Lord Abbett Research Fund
Large-Cap Series Small-Cap Value Series
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED MAY 31, 1999
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Two portfolios designed to help
you build for your future
<PAGE>
Lord Abbett Research Fund Large-Cap Series Small-Cap Value Series
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A Tradition of
Value Investing
We recognize each investor's need for a well-diversified portfolio. Our value
investing process can benefit investors in both large and small company stocks.
Our goal, to provide investors competitive returns with relatively moderate
fluctuations in price, applies to both Series.
- --------------------------------------------------------------------------------
Value Investing at Work in a Portfolio of Large Company Stocks and a Portfolio
of Small Company Stocks
Lord Abbett Research Fund- Large-Cap Series has produced long-term returns above
the average of mutual funds that focus on large companies.
Large-Cap Series Performance
Average Annual Total Returns as of 5/31/99
6 months 5 years
The Large-Cap Series 13.95% 21.70%
Morningstar Average of Large
Value Funds 10.62% 19.61%
Morningstar Average of Growth
& Income Funds 11.0% 20.73%
The Small-Cap Value Series has outperformed small company stocks in general and
the average of mutual funds that focus on small companies for the period since
its inception.
Small-Cap Value Series Performance
Average Annual Total Returns as of 5/31/99
6 months Life of Series
The Small-Cap Value Series 8.15% 16.30%
Morningstar Average of Small
Value Funds 4.98% 12.70%
Russell 2000 Value Index 4.77% 13.06%
Performance data shown is for Class A shares at net asset value and assumes the
reinvestment of all distributions. Comparative fund performance provided by
Morningstar, Inc., does not account for the deduction of sales charges and would
be different if sales charges were included. The Russell 2000 Value Index is an
unmanaged index measuring the performance of those Russell 2000 companies with
lower price-to-book ratios and lower forecasted earnings growth values. An
investor cannot invest directly in an index. Source: Morningstar, Inc.
Average Annual Total Returns
Average annual total returns for the periods ended 6/30/99 at the Class A
share maximum sales charge of 5.75%, with all distributions reinvested:
Large-Cap Series Small-Cap Value Series
1 year 13.00% -
5 years 21.69% 1 year -6.20%
Life of Series 19.22% Life of Series 12.22%
The results quoted herein represent past performance, which is no indication of
future results. The investment return and principal value of an investment in
either Series will fluctuate so that shares, on any given day or when redeemed,
may be worth more or less than their original cost.
(1) Period 12/13/95- 5/31/99 for the Small-Cap Value Series; 1/1/96- 5/31/99 for
Morningstar averages and the Russell 2000 Index, an unmanaged index consisting
of the common stocks of 2000 companies. The Index is unavailable for investment.
(2) The Large-Cap Series commenced operations 6/3/92.
(3) The Small-Cap Value Series commenced operations 12/13/95. During the 5-year
and Life-of-Series periods shown, Lord Abbett waived or assumed a portion of
fees and expenses for each Series. Please see the Series' prospectus for a
history of such waivers and assumptions. There are no plans to continue such
waivers and assumptions in the future.
<PAGE>
Report to Shareholders
For the Six Months Ended May 31, 1999
[GRAPHIC OMITTED]
Robert S. Dow
Chairman
June 5, 1999
"...in our opinion, over the long term, a value-oriented, disciplined approach
to investing provides the greatest potential for achieving consistent,
above-market returns."
Lord Abbett Research Fund completed the first half of its fiscal year on May 31,
1999. We are pleased to present you with an overview of performance and
class-specific data for the period.
<TABLE>
<CAPTION>
Large-Cap Series Small-Cap Value Series
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Class B Class C Class P+ Class Y++ Class A Class B Class C Class Y
- -------------------------------------------------------------------------------------------------------------------
Net asset value $24.69 $24.46 $24.46 $24.70 $24.69 $15.53 $15.29 $15.29 $15.57
Dividends $ 0.07 $ - $ - $ - $ - $ - $ - $ - $ -
Capital gains paid $ 0.17 $ 0.17 $ 0.17 $ - $ - $ - $ - $ - $ -
Total return*+++ +13.95% +13.57% +13.46% -1.55% -2.06% +8.15% +7.68% +7.68% +8.12%
</TABLE>
U. S. stocks were subject to significant volatility during the first half of the
Fund's fiscal year. 1 However, a more favorable environment developed later in
the period as investors' concerns regarding diminished corporate earnings eased
somewhat and low inflation and strong economic growth continued in the U. S. In
the early months of 1999, investor sentiment continued to improve as Southeast
Asian economies, which had been hit hard by currency problems and fallout from a
faltering Japanese economy, began to recover. Japan's efforts to address its
economic and banking system problems have given support to the region and have
generated hope that the financial crises in that part of the world may be
nearing an end.
