1933 Act File No. 33-47641
1940 Act File No. 811-6650
SECURITIES & EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 14 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
AMENDMENT No. 13 [X]
LORD ABBETT RESEARCH FUND, INC.
-------------------------------
Exact Name of Registrant as Specified in Charter
767 Fifth Avenue, New York, N.Y. 10153
--------------------------------------
Address of Principal Executive Office
Registrant's Telephone Number (212) 848-1800
--------------------------------------------
Thomas F. Konop, Vice President
767 Fifth Avenue, New York, N.Y. 10153
--------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
______ immediately on filing pursuant to paragraph (b) of Rule 485
X on April 1, 1998 pursuant to paragraph (b) of Rule 485
______
60 days after filing pursuant to paragraph (a) (1) of Rule 485
______ on (date) pursuant to paragraph (a) (1) of Rule 485
75 days after filing pursuant to paragraph (a) (2) of Rule 485
on (date) pursuant to paragraph (a) (2) of Rule 485
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
<PAGE>
LORD ABBETT RESEARCH FUND, INC.
FORM N-1A
Cross Reference Sheet
Post-Effective Amendment No. 14
Pursuant to Rule 481(a)
This Post-Effective Amendment No. 14 (the "Amendment") to the Registrant's
Registration Statement relates only to Lord Abbett Research Fund - Mid-Cap
Series.
The other series and classes of shares of the Registrant are listed below and
are offered by the Prospectus and Statement of Additional Information in Parts A
and B, respectively, of the Post-Effective Amendments to the Registrant's
Registration Statement as identified. The following are separate series and/or
classes of shares of the Registrant. This Amendment does not relate to, amend or
otherwise affect the Prospectus and Statement of Additional Information
contained in the prior Post-Effective Amendments listed below, and pursuant to
Rule 485(d) under the Securities Act of 1933, does not affect the effectiveness
of such Post-Effecive Amendments.
Post-Effective
Amendment No.
--------------
Small-Cap Series - Class Y 13
Small-Cap Series - Class A, B and C 12
Large-Cap Series - Class A, B and C 12
Form N-1A Location In Prospectus or
Item No. Statement of Additional Information
- --------- ------------------------------------
1 Cover Page
2 Fee Table
3 (a) Financial Highlights; Performance
3 (b) N/A
4 (a) (i) Cover Page
4 (a) (ii) Investment Objective; How We Invest
4 (b) (c) How We Invest
5 (a) (b) (c) Our Management; Back Cover Page
5 (d) N/A
5 (e) Back Cover Page
5 (f) Our Management
5 (g) N/A
5 A Performance
6 (a) Cover Page
6 (b) (c) (d) N/A
6 (e) Cover Page
6 (f) (g) Dividends, Capital Gains
Distributions and Taxes
7 (a) Back Cover Page
7 (b) (c) (d)
(e) (f) Purchases
8 (a) (b) (c)
(d) Redemptions
9 N/A
10 Cover Page
11 Cover Page - Table of Contents
12 N/A
13 (a) (b) (c)
(d) Investment Objective and Policies
14 Trustees and Officers
15 (a) (b) N/A
15 (c) Trustees and Officers
16 (a) (i) Investment Advisory and Other Services
16 (a) (ii) Trustees and Officers
16 (a) (iii) Investment Advisory and Other Services
<PAGE>
16 (b) Investment Advisory and Other Services
16 (c) (d) (e)
(g) N/A
16 (f) Purchases, Redemptions
and Shareholder Services
16 (h) Investment Advisory and Other Services
16 (i) N/A
17 (a) Portfolio Transactions
17 (b) N/A
17 (c) Portfolio Transactions
17 (d) Portfolio Transactions
17 (e) N/A
18 (a) Cover Page
18 (b) N/A
19 (a) (b) Purchases, Redemptions
and Shareholder Services; Notes
to Financial Statements
19 (c) N/A
20 Taxes
Form N-1A Location In Prospectus or
Item No. Statement of Additional Information
- --------- -----------------------------------
21 (a) Purchases, Redemptions
and Shareholder Services
21 (b) (c) N/A
22 (a) N/A
22 (b) Past Performance
23 Financial Statements; Supplementary
Financial Information
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Part A - Financial Highlights for the two fiscal years ended
November 30, 1997 and November 30, 996, and for the period August
1, 1995 (commencement of operations) - to November 30, 1995.
Part B - Statement of Net Assets at November 30, 1996. Statement
of Operations at November 30, 1997.
(b) Exhibits -
99.B11 Consent of Deloitte & Touche**
Ex.16 Computation of Performance*
* Filed herewith
** To Be Filed
If exhibit is not mentioned above, it is not applicable or has been previously
filed.
<PAGE>
Item 25. Person Controlled by or Under Common Control with Registrant
None.
Item 26. Number of Record Holders of Securities
As of March 6, 1998
Mid-Cap - 60
Item 27. Indemnification
Registrant is incorporated under the laws of the State of Maryland and
is subject to Section 2-418 of the Corporations and Associations
Article of the Annotated Code of the State of Maryland controlling the
indemnification of directors and officers. Since Registrant has its
executive offices in the State of New York, and is qualified as a
foreign corporation doing business in such State, the persons covered
by the foregoing statute may also be entitled to and subject to the
limitations of the indemnification provisions of Section 721-727 of the
New York Business Corporation Law.
The general effect of these statutes is to protect officers, directors
and employees of Registrant against legal liability and expenses
incurred by reason of their positions with the Registrant. The statutes
provide for indemnification for liability for proceedings not brought
on behalf of the corporation and for those brought on behalf of the
corporation, and in each case place conditions under which
indemnification will be permitted, including requirements that the
officer, director or employee acted in good faith. Under certain
conditions, payment of expenses in advance of final disposition may be
permitted. The By-Laws of Registrant, without limiting the authority of
Registrant to indemnify any of its officers, employees or agents to the
extent consistent with applicable law, makes the indemnification of its
directors mandatory subject only to the conditions and limitations
imposed by the above-mentioned Section 2-418 of Maryland Law and by the
provisions of Section 17(h) of the Investment Company Act of 1940 as
interpreted and required to be implemented by SEC Release No. IC-11330
of September 4, 1980.
In referring in its By-Laws to, and making indemnification of directors
subject to the conditions and limitations of, both Section 2-418 of the
Maryland Law and Section 17(h) of the Investment Company Act of 1940,
Registrant intends that conditions and limitations on the extent of the
indemnification of directors imposed by the provisions of either
Section 2-418 or Section 17(h) shall apply and that any inconsistency
between the two will be resolved by applying the provisions of said
Section 17(h) if the condition or limitation imposed by Section 17(h)
is the more stringent. In referring in its By-Laws to SEC Release No.
IC-11330 as the source for interpretation and implementation of said
Section
<PAGE>
17(h), Registrant understands that it would be required under its
By-Laws to use reasonable and fair means in determining whether
indemnification of a director should be made and undertakes to use
either (1) a final decision on the merits by a court or other body
before whom the proceeding was brought that the person to be
indemnified ("indemnitee") was not liable to Registrant or to its
security holders by reason of willful malfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct
of his office ("disabling conduct") or (2) in the absence of such a
decision, a reasonable determination, based upon a review of the facts,
that the indemnitee was not liable by reason of such disabling conduct,
by (a) the vote of a majority of a quorum of directors who are neither
"interested persons" (as defined in the 1940 Act) of Registrant nor
parties to the proceeding, or (b) an independent legal counsel in a
written opinion. Also, Registrant will make advances of attorneys' fees
or other expenses incurred by a director in his defense only if (in
addition to his undertaking to repay the advance if he is not
ultimately entitled to indemnification) (1) the indemnitee provides a
security for his undertaking, (2) Registrant shall be insured against
losses arising by reason of any lawful advances, or (3) a majority of a
quorum of the non-interested, non-party directors of Registrant, or an
independent legal counsel in a written opinion, shall determine, based
on a review of readily available facts, that there is reason to believe
that the indemnitee ultimately will be found entitled to
indemnification. Insofar as indemnification for liability arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expense
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
Lord, Abbett & Co. acts as investment advisor for twelve, other
open-end investment companies (of which it is principal underwriter for
thirteen), and as investment adviser to approximately 6,220 private
accounts. Other than acting as directors and/or officers of open-end
investment companies managed by Lord, Abbett & Co., none of Lord,
Abbett & Co.'s partners has, in the past two fiscal years, engaged in
any other business, profession, vocation or employment of a substantial
nature for his own account or in the capacity of director, officer,
employee, partner or trustee of any entity except as follows:
<PAGE>
John J. Walsh
Trustee
The Brooklyn Hospital Center
100 Parkside Avenue
Brooklyn, N.Y.
Item 29. Principal Underwriter
(a) Lord Abbett Affiliated Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett U. S. Government Securities Money Market Fund, Inc.
Lord Abbett Series Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Tax-Free Income Trust
Lord Abbett Securities Trust
Lord Abbett Investment Trust
Investment Advisor
American Skandia Trust (Lord Abbett Growth and Income Portfolio)
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
Business Address (1) with Registrant
-------------------- ---------------
Robert S. Dow Chairman and President
Zane E. Brown Vice President
Paul A. Hilstad Vice President &
Secretary
Stephen I. Allen Vice President
Daniel E. Carper Vice President
Daria L. Foster Vice President
W. Thomas Hudson Vice President
Michael McLaughlin Vice President
Robert G. Morris Vice President
E. Wayne Nordberg Vice President
Robert J. Noelke Vice President
John J. Walsh Vice President
(1) Each of the above has a principal business address 767 Fifth
Avenue, New York, NY 10153
(c) Not applicable
Item 30. Location of Accounts and Records
Registrant maintains the records, required by Rules 31a - 1(a) and (b),
and 31a - 2(a) at its main office.
