<PAGE>
---------------------------------------------------------
Lord Abbett VALUE APPRECIATION FUND
---------------------------------------------------------
Semi-Annual Report for the Six Months Ended June 30, 1995
A mutual fund
with the objec-
tive of providing
you with capital
appreciation [Picture - Father teaching child to ride bicycle]
from a portfolio
that focuses
on midsized
companies.
<PAGE>
================================================================================
REPORT TO SHAREHOLDERS For the Six Months Ended June 30, 1995
--------------------------------------------------------------------------------
[PHOTO - RONALD P. LYNCH]
--------------------------
Ronald P. Lynch, Chairman
July 18, 1995
Lord Abbett Value Appreciation Fund completed the first half of its 1995 fiscal
year on June 30 with a net asset value of $11.09 per share, versus $9.805 six
months ago (the latter figure has been adjusted for a capital gains distribution
of $1.445 per share, paid in February). Over the period, the Fund paid dividends
totaling $.17 per share. The Fund's total return (the percent change in net
asset value, assuming the reinvestment of all distributions) was 14.8% over
these six months. In comparison, the unmanaged Standard & Poor's 400 Mid-Cap
Index posted a total return of 17.6%.
The Federal Reserve's efforts in 1994 to slow economic growth by raising
interest rates took hold over the first six months of 1995. The bond market
(which had been weak throughout most of 1994) rebounded sharply. The resultant
drop in interest rates stimulated the stock market as investors were encouraged
to pay more for a given level of dividends. Two other factors supported the
stock market's performance. First, corporate earnings, which had been rising
since 1992, continued to show strong increases. Second, investors' preference
for U.S. securities increased as a result of the steep decline in the dollar
(which made some foreign investments more expensive), the uninspiring
performance of a number of foreign markets and the sudden collapse of the
Mexican market.
Stock prices should continue to be supported by strong earnings in the
months ahead, but interest rates probably will not decline nearly as much and
the dollar should regain strength. Our projected corporate earnings for 1995 as
a whole have already been generously appraised by the stock market's year-to-
date advances. We remain watchful, therefore, for factors that could impair the
equity market's performance.
Against this backdrop, the Fund's portfolio is conservatively structured.
A value approach which focuses on midsized companies is the key differentiating
factor of your Fund. We seek to discover undervalued securities other investors
have overlooked. Therefore, at times the Fund's diversification will differ in
relation to our primary benchmark (the Standard & Poor's 400 Mid-Cap Index).
Currently your Fund is underweighted, relative to this Index, in technology and
--------------------------------------------------------------------------------
"With worldwide economic expansion continuing, along with a burgeoning of
technological advances, we foresee many investment opportunities in the years
ahead."
--------------------------------------------------------------------------------
electric utilities due to the lack of compelling value within these groups.
Holdings in areas sensitive to the economy (such as steel, chemicals and
manufacturing) have been reduced over the past year. Relatively defensive
consumer non-cyclical issues (such as food and drug/health care) have been
added. Overweighted groups include transportation, as well as certain interest-
sensitive securities, especially in the insurance area.
The long-term prospects for the stock market and your Fund remain bright.
We expect the rate of inflation to remain low, which is beneficial for the
financial markets. With worldwide economic expansion continuing, along with a
burgeoning of technological advances, we foresee many investment opportunities
in the years ahead. Furthermore, many mid-cap stocks still are priced at lower
multiples of earnings, cash flow and book value than many large capitalization
stocks. We will endeavor to exploit opportunities in the mid-cap area through
our unwavering focus on value.
As always, we welcome any questions or comments you may have about the Fund
or its investment policies and we thank you for your continued trust and
confidence.
<PAGE>
================================================================================
The Mid-Cap Advantage
--------------------------------------------------------------------------------
Lord Abbett Value Appreciation Fund is one of the few mutual funds in the
industry that focuses on midsized companies while utilizing a value approach
to investing. The Fund generally focuses on companies with market
capitalizations ranging from $500 million to $3 billion. Because midsized
companies operate from a smaller earnings base, it is mathematically easier
for these companies to grow earnings at a faster rate than larger companies.
Lord Abbett seeks companies which, relative to the market as a whole, are
underpriced. Often, this means focusing on companies that are currently out
of favor with investors. Below are three reasons we believe opportunity
exists in the mid-cap sector.
A Valuation Gap Exists
. Mid-cap companies have been less followed by investment analysts and have
been less a focus of investor interest in recent years. As a result, their
price/earnings and price-to-book ratios are relatively attractive compared
to large-cap companies. Also, we believe midsized companies offer the
potential for higher growth rates than large companies.
Decreased Tax Burden
. Tax rates for capital gains are lower than rates on ordinary income. Lord
Abbett Value Appreciation Fund, by investing in mid-cap companies, derives a
greater portion of its total return (price appreciation plus dividends) from
capital appreciation than from income. The result: a smaller tax burden.
Targeted Investing Signals Opportunity
. Midsized companies often concentrate their efforts on one product or
service. This singular focus means management's efforts are not diluted
across many industries.
================================================================================
The Fund Versus Inflation
--------------------------------------------------------------------------------
Years pass and prices increase. It seems to be a fact of life. Another fact:
If your purchasing power does not keep up with inflation, your standard of
living will suffer. Historically, stocks have proven a successful defense
against the erosion caused by inflation.
