1933 Act File No. 33-47641
1940 Act File No. 811-6650
SECURITIES & EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 6 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 [X]
AMENDMENT No. 6 [X]
LORD ABBETT RESEARCH FUND, INC.
Exact Name of Registrant as Specified in Charter
767 Fifth Avenue, New York, N.Y. 10153
Address of Principal Executive Office
Registrant's Telephone Number (212) 848-1800
Kenneth B. Cutler, Vice President & Secretary
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)
immediately on filing pursuant to paragraph (b) of Rule 485
on (date) pursuant to paragraph (b) of Rule 485
X 60 days after filing pursuant to paragraph (a) (1) of Rule 485
on (date) pursuant to paragraph (a) (1) of Rule 485
75 days after filing pursuant to paragraph (a) (2) of Rule 485
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>
EXPLANATORY NOTE
This Post-Effective Amendment No. 6 (the "Amendment") to the Registrant's
Registration Statement relates to Large - Cap Series (formerly Series 1) of the
Registrant.
The other series of shares of the Registrant is listed below and is
offered by the Prospectus in Part A of the Post-Effective Amendment to the
Registrant's Registration Statement as identified. The following is a separate
series of shares of the Registrant. This Amendment does not relate to, amend or
otherwise affect the Prospectus contained in the prior Post-Effective Amendment,
and pursuant to Rule 485(d) under the Securities Act of 1933, does not affect
the effectiveness of such Post-Effective Amendment.
Post-Effective
Lord Abbett Mid-Cap Research Fund Amendment No. 5
LORD ABBETT RESEARCH FUND, INC.
FORM N-1A
Cross Reference Sheet
Post-Effective Amendment No. 6
Pursuant to Rule 481(b)
Form N-1A Location In Prospectus or
Item No. Statement of Additional Information
- ---------- --------------------------------------
1 Cover Page
2 Fee Table
3 (a) Financial Highlights; Performance
3 (b) N/A
4 (a) (i) Cover Page
4 (a) (ii) Investment Objective; How We Invest
4 (b) (c) How We Invest
5 (a) (b) (c) Our Management; Back Cover Page
5 (d) N/A
5 (e) Back Cover Page
5 (f) Our Management
5 (g) N/A
5 A Performance
6 (a) Cover Page
6 (b) (c) (d) N/A
6 (e) Cover Page
6 (f) (g) Dividends, Capital Gains
Distributions and Taxes
7 (a) Back Cover Page
7 (b) (c) (d)
(e) (f) Purchases
8 (a) (b) (c)
(d) Redemptions
9 N/A
10 Cover Page
<PAGE>
Form N-1A Location In Prospectus or
Item No. Statement of Additional Information
- ---------- ------------------------------------
11 Cover Page - Table of Contents
12 N/A
13 (a) (b) (c)
(d) Investment Objective and Policies
14 Trustees and Officers
15 (a) (b) N/A
15 (c) Trustees and Officers
16 (a) (i) Investment Advisory and Other Services
16 (a) (ii) Trustees and Officers
16 (a) (iii) Investment Advisory and Other Services
16 (b) Investment Advisory and Other Services
16 (c) (d) (e)
(g) N/A
16 (f) Purchases, Redemptions
and Shareholder Services
16 (h) Investment Advisory and Other Services
16 (i) N/A
17 (a) Portfolio Transactions
17 (b) N/A
17 (c) Portfolio Transactions
17 (d) Portfolio Transactions
17 (e) N/A
18 (a) Cover Page
18 (b) N/A
19 (a) (b) Purchases, Redemptions
and Shareholder Services; Notes
to Financial Statements
19 (c) N/A
20 Taxes
21 (a) Purchases, Redemptions
and Shareholder Services
21 (b) (c) N/A
22 (a) N/A
22 (b) Past Performance
23 Financial Statements; Supplementary
Financial Information
<PAGE>
LORD ABBETT RESEARCH FUND, INC.
THE GENERAL MOTORS BUILDING
767 FIFTH AVENUE
NEW YORK, NY 10153-0203
800-426-1130
LARGE-CAP SERIES (THE SERIES OR WE) IS A DIVERSIFIED SEPARATE SERIES OF LORD
ABBETT RESEARCH FUND, INC. (THE FUND) AN OPEN-END MANAGEMENT INVESTMENT COMPANY
INCORPORATED IN MARYLAND ON APRIL 6, 1992. THE FUND CURRENTLY CONSISTS OF TWO
SERIES. ONLY SHARES OF THE SERIES ARE BEING OFFERED IN THIS PROSPECTUS
THE SERIES INVESTMENT OBJECTIVE IS GROWTH OF CAPITAL AND GROWTH OF INCOME
CONSISTENT WITH REASONABLE RISK. PRODUCTION OF CURRENT INCOME IS A SECONDARY
CONSIDERATION. THE SERIES SEEKS TO ATTAIN ITS OBJECTIVE BY INVESTING IN A BROAD
RANGE OF COMPANIES WHOSE COMMON STOCKS (INCLUDING SECURITIES CONVERTIBLE INTO
COMMON STOCKS) ARE SELLING AT ATTRACTIVE PRICES AND THEREFORE REPRESENT
FUNDAMENTAL INVESTMENT VALUE. THESE COMPANIES ARE PRIMARILY LARGE-SIZED, BASED
ON THE VALUE OF THEIR OUTSTANDING EQUITY SECURITIES. THIS OBJECTIVE MAY NOT BE
CHANGED WITHOUT SHAREHOLDER APPROVAL. THERE CAN BE NO ASSURANCE THAT THE SERIES
WILL ACHIEVE ITS OBJECTIVE.
THE DIRECTORS MAY PROVIDE FOR ADDITIONAL SERIES FROM TIME TO TIME. WITHIN EACH
SERIES, THE FREELY TRANSFERABLE SHARES WILL HAVE EQUAL RIGHTS WITH RESPECT TO
DIVIDENDS, ASSETS, LIQUIDATION AND VOTING.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE FUND AND THE
SERIES THAT A PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING. ADDITIONAL
INFORMATION ABOUT THE FUND AND THE SERIES HAS BEEN FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION AND IS AVAILABLE UPON REQUEST WITHOUT CHARGE. THE STATEMENT
OF ADDITIONAL INFORMATION IS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS AND
MAY BE OBTAINED, WITHOUT CHARGE, BY WRITING DIRECTLY TO THE FUND OR BY CALLING
800-874-3733. ASK FOR PART B OF THE PROSPECTUS THE STATEMENT OF ADDITIONAL
INFORMATION.
THE DATE OF THIS PROSPECTUS, AND THE DATE OF THE STATEMENT OF ADDITIONAL
INFORMATION, IS JANUARY ___, 1996.
PROSPECTUS
INVESTORS SHOULD READ AND RETAIN THIS PROSPECTUS. SHAREHOLDER INQUIRIES SHOULD
BE MADE IN WRITING DIRECTLY TO THE FUND OR BY CALLING 800-821-5129. YOU CAN ALSO
MAKE INQUIRIES THROUGH YOUR BROKER-DEALER.
SHARES OF THE SERIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
AN INVESTMENT IN THE SERIES INVOLVES RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
CONTENTS PAGE
1 Investment Objectives 2
2 Fee Table 2
3 Financial Highlights 2
4 How We Invest 3
5 Purchases 4
6 Shareholder Services 7
7 Our Management 8
8 Dividends, Capital Gains
Distributions and Taxes 8
9 Redemptions 9
10 Performance 9
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
1 INVESTMENT OBJECTIVES
---------------------
The investment objective of the Large-Cap Series is growth of capital and growth
of income consistent with reasonable risk. Production of current income is a
secondary consideration.
2 FEE TABLE
---------
A summary of the Series' expenses is set forth in the table below. The example
should not be considered a representation of past or future expenses. Actual
expenses may be more or less than those shown.
<TABLE>
<CAPTION>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
(AS A PERCENTAGE OF OFFERING PRICE)
Maximum Sales Load(1) on Purchases
(See Purchases) 5.75%
Redemption Fee (See Purchases) None(2)
- ------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees (See Our Management) .____%
12b-1 Fees (See Purchases) .____%
Other Expenses (See Our Management) .____%
- ------------------------------------------------
Total Operating Expenses .____%
================================================
<FN>
Example: Assume an annual return of 5% and there is no change in the level of
expenses described in the Fee Table. For every $1,000 invested, with
reinvestment of all distributions, you would pay the following total expenses if
you closed your account after the number of years indicated.
1 year(3) 3 years(3) 5 years(3) 10 years(3)
$---- $---- $---- $----
(1) Sales load is referred to as sales charge throughout this Prospectus.
(2) Redemptions of shares on which the Series Rule 12b-1 Plan distribution fee
up to 1% has been paid are subject to a 1% contingent deferred
reimbursement charge (CDRC), subject to certain exceptions described
herein. Although the Plan authorizes the Board of Directors to approve
payments up to the limit described in the next paragraph, initially the
Board approved the Series to pay Lord Abbett which, in its discretion,
retains and/or passes on to authorized institutions (a) this distribution
fee up to 1% (with various breakpoints determined based on net asset sales
during a year) with respect to three categories of share purchases: (i) $1
million or more, (ii) certain retirement plans and (iii) special mutual
fund wrap fee programs and/or (b) an annual service fee (payable quarterly)
up to .25% of the average daily net asset value of the Series shares
serviced by authorized institutions.
Under the Plan, the aggregate distribution fee, sales charge and CDRC
can not exceed the limit placed on them by the National Association of
Securities Dealers, Inc. In general, this means they may not exceed 6.25%
of total new gross Series share sales (excluding dividend reinvestme and
share exchanges within the Lord Abbett family) plus interest charges on
such amount equal to the prime rate plus one percent per annum. The
distribution and service fees can not exceed .75% and .25% of 1% per annum
of the Series average annual net assets, respectively. See Rule 12b-1 Plan
for details.
(3) Based on total operating expenses described above.
The foregoing is provided to give investors a better understanding of the
expenses that are incurred by an investment in the Fund.
</FN>
</TABLE>
3 FINANCIAL HIGHLIGHTS
--------------------
The following table has been audited by Deloitte & Touche LLP, independent
accountants, in connection with their annual audit of the Series Financial
Statements, whose report thereon is incorporated by reference in the Statement
of Additional Information and may be obtained upon request, and has been
included herein in reliance upon their authority as experts in auditing and
accounting.
<TABLE>
<CAPTION>
FOR THE PERIOD JUNE 3, 1992
PER SHARE OPERATING YEAR ENDED NOVEMBER 30, (COMMENCEMENT OF OPERATIONS)
PERFORMANCE: 1995 1994 1993 TO NOVEMBER 30, 1992
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $. $12.33 $10.61 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .34 .29 .12
Net realized and unrealized
gain on investments .65 1.57 .49
TOTAL FROM INVESTMENT OPERATIONS .99 1.86 .61
- --------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from net investment income (.20) (.14) --
Net realized gain from security transactions (.33)
NET ASSET VALUE, END OF PERIOD $12.79 $12.33 $10.61
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN 8.21% 17.72% 6.10%**
- --------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $5,558 $4,086 $2,372
RATIOS TO AVERAGE NET ASSETS:
Expenses, including waiver .00% .00% .00%
Expenses, excluding waiver 1.15% 1.20% .79%**
Net investment income 2.65% 2.44% 1.39%**
Portfolio turnover rate 43.85% 74.16% 20.70%
==============================================================================================================
<FN>
Net of management fee waiver.
**Not annualized.
</FN>
</TABLE>
<PAGE>
4 HOW WE INVEST
-------------
We invest in primarily common stocks (including securities convertible into
common stocks such as investment-grade convertible bonds or
convertible-preferred stocks) of large-cap companies defined for these purposes
as companies whose outstanding equity securities have an aggregate market value
of $1.5 billion and above. Under normal circumstances, at least 65% of the
Series total assets will consist of investments made in large-cap companies,
determined at the time of purchase. These companies will have good prospects for
improvement in earnings trends or asset values. We will invest in companies on
the basis of the fundamental economic and business factors (such as government,
fiscal and monetary policies, employment levels, demographics, retail sales and
market share) which will affect future earnings and which we believe are the
primary factors determining the future market valuation of stocks. Although the
prices of common stocks fluctuate and their dividends vary, historically, common
stocks have appreciated in value and their dividends have increased when the
companies they represent have prospered and grown. There can be no assurance
that stocks selected for our portfolio will appreciate in value or that their
dividends will increase or be maintained. In selecting securities for
investment, we give more weight to the possibilities of capital growth and
growth of income than to current income. In seeking to fulfill our objective, we
will invest also in both small and middle-sized companies, as measured by the
value of their outstanding stock guided by the policies mentioned herein. Stock
prices of such small-sized companies may be more volatile than those of large
and middle-sized companies.
By concentrating our research and stock selection on companies that are
undervalued or out of current investment favor, our investment portfolio
typically will encompass less market risk as measured by its
price-to-normal-earnings and price-to-book-value ratios. Our management process
results in the sale of stocks that we judge to be overpriced and reinvestment in
other securities which we believe offer better values and less market risk.
