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. 8 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
AMENDMENT No. 8 [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
X on January 29, 1996 pursuant to paragraph (b) of Rule 485
- -----
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. 8 (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 are listed below and are
offered by the Prospectus in Part A of the Post-Effective Amendment to the
Registrant's Registration Statement as identified. The following are 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 Amendments
numbered 5 and 7, and pursuant to Rule 485(d) under the Securities Act of 1933,
does not affect the effectiveness of such Post-Effective Amendments.
Small-Cap Series and Mid-Cap Series Post-Effective
(Formerly Lord Abbett Mid-Cap Research Fund) Amendment No. 5and 7
<PAGE>
LORD ABBETT RESEARCH FUND, INC.
FORM N-1A
Cross Reference Sheet
Post-Effective Amendment No. 8
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 29, 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 OBJECTIVE
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
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees (See "Our Management") .00%(2)
12b-1 Fees (See "Purchases") None
Other Expenses (See "Our Management") .00%(2)
Total Operating Expenses .00%(2)
<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)
--------- ---------- ---------- -----------
$58 $58 $58 $58
(1) Sales "load" is referred to as sales "charge" throughout this Prospectus.
(2) Although not obligated to, Lord, Abbett & Co. waived its management fee and
subsidized operating expenses of the Series and continues to do so. This
fee would have been .75% and total operating expenses are estimated to be
1.02% for the fiscal year absent such waiver and subsidy.
(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 $12.79 $12.33 $10.61 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income** .42 .34 .29 .12*
Net realized and unrealized
gain on investments 3.44 .65 1.57 .49
- --------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 3.86 .99 1.86 .61
- --------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from net investment income (.29) (.20) (.14) --
Net realized gain from security transactions (.82) (.33) -- --
NET ASSET VALUE, END OF PERIOD 15.54 $12.79 $12.33 $10.61
TOTAL RETURN 32.82% 8.21% 17.72% 6.10%*
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $7,549 $5,558 $4,086 $2,372
RATIOS TO AVERAGE NET ASSETS:
Expenses, including waiver .00% .00% .00% .00%*
Expenses, excluding waiver 1.02% 1.15% 1.20% .79%*
Net investment income 3.27% 2.65% 2.44% 1.39%*
PORTFOLIO TURNOVER RATE 37.17% 43.85% 74.16% 20.70%
- --------------------------------------------------------------------------------------------------------------
<FN>
** Not annualized.
* Net of management fee waiver and expenses assumed.
See notes to financials.
</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 Fund's 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 issuer's 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 Fund's Board of Directors to be liquid pursuant to Securities
and Exchange Commission Rule 144A ("Rule 144A") will not be subject to this
limit. 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
<PAGE>
orders to Lord Abbett. A business day is a day on which the NYSE is open for
trading.
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 Dealer's
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 Abbett's 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.
</FN>
</TABLE>
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.
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 purchaser's 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 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 director's or employee's spouse
(including the surviving spouse of a deceased director or employee). The terms
"directors" and "employees of Lord Abbett" also include other family
<PAGE>
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.
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 fund's 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
<PAGE>
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.
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 Fund's
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 Fund's 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%. This fee may be higher than
that paid by other mutual funds. For the fiscal year ended November 30, 1995,
Lord Abbett waived $50,255 of its management fee and assumed $18,000 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 .75%
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 1.02% had Lord Abbett not waived its
management fee and paid all other expenses of the Fund.
<PAGE>
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.
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%. Legislation pending 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.
HOUSEHOLDING: A new procedure has been inaugurated whereby a single copy of an
annual or semi-annual report is sent to an address to which more than one
registered shareholder of the Fund with the same last name has indicated mail is
to be delivered, unless additional reports are specifically requested in
writing or by telephone.