In our illustration, 1985 and 1995 are actual costs -- then and now. "Value
Appreciation Fund 1995" is what the 1985 amount would have grown to had it
been invested in the Fund.
Investments in Lord Abbett Value Appreciation Fund (up 212.9%) surpassed
increases in the cost of living (up 41.5%) in these 10 years. Finding
investments that grow faster than inflation is one important way to
maintain -- and enhance -- your lifestyle.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------
1985 $ 6,121 $ 90,800 $12,339
-----------------------------------------------------------------------------------------------------------------
1995 $11,709 $136,700 $19,860
-----------------------------------------------------------------------------------------------------------------
Value Appreciation Fund 1995 $19,153 $284,113 $38,809
-----------------------------------------------------------------------------------------------------------------
One-Year College (Private)/(1)/ One-Family House/(1)/ Income Per Capita/(1)/
-----------------------------------------------------------------------------------------------------------------
</TABLE>
Lord Abbett Value Appreciation Fund's results reflect total return at net
asset value, with all distributions reinvested for the 10 years ended
6/30/95. See Important Information on page 2.
/(1)/ National average.
Sources: U.S. Department of Education, Statistics Bureau Section; College
Board Annual Survey of Colleges; National Association of Realtors,
Research Division; Department of Commerce, Bureau of Economic Analysis
Statistics.
================================================================================
SEC Returns
--------------------------------------------------------------------------------
Average annual compound returns for periods ended 6/30/95 at the 5.75%
maximum sales charge, with all distributions reinvested:
<TABLE>
<CAPTION>
10 Years 5 Years 1 Year 10 Years (at net asset value)
-------------- -------------- ------------- -----------------------------
<S> <C> <C> <C>
+11.42% +10.20% +8.60% +12.08%
</TABLE>
The past performance of the Fund, stocks and inflation is no indication of
future results. The investment return and principal value of an investment
in the Fund will fluctuate so that shares, on any given day or when
redeemed, may be worth more or less than their original cost.
1
<PAGE>
================================================================================
The Value of a Managed Equity Portfolio
--------------------------------------------------------------------------------
YOU WORK HARD FOR YOUR MONEY. IS IT WORKING HARD FOR YOU?
----------------------------------------------------------------------------
The cost of goods and services (as measured by the Consumer Price Index) has
risen steadily over the past 10 years, increasing an average of 3.5% per
year. Over this time frame, the 6.4% average annual return of CDs did
outpace inflation. However, investors in the Fund saw their $100,000
investment grow an average of 11.7% per year, to $301,137.
There is no doubt that when it comes to saving for near-term obligations,
CDs are important. But, when investing for long-term goals such as a house,
a child's education or retirement, owning good companies through a fund like
Lord Abbett Value Appreciation Fund can help your money work harder for you.
Total Returns/(1)/
Over 10 Years
The Fund: 201.14%
CDs: 85.59%
Inflation: 41.54%
Information About the Following Investment
============================================================================
Investment Period: 6/30/85 to 6/30/95
----------------------------------------------------------------------------
Amount Invested: $100,000
----------------------------------------------------------------------------
Sales Charge: 3.75% (for investments of $100,000)
----------------------------------------------------------------------------
Distributions: Capital gains and dividends
reinvested
----------------------------------------------------------------------------
A Rewarding Total Return
----------------------------------------------------------------------------
THE INFLATION
DATE FUND 6 MONTH CD(2) (CONSUMER PRICE INDEX)
---- ---- ------------- ----------------------
12-31-85 $111,549 $103,958 $101,580
12-31-86 129,782 110,764 102,695
12-31-87 124,360 118,459 107,249
12-31-88 143,788 127,743 111,989
12-31-89 172,684 139,464 117,193
12-31-90 164,669 150,953 124,349
12-31-91 209,720 160,132 128,160
12-31-92 237,955 166,291 131,877
12-31-93 271,160 171,774 135,502
12-31-94 262,305 179,838 139,126
6-30-95 301,137 185,593 141,543
(1) The Fund's cumulative total return is at a reduced sales charge of 3.75%
applicable to investments of $100,000.
(2) Source: Salomon Brothers.
Total return is the percent change in value assuming the reinvestment of all
distributions. Results of the CD investment reflect the average six-month CD
rate available each year during the period. It is important to remember
that, unlike the Fund, a CD's rate and principal are guaranteed if held
until maturity. The Federal Deposit Insurance Corporation ("FDIC") insures
CDs up to $100,000.
================================================================================
Important Information
--------------------------------------------------------------------------------
Results quoted herein represent past performance based on the current sales
charge schedule and reflect appropriate Rule 12b-1 Plan expenses from
commencement of the Plan. Past performance is no indication of future
results. Tax consequences are not reflected. The Fund's sales charge
structure has changed from the past. The investment return and principal
value of a Fund investment will fluctuate so that shares, on any given day
or when redeemed, may be worth more or less than their original cost. If
used as sales material after 9/30/95, this report must be accompanied by
Lord Abbett's Performance Quarterly for the most recently completed calendar
quarter.
2
<PAGE>
--------------------------------------------------------------------------------
Searching for value
often dictates moving
away from the crowd.
