Lord Abbett
Research
Fund
o Large-Cap Series
o Small-Cap Series
1996 ANNUAL REPORT
[GRAPHIC] BLUE PRINTS, PLUM AND LEVEL
Two portfolios
designed to
help you build
for your future
[LOGO]
<PAGE>
Lord Abbett Research Fund Large-Cap Series o Small-Cap Series
A Tradition of
Value
Investing
For decades, Lord Abbett has employed a value approach to
investing: buying companies "on sale" and selling them when they
reach their potential. This process is built on our team of
in-house, equity research analysts. Our goal is to provide
investors competitive returns with relatively moderate
fluctuations in price.
- -------------------------------------------------------------------------------
The Benefits of Value Investing - In Stocks Both Large & Small
Both Series have provided competitive returns and have outpaced their respective
benchmarks and the average fund in their peer group:
[THE FOLLOWING WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
3 Years Life of Series
Large-Cap Series 19.9% 19.2%
Morningstare Average of Large Value Funds 13.3%
Unmanaged S&P 500 Index 19.6% 16.5
Small-Cap Series 30.5%
Morningstar Average of Small Cap Company Funds 19.9%
Morningstar Average of Small Value Funds 20.3%
Unmanaged Russell 2000 Index 16.5%
<TABLE>
<CAPTION>
Performance data shown for both Series is for Class A shares at net asset value
and assumes the reinvestment of all distributions.
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SEC-Required Average annual compound Large-Cap Series: 1 year: +13.40%
Information returns for periods ended Life of Series(2): +17.62%
12/31/96 at the Class A Small-Cap Series: 1 year: +23.10%
share maximum sales Life of Series(3): +22.24%
charge of 5.75%, with all
distributions reinvested:
</TABLE>
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) Period 6/3/92 (the Series' inception date) through 12/31/96;
Morningstar does not compute an average for Large Value Funds to
cover this time period.
(2) The Large-Cap Series commenced operations 6/3/92.
(3) 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>
Report to Shareholders
For the Fiscal Year Ended November 30,
1996
[PHOTO] PICTURE OF ROBERT S. DOW
/S/ Robert S. Dow
- -----------------
Robert S. Dow
Chairman
December 19, 1996
Lord Abbett Research Fund completed its fiscal year on November
30, 1996. The Large-Cap Series was opened to the public on August
1, 1996. The Small-Cap Series was opened to the public on
November 15, 1996. Below is an overview of class-specific data as
of the close of the year.
<TABLE>
<CAPTION>
Large-Cap Series Small-Cap Series
--------------------------------------- ---------------------------------------
12 Months Ended 4 Months Ended From 12/13/95** From 11/15/96**
11/30/96 11/30/96* through 11/30/96 through 11/30/96
--------------- ---------------------- ----------------- --------------------
Class A Class A Class B Class A Class A Class B
--------------- ---------------------- ----------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value $17.86 $ 17.86 $ 17.83 $12.01 $12.01 $12.00
Dividends paid $ 0.57 $ 0.19 $ 0.19 $ 0.075 $ -- $ --
Capital gains paid $0.885 $ -- $ -- $ 0.700 $ -- $ --
Total return+ +26.3% +18.6%++ +18.4%++ +28.2% +2.9%++ +2.8%++
</TABLE>
The past year saw stock market averages reach new heights,
against a background of modest economic growth, low inflation and
a volatile interest-rate environment. Going into 1997, we
anticipate the economy will slow to a growth rate of 2% or less,
with inflation averaging between 2 1/2%-3%. Given this, we expect
the 30-year Treasury bond yield to move toward 6 1/4% - 6% during
the first half of 1997. We forecast corporate profits in 1997 to
be flat compared to 1996's record levels and, with few areas of
the market representing exceptional value, performance for both
Series will rely heavily upon our individual stock selection
rather than economic dynamics. As always, our disciplined
investment process will continue to search for investments which
represent value and provide opportunities for price appreciation
with less-than-market risk.
About the Large-Cap Series
The strong performance your Series enjoyed over the past fiscal
year can be attributed to several factors. Our overweighting of
interest-sensitive stocks, particularly financial companies,
proved to be very beneficial. These stocks increased in value
toward the close of the fiscal year, as long-term interest rates
began to decline. Additionally, our holdings in consumer
non-cyclical stocks were steadily increased during the year and
performed well.