Lord, Abbett & Co. maintains the records required by Rules 31a - 1(f)
and 31a - 2(e) at its main office.
Certain records such as canceled stock certificates and correspondence
may be physically maintained at the main office
<PAGE>
of the Registrant's Transfer Agent, Custodian, or Shareholder Servicing
Agent within the requirements of Rule 31a-3.
Item 31. Management Services
None
Item 32. Undertakings
The Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>
LORD ABBETT RESEARCH FUND, INC.
The General Motors Building
767 Fifth Avenue
================================================================================
The Mid-Cap Series ("Mid-Cap Series", or the "Series") is a diversified separate
series of Lord Abbett Research Fund, Inc. ("we" or the "Fund"), an open-end
management investment company incorporated in Maryland on April 6, 1992. The
Fund currently consists of three Series. Only shares of the Mid-Cap Series are
being offered in this Prospectus.
The Mid-Cap Series' investment objective is to seek capital appreciation
through investments primarily in equity securities which are believed to be
undervalued in the marketplace. In its search for value, the Mid-Cap Series
seeks companies which are primarily middle-sized, based on the value of their
outstanding stock. There can be no assurance that the Series will achieve its
objective.
The Directors may provide for additional series from time to time. Within
each series, the freely transferable shares will have equal rights with respect
to dividends, assets, liquidation and voting.
This Prospectus sets forth concisely the information about the Series that a
prospective investor should know before investing. Additional information about
the Fund and the Series has been filed with the Securities and Exchange
Commission and is available upon request without charge. The Statement of
Additional Information is incorporated by reference into this Prospectus and may
be obtained, without charge, by writing to the Fund or by calling the Fund at
800-874-3733. Ask for "Part B of the Prospectus -- the Statement of Additional
Information".
The date of this Prospectus, and the date of the Statement of Additional
Information, is April 1, 1998.
PROSPECTUS
Investors should read and retain this Prospectus. Shareholder inquiries should
be made in writing to the Fund or by calling 800-821-5129. You can also make
inquiries through your broker-dealer.
================================================================================
CONTENTS PAGE
1 Investment Objectives 2
2 Fee Table 2
3 Financial Highlights 2
3 How We Invest 2
4 Purchases 8
5 Our Management 8
6 Dividends, Capital Gains
Distributions and Taxes 9
7 Redemptions 10
8 Performance 10
================================================================================
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
INVESTMENT OBJECTIVE
=============================================================================
The investment objective of the Mid-Cap Series is to seek capital appreciation
through investments, primarily in equity securities, which are believed to be
undervalued in the marketplace.
FEE TABLE
=============================================================================
A summary of expenses of the Series is set forth in the table below in order to
provide a better understanding of such expenses. The example is not a
representation of past or future expenses. Actual expenses may be more or less
than those shown.
Example: Assume annual return of the Series is 5% and there is no
- --------------------------------------------------------------------------------
Shareholder Transaction Expenses Mid-Cap
(as a percentage of offering price) Series
Maximum Sales Load(1) on Purchases -------
(See "Purchases") None
Redemption Fee None
- --------------------------------------------------------------------------------
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees (See "Our Management") .00%(2)
12b-1 Fees None
Other Expenses (See "Our Management") .00%(2)
- --------------------------------------------------------------------------------
Total Operating Expenses .00%(2)
- --------------------------------------------------------------------------------
change in the level of expenses described below. For a $1,000 investment, with
reinvestment of all distributions, you would pay the following total expenses if
you closed your account after the number of years indicated.
1 year(3) 3 years(3)
--------- ----------
Mid-Cap Series $0 $0
(1) Sales "load" is referred to as sales "charge" throughout this Prospectus.
(2) Although not obligated to, Lord, Abbett & Co. intends to waive its
management fee and subsidized the expenses of the Series. The management fee
for the Series would be .75% and other expenses are estimated to be .40%
(for total estimated operating expenses of 1.15%) for the Series for the
current fiscal year, absent such waiver and subsidy.
(3) These figures reflect a management fee waiver and expense subsidy from Lord,
Abbett & Co. These expenses without such waiver and subsidy are estimated to
be $12 and $37, respectively.
FINANCIAL HIGHLIGHTS
=============================================================================
The following financial highlights have been audited by Deloitte & Touche LLP,
independent auditors, whose report thereon is incorporated by reference into the
Statement of Additional Information and may be obtained on request.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Year Ended November 30, For the Period August 1, 1995
Per Class A Share+ Operating ----------------------- (Commencement of Operations)
Performance: 1997 1996 to November 30, 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $12.84 $10.18 $10.00
Income from Investment Operations
Net investment income++ .23 .30 .10*
Net realized and unrealized gain on investments 3.39 2.50 .08
Total from investment operations 3.62 2.80 .18
- ----------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.28) (.12) --
Net realized gain from security transactions -- (.02) --
Net asset value, end of period $16.18 $12.84 $10.18
- ----------------------------------------------------------------------------------------------------------------------
Total Return 28.90% 27.81% 1.80%*
- ----------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (000) $1,672 $1,462 $968
Ratios to Average Net Assets:
Expenses, including waiver .00% .00% 0.00%*
Expenses, excluding waiver 1.58% 2.39% 1.20%*
Net investment income 1.69% 2.67% 1.04%*
Portfolio turnover rate 52.86% 30.78% 1.55%
- ----------------------------------------------------------------------------------------------------------------------
Average commisions per share paid on
equity transactions $.049 $.062 $.048
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Not Annualized
+ See Notes to Financials
++ Net of management fee waiver and expenses assumed.
<PAGE>
4 HOW WE INVEST
=============================================================================
The Mid-Cap Series invests primarily in common stocks (including securities
convertible into common stocks) of mid-cap companies, defined for this purpose
as companies whose outstanding equity securities have an aggregate market value
of between $200 million and $5 billion. Under normal circumstances, at least 65%
of the Series' total assets will consist of investments made in mid-cap
companies, determined at the time of purchase. Stocks are selected based on
capital appreciation potential, without regard to current income, utilizing a
value-based, disciplined investment process that seeks to identify and invest in
undervalued securities. This investment process consists of three steps.
First, quantitative research is used to identify a universe of stocks which
are relatively undervalued in comparison to other similar investments. From this
universe of stocks the most attractive companies are set aside as candidates for
further analysis.
In the second step of the process, fundamental research seeks to identify
candidates likely to produce attractive investment returns over a six to twelve
month time period. This is done, for example, by analyzing the key elements of
each company's profitability, such as the company's competitive position, its
strategies for improving returns to shareholders, and the probability of
management's success based on past experience.
The third part of the investment process is an analysis of the company's
prospects in view of our economic outlook for a standard time period. This
outlook is developed periodically throughout the year, taking into
consideration, for example, such factors as (i) the level and direction of
inflation, interest rates, and general economic activity and (ii) government
monetary and fiscal policies.
The investment portfolio of the Mid-Cap Series will be diversified among many
issuers representing many different industries. The portfolio of the Mid-Cap
Series reflects the collective judgment of the Research Department of Lord,
Abbett & Co. ("Lord Abbett") as to what securities represent the greatest
long-term investment value pursuant to the Mid-Cap Series' investment objective
and policies. At the time of purchase, securities selected for the Mid-Cap
Series' portfolio may be largely neglected by the investment community or, if
widely followed, they may be out of favor.
Mid-Cap Series may deal in options on securities, and securities indexes, and
financial futures transactions, including options on financial futures. Mid-Cap
Series may write (sell) covered call options and secured put and call options
provided that no more than 5% of its net assets (at the time of purchase) may be
invested in premiums on such options.
Mid-Cap Series is not currently employing any of the options and financial
futures transactions described above.
OTHER POLICIES.
Foreign Investments. Up to 35% of the Series' net assets (at the time of
investment) may be invested in securities (of the type described above) which
are primarily traded in foreign countries. See "Risk Factors" below.
Foreign Currency Hedging Techniques. The Series may utilize various foreign
currency hedging techniques described below.
A forward foreign currency contract involves an obligation to purchase or
sell a specific amount of a currency at a set price on a future date. The Series
may enter into forward foreign currency contracts in primarily two
circumstances. First, when the Series desires to "lock in" the U.S. dollar price
of the security, by entering into a forward contract for the purchase or sale of
the amount of foreign currency involved in the underlying security transaction,
the Series will be able to protect against a possible loss resulting from an
adverse change in the relationship between the U.S. dollar and the subject
foreign currency during the period between the date of purchase or sale and the
date of settlement.
Second, when Fund management believes that the currency of a particular
foreign country may suffer a decline against the U.S. dollar, the Series may
enter into a forward contract to sell the amount of foreign currency
approximating the value of some or all of the Series' portfolio securities
denominated in such foreign currency or, in the alternative, the Series may use
a cross-currency-hedging technique whereby it enters into such a forward
contract to sell another currency (obtained in exchange for the cur-
3
<PAGE>
rency which the portfolio securities are denominated in if such securities are
sold) which it expects to decline in a similar manner but which has a lower
transaction cost. Precise matching of the forward contract and the value of the
securities involved will generally not be possible.
