Lord Abbett
Research
Fund
o Large-Cap Series
o Small-Cap Series
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED MAY 31, 1997
[PHOTO - Blue Prints and level]
Two portfolios designed
to help you build for
your future
[LOGO](R)
<PAGE>
Lord Abbett Research Fund Large-Cap Series o Small-Cap Series
[PHOTO - Bricks and spatula]
A Tradition of
Value
Investing
We recognize each investor's need for a well-diversified portfolio. Our value
investing process benefits investors in both large and small company stocks. Our
goal to provide investors competitive returns with relatively moderate
fluctuations in price applies to both Series.
Morningstar Says:
"Lord Abbett
Research [Fund]
Large Cap Series
doesn't need a big
handicap to score
well. This offering
has generated
some of the best
returns of any
large-value
fund."(1)
- --------------------------------------------------------------------------------
Value Investing at Work in a Portfolio of Large Company Stocks and a Portfolio
of Small Company Stocks
Both Series provided competitive returns versus their respective benchmarks and
outpaced the average fund in their peer group:
[THE FOLLOWING TABLE WAS REPRSENTED AS A BAR CHART IN THE PRINTED MATERIAL]
3 YEARS 5 YEARS
------- -------
The Large-Cap Series 23.6% 20.0%
Morningstar Average of Large Value Funds 18.0% 14.9%
Unmanaged S&P 500 Index 25.9% 18.3%
[THE FOLLOWING TABLE WAS REPRSENTED AS A BAR CHART IN THE PRINTED MATERIAL]
1 YEAR LIFE OF SERIES(2)
------ -----------------
The Small-Cap Series 28.0% 33.8%
Morningstar Average of Small Company Funds 4.5% 16.8%
Morningstar Average of Small Value Funds 15.5% 21.2%
Unmanaged Russell 2000 Index 7.0% 15.8%
Performance data shown is for Class A shares at net asset value and assumes the
reinvestment of all distributions.
- --------------------------------------------------------------------------------
Average Annual Total Returns
Average annual compound returns for periods ended 6/30/97 at the Class A share
maximum sales charge of 5.75%, with all distributions reinvested:
[THE FOLLOWING TABLE WAS REPRSENTED AS A BAR CHART IN THE PRINTED MATERIAL]
1 Year 5 Years Life of Series
------ ------- --------------
Large-Cap Series(3) +23.80% +19.49% +19.18%
Small-Cap Series(4) +29.80% -- +30.82%
The results quoted herein represent past performance, which is no indication of
future results. The investment return and principal value of an investment in
either Series will fluctuate so that shares, on any given day or when redeemed,
may be worth more or less than their original cost.
(1) Source: Morningstar Mutual Funds, April 11, 1997. (2) Period
12/13/95-5/31/97 for the Small-Cap Series; 12/31/95-5/31/97 for Morningstar
averages and the unmanaged Russell 2000 Index. (3) The Large-Cap Series
commenced operations 6/3/92. (4) The Small-Cap Series commenced operations
12/13/95. During the periods shown, Lord Abbett waived or assumed a portion of
fees and expenses for each Series. Please see the Series' prospectus for a
history of such waivers and assumptions. There are no plans to continue such
waivers and assumptions in the future.
<PAGE>
[PHOTO - Robert S. Dow]
/s/ROBERT S. DOW
- --------------------
ROBERT S. DOW
CHAIRMAN
JUNE 13, 1997
"...each Series performed
well in a climate of modest
economic growth, low
inflation and relatively
high interest rates... We
continue to employ in-depth
research to find the greatest
valuation opportunities."
Report to Shareholders
For the Six Months Ended May 31, 1997
Lord Abbett Research Fund completed the first half of its fiscal year on May 31,
1997. Below is an overview of class-specific data as of the end of the period.
<TABLE>
<CAPTION>
Large-Cap Series Small-Cap Series
--------------------------------------- ------------------------------------------
6 Months Ended 2 Months Ended 6 Months Ended 2 Months Ended
5/31/97 5/31/97+ 5/31/97 5/31/97+
----------------------- ---------------- ---------------------- -----------------
Class A Class B Class C Class A Class B Class C
- --------------------------------------------------- ---------------- ---------------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value $ 18.39 $ 18.35 $ 18.36 $ 14.36 $ 14.31 $ 14.31
Dividends $ 0.092 $ 0.021 $ -- $ -- $ -- $ --
Capital gains $ 0.95 $ 0.95 $ -- $ -- $ -- $ --
Total return*++ + 9.6% + 9.1% + 8.6% +19.6% +19.3% +11.7%
</TABLE>
Over the period, each Series performed well in a climate of modest economic
growth, low inflation and relatively high interest rates. In anticipation of a
slowing economic environment, we maintained somewhat defensive holdings in both
Series. We continue to employ in-depth research to find the greatest valuation
opportunities. Individual company selection, rather than top-down sector
allocation, determined our investment choices.
About the Large-Cap Series
During the period, we continued to seek out and invest in companies that would
deliver superior results in a slowing economy. Using our research process, we
found value in the consumer non-cyclical sector (such as drug, healthcare and
food companies) of the market. We also selectively added to our technology
holdings, where earnings and performance should be less affected by the slowing
U.S. economy we are anticipating (due to a shift toward the use of certain
technology products and the heavy exposure these companies have to non-U.S.
economies). Looking forward, we are encouraged by the lack of visible inflation
in a rather strong economic setting, as well as the positive ramifications
associated with the balancing of the Federal budget.
About the Small-Cap Series
Throughout the period, we increased our holdings in the consumer growth and
healthcare sectors, and substantially reduced our holdings in the financial
sector. These changes are consistent with our expectations of a slowing economy.
Additionally, we continue to experience favorable results in the industrial and
technology sectors. Here we see fairly visible earnings growth based on the
products these companies manufacture and the markets they serve. Going forward,
we believe that many of our holdings in these sectors will continue to benefit
from economic and secular trends (such as consolidation and market outsourcing),
and will provide strong returns for your portfolio.
Following robust economic conditions in the early part of 1997, we anticipate
that growth will slow measurably (to an annual rate of 1 1/2% - 2%) later in the
year. Inflation should average between 2 1/2% - 3%. As a result of the
anticipated economic slowdown, we also foresee a period of time during which
corporate earnings will be under pressure. Our disciplined investment process,
however, is geared toward uncovering company-specific investment values that
provide opportunity for price appreciation at less-than-market risk.
Thank you for your continued confidence in Lord Abbett Research Fund. We look
forward to maintaining our relationship in the coming years and helping you
achieve your financial goals.
+ Class C shares of the Large-Cap Series and Small-Cap Series were first
offered on April 1, 1997.
* Total return is the percent change in net asset value, assuming the
reinvestment of all distributions.
++ Not annualized.