"Lord Abbett brings a unique and disciplined value approach to investing in mid-
cap stocks. This gives us the ability to invest in securities that represent
solid opportunities for long-term appreciation while looking beyond the everyday
passions of the market."
John J. Walsh
Partner and Portfolio Manager
Value investing -- the strategy of investing in undervalued securities with
potential -- has guided Lord, Abbett & Co.'s investment decisions for decades.
A staff of 42 investment professionals, averaging 19 years of experience and 9
years of tenure with Lord, Abbett & Co., performs research aimed at finding the
best value in relation to risk.
Searching for Value By:
. Conducting fundamental analysis on an evolving universe of under-valued
stocks;
. Attempting to determine how global economic and political changes will affect
the relative performance of different industries; and
. Trying to identify those undervalued securities that are best positioned to
benefit from these changes.
[PICTURE OF PERSONNEL DESCRIBED BELOW]
(from left to right)
Edward K. von der Linde is a securities analyst in Lord, Abbett & Co.'s equity
research department and has over 10 years of experience in the industry. He
earned his MBA at New York University.
John J. Walsh is a partner of Lord, Abbett & Co. and serves as portfolio manager
for Lord Abbett Value Appreciation Fund. Mr. Walsh, who earned his MBA at New
York University, joined the Firm in 1960. In addition to managing institutional
equity portfolios, he serves as Vice President for all Lord Abbett funds and is
a member of the Executive Office of Investments.
W. Thomas Hudson, Jr. joined Lord, Abbett & Co. in 1982. Mr. Hudson served as
Director of Research from 1983 to 1989 and has been a portfolio manager since
1989. He earned his BS in finance and accounting at St. Mary's College.
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
THE LORD ABBETT FAMILY Meeting Investor Needs Since 1929
--------------------------------------------------------------------------------
Lord, Abbett & Co. manages a spectrum of mutual funds to meet the investment
goals of its shareholders. Assets may be allocated or transferred among these
funds as described in the relevant prospectus. The exchange privilege may be
modified or terminated. For more information about a Lord Abbett fund, including
charges and expenses, please call us at 800-874-3733 for a prospectus. Please
read the prospectus carefully before investing.
================================================================================
Equity Portfolios
--------------------------------------------------------------------------------
Affiliated Fund
Established 1934
Seeks long-term growth of capital and income without excessive fluctuations in
market value. Portfolio emphasis: The stocks of large, well-seasoned companies.
Lord Abbett Developing Growth Fund
Established 1973
Seeks aggressive, long-term capital appreciation. Price volatility is not
uncommon. Portfolio emphasis: The stocks of small growth companies mostly traded
over the counter.
Lord Abbett Fundamental Value Fund
Established 1986
Seeks growth of capital and growth of income consistent with reasonable risk.
Portfolio emphasis: The stocks of large and midsized companies with strong
underlying fundamentals.
Lord Abbett Global Fund
Equity Series
Established 1988
Seeks long-term growth of capital and, secondarily, production of current
income. Portfolio: A diversified portfolio of stocks from around the world.
Lord Abbett Value Appreciation Fund
Established 1983
Seeks capital appreciation. Portfolio emphasis: The stocks of midsized
companies.
================================================================================
Balanced Portfolio
--------------------------------------------------------------------------------
Lord Abbett Balanced Series
Established 1994
Seeks current income and capital growth. Portfolio: A blend of stocks and fixed-
income securities.
================================================================================
Fixed-Income Portfolios
--------------------------------------------------------------------------------
Lord Abbett Bond-Debenture Fund
Established 1971
Seeks high current income and capital growth to produce a high total return.
Portfolio emphasis: Convertible issues and lower rated debt.
Lord Abbett Global Fund
Income Series
Established 1988
Seeks high current income and, secondarily, capital appreciation. Portfolio:
High-quality international and U.S. debt.
Lord Abbett Limited Duration U.S. Government Securities Series
Established 1993
Seeks a high level of income, relative to money market instruments, with less
fluctuations in principal than long-term U.S. Government securities. Portfolio
emphasis: Limited duration fixed-income securities (primarily U.S. Government
securities).
Lord Abbett U.S. Government Securities Fund
Established 1932
Seeks high current income. Portfolio: Since 1985, U.S. Government securities
exclusively.
===============================================================================
Tax-Free Portfolios
-------------------------------------------------------------------------------
Lord Abbett Tax-Free Income Funds
-------------------------------------------------------------------------------
National and New York Series Established 1984
-------------------------------------------------------------------------------
California Fund Established 1985
-------------------------------------------------------------------------------
Texas Series Established 1987
-------------------------------------------------------------------------------
New Jersey, Connecticut, Missouri, Hawaii, Florida and Pennsylvania Series
Established 1991
-------------------------------------------------------------------------------
Washington and Michigan Series Established 1992
-------------------------------------------------------------------------------
Georgia and Minnesota Series Established 1994
-------------------------------------------------------------------------------
Seek high tax-free income. Portfolios' emphasis: High-quality municipal bonds.
===============================================================================
Money Market Portfolio
-------------------------------------------------------------------------------
Lord Abbett U.S. Government Securities
Money Market Fund
Established 1979
Seeks high current income and preservation of capital. Portfolio: U.S.