Our investment portfolio will be diversified among many issuers representing
many different industries. The portfolio reflects the collective judgment of the
Research Department of Lord, Abbett & Co. (Lord Abbett) as to what securities
represent the greatest investment value, regardless of industry sector, market
capitalization, or Wall Street sponsorship. At the time of purchase, securities
selected for our portfolio may be largely neglected by the investment community
or, if widely followed, they may be out of favor or at least controversial.
Up to 10% of our net assets (at the time of investment) may be invested in
foreign securities (of the type described herein) primarily traded in foreign
countries.
For securities in our portfolio with a market value of up to 5% of our gross
assets at the time an option is written, we may write covered call options which
are traded on a national securities exchange in an attempt to increase our
income and to provide greater flexibility in the disposition of our portfolio
securities.
We may engage in (a) lending of our portfolio securities to broker-dealers on a
secured basis and (b) investing in rights and warrants to purchase securities.
We have no present intention to commit more than 5% of gross assets to any one
of these two identified practices. The term warrants includes warrants which are
not listed on the New York or American Stock Exchanges. Such unlisted warrants
may not exceed 2% of the Funds assets.
We may invest in closed-end investment companies if bought in the secondary
market with a fee or commission no greater than the customary brokers commission
in compliance with the Investment Company Act of 1940. Shares of such investment
companies sometimes trade at a discount or premium in relation to their net
asset value and there may be duplication of fees, for example, to the extent
that we and the closed-end investment company both charge a management fee.
We will not borrow money, except as a temporary measure for extraordinary or
emergency purposes and then not in excess of 5% of our gross assets at the lower
of cost or market value.
<PAGE>
Neither an issuers ceasing to be rated investment grade nor a rating reduction
below that grade will require elimination of a bond from our portfolio. For
temporary defensive purposes, we may invest in high-quality, short-term debt
obligations of banks, corporations or the U.S. Government of the type normally
owned by a money market fund.
We may invest up to 15% of our net assets in illiquid securities. Securities
determined by the Funds Board of Directors to be liquid pursuant to Securities
and Exchange Commission Rule 144A (Rule 144A) will not be subject to this limit,
except to the extent necessary to comply with applicable state requirements.
Investments by us in Rule 144A securities initially determined to be liquid
could have the effect of diminishing the level of our liquidity during periods
of decreased market interest in such securities. Under Rule144A, a qualifying
security may be resold to a qualified institutional buyer without registration
and without regard to whether the seller originally purchased the security for
investment.
We may deal in financial futures transactions with respect to the type of
securities described herein, including indices of such securities and options on
such financial futures. We will not enter into any futures contracts, or options
thereon, if the aggregate market value of the securities covered by futures
contracts plus options on such financial futures exceeds 50% of our total
assets.
RISK FACTORS. If the Series remains small, there is risk that redemptions may
(a) cause portfolio securities to be sold prematurely (at a loss or gain,
depending upon the circumstances) or (b) hamper or prevent a contemplated
portfolio security purchase. Securities markets of foreign countries in which we
may invest (up to 10% of our net assets) generally are not subject to the same
degree of regulation as the U.S. markets and may be more volatile and less
liquid than the major U.S. markets. There may be less publicly-available
information on publicly-traded companies, banks and governments in foreign
countries than generally is the case for such entities in the United States. The
lack of uniform accounting standards and practices among countries impairs the
validity of direct comparisons of valuation measures (such as price/earnings
ratios) for securities in different countries. Other considerations include
political and social instability, expropriation, higher transaction costs,
currency fluctuations, withholding taxes that cannot be passed through as a tax
credit or reduction to shareholders and different securities settlement
practices. Foreign securities may be traded on days that we do not value our
portfolio securities, and, accordingly, our net asset value may be significantly
affected on days when shareholders do not have access to the Series.
Convertible bonds and convertible-preferred stocks tend to be more volatile than
straight bonds but less volatile and more income producing than their underlying
common stocks.
5 PURCHASES
---------
You may buy our shares through any independent securities dealer having a sales
agreement with Lord Abbett, our exclusive selling agent. Place your order with
your investment dealer or send it to the Large-Cap Series of Lord Abbett
Research Fund, Inc. (P.O. Box 419100, Kansas City, Missouri 64141). The minimum
initial investment is $1,000 except for Invest-A-Matic and Div-Move ($250
initial and $50 monthly minimum) and Retirement Plans ($250 minimum). Subsequent
investments may be made in any amount. (See Shareholder Services.)
The net asset value of our shares is calculated every business day as of the
close of the New York Stock Exchange (NYSE) by dividing our net assets by the
number of shares outstanding. Securities are valued at market value as more
fully described in the Statement of Additional Information.
Orders for shares received by the Fund prior to the close of the NYSE, or
received by dealers prior to such close and received by Lord Abbett in proper
form prior to the close of its business day, will be confirmed at the applicable
public offering price effective at such NYSE close. Orders received by dealers
after the NYSE closes and received by Lord Abbett prior to the close of its next
business day are executed at the applicable public offering price effective as
of the close of the NYSE on that next business day. The dealer is responsible
for the timely transmission of orders to Lord Abbett. A business day is a day on
which the NYSE is open for trading.
<PAGE>
For information regarding the proper form of a purchase or redemption order,
call the Fund at 800-821-5129. This offering may be suspended, changed or
withdrawn. Lord Abbett reserves the right to reject any order. The offering
price is based on the per-share net asset value next computed after your order
is received plus a sales charge as follows:
<TABLE>
<CAPTION>
Sales Charge as a Dealers
Percentage of: Concession
as a To Compute
Net Percentage Offering
Offering Amount of Offering Price, Divide
Size of Investment Price Invested Price* NAV by
<S> <C> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00% .9425
$50,000 to $99,999 4.75% 4.99% 4.00% .9525
$100,000 to $249,999 3.75% 3.90% 3.25% .9625
$250,000 to $499,999 2.75% 2.83% 2.25% .9725
$500,000 to $999,999 2.00% 2.04% 1.75% .9800
$1,000,000 or more No sales charge 1.00% 1.0000
<FN>
* Lord Abbett may, for specified periods, allow dealers to retain the full
sales charge for sales of shares during such periods, or pay an additional
concession to a dealer who, during a specified period, sells a minimum
dollar amount of our shares and/or shares of other Lord Abbett-sponsored
funds. In some instances, such additional concessions will be offered only
to certain dealers expected to sell significant amounts of shares. Lord
Abbett may, from time to time, implement promotions under which Lord Abbett
will pay a fee to dealers with respect to certain purchases not involving
the imposition of a sales charge. Additional payments may be paid from Lord
Abbetts own resources and will be made in the form of cash or, if
permitted, non-cash payments. The non-cash payments will include business
seminars at resorts or other locations, including meals and entertainment,
or the receipt of merchandise. The cash payments will include payment of
various business expenses of the dealer. In selecting dealers to execute
portfolio transactions for the Series portfolio, if two or more dealers are
considered capable of obtaining best execution, we may prefer the dealer
who has sold our shares and/or shares of other Lord Abbett-sponsored funds.
</FN>
</TABLE>
VOLUME DISCOUNTS. This section describes several ways to qualify for a lower
sales charge if you inform Lord Abbett or the Series that you are eligible at
the time of purchase.
(1) Any purchaser (as described below) may aggregate a purchase in the
Series with purchases of any other eligible Lord Abbett-sponsored fund, together
with the current value at maximum offering price of any shares in the Series and
in any eligible Lord Abbett-sponsored funds held by the purchaser. (Holdings in
the following funds are not eligible for the above rights of accumulation: Lord
Abbett Equity Fund (LAEF), Lord Abbett Series Fund (LASF),the other series of
the Fund if not offered to the general public (LARF) and Lord Abbett U.S.
Government Securities Money Market Fund (GSMMF), except for existing holdings in
GSMMF which are attributable to shares exchanged from a Lord Abbett-sponsored
fund offered with a front-end sales charge or from a fund in the Lord Abbett
Counsel Group.) (2) A purchaser may sign a non-binding 13-month statement of
intention to invest $50,000 or more in the Series or in any of the above
eligible funds. If the intended purchases are completed during the period, each
purchase will be at the sales charge, if any, applicable to the aggregate of
such purchasers intended purchases. If not completed, each purchase will be at
the sales charge for the aggregate of the actual purchases. Shares issued upon
reinvestment of dividends or distributions are not included in the statement of
intention. The term purchaser includes (i) an individual, (ii) an individual and
his or her spouse and children under the age of 21 and (iii) a trustee or other
fiduciary purchasing shares for a single trust estate or single fiduciary
account (including a pension, profit-sharing, or other employee benefit trust
qualified under Section 401 of the Internal Revenue Code more than one qualified
employee benefit trust of a single employer, including its consolidated
subsidiaries, may be considered a single trust, as may qualified plans of
multiple employers registered in the name of a single bank trustee as one
account), although more than one beneficiary is involved.
Our shares may be purchased at net asset value by our directors, employees of
Lord Abbett, employees of our shareholder servicing agent and employees of any
securities dealer having a sales agreement with Lord Abbett who consents to such
purchases or by the trustee or custodian under any
<PAGE>
pension or profit-sharing plan or Payroll Deduction IRA established for the
benefit of such persons or for the benefit of any national securities trade
organization to which Lord Abbett belongs or any company with an account(s) in
excess of $10 million managed by Lord Abbett on a private-advisory-account
basis. For purposes of this paragraph, the terms directors and employees include
a directors or employees spouse (including the surviving spouse of a deceased
director or employee). The terms directors and employees of Lord Abbett also
include other family members and retired directors and employees. Our shares
also may be purchased at net asset value (a) at $1 million or more, (b) with
dividends and distributions from other Lord Abbett-sponsored funds, except for
dividends and distributions on shares of LARF, LAEF, LASF and Lord Abbett
Counsel Group, (c) under the loan feature of the Lord Abbett-sponsored prototype
403(b) plan for share purchases representing the repayment of principal and
interest, (d) by certain authorized brokers, dealers, registered investment
advisers or other financial institutions who have entered into an agreement with
Lord Abbett in accordance with certain standards approved by Lord Abbett,
providing specifically for the use of our shares in particular investment
products made available for a fee to clients of such brokers, dealers,
registered investment advisers and other financial institutions (mutual fund
wrap fee programs), (e) by employees, partners and owners of unaffiliated
consultants and advisers to Lord Abbett or Lord Abbett-sponsored funds who
consent to such purchase if such persons provide services to Lord Abbett or such
funds on a continuing basis and are familiar with such funds, (f) subject to
appropriate documentation, through a securities dealer where the amount invested
represents redemption proceeds from shares (Redeemed Shares) of a registered
open-end management investment company not distributed or managed by Lord Abbett
(other than a money market fund), if such redemptions have occurred no more than
60 days prior to the purchase of our shares, the Redeemed Shares were held for
at least six months prior to redemption and the proceeds of redemption were
maintained in cash or a money market fund prior to purchase and (g) through
retirement plans under Sections 401(a) and (k) and 408(k) of the Internal
Revenue Code with at least 100 eligible employees (retirement plans). Purchasers
should consider the impact, if any, of contingent deferred sales charges in
determining whether to redeem shares for subsequent investment in our shares.
Lord Abbett may suspend or terminate the purchase option referred to in (f)
above at any time.
Our shares may be issued at net asset value in exchange for the assets, subject
to possible tax adjustment, of a personal holding company or an investment
company.
RULE 12B-1 PLAN. We have adopted a Rule 12b-1 Plan (the Plan) which authorizes
the payment of fees to authorized institutions (except as to certain accounts
for which tracking data is not available) in order to provide additional
incentives for them (a) to provide continuing information and investment
services to their shareholder accounts and otherwise to encourage their accounts
to remain invested in the Series and (b) to sell shares of the Series. Under the
Plan, in order to save on the expense of our shareholder meetings and to provide
maximum flexibility to the Board of Directors, including a majority of the
outside directors who are not interested persons of the Fund as defined in the
Investment Company Act of 1940, the Board is authorized to permit fee payments
from our assets provided these fees do not exceed the limit on them expressed in
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc.
Under the Plan, as initially authorized by the Board, the Series pays Lord
Abbett which, in its discretion, retains and/or passes on to authorized
institutions (1) an annual service fee (payable quarterly) up to .25% of the
average daily net asset value of the Series shares serviced by authorized
institutions and/or (2) a (stepped as follows: 1% of the first $5 million, .55%
of the next $5 million. .50% of the next $50 million and .25% over $50 million),
on all shares sold during any 12-month period starting from the day of the first
net asset value sale (i) at the $1
<PAGE>
million level by authorized institutions, including sales qualifying at such
level under the rights of accumulation and statement of intention privileges,
(ii) through retirement plans, or (iii) representing new program purchases
through special mutual fund wrap fee programs. Special mutual fund wrap fee
programs share one or more characteristics distinguishing them, in the opinion
of Lord Abbett, from regular mutual fund wrap fee programs such as, for example,
no fee is charged to clients which is economically equivalent to such
distribution fee and/or the programs are involved with retirement plans
permitting participant self direction with respect to investments. Regular
mutual fund wrap fee programs are not eligible for such a distribution fee.
