<PAGE>
REPORT TO SHAREHOLDERS
For the Fiscal Year Ended November 30, 1995
[Photo- Ronald P. Lynch]
Ronald P. Lynch
Chairman
[Photo - Robert S. Dow
Robert S. Dow
President
December 20, 1995
Lord Abbett Research Fund, Inc. -- Large Cap Series (formerly known as Series 1)
completed fiscal 1995 on November 30 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. Since its 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. (See Statement of Operations for management fee waived and expenses
currently assumed by Lord, Abbett & Co.)
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 the Research Department's ability to identify undervalued issues will drive
the Fund's performance in the first half of 1996.
The investment team responsible for the Series' performance is comprised of
analysts from Lord Abbett's Equity Research Department. The Series seeks to be
fully invested at all times in a portfolio of carefully researched securities
which offer exceptional value.
Specific stock selection is the result of recommendations from individual
analysts. In each case, quantitative valuation models are integrated with
fundamental analysis to identify the best values among a universe of
approximately 1,000 large company common stocks.
We are pleased to announce that Lord Abbett Research Fund's Board of Directors
elected Robert S. Dow as President and as a Director of the Fund. Mr. Dow, who
has been a partner of Lord, Abbett & Co. for nine years, also serves as the
Firm's Chief Investment Officer.
Thank you for the confidence you have placed in Lord Abbett Research Fund, Inc.
We look forward to helping you achieve your financial goals in 1996 and beyond.
---------------------------
AVERAGE ANNUAL TOTAL RETURN
(Through 11/30/95)/(1)/
---------------------------
1 Year Life of Fund/(2)/
---------------------------
32.82% 18.23%
---------------------------
This past performance is no indication of future results. The investment return
and principal value of an investment in the Series will fluctuate so that
shares, on any given day or when redeemed, may be worth more or less than their
original cost.
/(1)/ Total return is the percent change in value with all dividends and
distributions reinvested. At 11/30/95, the Series' shares were sold
without a sales charge. The Series' management fee has been waived and all
expenses have been assumed by Lord, Abbett & Co.
/(2)/ Date of inception: 6/3/92.
<PAGE>
Performance
Comparison of change in value of a $10,000 investment in Lord Abbett Research
Fund (1) and the Unmanaged S&P 500(2)
DATE THE FUND S&P 500
AT NAV INDEX
6/30/92 $10,000 $10,000
11/30/92 10,610 10,534
11/30/93 12,490 11,597
11/30/94 13,516 11,719
11/30/95 17,952 16,048
(1) At net asset value.
(2) The S&P 500 is an unmanaged index consisting of the common stocks of 500
companies widely followed by the investment community. An investor cannot
invest directly in an index.
<PAGE>
LORD ABBETT RESEARCH FUND, INC. - Large-Cap Series
November 30, 1995
STATEMENT OF NET ASSETS
- -----------------------
<TABLE>
<CAPTION>
Market
Value
Security Number of Shares (Note 1a)
- --------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENTS IN COMMON STOCKS 95.94%
- --------------------------------------------------------------------------------
AEROSPACE - 4.33%
Boeing Co....................................................................... 2,800 $ 204,050
Rockwell International Corp..................................................... 2,500 122,500
Total........................................................................... 326,550
----------
AIRLINES - 1.96%
British Airways plc ADR......................................................... 2,100 147,787
----------
APPAREL - .55%
VF Corp......................................................................... 800 41,600
----------
AUTO PARTS - 3.77%
Genuine Parts Company........................................................... 5,300 213,987
Snap-On, Inc.................................................................... 1,600 70,800
Total........................................................................... 284,787
----------
AUTOMOBILES - 1.28%
General Motors Corp............................................................. 2,000 97,000
----------
BANKS: MONEY CENTER - 1.75%
Chemical Banking Corp........................................................... 2,200 132,000
----------
BANKS: REGIONAL - 3.19%
BankAmerica Corp................................................................ 2,200 139,975
Comerica Inc.................................................................... 2,700 100,912
Total........................................................................... 240,887
----------
CHEMICALS - 4.84%
Dow Chemical Co................................................................. 1,200 85,050
Hanna, M.A. Co.................................................................. 4,400 118,250
Lyondell Petrochemical Co....................................................... 2,100 51,450
Union Carbide Corp.............................................................. 2,800 110,950
Total........................................................................... 365,700
----------
CONTAINERS - 1.39%
Sonoco Products Co.............................................................. 4,200 105,000
----------
DATA PROCESSING EQUIPMENT - 1.43%
Hewlett-Packard Co.............................................................. 1,300 107,738
----------
DATA PROCESSING SERVICES - 2.81%
General Motors Corp. Class E.................................................... 4,200 212,100
----------
DRUGS/HEALTH CARE PRODUCTS - 8.88%
Baxter International Inc........................................................ 3,100 130,200
