaction does not perform as
promised.
BORROWING. The fund may borrow from banks. If the fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. The fund may borrow up to one third of the value of the
portfolio's total assets taken at current value but only from banks as a
temporary measure for extraordinary or emergency purposes. Beyond 5% of the
portfolio's total assets (at current value), this borrowing may not be used
for investment leverage to purchase securities. As a matter of operating
policy, the portfolio will not borrow more than 25% of its total assets
taken at current value.
CLOSED-END INVESTMENT COMPANIES. The fund may invest in shares of
closed-end investment companies if bought in the primary or secondary
market with a fee or commission no greater than the customary broker's
commission. Shares of such investment companies sometimes trade at a
discount or premium in relation to their net asset value.
COVERED CALL OPTIONS. The fund may write (sell) call options on securities
it owns. A call option on stock gives the purchaser of the option, upon
payment of a premium to the writer of the option, the right to call upon
the writer to deliver a specified number of shares of a stock on or before
a fixed date at a predetermined price.
PORTFOLIO SECURITIES LENDING. The fund may seek to earn income by lending
its portfolio securities if the loan is collateralized and complies with
regulatory requirements.
REPURCHASE AGREEMENTS. The fund may enter into repurchase agreements with
respect to a security. In a repurchase agreement, the fund buys a security
at one price from a broker-dealer or financial institution and
simultaneously agrees to sell the same security back to the same party at a
higher price in the future. If the other party to the agreement defaults or
becomes insolvent, the fund could lose money.
RIGHTS AND WARRANTS. The fund may invest in rights and warrants to purchase
securities. Included within these purchases, but not exceeding 2% of the
value of the portfolio's net assets, may be warrants which are not listed
on the New York Stock Exchange or American Stock Exchange.
6 For More Information
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RECENT PERFORMANCE
Our mid-year concerns regarding the future health of world markets turned
out to be extremely well-founded. As we feared, the Asian economic and
currency crises, along with economic problems in Russia, had a negative
impact on U.S. corporate profits and on U.S. investor confidence. As a
result, investors focused on a very small number of the perceived "safer"
largest growth stocks. The performance of our portfolio was negatively
affected by this investor focus on large-capitalization growth stocks,
which caused large value stocks to underperform.
Financial markets, meanwhile, have shown increased volatility over concern
regarding the likelihood that corporate earnings will fall short of
previous estimates and evidence of a global credit crunch. However, our
expectation for the U.S. economy at this time is not recession, but rather
that we have reached a turning point and will now see slower growth.
Consumer activity, which comprises well over half the economy, continues to
provide support for growth with additional gains seen in job creation,
income and spending. Business spending, however, is slowing down and
recession abroad is likely to reduce exports. Both developments will have a
flattening effect on corporate profit growth.
YEAR 2000 ISSUES. The fund could be adversely affected if the computers
used by each fund and their service providers do not properly process and
calculate date-related information from and after January 1, 2000.
Lord Abbett is working to avoid such problems and has received assurances
from each fund's service providers that they are taking similar steps. Of
course, the Year 2000 problem is unprecedented and, therefore, Lord Abbett
cannot eliminate altogether the possibility that it or the funds will be
affected.
For More Information 7
<PAGE>
Financial Information
FINANCIAL HIGHLIGHTS
The following financial highlights have been audited by Deloitte & Touche
LLP, independent auditors, whose report thereon is incorporated by
reference into the Statement of Additional Information and may be obtained
on request. The total return information for the portfolio shown in the
table below does not reflect expenses of a separate account or any variable
contracts. If such charges were included, the total return figures would be
lower for all periods shown.
<TABLE>
<CAPTION>
===================================================================================
GROWTH & INCOME PORTFOLIO - CLASS VC
---------------------------------------------
Year Ended December 31,
Per Share Operating Performance: 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $19.510 $17.022 $15.241 $12.71 $13.15
- --------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------
Net Investment Income .360(a) .393(a) .408 .459 .41
- --------------------------------------------------------------------------------------
Net realized and unrealized
- --------------------------------------------------------------------------------------
gain (loss) on investments 2.149 3.755 2.563 3.332 (.045)
- --------------------------------------------------------------------------------------
Total from investment operations 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 YEAR $20.649 $19.510 $17.022 $15.241 $12.71
- --------------------------------------------------------------------------------------
TOTAL RETURN(b) 12.82% 24.34% 19.49% 29.82% 2.76%
- --------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------
Expenses(b) .51% .52% .52% .52% .59%
- --------------------------------------------------------------------------------------
Net investment income 1.78% 2.02% 2.32% 2.91% 2.97%
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
=======================================================================================
Year Ended December 31,
- ---------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA: 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
NET ASSETS, END OF YEAR (000) $714,274 $512,438 $303,982 $193,575 $114,608
- ---------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 76.62% 43.09% 48.93% 70.30% 68.94%
- ---------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding during the period.
(b) Total return assumes the reinvestment of all distributions.
8 Financial Information
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LINE GRAPH COMPARISON
Immediately below is a comparison of a $10,000 investment in class VC shares
to the same investment in the S&P 500'r' Index, assuming reinvestment of all
dividends and distributions.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
=================================================================
Average Annual Total Return
For The Periods Ending December 31, 1998
1 YEAR 5 YEAR LIFE
- -----------------------------------------------------------------
<S> <C> <C> <C>
Class VC(2) 12.82% 17.51% 16.17%
- -----------------------------------------------------------------
</TABLE>
- -----------------------------------------------------------------
(1) Performance for the unmanaged S&P500'r' Index does not reflect transaction
costs, management fees or sales charges. Performance for the S&P500'r'
Index begins on 12/31/89.
(2) The class VC shares were first offered on 12/11/89.
Financial Information 9
<PAGE>
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<PAGE>
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This prospectus is intended for use in connection with a Variable Contract
Plan. More information on this fund is available free upon request,
including:
ANNUAL/SEMI-ANNUAL REPORT
Describes the fund, lists portfolio holdings and contains a letter from the
fund's manager discussing recent market conditions and investment
strategies.
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
Provides more details about the fund and its policies. A current SAI is on
file with the Securities and Exchange Commission ("SEC") and is incorporated
by reference (is legally considered part of this prospectus).
Both the SAI and the prospectus may be obtained, without charge, by writing
to the fund or by calling 800-831-LIFE with respect to Variable Contracts of
Cova Financial Services Life Insurance Company, 800-342-6307 with respect to
Variable Contracts of Great American Reserve Insurance Company, 800-752-7215
with respect to the Variable Contracts of SunLife of Canada (U.S.), and
800-272-1642 with respect to the Variable Contracts of Midland National Life
Insurance Company.