Institutions and persons permitted by law to receive such fees are authorized
institutions.
Holders of shares on which the 1% sales distribution fee has been paid will be
required to pay to the Series a contingent deferred reimbursement charge (CDRC)
of 1% of the original cost or the then net asset value, whichever is less, of
all shares so purchased which are redeemed out of the Lord Abbett-sponsored
family of funds on or before the end of the twenty-fourth month after the month
in which the purchase occurred. (An exception is made (a) for redemptions by
retirement plans due to any benefit payment such as plan loans, hardship
withdrawals, death, retirement or separation from service with respect to plan
participants or the distribution of any excess deferral contribution and (b) for
special mutual fund wrap fee programs which qualify in the discretion of Lord
Abbett.) If the shares have been exchanged into another Lord Abbett-sponsored
fund and are thereafter redeemed out of the Lord Abbett family of funds on or
before the end of such twenty-fourth month, the charge will be collected for the
Series by the other fund. The Series will collect such a charge for other Lord
Abbett-sponsored funds in a similar situation. Shares of a fund or series on
which the 1% sales distribution fee has been paid may not be exchanged into a
fund or series with a Rule 12b-1 Plan for which the payment provisions have not
been in effect for at least one year.
6 SHAREHOLDER SERVICES
--------------------
We offer the following shareholder services:
TELEPHONE EXCHANGE PRIVILEGE: Shares may be exchanged, without a service
charge, for those of any other Lord Abbett-sponsored fund except for (i) LAEF,
LARF, LASF and Lord Abbett Counsel Group and (ii) certain tax-free single-state
series where the exchanging shareholder is a resident of a state in which such
series is not offered for sale (together, Eligible Funds).
You or YOUR REPRESENTATIVE WITH PROPER IDENTIFICATION can instruct the Fund to
exchange uncertificated shares (held by the transfer agent) by telephone.
Shareholders have this privilege unless they refuse it in writing. The Fund will
not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine and will employ reasonable procedures to
confirm that instructions received are genuine, including requesting proper
identification and recording all telephone exchanges. Instructions must be
received by the Fund in Kansas City (800-521-5315) prior to the close of the
NYSE to obtain each funds net asset value per share on that day. Expedited
exchanges by telephone may be difficult to implement in times of drastic
economic or market change. The exchange privilege should not be used to take
advantage of short-term swings in the market. The Fund reserves the right to
terminate or limit the privilege of any shareholder who makes frequent
exchanges. The Fund can revoke the privilege for all shareholders upon 60 days
prior written notice. A prospectus for the other Lord Abbett-sponsored fund
selected by you should be obtained and read before an exchange. Exercise of the
Exchange Privilege will be treated as a sale for federal income tax purposes
and, depending on the circumstances, a capital gain or loss may be recognized.
SYSTEMATIC WITHDRAWAL PLAN: Except for retirement plans for which there is no
such minimum, if the maximum offering price value of your uncertificated shares
is at least $10,000, you may have periodic cash withdrawals automatically paid
to you in either fixed or variable amounts.
DIV-MOVE: You can invest the dividends paid on your account ($50 minimum
investment) into an existing account in any other Eligible Fund. The account
must be either your account, a joint account for you and your spouse, a single
account for your spouse, or a custodial account for your minor child under the
age of 21. You should read the prospectus of the other fund before investing.
<PAGE>
INVEST-A-MATIC: You can make fixed, periodic investments ($50 minimum
investment) into the Series and/or any Eligible Fund by means of automatic money
transfers from your bank checking account. You should read the prospectus of the
other fund before investing.
RETIREMENT PLANS: Lord Abbett makes available the retirement plan forms and
custodial agreements for IRAs (Individual Retirement Accounts including
Simplified Employee Pensions), 403(b) plans and pension and profit-sharing
plans, including 401(k) plans.
All correspondence should be directed to the Large-Cap Series of Lord Abbett
Research Fund, Inc. (P.O. Box 419100, Kansas City, Missouri 64141;
800-821-5129).
7 OUR MANAGEMENT
--------------
Our business is managed by our officers on a day-to-day basis under the overall
direction of our Board of Directors. We employ Lord Abbett as investment manager
pursuant to a Management Agreement. Lord Abbett has been an investment manager
for over 65 years and currently manages approximately $18 billion in a family of
mutual funds and other advisory accounts. Under the Management Agreement, Lord
Abbett provides the Fund with investment management services and executive and
other personnel, pays the remuneration of our officers and of our directors
affiliated with Lord Abbett, provides us with office space and pays for ordinary
and necessary office and clerical expenses relating to research, statistical
work and supervision of our portfolio and certain other costs. Lord Abbett
provides similar services to fifteen other Lord Abbett-sponsored funds having
various investment objectives and also advises other investment clients. Robert
G. Morris, Lord Abbett partner, is primarily responsible for the day-to-day
management of the Fund since 1996, although he has been involved with the Funds
management since inception. Prior to joining Lord Abbett in 1991, Mr. Morris was
Vice President and Manager of Chase Manhattan Bank, N.A. E. Wayne Nordberg, Lord
Abbett partner for over five years, was primarily responsible for such
day-to-day management before Mr. Morris and since the Funds inception. Mr.
Nordberg delegated (and Mr. Morris will continue to delegate) management duties
to a committee consisting, at any time, of three Lord Abbett employees from the
Research Department. The members of the committee, who also may be officers of
the Fund, have staggered terms to assure continuity and a forum for different
judgments as to what securities represent the greatest investment value,
regardless of industry sector, market capitalization or Wall Street sponsorship.
We are obligated to pay Lord Abbett a monthly fee based on average daily net
assets for each month at the annual rate of .75%. For the fiscal year ended
November 30, 1995, Lord Abbett waived $______ of its management fee and assumed
$________ of expenses. Due to such waiver, the effective fee paid to Lord Abbett
as a percentage of average daily net assets was at the annual rate of zero
percent for such period. This effective fee would have been at the annual rate
of .____% had Lord Abbett not waived its management fee. In addition, we pay all
expenses not expressly assumed by Lord Abbett. Our ratio of expenses, including
management fee expenses, to average net assets for such fiscal year was zero
percent. This expense ratio would have been 1.15% had Lord Abbett not waived its
management fee and paid all other expenses of the Fund.
8 DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
------------------------------------------------
Dividends from taxable net investment income may be taken in cash or reinvested
in additional shares at net asset value (without a sales charge) and may be paid
to shareholders quarterly in March, June, September and December.
If you elect a cash payment (i) a check will be mailed to you as soon as
possible after the monthly reinvestment date or (ii) if you arrange for direct
deposit, your payment will be wired directly to your bank account within one day
after the payable date.
<PAGE>
A long-term capital gains distribution is made when we have net profits during
the year from sales of securities which we have held more than one year. If we
realize net short-term capital gains, they also will be distributed. Any capital
gains distribution will be made in December and may be taken in cash or
reinvested in more shares at net asset value without a sales charge.
Supplemental dividends and distributions also may be paid in December. Dividends
and distributions declared in October, November or December of any year to
shareholders of record as of a date in such a month will be treated for federal
income tax purposes as having been received by shareholders in that year if they
are paid before February 1 of the following year.
We intend to continue to meet the requirements of Subchapter M of the Internal
Revenue Code. We try to distribute to shareholders all our net investment income
and net realized capital gains, so as to avoid the necessity of the Fund paying
federal income tax. Shareholders, however, must report dividends and capital
gains distributions as taxable income. Distributions derived from net long-term
capital gains which are designated by the Fund as capital gains dividends will
be taxable to shareholders as long-term capital gains, whether received in cash
or shares, regardless of how long a taxpayer has held the shares. Under current
law, net long-term capital gains of individuals and corporations are taxed at
the rates applicable to ordinary income, except that the maximum rate for
long-term capital gains for individuals is 28%. Provisions of the Contract with
America Tax Relief Act of 1995, that were pending in Congress as of the date of
this Prospectus, would have the effect of reducing the federal income tax rate
on capital gains.
Shareholders may be subject to a $50 penalty under the Internal Revenue Code and
we may be required to withhold and remit to the U.S. Treasury a portion (31%) of
any redemption proceeds (including the value of shares exchanged into another
Lord Abbett-sponsored fund), and of any dividend or distribution on any account,
where the payee (shareholder) failed to provide a correct taxpayer
identification number or to make certain required certifications.
We will inform shareholders of the federal tax status of each dividend and
distribution after the end of each calendar year. Shareholders should consult
their tax advisers concerning applicable state and local taxes as well as the
tax consequences of gains or losses from the redemption or exchange of our
shares.
9 REDEMPTIONS
-----------
To obtain the proceeds of an expedited redemption of $50,000 or less, you or
your representative with proper identification can telephone the Fund. The Fund
will not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine and will employ reasonable procedures to
confirm that instructions received are genuine, including requesting proper
identification, recording all telephone redemptions and mailing the proceeds
only to the named shareholder at the address appearing on the account
registration.
If you do not qualify for the expedited redemption procedures described above to
redeem shares directly, send your request to the Large-Cap Series of Lord Abbett
Research Fund, Inc. (P.O. Box 419100, Kansas City, Missouri 64141) with
signature(s) and any legal capacity of the signer(s) guaranteed by an eligible
guarantor.
Under certain circumstances and subject to prior written notice, our Board of
Directors may authorize redemption of all of the shares in any account in which
there are fewer than 25 shares.
10 PERFORMANCE
-----------
[SPACE FOR (i) PERFORMANCE DISCUSSION TO BE EXCERPTED FROM THE ANNUAL REPORT TO
SHAREHOLDERS FOR 11/30/95 AND (ii) PERFORMANCE CHART.
TOTAL RETURN. Total return data may, from time to time, be included in
advertisements about the Series. Total return for the one-, five- and ten-year
periods represents the average annual compounded rate of return on an investment
of $1,000 in the Series at the maximum public offering price. Total return also
may be presented for other periods or based on investment at reduced sales
charge levels or net asset value. Any quotation of total return not reflecting
the maximum initial sales charge would be reduced if such sales charge were
used. Quotations of total return for
<PAGE>
any period when an expense limitation is in effect will be greater than if the
limitation had not been in effect.
See Past Performance in the Statement of Additional Information for a more
detailed discussion of the computation of the Series total return.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFER IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
NOT CONTAINED IN THIS PROSPECTUS OR IN SUPPLEMENTAL SALES MATERIAL AUTHORIZED BY
THE FUND AND NO PERSON IS ENTITLED TO RELY UPON ANY INFORMATION OR
REPRESENTATION NOT CONTAINED HEREIN OR THEREIN.
<PAGE>
INVESTMENT MANAGER Lord, Abbett & Co.
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
212-848-1800
CUSTODIAN
The Bank of New York
48 Wall Street
New York, New York 10286
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
United Missouri Bank of Kansas City, N.A.
Tenth and Grand
Kansas City, Missouri 64141
SHAREHOLDER SERVICING AGENT
DST Systems, Inc.
P.O. Box 419100
Kansas City, Missouri 64141
800-821-5129
AUDITORS
Deloitte & Touche LLP
<PAGE>
LORD ABBETT
STATEMENT OF ADDITIONAL INFORMATION JANUARY __, 1996
LORD ABBETT
RESEARCH FUND, INC.
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from your securities dealer or from Lord, Abbett & Co. ("Lord
Abbett") at The General Motors Building, 767 Fifth Avenue, New York, New York
10153-0203. This Statement relates to, and should be read in conjunction with,
the Prospectus dated January __, 1996.
Large-Cap Series (the "Series" or "we") is a diversified separate series of Lord
Abbett Research Fund, Inc. (sometimes referred to as the "Fund") which was
incorporated under Maryland law on April 6, 1992. Our authorized capital stock
consists of a single class of 50,000,000 shares, $.001 par value. All shares
have equal noncumulative voting rights and equal rights with respect to
dividends, assets and liquidation. They are fully paid and nonassessable when
issued and have no preemptive or conversion rights.
Shareholder inquiries should be made by writing directly to the Fund or by
calling 800-821-5129. In addition, you can make inquiries through Lord Abbett.
TABLE OF CONTENTS PAGE
1. Investment Objective and Policies 2
2. Directors and Officers 5
3. Investment Advisory and Other Services 7
4. Portfolio Transactions 8
5. Purchases, Redemptions
and Shareholder Services 9
6. Past Performance 13
7. Taxes 13
8. Information About The Fund 14
9. Financial Statements 14
<PAGE>
1.