1
<PAGE>
LORD ABBETT RESEARCH FUND - LARGE-CAP SERIES
Unique Management Style Produces an Outperformer
The Series is managed by a team of in-house equity research analysts under the
direction of Robert G. Morris, partner in charge of equity investments. The
analysts bring their own unique industry specialization and their very best
investment ideas to the team. This specialized approach, together with Lord
Abbett's unique value discipline process, has helped the Series outperform the
S&P 500 and the Average Growth Fund since its inception in 1992.
Average Annual
Total Return for the Period
Investment 6/30/92 Through 6/30/97
================================================================================
Lord Abbett Research Fund - Large-Cap Series(1) 20.91%
- --------------------------------------------------------------------------------
S&P 500 Index(2) 19.74%
- --------------------------------------------------------------------------------
Lipper Growth Fund Average(3) 17.25%
- --------------------------------------------------------------------------------
(1) Total return performance is at net asset value for Class A shares and
assumes the reinvestment of all dividends and distributions.
(2) The S&P 500 Index 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.
(3) Source: Lipper Analytical Services, Inc.
LORD ABBETT RESEARCH FUND - SMALL-CAP SERIES
Seeking the Best Small-Cap Value Stocks
Portfolio manager Robert P. Fetch leads an investment team that employs
quantitative analysis to identify seasoned, small companies whose stocks
represent bargains. In-house research is conducted to determine if a company's
strategic plans are feasible. Personal contact is made with companies we are
seriously considering for investment.
The Series focuses on companies that possess many of the following attributes:
o Lower Business Risk - Profitable companies with a long operating history
and important market share create a competitive environment that
discourages newcomers.
o Strong Balance Sheets and Cash Flows - Financial strength helps to insulate
companies from economic and competitive pressures.
o Management Depth and Quality - Capable, honest and knowledgeable managers
provide the necessary leadership to sustain growth, resulting in larger and
more profitable companies.
o High Level of Insider Ownership - Many companies the Series invests in are
characterized by 15% or more employee ownership; one-third of the Series'
holdings have 25% or more insider ownership. Managements with a direct
interest in a company's success tend to focus on enhancing profitability.
o Low Levels of Institutional Ownership - These companies tend to be largely
ignored, with few analysts covering them; what we consider "undiscovered
gems."
2
<PAGE>
Important Information
Common stocks purchased by the Series are subject to market fluctuations,
providing the potential for gains and the risk of loss. Lord Abbett Research
Fund-Small-Cap Series invests in small-cap companies, which typically have a
higher risk of failure and historically have experienced a greater degree of
illiquidity and market volatility than large-cap companies. Performance results
quoted herein reflect past performance, current sales charges (where applicable)
and appropriate Rule 12b-1 Plan expenses from commencement of the Plan. Past
performance is no indication of future results. Tax consequences are not
reflected. The investment return and principal value of an investment will
fluctuate so that shares, on any given day or when redeemed, may be worth more
or less than their original cost. The Series issues additional classes of
shares, with distinct pricing options. For a full discussion of the differences
in pricing alternatives, please call Lord Abbett Distributor LLC at 800-874-3733
and ask for the Fund's current prospectus. If used as sales material after
9/30/97, this report must be accompanied by Lord Abbett's Performance Quarterly
for the most recently completed calendar quarter.
<TABLE>
<CAPTION>
Statement of Net Assets
LARGE-CAP SERIES May 31, 1997
Investments Shares Market Value
===================================================================================================================================
Investments in Common Stocks 93.90%
===================================================================================================================================
<S> <C> <C> <C>
Aerospace 1.29% Boeing Co.-World's leading commercial aircraft manufacturer 5,300 $ 557,825
- -------------------------------------------------------------------------------------------------------------------------==========
Agricultural Products 1.09% Pioneer Hi-Bred International, Inc.-Leading U.S. supplier of hybrid seed 6,800 474,300
- -------------------------------------------------------------------------------------------------------------------------==========
Airlines .73% British Airways plc ADR-One of the world's largest international airlines 2,700 317,587
- -------------------------------------------------------------------------------------------------------------------------==========
Apparel 1.97% * Fruit of the Loom-Producer of non-fashion apparel and undergarments 12,700 442,912
VF Corp.-Leading producer of blue jeans and other apparel 5,250 410,156
Total 853,068
- -------------------------------------------------------------------------------------------------------------------------==========
Auto Parts 2.72% * Autoliv Inc.-Leading European supplier of air bags to the auto industry 3,410 127,023
Genuine Parts Company-National distributor of automotive replacement parts 14,625 489,937
Snap-on, Inc.-Manufacturer and distributor of hand tools and diagnostic
equipment for the automotive industry 14,075 561,241
Total 1,178,201
- -------------------------------------------------------------------------------------------------------------------------==========
Automobiles .28% General Motors Corp.-Worldwide auto producer 2,100 120,225
- --------------------------------------------------------------------------------------------------------------------------==========
Banks: Money Center 2.46% Chase Manhattan Corp.-Major money-center bank holding company 5,750 543,375
First Chicago NBD-Major midwest bank 8,800 521,400
Total 1,064,775
- --------------------------------------------------------------------------------------------------------------------------==========
Banks: Regional 8.04% BankAmerica Corp.-Major west coast bank 5,000 584,375
BankBoston, N.A.-Leading New England regional bank 7,450 543,850
Comerica Inc.-Midwestern regional bank holding company 8,500 531,250
First Union Corp.-Major east coast bank 6,600 566,775
KeyCorp-Multi-regional bank holding company serving the northwest U.S. 11,200 609,000
Mellon Bank Corp.-Commercial bank located in Pittsburgh, PA 7,400 647,500
Total 3,482,750
- -------------------------------------------------------------------------------------------------------------------------==========
Brokers 1.45% Morgan Stanley, Dean Witter, Discover & Co.-Major brokerage and credit
card company 15,200 627,000
- -------------------------------------------------------------------------------------------------------------------------==========
Chemicals 3.83% Air Products & Chemicals Inc.-Industrial gas producer 5,000 388,750
Hanna, M.A. Co.-Leading producer and distributor of plastic compounds,
resins and additives 11,750 271,718
Morton International Inc.-Producer of specialty chemicals,
salt and air bags 10,000 322,500
Rohm & Haas Co.-Manufacturer of specialty chemicals and plastics 7,850 677,062
Total 1,660,030
- -------------------------------------------------------------------------------------------------------------------------==========
Communications Equipment 1.69% Corning Inc.-Major producer of fiber optics and provider of
medical testing services 14,500 730,438
- -------------------------------------------------------------------------------------------------------------------------==========
Computer Software/Services 1.09% * Cisco Systems Inc.-Manufacturer of computer network products 7,000 474,250
- -------------------------------------------------------------------------------------------------------------------------==========
Containers .89% Sonoco Products Co.-A leading U.S. producer of specialty paper
and plastic packaging components 13,200 384,450
--------------------------------------------------------------------------------------==========
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
LARGE-CAP SERIES May 31, 1997
Investments Shares Market Value
===================================================================================================================================
<S> <C> <C>
Data Processing Equipment 7.25% *Digital Equipment Corp.-Manufacturer of data processing equipment 14,800 $ 530,950
*EMC Corp.-A supplier of high-performance storage devices and
related services 13,600 542,300
Hewlett-Packard Co.-Leading manufacturer of computer products
including printers, servers, workstations and PCs 15,825 814,988