About the Small-Cap Series
The Series' strong performance in 1996 can be attributed to three
sectors: industrial, technology and transportation. The
technology sector experienced a third quarter correction which
allowed us to add to positions at attractive prices. The Series'
industrial and transportation holdings were relatively steady
performers throughout the year. Your Series is not sector
weighted (diversified in proportion to an index) and, as such,
continues to rely on stock selection of undervalued companies in
the small-cap universe with solid fundamental prospects.
We would like to welcome all new shareholders to Lord Abbett
Research Fund. We are pleased the Fund is a part of your
investment portfolio and look forward to helping you attain your
financial goals in 1997 and beyond.
* For the Large-Cap Series: Class A shares commenced operations on
June 3, 1992; Class B shares commenced operations on August 1,
1996. Class A and B shares were first offered to the public on
August 1, 1996.
** For the Small-Cap Series: Class A shares commenced operations on
December 13, 1995; Class B shares commenced operations on
November 15, 1996. Class A and B shares were first offered to the
public on November 15, 1996.
+ Total return is the percent change in net asset value, assuming
the reinvestment of all distributions.
++ Not annualized.
<PAGE>
Statement of Net Assets
LARGE-CAP SERIES NOVEMBER 30, 1996
- -----------------------------------------------------------------------
Investment Shares Market Value
- -----------------------------------------------------------------------
Investments in Common Stocks 93.57%
- -----------------------------------------------------------------------
Aerospace 1.39% Boeing Co. 3,300 $ 327,938
---------
- -----------------------------------------------------------------------
Agricultural Pioneer Hi-Bred
Products 2.01% International, Inc. 6,800 474,300
---------
- -----------------------------------------------------------------------
Airlines 1.14% British Airways plc ADR 2,700 267,975
---------
- -----------------------------------------------------------------------
Apparel 3.43% Fruit of The Loom+ 12,700 452,438
VF Corp. 5,250 356,344
Total 808,782
---------
- -----------------------------------------------------------------------
Auto Parts 3.41% Genuine Parts Company 9,750 438,750
Snap-On, Inc. 10,075 365,219
Total 803,969
---------
- -----------------------------------------------------------------------
Automobiles .51% General Motors Corp. 2,100 121,013
---------
- -----------------------------------------------------------------------
Banks: Money
Center 2.30% Chase Manhattan Corp. 5,750 543,375
---------
- -----------------------------------------------------------------------
Banks: Regional Bank of Boston Corp. 7,950 555,506
10.25% BankAmerica Corp. 6,750 695,250
First Union Corp. 7,600 580,450
KeyCorp 11,200 586,600
Total 2,417,806
---------
- -----------------------------------------------------------------------
Brokers 2.20% Dean Witter, Discover & Co. 7,600 519,650
---------
- -----------------------------------------------------------------------
Chemicals 4.16% Air Products &
Chemicals Inc. 5,000 347,500
Hanna, M.A. Co. 11,750 248,219
Rohm & Haas Co. 4,850 386,181
Total 981,900
---------
- -----------------------------------------------------------------------
Communications
Equipment .86% Corning Inc. 5,000 202,500
---------
- -----------------------------------------------------------------------
Containers 1.52% Sonoco Products Co. 13,200 359,700
---------
- -----------------------------------------------------------------------
Data Processing Digital Equipment Corp. 2,400 88,200
Equipment 7.33% EMC Corp.+ 14,600 470,850
Hewlett-Packard Co. 8,825 475,447
International Business
Machines Corp. 3,150 502,031
Seagate Technology Inc.+ 4,900 193,550
Total 1,730,078
---------
- -----------------------------------------------------------------------
Drugs/Health Care Baxter International Inc. 4,100 174,250
Products 8.92% Bristol-Myers Squibb
Company 3,700 420,875
Lilly, Eli & Co. 2,400 183,600
Merck & Co., Inc. 4,550 377,650
SmithKline Beecham
plc ADS 5,600 385,700
Tambrands Inc. 7,350 314,213
Warner-Lambert Co. 3,450 246,675
Total 2,102,963
---------
- -----------------------------------------------------------------------
Electric Power Baltimore Gas & Electric Co. 5,400 150,525
1.74% Central & South West Corp. 5,800 155,150
- -----------------------------------------------------------------------
Investment Shares Market Value