</TABLE>
<PAGE>
LORD ABBETT RESEARCH FUND, INC. - Large-Cap Series
November 30, 1995
STATEMENT OF NET ASSETS
- -----------------------
<TABLE>
<CAPTION>
Market
Value
Security Number of Shares (Note 1a)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Lilly, Eli & Co..................................................................... 2,000 $ 199,000
Merck & Co., Inc.................................................................... 2,500 154,687
SmithKline Beecham plc ADR.......................................................... 3,500 186,375
Total............................................................................... 670,262
----------
ELECTRIC POWER - 6.27%
Baltimore Gas & Electric Co......................................................... 4,200 111,825
CINergy Corp........................................................................ 5,300 156,350
Detroit Edison Co................................................................... 2,300 75,037
Public Service Enterprises Group Inc................................................ 4,400 130,350
Total............................................................................... 473,562
----------
ELECTRICAL EQUIPMENT - 2.48%
Emerson Electric Co................................................................. 2,400 187,200
----------
ELECTRONICS: COMMUNICATIONS - .69%
Harris Corp......................................................................... 900 51,862
----------
ELECTRONICS: COMPONENTS - 2.55%
AMP Inc............................................................................. 4,800 192,600
----------
ELECTRONICS: EQUIPMENT - 1.82%
Perkin-Elmer Corp................................................................... 1,600 57,600
Raytheon Company.................................................................... 1,800 80,100
Total............................................................................... 137,700
----------
FINANCIAL: MISCELLANEOUS - 1.83%
Transamerica Corp................................................................... 1,800 137,925
----------
FOOD - 7.42%
Hershey Foods Corp.................................................................. 3,300 203,775
RJR Nabisco......................................................................... 6,700 195,138
Supervalu Inc....................................................................... 5,000 161,250
Total............................................................................... 560,163
----------
INSURANCE - 3.91%
Aetna Life & Casualty Co............................................................ 1,700 124,737
CIGNA Corp.......................................................................... 1,550 170,500
Total............................................................................... 295,237
----------
MACHINERY: DIVERSIFIED - 2.35%
Deere & Co.......................................................................... 5,400 177,525
----------
MISCELLANEOUS - 1.54%
Moore Corp. Ltd..................................................................... 6,500 116,188
----------
</TABLE>
<PAGE>
LORD ABBETT RESEARCH FUND, INC. - Large-Cap Series
November 30, 1995
STATEMENT OF NET ASSETS
- -----------------------
<TABLE>
<CAPTION>
Market
Value
Security Number of Shares (Note 1a)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NATURAL GAS TRANSMISSION - 1.02%
Coastal Corp........................................................................ 2,300 $ 76,475
----------
OIL: INTERNATIONAL - 4.12%
Chevron Corp........................................................................ 1,500 74,062
Mobil Corp.......................................................................... 1,500 156,563
Total S.A. Sponsored ADR............................................................ 2,600 80,275
Total............................................................................... 310,900
----------
PAPER AND FOREST PRODUCTS - .53%
Scott Paper Co...................................................................... 700 39,988
----------
PRINTING AND PUBLISHING - 1.16%
Banta Corp.......................................................................... 2,000 87,500
----------
RETAIL - 3.37%
Dayton Hudson Corp.................................................................. 1,500 108,938
Sears, Roebuck & Co................................................................. 3,700 145,688
Total............................................................................... 254,626
----------
SAVINGS AND LOAN - 4.86%
Ahmanson, H.F. & Co................................................................. 5,800 155,150
Great Western Financial Corp........................................................ 8,300 211,650
Total............................................................................... 366,800
----------
TELECOMMUNICATIONS - 4.18%
AT&T Corp........................................................................... 1,900 125,400
MCI Communications Corp............................................................. 7,100 189,925
Total............................................................................... 315,325
----------
TEXTILES: APPAREL - 1.10%
Fruit of The Loom................................................................... 4,300 83,313
----------
TIRE AND RUBBER GOODS - 2.99%
Cooper Tire & Rubber Co............................................................. 6,600 162,525
Standard Products Co................................................................ 3,925 63,291
Total............................................................................... 225,816
----------
TOBACCO - 5.56%