International Business Machines Corp.-Largest computer manufacturer 8,300 717,950
*Seagate Technology Inc.-Manufacturer of computer disk drive equipment 13,200 536,250
Total 3,142,438
- -------------------------------------------------------------------------------------------------------------------------==========
Data Processing Services .75% Electronic Data Systems Corp.-Leading computer services company 8,750 327,031
- -------------------------------------------------------------------------------------------------------------------------==========
Drugs/Health Care Products American Home Products Corp.-Producer of drugs, food, housewares and packaged
9.09% medicine and medical products 7,200 549,000
Baxter International Inc.-World's leading distributor and major
manufacturer of hospital supplies and related medical equipment 11,100 585,525
Bristol-Myers Squibb Company-Major worldwide pharmaceutical concern
with other interests in infant nutrition, non-prescription medications,
medical devices and toiletries 9,200 675,050
*Humana Inc.-Provider of managed health plans 21,500 486,438
Lilly, Eli & Co.-Major drug company 2,400 223,200
Merck & Co., Inc.-Nation's largest ethical drug manufacturer 4,550 408,931
SmithKline Beecham plc ADS-United Kingdom-based health care company
providing prescription and over-the-counter drugs and clinical
laboratory services 7,600 665,000
Warner-Lambert Co.-Drugs and consumer products manufacturer 3,450 347,588
Total 3,940,732
- -------------------------------------------------------------------------------------------------------------------------==========
Electric Power 1.48% Baltimore Gas & Electric Co.-Regional electric utility company 10,800 283,500
CINergy Corp.-Supplier of electricity and natural gas in southwestern
Ohio and adjacent Kentucky and Indiana territories 3,100 108,500
SCANA Corp.-Major southeastern electric and gas utility holding company 9,900 247,500
Total 639,500
- -------------------------------------------------------------------------------------------------------------------------==========
Electrical Equipment 1.87% Emerson Electric Co.-Diversified manufacturer of consumer and industrial
electrical components 15,000 810,000
- -------------------------------------------------------------------------------------------------------------------------==========
Electronics: Equipment .92% Perkin-Elmer Corp.-Leading manufacturer of analytical instruments and life
science systems 5,250 399,000
- -------------------------------------------------------------------------------------------------------------------------==========
Electronics: Semiconductors 1.96% Intel Corp.-Leading producer of semiconductor memory circuits 5,600 848,400
- -------------------------------------------------------------------------------------------------------------------------==========
Food 6.47% ConAgra Inc.-Major producer of agricultural and consumer products 8,850 532,106
CPC International Inc.-Producer of diversified packaged foods 8,600 739,600
Heinz H.J. Co.-Domestic packaged foods producer 19,000 817,000
Sara Lee Corp.-A diversified maker of branded food products, apparel
and household consumer products 17,500 715,312
Total 2,804,018
- -------------------------------------------------------------------------------------------------------------------------==========
Household Products 2.68% James River Corp.-Producer of paper-based consumer products, packaging and
communication papers 14,400 505,800
Kimberly Clark Corp.-Major producer of consumer and personal care products 13,092 656,237
Total 1,162,037
- -------------------------------------------------------------------------------------------------------------------------==========
Insurance 6.58% Aetna Inc.-Major multi-line insurer 2,750 277,750
Chubb Corp.-Broad-based property and casualty insurance organization 9,850 600,850
CIGNA Corp.-Multi-line insurance and medical services provider 2,750 477,813
Jefferson-Pilot Corp.-Life insurance holding company 5,700 362,663
Providian Corp.-Financial services company 9,000 538,875
SAFECO Corp.-Insurance and financial services provider 13,600 591,600
Total 2,849,551
- -------------------------------------------------------------------------------------------------------------------------==========
Machinery: Diversified 1.19% Deere & Co.-World's largest manufacturer of farm equipment 10,050 513,806
- -------------------------------------------------------------------------------------------------------------------------==========
Miscellaneous 1.34% Minnesota Mining & Mfg. Co.-Diversified global manufacturer of
value-added industrial, consumer and medical products 6,350 582,613
--------------------------------------------------------------------------------------==========
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
LARGE-CAP SERIES May 31, 1997
Shares or
Investments Principal Amount Market Value
===================================================================================================================================
<S> <C> <C> <C>
Natural Gas Distribution 1.99% Columbia Gas Systems Inc.-Natural gas utility holding
company 8,600 $ 553,625
Nicor Inc.-Natural gas distributor in Illinois 9,000 309,375
Total 863,000
- -------------------------------------------------------------------------------------------------------------------------==========
Natural Gas Diversified 1.49% The Coastal Corporation-A diversified gas pipeline company 12,850 644,106
- -------------------------------------------------------------------------------------------------------------------------==========
Oil: International 3.50% *ENI ADS-Italian oil and gas exploration, development and production company 10,200 517,650
Mobil Corp.-Large international oil company 4,700 657,413
*Total S.A. Sponsored ADR-Leading French international oil and gas company 7,500 342,187
Total 1,517,250
- -------------------------------------------------------------------------------------------------------------------------==========
Paper and Forest Products 1.21% Temple-Inland, Inc.-Leading manufacturer of corrugated boxes, bleached
paperboard, pulp and building materials 8,700 526,350
- -------------------------------------------------------------------------------------------------------------------------==========
Printing: Specialty 1.11% Deluxe Corp.-Supplier of imprinted bank checks and forms 14,800 481,000
- -------------------------------------------------------------------------------------------------------------------------==========
Restaurants .90% *Brinker International Inc.-Major developer and operator of casual
dining restaurants 28,000 388,500
- -------------------------------------------------------------------------------------------------------------------------==========
Retail 3.41% Dillard Department Stores Inc.-Southwestern department store chain 10,000 337,500
*Payless Shoe Source-Major U.S. footwear retailer 11,660 552,392
*Toys R Us Inc.-Discount toy supermarts; department stores 18,950 589,819
Total 1,479,711
- -------------------------------------------------------------------------------------------------------------------------==========
Telecommunications 2.11% AT&T Corp.-Global telecommunications giant 9,050 333,719
MCI Communications Corp.-Long distance telecommunications provider 15,150 581,381
Total 915,100
- -------------------------------------------------------------------------------------------------------------------------==========
Telephone 4.57% Alltel Corp.-Regional telephone holding company 9,500 312,312
Bell Atlantic Corp.-Regional telephone company 7,050 493,500
BellSouth Corp.-Regional telephone company 14,100 639,788
SBC Communication Inc.-Mexican telephone monopoly 9,100 532,350
Total 1,977,950
- -------------------------------------------------------------------------------------------------------------------------==========
Tobacco 2.93% American Brands Inc.-Consumer products conglomerate 8,300 406,700
Philip Morris Inc.-Leading tobacco company 10,500 462,000
RJR Nabisco-Diversified food and tobacco producer 12,400 401,450
Total 1,270,150
- -------------------------------------------------------------------------------------------------------------------------==========
Toys 1.12% Hasbro Inc.-Major U.S. manufacturer of toys and games 16,750 485,750
- -------------------------------------------------------------------------------------------------------------------------==========
Waste Management .45% Waste Management Inc.-A leading international provider of solid waste
disposal and other environmental services 6,200 196,850
--------------------------------------------------------------------------------------==========
Total Investments in Common Stocks (Cost $34,385,488) 40,689,742
===================================================================================================================================
Other Assets, Less Liabilities 6.10%
===================================================================================================================================
Short-Term
Investment, General Electric Capital Corp.