Lord Abbett Series Fund
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
----------------------------
SEC file number: 811-5876
To obtain information:
BY TELEPHONE. Call the fund at:
800-426-1130
BY MAIL. Write to the fund at:
The Lord Abbett Family of Funds
767 Fifth Avenue
New York, NY 10153-0203
VIA THE INTERNET.
LORD, ABBETT & CO.
http://www.lordabbett.com
Text only versions of fund documents can be viewed online or downloaded from:
SEC
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 800-SEC-0330) or by sending your request and a duplicating
fee to the SEC's Public Reference Section, Washington, DC 20549-6009.
LASF-1-599
(5/99)
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
LORD ABBETT SERIES FUND, INC. May 1, 1999
GROWTH AND INCOME PORTFOLIO
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from Lord, Abbett & Co ("Lord Abbett"), The General Motors Building,
767 Fifth Avenue, New York, N.Y. 10153-0203. This Statement of Additional
Information relates to, and should be read in conjunction with, the Prospectus
dated May 1, 1999.
The Fund was incorporated under Maryland law on August 28, 1989. Shareholder
inquiries should be made by writing directly to the Fund or by calling
800-831-LIFE with respect to Variable Contracts of Cova Financial Services Life
Insurance Company, 800-342-6307 with respect to Variable Contracts of Great
American Reserve Insurance Company, 800-752-7215 with respect to the Variable
Contracts of SunLife of Canada (U.S.), and 800-272-1642 with respect to the
Variable Contracts of Midland National Life Insurance Company.
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C> <C>
1. Investment Objectives and Policies 2
2. Directors and Officers 4
3. Control Persons and Principal Holders of Securities 7
4. Investment Advisory and Other Services 8
5. Portfolio Transactions 9
6. Net Asset Value of Fund Shares 10
7. Dividends and Distributions 11
8. Distribution Arrangements 11
9. Taxes 11
10. Calculation of Performance Data 11
11. Financial Statements 12
</TABLE>
<PAGE>
1.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objectives and policies are described in the Prospectus
under "Goal/Approach," "Risks," and "Other Investment Techniques." In addition
to those investment objectives, the Growth and Income Portfolio (the
"Portfolio") is subject to the following investment restrictions which cannot be
changed without approval of a majority of the outstanding shares of the
Portfolio. The Portfolio may not: (1) sell short securities or buy securities or
evidences of interests therein on margin, although it may obtain short-term
credit necessary for the clearance of purchases of securities; (2) buy or sell
put or call options, although it may buy, hold or sell rights or warrants, write
covered call options and enter into closing purchase transactions as discussed
below; (3) borrow money which is in excess of one-third of the value of its
total assets taken at market value (including the amount borrowed) and then only
from banks as a temporary measure for extraordinary or emergency purposes
(borrowings beyond 5% of such total assets may not be used for investment
leverage to purchase securities but solely to meet redemption requests where the
liquidation of the Portfolio's investment is deemed to be inconvenient or
disadvantageous); (4) invest in securities or other assets not readily
marketable at the time of purchase or subject to legal or contractual
restrictions on resale except as described under "Restricted or Not Readily
Marketable Securities for the Fund's Portfolio" below; (5) act as underwriter of
securities issued by others, unless it is deemed to be one in selling a
portfolio security requiring registration under the Securities Act of 1933, such
as those described under "Restricted or Not Readily Marketable Securities for
the Fund's Portfolio" below; (6) lend money or securities to any person except
that it may enter into short-term repurchase agreements with sellers of
securities it has purchased, and it may lend its portfolio securities to
registered broker-dealers where the loan is 100% secured by cash or its
equivalent as long as it complies with regulatory requirements and the Fund
deems such loans not to expose the Portfolio to significant risk (investment in
repurchase agreements exceeding 7 days and in other illiquid investments is
limited to a maximum of 5% of a Portfolio's assets); (7) pledge, mortgage or
hypothecate its assets; however, this provision does not apply to permitted
borrowing mentioned above or to the grant of escrow receipts or the entry into
other similar escrow arrangements arising out of the writing of covered call
options; (8) buy or sell real estate including limited partnership interests
therein (except securities of companies, such as real estate investment trusts,
that deal in real estate or interests therein), or oil, gas or other mineral
leases, commodities or commodity contracts in the ordinary course of its
business, except such interests and other property acquired as a result of
owning other securities, though securities will not be purchased in order to
acquire any of these interests; (9) invest more than 5% of its gross assets,
taken at market value at the time of investment, in companies (including their
predecessors) with less than three years' continuous operation; (10) buy
securities if the purchase would then cause a Portfolio to have more than (i) 5%
of its gross assets, at market value at the time of purchase, invested in
securities of any one issuer, except securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, or (ii) 25% of its gross assets,
at market value at the time of purchase, invested in securities issued or
guaranteed by a foreign government, its agencies or instrumentalities; (11) buy
voting securities if the purchase would then cause a Portfolio to own more than
10% of the outstanding voting stock of any one issuer; (12) own securities in a
company when any of its officers, directors or security holders is an officer or
director of the Fund or an officer, director or partner of the Investment
Manager or sub-adviser, if after the purchase any of such persons owns
beneficially more than 1/2 of 1% of such securities and such persons together
own more than 5% of such securities; (13) concentrate its investments in any
particular industry, but if deemed appropriate for attainment of its investment
objective, up to 25% of its gross assets (at market value at the time of
investment) may be invested in any one industry classification used for
investment purposes; (14) buy securities from or sell them to the Fund's
officers, directors, or employees, or to the Investment Manager or sub-adviser
or to their partners, directors and employees; or (15) issue senior securities
to the extent such issuance would violate applicable law.
CHANGES IN FUND OBJECTIVES, RESTRICTIONS, POLICIES AND STRATEGIES
The Fund's investment objectives described in the Prospectus and the Fund's
investment restrictions described above in this Statement of Additional
Information, both can be changed only with the approval of
2
<PAGE>
a majority of the outstanding shares of the affected Portfolio. All of the
Fund's policies and techniques, including those described below, can be changed
without such approval.
INVESTMENT TECHNIQUES
The Fund intends to utilize from time to time one or more of the investment
techniques described below, including covered call options, rights and warrants
and repurchase agreements. It is the Fund's current intention that no more than
5% of the Portfolio's net assets will be at risk in the use of any one of such
investment techniques. While some of these techniques involve risk when utilized
independently, the Fund intends to use them to reduce risk and volatility in its
Portfolio.