Government money market instruments.
An investment in this Fund is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that this Fund will be able to maintain
a stable net asset value of $1.00 per share. This Fund is managed to maintain,
and has maintained, its stable $1.00 per share price.
[PICTURE - FATHER MOTHER AND SON]
[LOGO APPEARS HERE] Lord, Abbett & Co.
Investment Management
A Tradition of Performance Through Disciplined Investing
LAVA-3-695
The GM Building * 767 Fifth Avenue * New York, NY 10153-0203 (8/95)
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Statement of Net Assets June 30, 1995
------------------------------------------------------------------------------------------------------------------------------------
Number of Market Value
Security Shares (Note 1a)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN COMMON STOCKS 94.02%
------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Aerospace AAR Corp.-Major supplier of products and services for the worldwide
1.93% aviation industry 225,000 $ 4,021,875
------------------------------------------------------------------------------------------------------------------------------------
Apparel Jones Apparel Group+-Leading designer, manufacturer and marketer
5.13% of women's apparel 135,000 4,033,125
------------------------------------------------------------------------------------------------------------
V.F. Corp.-Leading producer of blue jeans and other apparel 40,000 2,150,000
------------------------------------------------------------------------------------------------------------
Warnaco Group Inc. Class A-Designer and manufacturer of branded
apparel products 225,000 4,500,000
------------------------------------------------------------------------------------------------------------
Total 10,683,125
------------------------------------------------------------------------------------------------------------------------------------
Auto Parts Genuine Parts Co.-National distributor of automotive replacement parts 150,000 5,681,250
8.52% ------------------------------------------------------------------------------------------------------------
Johnson Controls, Inc.-Diversified manufacturer of auto seats, car batteries,
plastic beverage containers and systems for commercial buildings 100,000 5,650,000
------------------------------------------------------------------------------------------------------------
Snap-On, Inc.-Manufactures and distributes hand tools and diagnostic
equipment for the automotive industry 165,000 6,393,750
------------------------------------------------------------------------------------------------------------
Total 17,725,000
------------------------------------------------------------------------------------------------------------------------------------
Banks:
Money Center 1.80% Bank of Boston-Major money center bank 100,000 3,750,000
------------------------------------------------------------------------------------------------------------------------------------
Chemicals Hanna, M.A. Co.-Leading producer and distributor of plastic
7.43% compounds, resins and additives 150,000 3,900,000
------------------------------------------------------------------------------------------------------------
Lyondell Petrochemical Co.-Integrated manufacturer and marketer of
petrochemicals and refined petroleum products 90,000 2,306,250
------------------------------------------------------------------------------------------------------------
Nalco Chemical Co.-Producer of specialty chemicals for water and wastewater
treatment and other industrial uses 100,000 3,637,500
------------------------------------------------------------------------------------------------------------
Praxair, Inc.-Leading producer of industrial gases 75,000 1,875,000
------------------------------------------------------------------------------------------------------------
Union Carbide Corp.-Major U.S.-based producer of plastics and chemicals 112,000 3,738,000
------------------------------------------------------------------------------------------------------------
Total 15,456,750
------------------------------------------------------------------------------------------------------------------------------------
Containers Sonoco Products Co.-A leading U.S. producer of specialty paper and
2.25% plastic packaging components 189,000 4,677,750
------------------------------------------------------------------------------------------------------------------------------------
Drugs/Health Haemonetics Corp.+-Major manufacturer of blood collection systems 25,000 481,250
Care Products ------------------------------------------------------------------------------------------------------------
1.94% Mallinckrodt Group Inc.-Producer of medical products,
specialty chemicals and veterinary supplies 100,000 3,550,000
------------------------------------------------------------------------------------------------------------
Total 4,031,250
------------------------------------------------------------------------------------------------------------------------------------
Electric Power 1.53% Ipalco Enterprises Inc.-Major midwestern electric utility holding company 100,000 3,187,500
------------------------------------------------------------------------------------------------------------------------------------
Electronics: Harris Corp.-Manufacturer of advanced electronic systems and
Communications .99% communications equipment 40,000 2,065,000
------------------------------------------------------------------------------------------------------------------------------------
Electronics: Loral Corp.-Major manufacturer of electronic warfare and communications systems 30,000 1,552,500
Equipment ------------------------------------------------------------------------------------------------------------
3.22% Perkin-Elmer Corp.-Leading manufacturer of analytical instruments and
life science systems 145,000 5,147,500
------------------------------------------------------------------------------------------------------------
Total 6,700,000
------------------------------------------------------------------------------------------------------------------------------------
Food Dean Foods Co.-Major producer of dairy foods, canned and frozen vegetables 180,000 5,040,000
8.42% ------------------------------------------------------------------------------------------------------------
Hershey Foods Corp.-Major U.S. maker of chocolate and confectionary products 70,000 3,867,500
------------------------------------------------------------------------------------------------------------
Supervalu Inc.-Second largest U.S. food wholesaler 140,000 4,077,500
------------------------------------------------------------------------------------------------------------
Universal Foods Corp.-Manufacturer of yeast, flavorings, colorants and
dried spices for the food industry 140,000 4,532,500
------------------------------------------------------------------------------------------------------------
Total 17,517,500
------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Statement of Net Assets June 30, 1995
------------------------------------------------------------------------------------------------------------------------------------
Number of Market Value
Security Shares (Note 1a)
------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Health Care DSG International Ltd.-Global manufacturer of disposable diapers 140,000 $ 2,555,000