- -----------------------------------------------------------------------
CINergy Corp. 3,100 $ 103,850
Total 409,525
---------
- -----------------------------------------------------------------------
Electrical
Equipment Emerson Electric Co. 4,000 392,500
2.41% Raytheon Company 3,450 176,381
Total 568,881
---------
- -----------------------------------------------------------------------
Electronics
Equipment .59% Perkin-Elmer Corp. 2,250 138,656
---------
- -----------------------------------------------------------------------
Food 6.53% ConAgra Inc. 8,850 470,156
CPC International Inc. 5,400 449,550
Heinz H.J. Co. 10,000 378,750
Supervalu Inc. 8,200 242,925
Total 1,541,381
---------
- -----------------------------------------------------------------------
Household Products James River Corp. 7,400 236,800
2.78% Kimberly Clark Corp. 4,296 419,934
Total 656,734
---------
- -----------------------------------------------------------------------
Insurance 6.06% Aetna Inc. 2,750 198,344
Chubb Corp. 7,350 398,738
CIGNA Corp. 2,750 388,781
SAFECO Corp. 10,600 441,225
Total 1,427,088
---------
- -----------------------------------------------------------------------
Machinery Diversified
1.33% Deere & Co. 7,050 314,606
---------
- -----------------------------------------------------------------------
Miscellaneous 1.54% Minnesota Mining &
Mfg. Co. 4,350 364,313
---------
- -----------------------------------------------------------------------
Natural Gas
Diversified 2.21% The Coastal Corporation 10,850 522,156
---------
- -----------------------------------------------------------------------
Oil: International ENI ADS 7,700 404,250
3.97% Mobil Corp. 2,700 326,700
Total S.A. Sponsored ADR 5,100 205,913
Total 936,863
---------
- -----------------------------------------------------------------------
Printing Specialty
.37% Deluxe Corp. 2,800 86,800
---------
- -----------------------------------------------------------------------
Retail 4.04% Dillard Department
Stores Inc. 3,700 113,313
Payless Shoe Source 9,160 358,385
Toys R Us Inc.+ 13,950 481,275
Total 952,973
---------
- -----------------------------------------------------------------------
Savings and Loan
.35% Jefferson-Pilot Corp. 1,400 81,550
---------
- -----------------------------------------------------------------------
Telecommunications AT&T Corp. 9,050 355,249
3.21% MCI Communications
Corp. 13,150 401,075
Total 756,324
---------
- -----------------------------------------------------------------------
Telephone 2.67% Alltel Corp. 9,500 302,813
Bell Atlantic Corp. 1,550 97,456
BellSouth Corp. 2,700 109,013
SBC Communication Inc. 2,300 121,038
Total 630,320
---------
---------------------------------------------------
2
<PAGE>
Statement of Net Assets
LARGE-CAP SERIES NOVEMBER 30, 1996
- -----------------------------------------------------------------------
Investment Shares Market Value
- -----------------------------------------------------------------------
Tire and Rubber Cooper Tire & Rubber
Goods .51% Company 5,900 $ 120,950
---------
- -----------------------------------------------------------------------
Tobacco 3.36% American Brands Inc. 8,300 396,325
RJR Nabisco 12,400 396,800
Total 793,125
---------
- -----------------------------------------------------------------------
Waste Management
.47% WMX Technologies Inc. 3,050 109,800
---------
- -----------------------------------------------------------------------
Total Investments in
Common Stocks
(Cost $18,737,207) 22,073,994
---------
---------------------------------------------------
Principal Market
Investment Amount Value
- -----------------------------------------------------------------------
Other Assets, Less Liabilities 6.43%
- -----------------------------------------------------------------------
Short-Term Ford Motor Credit Co.
Investments, 5.10% due 12/2/1996 $600M $ 600,000
at Cost
General Electric
Capital Corp.
5.35% due 12/3/1996 400M 400,000
Total 1,000,000
---------
- -----------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 518,053
---------
- -----------------------------------------------------------------------
Total Other Assets,
Less Liabilities 1,518,053
---------
- -----------------------------------------------------------------------
Net Assets 100.00% $23,592,047
----------
- -----------------------------------------------------------------------
Class A Shares-Net asset value
($17,095,367 / 956,983
shares outstanding) $17.86
Class B Shares-Net asset value
($6,496,680 / 364,464
shares outstanding) $17.83
+ Non-income producing.
See Notes to Financial Statements.
