<PAGE>
Lord Abbett Equity
Fund
-----------
Semi-Annual Report For the Six Months Ended November 30, 1995
-----------
[PHOTO - FLY FISHING ROD]
An insured investment
designed to help you
capture capital growth
over the long term
<PAGE>
Report to Shareholders
For the Six Months Ended November 30, 1995
[PHOTO - RONALD P. LYNCH]
/s/ Ronald P. Lynch
Ronald P. Lynch
Chairman
[PHOTO - ROBERT S. DOW]
/s/ Robert S. Dow
Robert S. Dow
President
December 28, 1995
Lord Abbett Equity Fund ended the first six months of its fiscal year with a net
asset value of $18.11 per share, versus $16.40 on May 31, 1995. Over the past
six months, the Fund produced a total return (the percent change in value
assuming the reinvestment of all distributions) of 10.4%. In comparison, the S&P
500, an unmanaged index of common stocks, produced a total return of 14.9% over
the same period.
On December 27, 1995, the Board of Trustees of Lord Abbett Equity Fund declared
a dividend of $.22 per share, a short-term capital gains distribution of $.23
per share and a long-term capital gains distribution of $1.38 per share. These
distributions were reinvested on December 27, 1995 on behalf of shareholders of
record on December 27, 1995. As described in the prospectus, all such
distributions are reinvested in additional shares of the Fund (unless otherwise
instructed) and then a "reverse split" is effected, thus retaining the same
number of shares outstanding and the same total value of the shares that existed
prior to the payment of the distributions. This enables shareholders to see the
Fund's performance on a per-share basis. The Fund encourages shareholders to
reinvest all distributions because it maintains the amount of insurance on your
original investment.
The economic environment over the last six months was quite favorable.
Inflation, as measured by the Consumer Price Index, has averaged just over
2 1/2% over the last six months. The yield on a 30-year Treasury bond fell to
approximately 6% from more than 8% last November. Corporate operating profits
continued to climb at a double-digit pace. As a positive result, the economy
overall slowed in the first half of the year in response to these factors as
well as credit restraints by the Federal Reserve. Since December 1994, economic
growth averaged slightly over 2 1/2%, annualized (excluding the effects of
inflation).
Over the last six months, Lord Abbett Equity Fund's performance benefited from
its increased exposure to the long-distance telephone industry. Holdings in the
interest-sensitive sector also helped your Fund's performance as interest rates
continued to decline. We continue to see value in this sector, given our
expectation of a favorable interest-rate environment. Moreover, we are confident
that your Fund is well positioned to meet the challenges that lie ahead.
"...we are confident that your Fund is well positioned to meet the
challenges that lie ahead."
We are pleased to announce that Lord Abbett Equity Fund's Board of Trustees has
elected Robert S. Dow as President of the Fund. Mr. Dow, who has been a partner
of Lord, Abbett & Co. for nine years, also serves as the Firm's Chief Investment
Officer. In addition, we are pleased to announce that Robert P. Fetch has been
named as portfolio manager for the Fund. Prior to joining Lord Abbett, Mr. Fetch
served for 12 years with Prudential Investment Advisors, where he was a Managing
Director.
Thank you for continuing to make the Fund a part of your investment portfolio.
We are confident that the Fund's basic value investment style will continue to
help you achieve your long-term growth objectives while reducing your overall
portfolio risk.
<PAGE>
Fund Facts
Lord Abbett Equity Fund: The Insured Investment That Does Not Sacrifice
Capital Growth Potential/(1)/
While investments in both Lord Abbett Equity Fund and a CD are insured,
Fund shareholders participate in the growth potential of equities. During
the period shown below, Lord Abbett Equity Fund provided impressive total
returns relative to the CD.
A Reminder of Your Guarantee:
Participate in the stock market's potential rewards without risking the loss of
your original investment in the initial offering, if held until May 31, 2000
with all dividends and distributions reinvested
Comparison Of Change In Value Of A $10,000 Investment In Lord Abbett Equity
Fund/(2)/ And Six-Month CDs/(3)/
DATE THE FUND CD'S
6/1/90 $9,450 $10,000
11/30/90 9,280 10,418
11/30/91 10,490 11,169
11/30/92 12,130 11,665
11/30/93 13,790 12,087
11/30/94 14,080 12,593
11/30/95 $18,110 $13,388
Past performance is no guarantee of future results.