Products ------------------------------------------------------------------------------------------------------------
3.88% Guidant Corp.+-Major designer and manufacturer of cardiological equipment 100,000 2,400,000
------------------------------------------------------------------------------------------------------------
Vivra Inc.+-Leading provider of end-stage renal dialysis treatment 115,000 3,119,375
------------------------------------------------------------------------------------------------------------
Total 8,074,375
------------------------------------------------------------------------------------------------------------------------------------
Hotel/Motel 1.11% Starwood Lodging Trust-Hotel Real Estate Investment Trust 100,000 2,303,125
------------------------------------------------------------------------------------------------------------------------------------
Insurance Alexander & Alexander Services-Second largest insurance broker in the world 180,000 4,297,500
8.15% ------------------------------------------------------------------------------------------------------------
Equitable of Iowa-A leading provider of individual annuities and insurance 30,000 986,250
------------------------------------------------------------------------------------------------------------
John Alden Financial Corp.-Holding company specializing in life and
health insurance 115,000 1,969,375
------------------------------------------------------------------------------------------------------------
Lincoln National Corp.-Holding company with operations in insurance,
reinsurance and investment-related services 80,000 3,500,000
------------------------------------------------------------------------------------------------------------
The Progressive Corporation-Insurance holding company specializing in
non-standard auto insurance 60,000 2,302,500
------------------------------------------------------------------------------------------------------------
Transatlantic Holdings Inc.-International property and casualty reinsurer 60,000 3,900,000
------------------------------------------------------------------------------------------------------------
Total 16,955,625
------------------------------------------------------------------------------------------------------------------------------------
Machinery:
Diversified 1.57% Goulds Pumps, Inc.-Largest U.S. producer of industrial and residential
pump systems 150,000 3,262,500
------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Moore Corp. Ltd.-World's largest manufacturer of business forms and
5.81% related products 325,000 7,190,625
------------------------------------------------------------------------------------------------------------
National Service Industries, Inc.-Diversified manufacturer of lighting
equipment, rental uniforms and specialty chemicals 170,000 4,908,750
------------------------------------------------------------------------------------------------------------
Total 12,099,375
------------------------------------------------------------------------------------------------------------------------------------
Natural Gas Coastal Corp.-A diversified gas pipeline company 95,000 2,885,625
Distribution/ ------------------------------------------------------------------------------------------------------------
Transmission Eastern Enterprises-Natural gas distributor in Massachusetts 215,000 6,423,125
6.48% ------------------------------------------------------------------------------------------------------------
Equitable Resources, Inc.-Natural gas distributor in Appalachia;
oil and gas exploration 100,000 2,887,500
------------------------------------------------------------------------------------------------------------
Western Gas Resources, Inc.-An owner and operator of natural gas
processing plants 75,000 1,293,750
------------------------------------------------------------------------------------------------------------
Total 13,490,000
------------------------------------------------------------------------------------------------------------------------------------
Oil: Domestic Kerr-McGee Corp.-Oil and gas exploration and production, refining and
2.86% chemicals 50,000 2,681,250
------------------------------------------------------------------------------------------------------------
Ultramar Corp.-Refiner and marketer of petroleum products 130,000 3,282,500
------------------------------------------------------------------------------------------------------------
Total 5,963,750
------------------------------------------------------------------------------------------------------------------------------------
Oil Well Equipment/ COFLEXIP S.A. Sponsored ADR-World leader in design, manufacture and
Service .97% installation of flexible pipe for offshore petroleum transportation 80,000 2,030,000
------------------------------------------------------------------------------------------------------------------------------------
Paper and Federal Paper Board Inc.-Producer of linerboard and pulp 134,000 4,740,250
Forest Products ------------------------------------------------------------------------------------------------------------
4.83% James River Corp.-Producer of paper-based consumer products,
packaging and communication papers 120,000 3,315,000
------------------------------------------------------------------------------------------------------------
Westvaco Corp.-Major producer of paper and paperboard products 45,000 1,991,250
------------------------------------------------------------------------------------------------------------
Total 10,046,500
------------------------------------------------------------------------------------------------------------------------------------
Printing and
Publishing 1.76% Banta Corp.-A leading U.S. printer of books, magazines and catalogs 110,000 3,657,500
------------------------------------------------------------------------------------------------------------------------------------
Railroads 1.16% Illinois Central Corp.-Major midwestern freight railroad operator 70,000 2,415,000
------------------------------------------------------------------------------------------------------------------------------------
Restaurants 1.24% Brinker International Inc.+-Major developer and operator of casual
dining restaurants 150,000 2,587,500
------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Statement of Net Assets June 30, 1995
------------------------------------------------------------------------------------------------------------------------------------
Number of
Shares Market Value
Security or Principal Amount (Note 1a)
------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Savings and Loan Ahmanson, H.F. & Co.-Largest savings and loan holding company in the U.S. 120,000 $ 2,640,000
4.49% ------------------------------------------------------------------------------------------------------------
Great Western Financial Corp.-A leading savings and loan company 325,000 6,703,125
------------------------------------------------------------------------------------------------------------
Total 9,343,125
------------------------------------------------------------------------------------------------------------------------------------
Steel .98% Birmingham Steel Corporation-Successful U.S. mini-mill steel producer 110,000 2,035,000
------------------------------------------------------------------------------------------------------------------------------------
Tire and Cooper Tire & Rubber Company-Major manufacturer of replacement tires