About Large-Cap Series
During the period, the Fund established and added to positions in stocks that,
in our opinion, were undervalued due to investor sentiment rather than
deteriorating company fundamentals. A number of positions we established or
strengthened in telecommunications, technology and select financial services
companies performed well. A slight increase in long-term interest rates, brought
on in part by a rise in commodity prices, resulted in markdowns on our electric
utility holdings.
About Small-Cap Value Series
In April and May many small-cap stocks performed well, rebounding from their
1998 and first quarter 1999 price levels. This was generally a result of
improving investor sentiment and an increased interest in the sector, which had
become significantly undervalued as a result of the "flight to quality" that
drove investors to large-company stocks and a period of tax-loss selling that
put further pressure on small-cap stock prices in 1998. Holdings in the
technology and energy sectors turned in strong performance as the market bounced
back. We believe that select investments in these areas may provide value, given
existing price levels and our current interest rate forecasts.
Looking Ahead
Through the remainder of 1999, we anticipate that the domestic economy will
continue to grow, fueled in part by strong consumer spending. If recovery in
Asia also continues, a global economic expansion is likely in 2000. With the
general rise in interest rates we've experienced since the beginning of the
year, we do not expect inflation to exceed our earlier forecast of approximately
2 to 2 1 /2% in 1999. Given these conditions, we believe that value stocks will
perform well relative to growth stocks. It is important to note, however, that
we work to apply our bottom-up, stock-picking strategy regardless of market
conditions because, in our opinion, over the long term, a value-oriented,
disciplined approach to investing provides the greatest potential for achieving
consistent, above-market returns.
Thank you for your continued confidence in Lord Abbett Research Fund. We look
forward to helping you achieve your financial goals in the years ahead.
* Total return is the percent change in net asset value, assuming the
reinvestment of all distributions.
+ Since inception (4/28/99).
++ Since inception (5/4/99).
+++ Not annualized.
1
<PAGE>
LORD ABBETT RESEARCH FUND- LARGE-CAP SERIES
Unique Management Style Produces An Outperformer
Shareholders investing $10,000 at the Series' inception on June 3, 1992 had a
portfolio worth $35,120 as of May 31, 1999, an average annual gain of 19.7%.
Lord Abbett Research Fund-
Large-Cap Series (1) $35,120
Morningstar Average of Large
Value Funds (2) $29,492
Morningstar Average of
Growth & Income Funds (2) $29,978
(1) Series performance is at net asset value for Class A shares and assumes the
reinvestment of all distributions.
(2) Source: Morningstar, Inc. Morningstar performance reflects the period
6/1/92- 5/31/99.
LORD ABBETT RESEARCH FUND- SMALL-CAP VALUE SERIES
Seeking the Best Small-Cap Value Stocks
A $10,000 investment made on January 1, 1996 was worth $16,834 as of May 31,
1999, outperforming both the unmanaged Russell 2000 Index and the
Morningstar Average of Small Value Funds.
Lord Abbett Research Fund-
Small-Cap Value Series (1) $16,834
Morningstar Average of Small
Value Funds (2) $15,259
Russell 2000 Value Index (2)(3) $15,197
(1) Series performance is at net asset value for Class A shares and assumes the
reinvestment of all distributions.
(2) Source: Morningstar, Inc.
(3) The Russell 2000 Value Index is an unmanaged index measuring the performance
of those Russell 2000 companies with lower price-tobook ratios and
lower forecasted earnings growth values. An investor cannot invest
directly in an index. Source: Morningstar, Inc.
2
<PAGE>
A Note About Year 2000 Matters
As you may know, there has been extensive media coverage about possible problems
that may arise as a result of uncertainties about the ability of computers to
"understand" dates using the year 2000. Potentially, these problems could
disrupt the services and systems that the Fund relies on in its daily
operations.
As a general matter, we believe the financial industry has taken a leadership
role addressing year 2000 (Y2K) issues and this should help to inspire
confidence among concerned investors. More specifically, Lord Abbett, Lord
Abbett Distributor LLC and the Fund's transfer agent, custodian and other
providers of services critical to the Fund have been actively working on
reviewing and replacing or updating computer systems and computer-to-computer
interfaces, as needed. Each has completed or is in the process of testing new or
revised systems and interfaces and generally expects that their systems, as well
as those of their key external service providers, will be ready to handle Y2K
without significant problems. Furthermore, the Fund has been routinely taking
each company's Y2K preparations into account when considering or reviewing
investments.