It is important to remember that the interest rate on a certificate of
deposit ("CD"), unlike the Fund, is fixed and this rate and the principal,
if held until maturity, are guaranteed. The Federal Deposit Insurance
Corporation (FDIC) insures CDs up to $100,000. The guarantee applicable to
shares of the Fund is issued by Financial Security Assurance Inc., a
private company, rated Aaa/AAA by Moody's and Standard & Poor's,
respectively.
SEC-Required Average Annual Rates Of Total Return At The Maximum Sales
Charge Of 5.5% For The Periods Ended 12/31/95 Were:
<TABLE>
<CAPTION>
Life of Fund (inception: 6/1/90) 1 Year 5 Years Life of Fund (at net asset value)
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
11.60% 21.10% 12.93% 12.74%
</TABLE>
The results quoted herein represent past performance based on the maximum
sales charge of 5.5% and reflect appropriate Rule 12b-1 Plan expenses. Tax
consequences are not reflected. The investment return and principal value
of a Fund investment will fluctuate so that shares, on any given day or
when redeemed on a day other than May 31, 2000, may be worth more or less
than their original cost.
The Fund Offers The Growth Potential Of Stocks With The Security Of
Insurance
At 11/30/95, Lord Abbett Equity Fund was invested in a diversified
portfolio of 53 equity securities.
The Fund is well positioned to benefit from a slowing economic environment
<TABLE>
<CAPTION>
Lord Abbett Equity Fund's Top Five Equity Holdings Percent of
Net Assets
---------------------------------------------------------------------------
<S> <C>
MCI Communications Corp. 2.77%
---------------------------------------------------------------------------
Hershey Foods Corp. 2.13%
---------------------------------------------------------------------------
Emerson Electric Co. 2.13%
---------------------------------------------------------------------------
Baxter International Inc. 2.00%
---------------------------------------------------------------------------
Scott Paper Co. 1.97%
---------------------------------------------------------------------------
Data as of 11/30/95
</TABLE>
/(1)/ The Fund's insurance policy guarantees unconditionally and
irrevocably that the net asset value of each initially purchased
share will not be less than $10 on May 31, 2000, provided all
dividends and distributions attributable to that share are
reinvested.
/(2)/ Data reflects the deduction of the maximum sales charge of 5.5%.
/(3)/ Six-month CDs were rolled over at prevailing rates. Source: Salomon
Brothers and The Federal Reserve Bank.
1
<PAGE>
Statement of Net Assets November 30, 1995
<TABLE>
<CAPTION>
Number of Market Value
Security Shares (Note 1a)
- ---------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
INVESTMENTS IN SECURITIES 90.67%
- ---------------------------------------------------------------------------------------------------------------------
COMMON STOCKS 65.00%
- ---------------------------------------------------------------------------------------------------------------------
Aerospace 1.89% Boeing Co. 15,000 $ 1,093,125
- ---------------------------------------------------------------------------------------------------------------------
Apparel .54% VF Corp. 6,000 312,000
- ---------------------------------------------------------------------------------------------------------------------
Auto Parts 1.05% Genuine Parts Company 15,000 605,625
- ---------------------------------------------------------------------------------------------------------------------
Automobiles 1.68% General Motors Corp. 20,000 970,000
- ---------------------------------------------------------------------------------------------------------------------
Banks: Bank of New York 10,000 471,250
Money Center Chemical Banking Corp. 15,000 900,000
3.21% First Chicago Corp. 7,000 486,500
Total 1,857,750
- ---------------------------------------------------------------------------------------------------------------------
Banks: BankAmerica Corp. 10,000 636,250
Regional Comerica Inc. 10,000 373,750
2.70% KeyCorp 15,000 553,125
Total 1,563,125
- ---------------------------------------------------------------------------------------------------------------------
Chemicals Dow Chemical Co. 4,000 283,500
1.52% Union Carbide Corp. 15,000 594,375
Total 877,875
- ---------------------------------------------------------------------------------------------------------------------
Containers .43% Sonoco Products Co. 10,000 250,000
- ---------------------------------------------------------------------------------------------------------------------
Data Processing
Equipment 1.07% Hewlett-Packard Co. 7,500 621,562
- ---------------------------------------------------------------------------------------------------------------------
Data Processing General Motors Corp.