Investment Objectives and Policies
Fundamental Investment Restrictions. The Series' investment objective and
policies are described in the Prospectus under "How We Invest". In addition to
those policies described in the Prospectus, we are subject to the following
fundamental investment restrictions which cannot be changed for the Series
without the approval of the holders of a majority of the Series' respective
shares. The Series may not: (1) borrow money (except that (i) the Series may
borrow from banks (as defined in the Act) in amounts up to 33 1/3% of its total
assets (including the amount borrowed), (ii) the Series may borrow up to an
additional 5% of its total assets for temporary purposes, (iii) the Series may
obtain such short-term credit as may be necessary for the clearance of purchases
and sales of portfolio securities and (iv) the Series may purchase securities on
margin to the extent permitted by applicable law); (2) pledge its assets (other
than to secure such borrowings or, to the extent permitted by the Series'
investment policies as set forth in its prospectus and statement of additional
information, as they may be amended from time to time, in connection with
hedging transactions, short sales, when-issued and forward commitment
transactions and similar investment strategies); (3) engage in the underwriting
of securities except pursuant to a merger or acquisition or to the extent that
in connection with the disposition of its portfolio securities it may be deemed
to be an underwriter under federal securities laws; (4) make loans to other
persons, except that the acquisition of bonds, debentures or other corporate
debt securities and investment in government obligations, commercial paper,
pass-through instruments, certificates of deposit, bankers acceptances,
repurchase agreements or any similar instruments shall not be deemed to be the
making of a loan, and except further that the Series may lend its portfolio
securities, provided that the lending of portfolio securities may be made only
in accordance with applicable law and the guidelines set forth in the Series'
prospectus and statement of additional information, as they may be amended from
time to time; (5) buy or sell real estate (except that the Series may invest in
securities directly or indirectly secured by real estate or interests therein or
issued by companies which invest in real estate or interests therein),
commodities or commodity contracts (except to the extent the Series may do so in
accordance with applicable law and without registering as a commodity pool
operator under the Commodity Exchange Act as, for example, with futures
contracts); (6) with respect to 75% of the gross assets of the Series, buy
securities if the purchase would then cause it to (i) have more than 5% of its
gross assets, at market value at the time of investment, invested in the
securities of any one issuer except securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities or (ii) own more than 10% of the
voting securities of any issuer; (7) invest more than 25% of its assets, taken
at market value, in the securities of issuers in any particular industry
(excluding securities of the U.S. Government, its agencies and
instrumentalities);or (8) issue senior securities to the extent such issuance
would violate applicable law.
With respect to the restrictions mentioned herein, compliance therewith will not
be affected by change in the market value of portfolio securities but will be
determined at the time of purchase or sale of such securities.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. In addition to those policies described
in the Prospectus and the investment restrictions above which cannot be changed
without shareholder approval, we also are subject to the following
non-fundamental investment policies which may be changed by the Board of
Directors without shareholder approval. The Series may not: (1) make short sales
of securities or maintain a short position except to the extent permitted by
applicable law; (2) invest knowingly more than 15% of its net assets (at the
time of investment) in illiquid securities (securities qualifying for resale
under Rule 144A of the Securities Act of 1933 ("Rule 144A") that are determined
by the Directors, or by Lord Abbett pursuant to delegated authority, to be
liquid are considered liquid securities); (3) invest in securities issued by
other investment companies as defined in the Act, except as permitted by the
Act; (4) purchase securities of any issuer unless it or its predecessor has a
record of three years' continuous operation, except that the Series may purchase
securities of such issuers through subscription offers or other rights it
receives as a security holder of companies offering such subscriptions or
rights, and such purchases will then be limited in the aggregate to 5% of the
Series' net assets at the time of investment; (5) hold securities of any issuer
when more than 1/2 of 1% of the issuer's securities are owned beneficially by
one or more of the Fund's officers or directors or by one or more partners of
the Fund's underwriter or investment adviser if these owners in the aggregate
own beneficially more than 5% of such securities; (6) invest in warrants, valued
at the lower of cost or market, to exceed 5% of the Series' net assets,
including warrants not listed on the New York or American Stock Exchange which
may not exceed 2% of such net assets; or (7) invest in real estate limited
<PAGE>
partnership interests or interest in oil, gas or other mineral leases, or
exploration or development programs, except that the Series may invest in
securities issued by companies that engage in oil, gas or other mineral
exploration or development activities.
For the year ended November 30, 1995, the portfolio turnover rate was ______%
versus 43.85% for the prior year.
LENDING OF PORTFOLIO SECURITIES
Although we have no current intention of doing so in the foreseeable future, we
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 ("NYSE") 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. We will have the right to call a loan and obtain the securities loaned
at any time upon five days' notice. During the existence of a loan we will
receive the income earned on investment of collateral. The aggregate value of
the securities loaned will not exceed 5% of the value of the Series' gross
assets.
OTHER INVESTMENT RESTRICTIONS (WHICH CAN BE CHANGED WITHOUT SHAREHOLDER
APPROVAL)
COVERED CALL OPTIONS
As stated in the Prospectus, we may write covered call options on securities in
our portfolio in an attempt to increase our income and to provide greater
flexibility in the disposition of our portfolio securities. A "call option" is a
contract sold for a price (the "premium") giving its holder the right to buy a
specific number of shares of a stock at a specific price prior to a specified
date. A "covered call option" is a call option issued on securities already
owned by the writer of the call option for delivery to the holder upon the
exercise of the option. During the period of the option, we forgo the
opportunity to profit from any increase in the market price of the underlying
security above the exercise price of the option (to the extent that the increase
exceeds our net premium). We also may enter into "closing purchase transactions"
in order to terminate our obligation to deliver the underlying security (this
may result in a short-term gain or loss). A closing purchase transaction is the
purchase of a call option (at a cost which may be more or less than the premium
received for writing the original call option) on the same security with the
same exercise price and call period as the option previously written. If we are
unable to enter into a closing purchase transaction, we may be required to hold
a security that we otherwise might have sold to protect against depreciation. We
don't intend to write covered call options with respect to securities with an
aggregate market value of more than 5% of our gross assets at the time an option
is written. This percentage limitation will not be increased without prior
disclosure in our current prospectus.
RIGHTS AND WARRANTS
We may invest in rights and warrants to purchase securities. Included within
that amount, but not to exceed 2% of the value of the Series' net assets, may be
warrants which are not listed on the NYSE 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.
OPTIONS AND FINANCIAL FUTURES TRANSACTIONS
GENERAL. We may engage in options and financial futures transactions in
accordance with our investment objective and policies. Although we are not
currently employing such options and financial futures transactions, we may
engage in such transactions in the future if it appears advantageous to us to do
so, in order to cushion the effects of fluctuating interest rates and adverse
<PAGE>
market conditions. The use of options and financial futures, and possible
benefits and attendant risks, are discussed below, along with information
concerning certain other investment policies and techniques.
FINANCIAL FUTURES CONTRACTS. We may enter into contracts for the future delivery
of a financial instrument, such as a security or the cash value of a securities
index. This investment technique is designed primarily to hedge (i.e., protect)
against anticipated future changes in interest rates or market conditions which
otherwise might adversely affect the value of securities which we hold or intend
to purchase. A "sale" of a futures contract means the undertaking of a
contractual obligation to deliver the securities or the cash value of an index
called for by the contract at a specified price during a specified delivery
period. A "purchase" of a futures contract means the undertaking of a
contractual obligation to acquire the securities or cash value of an index at a
specified price during a specified delivery period. At the time of delivery
pursuant to the contract, adjustments are made to recognize differences in value
arising from the delivery of securities which differ from those specified in the
contract. In some cases, securities called for by a futures contract may not
have been issued at the time the contract was written. We will not enter into
any futures contracts or options on futures contracts if the aggregate of the
market value of the securities covered by our outstanding futures contracts and
securities covered by futures contracts subject to the outstanding options
written by us would exceed 50% of our total assets.
Although some financial futures contracts by their terms call for the actual
delivery or acquisition of securities, in most cases, a party will close out the
contractual commitment before delivery without having to make or take delivery
of the security by purchasing (or selling, as the case may be) on a commodities
exchange an identical futures contract calling for delivery in the same month.
Such a transaction, if effected through a member of an exchange, cancels the
obligation to make or take delivery of the securities. All transactions in the
futures market are made, offset or fulfilled through a clearing house associated
with the exchange on which the contracts are traded. We will incur brokerage
fees when we purchase or sell contracts and will be required to maintain margin
deposits. At the time we enter into a futures contract, it is required to
deposit with our custodian, on behalf of the broker, a specified amount of cash
or eligible securities called "initial margin." The initial margin required for
a futures contract is set by the exchange on which the contract is traded.
Subsequent payments, called "variation margin," to and from the broker are made
on a daily basis as the market price of the futures contract fluctuates. The
costs incurred in connection with futures transactions could reduce our return.
Futures contracts entail risks. If the investment adviser's judgment about the
general direction of interest rates or markets is wrong, the overall performance
may be poorer than if no such contracts had been entered into.
There may be an imperfect correlation between movements in prices of futures
contracts and portfolio securities being hedged. The degree of difference in
price movements between futures contracts and the securities (or securities
indices) being hedged depends upon such things as variations in demand for
futures contracts and securities underlying the contracts and differences
between the liquidity of the markets for such contracts and the securities
underlying them. In addition, the market prices of futures contracts may be
affected by certain factors not directly related to the underlying securities.
At any given time, the availability of futures contracts, and hence their
prices, are influenced by credit conditions and margin requirements. Due to the
possibility of price distortions in the futures market and because of the
imperfect correlation between movements in the prices of securities and
movements in the prices of futures contracts, a correct forecast of market
trends by the investment adviser may not result in a successful hedging
transaction.
OPTIONS ON FINANCIAL FUTURES CONTRACTS. We may purchase and write call and put
options on financial futures contracts. An option on a futures contract gives
the purchaser the right, in return for the premium paid, to assume a position in
a futures contract at a specified exercise price at any time during the period
of the option. Upon exercise, the writer of the option delivers the futures
contract to the holder at the exercise price. We would be required to deposit
with our custodian initial margin and maintenance margin with respect to put and
call options on futures contracts written by us. Options on futures contracts
involve risks similar to the risks relating to transactions in financial futures
contracts described above. Generally speaking, a given dollar amount used to
purchase an option on a financial futures contract can hedge a much greater
value of underlying securities than if that amount were used to directly
purchase the same financial futures. Should the event we intend to hedge (or
protect) against not materialize, however, the option may expire worthless, in
which case we would lose the premium paid therefor.
<PAGE>
2.
Directors and Officers
The following directors are partners of Lord Abbett, The General Motors
Building, 767 Fifth Avenue, New York, New York 10153-0203. They have been
associated with Lord Abbett for over five years and are also officers and/or
directors or trustees of the fifteen other Lord Abbett-sponsored funds. They are
"interested persons" as defined in the Investment Company Act of 1940 (the
"Act") as amended, and as such , may be considered to have an indirect financial
interest in the Rule 12b-1 Plan described in the Prospectus.
Ronald P. Lynch, age 60, Chairman and President
Robert S. Dow, age 50, President
Thomas S. Henderson, age 64, Vice President
The following outside directors are also directors or trustees of the fifteen
other Lord Abbett-sponsored funds referred to above.
E. Thayer Bigelow
Time Warner Cable
300 First Stamford Place
Stamford, Connecticut
President and Chief Executive Officer of Time Warner Cable Programming, Inc.
Formerly President and Chief Operating Officer of Home Box Office, Inc. Age 54.
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 65.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 70.
C. Alan MacDonald
The Marketing Partnership, Inc.
27 Signal Road
Stamford, Connecticut
General Partner, The Marketing Partnership, Inc., a full service marketing
consulting firm that specializes in strategic planning and customer-specific
marketing. Formerly Acquisition Consultant, The Noel Group, a private consulting
firm (1994). Formerly Chairman and Chief Executive Officer of Lincoln Foods,
Inc., manufacturer of branded snack foods (1992-1994). Formerly President and
Chief Executive Officer of Nestle Foods Corporation, a subsidiary of Nestle S.A.
(Switzerland). Age 62.
<PAGE>
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 67.
Thomas J. Neff
Spencer Stuart & Associates
277 Park Avenue
New York, New York
President of Spencer Stuart & Associates, an executive search consulting firm.
Age 58.
The second column of the following table sets forth the compensation accrued for
the Fund's outside directors. The third and fourth columns set forth information
with respect to the retirement plan for outside directors maintained by the Lord
Abbett-sponsored funds. The fifth column 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 November 30, 1995
----------------------------------------------------------------
(1) (2) (3) (4) (5)
Pension or Estimated Annual For Year Ended
Retirement Benefits Benefits Upon December 31, 1995
Accrued by the Retirement Proposed Total Compensation
Aggregate Fund and to be Paid by the Accrued by the Fund and
Compensation Fifteen Other Lord Fund and Fifteen Fifteen Other Lord
Accrued by Abbett-sponsored Other Lord Abbett- Abbett-sponsored
Name of Director the Fund 1 Funds sponsored Funds2 Funds3
- ------------------ ------------ ------------------- -------------------- -------------------------
<S> <C> <C> <C> <C>
E. Thayer Bigelow 4 $ $ $ $
Stewart S. Dixon 4 $ $ $ $
John C. Jansing 4 $ $ $ $
C. Alan MacDonald 4 $ $ $ $
Hansel B. Millican, Jr. 4 $ $ $ $
Thomas J. Neff 4 $ $ $ $
<FN>
1. Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on net
assets of each fund. Fees payable by the Fund to its outside directors are
being deferred under a plan that deems the deferred amounts to be invested in
shares of the Fund for later distribution to the directors. The amounts of
the aggregate compensation payable by the Fund for the fiscal year ended
November 30, 1995 deemed invested in Fund shares, including dividends
reinvested and changes in net asset value applicable to such deemed
investments through the end of such year, were as follows: Mr. Bigelow, $__ ;
Mr. Dixon, $______; Mr. Jansing, $______; Mr. MacDonald, $_____; Mr.