American Brands Inc................................................................. 4,800 200,400
Philip Morris Inc................................................................... 2,500 219,375
Total............................................................................... 419,775
----------
Total Investments in Common Stocks (Cost $5,760,743)................................ 7,241,891
</TABLE>
<PAGE>
LORD ABBETT RESEARCH FUND, INC. - Large-Cap Series
November 30, 1995
STATEMENT OF NET ASSETS
- -----------------------
<TABLE>
<CAPTION>
Market
Value
Security Principal Amount (Note 1a)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OTHER ASSETS, LESS LIABILITIES 4.06%
- -------------------------------------------------------------------------------------------------------------------------
Short-Term Investment, at Cost
American Express Credit Corp. 5.76% due 12/5/1995................................... $100M $ 100,000
- -------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities............................................ 206,845
Total Other Assets, Less Liabilities................................................ 306,845
- -------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00% (equivalent to $15.54 a share on 485,880 shares of
$.001 par value capital stock outstanding; authorized, 50,000,000 shares)........... $7,548,736
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE YEAR ENDED NOVEMBER 30, 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME Dividends $198,105
--------------------------------------------------------------------------------------------------------------
Interest 20,905
--------------------------------------------------------------------------------------------------------------
Total income $ 219,010
- ---------------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fee (Note 6) 50,255
--------------------------------------------------------------------------------------------------------------
Tax fee 5,000
--------------------------------------------------------------------------------------------------------------
Audit fees 3,000
--------------------------------------------------------------------------------------------------------------
Shareholder servicing fees 3,000
--------------------------------------------------------------------------------------------------------------
Registration fees 1,500
--------------------------------------------------------------------------------------------------------------
Organization (Note 1e) 1,202
--------------------------------------------------------------------------------------------------------------
Other 4,298
--------------------------------------------------------------------------------------------------------------
Management fee waived and expenses assumed by Lord, Abbett & Co. (68,255)
--------------------------------------------------------------------------------------------------------------
Net expenses --
--------------------------------------------------------------------------------------------------------------
Net investment income 219,010
--------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 5)
- ---------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN FROM SECURITY TRANSACTIONS (excluding short-term securities)
--------------------------------------------------------------------------------------------------------------
Proceeds from sales 2,322,497
--------------------------------------------------------------------------------------------------------------
Cost of securities sold 1,893,649
--------------------------------------------------------------------------------------------------------------
Net realized gain 428,848
--------------------------------------------------------------------------------------------------------------
NET UNREALIZED APPRECIATION OF INVESTMENTS
- ---------------------------------------------------------------------------------------------------------------------------------
Beginning of year 222,531
--------------------------------------------------------------------------------------------------------------
End of year 1,481,148
--------------------------------------------------------------------------------------------------------------
Net increase in unrealized appreciation 1,258,617
--------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 1,687,465
--------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,906,475
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED
INCREASE (DECREASE) IN NET ASSETS 1995 NOVEMBER 30, 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS Net investment income $ 219,010 $ 119,910
--------------------------------------------------------------------------------------------------------------
Net realized gain from security transactions 428,848 356,654
--------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 1,258,617 (164,590)
--------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,906,475 311,974
--------------------------------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN PRICE OF SHARES SOLD (Note 1d) 17,909 35,300
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 3)
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (126,046) (66,270)
--------------------------------------------------------------------------------------------------------------
Net realized gain from security transactions (356,407) (109,342)
--------------------------------------------------------------------------------------------------------------
Total distributions (482,453) (175,612)
--------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (exclusive of amounts allocated to net investment income)