The Series also may purchase foreign currency put options and write foreign
currency call options on U.S. exchanges or U.S. over-the-counter markets (O-T-C
options are generally less liquid and involve issuer credit risk). A put option
gives the Series, upon payment of a premium, the right to sell a currency at the
exercise price until the expiration of the option and serves to insure against
adverse currency price movements in the underlying portfolio assets denominated
in that currency. The premiums paid for such foreign currency put options will
not exceed 5% of the net assets of the Series.
Unlisted options together with other illiquid securities may comprise no more
than 15% of the Series' net assets.
A foreign currency call option written by the Series gives the purchaser,
upon payment of a premium, the right to purchase from the Series a currency at
the exercise price until the expiration of the option. The Series may write a
call option on a foreign currency only in conjunction with a purchase of a put
option on that currency. Such a strategy is designed to reduce the cost of
downside currency protection by limiting currency appreciation potential. The
face value of such writing or cross-hedging (described above) may not exceed 90%
of the value of the securities denominated in such currency (a) invested in by
the Series to cover such call writing or (b) to be crossed.
The Series may invest up to 15% of its net assets in illiquid securities.
Securities determined by the Directors to be liquid pursuant to Securities and
Exchange Commission Rule 144A will not be subject to this limit. Investments by
the Series in Rule 144A securities initially determined to be liquid could have
the effect of diminishing the level of the Series' liquidity during periods of
decreased market interest in such securities. Under the Rule, a qualifying
unregistered security may be resold to a qualified institutional buyer without
registration and without regard to whether the seller originally purchased the
security for investment.
The Series may engage in (a) investing in closed-end investment companies,
(b) investing in straight bonds or other debt securities, including lower rated,
high-yield bonds, (c) lending of its portfolio securities to broker-dealers on a
secured basis and (d) investing in rights and warrants to purchase securities
(included within these purchases but not exceeding 2% of the value of its
assets, may be warrants which are not listed on the New York or American Stock
Exchanges), but the Series has the present intention to commit more than 5% of
gross assets to any one of these four identified practices. The Series will
invest more than 5% of its assets (at the time of investment) in lower rated
(BB/Ba or lower), high-yield bonds.
The Series will not borrow money, except as a temporary measure for
extraordinary or emergency purposes and then not in excess of 5% of its gross
assets at the lower of cost or market value.
For temporary defensive purposes or to create reserve purchasing power
pending other investments, the Series may invest in high-quality, short-term
debt obligations of banks, corporations or the U.S. Government of the type
normally owned by a money market fund.
The Series may on occasion enter into repurchase agreements whereby the
seller of a security agrees to repurchase that security from the Series at a
mutually agreed-upon time and price. The period of maturity is usually quite
short, possibly overnight or a few days, although it may extend over a number of
months. The resale price is in excess of the purchase price, reflecting an
agreed-upon rate of return effective for the period of time the Series' money is
invested in the security. The Series repurchase agreements will at all times be
fully collateralized in an amount at least equal to the purchase price,
including accrued interest earned on the underlying securities. The instruments
held as collateral are valued daily, and if the value of the instruments
declines, the Series will require additional collateral. If the seller defaults
and the value of the collateral securing the repurchase agreement declines, the
Series may incur a loss.
The Series may purchase or sell securities on a when-issued or delayed
delivery basis. When-issued or delayed delivery transactions arise when
4
<PAGE>
securities are purchased or sold by the Series with payment and delivery taking
place as much as a month or more in the future in order to secure what is
considered to be an advantageous price and yield to the Series at the time of
entering other liquid high-grade debt obligations having a value equal to or
greater than the Series' purchase commitments; the Custodian will likewise
segregate securities sold on a delayed delivery basis. The securities so
purchased are subject to market fluctuation and no interest accrues to the
purchaser during the period between purchase and settlement. At the time of
delivery of the securities the value may be more or less than the purchase price
and an increase in the percentage of the Series' assets committed to the
purchase of securities on a when-issued or delayed delivery basis may increase
the volatility of the Series' net asset value.
The Series may make short sales of securities or maintain a short position,
provided that at all times when a short position is open the Series owns an
equal amount of such securities or securities convertible into or exchangeable,
without payment of any further consideration, for an equal amount of the
securities of the same issuer as the securities sold short (a short sale
against-the-box), and that not more than 25% of the Series' net assets
(determined at the time of the short sale) may be subject to such sales. Short
sales will be made primarily to defer realization of gain or loss for federal
tax purposes. The Series does not intend to have more than 5% of its net assets
(determined at the time of the short sale) subject to short sales
against-the-box.
The staff of the SEC has taken the position that purchased over-the-counter
options and the assets used as "cover" for written over-the-counter options are
illiquid securities unless the Series and the counterparty have provided for the
Series, at the Series' election, to unwind the over-the-counter option. The
exercise of such an option ordinarily would involve the payment by the Series of
an amount designed to reflect the counterparty's economic loss from an early
termination, but does allow the Series to treat the assets used as "cover" as
"liquid".
The Series will not change its investment objective without shareholder
approval. If the Series determines that its objective can best be achieved by a
substantive change in investment policy or strategy, the Series may make such a
change without shareholder approval by disclosing it in the prospectus.
Risk Factors. If the Series remains small, there is risk that redemptions may
(a) cause portfolio securities to be sold prematurely (at a loss or gain,
depending upon the circumstances) or (b) hamper or prevent a contemplated
portfolio security purchase.
Foreign Securities. Securities markets of foreign countries in which the
Series may invest generally are not subject to the same degree of regulation as
the U.S. markets and may be more volatile and less liquid than the major U.S.
markets. There may be less publicly-available information on publicly-traded
companies, banks and governments in foreign countries than generally is the case
for such entities in the United States. The lack of uniform accounting standards
and practices among countries impairs the validity of direct comparisons of
valuation measures (such as price/earnings ratios) for securities in different
countries. Other considerations include political and social instability,
expropriation, higher transaction costs, currency fluctuations, withholding
taxes that cannot be passed through as a tax credit to shareholders and
different securities settlement practices. Foreign securities may be traded on
days that the Series does not value its portfolio securities, and, accordingly,
the Series' net asset value may be significantly affected.
Under normal circumstances, the Series will invest primarily in common
stocks, and/or securities convertible into common stocks, which subjects the
Series to market risk, that is, the possibility that common stock prices will
decline over short or even extended periods. Although Mid-Cap Series invests
primarily in middle-sized companies, it also may invest, from time to time, in
stocks of large-sized and small-sized companies guided by the policies mentioned
above. Small capitalized companies may offer significant appreciation potential.
However, smaller companies may carry more risk than larger companies. Generally,
small companies rely on limited product lines and markets, financial resources,
or other factors, and this
5
<PAGE>
may make them more susceptible to setbacks or economic downturns. Small
capitalized companies may be more volatile in price, normally have fewer shares
outstanding and these shares trade less frequently than large companies.
Therefore, the securities of smaller companies may be subject to wider price
fluctuations. In many instances the securities of smaller companies are traded
over the counter and may not be traded in the volume typical on a national
securities exchange.
5 PURCHASES
=============================================================================
The Series' shares may only be purchased by employees and partners of Lord
Abbett, directors (trustees) of Lord Abbett-managed funds and spouses and other
family members of such employees, partners and directors (trustees). All shares
may be purchased at the net asset value per share next computed after the order
is received by Lord Abbett. For the Series the minimum initial investment is
$1,000. Subsequent investments may be made in any amount. Place your order with
Lord Abbett or send it to Mid-Cap Series of the Lord Abbett Research Fund, Inc.
(P.O. Box 419100, Kansas City, Missouri 64141).
The net asset value of the Series' shares is calculated every business day as
of the close of the New York Stock Exchange ("NYSE"), by dividing net assets by
shares outstanding. Securities in the Series' portfolio are valued at their
market value as more fully described in the Statement of Additional Information.
A business day is a day on which the NYSE is open for trading. We are not
obligated to maintain the offering or its terms and the offering may be
suspended, changed or withdrawn. Lord Abbett reserves the right to reject any
order. Certificates representing shares of the Series will not be issued. This
will relieve shareholders of the responsibility and inconvenience of safekeeping
share certificates and save the Fund unnecessary expense. If you have any
questions, call the Fund at 800-821-5129.
Telephone Exchange Privilege: Shares may be exchanged, without a service
charge, for those of any other Lord Abbett-sponsored fund except for (i) Lord
Abbett Equity Fund, (ii) Lord Abbett Series Fund and (iii) certain tax-free
single-state series where the exchanging shareholder is a resident of a state in
which such series is not offered for sale (together, "Eligible Funds").
You or your representative with proper identification can instruct the Fund
to exchange shares by telephone. Shareholders have this privilege unless they
refuse it in writing. The Fund will not be liable for following instructions
communicated by telephone that it reasonably believes to be genuine and will
employ reasonable procedures to confirm that instructions received are genuine,
including requesting proper identification, and recording all telephone
exchanges. Instructions must be received by the Fund in Kansas City
(800-521-5315) prior to the close of the NYSE to obtain each fund's net asset
value per share on that day. Expedited exchanges by telephone may be difficult
to implement in times of drastic economic or market change. The exchange
privilege should not be used to take advantage of short-term swings in the
market. The Fund reserves the right to terminate or limit the privilege of any
shareholder who makes frequent exchanges. The Fund can revoke the privilege for
all shareholders upon 60 days' prior written notice. A prospectus for the other
Lord Abbett-sponsored fund selected by you should be obtained and read before an
exchange. Exercise of the Exchange Privilege will be treated as a sale for
federal income tax purposes and, depending on the circumstances, a capital gain
or loss may be recognized.