Covered Call Options. The Fund may write call options on securities it owns. A
call option on stock gives the purchaser of the option, upon payment of a
premium to the writer of the option, the right to call upon the writer to
deliver a specified number of shares of a stock on or before a fixed date at a
predetermined price.
The writing of call options will, therefore, involve a potential loss of
opportunity to sell securities at higher prices. The writer of a fully
collateralized call option assumes the full downside risk of the securities
subject to such option. In addition, in exchange for the premium received, the
writer of the call gives up the gain possibility of the stock appreciating
beyond the call price. While an option that has been written is in force, the
maximum profit that may be derived from the optioned stock is the sum of the
premium (less brokerage commissions and fees) plus the difference between the
strike price of the call and the market price of the underlying security.
The Fund's custodian will segregate cash, liquid high grade debt securities or
other permitted securities in an amount not less than the value of the Fund's
assets committed to written covered call options. If the value of the securities
segregated declines, additional cash or permitted securities will be added on a
daily basis (i.e., marked to market) so that the segregated amount will not be
less than the amount of the Fund's commitments with respect to such written
options.
Rights and Warrants. The Fund may invest in rights and warrants to purchase
securities. Included within that amount, but not to exceed 2% of the value of
the Portfolio's net assets, may be warrants which are not listed on the New York
Stock Exchange or American Stock Exchange.
Rights represent a privilege offered to holders of record of issued securities
to subscribe (usually on a pro rata basis) for additional securities of the same
class, of a different class, or of a different issuer, as the case may be.
Warrants represent the privilege to purchase securities at a stipulated price
and are usually valid for several years. Rights and warrants generally do not
entitle a holder to dividends or voting rights with respect to the underlying
securities nor do they represent any rights in the assets of the issuing
company.
Also, the value of a right or warrant may not necessarily change with the value
of the underlying securities, and rights and warrants cease to have value if
they are not exercised prior to their expiration date.
Repurchase Agreements. The Fund may enter into repurchase agreements with
respect to a security. A repurchase agreement is a transaction by which the Fund
acquires a security and simultaneously commits to resell that security to the
seller (a bank or securities dealer) at an agreed-upon price on an agreed-upon
date. The resale price reflects the purchase price plus an agreed-upon market
rate of interest which is unrelated to the coupon rate or date of maturity of
the purchased security. In this type of transaction, the securities purchased by
the Fund have a total value in excess of the value of the repurchase agreement.
The Fund requires at all times that the repurchase agreement be collateralized
by cash or U.S. government securities having a value equal to, or in excess of,
the value of the repurchase agreement. Such agreements permit the Fund to keep
all of its assets at work while retaining flexibility in pursuit of investments
of a longer-term nature.
3
Page>
The use of repurchase agreements involves certain risks. For example, if the
seller of the agreement defaults on its obligation to repurchase the underlying
securities at a time when the value of these securities has declined, the Fund
may incur a loss upon disposition of them. If the seller of the agreement
becomes insolvent and subject to liquidation or reorganization under the
Bankruptcy Code or other laws, a bankruptcy court may determine that the
underlying securities are collateral not within the control of the Fund and
therefore subject to sale by the trustee in bankruptcy. Even though the
repurchase agreements may have maturities of seven days or less, they may lack
liquidity, especially if the issuer encounters financial difficulties. While the
Fund acknowledges these risks, it is expected that they can be controlled
through stringent selection criteria and careful monitoring procedures. The Fund
intends to limit repurchase agreements to transactions with dealers and
financial institutions believed by the Fund to present minimal credit risks. The
Fund will monitor creditworthiness of the repurchase agreement sellers on an
ongoing basis.
RESTRICTED OR NOT READILY MARKETABLE SECURITIES FOR THE FUND'S PORTFOLIO
Although the Fund has no current intention of investing in such securities in
the foreseeable future, no more than 5% of the value of the Portfolio may be
invested in securities with legal or contractual restrictions on resale
("restricted securities") (including securities qualifying for resale under SEC
Rule 144A that are determined by the Board, or by Lord Abbett pursuant to the
Board's delegation, to be liquid securities, restricted securities, repurchase
agreements with maturities of more than seven days and over-the-counter
options), other than repurchase agreements and those restricted securities which
have a liquid market among certain institutions, including the Fund, and in
securities which are not readily marketable.
LENDING OF SECURITIES BY THE FUND'S PORTFOLIO
Although the Fund has no current intention of doing so in the foreseeable
future, the Fund may seek to earn income by lending portfolio securities. Under
present regulatory policies, such loans may be made to member firms of the New
York Stock Exchange and are required to be secured continuously by collateral
consisting of cash, cash equivalents, or United States Treasury bills maintained
in an amount at least equal to the market value of the securities loaned. The
Fund will have the right to call a loan and obtain the securities loaned at any
time on five days' notice. During the existence of a loan the Fund will receive
the income earned on investment of collateral. The aggregate value of the
securities loaned will not exceed 15% of the value of the Portfolio's total
assets.
PORTFOLIO TURNOVER RATES
For the fiscal year ended December 31, 1998, the portfolio turnover rate of the
Portfolio was 76.62% compared to 43.09% for the prior fiscal year.
2.
DIRECTORS AND OFFICERS
The following director is a partner of Lord, Abbett & Co. ("Lord Abbett"), The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. He has
been associated with Lord Abbett for over five years and is also an officer,
director, or trustee of twelve other Lord Abbett-sponsored funds. He is an
"interested person" as defined in the Act, and as such, may be considered to
have an indirect financial interest in the Rule 12b-1 Plan described in the
Prospectus.
Robert S. Dow, age 54, Chairman and President
The following outside directors are also directors or trustees of twelve other
Lord Abbett-sponsored funds referred to above. The Board of Directors/Trustees
of each Lord Abbet fund oversees fund operations and management. E. Thayer
Bigelow
4
<PAGE>
Time Warner Inc.
1271 Avenue of the Americas
New York, New York
Senior Adviser, Time Warner Inc. Formerly, Acting Chief Executive Officer of
Courtroom Television Network (1997 - 1998). Formerly, President and Chief
Executive Officer of Time Warner Cable Programming, Inc. (1991 - 1997). Prior to
that, President and Chief Operating Officer of Home Box Office, Inc. Age 57.
William H.T. Bush
Bush-O'Donnell & Co., Inc.
101 South Hanley Road, Suite 1025
St. Louis, Missouri
Co-founder and Chairman of the Board of financial advisory firm of
Bush-O'Donnell & Company. Age 60.