at Cost 5.40% due 6/2/1997 1,500M 1,500,000
- -------------------------------------------------------------------------------------------------------------------------==========
Cash and Receivables, Net of Liabilities 1,145,130
- -------------------------------------------------------------------------------------------------------------------------==========
Total Other Assets, Less Liabilities 2,645,130
===================================================================================================================================
Net Assets 100.00% $43,334,872
===================================================================================================================================
Class A Shares-Net asset value ($30,202,243 / 1,642,609 shares outstanding) $18.39
Class B Shares-Net asset value ($12,979,612 / 707,312 shares outstanding) $18.35
Class C Shares-Net asset value ($153,017 / 8,334 shares outstanding) $18.36
*Non-income producing.
See Notes to Financial Statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
SMALL-CAP SERIES May 31, 1997
Investments Shares Market Value
===================================================================================================================================
Investments in Common Stocks 95.25%
===================================================================================================================================
<S> <C> <C> <C>
Aerospace 9.08% AAR Corp.-Major supplier of products and services for the worldwide
aviation industry 17,500 $ 542,500
*Doncasters plc ADR-Supplier of tolerance-critical components 36,000 801,000
*Moog Inc. Class A-Manufacturer of electrohydraulic control components
and systems 47,400 1,190,925
Precision Castparts Corp.-Manufacturer of jet engine castings and other
components for the aerospace industry 53,000 3,312,500
*SPS Technologies Inc.-Manufacturer of industrial fasteners 29,000 2,131,500
Total 7,978,425
- -------------------------------------------------------------------------------------------------------------------------==========
Apparel 5.55% Garan Inc.-Manufacturer of knitted and woven apparel 80,000 1,600,000
Stride Rite Corp.-Manufacturer of children's and women's shoes 215,000 3,278,750
Total 4,878,750
- -------------------------------------------------------------------------------------------------------------------------==========
Auto Parts 4.20% *Control Devices Inc.-Manufacturer of circuit breakers and electronic
sensors for the auto industry 72,700 890,575
Masco Tech Inc.-Manufacturer of custom engineered products 38,000 850,250
Newcor Inc.-Manufacturer of metal and rubber auto parts 40,000 350,000
Walbro Corp.-Manufacturer of fuel system components for auto and
small engines 80,000 1,600,000
Total 3,690,825
- -------------------------------------------------------------------------------------------------------------------------==========
Brokers .44% Piper Jaffray Inc.-Brokerage, investment banking and money management
firm 20,000 392,500
- -------------------------------------------------------------------------------------------------------------------------==========
Building Materials 2.33% *AFC Cable-Manufacturer and supplier of electrical wire
and cable 30,000 821,250
*Cameron Ashley Building Products-Distributor of building materials 60,000 787,500
*Central Sprinkler Corp.-Manufacturer of automatic fire sprinkler heads
and valves 21,000 443,625
Total 2,052,375
- -------------------------------------------------------------------------------------------------------------------------==========
Chemicals 2.53% A. Schulman Inc.-Manufacturer and distributor of plastic compounds and
resins 100,000 2,225,000
- -------------------------------------------------------------------------------------------------------------------------==========
Coal 1.03% Penn Virginia Corp.-Natural resources company engaged in coal mining, timber
and oil/gas exploration and development 19,000 909,625
- -------------------------------------------------------------------------------------------------------------------------==========
Communications Services
and Products 1.34% *General Cable Corp.-Manufacturer and distributor of copper wire and cable 55,000 1,175,625
- -------------------------------------------------------------------------------------------------------------------------==========
Computer Software/Services *BTG Inc.-An information technology company that provides systems solutions 40,000 540,000
2.85% *Evans & Sutherland Computer Corp.-Developer of computer graphics software
systems 75,000 1,968,750
Total 2,508,750
- -------------------------------------------------------------------------------------------------------------------------==========
Containers 1.43% *BWAY Corp.-Manufacturer of steel containers, primarily for consumer
products 58,000 1,261,500
- -------------------------------------------------------------------------------------------------------------------------==========
Electrical Equipment 4.14% American Precision Industries Inc.-Manufacturer of industrial processing
equipment and electronic products for aerospace, industrial and military
industries 55,000 1,065,625
Kollmorgen Corp.-Manufacturer of motors and controls 135,000 1,771,875
Woodhead Industries Inc.-Manufacturer of specialty electrical products 46,000 805,000
Total 3,642,500
- -------------------------------------------------------------------------------------------------------------------------==========
Electronics: Components 8.13% *AdFlex Solutions, Inc.-Designer and manufacturer of flexible interconnects
that contain integrated circuits, connectors, stiffeners, resistors and/or
capacitors and are used to miniaturize electronic products 36,000 580,500
*DII Group Inc.-A global supplier of integrated electronic manufacturing
products and services 44,000 1,397,000
*Kemet Corp.-Leading manufacturer of tantalum and ceramic capacitors 70,000 1,776,250
Methode Electronics Inc.-Manufacturer of electronic components 100,000 1,687,500
*SpecTran Corp.-Manufacturer of optical fibers primarily used for data and
voice communications 40,000 745,000
*Tech-Sym Corp.-Supplier of electronic components and systems 30,000 956,250
Total 7,142,500
- -------------------------------------------------------------------------------------------------------------------------==========
Electronics: Equipment 8.72% *Dynatech Corp.-Manufacturer of communication test and industrial computers 37,000 1,387,500
*GenRad Inc.-Supplier of electrical test and measurement products 55,000 1,024,375
*Richey Electronics Inc.-Wholesale distributor of electronic components to
manufacturers of electronic equipment in the telecommunications, computer,
medical and aerospace markets 90,000 720,000
Telxon Corp.-Supplier of hand-held microcomputer systems 120,000 2,223,750
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
SMALL-CAP SERIES May 31, 1997
Investments Shares Market Value
===================================================================================================================================
<S> <C> <C> <C>
Watkins-Johnson Co.-Designer and manufacturer of chemical-vapor-deposition
equipment for semiconductor manufacturing 15,000 $ 474,375
Zero Corp.-Manufacturer of electronics enclosures 80,000 1,840,000
Total 7,670,000
- -------------------------------------------------------------------------------------------------------------------------==========
Engineering/Construction 2.04% *CDI Corp.-Engineering and technical services company 10,000 403,750
*Michael Baker Corp.-Engineering, operations and maintenance and construction
company 200,000 1,387,500
Total 1,791,250
- -------------------------------------------------------------------------------------------------------------------------==========
Fluid Separation 1.60% *CUNO Inc.-Manufacturer of fluid filtration products for healthcare, potable
water and industrial fluid processing markets 85,000 1,402,500
- -------------------------------------------------------------------------------------------------------------------------==========
Food 5.40% Dreyer's Grand Ice Cream-Ice cream manufacturer and distributor 29,000 1,065,750