Millican, $______ and Mr. Neff, $______.
2. Each Lord Abbett-sponsored fund has a retirement plan providing that outside
directors will receive annual retirement benefits for life equal to 80% of
their final annual retainers following retirement at or after age 72 with at
least 10 years of service. Each plan also provides for a reduced benefit upon
early retirement under certain circumstances, a pre-retirement death benefit
and actuarially reduced joint-and-survivor spousal benefits. The amounts
stated would be payable annually under such retirement plans if the director
were to retire at age 72 and the annual retainers payable by such funds were
the same as they are today. The amounts accrued in column 3 were accrued by
the Lord Abbett-sponsored funds during the fiscal year ended November 30,
1995 with respect to the retirement benefits in column 4.
<PAGE>
3. This column shows aggregate compensation, including director's 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, 1995.
4. Messrs. Bigelow, Dixon, Jansing and MacDonald, outside directors, and
Messrs. Dow and Henderson, inside directors, were elected as directors of
the Fund on _________________, 1995. Messrs. Millican and Neff, outside
directors, and Mr. Lynch, inside director have been Fund directors since
its inception.
</FN>
</TABLE>
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Allen, Carper, Cutler, Dow, Henderson, Morris, Nordberg and Walsh are partners
of Lord Abbett; the others are employees: William T. Hudson, age 53, Executive
Vice President; Kenneth B. Cutler, age 63, Vice President and Secretary; Stephen
I. Allen, age 41; Daniel E. Carper, age 43; Robert S. Dow, age 50; Thomas S.
Henderson, age 63; Robert G. Morris, age 51, E. Wayne Nordberg, age 57; John J.
Gargana, Jr., age 63; Paul A. Hilstad, age 53 (with Lord Abbett since 1995 -
formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.); Thomas F. Konop, age 53; Victor W. Pizzolato, age
62; John J. Walsh, age 58, Vice Presidents; and Keith F. O'Connor, age 40,
Treasurer.
The Fund's By-Laws provide that the Fund 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 Investment Company Act of 1940, as amended (the
"Act"), or unless called by a majority of the Board of Directors or by
stockholders holding at least one quarter of the stock of the Fund outstanding
and entitled to vote at the meeting. When any such annual meeting is held, the
stockholders will elect directors and vote on the approval of the independent
auditors of the Fund.
As of January 1, 1996 our officers and directors as a group owned less than
_____% of our outstanding shares.
3.
Investment Advisory and Other Services
As described under "Our Management" in the Prospectus, Lord Abbett is the Fund's
investment manager. The nine general partners of Lord Abbett, all of whom are
officers and/or directors of the Fund, are: Stephen I. Allen, Daniel E. Carper,
Kenneth B. Cutler, Robert S. Dow, Thomas S. Henderson, Ronald P. Lynch, Robert
G. Morris, E. Wayne Nordberg and John J. Walsh. The address of each partner is
The General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203.
The services performed by Lord Abbett are described under "Our Management" in
the Prospectus. Under the Management Agreement, we are obligated to pay Lord
Abbett a monthly fee, based on average daily net assets for each month, at the
annual rate of .75 of 1% of the Series' average daily net assets. For the fiscal
years ended November 30, 1995, 1994, and 1993, respectively, this management fee
was waived by Lord Abbett and, except for this waiver, would have amounted to
$______, $33,861 and $_______, respectively.
We are obligated to pay all expenses not expressly assumed by Lord Abbett,
including, without limitation, 12b-1 expenses, 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 our shares
under federal and state securities laws, expenses of preparing, printing and
mailing prospectuses to existing shareholders, insurance premiums, brokerage and
other expenses connected with executing portfolio transactions. For the fiscal
years ended November 30, 1995, 1994 and 1993, respectively, Lord Abbett,
although not obligated to, voluntarily assumed the above-mentioned expenses
which, if not so assumed, would have amounted to $_________, $________ and
$_________, respectively.
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
our Board of Directors to continue in such capacity. They perform audit services
for the Fund including the examination of financial statements included in our
annual report to shareholders.
<PAGE>
The Bank of New York ("BONY"), 48 Wall Street, New York, New York, is the Fund's
custodian. 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 BONY or its foreign branches to be held by certain qualified foreign
banks and depositories.
4.
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 in a timely manner, 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 from 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
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.
<PAGE>
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 therm of portfolio business.
If we tender portfolio securities pursuant to a cash tender offer, we will seek
to recapture any fees or commissions involved by designating Lord Abbett our
agent so that the fees may be passed back to us. As other legally permissible
opportunities come to our attention for the direct or indirect recapture by us
of brokerage commissions or similar fees paid on portfolio transactions, our
directors will determine whether we should or should not seek such recapture.
For the fiscal years ended November 30, 1993, 1994 and 1995, we paid total
commissions to independent broker-dealers of $14,055, $8,033 and $_________,
respectively.
5.
Purchases, Redemptions
and Shareholder Services
Information concerning how we value our shares for the purchase and redemption
of our shares is contained in the Prospectus under "Purchases" and
"Redemptions", respectively.
As disclosed in the Prospectus, we calculate our net asset value as of the close
of the New York Stock Exchange ("NYSE") on each day is a day that the NYSE is
open for trading by dividing our total net assets by the number of shares
outstanding at the time of calculation. The NYSE is closed on Saturdays and
Sundays and the following holidays -- New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
The Fund values its portfolio securities at market value as of the close of the
NYSE. Market value will be determined as follows: securities listed or admitted
to trading privileges on the New York or American Stock Exchange or on the
NASDAQ National Market System are valued at the last sales price, or, if there
is no sale on that day, at the mean between the last bid and asked prices, or,
in the case of bonds, in the over-the-counter market if, in the judgment of the
Fund's officers, that market more accurately reflects the market value of the
bonds. Over-the-counter securities not traded on the NASDAQ National Market
System are valued at the mean between the last bid and asked prices. Securities
for which market quotations are not available are valued at fair market value
under procedures approved by the Board of Directors.
The maximum offering price of our shares on November 30, 1995 was computed as
follows: Net asset value per share (net assets divided
by shares outstanding)....................................................$_____
Maximum offering price per share (net asset
value divided by .9425)...................................................$_____
The Fund has entered into a distribution agreement with Lord Abbett under which
Lord Abbett is obligated to use its best efforts to find purchasers for the
shares of the Fund, and to make reasonable efforts to sell Fund shares so long
as, in Lord Abbett's judgment, a substantial distribution can be obtained by
reasonable efforts. Prior to the distribution agreement, the Fund acted as the
distributor of its own shares pursuant to the provisions of Section 10(d) of the
Act. Since our shares were sold at net asset value, there were neither gross
sales charges, amounts allowed to dealers, nor net commissions received by Lord
Abbett for the fiscal years ended November 30, 1995, 1994 and 1993.
<PAGE>
As described in the Prospectus, the Series has adopted a Distribution Plan and
Agreement (the "Plan") pursuant to Rule 12b-1 of the Act. In adopting the Plan
and in approving its continuance, the Board of Directors has concluded that
there is a reasonable likelihood that the Plan will benefit the Series and its
shareholders. The expected benefits include greater sales and lower redemptions
of Series shares, which should allow the Series to maintain a consistent cash
flow, and a higher quality of service to shareholders by dealers than would
otherwise be the case. All amounts received under the Plan are for retention by,
or payments to, institutions or persons permitted by law to receive such
payments for (i) providing continuous services to the Series' shareholders, such
as answering shareholder inquiries, maintaining records, and assisting
shareholders in making redemptions, transfers, additional purchases and
exchanges and (ii) their assistance in distributing shares of the Series.
The Plan requires the Board of Directors to review, on a quarterly basis,
written reports of all amounts expended pursuant to the Plan and the purpose for
which such expenditures were made. The Plan shall continue in effect only if its
continuance is specifically approved at least annually by vote of the Fund's
Board of Directors and of the Fund's directors who are not interested persons of
the Fund and who have no direct or indirect financial interest in the operation
of the Plan or in any agreements related to the Plan ("outside directors"), cast
in person at a meeting called for the purpose of voting on such Plan and
agreements. The Plan may not be amended to increase materially the amount spent
for distribution expenses without approval by a majority of the Series'
outstanding voting securities and the approval of a majority of the Fund's
directors, including a majority of the outside directors. The Plan may be
terminated at any time by vote of a majority of the Fund's outside directors or
by vote of a majority of the Series' outstanding voting securities.
As stated in the Prospectus, a 1% contingent deferred reimbursement charge
("CDRC") is imposed with respect to those shares (or shares of another Lord
Abbett-sponsored fund or series acquired through exchange of such shares) on
which the Fund has paid the one-time 1% 12b-1 sales distribution fee if such
shares are redeemed out of the Lord Abbett-sponsored family of funds within a
period of 24 months from the end of the month in which the original sale
occurred.
The CDRC is received by the Series and is intended to reimburse all or a
portion of the amount paid by the Series if the shares are redeemed before the
Series has had an opportunity to realize the anticipated benefits of having a
large, long-term shareholder account in the Series. Shares of a fund or series
on which such 1% sales distribution fee has been paid may not be exchanged into
a fund or series with a Rule 12b-1 plan for which the payment provisions have
not been in effect for at least one year.
The other Lord Abbett-sponsored funds and series which participate in the
Telephone Exchange Privilege (except Lord Abbett U.S. Government Securities
Money Market Fund, Inc. ("GSMMF") and certain series of Lord Abbett Tax-Free
Income Fund, Inc. and Lord Abbett Tax-Free Income Trust for which a Rule 12b-1
Plan is not yet in effect) have instituted a CDRC. No CDRC will be charged on an
exchange of shares between Lord Abbett funds. Upon redemption of shares out of
the Lord Abbett family of funds, the CDRC will be charged on behalf of and paid
to the fund in which the original purchase (subject to a CDRC) occurred. Thus,
if shares of a Lord Abbett fund are exchanged for shares of another such fund
and the shares tendered ("Exchanged Shares") are subject to a CDRC, the CDRC
will carry over to the shares being acquired, including GSMMF ("Acquired
Shares"). Any CDRC that is carried over to Acquired Shares is calculated as if
the holder of the Acquired Shares had held those shares from the date on which
he or she became the holder of the Exchanged Shares. Although GSMMF will not pay
a 1% sales distribution fee pursuant to a Rule 12b-1 Plan on purchases of their
own shares, and will therefore not impose their own CDRC, GSMMF will collect the
CDRC on behalf of other Lord Abbett funds. Acquired shares held in GSMMF which
are subject to a CDRC will be credited with the time such shares are held in
that fund.
In no event will the amount of the CDRC exceed 1% of the lesser of (i) the net
asset value of the shares redeemed or (ii) the original cost of such shares (or
of the Exchanged Shares for which such shares were acquired). No CDRC will be
imposed when the investor redeems (i) amounts derived from increases in the
value of the account above the total cost of shares being redeemed due to
increases in net asset value, (ii) shares with respect to which no Lord Abbett
fund paid a 1% sales distribution fee on issuance (including shares acquired
through reinvestment of dividend income and capital gains distributions), (iii)
shares which, together with Exchanged Shares, have been held continuously for 24
months from the end of the month in which the original sale occurred, (iv) from
a retirement plans due to any benefit payment such as plan loans, hardship
<PAGE>
withdrawals, death, retirement or separation from service with respect to plan
participants or the distribution of any excess deferral continuations or (v) for
special mutual fund wrap fee programs (as defined in the Prospectus). In
determining whether a CDRC is payable, (a) shares not subject to the CDRC will
be redeemed before shares subject to the CDRC and (b) of shares subject to a
CDRC, those held the longest will be the first to be redeemed.
Under the terms of the Statement of Intention to invest $50,000 or more over a
13-month period as described in the Prospectus, shares of Lord Abbett-sponsored
funds (other than shares of Lord Abbett Equity Fund ("LAEF"), Lord Abbett Series
Fund ("LASF"), the other series of the Fund if not offered to the general public
("LARF"), and GSMMF, unless holdings in GSMMF are attributable to shares
exchanged from a Lord Abbett-sponsored fund offered with a sales charge or from
a fund in the Lord Abbett Counsel Group) currently owned by you are credited as
purchases (at their current offering prices on the date the Statement is signed)
toward achieving the stated investment. Shares valued at 5% of the amount of
intended purchases are escrowed and may be redeemed to cover the additional
sales charge payable if the Statement is not completed. The Statement of
Intention is neither a binding obligation on you to buy, nor on the Fund to
sell, the full amount indicated.