Statement of Net Assets
LARGE-CAP SERIES NOVEMBER 30, 1996
- -----------------------------------------------------------------------
Investment Shares Market Value
- -----------------------------------------------------------------------
Aerospace 11.21% AAR Corp. 1,000 $ 29,875
Banner Aerospace Inc.+ 14,000 117,250
Ducommun Inc. Del+ 3,000 66,375
Moog, Inc. Class A+ 7,500 180,000
Precision Castparts Corp. 8,700 407,813
SPS Technologies Inc.+ 2,900 181,975
Total 983,288
---------
- -----------------------------------------------------------------------
Apparel .71% Garan Inc. 3,500 62,562
---------
- -----------------------------------------------------------------------
Auto Parts 5.78% Control Devices Inc.+ 4,000 41,000
MascoTech Inc. 13,000 216,125
Newcor Inc. 7,000 62,125
Walbro Corp. 9,500 187,625
Total 506,875
---------
- -----------------------------------------------------------------------
Banks: Regional Collective Bancorp Inc. 1,000 35,375
2.65% First Colorado Bancorp Inc. 6,000 106,500
FirstMerit Corp. 2,600 90,350
Total 232,225
---------
- -----------------------------------------------------------------------
Brokers 3.41% McDonald & Co.
Investments Inc. 5,000 152,500
Piper Jaffray Cos Inc. 10,000 146,250
Total 298,750
---------
- -----------------------------------------------------------------------
Building Materials Cameron Ashley Building
2.46% Products Inc.+ 14,500 215,687
---------
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
Investment Shares Market Value
- -----------------------------------------------------------------------
Communications
Equipment 1.07% TII Industries Inc.+ 15,000 $ 93,748
---------
- -----------------------------------------------------------------------
Computer Software/ Evans & Sutherland
Services 2.58% Computer Corp.+ 5,700 146,775
General Binding Corp. 2,900 79,750
Total 226,525
---------
- -----------------------------------------------------------------------
Consumer Products
.79% Paragon Trade Brands, Inc.+ 2,500 69,374
---------
- -----------------------------------------------------------------------
Containers 1.76% BWAY Corp.+ 8,500 154,063
---------
- -----------------------------------------------------------------------
Electrical
Equipment Kollmorgen Corp. 17,000 193,375
2.56% Woodhead Industries Inc. 2,500 31,563
Total 224,938
---------
- -----------------------------------------------------------------------
Electronics: Burr-Brown Group+ 8,000 208,000
Components Charter Power Systems Inc. 3,000 81,750
9.25% DII Group Inc.+ 10,000 247,500
Methode Electronics Inc.
Class A 11,500 221,375
SpecTran Corp.+ 3,000 52,875
Total 811,500
---------
- -----------------------------------------------------------------------
Electronics: Richey Electronics Inc.+ 15,000 146,250
Equipment 7.45% Telxon Corp. 16,000 196,000
Zebra Technologies Corp.
Class A+ 6,000 154,500
Zero Corp. 8,000 157,000
Total 653,750
---------
---------------------------------------------------
<PAGE>
Statement of Net Assets
SMALL-CAP SERIES NOVEMBER 30, 1996
- -----------------------------------------------------------------------
Investment Shares Market Value
- -----------------------------------------------------------------------
Engineering/ CDI Corp.+ 5,000 $ 145,625
Construction 6.38% Michael Baker Corp.+ 65,000 414,375
Total 560,000
---------
- -----------------------------------------------------------------------
Food 2.45% Michael Foods Inc. 7,000 79,625
Sanderson Farms Inc. 8,500 134,938
Total 214,563
---------
- -----------------------------------------------------------------------
Health Care
Products
.66% Sunrise Medical Inc.+ 4,000 57,500
---------
- -----------------------------------------------------------------------
Industrial
Distribution Bearings Inc. 4,800 132,600
3.42% Vallen Corp.+ 10,000 167,500
Total 300,100
---------
- -----------------------------------------------------------------------
Insurance 2.05% Harleysville Group Inc. 2,000 62,000
Philadelphia Cons Holding
Company+ 5,000 117,500
Total 179,500
---------
- -----------------------------------------------------------------------
Leasing .82% Interpool Inc. 3,000 72,000
---------
- -----------------------------------------------------------------------
Manufacturing Albany International Corp.