Michael Foods Inc.-Holding company engaged in processing and distributing
eggs and egg products, refrigerated groceries, and potato and dairy items 140,000 1,986,250
Rykoff Sexton Co.-Distributor to the food services industry 23,000 439,875
Sanderson Farms Inc.-Engaged in the production, processing, marketing
and distribution of fresh and frozen chicken and other prepared food 85,000 1,253,750
Total 4,745,625
- -------------------------------------------------------------------------------------------------------------------------==========
Health Care Products 3.61% Arrow International, Inc.-Develops, manufactures and markets a broad range
of state-of-the-art disposable catheters and related clinical products 37,700 1,215,825
*Marquette Medical Systems Class A-Supplier of medical electronic
equipment and systems 85,000 1,955,000
Total 3,170,825
- -------------------------------------------------------------------------------------------------------------------------==========
Health Care Services 1.52% *Sun Healthcare Group Inc.-Operator of long-term care facilities 80,000 1,340,000
- -------------------------------------------------------------------------------------------------------------------------==========
Home Building .43% Kaufman & Broad Home Corp.-Single-family home builder 25,000 375,000
- -------------------------------------------------------------------------------------------------------------------------==========
Industrial Distribution 1.04% Applied Industrial Tech Inc.-Distributor of bearings and power
transmissions 26,000 913,250
- -------------------------------------------------------------------------------------------------------------------------==========
Insurance 1.88% Harleysville Group Inc.-Property/casualty insurance holding company 33,000 1,204,500
*Philadelphia Cons Holding Company-Property/casualty insurance company 13,000 443,625
Total 1,648,125
- -------------------------------------------------------------------------------------------------------------------------==========
Leasing .07% Interpool Inc.-Lessor of dry cargo containers 4,500 63,000
- -------------------------------------------------------------------------------------------------------------------------==========
Machinery: Diversified 4.97% Applied Power Inc. Class A-Manufacturer and distributor of hydraulic
tools and equipment 24,000 1,056,000
Idex Corp.-Manufacturer of fluid handling and industrial products 15,000 425,625
Lincoln Electric Co. Class A-Manufacturer of arc welding products 9,500 312,313
Regal Beloit Corp.-Manufacturer of cutting tools and power transmissions 47,000 1,251,375
Roper Industries Inc.-Manufacturer of fluid handling and control products 27,000 1,326,375
Total 4,371,688
- -------------------------------------------------------------------------------------------------------------------------==========
Manufacturing: Diversified 7.44% *ACX Technologies Inc.-Holding company with interests in ceramics,
packaging and the development of technology-based businesses 15,000 318,750
Amcast Industrial Corp.-Manufacturer of metal engineered and flow
control products 16,000 392,000
Brady (WH) Co.-Manufacturer of industrial identification products and
coated materials 45,000 1,282,500
Penn Engineering & Mfg. Corp.-Manufacturer of fastener systems
and DC motors 28,000 553,000
Varlen Corp.-Manufacturer of precision engineered transportation
products and petroleum analyzers 65,000 1,641,250
*Wolverine Tube Inc.-Manufacturer of copper and copper-alloy tube 80,000 2,350,000
Total 6,537,500
- -------------------------------------------------------------------------------------------------------------------------==========
Natural Gas Diversified 1.20% KN Energy Inc.-Provider of natural gas and mineral resources 25,000 1,053,125
- -------------------------------------------------------------------------------------------------------------------------==========
Office Equipment and Supplies General Binding Corp.-The leading vendor of office binding and laminating
1.01% systems and related supplies 30,000 885,000
- -------------------------------------------------------------------------------------------------------------------------==========
Paper and Forest Products .38% Blount International Inc.-Manufacturer of timber-cutting equipment and
small arms accessories 8,000 330,000
- -------------------------------------------------------------------------------------------------------------------------==========
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
SMALL-CAP SERIES May 31, 1997
Shares or
Investments Principal Amount Market Value
===================================================================================================================================
<S> <C> <C> <C>
Printing and Publishing 2.05% *Golden Books Family Entertainment Inc.-Publisher of children's books 80,000 $ 910,000
*Scholastic Corp.-A leading publisher of children's books and educational
materials 30,000 892,500
Total 1,802,500
- -------------------------------------------------------------------------------------------------------------------------==========
Printing: Specialty 1.73% *Gibson Greetings Inc.-Manufacturer of greeting cards and wrappings 70,000 1,522,500
- -------------------------------------------------------------------------------------------------------------------------==========
Retail .57% Casey's General Store-Chain of convenience-style general stores 25,000 500,000
- -------------------------------------------------------------------------------------------------------------------------==========
Specialty Materials 4.13% *Rogers Corp.-Manufacturer of polymeric metals 110,000 3,630,000
- -------------------------------------------------------------------------------------------------------------------------==========
Steel 1.23% Oregon Steel Mills Inc.-Manufacturer of steel plate and rail 40,000 750,000
Quanex Corp.-Manufacturer of specialty steel and aluminum products 12,000 327,000
Total 1,077,000
- -------------------------------------------------------------------------------------------------------------------------==========
Transportation:
Miscellaneous .46% Air Express International Corp.-Air freight forwarding company 11,000 401,500
- -------------------------------------------------------------------------------------------------------------------------==========
Truckers .72% *Smithway Motor Xpress Class A-Truckload carrier transporting diversified
manufactured and processed products 56,000 602,000
*Transport Corp. of America-Provider of truckload carriage and logistics
services, primarily in the midwestern and eastern U.S. 2,500 33,750
Total 635,750
--------------------------------------------------------------------------------------==========
Total Investments in Common Stocks (Cost $74,613,425) 83,724,513
===================================================================================================================================
Other Assets, Less Liabilities 4.75%
===================================================================================================================================
Short-Term
Investment, General Electric Capital Corp.
at Cost 5.40% due 6/2/1997 2,900M 2,900,000
- -------------------------------------------------------------------------------------------------------------------------==========
Cash and Receivables, Net of Liabilities 1,274,744
- -------------------------------------------------------------------------------------------------------------------------==========
Total Other Assets, Less Liabilities 4,174,744
===================================================================================================================================
Net Assets 100.00% $87,899,257
===================================================================================================================================
Class A Shares-Net asset value ($52,724,056 / 3,672,314 shares outstanding) $14.36
Class B Shares-Net asset value ($32,921,171 / 2,300,605 shares outstanding) $14.31
Class C Shares-Net asset value ($2,254,030 / 157,549 shares outstanding) $14.31
*Non-income producing.