- ---------------------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of 87,676 and 118,904 shares, respectively 1,136,497 1,502,610
--------------------------------------------------------------------------------------------------------------
Net asset value of 40,508 and 14,324 shares issued to shareholders in
reinvestment of net investment income and net realized gain from
security transactions 464,652 171,621
--------------------------------------------------------------------------------------------------------------
Total 1,601,149 1,674,231
--------------------------------------------------------------------------------------------------------------
Cost of 76,790 and 30,076 shares reacquired, respectively (1,052,464) (373,593)
--------------------------------------------------------------------------------------------------------------
Increase in net assets derived from capital share transactions
(net increase of 51,394 and 103,152 shares, respectively) 548,685 1,300,638
--------------------------------------------------------------------------------------------------------------
Total increase in net assets 1,990,616 1,472,300
--------------------------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
Beginning of year 5,558,120 4,085,820
--------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment income
of $230,783 and $169,712, respectively) $7,548,736 $5,558,120
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------
JUNE 3, 1992
YEAR ENDED NOVEMBER 30, (COMMENCEMENT OF
------------------------------------- OPERATIONS)+ TO
PER SHARE OPERATING PERFORMANCE: 1995 1994 1993 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%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ See Note 2.
++ Net of management fee waiver and expenses assumed.
*Not annualized.
See Notes to Financial Statements.
7
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated under Maryland law on April 26, 1992 and is
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The following is a summary of significant
accounting policies consistently followed by the Company. The policies are in
conformity with generally accepted accounting principles.
(A) Market value is determined as follows: Securities listed or admitted to
trading privileges on any national securities exchange are valued at the last
sales price on the principal securities exchange on which such securities are
traded, or, if there is no sale, at the mean between the last bid and asked
price on such exchange. Securities traded in the over-the-counter market are
valued at the mean between the last bid and asked prices in such market, except
that securities admitted to trading on the NASDAQ National Market System are
valued at the last sales price if it is determined that such price more
accurately reflects the value of such securities. Securities for which market
quotations are not available are valued at fair value under procedures approved
by the Board of Directors.
(B) It is the policy of the Company to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income in taxable distributions. Therefore, no federal income tax
provision is required.
(C) Security transactions are accounted for on the date that the securities are
purchased or sold (trade date). Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Interest income is accrued on
a daily basis.
(D) A portion of proceeds from the sales and costs of repurchases of capital
shares, equivalent to the amount of distributable net investment income on the
date of the transaction, is credited or charged to undistributed income.
Undistributed net investment income per share thus is unaffected by sales or
repurchases of shares.
(E) The organizational expenses of the Company are amortized evenly over a
period of five years.
2. INITIAL CAPITALIZATION AND OFFERING OF SHARES
During the period from the date of incorporation to June 3, 1992, the Company
had no operations other than those related to organizational matters, including
the initial capital contribution of $100,000 and the issuance of 10,000 shares
to the partners of Lord, Abbett & Co. which occurred on June 3, 1992. Regular
investment operations commenced on June 3, 1992.
3. DISTRIBUTIONS
Taxable net realized gain from security transactions, if any, is distributed to
shareholders in the succeeding year. At November 30, 1995, the accumulated net
realized gain for financial reporting purposes, which is substantially the same
as for federal income tax purposes, aggregated $429,061.
Income and capital gains distributions are determined in accordance with income
tax regulations which may differ from methods used to determine the
corresponding income and capital gain amounts in accordance with generally
accepted accounting principles. These differences are primarily caused by
differences in the timing of recognition of certain components of income,
expenses or capital gains and losses. Where such differences are permanent in
nature, they are reclassified based upon their ultimate characterization for
federal income tax purposes. Any such reclassification will have no effect on
net assets, results of operations or net asset value of the Series.
4. CAPITAL PAID IN
At November 30, 1995, capital paid in aggregated $5,407,744.
5. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (other than short-term investments)
aggregated $2,614,657 and $2,322,497, respectively. Security gains and losses
are computed on the identified cost basis.
As of November 30, 1995, unrealized appreciation for federal income tax purposes
aggregated $1,481,148 of which $1,562,470 related to appreciated securities and
$81,322 related to depreciated securities.