Services 1.73% (Electronic Data Systems)
Class E 19,800 999,900
- ---------------------------------------------------------------------------------------------------------------------
Drugs/Health Baxter International Inc. 27,500 1,155,000
Care Products Lilly, Eli & Co. 11,000 1,094,500
5.33% Merck & Co., Inc. 13,500 835,313
Total 3,084,813
- ---------------------------------------------------------------------------------------------------------------------
Electric Power CINergy Corp. 30,000 885,000
3.89% Detroit Edison Co. 22,000 717,750
Public Service
Enterprises Group Inc. 22,000 651,750
Total 2,254,500
- ---------------------------------------------------------------------------------------------------------------------
Electrical
Equipment 2.13% Emerson Electric Co. 15,800 1,232,400
- ---------------------------------------------------------------------------------------------------------------------
Electronics:
Components 1.66% AMP Inc. 24,000 963,000
- ---------------------------------------------------------------------------------------------------------------------
Financial: American Express Co. 10,000 425,000
Miscellaneous Transamerica Corp. 10,000 766,250
2.06% Total 1,191,250
- ---------------------------------------------------------------------------------------------------------------------
Food Conagra Inc. 15,000 598,125
5.48% Hershey Foods Corp. 20,000 1,235,000
RJR Nabisco 25,000 728,125
Supervalu Inc. 19,000 612,750
Total 3,174,000
- ---------------------------------------------------------------------------------------------------------------------
Insurance Chubb Corp. 5,000 486,250
3.98% CIGNA Corp. 4,000 440,000
Jefferson-Pilot Corp. 10,000 711,250
The Progressive Corporation 15,000 667,500
Total 2,305,000
------------------------------------------------------------------------------------------
<CAPTION>
Number of
Shares or
Principal Market Value
Security Amount (Note 1a)
- ---------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Machinery:
Diversified 1.87% Deere & Co. 33,000 $ 1,084,875
- ---------------------------------------------------------------------------------------------------------------------
Miscellaneous .34% Minnesota Mining & Mfg. Co. 3,000 196,500
- ---------------------------------------------------------------------------------------------------------------------
Natural Gas
Diversified .84% Sonat Inc. 15,000 483,750
- ---------------------------------------------------------------------------------------------------------------------
Natural Gas
Transmission .46% Coastal Corp. 8,000 266,000
- ---------------------------------------------------------------------------------------------------------------------
Oil: Domestic .59% Amoco Corporation 5,000 338,750
- ---------------------------------------------------------------------------------------------------------------------
Oil: Chevron Corp. 4,000 197,500
International Exxon Corp. 8,000 619,000
3.03% Mobil Corp. 9,000 939,375
Total 1,755,875
- ---------------------------------------------------------------------------------------------------------------------
Paper and James River Corp. 15,000 472,500
Forest Products Scott Paper Co. 20,000 1,142,500
2.79% Total 1,615,000
- ---------------------------------------------------------------------------------------------------------------------
Printing and
Publishing 1.33% Donnelley, R.R. & Sons Co. 20,000 767,500
- ---------------------------------------------------------------------------------------------------------------------
Retail Dillard Department
3.48% Stores Inc. 20,000 577,500
May Department
Stores Company 15,000 654,375
Sears, Roebuck & Co. 20,000 787,500
Total 2,019,375
- ---------------------------------------------------------------------------------------------------------------------
Savings Ahmanson, H.F. & Co. 30,000 802,500
and Loan Great Western
2.93% Financial Corp. 35,000 892,500
Total 1,695,000
- ---------------------------------------------------------------------------------------------------------------------
Telecommunications AT&T Corp. 14,000 924,000
4.37% MCI Communications Corp. 60,000 1,605,000
Total 2,529,000
- ---------------------------------------------------------------------------------------------------------------------
Tire and Rubber Cooper Tire & Rubber
Goods 1.06% Company 25,000 615,625
- ---------------------------------------------------------------------------------------------------------------------
Waste Management Browning Ferris
1.56% Industries Inc. 30,000 903,750
------------------------------------------------------------------------------------------
Total Investments in Common
Stocks (Cost $30,659,255) 37,626,925
- ---------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS 25.67%
- ---------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds
Strips due 5/15/2000
(Cost $12,913,180) 18,900M 14,860,125
------------------------------------------------------------------------------------------
Total Investments in Securities
(Cost $43,572,435) 52,487,050
- ---------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES 9.33%
- ---------------------------------------------------------------------------------------------------------------------
Short-Term American Express
Investments, Credit Co.