Robert B. Calhoun, Jr.
Monitor Clipper Partners
650 Madison Avenue, 9th Floor
New York, New York
Managing Director of Monitor Clipper Partners and President of The Clipper Group
L.P., both private equity investment funds. Age 56.
Stewart S. Dixon
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon. Age 68.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 73.
C. Alan MacDonald
Directorship Inc.
8 Sound Shore Drive
Greenwich, Connecticut
Managing Director of Directorship Inc., a consultancy in board management and
corporate governance. Formerly, General Partner of The Marketing Partnership,
Inc., a full service marketing consulting firm (1994-1997). Prior to that,
Chairman and Chief Executive Officer of Lincoln Snacks, Inc., manufacturer of
branded snack foods (1992-1994). His career spans 36 years at Stouffers and
Nestle with 18 of the years as Chief Executive Officer. Currently serves as
Director of DenAmerica Corp., J. B. Williams Company, Inc., Fountainhead Water
Company and Exigent Diagnostics. Age 65.
Hansel B. Millican, Jr.
Rochester Button Company
1328 Broadway (Suite 816)
New York, New York
President and Chief Executive Officer of Rochester Button Company. Age 70.
5
Page>
Thomas J. Neff
Spencer Stuart
277 Park Avenue
New York, New York
Chairman of Spencer Stuart, an executive search consulting firm. Currently
serves as a Director of Ace, Ltd. (NYSE). Age 61.
The second column of the following table sets forth the compensation accrued for
the Fund's outside directors. The third column sets forth information with
respect to the equity-based benefits accrued for outside directors by the Lord
Abbett-sponsored funds. The fourth sets forth the total compensation payable by
such funds to the outside directors. No director of the Fund associated with
Lord Abbett and no officer of the Fund received any compensation from the Fund
for acting as a director or officer.
<TABLE>
<CAPTION>
For the Fiscal Year Ended December 31, 1998
--------------------------------------------
(1) (2) (3) (4)
Pension or For Year Ended
Retirement Benefits December 31, 1998
Accrued by the Total Compensation
Aggregate Company and Accrued by the Company and
Compensation Twelve Other Lord Twelve Other Lord
Accrued by Abbett-sponsored Abbett-sponsored
Name of Director the Company(1) Companies(2) Companies(3)
- ---------------- -------------- ------------ ------------
<S> <C> <C> <C>
E. Thayer Bigelow $1,969 $17,068 $57,400
Stewart S. Dixon $1,938 $32,190 $56,500
John C. Jansing $1,904 $45,085(4) $55,500
C. Alan MacDonald $1,887 $30,703 $55,000
Hansel B. Millican, Jr $1,904 $37,747 $55,500
Thomas J. Neff $1,938 $19,853 $56,500
</TABLE>
(1) Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on the
net assets of each fund. A portion of the fees payable by the Fund to its
outside directors is being deferred under a plan that deems the deferred
amounts to be invested in shares of the Fund for later distribution to the
directors.
(2) The amounts in Column 3 were accrued by the Lord Abbett-Sponsored Funds for
the 12 months ended December 31, 1998 with respect to the equity based plans
established for independent directors in 1996. This plan supercedes a
previously approved retirement plan for all future directors. Current
directors had the option to convert their accrued benefits under the
retirement plan. All of the outside directors except one made such an
election.
(3) This column shows aggregate compensation, including directors fees and
attendance fees for board and committee meetings, of a nature referred to in
footnote one, accrued by the Lord Abbett-sponsored funds during the year
ended December 31, 1998. The amounts of the aggregate compensation payable
by the Fund as of December 31, 1998 deemed invested in Fund shares,
including dividends reinvested and changes in net asset value applicable to
such deemed investments, were: Mr. Bigelow, $5,213; Mr. Dixon, $567; Mr.
Jansing, $6,181; Mr. MacDonald, $1,173; Mr. Millican, $6,220 and Mr. Neff,
$6,209. If the amounts deemed invested in Fund shares were added to each
director's actual holdings of Fund shares as of December 31, 1998, each
would own, the following: Mr. Bigelow, 253 shares; Mr. Dixon, 28 shares;
Mr. Jansing, 299 shares; Mr. McDonald, 57 shares; Mr. Millican, 301 shares;
and Mr. Neff, 301 shares.
6
<PAGE>
(4) Mr. Jansing chose to continue to receive benefits under the retirement plan,
which provides that outside directors (Trustees) may receive annual
retirement benefits for life equal to their final annual retainer following
retirement at or after age 72 with at least ten years of service. Thus, if
Mr. Jansing were to retire and the annual retainer payable by the funds
were the same as it is today, he would receive annual retirement benefits
of $50,000.
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Brown, Carper, Hilstad, Hudson, Morris and Walsh are partners of Lord Abbett;
the others are employees:
EXECUTIVE VICE PRESIDENT
W. Thomas Hudson, age 56
VICE PRESIDENTS
Paul A. Hilstad, age 56 (with Lord Abbett since 1995; formerly Senior Vice
President and General Counsel of American Capital Management & Research, Inc.)
Zane E. Brown, age 46
Daniel E. Carper, age 47
Robert G. Morris, age 54
Lawrence H. Kaplan, age 43 (with Lord Abbett since 1997 - formerly, Vice
President and Chief Counsel of Salomon Brothers Asset Management Inc
(1995-1997); prior thereto, Senior Vice President, Director and General Counsel
of Kidder Peabody Asset Management, Inc. (1990-1995))
A. Edward Oberhaus, age 39
Keith O'Connor, age 43
John J. Walsh, age 62
TREASURER
Donna M. McManus, age 38, Treasurer (with Lord Abbett since 1996; formerly a
Senior Manager at Deloitte & Touche LLP).
The Company's By-Laws provide that the Company shall not hold an annual meeting
of its stockholders in any year unless one or more matters are required to be
acted on by stockholders under the Act, or unless called at the request of a
majority of the Board of Directors or by stockholders holding at least
one-quarter of the stock of the Company outstanding and entitled to vote at the
meeting. When any such annual meeting is held, the stockholders will elect
directors to hold the offices of any directors who have held office for more
than one year or who have been elected by the Board of Directors to fill
vacancies. Under the By-Laws and in accordance with the Act, stockholder
approval of the independent auditors of the Company will not be required except
when such meetings are held.