Rubber Goods and inner tubes for cars, trucks and buses 150,000 3,656,250
3.85% ------------------------------------------------------------------------------------------------------------
Standard Products Co.-Manufactures plastic and rubber products for the
automotive and appliance industries 200,000 4,350,000
------------------------------------------------------------------------------------------------------------
Total 8,006,250
------------------------------------------------------------------------------------------------------------------------------------
Transportation: Ryder Systems Inc.-Largest supplier of full-service truck leasing and other
Miscellaneous 1.72% related transportation services in the U.S. 150,000 3,581,250
------------------------------------------------------------------------------------------------------------
Total Investments in Common Stocks (Cost $167,336,073) 195,666,625
------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES 5.98%
------------------------------------------------------------------------------------------------------------------------------------
Short-Term Beneficial Corp. 6.00% due 7/5/1995 8,800M 8,800,000
Investments, ------------------------------------------------------------------------------------------------------------
at Cost Federal National Mortgage Association 5.87% due 7/14/1995 2,000M 1,995,108
------------------------------------------------------------------------------------------------------------
General Electric Co. 5.70% due 7/3/1995 3,800M 3,800,000
------------------------------------------------------------------------------------------------------------
Total Short-Term Investments 14,595,108
------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities (2,142,638)
------------------------------------------------------------------------------------------------------------
Total Other Assets, Less Liabilities 12,452,470
------------------------------------------------------------------------------------------------------------------------------------
Net Assets (equivalent to $11.09 a share on 18,770,080 shares of $.10 par value capital
100.00% stock outstanding; authorized, 150,000,000 shares) $208,119,095
------------------------------------------------------------------------------------------------------------
+Non-income producing.
See Notes to Financial Statements.
</TABLE>
<TABLE>
==============================================================================================================================
Portfolio Changes
------------------------------------------------------------------------------------------------------------------------------
Issues added to or eliminated from the portfolio (exclusive of U.S. Government obligations and short-term investments) during
the six months ended June 30, 1995
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Additions* Brinker International Inc. Hershey Foods Corp. Starwood Lodging Trust
Coastal Corp. John Alden Financial Corp. Universal Foods Corp.
Equitable of Iowa Mallinckrodt Group Inc. Westvaco Corp.
Guidant Corp. OFFICEMAX Inc.
Haemonetics Corp. The Progressive Corporation
------------------------------------------------------------------------------------------------------------------------------
Eliminations* Allegheny Ludlum Corp. Kemet Corp. PPG Industries, Inc.
Alumax Inc. LDDS Communications Inc. Temple-Inland, Inc.
Crane Co. OFFICEMAX Inc. UAL Corp. (new)
Cyprus Amax Minerals Co. Parker Hannifin Corp. Union Texas Petroleum Holdings, Inc.
Fleetwood Enterprises, Inc. Pioneer Hi-Bred International, Inc. Worthington Industries Inc.
------------------------------------------------------------------------------------------------------------------------------
*Includes securities previously classified in the Investment Portfolio under "Other".
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================================
Statement of Operations For the Six Months Ended June 30, 1995
-------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Investment Income
==========================================================================================================================
Income Dividends $ 2,528,766
---------------------------------------------------------------------------------------------------------
Interest 305,052
---------------------------------------------------------------------------------------------------------
Total income $ 2,833,818
--------------------------------------------------------------------------------------------------------------------------
Expenses Management fee (Note 5) 788,205
---------------------------------------------------------------------------------------------------------
12b-1 distribution plan (Note 5) 211,165
---------------------------------------------------------------------------------------------------------
Shareholder servicing 150,000
---------------------------------------------------------------------------------------------------------
Reports to shareholders 42,000
---------------------------------------------------------------------------------------------------------
Audit 24,000
---------------------------------------------------------------------------------------------------------
Other 58,812
---------------------------------------------------------------------------------------------------------
Total expenses 1,274,182
---------------------------------------------------------------------------------------------------------
Net investment income 1,559,636
---------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments (Note 4)
==========================================================================================================================
Net realized gain from security transactions (excluding short-term securities)
---------------------------------------------------------------------------------------------------------
Proceeds from sales 44,337,848
---------------------------------------------------------------------------------------------------------
Cost of securities sold 32,721,898
---------------------------------------------------------------------------------------------------------
Net realized gain 11,615,950
--------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments
---------------------------------------------------------------------------------------------------------
Beginning of period 14,542,344
---------------------------------------------------------------------------------------------------------
End of period 28,330,552
---------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 13,788,208
---------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 25,404,158
---------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $26,963,794
==========================================================================================================================
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
===============================================================================================================================
Statements of Changes in Net Assets
-------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
Increase (Decrease) in Net Assets June 30, 1995 Dec. 31, 1994
==========================================================================================================================
<C> <S> <C> <C>
Operations Net investment income $ 1,559,636 $ 3,048,458
---------------------------------------------------------------------------------------------------------