The cost of investments for federal income tax purposes is substantially the
same as that used for financial reporting purposes.
6. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Lord, Abbett & Co. provides the Company with investment management services and
executive and other personnel, pays the remuneration of officers, provides
office space and pays for ordinary and necessary office and clerical expenses
relating to research, statistical work and the supervision of the Company's
investment portfolio. The management fee paid to Lord, Abbett & Co. is based on
average daily net assets for each month at the annual rate of .75 of 1%. For the
year ended November 30, 1995, Lord, Abbett & Co. waived a management fee of
$50,255 and assumed expenses of $18,000.
As of November 30, 1995, all outstanding capital shares of Lord Abbett Research
Fund, Inc. - Large-Cap Series are held by directors and officers of the Company
and by partners and employees of Lord, Abbett & Co.
Copyright (C) 1996 by Lord Abbett Research Fund, Inc.
767 Fifth Avenue, New York, NY 10153-0203
This publication, when not used for the general information of shareholders of
Lord Abbett Research Fund, Inc., is to be distributed only if preceded or
accompanied by a current prospectus which includes information concerning the
Fund's investment objective and policies, charges and other matters.
All rights reserved. Printed in the U.S.A.
8
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders,
Lord Abbett Research Fund, Inc. -- Large-Cap Series:
We have audited the accompanying statement of net assets of Lord Abbett Research
Fund, Inc. -- Large-Cap Series as of November 30, 1995, and the related
statements of operations for the year then ended, and of changes in net assets
and the financial highlights for each of the periods presented. These financial
statements and the financial highlights are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at November
30, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Lord Abbett Research
Fund, Inc. -- Large-Cap Series at November 30, 1995, the results of its
operations for the year then ended, and the changes in its net assets and the
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
December 22, 1995
9
<PAGE>
<PAGE>
REPORT TO SHAREHOLDERS
For the Fiscal Year Ended November 30, 1995
[Photo- Ronald P. Lynch]
Ronald P. Lynch
Chairman
[Photo- Robert S. Dow]
Robert S. Dow
President
December 20, 1995
Lord Abbett Research Fund, Inc. completed its fiscal year on November 30. A new
portfolio, the Mid-Cap Series (formerly known as Lord Abbett Mid-Cap Research
Fund) was added to the Fund on July 27, 1995. The Mid-Cap Series completed its
abbreviated fiscal year with a net asset value of $10.18 on November 30, which
was 1.8% higher than the $10.00 net asset value at its start-up on August 1.
The four-month period since your Series commenced operations was marked by a
rapid run-up in stock prices resulting from moderate economic growth and falling
interest rates. Technology stocks remained the leading sector of the market
throughout most of this period, a sector that is underweighted in the Series.
Going forward, the Series will continue to emphasize undervalued middle
capitalization issues (stocks of companies with market capitalizations ranging
from $500 million to $3 billion) that are likely to improve their earnings,
regardless of the level of broader business activity.
The Series' portfolio managers, who are part of a rotating team chosen from Lord
Abbett's Equity Research Department, are responsible for drawing upon their own
areas of expertise, as well as the rest of the equity research team, to select
stocks for inclusion in the portfolio. The Series seeks to remain fully invested
in common stocks at all times.
The process utilized in mid-cap stock selection is similar to that of Lord
Abbett's large capitalization portfolios; quantitative valuation models are used
to screen a potential universe of mid-cap issues of approximately 1,400 names
for undervalued candidates. From this universe, fundamental analysis is used to
select individual stocks for inclusion in the portfolio.
We are pleased to announce that Lord Abbett Research Fund's Board of Directors
has elected Robert S. Dow as President and as a Director of the Fund. Mr. Dow,
who has been a partner of Lord, Abbett & Co. for nine years, also serves as the
Firm's Chief Investment Officer.
Thank you for investing in the Mid-Cap Series. We look forward to helping you
achieve your financial goals in the years to come.