OUR MANAGEMENT
=============================================================================
Our business is managed by our officers on a day-to-day basis under the overall
direction of our Board of Directors with the advice of Lord Abbett (herein
referred to as "management"). We employ Lord Abbett as investment manager for
the Series pursuant to a Management Agreement. Lord Abbett has been an
investment manager for over 65 years and currently manages approximately $25
billion in a family of mutual funds and other advisory accounts. Under the
Management Agreement, Lord Abbett is obligated to provide the Series with
investment management services and executive and other personnel, pay the
remuneration of our officers and of our directors affiliated with Lord Abbett,
provide us with office space and pay for ordinary and necessary office and
clerical
6
<PAGE>
expenses relating to research, statistical work and supervision of the Series'
portfolio and certain other costs. Lord Abbett provides similar services to
twelve other Lord Abbett-sponsored funds having various investment objectives
and also advises other investment clients. John J. Walsh, Jr., Lord Abbett
partner for over five years, is primarily responsible for the day-to-day
management of the Mid-Cap Series and has been since inception. Mr. Walsh
delegates management duties with respect to the Mid-Cap Series to a committee
consisting, at any time, of three Lord Abbett employees from the Research
Department. The members of the committee, who also may be officers of the Fund,
have staggered terms to assure continuity and a forum for different judgments as
to what securities represent the greatest investment value for the Mid-Cap
Series.
Under the Management Agreement, the Series is obligated to pay Lord Abbett a
monthly fee based on its average daily net assets for each month at the annual
rate of .75%. This fee is higher than that used for most mutual funds. Because
Lord Abbett intends to waive the payment of the management fee, for the year
after commencement of operations of the Series, the effective fee payable to
Lord Abbett by the Series as a percentage of average daily net assets is
expected to be at the annual rate of zero percent for such period. In addition,
we pay all expenses not expressly assumed by Lord Abbett. The Series' ratio of
expenses, including management fee expenses, to average net assets for such
one-year period is expected to be zero percent.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
=============================================================================
With respect to the Series, dividends from taxable net investment income may be
taken in cash or invested in additional shares at net asset value (without a
sales charge) and will be paid to shareholders annually in December.
A long-term capital gains distribution is made when the Series has net
profits during the year from sales of securities which it has held more than one
year. If the Series has realized net short-term capital gains, they also will be
distributed. Any capital gains distributions will be made annually in December.
They may be taken in cash or invested in more shares at net asset value without
a sales charge.
Dividends and distributions declared in October, November or December of any
year will be treated for federal income tax purposes as having been received by
shareholders of the Series in that year if they are paid before February 1 of
the following year. A supplemental capital gains distribution also may be paid
in December.
The Series intends to meet the requirements of Subchapter M of the Internal
Revenue Code. The Series will try to distribute to shareholders all of its net
investment income and net realized capital gains, so as to avoid the necessity
of paying federal income tax. Distributions by the Series of any net long-term
capital gains will be taxable to a shareholder as long-term capital gains
regardless of how long the shareholder has held the shares. Under recently
enacted legislation, the maximum tax rate for a U.S. individual, estate or trust
is reduced to 20% for distributions derived from the sale of assets held by the
Series for more than 18 months. (If the taxpayer is in the 15% tax bracket, the
rate is 10%.) For distributions derived from the sale of assets held by the
Series for between 12 and 18 months, the tax rate remains at 28% (15% if the
taxpayer is in the 15% tax bracket).
Shareholders may be subject to a $50 penalty under the Internal Revenue Code
and we may be required to withhold and remit to the U.S. Treasury a portion
(31%) of any redemption or repurchase proceeds and of any dividend or
distribution on any account, where the payee (shareholder) failed to provide a
correct taxpayer identification number or to make certain required
certifications.
Limitations imposed by the Internal Revenue Code on regulated investment
companies may restrict the Series' ability to engage in transactions in options,
forward contracts and cross hedges.
We will inform shareholders of the federal tax status of each dividend and
distribution after the end of each calendar year.
Shareholders should consult their tax advisers concerning applicable state
and local taxes as well as on the tax consequences of gains or losses from the
redemption or exchange of our shares.
7
<PAGE>
REDEMPTIONS
=============================================================================
To obtain the proceeds of an expedited redemption of $50,000 or less, you or
your representative with proper identification can telephone the Fund. This
privilege is automatically extended to all shareholders. The Fund will not be
liable for following instructions communicated by telephone that it reasonably
believes to be genuine with respect to the Fund and, therefore, will employ
reasonable procedures to confirm that instructions received are genuine,
including requesting proper identification, recording all telephone redemptions
and mailing the proceeds only to the named shareholder at the address appearing
on the account registration.
If you cannot use the expedited redemption procedures described above to
redeem shares directly, send your request to Mid-Cap Series of the Lord Abbett
Research Fund, Inc. (P.O. Box 419100, Kansas City, Missouri 64141) with
signature(s) and any legal capacity of the signer(s) guaranteed by an eligible
guarantor.
Under certain circumstances and subject to prior written notice, our Board of
Directors may authorize redemption of all of the shares in any account in which
there are fewer than 25 shares.
PERFORMANCE
=============================================================================
Lord Abbett Research Fund -- Mid-Cap Series completed its fiscal year on
November 30, 1997. The Series' net asset value was $16.18 per share versus
$12.84 one year ago. Over the period, the Series' produced a total return (the
percent change in net asset value with all distributions reinvested) of 28.9%.
Over the past year, the stock market experienced several corrections before
rebounding to new heights. This occurred against a background of surprising
strength in the economy, concerns of inflation and a volatile interest-rate
environment. The positive performance of your Series over the past year can be
attributed to the use of the best ideas generated by the Series' research team.
Specifically, individual issues in the technology, finance and consumer sectors
proved to be rewarding.
Your Series is not sector-weighted (diversified in proportion to an index)
and, as such, during the past year relied on, and continues to rely on, stock
selection of undervalued companies, with solid fundamental prospects, in the
mid-cap universe. The prospects are good for mid-cap company stocks (those with
total outstanding stock valued between $500 million and $5 billion) because they
have been overlooked in a market primarily driven by large-caps.
Total Return. We calculate our average annual total return for the Series for
a given period by determining an annual compounded rate that would cause the
hypothetical initial investment made on the first day of the period to equal the
ending redeemable value. The calculation assumes for the period a $1,000
hypothetical initial investment in the Series, the reinvestment of all income
and capital gains distributions on the reinvestment dates at the prices
calculated as stated in the Prospectus, and a complete redemption at the end of
the period to determine the ending redeemable value. Further information about
the Series' performance will be in its annual report to shareholders which may
be obtained without charge.
Underwriter and Distributor
Lord, Abbett & Co. and Lord Abbett Distributor LLC
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
212-848-1800
Custodian
The Bank of New York
48 Wall Street
New York, New York 10286
8
<PAGE>
Comparison of changes in value of a $10,000 investment in shares of Lord Abbett
Research Fund Mid-Cap Series, assuming reinvestment of all dividends and
distributions, to such an investment in the unmanaged Standard & Poor's Mid-Cap
400 Index
[LINE CHART OMITTED]
----------------------------------
Average Annual Total Return
for Mid-Cap Series Shares(2)
----------------------------------
Life of Series
1 Year 8/1/95-11/30/97
----------------------------------
28.90% 24.80%
----------------------------------
(1) Performance numbers for the Standard & Poor's Mid-Cap 400 Index, which is
unmanaged, do not reflect transaction costs or management fees. An investor
cannot invest directly in this index.
(2) Total return is the percent chagne in value with all dividends and
distributions reinvested for the periods shown using the SEC-required
uniform method to compute such return.
9
<PAGE>
Transfer Agent and Dividend Disbursing Agent
United Missouri Bank of Kansas City, N.A.
Tenth and Grand
Kansas City, Missouri 64141
Shareholder Servicing Agent
DST Systems, Inc.
P.O. Box 419100
Kansas City, Missouri 64141
800-821-5129
Auditors
Deloitte & Touche LLP
10
<PAGE>
LORD ABBETT
Statement of Additional Information April 1, 1998
Lord Abbett Research Fund, Inc.
Mid-Cap Series
- --------------------------------------------------------------------------------
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from your securities dealer or from Lord, Abbett & Co. ("Lord
Abbett") at The General Motors Building, 767 Fifth Avenue, New York, New York
10153-0203. This Statement relates to, and should be read in conjunction with,
the Prospectus dated April 1, 1998.
Lord Abbett Research Fund, Inc. (sometimes referred to as the "Fund") was
incorporated under Maryland law on April 6, 1992. The Fund's Board of Directors
has authority to classify its shares of common stock into separate Series
without further action by shareholders. The Fund has three Series: Large-Cap,
Mid-Cap and Small-Cap. Only Mid-Cap Series (sometimes referred to as the
"Series" or "we" and/or "Mid-Cap Series") is described in this Statement of
Additional Information. To date, 50,000,000 shares of Mid-Cap Series have been
designated by the Board of Directors. Although no present plans exist, further
series may be added in the future. The Investment Company Act of 1940, as
amended (the "Act"), requires that where more than one series exists, the series
must be preferred over all other series with respect to assets specifically
allocated to such series.
Rule 18f-2 under the Act provides that any matter required to be submitted by
the provisions of the Act or applicable state law, or otherwise, to the holders
of the outstanding voting securities of an investment company, such as the Fund,
shall not be deemed to have been effectively acted upon unless approved by the
holders of a majority of the outstanding shares of the Series affected by such
matter. Rule 18f-2 further provides that a series shall be deemed to be affected
by a matter unless the interests of the Series in the matter are identical or
the matter does not affect any interest of such Series. However, the Rule
exempts from these separate voting requirements the selection of independent
public accountants, the approval of principal distributing contracts and the
election of directors.