See Notes to Financial Statements.
</TABLE>
8
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Six Months Ended May 31, 1997
-----------------------------
Large-Cap Small-Cap
Investment Income (Loss) Series Series
===============================================================================================================
<S> <C> <C>
Income Dividends $ 301,236 $ 181,819
Interest 43,260 24,958
Total income 344,496 206,777
-----------------------------------------------------------------------------------------------------
Expenses Management fee 121,483 128,064
12b-1 distribution plan-Class A 29,443 44,973
12b-1 distribution plan-Class B 50,241 63,639
12b-1 distribution plan-Class C 101 1,051
Registration fee 18,000 15,000
Shareholder servicing 15,400 12,905
Audit and tax 10,150 6,487
Reports to shareholders 8,900 8,023
Organization fee 601 373
Other 7,345 3,418
Total expenses 261,664 283,933
-----------------------------------------------------------------------------------------------------
Net investment income (loss) 82,832 (77,156)
-----------------------------------------------------------------------------------------------------
Realized and Unrealized Gain on Investments
===============================================================================================================
Realized gain from investment transactions
Proceeds from sales 2,332,653 6,707,955
Cost of investments sold 2,168,472 6,368,489
Net realized gain 164,181 339,466
-----------------------------------------------------------------------------------------------------
Unrealized appreciation of investments 2,967,467 8,555,027
- ---------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 3,131,648 8,894,493
- ---------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $ 3,214,480 $ 8,817,337
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 13, 1995(a)
May 31, November 30, to November 30,
1997 1996 1996
-------------------------- ------------- -------------------
Large-Cap Small-Cap Large-Cap Small-Cap
Increase (Decrease) in Net Assets Series Series Series Series
================================================================================================== ============= =================
<S> <C> <C> <C> <C>
Operations Net investment income (loss) $ 82,832 $ (77,156) $ 215,880 $ 39,350
Net realized gain from investment transactions 164,181 339,466 1,256,915 384,187
Net unrealized appreciation of investments 2,967,467 8,555,027 1,855,639 556,060
Net increase in net assets resulting from operations 3,214,480 8,817,337 3,328,434 979,597
--------------------------------------------------------------------------------------- -------------- -----------------
Undistributed net investment income included in price of
share transactions 115,870 139,290 87,151 29,824
- -------------------------------------------------------------------------------------------------- -------------- -----------------
Distributions to shareholders from:
Net investment income-Class A (102,730) -- (307,886) (34,864)
Net investment income-Class B (7,959) -- (32,704) --
Net realized gain from investment transactions-Class A (943,694) -- (428,272) (347,605)
Net realized gain from investment transactions-Class B (360,069) -- -- --
Total distributions (1,414,452) -- (768,862) (382,469)
--------------------------------------------------------------------------------------- -------------- -----------------
Capital share transactions:
Net proceeds from sales of shares 18,517,673 72,256,800 15,705,205 7,839,815
Net asset value of shares issued to shareholders in
reinvestment of net investment income and realized gain
from investment transactions 1,353,273 -- 730,851 382,601
Total 19,870,946 72,256,800 16,436,056 8,222,416
--------------------------------------------------------------------------------------- -------------- -----------------
Cost of shares reacquired (2,044,019) (2,086,341) (3,039,468) (77,197)
--------------------------------------------------------------------------------------- -------------- -----------------
Increase in net assets derived from capital share
transactions 17,826,927 70,170,459 13,396,588 8,145,219
--------------------------------------------------------------------------------------- -------------- -----------------
Increase in net assets 19,742,825 79,127,086 16,043,311 8,772,171
- -------------------------------------------------------------------------------------------------- -------------- -----------------
Net Assets
Beginning of period 23,592,047 8,772,171 7,548,736 --
--------------------------------------------------------------------------------------- -------------- -----------------
End of period(b) $ 43,334,872 $ 87,899,257 $ 23,592,047 $ 8,772,171
--------------------------------------------------------------------------------------- -------------- -----------------
</TABLE>
(a)Commencement of operations.
(b)Including undistributed net investment income of $337,763 and
$97,963 as of May 31, 1997 and $223,649 and $34,310 as of November 30,
1996 for the Large-Cap Series and Small-Cap Series, respectively.
See Notes to Financial Statements.
10
<PAGE>
Financial Highlights
LARGE-CAP SERIES
<TABLE>
<CAPTION>
Class A Shares
---------------------------------------------------------------------------------
Six Months June 3, 1992(a) to
Ended May 31, Year Ended November 30, November 30,
Per Share Operating Performance: 1997 1996 1995 1994 1993 1992
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $17.86 $15.54 $12.79 $12.33 $10.61 $10.00
------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .06(b) .270 .42 .34 .29 .12
Net realized and unrealized gain on investments 1.51 3.505 3.44 .65 1.57 .49
Total from investment operations 1.57 3.775 3.86 .99 1.86 .61
------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.09) (.57) (.29) (.20) (.14) --
Distributions from net realized gain (.95) (.885) (.82) (.33) -- --
------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $18.39 $17.86 $15.54 $12.79 $12.33 $10.61
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(c) 9.60%(d) 26.25% 32.82% 8.21% 17.72% 6.10%(d)
====================================================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursements .70%(d) .36% .00% .00% .00% .00%(d)
Expenses, excluding waiver and reimbursements .70%(d) .96% 1.02% 1.15% 1.20% .79%(d)
Net investment income .37%(d) 2.24% 3.27% 2.65% 2.44% 1.39%(d)
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Class C Shares
-------------------------------------------------- --------------------
Six Months August 1, 1996(e) April 1, 1997(e)
Ended May 31, to November 30, to May 31,
Per Share Operating Performance: 1997 1996 1997
========================================================================================================= ====================
<S> <C> <C> <C>
Net asset value, beginning of period $17.83 $15.24 $16.90
--------------------------------------------------------------------------------------------------- --------------------
Income (loss) from investment operations
Net investment income (loss) .00(b) .12 (.01)(b)
Net realized and unrealized gain on investments 1.49 2.66 1.47
Total from investment operations 1.49 2.78 1.46
--------------------------------------------------------------------------------------------------- --------------------
Distributions
Dividends from net investment income (.02) (.19) --
Distributions from net realized gain (.95) -- --
--------------------------------------------------------------------------------------------------- --------------------
Net asset value, end of period $18.35 $17.83 $18.36
- --------------------------------------------------------------------------------------------------------- --------------------
Total Return(c)(d) 9.10% 18.39% 8.64%
====================================================================================================================================
Ratios to Average Net Assets(d):
Expenses 1.07% .59% .36%
Net investment income (loss) .00% .22% (.04)%
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Six Months June 3, 1992(a)
Ended May 31, Year Ended November 30, to November 30,
Supplemental Data For AllClasses: 1997 1996 1995 1994 1993 1992
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $43,335 $23,592 $7,549 $5,558 $4,086 $2,372
Portfolio turnover rate 7.63% 62.25% 37.17% 43.85% 74.16% 20.70%
Average commissions per share paid
on equity transactions $.059 $.056 n/a n/a n/a n/a
=========================================================================================================================
<FN>
(a) Commencement of operations.