at Cost 5.77% due 12/6/1995 1,700M 1,700,000
Chevron Oil Finance Co.
5.60% due 12/1/1995 400M 400,000
Ford Motor Credit Co.
5.74% due 12/5/1995 1,100M 1,100,000
General Electric
Capital Corp.
5.73% due 12/6/1995 800M 800,000
</TABLE>
2
<PAGE>
Statement of Net Assets November 30, 1995
<TABLE>
<CAPTION>
Principal Market Value
Security Amount (Note 1a)
- ---------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Prudential Funding Corp.
5.67% due 12/4/1995 $ 1,000M $ 1,000,000
Total 5,000,000
------------------------------------------------------------------------------------------
<CAPTION>
Market Value
(Note 1a)
- ---------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
Cash and Receivables, Net of Liabilities $ 403,254
------------------------------------------------------------------------------------------
Total Other Assets,
Less Liabilities 5,403,254
- ---------------------------------------------------------------------------------------------------------------------
Net Assets (equivalent to $18.11 a share on
100.00% 3,195,825 shares of beneficial
interest outstanding) $57,890,304
------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
Portfolio Changes
Issues added to or eliminated from the portfolio (exclusive of U.S.Government
obligations and short-term investments) during the six months ended
November 30, 1995
Additions+ Amoco Corporation
Apple Computer Inc.
AT&T Corp.
Bank of New York
Comerica Inc.
Detroit Edison Co.
Dillard Department Stores Inc.
First Chicago Corp.
James River Corp.
Jefferson-Pilot Corp.
KeyCorp
May Department Stores Company
Mobil Corp.
The Progressive Corporation
RJR Nabisco
Scott Paper Co.
Sonat Inc.
Sonoco Products Co.
---------------------------------------------------------------------------
Eliminations+ Aetna Life & Casualty Co.
Allstate Corp.
American Brands Inc.
Anheuser-Busch Companies Inc.
Apple Computer Inc.
Archer-Daniels-Midland Co.
Baltimore Gas & Electric Co.
H & R Block Inc.
Dayton Hudson Corp.
Dean Foods Co.
Eastern Enterprises
Federal Paper Board Inc.
Harris Corp.
International Paper Co.
TRW Inc.
WMX Technologies Inc.
Westvaco Corporation
+Includes securities previously classified in the Investment Portfolio
under "Other".