Diversified 11.70% Class A 4,500 99,563
Amcast Industrial Corp.
Class A 6,500 153,563
Applied Power Inc. 6,500 235,625
Lincoln Electric Co. Class A 6,500 198,250
Penn Engineering &
Mfg. Corp. 7,000 130,375
Regal Beloit Corp. 1,000 19,375
Teleflex Inc. 1,200 59,400
Wolverine Tube Inc.+ 3,500 130,375
Total 1,026,526
---------
- -----------------------------------------------------------------------
Natural Gas
Diversified .74% KN Energy Inc. 1,600 65,000
---------
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
Investment Shares Market Value
- -----------------------------------------------------------------------
Printing and Gibson Greetings Inc.+ 12,500 $ 235,938
Publishing 3.87% Golden Books Family
Entertainment Inc.+ 9,000 103,500
Total 339,438
---------
- -----------------------------------------------------------------------
Specialty
Materials Material Sciences Corp.+ 5,000 83,125
4.80% Rogers Corp.+ 12,300 338,250
Total 421,375
---------
- -----------------------------------------------------------------------
Steel 2.72% Oregon Steel Mills Inc. 7,700 131,863
Quanex Corp. 4,000 107,000
Total 238,863
---------
- -----------------------------------------------------------------------
Transportation: Air Express International
4.10% Corp. 6,300 205,931
Smithway Motor Express
Class A+ 8,000 71,000
Swift Transportation Co. Inc.+ 2,300 55,344
Transport Corp. of America+ 2,500 27,500
Total 359,775
---------
- -----------------------------------------------------------------------
Total Investments in
Common Stocks
(Cost $7,811,865) 8,367,925
---------
- -----------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 4.61% 404,246
---------
- -----------------------------------------------------------------------
Net Assets 100.00% $8,772,171
=======================================================================
Class A Shares-Net asset value
($8,274,652 / 689,038
shares outstanding) $12.01
Class B Shares-Net asset value
($497,519 / 41,443
shares outstanding) $12.00
+ Non-income producing.
See Notes to Financial Statements.
4
<PAGE>
Statements of Operations
Year Ended December 13, 1995(a)
November 30, to November 30,
1996 1996
---------------- -----------------
Large-Cap Small-Cap
Investment Income Series Series
============================================================== =================
Income Dividends $ 251,126 $ 35,169
Interest 19,320 4,545
Total income 270,446 39,714
--------------------------------------------------- ----------------
Expenses Management fee 78,668 24,461
Management fee waived (40,304) (24,461)
12b-1 distribution plan-Class A 3,700 343
12b-1 distribution plan-Class B 11,900 131
Audit and tax 6,000 4,000
Shareholder servicing 4,000 3,000
Reports to shareholders 3,000 3,000
Registration 1,000 1,000
Organization 1,202 745
Other 718 -
Expenses assumed by Lord Abbett (15,318) (11,855)
Net expenses 54,566 364
--------------------------------------------------- ----------------
Net investment income 215,880 39,350
--------------------------------------------------- ----------------
Realized and Unrealized Gain on Investments
================================================================================
Realized gain from investment transactions
Proceeds from sales 6,308,684 4,484,812
Cost of securities sold 5,051,769 4,100,625
Net realized gain 1,256,915 384,187
--------------------------------------------------- ----------------
Unrealized appreciation of investments 1,855,639 556,060
- -------------------------------------------------------------- ----------------
Net realized and unrealized gain on investments 3,112,554 940,247
- -------------------------------------------------------------- ----------------
Net Increase in Net Assets Resulting
from Operations $ 3,328,434 $ 979,597
================================================================================
(a) Commencement of operations.
See Notes to Financial Statements.