Shareholder inquiries should be made by writing directly to the Fund or by
calling 800-821-5129. In addition, you can make inquiries through Lord Abbett.
TABLE OF CONTENTS PAGE
1. Investment Objective and Policies 2
2. Directors and Officers 4
3. Investment Advisory and Other Services 6
4. Portfolio Transactions 7
5. Purchases, Redemptions
and Shareholder Services 8
6. Past Performance 9
7. Taxes 9
8. Information About The Fund 10
<PAGE>
9. Financial Statements 10
2
<PAGE>
1.
Investment Objective and Policies
Fundamental Investment Restrictions. The Series' investment objective and
policies are described in the Prospectus under "How We Invest". In addition to
those policies described in the Prospectus, the Series is subject to the
following fundamental investment restrictions which cannot be changed for the
series without the approval of the holders of a majority of the Series'
respective shares. The Series may not: (1) borrow money (except that (i) the
series may borrow from banks (as defined in the Act) in amounts up to 33 1/3% of
its total assets (including the amount borrowed), (ii) the Series may borrow up
to an additional 5% of its total assets for temporary purposes, (iii) the series
may obtain such short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities and (iv) the Series may purchase
securities on margin to the extent permitted by applicable law); (2) pledge its
assets (other than to secure such borrowings or, to the extent permitted by the
Series' investment policies as set forth in its prospectus and statement of
additional information, as they may be amended from time to time, in connection
with hedging transactions, short sales, when-issued and forward commitment
transactions and similar investment strategies); (3) engage in the underwriting
of securities except pursuant to a merger or acquisition or to the extent that
in connection with the disposition of its portfolio securities it may be deemed
to be an underwriter under federal securities laws; (4) make loans to other
persons, except that the acquisition of bonds, debentures or other corporate
debt securities and investment in government obligations, commercial paper,
pass-through instruments, certificates of deposit, bankers acceptances,
repurchase agreements or any similar instruments shall not be deemed to be the
making of a loan, and except further that the Series may lend its portfolio
securities, provided that the lending of portfolio securities may be made only
in accordance with applicable law and the guidelines set forth in the series'
prospectus and statement of additional information, as they may be amended from
time to time; (5) buy or sell real estate (except that the Series may invest in
securities directly or indirectly secured by real estate or interests therein or
issued by companies which invest in real estate or interests therein),
commodities or commodity contracts (except to the extent the Series may do so in
accordance with applicable law and without registering as a commodity pool
operator under the Commodity Exchange Act as, for example, with futures
contracts); (6) with respect to 75% of the gross assets of the Series, buy
securities if the purchase would then cause it to (i) have more than 5% of its
gross assets, at market value at the time of investment, invested in the
securities of any one issuer except securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities or (ii) own more than 10% of the
voting securities of any issuer; (7) invest more than 25% of its assets, taken
at market value, in the securities of issuers in any particular industry
(excluding securities of the U.S. Government, its agencies and
instrumentalities); or (8) issue senior securities to the extent such issuance
would violate applicable law.
With respect to the restrictions mentioned herein, compliance therewith will not
be affected by change in the market value of portfolio securities but will be
determined at the time of purchase or sale of such securities.
Non-Fundamental Investment Restrictions. In addition to those policies described
in the Prospectus and the investment restrictions above which cannot be changed
without shareholder approval, the Series also is subject to the following
non-fundamental investment policies which may be changed by the Board of
Directors without shareholder approval. The Series may not: (1)borrow in excess
of 5% of make short sales of securities or maintain a short position except to
the extent permitted by applicable law; (2) invest knowingly more than 15% of
its net assets (at the time of investment) in illiquid securities (securities
qualifying for resale under Rule 144A of the Securities Act of 1933 ("Rule
144A") that are determined by the Directors, or by Lord Abbett pursuant to
delegated authority, to be liquid are considered liquid securities); (3) invest
in securities issued by other investment companies as defined in the Act, except
as permitted by the Act; (4) purchase securities of any issuer unless it or its
predecessor has a record of three years' continuous operation, except that the
Series may purchase securities of such issuers through subscription offers or
other rights it receives as a security holder of companies offering such
subscriptions or rights, and such purchases will then be limited in the
aggregate to 5% of the Series' net assets at the time of investment; (5) hold
securities of any issuer when more than 1/2 of 1% of the issuer's securities are
owned beneficially by one or more of the Fund's officers or directors or by one
or more partners of the Fund's underwriter or investment adviser if these owners
in the aggregate own beneficially more than 5% of such securities; (6) invest in
warrants, valued at the lower of cost or market, to exceed 5% of the Series' net
assets, including warrants not listed on the New York or American Stock Exchange
which may not exceed
3
<PAGE>
2% of such net assets; (7) invest in real estate limited partnership interests
or interest in oil, gas or other mineral leases, or exploration or development
programs, except that the Series may invest in securities issued by companies
that engage in oil, gas or other mineral exploration or development activities;
or (8) borrow in excess of 33 1/3 of its total assets (including the amount
borrowed), and then only as a temporary measure for extraordinary or emergency
purposes.
Investment Techniques Which May Be Used By The Series
Lending of Portfolio Securities. Although the Series has no current intention of
doing so in the foreseeable future, the Series may seek to earn income by
lending portfolio securities. Under present regulatory policies, such loans may
be made to member firms of the New York Stock Exchange ("NYSE") and are required
to be secured continuously by collateral consisting of cash, cash equivalents,
or United States Treasury bills maintained in an amount at least equal to the
market value of the securities loaned. The Series will have the right to call a
loan and obtain the securities loaned at any time upon five days' notice. During
the existence of a loan the Series will receive the income earned on investment
of collateral. The aggregate value of the securities loaned will not exceed 5%
of the value of the Series' gross assets.
If the Series enters into repurchase agreements as provided in clause (4) above,
it will do so only with those primary reporting dealers that report to the
Federal Reserve Bank of New York and with the 100 largest United States
commercial banks and the underlying securities purchased under the agreements
will consist only of those securities in which the Series otherwise may invest.
Foreign Currency Hedging Techniques. The Series may utilize various foreign
currency hedging techniques described below, including forward foreign currency
contracts and foreign currency put and call options.
Forward Foreign Currency Contracts. A forward foreign currency contract involves
an obligation to purchase or sell a specific amount of a specific currency at a
set price at a future date. The Series expects to enter into forward foreign
currency contracts in primarily two circumstances. First, when the Series enters
into a contract for the purchase or sale of a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security. By
entering into a forward contract for the purchase or sale of the amount of
foreign currency involved in the underlying security transaction, the Series
will be able to protect against a possible loss resulting from an adverse change
in the relationship between the U.S. dollar and the subject foreign currency
during the period between the date the security is purchased or sold and the
date on which payment is made or received.
Second, when management believes that the currency of a particular foreign
country may suffer a decline against the U.S. dollar, the Series may enter into
a forward contract to sell the amount of foreign currency approximating the
value of some or all of the Series' portfolio securities denominated in such
foreign currency or, in the alternative, the Series may use a cross-hedging
technique whereby it sells another currency which the Series expects to decline
in a similar way but which has a lower transaction cost. Precise matching of the
forward contract amount and the value of the securities involved will not
generally be possible since the future value of such securities denominated in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the forward contract is entered into and
the date it matures. The Series does not intend to enter into such forward
contracts under this second circumstance on a continuous basis.
Foreign Currency Put and Call Options. The Series also may purchase foreign
currency put options and write foreign currency call options on U.S. exchanges
or U.S. over-the-counter markets. A put option gives the Series, upon payment of
a premium, the right to sell a currency at the exercise price until the
expiration of the option and serves to insure against adverse currency price
movements in the underlying portfolio assets denominated in that currency.
Exchange-listed options markets in the United States include several major
currencies, and trading may be thin and illiquid. A number of major investment
firms trade unlisted options which are more flexible than exchange-listed
options with respect to strike price and maturity date. Unlisted options
generally are available in a wider range of
4
<PAGE>
currencies. Unlisted foreign currency options are generally less liquid than
listed options and involve the credit risk associated with the individual
issuer. Unlisted options, together with other illiquid securities, are subject
to a limit of 15% of the Series' net assets.
A call option written by the Series gives the purchaser, upon payment of a
premium, the right to purchase from the Series a currency at the exercise price
until the expiration of the option. The Series may write a call option on a
foreign currency only in conjunction with a purchase of a put option on that
currency. Such a strategy is designed to reduce the cost of downside currency
protection by limiting currency appreciation potential. The face value of such
writing may not exceed 90% of the value of the securities denominated in such
currency invested in by a Series or in such cross currency (referred to above)
to cover such call writing.
The Fund's custodian will segregate cash or permitted securities belonging to
the Series in an amount not less than that required by SEC Release 10666 and
related policies with respect to the Series' assets committed to (a) writing
options, (b) forward foreign currency contracts and (c) cross hedges entered
into by the Series. If the value of the securities segregated declines,
additional cash or debt securities will be added on a daily basis (i.e., marked
to market), so that the segregated amount will not be less than the amount of
the Series' commitments with respect to such written options, forward foreign
currency contracts and cross hedges.
2.