Statement of Operations For the Six Months Ended November 30, 1995
<TABLE>
<S> <C> <C> <C>
Investment Income
- ---------------------------------------------------------------------------------------------------------------------------
Income Interest $ 631,759
----------------------------------------------------------------------------------------------------------
Dividends 541,275
----------------------------------------------------------------------------------------------------------
Total income $1,173,034
- ---------------------------------------------------------------------------------------------------------------------------
Expenses Management fee (Note 5) 180,414
----------------------------------------------------------------------------------------------------------
Insurance (Note 6) 81,842
----------------------------------------------------------------------------------------------------------
12b-1 distribution plan (Note 5) 62,000
----------------------------------------------------------------------------------------------------------
Shareholder servicing 33,500
----------------------------------------------------------------------------------------------------------
Audit and tax 16,998
----------------------------------------------------------------------------------------------------------
Reports to shareholders 9,000
----------------------------------------------------------------------------------------------------------
Other 7,206
----------------------------------------------------------------------------------------------------------
Total expenses 390,960
----------------------------------------------------------------------------------------------------------
Net investment income 782,074
----------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments (Note 4)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain from security transactions (excluding short-term securities)
----------------------------------------------------------------------------------------------------------
Proceeds from sales 21,918,183
----------------------------------------------------------------------------------------------------------
Cost of securities sold 18,005,300
----------------------------------------------------------------------------------------------------------
Net realized gain 3,912,883
- ---------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments
----------------------------------------------------------------------------------------------------------
Beginning of period 8,023,483
----------------------------------------------------------------------------------------------------------
End of period 8,914,615
----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 891,132
----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 4,804,015
----------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $5,586,089
- ---------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
3
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
November 30, May 31,
Increase (Decrease) in Net Assets 1995 1995
==============================================================================================================================
<S> <C> <C> <C>
Operations Net investment income $ 782,074 $ 1,292,384
------------------------------------------------------------------------------- --------------- -------------
Net realized gain from security transactions 3,912,883 3,328,690
------------------------------------------------------------------------------- --------------- -------------
Net unrealized appreciation of investments 891,132 3,518,242
------------------------------------------------------------------------------- --------------- -------------
Net increase in net assets resulting from operations 5,586,089 8,139,316
- ------------------------------------------------------------------------------------------------ --------------- -------------
Undistributed net investment income included in price of shares reacquired (Note 1d) (37,512) (71,747)
- ------------------------------------------------------------------------------------------------ --------------- -------------
Distributions to shareholders from (Note 2)
------------------------------------------------------------------------------- --------------- -------------
Net investment income - (1,195,266)
------------------------------------------------------------------------------- --------------- -------------
Net realized gain from security transactions - (4,394,361)
------------------------------------------------------------------------------- --------------- -------------
Total distributions - (5,589,627)
- ------------------------------------------------------------------------------------------------ --------------- -------------
Share transactions
------------------------------------------------------------------------------- --------------- -------------
Net asset value of 436,349 shares issued to shareholders in reinvestment of
net investment income and realized gain from security transactions - 5,589,627
------------------------------------------------------------------------------- --------------- -------------
Cost of 141,091 and 438,620 shares reacquired, respectively (2,375,115) (6,364,760)
------------------------------------------------------------------------------- --------------- -------------
Reverse share split of 436,349 shares (Note 2) - -
------------------------------------------------------------------------------- --------------- -------------
Decrease in net assets derived from share transactions
(net decrease of 141,091 and 438,620 shares, respectively) (2,375,115) (775,133)
- ------------------------------------------------------------------------------------------------ --------------- -------------
Increase in net assets 3,173,462 1,702,809
- ------------------------------------------------------------------------------------------------ --------------- -------------
Net Assets
==============================================================================================================================
Beginning of period 54,716,842 53,014,033
------------------------------------------------------------------------------- --------------- -------------
End of period (including undistributed net investment income of
$1,887,956 and $1,143,394, respectively) $57,890,304 $54,716,842
==============================================================================================================================
</TABLE>
See Notes to Financial Statements.