<PAGE>
LORD ABBETT RESEARCH FUND, INC. -- Mid-Cap Series
November 30, 1995
STATEMENT OF NET ASSETS
- -----------------------
<TABLE>
<CAPTION>
Market
Value
Security Number of Shares (Note 1a)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENTS IN COMMON STOCKS 95.11%
- -------------------------------------------------------------------------------------------------------------------------
APPAREL - 4.95%
Fruit of The Loom................................................................. 1,400 $ 27,125
VF Corp........................................................................... 400 20,800
Total............................................................................. 47,925
--------
AUTO PARTS - 2.92%
Genuine Parts Company............................................................. 700 28,263
--------
BANKS: REGIONAL - 9.69%
Bank of Boston Corp............................................................... 400 18,550
Comerica Inc...................................................................... 500 18,687
Crestar Financial Corp............................................................ 300 18,300
Firstar Corp...................................................................... 500 20,500
Hibernia Corp..................................................................... 1,700 17,850
Total............................................................................. 93,887
--------
CONTAINERS - 2.58%
Sonoco Products Co................................................................ 1,000 25,000
--------
DRUGS/HEALTH CARE PRODUCTS - 5.05%
Laboratory Corp. of America+...................................................... 2,500 21,563
Mallinckrodt Group Inc............................................................ 800 27,300
Total............................................................................. 48,863
--------
ELECTRIC POWER - 9.36%
CINergy Corp...................................................................... 1,300 38,350
Detroit Edison Co................................................................. 800 26,100
Ipalco Enterprises Inc............................................................ 700 26,162
Total............................................................................. 90,612
--------
FOOD - 10.10%
Dean Foods Co..................................................................... 1,200 33,600
Supervalu Inc..................................................................... 800 25,800
Universal Foods Corp.............................................................. 1,100 38,362
Total............................................................................. 97,762
--------
HOTEL/MOTEL - 7.39%
Patriot American Hospitality Inc. (real estate investment trust)+................. 1,500 35,625
Starwood Lodging Trust (real estate investment trust)............................. 1,300 35,913
Total............................................................................. 71,538
--------
INSURANCE - 6.31%
The Progressive Corporation....................................................... 600 26,700
Transatlantic Holdings Inc........................................................ 500 34,375
Total............................................................................. 61,075
--------
</TABLE>
<PAGE>
LORD ABBETT RESEARCH FUND, INC. -- Mid-Cap Series
November 30, 1995
STATEMENT OF NET ASSETS
- -----------------------
<TABLE>
<CAPTION>
Market
Value
Security Number of Shares (Note 1a)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MACHINERY: DIVERSIFIED - 3.90%
Goulds Pumps, Inc................................................................. 1,600 $ 37,800
--------
MISCELLANEOUS - 7.28%
Jostens Inc....................................................................... 800 19,800
Moore Corp. Ltd................................................................... 1,200 21,450
National Service Industries, Inc.................................................. 900 29,250
Total............................................................................. 70,500
--------
NATURAL GAS DIVERSIFIED - 2.66%
Sonat Inc......................................................................... 800 25,800
--------
NATURAL GAS TRANSMISSION - 2.69%
Eastern Enterprises............................................................... 800 26,000
--------
OIL: DOMESTIC - 2.61%
Ultramar Corp..................................................................... 1,000 25,250
--------
PRINTING AND PUBLISHING - 3.16%
Banta Corp........................................................................ 700 30,625
--------
RAILROADS - .93%
Canadian National Railway (partially paid)+...................................... 600 9,000
--------
RESTAURANTS - 3.65%
Brinker International Inc.+....................................................... 2,300 35,363
--------
RETAIL - 4.82%
Dillard Department Stores Inc..................................................... 800 23,100
Nordstrom Inc..................................................................... 600 23,550
Total............................................................................. 46,650
--------
TIRE AND RUBBER GOODS - 2.54%
Cooper Tire & Rubber Company...................................................... 1,000 24,625
--------
TOYS - 2.52%
Hasbro Inc........................................................................ 800 24,400
--------
Total Investments in Common Stocks (Cost $914,424) 920,938
- -------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES
- -------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 4.89% 47,330
- -------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00% (equivalent to $10.18 a share on 95,089 shares of $.001 par
value capital stock outstanding; authorized, 50,000,000 shares) $968,268
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
+Non-income producing.