In summary, while the Y2K problem is unprecedented and we cannot completely
eliminate the possibility that the Fund could be affected in some way, we are
confident that all parties involved are taking appropriate steps to resolve Y2K
concerns.
Important Information
Common stocks purchased by each Series are subject to market fluctuations,
providing the potential for gains and the risk of loss. Lord Abbett Research
Fund- Small-Cap Value Series invests in small-cap companies, which typically
have a higher risk of failure and historically have experienced a greater degree
of illiquidity and market volatility than large-cap companies. Performance
results quoted herein reflect past performance, current sales charges (where
applicable) and appropriate Rule 12b-1 Plan expenses from commencement of the
Plan. Past performance is no indication of future results. Tax consequences are
not reflected. The investment return and principal value of an investment will
fluctuate so that shares, on any given day or when redeemed, may be worth more
or less than their original cost. Each Series issues additional classes of
shares, with distinct pricing options. For a full discussion of the differences
in pricing alternatives, please call Lord Abbett Distributor LLC at 800-874-3733
and ask for the Fund's current prospectus. If used as sales material after
9/30/99, this report must be accompanied by Lord Abbett's Performance Quarterly
for the most recently completed calendar quarter.
Statement of Net Assets
SMALL-CAP VALUE SERIES May 31, 1999
<TABLE>
<CAPTION>
Investments Shares Value
----------- ------ -----
<S> <C> <C> <C>
Investments in Common Stocks 97.49%
- ------------------------------------------------------------------------------------------------------------------------------------
Aerospace 6.57% AAR Corp. - Major supplier of products and services for the worldwide aviation
industry 315,000 $ 6,221,250
*Doncasters plc ADR- Supplier of tolerance-critical aircraft engine components 305,900 4,684,094
*Moog Inc.+ Class A- Manufacturer of electrohydraulic control systems 455,200 11,835,200
*SPS Technologies Inc. - Producer of industrial fasteners 164,000 6,949,500
Total 29,690,044
===========
Airlines .23% *Midwest Express Holdings Inc. - A U. S. carrier connecting 45 cities, primarily 34,400 1,029,850
with Milwaukee ===========
Aluminum 1.65% IMCO Recycling Inc. - Major aluminum recycler and zinc and magnesium processor 445,000 7,453,750
===========
Apparel 9.84% Garan Inc. - Supplier of knitted and woven apparel 250,000 7,187,500
*Gerber Childrenswear Inc. - Markets infant & toddler apparel & related products 710,600 4,796,550
*Gildan Activewear Inc. Class A- Manufacturer of branded basic activewear 229,800 3,619,350
*North Face Inc.- Manufacturer of camping and outerwear 624,700 4,997,600
Phillips Van Heusen Corp. - Apparel manufacturer 670,000 5,862,500
Stride Rite Corp. - Producer and retail marketer of adults & children's shoes 1,726,200 18,017,213
Total 44,480,713
==========
Auto Parts 1.52% *American Axle & Manufacturing Holdings Inc.- Manufacturer of driveline systems for
light trucks and sport utility vehicles 220,000 3,341,250
3
<PAGE>
Statement of Net Assets
SMALL-CAP VALUE SERIES May 31, 1999
Investments Shares Value
----------- ------ ------
Clarcor Inc.- Manufactures oil and air filters 193,200 $ 3,550,050
Total 6,891,300
==========
Banks:
Regional .42% Community First Bankshares Inc.- A multi-bank holding company 90,000 1,906,875
==========
Building
Materials 5.20% Hughes Supply Inc.- Supplier of building materials and plumbing equipment 340,000 9,158,750
LSI Industries Inc.- Manufacturer of lighting fixtures, menu board systems
and graphic products 25,500 566,577
*Newmark Homes Corp. - Provides single-family homes in five major markets 195,400 1,123,550
*Simpson Manufacturing Co. Inc.- Manufacturer of construction-related fasteners 285,700 12,677,938
Total 23,526,815
==========
Business
Services 1.01% *Right Management Consultant Inc.- Career transition services 280,000 4,585,000
==========
Capital
Equipment 6.68% CMI Corp. Class A- Manufactures equipment for heavy-duty construction
and infrastructure applications 46,700 429,056
*Gardner Denver Inc.- Manufactures stationary air compressors and blowers for
industrial applications 128,000 2,192,000
*Gradall Industries Inc.- Makes wheeled hydraulic excavators and rough-terrain