3.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES SUBSTANTIAL SHAREHOLDERS
As of April 15, 1999 our officers and trustees, as a group, owned less than 1%
of the Fund's outstanding shares. As of April 15, 1999 the following were record
holders of 5% or more of the Fund's outstanding shares:
COVA VARIABLE ANNUITY ACCOUNT #1
1 Tower Lane #3000
Villa Park, IL
7
Page>
COVA VARIABLE ANNUITY ACCOUNT #5
1 Tower Lane
Villa Park, IL
As of March 31, 1998, COVA Variable Annuity Accounts One, Five, Six, and Seven,
separate accounts of COVA Financial Services Life Insurance Company, One Tower
Lane, Oakbrook Terrace, Illinois 60181 ("COVA Life"), was known to the Board of
Directors and the management of the Fund to own of record 28,282,357 shares
representing 99.93% of the total shares issued and outstanding of the Portfolio.
As of the same date, Great American Reserve Insurance Company, 11815 North
Pennsylvania St., Carmel, Indiana 46032, and Sun Life of Canada (U.S.), 1 Copley
Place, Suite 200, Boston, Massachusetts 02116 were so known to own of record
1,408 shares representing .01% and 46 shares representing less than 1/2 of 1%,
respectively. Also, as of such date, Lord Abbett was known to own of record
17,653 shares representing .06% of the total shares issued and outstanding. As
of that date, the officers and directors of the Fund together owned no Variable
Contracts.
4.
INVESTMENT ADVISORY AND OTHER SERVICES
As described under "Management" in the Prospectus, Lord Abbett is the Fund's
investment manager. Eight of the general partners of Lord Abbett are officers
and/or directors of the Fund and are identified as follows: Zane E. Brown,
Daniel E. Carper, Robert S. Dow, Paul A. Hilstad, W. Thomas Hudson, Robert G.
Morris, and John J. Walsh. The other general partners of Lord Abbett are Stephen
I. Allen, John E. Erard, Robert P. Fetch, Daria L. Foster, Robert I. Gerber,
Stephen I. McGruder, Michael B. McLaughlin, Robert J. Noelke, Mark R. Pennington
and Christopher J. Towle.
The address of each partner is The General Motors Building, 767 Fifth Avenue,
New York, New York 10153-0203.
Lord Abbett acts as investment manager for twelve other investment companies
comprising the Lord Abbett Family of Funds. The names of these investment
companies are:
Lord Abbett Affiliated Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Tax-Free Income Trust
Lord Abbett Equity Fund
Lord Abbett U.S. Government Securities Money Market Fund, Inc.
Lord Abbett Securities Trust
Lord Abbett Investment Trust
Lord Abbett Research Fund, Inc.
The services to be provided by Lord Abbett are described under "Management" in
the Prospectus. Under the Management Agreement, the Fund on behalf of the
Portfolio is obligated to pay Lord Abbett a monthly fee, based on the average
daily net assets of the Portfolio for each month, at the annual rate of 0.50 of
1%. For the fiscal years ended December 31, 1996, 1997 and 1998, Lord Abbett
received $1,234,273, $2,019,891 and $3,070,876 in advisory fees, respectively.
The Fund pays all expenses not expressly assumed by Lord Abbett, including,
without limitation, outside directors' fees and expenses, association membership
dues, legal and auditing fees, taxes, transfer and dividend disbursing agent
fees, shareholder servicing costs, expenses relating to shareholder meetings,
expenses of preparing, printing and mailing stock certificates and shareholder
reports, expenses of registering the Fund's shares under federal and state
securities laws, expenses of printing and mailing
8
<PAGE>
prospectuses to existing shareholders, insurance premiums, brokerage and other
expenses connected with executing portfolio transactions.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281 are
the independent auditors of the Fund and must be approved at least annually by
the Fund's Board of Directors to continue in such capacity. They perform audit
services for the Fund including the examination of financial statements included
in the Fund's annual report to shareholders.
The Bank of New York ("BNY"), 48 Wall Street, New York, New York, is the Fund's
custodian and maintains the fund's assets. In accordance with the requirements
of Rule 17f-5, the Fund's directors have approved arrangements permitting the
Fund's foreign assets not held by BNY or its foreign branches to be held by
certain qualified foreign banks and depositories.
5.
PORTFOLIO TRANSACTIONS
Our policy is to obtain best execution on all our portfolio transactions, which
means that we seek to have purchases and sales of portfolio securities executed
at the most favorable prices, considering all costs of the transaction including
brokerage commissions and dealer markups and markdowns and taking into account
the full range and quality of the brokers' services. Consistent with obtaining
best execution, we generally pay, as described below, a higher commission than
some brokers might charge on the same transactions. Our policy with respect to
best execution governs the selection of brokers or dealers and the market in
which the transaction is executed. To the extent permitted by law, we may, if
considered advantageous, make a purchase from or sale to another Lord
Abbett-sponsored fund without the intervention of any broker-dealer.
Broker-dealers are selected on the basis of their professional capability and
the value and quality of their brokerage and research services. Normally, the
selection is made by traders who are officers of the Fund and also are employees
of Lord Abbett. These traders do the trading as well for other accounts --
investment companies (of which they are also officers) and other investment
clients -- managed by Lord Abbett. They are responsible for obtaining best
execution.
We pay a commission rate that we believe is appropriate to give maximum
assurance that our brokers will provide us, on a continuing basis, the highest
level of brokerage services available. While we do not always seek the lowest
possible commissions on particular trades, we believe that our commission rates
are in line with the rates that many other institutions pay. Our traders are
authorized to pay brokerage commissions in excess of those that other brokers
might accept on the same transactions in recognition of the value of the
services performed by the executing brokers, viewed in terms of either the
particular transaction or the overall responsibilities of Lord Abbett with
respect to us and the other accounts they manage. Such services include showing
us trading opportunities including blocks, a willingness and ability to take
positions in securities, knowledge of a particular security or market proven
ability to handle a particular type of trade, confidential treatment, promptness
and reliability.
Some of these brokers also provide research services at least some of which are
useful to Lord Abbett in their overall responsibilities with respect to us and
the other accounts they manage. Research includes the furnishing of analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts and trading equipment and
computer software packages, acquired from third-party suppliers, that enable
Lord Abbett to access various information bases. Such services may be used by
Lord Abbett in servicing all their accounts, and not all of such services will
necessarily be used by Lord Abbett in connection with their management of the
Fund; conversely, such services furnished in connection with brokerage on other
accounts managed by Lord Abbett may be used in connection with their management
of the Fund, and not all of such services will necessarily be used by Lord
Abbett in connection with their advisory services to such other accounts. We
have been advised by Lord Abbett that research services received form brokers
cannot be allocated to any particular account, are not a substitute for Lord
Abbett's services but are supplemental to their own research effort and when
9
Page>
utilized, are subject to internal analysis before being incorporated by Lord
Abbett into their investment process. As a practical matter, it would not be
possible for Lord Abbett to generate all of the information presently provided
by brokers. While receipt of research services from brokerage firms has not
reduced Lord Abbett's normal research activities, the expenses of Lord Abbett
could be materially increased if it attempted to generate such additional
information through its own staff and purchased such equipment and software
packages directly from the suppliers.