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Period August 1, 1995 (Commencement of Operations) to November 30, 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
- -------------------------------------------------------------------------------------------------------------------------------
INCOME Dividends $ 6,807
------------------------------------------------------------------------------------------------------------
Interest 2,269
------------------------------------------------------------------------------------------------------------
Total income $ 9,076
- -------------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fee (Note 6) 2,125
------------------------------------------------------------------------------------------------------------
Tax fee 4,000
------------------------------------------------------------------------------------------------------------
Audit fees 1,000
------------------------------------------------------------------------------------------------------------
Shareholder servicing fees 1,000
------------------------------------------------------------------------------------------------------------
Registration fees 1,000
------------------------------------------------------------------------------------------------------------
Organization (Note 1e) 44
------------------------------------------------------------------------------------------------------------
Other 500
------------------------------------------------------------------------------------------------------------
Management fee waived and expenses assumed by Lord, Abbett & Co. (9,669)
------------------------------------------------------------------------------------------------------------
Net expenses --
------------------------------------------------------------------------------------------------------------
Net investment income 9,076
------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 5)
- -------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN FROM SECURITY TRANSACTIONS (excluding short-term securities)
------------------------------------------------------------------------------------------------------------
Proceeds from sales 10,114
------------------------------------------------------------------------------------------------------------
Cost of securities sold 8,400
------------------------------------------------------------------------------------------------------------
Net realized gain 1,714
------------------------------------------------------------------------------------------------------------
NET UNREALIZED APPRECIATION OF INVESTMENTS
- -------------------------------------------------------------------------------------------------------------------------------
Beginning of period --
------------------------------------------------------------------------------------------------------------
End of period 6,514
------------------------------------------------------------------------------------------------------------
Net unrealized appreciation 6,514
------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 8,228
------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $17,304
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD 8/1/95
(COMMENCEMENT OF
INCREASE IN NET ASSETS OPERATIONS) TO 11/30/95
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
OPERATIONS Net investment income $ 9,076
------------------------------------------------------------------------------------------------------------
Net realized gain from security transactions 1,714
------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 6,514
------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 17,304
------------------------------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME INCLUDED IN PRICE OF SHARES SOLD (Note 1d) 784
- -------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (exclusive of amounts allocated to net investment income)
- -------------------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of 85,090 shares 850,189
------------------------------------------------------------------------------------------------------------
Cost of 1 share reacquired (9)
------------------------------------------------------------------------------------------------------------
Increase in net assets derived from capital share transactions
(net increase of 85,089 shares) 850,180
------------------------------------------------------------------------------------------------------------
Total increase in net assets 868,268
------------------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------------
Beginning of period 100,000
------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment income
of $9,860) $968,268
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD 8/1/95
(COMMENCEMENT OF
PER SHARE OPERATING PERFORMANCE: OPERATIONS)+ TO 11/30/95
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
- -------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------------------------------------------------------------------------
Net investment income++ .10*
----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments .08
----------------------------------------------------------------------------------------------------------
Total from investment operations .18
----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $10.18
- -------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 1.80%*
- -------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $968
----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
----------------------------------------------------------------------------------------------------------
Expenses, including waiver .00%*
----------------------------------------------------------------------------------------------------------
Expenses, excluding waiver 1.20%*
----------------------------------------------------------------------------------------------------------
Net investment income 1.04%*
- -------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 1.55%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
+ See Note 2.
++ Net of management fee waiver and expenses assumed.
* Not annualized.
See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated under Maryland law on April 26, 1992 and is
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. Effective July 27, 1995, the Mid-Cap Series
(formerly known as Lord Abbett Mid-Cap Research Fund) was added to the Research
Fund and the Mid-Cap Series received an initial capital contribution of $100,000
and issued 10,000 shares to the partners of Lord, Abbett & Co. The following is
a summary of significant accounting policies consistently followed by the
Company. The policies are in conformity with generally accepted accounting
principles.
(A) Market value is determined as follows: Securities listed or admitted to
trading privileges on any national securities exchange are valued at the last
sales price on the principal securities exchange on which such securities are
traded, or, if there is no sale, at the mean between the last bid and asked
price on such exchange. Securities traded in the over-the-counter market are
valued at the mean between the last bid and asked prices in such market, except
that securities admitted to trading on the NASDAQ National Market System are
valued at the last sales price if it is determined that such price more
accurately reflects the value of such securities. Securities for which market
quotations are not available are valued at fair value under procedures approved
by the Board of Directors.