(b) Calculated using average shares outstanding during the period.
(c) Total return does not consider the effects of sales loads.
(d) Not annualized.
(e) Commencement of offering Class B and Class C shares.
</FN>
See Notes to Financial Statements.
</TABLE>
11
<PAGE>
Financial Highlights
SMALL-CAP SERIES
<TABLE>
<CAPTION>
Class A Shares Class B Shares
-------------------------------------- -------------------------------------------
Six Months December 13, 1995(a) Six Months November 15, 1996(b)
Ended May 31, to November 30, Ended May 31, to November 30,
Per Share Operating Performance: 1997 1996 1997 1996
===================================================================================== ===========================================
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.01 $10.00 $12.00 $11.67
--------------------------------------------------------------------------------- -------------------------------------------
Income (loss) from investment operations
Net investment income (loss) (.01)(c) .127 (.05)(c) .001
Net realized and unrealized gain on
investments 2.36 2.658 2.36 .329
Total from investment operations 2.35 2.785 2.31 .33
--------------------------------------------------------------------------------- -------------------------------------------
Distributions
Dividends from net investment income -- (.075) -- --
Distribution from net realized gain -- (.700) -- --
--------------------------------------------------------------------------------- -------------------------------------------
Net asset value, end of period $14.36 $12.01 $14.31 $12.00
- ------------------------------------------------------------------------------------- -------------------------------------------
Total Return(d)(e) 19.57% 28.24% 19.25% 2.84%
===================================================================================== ===========================================
Ratios to Average Net Assets(d):
Expenses, including waiver and reimbursements .61% .01% .93% .04%
Expenses, excluding waiver and reimbursements .61% 1.00% .93% .07%
Net investment income (loss) (.09)% 1.02% (.40)% .01%
====================================================================================================================================
<CAPTION>
Class C Shares
--------------------
April 1, 1997(b)
to May 31,
Per Share Operating Performance: 1997
=================================================== ====================
<S> <C>
Net asset value, beginning of period $12.81
----------------------------------------------- --------------------
Income (loss) from investment operations
Net investment income (loss) (.02)(c)
Net realized and unrealized gain on
investments 1.52
Total from investment operations 1.50
----------------------------------------------- --------------------
Distributions
Dividends from net investment income --
Distribution from net realized gain --
----------------------------------------------- --------------------
Net asset value, end of period $14.31
- --------------------------------------------------- --------------------
Total Return(d)(e) 11.71%
=================================================== ====================
Ratios to Average Net Assets(d):
Expenses, including waiver and reimbursements .32%
Expenses, excluding waiver and reimbursements .32%
Net investment income (loss) (.14)%
===========================================================================
</TABLE>
<TABLE>
<CAPTION>
Six Months December 13, 1995(a)
Ended May 31, to November 30,
Supplemental Data for AllClasses: 1997 1996
====================================================================================================================================
<S> <C> <C>
Net assets, end of period (000) $87,899 $8,772
Portfolio turnover rate 17.42% 110.09%
Average commissions per share paid on equity transactions $.061 $.052
====================================================================================================================================
</TABLE>
(a) Commencement of operations.
(b) Commencement of offering Class B and Class C shares.
(c) Calculated using average shares outstanding during the period.
(d) Total return does not consider the effects of sales loads.
(e) Not annualized.
See Notes to Financial Statements.
Notes to Financial Statements
1. Significant Accounting Policies
Lord Abbett Research Fund, Inc. (the "Company") is an open-end management
investment company incorporated under Maryland law on April 26, 1992. The
Company consists of three separate portfolios ("Series"). This report covers two
of the Series - Large-Cap Series and Small-Cap Series. Each Series is
diversified as defined under the Investment Company Act of 1940. The financial
statements have been prepared in conformity with generally accepted accounting
principles which permit management to make certain estimates and assumptions at
the date of the financial statements. The following summarizes the significant
accounting policies of the Company:
(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, or, in the case of bonds, in the over-the-counter market
if, in the judgment of the Company's officers, that market more accurately
reflects the market value of the bonds. Securities traded only in the
over-the-counter market are valued at the mean between the bid and asked prices,
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. Therefore, no federal income tax provision is required.
(c) Investment transactions are accounted for on the date that the securities
are purchased or sold (trade date). Realized gains and losses from investment
transactions are calculated on the identified cost basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Net
investment income (other than distribution and service fees) and realized and
unrealized gains or losses are allocated to each class of shares based upon the
relative proportion of net assets at the beginning of the day.
(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 organization expenses of the Company are amortized evenly over a period
of five years.
12
<PAGE>
Notes to Financial Statements
2. Management Fee and Other Transactions with Affiliates
The Company has a management agreement with Lord, Abbett & Co. ("Lord Abbett")
pursuant to which Lord Abbett supplies 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 is based on average
daily net assets for each month at the annual rate of .75 of 1%.
The Large-Cap Series and Small-Cap Series of the Company have Rule 12b-1 plans
and agreements (the "Class A, Class B and Class C Plans") with Lord Abbett
Distributor LLC ("Distributor"), an affiliate of Lord Abbett. Each Series makes
payments to Distributor which uses or passes on such payments to authorized
institutions. Pursuant to the Class A Plan, each Series pays Distributor (1) an
annual service fee of 0.25% of the average daily net assets of Class A shares,
(2) a one-time distribution fee of up to 1% on certain qualifying purchases and
(3) a supplemental annual distribution fee of 0.10% of the average daily net
assets of Class A shares serviced by certain qualifying institutions. Pursuant
to the Class B Plan, each Series pays Distributor an annual service and
distribution fee of 0.25% and 0.75%, respectively, of the average daily net
asset value of the Class B shares. Pursuant to the Class C Plan, each Series
pays Distributor (1) a service fee and a distribution fee, at the time such
shares are sold, not to exceed 0.25% and 0.75%, respectively, of the net asset
value of such shares sold and (2) at each quarter-end after the first
anniversary of the sale of such shares, a service fee and a distribution fee at
an annual rate not to exceed 0.25% and 0.75%, respectively, of the average
annual net asset value of such shares outstanding.
Lord Abbett received the following commissions on sales of shares of the Company
after concessions were paid to authorized dealers:
Lord Abbett Dealers'
Series Commissions Concessions
- --------------------------------------------------------------------------------
Large-Cap $ 50,356 $ 314,128
Small-Cap $ 164,771 $1,047,415
- --------------------------------------------------------------------------------
Certain of the Company's officers and directors have an interest in Lord Abbett.