Financial Highlights
<TABLE>
<CAPTION>
Six Months
Ended
November 30, Year Ended May 31,
Per Share Operating Performance: 1995 1995 1994 1993 1992 1991
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.40 $ 14.04 $ 13.26 $ 11.61 $ 10.62 $ 9.45
--------------------------------------------- ----------- --------- --------- --------- --------- --------
Income from investment operations
--------------------------------------- ----------- --------- --------- --------- --------- --------
Net investment income .24 .36* .31* .32* .34* .38*
--------------------------------------- ----------- --------- --------- --------- --------- --------
Net realized and unrealized gain
on investments 1.47 2.00 .47 1.33 .65 .79
--------------------------------------- ----------- --------- --------- --------- --------- --------
Total from investment operations 1.71 2.36 .78 1.65 .99 1.17
--------------------------------------------- ----------- --------- --------- --------- --------- --------
Distributions
--------------------------------------- ----------- --------- --------- --------- --------- --------
Dividends from net investment income - (.34) (.28) (.34) (.34) (.25)
--------------------------------------- ----------- --------- --------- --------- --------- --------
Distributions from capital gains - (1.25) (1.18) (.78) (.215) -
--------------------------------------- ----------- --------- --------- --------- --------- --------
Total distributions - (1.59) (1.46) (1.12) (.555) (.25)
--------------------------------------- ----------- --------- --------- --------- --------- --------
Reverse share split (Note 2) - 1.59 1.46 1.12 .555 .25
- -------------------------------------------------- ----------- --------- --------- --------- --------- --------
Net asset value, end of period $ 18.11 $ 16.40 $ 14.04 $ 13.26 $ 11.61 $ 10.62
================================================== =========== ========= ========= ========= ========= ========
Total Return+ 10.42%++ 16.81% 5.88% 14.21% 9.32% 12.38%
================================================== =========== ========= ========= ========= ========= ========
Ratios/Supplemental Data:
================================================== =========== ========= ========= ========= ========= ========
Net assets, end of period (000) $57,890 $54,717 $53,014 $57,122 $58,358 $72,120
--------------------------------------- ----------- --------- --------- --------- --------- --------
Ratios to Average Net Assets:
============================================= =========== ========= ========= ========= ========= ========
Expenses, including waiver .70%++ 1.80% 1.80% 1.80% 1.80% 1.80%
--------------------------------------- ----------- --------- --------- --------- --------- --------
Expenses, excluding waiver .70%++ 1.81% 1.96% 2.25% 2.12% 1.97%
--------------------------------------- ----------- --------- --------- --------- --------- --------
Net investment income 1.40%++ 2.48% 2.19% 2.57% 3.09% 4.02%
--------------------------------------------- ----------- --------- --------- --------- --------- --------
Portfolio turnover rate 32.46% 35.12% 50.77% 52.29% 24.43% 42.06%
===============================================================================================================
</TABLE>
* Net of management fee waiver.
+ Total return does not consider the effects of sales loads.
++ Not annualized.
See Notes to Financial Statements.
4
<PAGE>
Notes to Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
The Company was organized as a Massachusetts business trust on January 19, 1990
and is registered under the Investment Company Act of 1940 as a diversified,
open-end management investment company. The following is a summary of
significant accounting policies consistently followed by the Company. The
policies are in conformity with generally accepted accounting principles. (a)
Market value is determined as follows: 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 in such market, 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 Trustees. (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 in taxable distributions. Therefore, no
federal income tax provision is required. (c) Security transactions are
accounted for on the date that the securities are purchased or sold (trade
date). Dividend income and distributions to shareholders are recorded on the ex-
dividend date. (d) A portion of the cost of repurchases of shares of beneficial
interest, equivalent to the amount of distributable net investment income on the
date of the transaction, is credited or charged to undistributed income.
Undistributed net investment income per share thus is unaffected by repurchases
of shares. (e) Discounts on U.S. Treasury Bond Strips are accrued to maturity.
The constant yield method is used. (f) Reverse Share Splits--The Trustees may
authorize reverse share splits immediately after, and of a size so as to exactly
offset, the payment of dividends and distributions. After taking into account
the reverse share split, a shareholder reinvesting dividends and distributions
will hold exactly the same number of shares as owned prior to the distribution
and reverse share split. A shareholder electing to receive dividends and
distributions in cash will have fewer shares than previously owned.
2. DISTRIBUTIONS
Net realized gain from security transactions, if any, is declared and
distributed in December to shareholders. Accumulated undistributed net realized
gain at November 30, 1995 for financial reporting purposes, which is
substantially the same as for federal income tax purposes, aggregated
$5,240,183. Income and capital gains distributions are determined in accordance
with income tax regulations which may differ from methods used to determine the
corresponding income and capital gains amounts in accordance with generally
accepted accounting principles. These differences are primarily caused by
differences in the timing of recognition of certain components of income,
expenses or capital gains and losses. Where such differences are permanent in
nature, they are reclassified based upon their ultimate characterization for
federal income tax purposes. Any such reclassifications will have no effect on
net assets, results of operations or net asset value of the Fund.
A distribution of $1.61 a share aggregating $5,122,310 was declared on December
27, 1995 from net realized gains from security transactions. Such distribution
was paid on December 29, 1995 to each shareholder of record on December 27,
1995. A dividend of $.22 a share from net investment income aggregating $699,943
was declared on December 27, 1995 and was paid on December 29, 1995 to
shareholders of record on December 27, 1995.