As stated in the Prospectus, purchasers (as defined in the Prospectus) may
accumulate their investment in Lord Abbett-sponsored funds (other than LAEF,
LARF, LASF, and GSMMF, unless holdings in GSMMF are attributable to shares
exchanged from a Lord Abbett-sponsored fund offered with a front-end sales
charge or from Lord Abbett Counsel Group) so that a current investment, plus the
purchaser's holdings valued at the current maximum offering price, reach a level
eligible for a discounted sales charge.
As stated in the Prospectus, our shares may be purchased at net asset value by
our directors, employees of Lord Abbett, employees of our shareholder servicing
agent and employees of any securities dealer having a sales agreement with Lord
Abbett who consents to such purchases or by the trustee or custodian under any
pension or profit-sharing plan or Payroll Deduction IRA established for the
benefit of such persons or for the benefit of employees of any national
securities trade organization to which Lord Abbett belongs or any company with
an account(s) in excess of $10 million managed by Lord Abbett on a
private-advisory-account basis. For purposes of this paragraph, the terms
"directors" and "employees" include a director's or employee's spouse (including
the surviving spouse of a deceased director or employee). The terms "our
directors" and "employees of Lord Abbett" also include other family members and
retired directors and employees.
Our shares also may be purchased at net asset value (a) at $1 million or more,
(b) with dividends and distributions from other Lord Abbett-sponsored funds,
except for LARF, LAEF, LASF and Lord Abbett Counsel Group, (c) under the loan
feature of the Lord Abbett-sponsored prototype 403(b) plan for share purchases
representing the repayment of principal and interest, (d) by certain authorized
brokers, dealers, registered investment advisers or other financial institutions
who have entered into an agreement with Lord Abbett in accordance with certain
standards approved by Lord Abbett, providing specifically for the use of our
shares in particular investment products made available for a fee to clients of
such brokers, dealers, registered investment advisers and other financial
institutions ("mutual fund wrap fee programs"), (e) by employees, partners and
owners of unaffiliated consultants and advisors to Lord Abbett or Lord
Abbett-sponsored funds who consent to such purchase if such persons provide
service to Lord Abbett or such funds on a continuing basis and are familiar with
such funds, (f) subject to appropriate documentation, through a securities
dealer where the mount invested represents redemption proceeds from shares
("Redeemed Shares") of a registered open-end management investment company not
distributed or managed by Lord Abbett (other than a money market fund), if such
redemptions have occurred no more than 60 days prior to the purchase of our
shares, the Redeemed Shares were held for at least six months prior to
redemption and the proceeds of redemption were maintained in cash or a money
market fund prior to purchase and (g) through retirement plans under Sections
401 (a) and (k) and 408(k) of the Internal Revenue Code with at least 100
eligible employees ("retirement plans"). Purchasers should consider the impact,
if any, of contingent deferred sales charges in determining whether to redeem
shares for subsequent investment in our shares. Lord Abbett may suspend or
terminate the purchase option referred to in (f) above at any time.
Our shares may be issued at net asset value in exchange for the assets, subject
to possible tax adjustment, of a personal holding company or an investment
company. There are economies of selling efforts and sales-related expenses with
respect to offers to these investors and those referred to above.
<PAGE>
The Prospectus briefly describes the Telephone Exchange Privilege. You may
exchange some or all of your shares for those of Lord Abbett-sponsored funds
currently offered to the public with a sales charge and GSMMF, to the extent
offers and sales may be made in your state. You should read the prospectus of
the other fund before exchanging. In establishing a new account by exchange,
shares of the Series being exchanged must have a value equal to at least the
minimum initial investment required for the fund into which the exchange is
made.
Shareholders in such other funds have the same right to exchange their shares
for the Series' shares. Exchanges are based on relative net asset values on the
day instructions are received by the Fund in Kansas City if the instructions are
received prior to the close of the NYSE in proper form. No sales charges are
imposed except in the case of exchanges out of GSMMF (unless a sales charge was
paid on the initial investment). Exercise of the exchange privilege will be
treated as a sale for federal income tax purposes, and, depending on the
circumstances, a gain or loss may be recognized. In the case of an exchange of
shares that have been held for 90 days or less where no sales charge is payable
on the exchange, the original sales charge incurred with respect to the
exchanged shares will be taken into account in determining gain or loss on the
exchange only to the extent such charge exceeds the sales charge that would have
been payable on the acquired shares had they been acquired for cash rather than
by exchange. The portion of the original sales charge not so taken into account
will increase the basis of the acquired shares.
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as a means for taking advantage of
short-term swings in the market, and we reserve the right to terminate or limit
the privilege of any shareholder who makes frequent exchanges. We can revoke or
modify the privilege for all shareholders upon 60 days' prior notice. "Eligible
Funds" are other Lord Abbett-sponsored funds which are eligible for the exchange
privilege, except LASF which offers its shares only in connection with certain
variable annuity contracts, LAEF which is not issuing shares, LARF and Lord
Abbett Counsel Group.
A redemption order is in proper form when it contains all of the information and
documentation required by the order form or supplementally by Lord Abbett or the
Fund to carry out the order. The signature(s) and any legal capacity of the
signer(s) must be guaranteed by an eligible guarantor. See the Prospectus for
expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Directors may authorize redemption of all of the shares in any
account in which there are fewer than 25 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least 30 days' prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
Under the Div-Move service described in the Prospectus, you can invest the
dividends paid on your account into an existing account in any other Eligible
Fund. The account must be either your account, a joint account for you and your
spouse, a single account for your spouse, or a custodial account for your minor
child under the age of 21. You should read the prospectus of the other fund
before investing.
The Invest-A-Matic method of investing in the Series and/or any other Eligible
Series is described in the Prospectus. To avail yourself of this method you must
complete the application form, selecting the time and amount of your bank
checking account withdrawals and the funds for investment, include a voided,
unsigned check and complete the bank authorization.
The Systematic Withdrawal Plan (the "SWP") also is described in the Prospectus.
You may establish a SWP if you own or purchase uncertificated shares having a
current offering price value of at least $10,000. Lord Abbett prototype
retirement plans have no such minimum. The SWP involves the planned redemption
of shares on a periodic basis by receiving either fixed or variable amounts at
periodic intervals. Since the value of shares redeemed may be more or less than
their cost, gain or loss may be recognized for income tax purposes on each
periodic payment. Normally, you may not make regular investments at the same
time you are receiving systematic withdrawal payments because it is not in your
<PAGE>
interest to pay a sales charge on new investments when in effect a portion of
that new investment is soon withdrawn. The minimum investment accepted while a
withdrawal plan is in effect is $1,000. The SWP may be terminated by you or by
us at any time by written notice.
The Prospectus indicates the types of retirement plans for which Lord Abbett
provides forms and explanations. Lord Abbett makes available the retirement plan
forms and custodial agreements for IRAs (Individual Retirement Accounts
including Simplified Employee Pensions), 403(b) plans and qualified pension and
profit-sharing plans, including 401(k) plans. The forms name Investors Fiduciary
Trust Company as custodian and contain specific information about the plans.
Explanations of the eligibility requirements, annual custodial fees and
allowable tax advantages and penalties are set forth in the relevant plan
documents. Adoption of any of these plans should be on the advice of your legal
counsel or qualified tax adviser.
6.
Past Performance
The Series computes the average annual compounded rate of total return during
specified periods that would equate the initial amount invested to the ending
redeemable value of such investment by adding one to the computed average annual
total return, raising the sum to a power equal to the number of years covered by
the computation and multiplying the result by one thousand dollars, which
represents a hypothetical initial investment. The calculation assumes deduction
of the maximum sales charge from the initial amount invested and reinvestment of
all income dividends and capital gains distributions on the reinvestment dates
at prices calculated as stated in the Prospectus. The ending redeemable value is
determined by assuming a complete redemption at the end of the period(s) covered
by the average annual total return computation.
Using the method to compute average annual compounded total return described
above, for the one year ended, and the life-of-series periods (from commencement
of operations on June 3, 1992 through) November 30, 1995 assuming a $1,000
investment at the beginning of the period, the average annual rate of total
return of the Series amounted to ___% and ___8% and the redeemable values were
$_____ and $_____, respectively.
These figures represent past performance, and an investor should be aware that
the investment return and principal value of a Series investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. Therefore, there is no assurance that this performance will
be repeated in the future.
7.
Taxes
The value of any shares redeemed by the Series or repurchased or otherwise sold
may be more or less than your tax basis in the shares at the time the
redemption, repurchase or sale is made. Any gain or loss will generally be
taxable for federal income tax purposes. Any loss realized on the sale,
redemption or repurchase of Series shares which you have held for six months or
less will be treated for tax purposes as a long-term capital loss to the extent
of any capital gains distributions which you received with respect to such
shares. Losses on the sale of stock or securities are not deductible if, within
a period beginning 30 days before the date of the sale and ending 30 days after
the date of the sale, the taxpayer acquires stock or securities that are
substantially identical.
The Series will be subject to a four-percent nondeductible excise tax on certain
amounts not distributed (and not treated as having been distributed) on a timely
basis in accordance with a calendar-year distribution requirement. The Series
intends to distribute to shareholders each year an amount adequate to avoid the
imposition of such excise tax.
The writing of call options and other investment techniques and practices which
the Series may utilize, as described above under "Investment Objectives and
Policies," may create "straddles" for United States federal income tax purposes
and may affect the character and timing of the recognition of gains and losses
by the Series. Such transactions may increase the amount of short-term capital
gain realized by the Series, which is taxed as ordinary income when distributed
to shareholders. Limitations imposed by the Internal Revenue Code on regulated
investment companies may restrict the Series' ability to engage in transactions
in options. As described in the Prospectus under "How We Invest - Risk Factors,"
<PAGE>
the Series may be subject to foreign withholding taxes which would reduce the
yield on its investments. Tax treaties between certain countries and the United
States may reduce or eliminate such taxes. It is expected that Series
shareholders who are subject to United States federal income tax will not be
entitled to claim a federal income tax credit or deduction for foreign income
taxes paid by the Series.
Gains and losses realized by the Series on certain transactions, including sales
of foreign debt securities and certain transactions involving foreign currency,
will be treated as ordinary income or loss for federal income tax purposes to
the extent, if any, that such gains or losses are attributable to changes in
exchange rates for foreign currencies. Accordingly, distributions taxable as
ordinary income will include the net amount, if any, of such foreign exchange
gains and will be reduced by the net amount, if any, of such foreign exchange
losses.
If the Series purchases shares in certain foreign investment entities, called
"passive foreign investment companies," it may be subject to United States
federal income tax on a portion of any "excess distribution" or gain from the
disposition of such shares, even if such income is distributed as a taxable
dividend by the Series to its shareholders. Additional charges in the nature of
interest may be imposed on either the Series or its shareholders in respect to
deferred taxes arising from such distributions or gains.
If the Series were to invest in a passive foreign investment company with
respect to which the Series elected to make a "qualified electing fund"
election, in lieu of the foregoing requirements, the Series might be required to
include in income each year a portion of the ordinary earnings and net capital
gains of the qualified electing series, even if such amount were not distributed
to the Series.
Dividends paid by the Series will qualify for the dividends-received deduction
for corporations to the extent they are derived from dividends paid by domestic
corporations.
8.
Information About the Fund
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment accounts. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Fund's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security 7 days
before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account
considers a trade or trades in such security, prohibiting profiting on trades of
the same security within 60 days and trading on material and non-public
information. The Code imposes certain similar requirements and restrictions on
the independent directors and trustees of each Lord Abbett-sponsored mutual fund
to the extent contemplated by the recommendations of such Advisory Group.
9.
Financial Statements
The financial statements for the fiscal year ended November 30, 1995 and the
report of Deloitte & Touche LLP, independent auditors, on such financial
statements contained in the 1995 Annual Report to Series Shareholders of Lord
Abbett Research 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.
<PAGE>
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Part A - Financial Highlights for the period June 3, 1992
(commencement of operations) to November 30, 1992 and for the years
ended November 30, 1993,1994 and 1995.*****
Part B - Statement of Net Assets at November 30, 1995.*****
Statement of Operations for the year ended November 30, 1995.*****
Statement of Changes in Net Assets for the years ended November 30,
1994 and 1995.*****
(b) Exhibits -
99.B1 Articles of Incorporation*
99.B2 By-Laws*
99.B5 Management Agreement between Registrant and Lord, Abbett
& Co.*
99.B6 Form of Distribution Agreement between Registrant and
Lord, Abbett & Co.**
99.B7 Retirement Plan for Non-interested Person Directors and
Trustees of Lord Abbett Funds.***
99.B8 Global Custody Agreement*
99.B9 Agreement between Registrant and Transfer Agent*
99.B10 Opinion and Consent of Counsel*
99.B11 Consent of Deloitte & Touche LLP*****
99.B13 Subscription Agreement*
99.B14 Lord Abbett Prototype Retirements Plans****
(1) 401(k)
(2) IRA
(3) 403(b)
(4) Profit-Sharing, and
(5) Money Purchases
99.B15 Form of Rule 12b-1 Plan **
99.B16 Total Return and Yield Computations.*****
27 Financial Data Schedule Under Rule 483*****
* Previously filed
** Filed herewith.
*** Incorporated by reference to Post-Effective Amendment No.
7 to the Registration Statement (on Form N1-A) of Lord
Abbett Equity Fund (File No. 811-6033).