Directors and Officers
The following directors are partners of Lord, Abbett & Co. ("Lord Abbett"), The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. They
have been associated with Lord Abbett for over five years and are also officers,
directors or trustees of the twelve other Lord Abbett-sponsored funds. They are
"interested persons" as defined in the Act, and as such, may be considered to
have an indirect financial interest in the Rule 12b-1 Plan described in the
Prospectus.
Robert S. Dow, age 53, Chairman and President
E. Wayne Nordberg, age 59
The following outside directors are also directors or trustees of the twelve
other Lord Abbett-sponsored funds referred to above.
E. Thayer Bigelow
Courtroom Television Network
600 Third Avenue
New York, New York
Chief Executive Officer of Courtroom Television Network. Formerly President and
Chief Executive Officer of Time Warner Cable Programming, Inc. Prior to that,
formerly President and Chief Operating Officer of Home Box Office, Inc. Age 56.
Stewart S. Dixon
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon. Age 67.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
5
<PAGE>
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 72.
6
<PAGE>
C. Alan MacDonald
Directorship Inc.
8 Sound Shore Drive
Greenwich, Connecticut
Managing Director of Directorship Inc., a consultancy in board management and
corporate governance. Formerly General Partner of The Marketing Partnership,
Inc., a full service marketing consulting firm (1994-1997). Prior to that,
formerly Chairman and Chief Executive Officer of Lincoln Snacks, Inc.,
manufacturer of branded snack foods (1992- 1994). Currently serves as Director
of Den West Restaurant Co., J. B. Williams, and Fountainhead Water Company. Age
64.
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 69.
Thomas J. Neff
Spencer Stuart & Associates
277 Park Avenue
New York, New York
Chairman of Spencer Stuart U.S., an executive search consulting firm. Age 60.
The second column of the following table sets forth the compensation accrued for
the Fund's outside directors. The third and fourth columns set forth information
with respect to the equity-based benefits accrued for outside directors
maintained by the Lord Abbett-sponsored funds. The fourth column sets forth the
total compensation payable by such funds to the outside directors. No director
of the Fund associated with Lord Abbett and no officer of the Fund received any
compensation from the Fund for acting as a director or officer.
For the Fiscal Year Ended November 30, 1997
(1) (2) (3) (4)
Pension or For Year Ended
Retirement Benefits December 31, 1997
Accrued by the Total Compensation
Aggregate Mid-Cap Series of Accrued by the
Compensation the Fund and Mid-Cap Series
Accrued by Twelve Other of Fund and
Mid-Cap Series Lord Abbett- Twelve Other
of the sponsored Funds(2) Lord Abbett-
Name of Director Fund(1) ------------------ sponsored Funds(3)
- ---------------- ------- ------------------
E. Thayer Bigelow None $17,068 $56,000
Stewart S. Dixon None $32,190 $55,000
John C. Jansing None $45,085(4) $55,000
C. Alan MacDonald None $30,703 $57,400
Hansel B. Millican, Jr. None $37,747 $55,000
Thomas J. Neff None $19,853 $56,000
7
<PAGE>
1. Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on the
net assets of each fund. A portion of the fees payable by the other Lord
Abbett Funds (excluding the Mid-Cap Series) to its outside
directors/trustees is being deferred under a plan that deems the deferred
amounts to be invested in shares of the other Lord Abbett Funds (excluding
the Mid-Cap Series, for later distribution to the directors/trustees.
2. The amounts in Column 3 were accrued by the Lord Abbett-Sponsored Funds
for the 12 months ended November 30, 1997 with respect to the equity based
plans established for independent directors in 1996. This plan supersedes
a previously approved retirement plan for all future directors. Current
directors had the option to convert their accrued benefits under the
retirement plan. All of the outside directors except one made such an
election.
3. This column shows aggregate compensation, including directors fees and
attendance fees for board and committee meetings, of a nature referred to
in footnote one, accrued by the Lord Abbett-sponsored funds during the
year ended December 31, 1997. Since no amounts of aggregate compensation
were payable by the Mid-Cap Series for the year ended November 30, 1997,
no shares were deemed invested in Mid-Cap Series shares.
4. Mr. Jansing chose to continue to receive benefits under the retirement
plan which provides that outside directors (trustees) may receive annual
retirement benefits for life equal to their final annual retainer
following retirement at or after age 72 with at least ten years of
service. Thus, if Mr. Jansing were to retire and the annual retainer
payable by the other Lord Abbett Funds (excluding the Mid-Cap Series) were
the same as it is today, he would receive annual retirement benefits of
$50,000.
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Allen, Brown, Carper, Ms. Foster, Messrs. Hilstad, Hudson, Morris, Noelke and
Walsh are partners of Lord Abbett; the others are employees: Robert G. Morris,
age 52, Robert P. Fetch, age 45 Executive Vice Presidents, Paul A. Hilstad, age
55, Vice President and Secretary (with Lord Abbett since 1995; formerly Senior
Vice President and General Counsel of American Capital Management & Research,
Inc.); Stephen I. Allen, age 44; Zane E. Brown, age 46; Daniel E. Carper, age
46; Daria L. Foster, age 43; Lawrence H. Kaplan, age 41 (with Lord Abbett since
1977 - formerly Vice President and Chief Counsel of Salomon Brothers Asset
Management Inc. - 1995 - 1997; prior thereto Senior Vice President and Associate
General Counsel of Kidder, Peabody & Co. Incorporated); Thomas F. Konop, age 55;
Robert J. Noelke, age 41; A. Edward Oberhaus, age 37; Keith F. O'Connor, age 42;
John J. Walsh, age 62, Vice Presidents; and Donna M. McManus, age 37, Treasurer
(with Lord Abbett since 1996, formerly a Senior Manager at Deloitte & Touche
LLP).
The Fund's By-Laws provide that the Fund shall not hold an annual meeting of its
stockholders in any year unless one or more matters are required to be acted on
by stockholders under the Act, or unless called by a majority of the Board of
Directors or by stockholders holding at least one quarter of the stock of the
Fund outstanding and entitled to vote at the meeting. When any such annual
meeting is held, the stockholders will elect directors and vote on the approval
of the independent auditors of the Fund.
As of November 30, 1997 our officers and directors, as a group, owned less than
12% of the Mid-Cap Series' outstanding shares.
3.
Investment Advisory and Other Services
As described under "Our Management" in the Prospectus, Lord Abbett is the Fund's
investment manager. Eleven of the twelve general partners of Lord Abbett are
officers and/or directors of the Fund and are identified as follows: Stephen I.
Allen, Zane E. Brown, Daniel E. Carper, Robert S. Dow, Daria L. Foster, Paul A.
Hilstad, Robert G. Morris, Robert J. Noelke, E. Wayne Nordberg and John J.
Walsh. The other general partners of Lord Abbett who
8
<PAGE>
are neither an officers nor directors of the Fund are Michael McLaughlin and W.
Thomas Hudson. The address of each partner is The General Motors Building, 767
Fifth Avenue, New York, New York 10153-0203.
The services performed by Lord Abbett are described under "Our Management" in
the Prospectus. Under the Management Agreement, we are obligated to pay Lord
Abbett a monthly fee, based on average daily net assets for each month, at the
annual rate of .75 of 1% of the Series' average daily net assets. For the period
from August 1, 1995 (commencement of operations) through November 30, 1995, and
each of the two fiscal years ended November 30, 1997 this management fee was
waived by Lord Abbett with respect to the Mid-Cap Series and, except for this
waiver, would have amounted to $2,125, $8,249 and $10,844, respectively.
We are obligated to pay all expenses not expressly assumed by Lord Abbett,
including, without limitation, 12b-1 expenses, outside directors' fees and
expenses, association membership dues, legal and auditing fees, taxes, transfer
and dividend disbursing agent fees, shareholder servicing costs, expenses
relating to shareholder meetings, expenses of preparing, printing and mailing
stock certificates and shareholder reports, expenses of registering the Series'
shares under federal and state securities laws, expenses of preparing, printing
and mailing prospectuses to existing shareholders, insurance premiums, brokerage
and other expenses connected with executing portfolio transactions. For the
period from August 1, 1995 (commencement of operations) through November 30,
1995 and each of the two fiscal years ended November 30, 1997, Lord Abbett,
although not obligated to, voluntarily assumed the above-mentioned expenses
which, if not so assumed, would have amounted to $7,544, $18,000 and $12,000,
respectively, with respect to the Mid-Cap Series.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281 are
the independent auditors of the Fund and must be approved at least annually by
our Board of Directors to continue in such capacity. They perform audit services
for the Fund including the examination of financial statements included in our
annual report to shareholders.
The Bank of New York ("BONY"), 48 Wall Street, New York, New York, is the Fund's
custodian. In accordance with the requirements of Rule 17f-5, the Fund's
directors have approved arrangements permitting the Fund's foreign assets not
held by BONY or its foreign branches to be held by certain qualified foreign
banks and depositories.
4.
Portfolio Transactions
Our policy is to obtain best execution on all our portfolio transactions, which
means that we seek to have purchases and sales of portfolio securities executed
at the most favorable prices, considering all costs of the transaction including
brokerage commissions and dealer markups and markdowns and taking into account
the full range and quality of the brokers' services. Consistent with obtaining
best execution, we pay a commission rate determined to attract the services we
require, as described below. That rate may be higher or lower than other brokers
might charge on the same transactions. Our policy with respect to best execution
governs the selection of brokers or dealers and the market in which the
transaction is executed. To the extent permitted by law, we may, if considered
advantageous, make a purchase from or sale to another Lord Abbett-sponsored fund
without the intervention of any broker-dealer.