Net realized gain from security transactions 11,615,950 24,301,857
---------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 13,788,208 (34,053,037)
---------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 26,963,794 (6,702,722)
--------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income included in price of shares sold and
(reacquired) (Note 1d) (18,056) 25,456
--------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from
---------------------------------------------------------------------------------------------------------
Net investment income (2,778,019) (2,579,254)
---------------------------------------------------------------------------------------------------------
Net realized gain from security transactions (23,613,139) (14,064,523)
---------------------------------------------------------------------------------------------------------
Total distributions (26,391,158) (16,643,777)
--------------------------------------------------------------------------------------------------------------------------
Capital share transactions (exclusive of amounts allocated to net investment income)
---------------------------------------------------------------------------------------------------------
Net proceeds from sales of 1,277,001 and 1,994,914 shares,
respectively 13,257,517 22,968,898
---------------------------------------------------------------------------------------------------------
Net asset value of 2,422,885 and 1,234,992 shares, respectively,
issued to shareholders in reinvestment of net investment income and
realized gain from security transactions 23,501,594 14,664,505
---------------------------------------------------------------------------------------------------------
Total 36,759,111 37,633,403
---------------------------------------------------------------------------------------------------------
Cost of 1,881,789 and 2,281,809 shares reacquired, respectively (19,982,319) (26,043,542)
---------------------------------------------------------------------------------------------------------
Increase in net assets derived from capital share transactions
(net increase of 1,818,097 and 948,097 shares, respectively) 16,776,792 11,589,861
--------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 17,331,372 (11,731,182)
--------------------------------------------------------------------------------------------------------------------------
Net Assets
==========================================================================================================================
Beginning of period 190,787,723 202,518,905
---------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment income of
$1,376,659 and $2,613,098, respectively) $208,119,095 $190,787,723
==========================================================================================================================
See Notes to Financial Statements.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
Financial Highlights
----------------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended December 31,
Ended ----------------------------------------------------------
Per Share Operating Performance: June 30, 1995 1994 1993 1992 1991 1990
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.25 $ 12.65 $ 12.60 $ 11.81 $ 9.80 $ 10.59
-------------------------------------------------------------------------------------------------------------------------
Income from investment operations
---------------------------------------------------------------------------------------------------------------------
Net investment income .08+ .18 .16 .20 .23 .28
---------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 1.375 (.545) 1.42 1.31 2.30 (.77)
---------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.455 (.365) 1.58 1.51 2.53 (.49)
-------------------------------------------------------------------------------------------------------------------------
Distributions
---------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.17) (.16) (.20) (.22) (.26) (.30)
---------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain (1.445) (.875) (1.33) (.50) (.26) -
-----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.09 $ 11.25 $ 12.65 $ 12.60 $ 11.81 $ 9.80
-----------------------------------------------------------------------------------------------------------------------------
Total Return* 14.81%+ (3.27)% 13.95% 13.46% 27.36% (4.64)%
=============================================================================================================================
Ratios/Supplemental Data:
=============================================================================================================================
Net assets, end of period (000) $208,119 $190,788 $202,519 $173,380 $166,056 $155,018
---------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
-------------------------------------------------------------------------------------------------------------------------
Expenses .65%+ 1.12% 1.22% 1.22% 1.14% 1.12%
---------------------------------------------------------------------------------------------------------------------
Net investment income .80%+ 1.53% 1.35% 1.71% 2.16% 2.79%
-------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 20.81% 57.49% 33.42% 62.55% 34.20% 51.49%
=============================================================================================================================
*Total return does not consider the effects of sales loads.
+Not annualized.
See Notes to Financial Statements.
</TABLE>
================================================================================
Notes to Financial Statements
--------------------------------------------------------------------------------
1. Significant Accounting Policies
The Company is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The following is a summary
of significant accounting policies consistently followed by the Company. The
policies are in conformity with generally accepted accounting principles.
(a) Market value is determined as follows: Securities listed or admitted to
trading privileges on any national securities exchange are valued at the last
sales price on the principal securities exchange on which such securities are
traded, or, if there is no sale, at the mean between the last bid and asked
prices on such exchange. Securities traded only in the over-the-counter market
are valued at the mean between the last bid and asked prices in such market,
except that securities admitted to trading on the NASDAQ National Market System
are valued at the last sales price if it is determined that such price more
accurately reflects the value of such securities. Securities for which market
quotations are not available are valued at fair value under procedures approved
by the Board of Directors.
(b) It is the policy of the Company to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income in taxable distributions. Therefore, no income tax
provision is required.
(c) Security transactions are accounted for on the date that the securities are
purchased or sold (trade date). Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Interest income is accrued on
a daily basis.
(d) A portion of proceeds from sales and costs of repurchases of capital shares,
equivalent to the amount of distributable net investment income on the date of
the transaction, is credited or charged to undistributed income. Undistributed
net investment income per share thus is unaffected by sales or repurchases of
shares.