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, accompanied by any certificates for shares to be redeemed and other
required documentation. We will make payment of the net asset value of the
shares on the date the redemption order was received in proper form. Payment
will be made within three days. The Fund may suspend the right to redeem shares
for not more than seven days or longer under unusual circumstances as permitted
by Federal law. If you have purchased Fund shares by check and subsequently
submit a redemption request, redemption proceeds will be paid upon clearance of
your
<PAGE>
purchase check, which may take up to 15 days. To avoid delays you may arrange
for the bank upon which a check was drawn to communicate to the Fund that the
check has cleared. Shares also may be redeemed by the Fund at net asset value
through your securities dealer who, as an unaffiliated dealer, may charge you a
fee. If your dealer receives your order prior to the close of the NYSE and
communicates it to Lord Abbett, as our agent, prior to the close of Lord
Abbett's business day, you will receive the net asset value as of the close of
the NYSE on that day. If the dealer does not communicate such an order to Lord
Abbett until the next business day, you will receive the net asset value as of
the close of the NYSE on that next business day.
Shareholders who have redeemed their shares have a one-time right to reinvest,
into another account having the identical registration, in any of the Eligible
Funds at the then applicable net asset value without the payment of a sales
charge. Such reinvestment must be made within 60 days of the redemption and is
limited to no more than the amount of the redemption proceeds.
Under certain circumstances and subject to 30 days' 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, resulting from redemption or exchange
not market action.
10 PERFORMANCE
The fiscal year ended on November 30, 1995 with a net asset value of $15.54,
which was 29.8% higher than the $11.97 price recorded at the close of fiscal
1994 (after adjustment for a capital gains distribution of $.82 per share paid
in December 1994). The Series produced a total return of 32.8% compared to a
36.9% return for the unmanaged S&P 500 Index. Since inception on June 3, 1992,
the Series produced a total return of 79.5% versus 60.5% for the S&P 500 over
the same period.
Moderate economic growth and declining interest rates resulted in a positive
environment for stocks throughout fiscal 1995. The Series maintained its focus
on undervalued issues with positive fundamentals and earnings that are not
primarily dependent on strong economic activity. Currently, significant
valuation disparities are not readily apparent among industries and sectors;
thus our ability to identify undervalued issues will drive the Fund's
performance in the first half of 1996.
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 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>
Comparison of change in value of a $10,000 investment, assuming reinvestment of
all dividends and distributions, in the Fund and the managed Standard & Poor's
500 Index.
<TABLE>
<CAPTION>
The Fund The Fund S&P 500
at Net at Maximum Index
Date Asset Value Offering Price
- ----------------------------------------------------------------
<S> <C> <C> <C>
6/3/92 $10,000 $ 9,425 $10,000
11/30/92 10,610 10,000 10,534
11/30/93 12,490 11,772 11,597
11/30/94 13,516 12,739 11,719
11/30/95 17,952 16,921 16,048
Average Annual Total Return (3)
1 Year 3 Years Life of Fund
25.20% 16.81% 16.26%
<FN>
(1) Performance numbers for the unmanaged Standard & Poor's 500 Index do not
reflect transaction costs or management fees. An investor cannot invest
directly in the Standard & Poor's 500 Index.
(2) Data reflects the deduction of the maximum sales charge of 5.75%.
(3) Total return is the percent change in value, after deduction of the maximum
sales charge of 5.75%, with all dividends and distributions reinvested for
the periods shown ending November 30, 1995 using the SEC-required uniform
method to compute such return.
</FN>
</TABLE>
UNDERWRITER AND 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 29, 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 29, 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 Abett.
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 subject to this
restriction, 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
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 37.17%
versus 43.85% for the prior year.
<PAGE>
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
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.
<PAGE>
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.
Segregated Accounts. To the extent required to comply with Securities and
- ---------------------
Exchange Commission Release 10666, when purchasing a futures contract, or
writing a put option, we will maintain in a segregated account at our custodian
bank liquid high grade debt obligations, such as cash and U.S. Government
Securities to cover our position.
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
Robert S. Dow, age 50, President
The following outside directors are also directors or trustees of the fifteen
other Lord Abbett-sponsored funds referred to above.
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.
No compensation was paid or accrued for the Fund's directors or officers since
the Fund's inception. The third and fourth columns set forth information with
respect to the retirement plan for outside directors maintained by the other
Lord Abbett-sponsored funds(not the Fund). The fifth column sets forth the total
compensation payable by such other funds(not the Fund) to the outside directors.