(B) It is the policy of the Company to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income in taxable distributions. Therefore, no federal income tax
provision is required.
(C) Security transactions are accounted for on the date that the securities are
purchased or sold (trade date). Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Interest income is accrued on
a daily basis.
(D) A portion of proceeds from sales and costs of repurchases of capital shares,
equivalent to the amount of distributable net investment income on the date of
the transaction, is credited or charged to undistributed income. Undistributed
net investment income per share thus is unaffected by sales or repurchases of
shares.
(E) The organizational expenses of the Company are amortized evenly over a
period of five years.
2. INITIAL CAPITALIZATION AND OFFERING OF SHARES
During the period from July 27, 1995 to August 1, 1995, the Mid-Cap Series had
no operations other than those related to organizational matters, including the
initial capital contribution of $100,000 and the issuance of 10,000 shares to
the partners of Lord, Abbett & Co. which occurred on July 27, 1995. Regular
investment operations commenced on August 1, 1995.
3. DISTRIBUTIONS
Taxable net realized gain from security transactions, if any, is distributed to
shareholders in the succeeding year. At November 30, 1995, the accumulated net
realized gain for financial reporting purposes, which is substantially the same
as for federal income tax purposes, aggregated $1,714.
Income and capital gains distributions are determined in accordance with income
tax regulations which may differ from methods used to determine the
corresponding income and capital gain amounts in accordance with generally
accepted accounting principles. These differences are primarily caused by
differences in the timing of recognition of certain components of income,
expenses or capital gains and losses. Where such differences are permanent in
nature, they are reclassified based upon their ultimate characterization for
federal tax purposes. Any such reclassifications will have no effect on net
assets, results of operations, or net asset value of the Series.
4. CAPITAL PAID IN
At November 30, 1995, capital paid in aggregated $950,180.
5. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (other than short-term investments)
aggregated $922,824 and $10,114, respectively. Security gains and losses are
computed on the identified cost basis.
As of November 30, 1995, unrealized appreciation for federal income tax purposes
aggregated $6,514 of which $43,217 related to appreciated securities and $36,703
related to depreciated securities.
The cost of investments for federal income tax purposes is substantially the
same as that used for financial reporting purposes.
6. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Lord, Abbett & Co. provides the Company with investment management services and
executive and other personnel, pays the remuneration of officers, provides
office space and pays for ordinary and necessary office and clerical expenses
relating to research, statistical work and the supervision of the Company's
investment portfolios. The management fee paid to Lord, Abbett & Co. is based on
average daily net assets for each month at the annual rate of .75 of 1%. During
the period August 1, 1995 to November 30, 1995, Lord, Abbett & Co. waived a
management fee of $2,125 and assumed expenses of $7,544.
All outstanding capital shares of the Mid-Cap Series are held by directors and
officers of the Company and by partners and employees of Lord, Abbett & Co.
Copyright (C) 1996 by Lord Abbett Research Fund, Inc.
767 Fifth Avenue, New York, NY 10153-0203
This publication, when not used for the general information of shareholders of
Lord Abbett Research Fund, Inc., is to be distributed only if preceded or
accompanied by a current prospectus which includes information concerning the
Series' investment objective and policies, charges and other matters.
All rights reserved. Printed in the U.S.A.
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders,
Lord Abbett Research Fund, Inc. -- Mid-Cap Series:
We have audited the accompanying statement of net assets of Lord Abbett Research
Fund, Inc. -- Mid-Cap Series as of November 30, 1995, the related statements of
operations and of changes in net assets and the financial highlights for the
period August 1, 1995 (Commencement of Operations) to November 30, 1995. These
financial statements and the financial highlights are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at November 30, 1995 by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Lord Abbett Research
Fund, Inc. -- Mid-Cap Series at November 30, 1995, the results of its
operations, the changes in its net assets and the financial highlights for the
period August 1, 1995 to November 30, 1995, in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
New York, New York
December 22, 1995