No commitments are made regarding the allocation of brokerage business to or
among brokers, and trades are executed only when they are dictated by investment
decisions of the Fund to purchase or sell portfolio securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold our shares and/or
shares of other Lord Abbett-sponsored funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as we do, transactions will, to the extent practicable, be allocated among all
participating accounts in proportion to the amount of each order and will be
executed daily until filled so that each account shares the average price and
commission cost of each day. Other clients who direct that their brokerage
business be placed with specific brokers or who invest through wrap accounts
introduced to Lord Abbett by certain brokers may not participate with us in the
buying and selling of the same securities as described above. If these clients
wish to buy or sell the same security as we do, they may have their transactions
executed at times different from our transactions and thus may not receive the
same price or incur the same commission cost as we do.
We will not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from dealers as
consideration for the direction to them of portfolio business.
During the fiscal years ended December 31, 1998, 1997 and 1996, the total dollar
amounts of brokerage commissions paid by the Fund were $ , $631,256 and
$389,776, respectively.
6.
NET ASSET VALUE OF FUND SHARES
Information concerning how we value our shares for the purchase and redemption
of our shares is contained in the Prospectus under "Purchases and Redemptions."
As disclosed in the Prospectus, we calculate our net asset value as of the close
of the New York Stock Exchange ("NYSE") (normally at 4:00 P.M. Eastern Standard
Time) on each day that the NYSE is open for trading by dividing our total net
assets by the number of shares outstanding at the time of calculation. The NYSE
is closed on Saturdays and Sundays and the following holidays -- New Year's Day,
Martin Luther King, Jr.'s Birthday, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
VALUATION OF SECURITIES HELD IN THE PORTFOLIO
The Fund values its portfolio securities at market value as of the close of the
NYSE. Market value will be determined as follows: securities listed or admitted
to trading privileges on the New York or American Stock Exchange or on the
NASDAQ National Market System are valued at the last sales price, or, if there
is no sale on that day, at the mean between the last bid and asked prices, or,
in the case of bonds, in the over-the-counter market if, in the judgment of the
Fund's officers, that market more accurately reflects the market value of the
bonds. Over-the-counter securities not traded on the NASDAQ National Market
System are valued at the mean between the last bid and asked prices. Securities
for which market quotations are not available are valued at fair market value
under procedures approved by the Board of Directors.
10
<PAGE>
7.
DIVIDENDS AND DISTRIBUTIONS
It is the Fund's intention to distribute substantially all the net investment
income, if any, of the Portfolio. For dividend purposes, net investment income
of the Portfolio will consist of dividends and/or interest earned by the
Portfolio less the expenses of such Portfolio.
All net realized capital gains of the Fund, if any, are declared and distributed
annually.
8.
DISTRIBUTION ARRANGEMENTS
GENERAL
Lord Abbett Distributor LLC ("Lord Abbett Distributor") serves as the
distributor in connection with the offering of the Fund's shares. In connection
with the sale of its shares, the Fund has authorized Lord Abbett Distributor to
provide only such information and to make only such statements and
representations which are not materially misleading or which are contained in
the Fund's then current Prospectus or Statement of Additional Information or
shareholder reports in such financial and other statements which are furnished
to Lord Abbett by the Fund.
The Fund and Lord Abbett Distributor are parties to a Distribution Agreement
that continues in force until December, 1999. The Distribution Agreement may be
terminated by either party and will automatically terminate in the event of its
assignment. The Distribution Agreement may be renewed annually if specifically
approved by the Board of Directors or by vote of a majority of the outstanding
voting securities of the Fund provided that any such renewal shall be approved
by the vote of a majority of the Directors who are not parties to the
Distribution Agreement and are not "interested persons" of the Fund and have no
direct or indirect financial interest in the operation of the Distribution
Agreement.
9.
TAXES
It is the intention of the Fund to cause the Portfolio to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended. Under such provisions, the Portfolio will not be subject to federal
income tax on that part of its net ordinary income and net realized capital
gains which it distributes to shareholders. The Portfolio will be treated as a
separate entity for federal income tax purposes and, therefore, the investments
and results of the Portfolio are determined separately for purposes of
determining whether the Portfolio qualifies as a regulated investment company
and for purposes of determining the Portfolio's net ordinary income (or loss)
and net realized capital gains (or losses). To qualify for treatment as a
regulated investment company, the Portfolio must, among other things, derive in
each taxable year at least 90% of its gross income from dividends, interest and
gains from the sale or other disposition of securities and certain other related
income.
10.
CALCULATION OF PERFORMANCE DATA
The Portfolio's average annual compounded rate of return is determined by
reference to a hypothetical $1,000 investment that includes capital appreciation
and depreciation for the stated period, according to the following formula:
<TABLE>
<CAPTION>
<S> <C>
P(1+T)'pp'n = ERV
where
P = a hypothetical initial payment of $1,000
T = average annual total return
11
Page>
n = number of years
ERV = ending redeemable value of the hypothetical $1,000 purchase at
the end of the period.
</TABLE>
Aggregate total return is calculated in a similar manner, except that the
results are not annualized. Each calculation assumes that all dividends and
distributions are reinvested at net asset value on the reinvestment dates during
the period.
Using this method to compute average annual compounded rates of total return for
the Portfolio's last one, five and the life of the fund periods ending on
December 31, 1998 were: 24.34%, 17.87% and 16.56%, respectively.
11.
FINANCIAL STATEMENTS
The financial statements for the year ended December 31, 1998 and the report of
Deloitte & Touche LLP, independent auditors, on such financial statements
contained in the 1998 Annual Report to Shareholders of Lord Abbett Series Fund,
Inc. are incorporated herein by reference to such financial statements and
report in reliance upon the authority of Deloitte & Touche LLP as experts in
auditing and accounting.
12
Page>
PART C OTHER INFORMATION
This Post-Effective Amendment No. 17 (the "Amendment") to the Registrant's
Registration Statement relates only to Series Fund - class VC.