<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, 1994
Accrued Retirement Proposed Total Compensation
Aggregate by the to be Paid by the Accrued by the
Compensation Fifteen Other Lord Fifteen Fifteen Other Lord
Accrued by Abbett-sponsored Other Lord Abbett- Abbett-sponsored
Name of Director the Fund Funds sponsored Funds1 Funds2
- ---------------- ------------- ------------------ ---------------------- -------------------
<S> <C> <C> <C> <C>
Hansel B. Millican, Jr.(3) None $24,707 $33,600 $41,750
Thomas J. Neff(3) None $16,126 $33,600 $41,200
<FN>
1. Each other Lord Abbett-sponsored fund (not the 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 other Lord Abbett-sponsored funds
(not the Fund) during the fiscal year ended November 30, 1995 with respect
to the retirement benefits in column 4.
2. 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 other Lord Abbett-sponsored funds (not the
Fund) during the year ended December 31, 1995.
3. Messrs. Millican and Neff, outside directors, 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: Kenneth B. Cutler, age 63, Vice
President and Secretary; Stephen I. Allen, age 41; Daniel E. Carper, age 44;
Robert S. Dow, age 50; Thomas S. Henderson, age 64; Robert G. Morris, age 51, E.
Wayne Nordberg, age 57; John J. Gargana, Jr., age 64; 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 20%
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
$50,255, $33,861 and $22,408, respectively.
We are obligated to pay all expenses not expressly assumed by Lord Abbett,
including, without limitation, outside directors' fees and expenses, association
membership dues, legal and auditing fees, taxes, transfer and dividend
disbursing agent fees, shareholder servicing costs, expenses relating to
shareholder meetings, expenses of preparing, printing and mailing stock
certificates and shareholder reports, expenses of registering 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 $18,000, $18,000 and $13,500, 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.
The Bank of New York ("BONY"), 48 Wall Street, New York, New York 10268, 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.
<PAGE>
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.
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 $7,832,
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).................................................$15.54
Maximum offering price per share (net asset
value divided by .9425) ...............................................$16.49
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.
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.
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
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 25.20% and 16.26% and the redeemable values
were $1,252 and $1,693, 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,"
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 Shareholders of Lord Abbett
Research Fund, Inc. - Large-Cap Series 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.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.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).
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 Janaury 1, 1996 - 175
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.
<PAGE>
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>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
EX 99.B11 Consent of Deloitte & Touche LLP
EX 99.B16 Total Return and Yield Computations.
EX 27 Financial Data Schedule Under Rule 483
<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
26th day of January 1996
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) 1/26/96
/s/ Robert S. Dow President and Director
Robert S. Dow (Title) 1/26/95
/s/ Hansel B. Millican Director
Hansel B. Millican (Title) 1/26/96
Vice President and
/s/ John J. Gargana, Jr. Chief Financial Officer
John J. Gargana, Jr. (Title) 1/26/96
/s/ Thomas J. Neff Director
Thomas J. Neff (Title) 1/26/96
CONSENT OF INDEPENDENT AUDITORS
Lord Abbett Research Fund, Inc. - Large-Cap Series:
We consent to the incorporation by reference in Post-Effective Amendment No. 8
to Registration Statement No. 33-47641 of our report dated December 22, 1995
appearing in the annual report to shareholders and to the reference to us under
the captions "Financial Highlights" in the Prospectus and "Investment Advisory
and Other Services" and "Financial Statements" in the Statements of Additional
Information both of which are part of such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
January 26, 1996
EXHIBIT 16
Lord Abbett Research Fund, Inc. - Large-Cap Series
Post Effective Amendment No. 8
Results of a $1,000 investment reflecting net asset value and the reinvestment
of all distributions for:
Year Ending November 30, 1995
Life of Fund* One Year
------------ --------
P(1+T)n = ERV, P(1+T)n = ERV
WHERE:
N = 3.5 N = 1
P = $ 1,000 P = $ 1,000
ERV = $1,693 ERV = $1,252
T = Average annual total return
1000(1+T)3.5 = $1,693 1000(1+T)n = $1,252
(1 + T)3.5 = 1.693 (1 + T) = 1.252
T = (1.693)1/3.5 T = 1.252 -1
T = 16.26% T = 25.2%
* The Series commenced operations 6/3/92
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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