Broker-dealers are selected on the basis of their professional capability and
the value and quality of their brokerage and research services. Normally, the
selection is made by traders who are officers of the Fund and also are employees
of Lord Abbett. These traders do the trading as well for other accounts
- -- investment companies (of which they are also officers) and other investment
clients -- managed by Lord Abbett. They are responsible for obtaining best
execution.
We pay a commission rate that we believe is appropriate to give maximum
assurance that our brokers will provide us, on a continuing basis, the highest
level of brokerage services available. While we do not always seek the lowest
possible commissions on particular trades, we believe that our commission rates
are in line with the rates that many other institutions pay. Our traders are
authorized to pay brokerage commissions in excess of those that other brokers
might accept on the same transactions in recognition of the value of the
services performed by the executing brokers, viewed in terms of either the
particular transaction or the overall responsibilities of Lord Abbett with
respect to us and the other accounts they manage. Such services include showing
us trading opportunities in a timely manner, including blocks, a willingness and
ability to take positions in securities, knowledge of a
9
<PAGE>
particular security or market proven ability to handle a particular type of
trade, confidential treatment, promptness and reliability.
Some of these brokers also provide research services at least some of which are
useful to Lord Abbett in their overall responsibilities with respect to us and
the other accounts they manage. Research includes the furnishing of analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts and trading equipment and
computer software packages, acquired from third-party suppliers, that enable
Lord Abbett to access various information bases. Such services may be used by
Lord Abbett in servicing all their accounts, and not all of such services will
necessarily be used by Lord Abbett in connection with their management of the
Fund; conversely, such services furnished in connection with brokerage on other
accounts managed by Lord Abbett may be used in connection with their management
of the Fund, and not all of such services will necessarily be used by Lord
Abbett in connection with their advisory services to such other accounts. We
have been advised by Lord Abbett that research services received from brokers
cannot be allocated to any particular account, are not a substitute for Lord
Abbett's services but are supplemental to their own research effort and when
utilized, are subject to internal analysis before being incorporated by Lord
Abbett into their investment process. As a practical matter, it would not be
possible for Lord Abbett to generate all of the information presently provided
by brokers. While receipt of research services from brokerage firms has not
reduced Lord Abbett's normal research activities, the expenses of Lord Abbett
could be materially increased if it attempted to generate such additional
information through its own staff and purchased such equipment and software
packages directly from the suppliers.
No commitments are made regarding the allocation of brokerage business to or
among brokers, and trades are executed only when they are dictated by investment
decisions of the Fund to purchase or sell portfolio securities.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold our shares and/or
shares of other Lord Abbett-sponsored funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as we do, transactions will, to the extent practicable, be allocated among all
participating accounts in proportion to the amount of each order and will be
executed daily until filled so that each account shares the average price and
commission cost of each day. Other clients who direct that their brokerage
business be placed with specific brokers or who invest through wrap accounts
introduced to Lord Abbett by certain brokers may not participate with us in the
buying and selling of the same securities as described above. If these clients
wish to buy or sell the same security as we do, they may have their transactions
executed at times different from our transactions and thus may not receive the
same price or incur the same commission cost as we do.
We will not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from dealers as
consideration for the direction to therm of portfolio business.
If we tender portfolio securities pursuant to a cash tender offer, we will seek
to recapture any fees or commissions involved by designating Lord Abbett our
agent so that the fees may be passed back to us. As other legally permissible
opportunities come to our attention for the direct or indirect recapture by us
of brokerage commissions or similar fees paid on portfolio transactions, our
directors will determine whether we should or should not seek such recapture.
For the period from August 1, 1995 (commencement of operations) through November
30, 1995 and the two fiscal years ended November 30, 1997, we paid total
commissions to independent broker-dealers of $3,245, $2,155 and $3,687,
respectively, with respect to the Mid-Cap Series.
5.
Purchases, Redemptions
and Shareholder Services
Information concerning how we value our shares for the purchase and redemption
of our shares is contained in the Prospectus under "Purchases" and
"Redemptions," respectively.
As disclosed in the Prospectus, we calculate our net asset value as of the close
of the New York Stock Exchange ("NYSE") on each day that the NYSE is open for
trading by dividing our total net assets by the number of shares
10
<PAGE>
outstanding at the time of calculation. The NYSE is closed on Saturdays and
Sundays and the following holidays -- New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
The Fund values its portfolio securities at market value as of the close of the
NYSE. Market value will be determined as follows: securities listed or admitted
to trading privileges on the New York or American Stock Exchange or on the
NASDAQ National Market System are valued at the last sales price, or, if there
is no sale on that day, at the mean between the last bid and asked prices, or,
in the case of bonds, in the over-the-counter market if, in the judgment of the
Fund's officers, that market more accurately reflects the market value of the
bonds. Over-the-counter securities not traded on the NASDAQ National Market
System are valued at the mean between the last bid and asked prices. Securities
for which market quotations are not available are valued at fair market value
under procedures approved by the Board of Directors.
The maximum offering price of our shares on November 30, 1997 was computed as
follows (assuming no sales charge currently in effect):
Mid-Cap Series
--------------
Maximum offering price per share is equal to
the net asset value per share
(net assets divided by shares outstanding)........ $16.18
The Fund has entered into a distribution agreement with Lord Abbett under which
Lord Abbett is obligated to use its best efforts to find purchasers for the
shares of the Fund and to make reasonable efforts to sell the Series' shares so
long as, in Lord Abbett's judgment, a substantial distribution can be obtained
by reasonable efforts.
As stated in the Prospectus, our shares may be purchased at net asset value only
by directors (trustees) of the Lord Abbett-sponsored funds, partners and
employees of Lord Abbett, and spouses and other family members of such directors
(trustees), partners and employees.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Directors may authorize redemption of all of the shares in any
account in which there are fewer than 25 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least 60 days' prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
6.
Past Performance
The Fund computes the average annual compounded rate of total return during
specified periods that would equate the initial amount invested to the ending
redeemable value of such investment by adding one to the computed average annual
total return, raising the sum to a power equal to the number of years covered by
the computation and multiplying the result by one thousand dollars, which
represents a hypothetical initial investment. The calculation assumes deduction
of the maximum sales charge from the initial amount invested (in this case there
is no sales charge) and reinvestment of all income dividends and capital gains
distributions on the reinvestment dates at prices calculated as stated in the
Prospectus. The ending redeemable value is determined by assuming a complete
redemption at the end of the period(s) covered by the average annual total
return computation.
These figures represent past performance, and an investor should be aware that
the investment return and principal value of a Fund investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Therefore, there is no assurance that this performance will be
repeated in the future.
7.
11
<PAGE>
Taxes
The value of any shares redeemed by the Fund or otherwise sold may be more or
less than your tax basis in the shares at the time the redemption or sale is
made. Any gain or loss generally will be taxable for federal income tax
purposes. Any loss realized on the sale or redemption of Series shares which you
have held for six months or less will be treated for tax purposes as a long-term
capital loss to the extent of any capital gains distributions which you received
with respect to such shares. Losses on the sale of stock or securities are not
deductible if, within a period beginning 30 days before the date of the sale and
ending 30 days after the date of sale, the taxpayer acquires stock or securities
that are substantially identical.
The writing of call options and other investment techniques and practices which
the Series may utilize, as described above under "Investment Objectives and
Policies," may create "straddles" for United States federal income tax purposes
and may affect the character and timing of the recognition of gains and losses
by the Series. Such transactions may increase the amount of short-term capital
gain realized by the Series, which is taxed as ordinary income when distributed
to shareholders. Limitations imposed by the Internal Revenue Code on regulated
investment companies may restrict the Series' ability to engage in transactions
in options.
As described in the Prospectus under "How We Invest - Risk Factors," the Fund
may be subject to foreign withholding taxes which would reduce the yield on its
investments. Tax treaties between certain countries and the United States may
reduce or eliminate such taxes. It is expected that Series shareholders who are
subject to United States federal income tax will not be entitled to claim a
federal income tax credit or deduction for foreign income taxes paid by the
Series.
The Series will be subject to a 4% non-deductible excise tax on certain amounts
not distributed (and not treated as having been distributed) on a timely basis
in accordance with a calendar-year distribution requirement. The Series intends
to distribute to shareholders each year an amount adequate to avoid the
imposition of such excise tax. Dividends paid by the Series will qualify for the
dividends-received deduction for corporations to the extent they are derived
from dividends paid by domestic corporations.
Gains and losses realized by the Series on certain transactions, including sales
of foreign debt securities and certain transactions involving foreign currency,
will be treated as ordinary income or loss for federal income tax purposes to
the extent, if any, that such gains or losses are attributable to changes in
exchange rates for foreign currencies. Accordingly, distributions taxable as
ordinary income will include the net amount, if any, of such foreign exchange
gains and will be reduced by the net amount, if any, of such foreign exchange
losses.
If the Series purchases shares in certain foreign investment entities, called
"passive foreign investment companies," it may be subject to United States
federal income tax on a portion of any "excess distribution" or gain from the
disposition of such shares, even if such income is distributed as a taxable
dividend by the Series to its shareholders. Additional charges in the nature of
interest may be imposed on either the Fund or its shareholders in respect of
deferred taxes arising from such distributions or gains.
If the Series were to invest in a passive foreign investment company with
respect to which the Series elected to make a "qualified electing fund"
election, in lieu of the foregoing requirements, the Series might be required to
include in income each year a portion of the ordinary earnings and net capital
gains of the qualified electing fund, even if such amount were not distributed
to the Series.
8.