On December 26, 1990 the Trustees of the Company declared a reverse share split,
on the basis of .973628692 of a new share for each existing share held, to
shareholders of record on December 27, 1990. On December 26, 1991 the Trustees
of the Company declared a reverse share split, on the basis of .949909748 of a
new share for each existing share held, to shareholders of record on December
26, 1991. On December 29, 1992 the Trustees of the Company declared a reverse
share split, on the basis of .909750201 of a new share for each existing share
held, to shareholders of record on December 29, 1992. On December 28, 1993 the
Trustees of the Company declared a reverse share split, on the basis of
.896600567 of a new share for each existing share held, to shareholders of
record on December 28, 1993. On December 28, 1994 the Trustees of the Company
declared a reverse share split, on the basis of .889583333 of a new share for
each existing share held, to shareholders of record on December 28, 1994. On
December 27, 1995 the Trustees of the Company declared a reverse share split, on
the basis of .900489396 of a new share for each existing share held, to
shareholders of record on December 27, 1995.
3. CAPITAL PAID IN
At November 30, 1995, capital paid in aggregated $41,847,550.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (other than U.S. Government
obligations and short-term securities) aggregated $17,153,375 and $21,918,184,
respectively. As of November 30, 1995, net unrealized appreciation for federal
income tax purposes aggregated $8,914,615 of which $8,950,373 related to
appreciated securities and $35,758 related to depreciated securities. The cost
of investments for federal income tax purposes is substantially the same as that
used for financial reporting purposes.
5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Lord, Abbett & Co. received a management fee of $180,414 for which it supplied
investment management, research, statistical and advisory services and paid
officers' remuneration and certain other expenses of the Company. The management
fee paid to Lord, Abbett & Co. is based on average daily net assets at the rate
of .65 of 1% per annum. Certain of the Company's officers and trustees have an
interest in Lord, Abbett & Co. The Company adopted a Rule 12b-1 Plan which
provides for the payment of .25% of the average daily net asset value of shares
of the Company.
6. INSURANCE
The Company has entered into an agreement with Financial Security Assurance Inc.
("Financial Security"), pursuant to which Financial Security has guaranteed
unconditionally and irrevocably to the Company that the net asset value of each
initially purchased share will not be less than $10 on May 31, 2000, provided
that all dividends and distributions attributable to that share are reinvested.
Insurance expense includes an annual premium equal to 1/2 of 1% of the total
amount guaranteed.
<PAGE>
Notes to Financial Statements
7. TRUSTEES' REMUNERATION
The Trustees of the Company associated with Lord, Abbett & Co. and all officers
of the Company receive no compensation from the Company for acting as such.
Outside Trustees' fees, including attendance fees for board and committee
meetings, and outside Trustees' retirement costs, are allocated among all funds
in the Lord Abbett group based on net assets of each fund. The direct
remuneration accrued during the period for outside Trustees of the Company as a
group was $532 (exclusive of expenses), a portion of which has been deemed
invested in shares of other funds in the Lord Abbett group under a deferred
compensation plan contemplating future payment of the value of those shares. As
of November 30, 1995, the aggregate amount in Trustees' accounts maintained
under the plan was $21,708. Retirement costs accrued during the period amounted
to $330.
- --------------------------------------------------------------------------------
This report to shareholders inaugurates a new procedure whereby a single copy
of the report is sent to an address to which more than one registered
shareholder of the Fund with the same last name has indicated mail is to be
delivered, unless additional reports are specifically requested in writing or
by telephone.
- --------------------------------------------------------------------------------
Copyright (C) 1996 by Lord Abbett Equity Fund, 767 Fifth Avenue,
New York, NY 10153-0203
This publication is intended for the general information of shareholders of Lord
Abbett Equity Fund only. All rights reserved. Printed in the U.S.A.
[LOGO OF LORD, ABBETT & CO
INVESTMENT MANAGEMENT APPEARS HERE]
LAEF-3-1195
The GM Building . 767 Fifth Avenue . New York, NY 10153-0203 (1/96)