5
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 13, 1995(a) Year Ended
November 30, to November 30, November 30,
--------------- -------------------- --------------
1996 1996 1995
Large-Cap Small-Cap Large-Cap
Increase (Decrease) in Net Assets Series Series Series
================================================================================================== ================= ==============
<S> <C> <C> <C>
Operations Net investment income $ 215,880 $ 39,350 $ 219,010
Net realized gain from investment transactions 1,256,915 384,187 428,848
Net unrealized appreciation of investments 1,855,639 556,060 1,258,617
Net increase in net assets resulting from operations 3,328,434 979,597 1,906,475
------------------------------------------------------------------------------------ ----------------- --------------
Undistributed net investment income included in price of shares sold 87,151 29,824 17,909
- -------------------------------------------------------------------------------------------------- ----------------- --------------
Distributions to shareholders from:
Net investment income-Class A (307,886) (34,864) (126,046)
Net investment income-Class B (32,704) -- --
Net realized gain from investment transactions-Class A (428,272) (347,605) (356,407)
Net realized gain from investment transactions-Class B -- -- --
Total distributions (768,862) (382,469) (482,453)
------------------------------------------------------------------------------------ ----------------- --------------
Capital share transactions:
Net proceeds from sales of shares 15,705,205 7,839,815 1,136,497
Net asset value of shares issued to shareholders in reinvestment of
net investment income and realized gain from investment transactions 730,851 382,601 464,652
Total 16,436,056 8,222,416 1,601,149
------------------------------------------------------------------------------------ ----------------- --------------
Cost of shares reacquired (3,039,468) (77,197) (1,052,464)
------------------------------------------------------------------------------------ ----------------- --------------
Increase in net assets derived from capital share transactions 13,396,588 8,145,219 548,685
------------------------------------------------------------------------------------ ----------------- --------------
Increase in net assets 16,043,311 8,772,171 1,990,616
- -------------------------------------------------------------------------------------------------- ----------------- --------------
Net Assets
Beginning of period 7,548,736 -- 5,558,120
------------------------------------------------------------------------------------ ----------------- --------------
End of period(b) $23,592,047 $8,772,171 $7,548,736
=====================================================================================================================
</TABLE>
(a) Commencement of operations.
(b) Including undistributed net investment income of $223,649 and
$34,310, for the Large-Cap and Small-Cap Series, respectively, as
of November 30, 1996 and undistributed net investment income of
$287,310, as of November 30, 1995 for the Large-Cap Series. See
Notes to Financial Statements.
6
<PAGE>
Financial Highlights
LARGE-CAP SERIES
<TABLE>
<CAPTION>
Class A Shares Class B Shares
-------------------------------------------------------- --------------------
June 3, 1992(a) to
Year Ended November 30, November 30, August 1, 1996(b)
Per Share Operating Performance: 1996 1995 1994 1993 1992 to November 30, 1996
=========================================================================================== ================= ====================
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.54 $ 12.79 $ 12.33 $ 10.61 $ 10.00 $ 15.24
------------------------------------------------------------------------------------- ----------------- --------------------
Income from investment operations
Net investment income .270 .42 .34 .29 .12 .12
Net realized and unrealized gain on investments 3.505 3.44 .65 1.57 .49 2.66
Total from investment operations 3.775 3.86 .99 1.86 .61 2.78
------------------------------------------------------------------------------------- ----------------- --------------------
Distributions
Dividends from net investment income (.57) (.29) (.20) (.14) -- (.19)
Distributions from net realized gain (.885) (.82) (.33) -- -- --
------------------------------------------------------------------------------------- ----------------- --------------------
Net asset value, end of period $ 17.86 $ 15.54 $ 12.79 $ 12.33 $ 10.61 $ 17.83
- ------------------------------------------------------------------------------------------- ----------------- --------------------
Total Return(c) 26.25% 32.82% 8.21% 17.72% 6.10%(d) 18.39%(d)
=========================================================================================== ================= ====================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursements .36% .00% .00% .00% .00%(d) .59%(d)
Expenses, excluding waiver and reimbursements .96% 1.02% 1.15% 1.20% .79%(d) .59%(d)
Net investment income 2.24% 3.27% 2.65% 2.44% 1.39%(d) .22%(d)
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
June 3, 1992(a)
Year Ended November 30, to November 30,
Supplemental Data for AllClasses: 1996 1995 1994 1993 1992
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Net assets, end of period (000) $23,592 $7,549 $5,558 $4,086 $2,372
Portfolio turnover rate 62.25% 37.17% 43.85% 74.16% 20.70%
Average commissions per share paid
on equity transactions $.056 n/a n/a n/a n/a
====================================================================================================================================
</TABLE>
SMALL-CAP SERIES
<TABLE>
<CAPTION>
Class A Shares Class B Shares
---------------------- ------------------------
December 13, 1995(a) November 15, 1996(b)
to November 30, to November 30,
Per Share Operating Performance: 1996 1996
======================================================================================================= ==========================
<S> <C> <C>
Net asset value, beginning of period $10.00 $11.67
------------------------------------------------------------------------------------------------- --------------------------
Income from investment operations
Net investment income .127 .001
Net realized and unrealized gain on investments 2.658 .329
Total from investment operations 2.785 .33
------------------------------------------------------------------------------------------------- --------------------------
Distributions
Dividends from net investment income (.075) --
Distribution from net realized gain (.700) --
------------------------------------------------------------------------------------------------- --------------------------
Net asset value, end of period $12.01 $12.00
- ------------------------------------------------------------------------------------------------------- --------------------------
Total Return(c) 28.24%(d) 2.84%(d)
======================================================================================================= ==========================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursements .01%(d) .04%(d)
Expenses, excluding waiver and reimbursements 1.00%(d) .07%(d)
Net investment income 1.02%(d) .01%(d)
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
December 13, 1995(a)
to November 30,
Supplemental Data for All Classes: 1996
====================================================================================================================================
<S> <C>
Net assets, end of period (000) $ 8,772
Portfolio turnover rate 110.09%
Average commissions per share paid on equity transactions $ .052
==============================================================================================================================
</TABLE>
(a) Commencement of operations.