The other series and classes of shares of the Registrant are listed below and
are offered by the Prospectuses and Statements of Additional Information in
Parts A and B, respectively, of the Post-Effective Amendments to the
Registrant's Registration Statements as identified. The following are separate
series and/or classes of shares of the Registrant. This Amendment does not
relate to, amend or otherwise affect the Prospectuses and Statements of
Additional Information contained in the prior Post-Effective Amendments listed
below, and pursuant to Rule 485(d) under the Securities Act of 1933, does not
affect the effectiveness of such Post-Effective Amendments.
<TABLE>
<CAPTION>
POST-EFFECTIVE
AMENDMENT NO.
--------------
<S> <C>
Bond Debenture Portfolio- class VC 13
Mid-Cap Value Portfolio- class VC 14
International Portfolio- class VC 15
</TABLE>
Item 23 Exhibits
(a) Articles of Incorporation are incorporated by reference to
Post-Effective Amendment No. to the Registration Statement on Form
N-1A filed on .
(b) By-Laws incorporated by reference.
(c) Instruments Defining Rights of Security Holders incorporated by
reference.
(d) Investment Advisory Contracts incorporated by reference.
(e) Underwriting Contracts incorporated by reference.
(f) Bonus or Profit Sharing Contracts is incorporated by reference to
Post Effective Amendment No. 6 to the Registration Statement on
Form N-1A filed on October 7, 1994.
(g) Custodian Agreements incorporated by reference.
(h) Other Material Contracts incorporated by reference.
(i) Consent to Legal Opinion. Filed herewith.
(j) Consent of Independent Auditors. Filed herewith.
(k) Omitted Financial Statements incorporated by reference.
(l) Initial Capital Agreements incorporated by reference.
(m) Rule 12b-1 Plan incorporated by reference to Post Effective
Amendment No. 12 filed on August 29, 1996.
(n) Financial Data Schedule. Filed herewith.
(o) Rule 18f-3 Plan. Incorporated by reference to Post Effective
Amendment No. 12 filed on August 29, 1996.
Item 24 Persons Controlled by or Under Common Control with the Fund
None.
Item 25 Indemnification
All Trustees, officers, employees and agents of Registrant are to be
indemnified as set forth in Section 4.3 of Registrant's Declaration of
Trust.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to Trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expense incurred or paid
by a Trustee, officer or controlling person of
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<PAGE>
the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Trustee, officer or controlling person
in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
In addition, Registrant maintains a Trustees' and officers' errors and
omissions liability insurance policy protecting Trustees and officers
against liability for breach of duty, negligent act, error or omission
committed in their capacity as Trustees or officers. The policy
contains certain exclusions, among which is exclusion from coverage for
active or deliberate dishonest or fraudulent acts and exclusion for
fines or penalties imposed by law or other matters deemed uninsurable.
Item 26 Business and Other Connections of Investment Adviser
Lord, Abbett & Co. acts as investment adviser for twelve other
investment companies (of which it is principal underwriter for
thirteen) and as investment adviser to approximately 8,300 private
accounts as of September 30, 1998. Other than acting as trustees,
directors and/or officers of open-end investment companies managed by
Lord, Abbett & Co., none of Lord, Abbett & Co.'s partners has, in the
past two fiscal years, engaged in any other business, profession,
vocation or employment of a substantial nature for his own account or
in the capacity of director, officer, employee, partner or Trustee of
any entity.
Item 27 Principal Underwriters
(a) Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett U.S. Government Money Market Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Tax-Free Income Trust
Lord Abbett Affiliated Fund, Inc.
Lord Abbett Investment Trust
Lord Abbett Research Fund, Inc.
Lord Abbett Securities Trust
Investment Advisor
American Skandia Trust (Lord Abbett Growth & Income Portfolio)
(b) The partners of Lord, Abbett & Co. are:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address (1) with Registrant
- -------------------- ---------------------
<S> <C>
Robert S. Dow Chairman and President
W. Thomas Hudson Executive Vice President
Paul A. Hilstad Vice President & Secretary
Zane E. Brown Vice President
Daniel E. Carper Vice President
Robert G. Morris Vice President
John J. Walsh Vice President
</TABLE>
The other general partners of Lord Abbett & Co. who are neither
officers nor directors of the
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Page>
Registrant are Stephen I. Allen, John E. Erard, Robert P. Fetch, Daria
L. Foster, Robert I. Gerber, Thomas W. Hudson, Jr., Stephen I.
McGruder, Michael McLaughlin, Robert J. Noelke, R. Mark Pennington, and
Christopher J. Towle.
Each of the above has a principal business address: 767 Fifth Avenue,
New York, NY 10153
(c) Not applicable
Item 28 Location of Accounts and Records
Registrant maintains the records, required by Rules 31a - 1(a) and (b),
and 31a - 2(a) at its main office.
Lord, Abbett & Co. maintains the records required by Rules 31a - 1(f)
and 31a - 2(e) at its main office.
Certain records such as cancelled stock certificates and correspondence
may be physically maintained at the main office of the Registrant's
Transfer Agent, Custodian, or Shareholder Servicing Agent within the
requirements of Rule 31a-3.
Item 29 Management Services
None
Item 30 Undertakings
The Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
The registrant undertakes, if requested to do so by the holders of at
least 10% of the registrant's outstanding shares, to call a meeting of
shareholders for the purpose of voting upon the question of removal of
a director or directors and to assist in communications with other
shareholders as required by Section 16(c) of the Investment Company Act
of 1940, as amended.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Fund certifies that it meets all of the
requirements for effectiveness of this registration statement under rule 485(b)
under the Securities Act and had duly caused this registration statement to be
signed on its behlaf of the undersigned, duly authorized, in the City of New
York, and State of New York on the 30th day of April, 1999.
BY: /s/ Lawrence H. Kaplan
Lawrence H. Kaplan
Vice President
LORD ABBETT SERIES FUND, INC.