**** Incorporated by reference to Post-Effective Amendment No.
6 to the Registration Statement (on Form N1-A) of Lord
Abbett Securities Trust (File No. 811-7538).
***** To be filed.
Exhibit items from Form N-1A not mentioned are not applicable.
Item 25. Person Controlled by or Under Common Control with Registrant
None.
<PAGE>
Item 26. Number of Record Holders of Securities
As of September 30, 1995 - 157
Item 27. Indemnification
Registrant is incorporated under the laws of the State of Maryland and is
subject to Section 2-418 of the Corporations and Associations Article of
the Annotated Code of the State of Maryland controlling the indemnification
of directors and officers. Since Registrant has its executive offices in
the State of New York, and is qualified as a foreign corporation doing
business in such State, the persons covered by the foregoing statute may
also be entitled to and subject to the limitations of the indemnification
provisions of Section 721-727 of the New York Business Corporation Law.
The general effect of these statutes is to protect officers, directors and
employees of Registrant against legal liability and expenses incurred by
reason of their positions with the Registrant. The statutes provide for
indemnification for liability for proceedings not brought on behalf of the
corporation and for those brought on behalf of the corporation, and in each
case place conditions under which indemnification will be permitted,
including requirements that the officer, director or employee acted in good
faith. Under certain conditions, payment of expenses in advance of final
disposition may be permitted. The By-Laws of Registrant, without limiting
the authority of Registrant to indemnify any of its officers, employees or
agents to the extent consistent with applicable law, makes the
indemnification of its directors mandatory subject only to the conditions
and limitations imposed by the above-mentioned Section 2-418 of Maryland
Law and by the provisions of Section 17(h) of the Investment Company Act of
1940 as interpreted and required to be implemented by SEC Release No.
IC-11330 of September 4, 1980.
In referring in its By-Laws to, and making indemnification of directors
subject to the conditions and limitations of, both Section 2-418 of the
Maryland Law and Section 17(h) of the Investment Company Act of 1940,
Registrant intends that conditions and limitations on the extent of the
indemnification of directors imposed by the provisions of either Section
2-418 or Section 17(h) shall apply and that any inconsistency between the
two will be resolved by applying the provisions of said Section 17(h) if
the condition or limitation imposed by Section 17(h) is the more stringent.
In referring in its By-Laws to SEC Release No. IC-11330 as the source for
interpretation and implementation of said Section 17(h), Registrant
understands that it would be required under its By-Laws to use reasonable
and fair means in determining whether indemnification of a director should
be made and undertakes to use either (1) a final decision on the merits by
a court or other body before whom the proceeding was brought that the
person to be indemnified ("indemnitee") was not liable to Registrant or to
its security holders by reason of willful malfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
his office ("disabling conduct") or (2) in the absence of such a decision,
a reasonable determination, based upon a review of the facts, that the
indemnitee was not liable by reason of such disabling conduct, by (a) the
vote of a majority of a quorum of directors who are neither "interested
persons" (as defined in the 1940 Act) of Registrant nor parties to the
proceeding, or (b) an independent legal counsel in a written opinion. Also,
Registrant will make advances of attorneys' fees or other expenses incurred
by a director in his defense only if (in addition to his undertaking to
repay the advance if he is not ultimately entitled to indemnification) (1)
the indemnitee provides a security for his undertaking, (2) Registrant
shall be insured against losses arising by reason of any lawful advances,
or (3) a majority of a quorum of the non- interested, non-party directors
of Registrant, or an independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts, that there is
reason to believe that the indemnitee ultimately will be found entitled to
indemnification.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, 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 director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, 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 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.
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
Lord, Abbett & Co. acts as investment advisor for seventeen, other open-end
investment companies (of which it is principal underwriter for fifteen),
and as investment adviser to approximately 5,100 private accounts. Other
than acting as 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 except as follows:
John J. Walsh
Trustee
The Brooklyn Hospital Center
100 Parkside Avenue
Brooklyn, N.Y.
Item 29. Principal Underwriter
(a) Affiliated Fund, Inc.
Lord Abbett U. S. Government Securities Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Value Appreciation Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett California Tax-Free Income Fund, Inc.
Lord Abbett Fundamental Value Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett U.S. Government Securities Money Market Fund, Inc.
Lord Abbett Series Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Tax-Free Income Trust
Lord Abbett Securities Trust
Lord Abbett Investment Trust
Investment Advisor
American Skandia Trust (Lord Abbett Growth and
Income Portfolio)
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
Business Address (1) with Registrant
Ronald P. Lynch Chairman
Robert S. Dow President
Kenneth B. Cutler Vice President & Secretary
Thomas S. Henderson Vice President
Stephen I. Allen Vice President
Daniel E. Carper Vice President
Robert G. Morris Vice President
E. Wayne Nordberg Vice President
John J. Walsh Vice President
(1) Each of the above has a principal business address
767 Fifth Avenue, New York, NY 10153
(c) Not applicable
Item 30. 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 canceled 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 31. Management Services
None
Item 32. 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all the requirements
for effectiveness of this Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Registration Statement
and/or any amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on the
29th day of November, 1995
LORD ABBETT RESEARCH FUND, INC.
By /s/ Ronald P. Lynch
Ronald P. Lynch,
Chairman of the Board
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 dates indicated.
Chairman of the Board
/s/ Ronald P. Lynch and Director
Ronald P. Lynch (Title) 11/29/95
/s/ Hansel B. Millican Director
Hansel B. Millican (Title) 11/29/95
Vice President and
/s/ John J. Gargana, Jr. Chief Financial Officer
John J. Gargana, Jr. (Title) 11/29/95
/s/ Thomas J. Neff Director
Thomas J. Neff (Title) 11/29/95
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
EX-99.B6 Distribution Agreement
EX-99.B15 12-b1 Plan
<PAGE>
EXHIBIT 99.B6
DISTRIBUTION AGREEMENT
AGREEMENT made this __ day of _____________, 1995 by and
between LORD ABBETT RESEARCH FUND, INC., a Maryland
Corporation(hereinafter called the "Fund"), and LORD, ABBETT & CO., a
New York partnership (hereinafter called the "Distributor").
WHEREAS, the Fund desires to enter into an agreement with
the Distributor for the purpose of finding purchasers for its
securities which may be issued in various Series and/or classes, and
the Distributor is desirous of undertaking to perform these services
upon the terms and conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants
and of other good and valuable consideration, receipt of which is
hereby acknowledged, it is agreed as follows:
1. The Fund hereby appoints the Distributor its exclusive
selling agent for the sale of its shares of beneficial interest, of all
Series and classes, and all other securities now or hereafter created
or issued by the Fund (except notes and other evidences of indebtedness
issued for borrowed money), pursuant to paragraph 2 of this Agreement,
and the Fund agrees to issue its shares of beneficial interest or other
securities, subject to the provisions of its Articles of Incorporation,
to purchasers thereof and against payment of the consideration to be
received by the Fund therefor. The Distributor may appoint one or more
independent broker-dealers and the Distributor or any such
broker-dealer may transmit orders to the Fund for acceptance at its
office in New York. Such shares shall be registered in such name or
names and amounts as the Distributor or any such broker-dealer may
request from time to time, and all shares when so paid for and issued
shall be fully paid and non-assessable.
2. The Distributor will act as exclusive selling agent
for the Fund in selling shares of beneficial interest of the Fund.
The Distributor agrees to sell exclusively through independent
1
<PAGE>
broker-dealers and agrees to use its best efforts to find purchasers
for shares of beneficial interest of the Fund to be offered; provided
however, that the services of the Distributor under this Agreement are
not deemed to be exclusive, and nothing in this Agreement shall prevent
Distributor, or any officer, partner or employee thereof, from
providing similar services to other investment companies and other
clients or to engage in other activities.
The sales charge or premium, if any, relating to each
class of shares of beneficial interest of the Fund shall be determined
by the Directors of the Fund, but in no event shall the sales charge
(front-end and/or asset-based) and service fees exceed the maximum rate
permitted under Federal and state regulations and the rules of National
Association of Securities Dealers, Inc., and the amount to be retained
by the Fund on any sale of its shares shall in each case be the net
asset value thereof (determined as provided in the Articles of
Incorporation). If a front-end sales charge is imposed from the
premium, the Fund agrees to pay the Distributor a sales commission. If
appropriate, the Distributor may allow concessions from such sales
commissions. In such event the amount of the payment hereunder by the
Fund to the Distributor shall be the difference between the sales
commission and any concessions which have been allowed in accordance
herewith. If a front-end sales charge is imposed, the sales commission
payable to the Distributor shall not exceed the front-end sales charge.
If the Fund adopts a Distribution Plan ("Plan") under Rule 12b-1 of the
Investment Company Act of 1940, as amended (the "Act"), the Fund and
the Distributor may arrange to authorize the Fund to pay distribution
and/or service fees to the Distributor for retention by it and/or
remittance to institutions and persons permitted by applicable law
and/or rules to receive such fees ("authorized institutions"). The
purpose of these Plan fees would be to (i) finance any activity which
is primarily intended to result in the sale of shares of the Fund and
(ii) provide continuing information and investment services to
shareholder accounts not covered by
2
<PAGE>
authorized institutions which are not affiliated with the Distributor
and otherwise to encourage such accounts to remain invested in the
Fund.
3. Notwithstanding anything herein to the contrary, sales
and distributions of shares of beneficial interest of the Fund's
beneficial shares may be made upon the following special terms:
(a) Capital gains distributions and income dividends on
shares of the Fund may be reinvested by shareholders at net asset value
without any sales commission.
(b) Shares may be issued by the Fund at net asset value
without any sales commission in connection with any permitted offers of
exchange between investment companies having the same Distributor.
(c) Shares may be issued by the Fund at net asset value
without a sales commission or at a reduced sales commission or back-end
sales charge and with, or without, a service fee as may from time to
time be permitted by rules of the Securities and Exchange Commission
under the Act and the rules of National Association of Securities
Dealers, Inc.
4. The independent broker-dealers who sell the Fund's
shares may also render other services to the Fund, such as executing
purchases and sales of portfolio securities, providing statistical
information, and similar services. The receipt of compensation for such
other services shall in no way reduce the amount of the sales
commissions payable hereunder by the Fund to the Distributor or the
amount of the commissions, concessions or fees allowed.
5. The Distributor agrees to act as agent of the Fund in
connection with the repurchase of shares of beneficial interest of the
Fund, or in connection with permitted exchanges of shares between
investment companies having the same Distributor, and the Fund agrees
to advise the Distributor of the net asset value of its shares as
frequently as may be mutually agreed, and to accept shares duly
tendered to the Distributor. The net asset value shall
3
<PAGE>
be determined as provided in the Fund's Articles of Incorporation.
6. The Fund will pay all fees, costs, expenses and charges
in connection with the issuance, federal registration, transfer,
redemption and repurchase of its shares, including without limitation,
all fees, costs, expenses and charges of transfer agents and
registrars, all taxes and other Governmental charges, the costs of
qualifying or continuing the qualifications of the Fund as
broker-dealer, if required, and of registering the Fund's shares under
the state blue sky laws, or similar laws of any jurisdiction (domestic
or foreign), costs of preparation and mailing prospectuses to its
shareholders, and any other cost, expense or charge not expressly
assumed by the Distributor hereunder. The Fund will also furnish to the
Distributor daily such information as may reasonably be requested by
the Distributor in order that it may know all of the facts necessary to
sell the Fund's shares.
7. The Distributor agrees to pay the cost of all sales
literature and other material which it may require or think desirable
to use in connection with sale of such shares, including the cost of
reproducing the offering prospectus furnished to it by the Fund, except
as may be provided for subsequently pursuant to paragraph 2 hereunder.
The Fund agrees to use its best efforts to qualify its shares for sale
under the laws of such states of the United States and such other
jurisdictions (domestic or foreign) as the Distributor may reasonably
request.
If the Distributor pays for other expenses of the Fund or
furnishes the Fund with services, the cost of which is to be borne by
the Fund under this Agreement, the Distributor shall not be deemed to
have waived its rights under this Agreement to have the Fund pay for
such expenses or provide such services in the future.
8. The Distributor agrees to use its best efforts to find
purchasers for shares of each class of each Series of the Fund issued
and to make reasonable efforts to sell the same so long as in the
judgment of the Distributor a substantial distribution can
4
<PAGE>
be obtained by reasonable efforts. The Distributor is not
authorized to act otherwise than in accordance with applicable
laws.
9. Neither this Agreement nor any other transaction
between the parties hereto pursuant to this Agreement shall be
invalidated or in any way affected by the fact that any or all of the
directors, officers, shareholders, or other representatives of the Fund
are or may be interested in the Distributor, or any successor or
assignee thereof, or that any or all of the directors, officers,
partners, or other representatives of the Distributor are or may be
interested in the Fund, except as otherwise may be provided in the Act.
10. The Distributor agrees that it will not sell for its
own account to the Corporation any stocks, bonds or other securities of
any kind or character, except that if it shall own any of the Fund's
shares or other securities, it may sell them to the Fund on the same
terms as any other holder might do.