(b) Commencement of offering Class B shares.
(c) Total return does not consider the effects of sales loads.
(d) Not annualized.
See Notes to Financial Statements.
7
<PAGE>
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) Security transactions are accounted for on the date that the securities are
purchased or sold (trade date). Realized gains and losses from security
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.
(f) Certain components of net assets in the prior period have been reclassified
to conform to the current year presentation.
2. Management Fee and Other Transactions with Affiliates
The Company has a management agreement with Lord, Abbett & Co. ("Lord Abbett")
pursuant to which it supplies the Company with investment management services
and executive and other personnel, pays for 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%. Lord Abbett
waived its management fee for the entire year for the Small-Cap Series and for
the first eight months of the year for the Large-Cap Series.
The Large-Cap and Small-Cap Series of the Company have Rule 12b-1 plans and
agreements (the "Class A and Class B 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, the Series pay Distributor (1) an annual service
fee of 0.25% of the average daily net assets of Class A shares and (2) a
one-time distribution fee of up to 1% on certain qualifying purchases and a
supplemental annual distribution fee of 0.10% of the average daily net assets of
Class A shares serviced by certain qualifying institutions. The Class A Plan of
the Large-Cap and Small-Cap Series became operative on August 1, 1996 and
November 15, 1996, respectively. Pursuant to the Class B Plan, the Series pay
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.
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 $36,269 $234,486
Small-Cap $ 6,345 $ 39,745
- --------------------------------------------------------------------------------
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 and 30 million shares of $.001 par value capital stock
designated Class B. The Small-Cap Series has authorized 50 million shares of
$.001 par value capital stock designated Class A and 30 million shares of $.001
par value capital stock designated Class B. Paid in capital for the Company
amounted to $18,773,905 for the Large-Cap Series and $8,145,219 for the
Small-Cap Series at November 30, 1996. Transactions in capital stock were as
follows:
<TABLE>
<CAPTION>
12/13/95
(Commencement of
Operations)
Year Ended 11/30/96 to 11/30/96 Year Ended 11/30/95
----------------------- --------------------- ---------------------
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 594,545 $9,601,985 662,268 $7,351,610 87,676 $1,136,497
- ------------------------------------------------------ ----------------------- --------------------- ---------------------
Shares issued to shareholders in reinvestment of net
investment income and realized gain from
investment transactions 48,560 700,600 33,296 382,601 40,508 464,652
- ------------------------------------------------------ ----------------------- --------------------- ---------------------
Total 643,105 10,302,585 695,564 7,734,211 128,184 1,601,149
- ------------------------------------------------------ ----------------------- --------------------- ---------------------
Shares reacquired (172,002) (2,736,592) (6,526) (77,197) (76,790) (1,052,464)
- ------------------------------------------------------ ----------------------- --------------------- ---------------------
Increase in shares 471,103 $7,565,993 689,038 $7,657,014 51,394 $548,685
- ------------------------------------------------------ ----------------------- --------------------- ---------------------
</TABLE>
8
<PAGE>
Notes to Financial Statements
<TABLE>
<CAPTION>
8/1/96 (Commencement 11/15/96 (Commencement
of Offering Class B Shares) of Offering Class B Shares)
to 11/30/96 to 11/30/96
----------------------------- ---------------------------
Large-Cap Series Small-Cap Series
----------------------------- ---------------------------
Class B Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------ ---------------------------
<S> <C> <C> <C> <C>
Sales of shares 380,322 $ 6,103,220 41,443 $ 488,205
- ------------------------------------------------------------------------------------------ ---------------------------
Shares issued to shareholders in reinvestment
of net investment income and realized gain
from investment transactions 1,904 30,251 -- --
- ------------------------------------------------------------------------------------------ ---------------------------
Total 382,226 6,133,471 41,443 488,205
- ------------------------------------------------------------------------------------------ ---------------------------