3. Capital
The Large-Cap Series has authorized 20 million shares of $.001 par value capital
stock designated Class A, 30 million shares of $.001 par value capital stock
designated Class B and 20 million shares of $.001 par value capital stock
designated Class C. The Small-Cap Series has authorized 20 million shares of
$.001 par value capital stock designated Class A, 30 million shares of $.001 par
value capital stock designated Class B and 20 million shares of $.001 par value
capital stock designated Class C. Paid in capital for the Company amounted to
$36,574,731 for the Large-Cap Series and $78,314,158 for the Small-Cap Series at
May 31, 1997. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Six Months Ended 5/31/97 Year Ended 11/30/96
----------------------------------------------------------------------------------
Large-Cap Series Small-Cap Series Large-Cap Series
--------------------- --------------------------- -------------------------
Class A Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------- --------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 706,452 $ 12,192,184 3,116,601 $ 40,398,759 594,545 $ 9,601,985
- ------------------------------------------------------------- --------------------------- -------------------------
Shares issued to shareholders in
reinvestment of net investment
income and realized gain from
investment transactions 61,841 1,002,969 -- -- 48,560 700,600
- ------------------------------------------------------------- --------------------------- -------------------------
Total 768,293 13,195,153 3,116,601 40,398,759 643,105 10,302,585
- ------------------------------------------------------------- --------------------------- -------------------------
Shares reacquired (82,667) (1,418,772) (133,325) (1,742,746) (172,002) (2,736,592)
- ------------------------------------------------------------- --------------------------- -------------------------
Increase in shares 685,626 $ 11,776,381 2,983,276 $ 38,656,013 471,103 $ 7,565,993
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
12/13/95
(Commencement of Operations)
to 11/30/96
-----------------------------
Small-Cap Series
----------------------------
Class A Shares Amount
- -------------------------------------- ----------------------------
<S> <C> <C>
Sales of shares 662,268 $ 7,351,610
- -------------------------------------- ----------------------------
Shares issued to shareholders in
reinvestment of net investment
income and realized gain from
investment transactions 33,296 382,601
- -------------------------------------- ----------------------------
Total 695,564 7,734,211
- -------------------------------------- ----------------------------
Shares reacquired (6,526) (77,197)
- -------------------------------------- ----------------------------
Increase in shares 689,038 $ 7,657,014
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
8/1/96 (Commencement
of Offering Class B Shares
Six Months Ended 5/31/97 to 11/30/96
-----------------------------------------------------------------------------------
Large-Cap Series Small-Cap Series Large-Cap Series
--------------------- ------------------------ --------------------------
Class B Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------- ------------------------ --------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 357,076 $ 6,178,948 2,284,207 $ 29,707,356 380,322 $ 6,103,220
- ------------------------------------------------------------- ------------------------ --------------------------
Shares issued to shareholders in
reinvestment of net investment
income and realized gain from
investment transactions 21,691 350,304 -- -- 1,904 30,251
- ------------------------------------------------------------- ------------------------ --------------------------
Total 378,767 6,529,252 2,284,207 29,707,356 382,226 6,133,471
- ------------------------------------------------------------- ------------------------ --------------------------
Shares reacquired (35,919) (625,247) (25,045) (329,476) (17,762) (302,876)
- ------------------------------------------------------------- ------------------------ --------------------------
Increase in shares 342,848 $ 5,904,005 2,259,162 $ 29,377,880 364,464 $ 5,830,595
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
11/15/96 (Commencement
of Offering Class B Shares)
to 11/30/96
----------------------------
Small-Cap Series
---------------------------
Class B Shares Amount
- -------------------------------------- ---------------------------
<S> <C> <C>
Sales of shares 41,443 $ 488,205
- -------------------------------------- ---------------------------
Shares issued to shareholders in
reinvestment of net investment
income and realized gain from
investment transactions -- --
- -------------------------------------- ---------------------------
Total 41,443 488,205
- -------------------------------------- ---------------------------
Shares reacquired -- --
- -------------------------------------- ---------------------------
Increase in shares 41,443 $ 488,205
- ------------------------------------------------------------------
</TABLE>
<PAGE>
Notes to Financial Statements
<TABLE>
<CAPTION>
4/1/97 (Commencement 4/1/97 (Commencement
of Offering Class C Shares) of Offering Class C Shares)
to 5/31/97 to 5/31/97
---------------------------- --------------------------------
Large-Cap Series Small-Cap Series
---------------------------- --------------------------------
Class C Shares Amount Shares Amount
- -------------------------------------------------------------------------------------- --------------------------------
<S> <C> <C> <C> <C>
Sales of shares 8,334 $ 146,541 158,625 $ 2,150,685
- -------------------------------------------------------------------------------------- --------------------------------
Shares reacquired -- -- (1,076) (14,119)
- -------------------------------------------------------------------------------------- --------------------------------
Increase in shares 8,334 $ 146,541 157,549 $ 2,136,566
- -------------------------------------------------------------------------------------- --------------------------------
</TABLE>
4. Distributions
Dividends from net investment income are declared quarterly for the Large-Cap
Series and annually for the Small-Cap Series. Net realized gain from investment
transactions is distributed to shareholders annually. At May 31, 1997,
accumulated net realized gain for each Series was as follows:
- --------------------------------------------------------------------------------
Large-Cap Series $118,124
Small-Cap Series $376,048
- --------------------------------------------------------------------------------
Income and capital gains distributions are determined in accordance with income
tax regulations which may differ from methods used to determine the
corresponding income and capital gains amounts in accordance with generally
accepted accounting principles.
5. Purchases and Sales of Securities
Purchases and sales of investments (other than short-term investments) for the
period ended May 31, 1997 were as follows:
Series Purchases Sales
- --------------------------------------------------------------------------------
Large-Cap $17,880,481 $2,332,653
Small-Cap $73,170,049 $6,707,955
- --------------------------------------------------------------------------------
As of May 31, 1997, net unrealized appreciation, unrealized appreciation and
unrealized depreciation of investments based on cost for federal income tax
purposes were as follows:
Net
Unrealized Unrealized Unrealized
Series Appreciation Appreciation Depreciation
- --------------------------------------------------------------------------------
Large-Cap $6,304,254 $6,556,739 $252,485
Small-Cap $9,111,088 $9,433,039 $321,951
- --------------------------------------------------------------------------------
The cost of investments for federal income tax purposes is substantially the
same as that used for financial reporting purposes.
6. Directors` Remuneration
The Directors of the Company associated with Lord Abbett and all officers of the
Company receive no compensation from the Company for acting as such. Outside
Directors' fees and retirement costs are allocated among all funds in the Lord
Abbett group based on the net assets of each fund.
Copyright (C) 1997 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 each
Series' investment objective and policies, sales charges and other matters.
There is no guarantee that the forecasts contained in this publication will come
to pass.
All rights reserved. Printed in the U.S.A.
<PAGE>
[LOGO](R) Lord, Abbett & Co.
Investment Management
A Tradition of Performance Through Disciplined Investing
Lord Abbett Distributor LLC
- -------------------------------
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203
LARF-3-597
(7/97)