11. Other than to abide by the provisions hereof and
render the services called for hereunder in good faith, the Distributor
assumes no responsibility under this Agreement and, having so acted,
the Distributor shall not be held liable or held accountable for any
mistake of law or fact, or for any loss or damage arising or resulting
therefrom suffered by the Fund or any of the shareholders, creditors,
directors, or officers of the Fund; provided, however, that nothing
herein shall be deemed to protect the Distributor against any liability
to the Fund or its shareholders by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties hereunder,
or by reason of the reckless disregard of its obligations and duties
hereunder.
12. The Distributor agrees that it shall observe and be
bound by all of the terms of the Articles of Incorporation of the Fund,
including any amendments thereto, of the Fund which shall in any way
limit or restrict or prohibit or otherwise regulate any action of the
Distributor.
13. This Agreement shall continue in force until
5
<PAGE>
December __, 1997, and it is renewable annually thereafter by specific
approval of the directors of the Fund or by vote of a majority of the
outstanding voting securities of the Fund; any such renewal shall be
approved by the vote of a majority of the directors who are not parties
to this Agreement or interested persons of the Distributor or of the
Fund, cast in person, at a meeting called for the purpose of voting on
such renewal.
This Agreement may be terminated without penalty at any
time by the Directors of the Fund or by vote of a majority of the
outstanding voting securities of the Fund on 60 days' written notice.
This Agreement shall automatically terminate in the event of its
assignment. The terms "interested persons", "assignment" and "vote of a
majority of the outstanding voting securities" shall have the same
meaning as those terms are defined in the Act.
IN WITNESS WHEREOF, the Fund has caused this Agreement to
be executed by its duly authorized officers and its seal to be affixed
thereto, and the Distributor has caused this Agreement to be executed
by one of its partners all on the day and year first above written.
LORD ABBETT RESEARCH FUND, INC.
By:_____________________________
Chairman of the Board
Attest:
----------------------
Assistant Secretary
LORD, ABBETT & CO.
By:____________________________
A Partner
6
11/27/95 DRAFT
EXHIBIT 99.B15
Rule 12b-1 Distribution Plan and Agreement
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of the
____ day of December, 1995 by and between LORD ABBETT RESEARCH FUND, INC., a
Maryland corporation (the "Corporation"), on behalf of its Series, Large-Cap
Series (the "Series"), and LORD, ABBETT & CO., a New York partnership or any
subsequently substituted affiliated person thereof (the "Distributor").
WHEREAS, the Corporation is an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"Act"); and the Distributor is the exclusive selling agent of the Series' shares
of capital stock pursuant to the Distribution Agreement between the Corporation
and the Distributor, dated the ____ day of December __, 1995 (the "Distribution
Agreement").
WHEREAS, the Corporation desires to adopt a Distribution Plan
and Agreement (the "Plan") with the Distributor, as permitted by Rule 12b-1
under the Act, pursuant to which the Series may make certain payments to the
Distributor to be retained by it, or paid to, institutions and persons permitted
by applicable law and/or rules to receive such payments ("authorized
institutions") in connection with the sales of shares of the Series and/or the
servicing of shareholder accounts.
WHEREAS, the Corporation's Board of Directors has determined
that there is a reasonable likelihood that the Plan will benefit the Series and
its shareholders.
NOW, THEREFORE, in consideration of the mutual covenants and
of other good and valuable consideration, receipt of which is hereby
acknowledged, it is agreed as follows.
1. The Corporation hereby authorizes the Distributor to enter
into (a) agreements with independent broker-dealers appointed by the
Distributor, (b) agreements pursuant to a "mutual fund wrap fee program"
described in the Corporation's Prospectus as in effect at such time and (c)
agreements with administrators of "retirement plans" described in the
Corporation's Prospectus as in effect at such time providing for the payment to
authorized institutions of distribution and/or service fees which the
Distributor receives from the Series in order to provide additional incentives
to the authorized institutions (i) to sell shares of the Series and/or (ii) to
provide continuing information and investment services to their shareholder
accounts and otherwise to encourage their accounts to remain invested in the
Series. Such agreements referred to in (a), (b) and (c) above are hereinafter
referred to collectively as the "Agreements". The Agreements may, but are not
required to, provide for payment of all or any part of the distribution and/or
service fees authorized hereunder. The provisions of sections 1, 2 , 3 and 4 of
this Plan will go into effect (the "effective date") on the first day of the
calendar quarter subsequent to the date of this Plan with respect to accounts
existing at the time and covered by the Agreements, except with respect to
certain accounts for which tracking data is not available.
1
<PAGE>
2. The Corporation also hereby authorizes the Distributor to
retain distribution and/or service fees received from the Series to (i) finance
any activity which is primarily intended to result in the sale of shares of the
Series and (ii) provide continuing information and investment services to
shareholder accounts not covered by authorized institutions which are not
affiliated with the Distributor and otherwise to encourage such accounts to
remain invested in the Series.
3. In order to provide maximum flexibility to the Board of
Directors (in the manner contemplated in paragraph 12 of this Plan) and to save
on the expense of Series shareholder meetings, the Corporation hereby authorizes
an aggregate amount to be spent hereunder which is expressed as permitted in
Article III, Section 26 of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. The Distributor may use, or recommend
changes to, the amount of payments received from the Series to (A) finance any
activity which is primarily intended to result in the sale of shares of the
Series and/or (B) pay "service fees" as defined in such Section 26, provided:
(i) that the Corporation's Board of Directors (in the manner contemplated in
paragraph 12 of this Plan) shall have approved the amount, timing, calculation
and the categories of recipients of such payments, and (ii) the Distributor may
use any retained payments for its obligations to be paid for by this Plan as set
forth in the above-mentioned Distribution Agreement.
4. Subject to the limit on the amount to be spent hereunder in
paragraph 3, the Series is initially authorized to pay the Distributor for
retention by it and/or remittance to authorized institutions, in the
Distributor's discretion, pursuant to this Plan (i) service fees at an annual
rate not to exceed the sum of .25 of 1% of the average daily net asset value of
the shares of the Series in each account covered by the Agreements, and/or (ii)
distribution fees up to 1% (stepped as follows: 1% of the first $5 million, .55%
of the next $5 million, .50% of the next $50 million and .25% over $50 million)
of the net asset value of such shares sold over a 12-month period starting from
the day of the first net asset value sale (a) in the amount of $1 million or
more, (b) to retirement plans, or (c) representing new program purchases
pursuant to special mutual fund wrap fee programs. "Special mutual fund wrap fee
programs" share one or more characteristics which, in the opinion of the
Distributor, distinguish them from regular mutual fund wrap fee programs, such
as, for example, no fee is charged to clients which is economically equivalent
to such distribution fees and/or the programs are involved with retirement plans
which allow participant self direction with respect to investments. Regular
mutual fund wrap fee programs are not eligible for such distribution fees. In
determining whether a shareholder has made such an investment of $1 million or
more, the investment may be deemed to include the value of other shares of the
Series or class thereof and the value of the shares of any other Lord Abbett
managed fund or series or class that has a Rule 12b-1 plan deemed comparable to
this Plan for this purpose by the Board of Directors (a "Lord Abbett Rule 12b-1
Fund") which the shareholder could include within the right of accumulation or
statement of intention privileges described in the Series' Prospectus as in
effect at such time. Such fees (which may be waived by such authorized
institutions in whole or in part) shall be calculated and paid quarterly,
subject to change by the Board of Directors of the Corporation in the manner
contemplated in paragraph 12 of this Plan, provided the limit in paragraph 3 is
not exceeded.
2
<PAGE>
5. If any shares subject to the distribution fee of up to 1%
described in paragraph 4 are redeemed out of the Lord Abbett family of funds on
or before the end of the twenty-fourth month after the month in which the shares
were purchased (the "twenty-fourth month end"), the shareholder will be required
to reimburse the Series by paying a contingent deferred reimbursement charge of
up to 1% of the lesser of the cost or then net asset value of the shares;
provided, however, that (a) such reimbursement charge shall not apply to
redemptions from retirement plans due to any benefit payment, such as plan
loans, hardship withdrawals, death, retirement or separation from service with
respect to plan participants or the distribution of any excess deferral
contribution; and (b) in the case of special mutual fund wrap fee programs, the
Distributor is authorized to arrange in an agreement not to collect the 1%
contingent deferred reimbursement charge. If such shares in the Series are
exchanged for shares of another Lord Abbett Rule 12b-1 Fund and the shares of
the other fund are later redeemed out of the family before the twenty-fourth
month-end, the 1% contingent deferred reimbursement charge will be collected by
the other Lord Abbett Rule 12b-1 Fund at the time of redemption and will be paid
to the Series. The Series also will collect such a charge for another Lord
Abbett Rule 12b-1 Fund in a similar situation. Adoption of this provision in
similar Plans by the other Lord Abbett Rule 12b-1 Funds and their shareholders
represents the agreement of such funds to collect such charges from their
shareholders. Subject to the limit on the amount to be spent hereunder in
paragraph 3, the amount, timing, categories, collection, non-collection and
calculation of this charge may be changed by the Corporation's Board of
Directors in the manner contemplated in paragraph 12 of this Plan.
6. The value of the net assets of the Series shall be
determined as provided in the Articles of Incorporation of the Corporation. If
the Distributor waives all or a portion of fees which are to be paid by the
Series hereunder, the Distributor shall not be deemed to have waived its rights
under this Agreement to have the Series pay such fees in the future.
7. The Secretary of the Corporation, or in his absence the
Chief Financial Officer, is hereby authorized to direct the disposition of
monies paid or payable by the Series hereunder and shall provide to the
Corporation's Board of Directors, and the Directors shall review, at least
quarterly, a written report of the amounts so expended pursuant to this Plan and
the purposes for which such expenditures were made.
8. Neither this Plan nor any other transaction between the
parties hereto pursuant to this Plan shall be invalidated or in any way affected
by the fact that any or all of the directors, officers, stockholders, or other
representatives of the Corporation are or may be "interested persons" of the
Distributor, or any successor or assignee thereof, or that any or all of the
directors, officers, partners, or other representatives of the Distributor are
or may be "interested persons" of the Corporation, except as otherwise may be
provided in the Act.
9. The Distributor shall give the Corporation the benefit of
the Distributor's best judgment and good faith efforts in rendering services
under this Plan. Other than to abide by the provisions hereof and render the
services called for hereunder in good faith, the Distributor assumes no
responsibility under this Plan and, having so acted, the Distributor shall not
be held liable or held
3
<PAGE>
accountable for any mistake of law or fact, or for any loss or damage arising or
resulting therefrom suffered by the Corporation or any of the stockholders,
creditors, directors, or officers of the Corporation; provided however, that
nothing herein shall be deemed to protect the Distributor against any liability
to the Corporation or its stockholders by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties hereunder, or by
reason of the reckless disregard of its obligation and duties hereunder.
10. This Plan shall be effective upon the above-mentioned
effective date, and shall continue in effect for a period of more than one year
from that date only so long as such continuance is specifically approved at
least annually by a vote of the Board of Directors of the Corporation, including
the vote of a majority of the directors who are not "interested persons" of the
Corporation and who have no direct or indirect financial interest in the
operation of this Plan or in any agreement related to the Plan, cast in person
at a meeting called for the purpose of voting on such renewal.
11. This Plan may not be amended to increase materially the
amount to be spent by the Series hereunder without the vote of a majority of its
outstanding voting securities and each material amendment must be approved by a
vote of the Board of Directors of the Corporation, including the vote of a
majority of the directors who are not "interested persons" of the Corporation
and who have no direct or indirect financial interest in the operation of this
Plan or in any agreement related to the Plan, cast in person at a meeting called
for the purpose of voting on such amendment. Amendments to the Plan which do not
increase the amount to be spent by the Series beyond the limit set forth in
paragraph 3 shall not be material and may be made pursuant to paragraph 12.
12. Amendments to this Plan other than material amendments of
the kind referred to in the forgoing paragraph 11 may be adopted by a vote of
the Board of Directors of the Corporation, including the vote of a majority of
the directors who are not "interested persons" of the Corporation and who have
no direct or indirect financial interest in the operation of this Plan or in any
agreement related to this Plan. The Board of Directors of the Corporation may,
by such a vote, interpret this Plan and make all determinations necessary or
advisable for its administration.
13. This Plan may be terminated at any time without the
payment of any penalty by (a) the vote of a majority of the directors of the
Corporation who are not "interested persons" of the Corporation and have no
direct or indirect financial interest in the operation of this Plan or in any
agreement related to the Plan, or (b) by vote of a majority of the outstanding
voting securities of the Series. This Plan shall automatically terminate in the
event of its assignment. The terms "affiliated person", "interested persons,"
"assignment" and "vote of a majority of the outstanding voting securities" shall
have the same meaning as those terms are defined in the Act.
4
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and on its behalf by its duly authorized
representative as of the date first above written.
LORD ABBETT RESEARCH FUND, INC.
By:
Chairman
ATTEST:
Assistant Secretary
LORD, ABBETT & CO.
By:
Partner
5