Information About the Fund
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment accounts. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Fund's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security 7 days
before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account
considers a trade or trades in such G1 security, prohibiting profiting on trades
12
<PAGE>
of the same security within 60 days and trading on material and non-public
information. The Code imposes certain similar requirements and restrictions on
the independent directors and trustees of each Lord Abbett-sponsored mutual fund
to the extent contemplated by the recommendations of such Advisory Group.
9.
Financial Statements
The financial statements with respect to the Mid-Cap Series for the fiscal year
ended November 30, 1997 and the report of Deloitte & Touche LLP, independent
auditors, on such financial statements contained in the 1997 Annual Report to
Shareholders of Mid-Cap Series of Lord Abbett Research Fund, Inc. are
incorporated herein by reference to such financial statements and reports in
reliance upon the authority of Deloitte & Touche LLP as experts in auditing and
accounting.
<PAGE>
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Part A - Financial Highlights for the two fiscal years ended
November 30, 1997 and November 30, 996, and for the period August
1, 1995 (commencement of operations) - to November 30, 1995.
Part B - Statement of Net Assets at November 30, 1996. Statement
of Operations at November 30, 1997.
(b) Exhibits -
99.B11 Consent of Deloitte & Touche**
Ex.16 Computation of Performance*
* Filed herewith
** To Be Filed
If exhibit is not mentioned above, it is not applicable or has been previously
filed.
<PAGE>
Item 25. Person Controlled by or Under Common Control with Registrant
None.
Item 26. Number of Record Holders of Securities
As of March 6, 1998
Mid-Cap - 60
Item 27. Indemnification
Registrant is incorporated under the laws of the State of Maryland and
is subject to Section 2-418 of the Corporations and Associations
Article of the Annotated Code of the State of Maryland controlling the
indemnification of directors and officers. Since Registrant has its
executive offices in the State of New York, and is qualified as a
foreign corporation doing business in such State, the persons covered
by the foregoing statute may also be entitled to and subject to the
limitations of the indemnification provisions of Section 721-727 of the
New York Business Corporation Law.
The general effect of these statutes is to protect officers, directors
and employees of Registrant against legal liability and expenses
incurred by reason of their positions with the Registrant. The statutes
provide for indemnification for liability for proceedings not brought
on behalf of the corporation and for those brought on behalf of the
corporation, and in each case place conditions under which
indemnification will be permitted, including requirements that the
officer, director or employee acted in good faith. Under certain
conditions, payment of expenses in advance of final disposition may be
permitted. The By-Laws of Registrant, without limiting the authority of
Registrant to indemnify any of its officers, employees or agents to the
extent consistent with applicable law, makes the indemnification of its
directors mandatory subject only to the conditions and limitations
imposed by the above-mentioned Section 2-418 of Maryland Law and by the
provisions of Section 17(h) of the Investment Company Act of 1940 as
interpreted and required to be implemented by SEC Release No. IC-11330
of September 4, 1980.
In referring in its By-Laws to, and making indemnification of directors
subject to the conditions and limitations of, both Section 2-418 of the
Maryland Law and Section 17(h) of the Investment Company Act of 1940,
Registrant intends that conditions and limitations on the extent of the
indemnification of directors imposed by the provisions of either
Section 2-418 or Section 17(h) shall apply and that any inconsistency
between the two will be resolved by applying the provisions of said
Section 17(h) if the condition or limitation imposed by Section 17(h)
is the more stringent. In referring in its By-Laws to SEC Release No.
IC-11330 as the source for interpretation and implementation of said
Section
<PAGE>
17(h), Registrant understands that it would be required under its
By-Laws to use reasonable and fair means in determining whether
indemnification of a director should be made and undertakes to use
either (1) a final decision on the merits by a court or other body
before whom the proceeding was brought that the person to be
indemnified ("indemnitee") was not liable to Registrant or to its
security holders by reason of willful malfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct
of his office ("disabling conduct") or (2) in the absence of such a
decision, a reasonable determination, based upon a review of the facts,
that the indemnitee was not liable by reason of such disabling conduct,
by (a) the vote of a majority of a quorum of directors who are neither
"interested persons" (as defined in the 1940 Act) of Registrant nor
parties to the proceeding, or (b) an independent legal counsel in a
written opinion. Also, Registrant will make advances of attorneys' fees
or other expenses incurred by a director in his defense only if (in
addition to his undertaking to repay the advance if he is not
ultimately entitled to indemnification) (1) the indemnitee provides a
security for his undertaking, (2) Registrant shall be insured against
losses arising by reason of any lawful advances, or (3) a majority of a
quorum of the non-interested, non-party directors of Registrant, or an
independent legal counsel in a written opinion, shall determine, based
on a review of readily available facts, that there is reason to believe
that the indemnitee ultimately will be found entitled to
indemnification. Insofar as indemnification for liability arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expense
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
Lord, Abbett & Co. acts as investment advisor for twelve, other
open-end investment companies (of which it is principal underwriter for
thirteen), and as investment adviser to approximately 6,220 private
accounts. Other than acting as directors and/or officers of open-end
investment companies managed by Lord, Abbett & Co., none of Lord,
Abbett & Co.'s partners has, in the past two fiscal years, engaged in
any other business, profession, vocation or employment of a substantial
nature for his own account or in the capacity of director, officer,
employee, partner or trustee of any entity except as follows:
<PAGE>
John J. Walsh
Trustee
The Brooklyn Hospital Center
100 Parkside Avenue
Brooklyn, N.Y.
Item 29. Principal Underwriter
(a) Lord Abbett Affiliated Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett U. S. Government Securities Money Market Fund, Inc.
Lord Abbett Series Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Tax-Free Income Trust
Lord Abbett Securities Trust
Lord Abbett Investment Trust
Investment Advisor
American Skandia Trust (Lord Abbett Growth and Income Portfolio)
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
Business Address (1) with Registrant
-------------------- ---------------
Robert S. Dow Chairman and President
Zane E. Brown Vice President
Paul A. Hilstad Vice President &
Secretary
Stephen I. Allen Vice President
Daniel E. Carper Vice President
Daria L. Foster Vice President
W. Thomas Hudson Vice President
Michael McLaughlin Vice President
Robert G. Morris Vice President
E. Wayne Nordberg Vice President
Robert J. Noelke Vice President
John J. Walsh Vice President
(1) Each of the above has a principal business address 767 Fifth
Avenue, New York, NY 10153
(c) Not applicable
Item 30. Location of Accounts and Records
Registrant maintains the records, required by Rules 31a - 1(a) and (b),
and 31a - 2(a) at its main office.
Lord, Abbett & Co. maintains the records required by Rules 31a - 1(f)
and 31a - 2(e) at its main office.
Certain records such as canceled stock certificates and correspondence
may be physically maintained at the main office
<PAGE>
of the Registrant's Transfer Agent, Custodian, or Shareholder Servicing
Agent within the requirements of Rule 31a-3.
Item 31. Management Services
None
Item 32. Undertakings
The Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>
13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all the requirements
for effectiveness of this Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Registration Statement
and/or any amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on the
13th day of March, 1998.
LORD ABBETT RESEARCH FUND, INC.
By /s/ Robert S. Dow
---------------------------------
Robert S. Dow,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Chairman, President
/s/ Robert S. Dow and Director 3/13/98
- -------------------------- ------------------------ -----------------
Robert S. Dow (Title) (Date)
Vice President and
/s/ Keith F. O'Connor Chief Financial Officer 3/13/98
- -------------------------- ------------------------ -----------------
Keith F. O'Connor (Title) (Date)
/s/ E. Wayne Nordberg Director 3/13/98
- -------------------------- ------------------------ -----------------
E. Wayne Nordberg (Title) (Date)
/s/ Stewart S. Dixon Director 3/13/98
- -------------------------- ------------------------ -----------------
Stewart S. Dixon (Title) (Date)
/s/ John C. Jansing Director 3/13/98
- -------------------------- ------------------------ -----------------
John C. Jansing (Title) (Date)
/s/ C. Alan MacDonald Director 3/13/98
- -------------------------- ------------------------ -----------------
C. Alan MacDonald (Title) (Date)
/s/ Hansel B. Millican, Jr. Director 3/13/98
- -------------------------- ------------------------ -----------------
Hansel B. Millican, Jr. (Title) (Date)
/s/ Thomas J. Neff Director 3/13/98
- -------------------------- ------------------------ -----------------
Thomas J. Neff (Title) (Date)
/s/ E. Thayer Bigelow Director 3/13/98
- -------------------------- ------------------------ -----------------
E. Thayer Bigelow (Title) (Date)
EXHIBIT 16
Lord Abbett Research Fund - Mid-Cap Series
Post Effective Amendment No. 14
Results of a $1,000 investment in Class A shares reflecting net asset value and
the reinvestment of all distributions for:
Year Ending November 30, 1997
Life of Fund* One Year
------------- --------
P(1+T)^n = ERV P(1+T)^n = ERV
WHERE: WHERE:
1,677 1,289
N = 2.334 N = 1
P = $ 1,000 P = $ 1,000
ERV = $1,677 ERV = $1,289
T = Average annual total return
1000(1+T)^2.334 = $1,677 1000(1+T)^1 = $1,289
(1 + T)^2.334 = 1,677 (1 + T) = 1,289
----- -----
1,000 1,000
(1+T) = (1.677)^0.4285 T = 1,289 -1
------- ------
(1000) (1000)
T = (1,677)^0.4285
-------
(1,000) -1
T = 24.80% T = 28.90%
* The Series Class A shares commenced operations 8/1/95