2. Distributions
Taxable net realized gain from security transactions, if any, is declared in
December of the current year or January of the succeeding year. At June 30,
1995, undistributed net realized gain for financial reporting purposes, which is
substantially the same as for federal income tax purposes, aggregated
$12,661,907.
Income and capital gains distributions are determined in accordance with income
tax regulations which may differ from methods used to determine the
corresponding income and capital gains amounts in accordance with generally
accepted accounting principles. These differences are primarily caused by
differences in the timing of the recognition of certain components of income,
expense, or capital gain. Where such differences are permanent in nature, they
are reclassified in the Sources of Net Assets based upon their ultimate
characterization for federal income tax purposes. Any such reclassifications
will have no effect on net assets, results of operations, or net asset value of
the Fund.
3. Capital Paid In
At June 30, 1995, capital paid in aggregated $165,749,977.
4. Purchases and Sales of Securities
Purchases and sales of investment securities (other than short-term investments)
aggregated $38,601,199 and $44,337,848, respectively.
7
<PAGE>
================================================================================
Notes to Financial Statements
--------------------------------------------------------------------------------
Security gains and losses are computed on the identified cost basis.
As of June 30, 1995, net unrealized appreciation for federal income tax purposes
aggregated $28,330,552, of which $31,393,569 related to appreciated securities
and $3,063,017 related to depreciated securities. For federal income tax
purposes, the identified cost of investments owned at June 30, 1995 was
substantially the same as the cost for financial reporting purposes.
5. Management Fee and Other Transactions with Affiliates
Lord, Abbett & Co. received a management fee of $788,205 for which it supplied
investment management, research, statistical and advisory services and paid
officers' remuneration and certain other expenses of the Company. The management
fee is based on average daily net assets at the following annual rates: .75 of
1% on the first $200 million; .65 of 1% on the next $300 million; and .50 of 1%
on the excess over $500 million. Lord, Abbett & Co. also received $17,427,
representing payment of commissions on sales of capital stock of the Company
after deducting $113,082 allowed to authorized distributors as concessions.
Certain of the Company's officers and directors have an interest in Lord,
Abbett & Co.
The Company has a Rule 12b-1 Plan providing for (a) the payment of a service fee
to dealers at the annual rate of .15% of the average daily net asset value of
the Company's shares sold by dealers prior to June 1, 1990 and .25% of the
average daily net asset value of such shares sold on or after that date and (b)
a one-time 1% distribution fee, at the time of sale, on such shares sold at net
asset value of $1 million or more.
6. Directors' Remuneration
The Directors of the Company associated with Lord, Abbett & Co. and all officers
of the Company receive no compensation from the Company for acting as such.
Outside Directors' fees, including attendance fees for board and committee
meetings, and outside Directors' retirement costs, are allocated among all funds
in the Lord Abbett group based on net assets of each fund. The direct
remuneration accrued during the period for outside Directors of the Company as a
group was $1,987 (exclusive of expenses), which has been deemed invested in
shares of the Company under a deferred compensation plan contemplating future
payment of the value of those shares. As of June 30, 1995, the aggregate amount
in Directors' accounts maintained under the plan was $173,227. Retirement costs
accrued during the period amounted to $1,116.
Copyright (C) 1995 by Lord Abbett Value Appreciation Fund, Inc., 767 Fifth
Avenue, New York, NY 10153-0203
This publication, when not used for the general information of shareholders of
Lord Abbett Value Appreciation Fund, Inc., is to be distributed only if preceded
or accompanied by a current prospectus which includes information concerning the
Fund's investment objective and policies, sales charges and other matters.
All rights reserved. Printed in the U.S.A.
================================================================================
Our Management
--------------------------------------------------------------------------------
Board of Directors
Ronald P. Lynch
Thomas S. Henderson
E. Thayer Bigelow*
Stewart S. Dixon*
John C. Jansing*+
C. Alan MacDonald*+
Hansel B. Millican, Jr.*+
Thomas J. Neff*
*Outside Director
+Audit Committee
Officers
Ronald P. Lynch, Chairman
and President
John J. Walsh, Executive Vice
President and Portfolio Manager
Kenneth B. Cutler, Vice President
and Secretary
Stephen I. Allen, Vice President
Daniel E. Carper, Vice President
Robert S. Dow, Vice President
Thomas S. Henderson,
Vice President
E. Wayne Nordberg,
Vice President
John J. Gargana, Jr.,
Vice President
Thomas F. Konop, Vice President
and Assistant Secretary
Victor W. Pizzolato,
Vice President
Edward K. von der Linde,
Vice President
Keith F. O'Connor, Treasurer
Joseph Van Dyke,
Assistant Treasurer
Lydia Guzman,
Assistant Secretary
Robert M. Hickey,
Assistant Secretary
A. Edward Oberhaus III,
Assistant Secretary
Investment Manager
and Underwriter
Lord, Abbett & Co.
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
212-848-1800
Custodian
Morgan Guaranty
Trust Company
of New York
Transfer Agent
United Missouri Bank of
Kansas City, N.A.
Shareholder
Servicing Agent
DST Systems, Inc.
P.O. Box 419100
Kansas City, MO 64141
800-821-5129
Auditors
Deloitte & Touche LLP
New York, NY
Counsel
Debevoise & Plimpton
New York, NY
8