POWER OF ATTORNEY
Each person whose signature appears below on this Amendment to the
Registration Statement hereby constitutes and appoints Paul A. Hilstad and
Lawrence H. Kaplan , and each of them, with full power to act without the other,
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities (until revoked in writing) to sign any and all amendments to this
Registration Statement (including post-effective amendments and amendments
thereto), and to file the same, with all exhibits thereto), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
Chairman, President
/s/Robert S. Dow* and Director/Trustee 4/30/99
- -------------------------------------------------------------------------------
Robert S. Dow
/s/E. Thayer Bigelow* Director/Trustee 4/30/99
- -------------------------------------------------------------------------------
E. Thayer Bigelow
/s/ William H.T. Bush* Director/Trustee 4/30/99
- -------------------------------------------------------------------------------
William H. T. Bush
/s/Robert B. Calhoun* Director/Trustee 4/30/99
- -------------------------------------------------------------------------------
Robert B. Calhoun
/s/Stewart S. Dixon* Director/Trustee 4/30/99
- -------------------------------------------------------------------------------
Stewart S. Dixon
/s/John C. Jansing* Director/Trustee 4/30/99
- -------------------------------------------------------------------------------
John C. Jansing
C. Alan MacDonald* Director/Trustee 4/30/99
- -------------------------------------------------------------------------------
C. Alan MacDonald
/s/ Hansel B. Millican, Jr.* Director/Trustee 4/30/99
- -------------------------------------------------------------------------------
Hansel B. Millican, Jr.
/s/ Thomas J. Neff* Director/Trustee 4/30/99
- -------------------------------------------------------------------------------
Thomas J. Neff
*BY: /s/ Lawrence H. Kaplan
Lawrence H. Kaplan
Attorney-in-Fact
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PAGE
EXHIBIT INDEX NUMBER
------------- ------
<S> <C>
(a) Articles of Incorporation are incorporated by reference to
Post-Effective Amendment No. to the Registration Statement on Form
N-1A filed on .
(b) By-Laws incorporated by reference.
(c) Instruments Defining Rights of Security Holders incorporated by
reference.
(d) Investment Advisory Contracts incorporated by reference.
(e) Underwriting Contracts incorporated by reference.
(f) Bonus or Profit Sharing Contracts is incorporated by reference to
Post Effective Amendment No. 6 to the Registration Statement on
Form N-1A filed on October 7, 1994.
(g) Custodian Agreements incorporated by reference.
(h) Other Material Contracts incorporated by reference.
(i) Consent to Legal Opinion. Filed herewith.
(j) Consent of Independent Auditors. Filed herewith.
(k) Omitted Financial Statements incorporated by reference.
(l) Initial Capital Agreements incorporated by reference.
(m) Rule 12b-1 Plan incorporated by reference to Post Effective
Amendment No. 12 filed on August 29, 1996.
(n) Financial Data Schedule. Filed herewith.
(o) Rule 18f-3 Plan. Incorporated by reference to Post Effective
Amendment No. 12 filed on August 29, 1996.
STATEMENT OF DIFFERENCES
------------------------
Characters normally expressed as superscript shall be preceded by......... 'pp'
The registered trademark symbol shall be expressed as..................... 'r'
</TABLE>
<PAGE>
April 27, 1999
Lord Abbett Series Fund, Inc.
The GM Building
767 Fifth Avenue
New York, New York 10153-0203
Dear Sirs:
You have requested our opinion in connection with your filing of
Post-Effective Amendment No. 17 to the Registration Statement on Form N-1A (the
"Post-Effective Amendment") under the Investment Company Act, as amended (the
"Act"), of Lord Abbett Series Fund, Inc., a Maryland corporation (the
"Company"), and in connection therewith your registration of shares of capital
stock, par value of $.001 per share, of the Company (the "Shares").
We have examined and relied upon originals, or copies certified to our
satisfaction, of such company records, documents, certificates and other
instruments as in our judgment are necessary or appropriate to enable us to
render the opinion set forth below.
<PAGE>
We are of the opinion that the Shares issued in the continuous
offering have been duly authorized and, assuming the issuance of the Shares for
cash at net asset value and receipt by the Company of the consideration therefor
as set forth in the Post-Effective Amendment and to the extent such Shares
remain outstanding, the Shares have been and will be validly issued, fully paid
and nonassessable.
We express no opinion as to matters governed by any laws other than
the General Corporation Laws of the State of Maryland and the federal laws of
the United States. We consent to the filing of this opinion solely in connection
with the Post-Effective Amendment. In giving such consent, we do not hereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Act or the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
Debevoise & Plimpton
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
Lord Abbett Series Fund, Inc.:
We consent to the incorporation by reference in Post-Effective Amendment No. 17
to Registration Statement No. 33-31072 of our report dated February 12, 1999 for
Lord Abbett Series Fund, Inc. - Growth & Income Portfolio appearing in the
Annual Report to Shareholders for the year ended December 31, 1998, and to the
references to us under the caption "Financial Highlights" in the Prospectus and
under the captions "Investment Advisory and Other Services" and "Financial
Statements" appearing in the Statement of Additional Information, both of which
are part of such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
April 26, 1999
February 12, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000855396
<NAME> LORD ABBETT SERIES FUND, INC.
<SERIES>
<NUMBER> 01
<NAME> GROWTH & INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 558,325,282
<INVESTMENTS-AT-VALUE> 680,174,375
<RECEIVABLES> 163,941
<ASSETS-OTHER> 1,278,219
<OTHER-ITEMS-ASSETS> 34,480,239
<TOTAL-ASSETS> 716,096,774
<PAYABLE-FOR-SECURITIES> 1,133,900
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 688,630
<TOTAL-LIABILITIES> 1,822,530
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 592,356,306
<SHARES-COMMON-STOCK> 34,591,149
<SHARES-COMMON-PRIOR> 30,069,713
<ACCUMULATED-NII-CURRENT> 109,891
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 178,736
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 121,849,094
<NET-ASSETS> 714,274,245
<DIVIDEND-INCOME> 12,749,579
<INTEREST-INCOME> 1,262,369
<OTHER-INCOME> 0
<EXPENSES-NET> 3,136,549
<NET-INVESTMENT-INCOME> 10,875,399
<REALIZED-GAINS-CURRENT> 34,240,047
<APPREC-INCREASE-CURRENT> 29,394,800
<NET-CHANGE-FROM-OPS> 74,510,246
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (10,531,538)
<DISTRIBUTIONS-OF-GAINS> (33,862,945)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,898,183
<NUMBER-OF-SHARES-REDEEMED> 728,296
<SHARES-REINVESTED> 2,156,014
<NET-CHANGE-IN-ASSETS> 201,836,616
<ACCUMULATED-NII-PRIOR> 154,760
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 518,642
<GROSS-ADVISORY-FEES> 3,070,876
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,136,549
<AVERAGE-NET-ASSETS> 611,556,449
<PER-SHARE-NAV-BEGIN> 19.51
<PER-SHARE-NII> .36
<PER-SHARE-GAIN-APPREC> .149
<PER-SHARE-DIVIDEND> (.325)
<PER-SHARE-DISTRIBUTIONS> (1.045)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.649
<EXPENSE-RATIO> .51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