Shares reacquired (17,762) (302,876) -- --
- ------------------------------------------------------------------------------------------ ---------------------------
Increase in shares 364,464 $ 5,830,595 41,443 $ 488,205
- ------------------------------------------------------------------------------------------------------------------------------
</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 November 30, 1996,
accumulated net realized gain for each Series was as follows:
- -------------------------------------------------------------------------------
Large-Cap Series $1,257,706
Small-Cap Series $36,582
- -------------------------------------------------------------------------------
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. Distributions declared on December 12, 1996 were
as follows:
Rate Aggregate
Net Investment Income Per Share Amount
+-----------------------------------------------------------------
Large-Cap Series-Class A $ 0.06 $ 56,680
Large-Cap Series-Class B $ 0.021 $ 7,959
- ------------------------------------------------------------------
Rate Aggregate
Capital Gains Per Share Amount
- ------------------------------------------------------------------
Large-Cap Series-Class A $0.95 $944,955
Large-Cap Series-Class B $0.95 $360,068
- ------------------------------------------------------------------
5. Purchases and Sales of Securities
Purchases and sales of investments (other than short-term investments) for the
period ended November 30, 1996 were as follows:
Series Purchases Sales
- -------------------------------------------------------------------------
Large-Cap $18,032,172 $6,308,684
Small-Cap $11,912,489 $4,484,812
- -------------------------------------------------------------------------
As of November 30, 1996, 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 $3,336,787 $3,418,472 $ 81,685
Small-Cap $ 556,060 $ 723,851 $ 167,791
- --------------------------------------------------------------------------------
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. Directors' fees accrued
during the year were $300, a portion of which has been deemed invested in shares
of the Company under a deferred compensation plan contemplating future payment
of the value of those shares.
7. Proxy Results (unaudited)
The Company's shareholders voted on the following proposals at the Annual
Meeting of Shareholders held on June 19, 1996. Each Director was elected and all
other proposals were approved. The description of each proposal and the results
of the shareholder vote are as follows:
Election of Directors For Withheld
- --------------------------------------------------------------------------
Ronald P. Lynch 663,614
Robert S. Dow 663,614
E. Thayer Bigelow 663,614
Stewart S. Dixon 663,328 286
John C. Jansing 663,614
C. Alan MacDonald 663,614
Hansel B. Millican, Jr. 663,614
Thomas J. Neff 663,328 286
- --------------------------------------------------------------------------
For Against Abstain
- -----------------------------------------------------------------------------
Ratification of Deloitte & Touche LLP
as independent public accountants 663,453 161
Approval of new Distribution Plan
and Agreement
Large-Cap Series 492,953 20,922
Small-Cap Series 149,454 285
Approval of an amendment to the
Articles of Incorporation authorizing
the creation of classes and series of
shares and confirming that the
Directors may impose contingent
deferred sales charges on certain
redemptions of new classes of shares
Large-Cap Series 492,953 20,922
Small-Cap Series 149,454 285
- -----------------------------------------------------------------------------
Copyright (C) 1997 by Lord Abbett Research Fund, Inc., 767 Fifth Avenue, New
York, NY10153-0203
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>
Independent Auditors' Report
The Board of Directors and Shareholders,
Lord Abbett Research Fund, Inc.:
We have audited the accompanying statements of net assets of Lord Abbett
Research Fund, Inc.-Large-Cap Series and Small-Cap Series as of November 30,
1996, the related statements of operations 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 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, 1996 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. 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 and Small-Cap Series at November 30, 1996,
the results of their operations, the changes in their 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
January 6, 1997
[LOGO] LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
LORD ABBETT DISTRIBUTOR LLC
- ------------------------------------------------------------ LARF-2-1196
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203 (1/97)