variable-reach material handlers, as well as related service parts 175,700 3,470,075
Milacron Inc.- A leading manufacturer of plastics machinery and industrial
consumable products 200,000 4,262,500
Oshkosh Truck Corp. + -Markets a broad range of heavy specialized motor vehicles 500,000 19,875,000
Total 30,228,631
==========
Communications
Equipment 7.80% *Anicom Inc.- Distributes multimedia technology products throughout North America 354,600 3,257,887
*Commscope Inc.- Designs, makes and markets coaxial cables 500,300 13,132,875
*Dialogic Corp. - Manufactures and markets hardware and software enabling technologies
for computer telephony systems 326,500 10,896,937
General Cable Inc.- Manufacturer of copper wire and cable 525,000 7,973,437
Total 35,261,136
==========
Computer:
Hardware 3.45% *Electronics for Imaging Inc.- Develops technologies that enable digital color
printing over computer network 200,000 9,812,500
*Zebra Technologies Corp. Class A- Provider of bar code labeling systems 180,000 5,782,500
Total 15,595,000
==========
Computer:
Peripherals 2.76% Analysts International Corp. - Provides a variety of computer software services to
computer users 552,600 8,807,063
*Mentor Graphics Corp. - Designs, manufactures, markets and services electronic
design automation systems for use in the electrical engineering industry 290,000 3,661,250
Total 12,468,313
==========
Computer:
Software 1.36% *Evans & Sutherland Computer Corp. - Developer of computer graphics software systems 186,700 2,940,525
*Security Dynamics Technologies Inc.- Provides enterprise network and data security 169,000 3,211,000
solutions
Total 6,151,525
==========
Containers 2.60% *BWAY Corp. - Manufacturer of steel containers 286,200 4,078,350
*Ivex Packaging Corp. - Designer and manufacturer of flexible packaging products 399,000 7,680,750
Total 11,759,100
==========
Electrical
Equipment 1.33% Kollmorgen Corp. - Manufacturer of motors and controls 480,000 6,030,000
==========
Electronics:
Components 6.34% *Anadigics Inc.- Supplies radio frequency and microwave integrated circuits used
to receive and transmit signals 294,800 7,370,000
BEI Technologies Inc.+ -Designs, makes and sells electronic devices that
provide vital sensory input for the control systems of advanced machinery and 404,500 4,019,719
automation systems
Innovex, Inc.- Develops components, primarily lead wire assemblies, for the 165,000 2,206,875
disk drive industry
Methode Electronics Inc.- Producer of electronic components 673,600 12,419,500
*Sensormatic Electronics Corp. - Supplies electronic security systems to the
retail, commercial and industrial marketplaces 120,500 1,611,685
Technitrol Inc.- A worldwide manufacturer of electronic components, electrical
contacts and assemblies, thermostatic and clad-metal materials and components
and related items 34,3100 1,020,425
Total 28,648,204
4
<PAGE>
Statement of Net Assets
SMALL-CAP VALUE SERIES May 31, 1999
Investments Shares Value
----------- ------ -----
Electronics:
Equipment 2.50% *GenRad Inc.- Electrical test and measurement equipment, auto diagnostic equipment 620,000 $ 11,315,000
==========
Engineering/
Construction .82% *Baker Michael Corp.+ -Engineering, operations & maintenance and construction firm 511,500 3,708,375
==========
Financial:
Miscellaneous 1.51% Doral Financial Corp. - Originates, purchases, sells and services mortgage loans for
single-family residences in Puerto Rico 23,200 391,500
*Financial Federal Corp. - Provides installment financing and leasing programs to the
manufacturing industries 287,700 6,437,288
Total 6,828,788
==========
Fluid
Separation .81% *CUNO Inc.- Manufacturer of fluid filtration products for healthcare, potable water and
industrial fluid processing 200,000 3,662,500
==========
Food 4.22% Dreyer's Grand Ice Cream Inc.- Ice cream manufacturer and distributor 700,000 11,593,750
Michael Foods Inc.- Processor and distributor of eggs and egg products, retail potato
and dairy items 75,000 1,762,500
*Midwest Grain Products Inc.- Manufacturer of wheat gluten, starch, and alcohol 193,000 1,857,625
Sanderson Farms Inc.- Produces, processes, markets and distributes fresh & frozen chicken
and other prepared food 290,000 3,878,750
Total 19,092,625
==========
Furniture and
Appliances .15% *Neutral Posture Ergonomics Inc.+ -Producer of office chairs 305,000 686,250
==========
Health-Care
Products 7.80% Arrow International Inc.- Supplies disposable catheters and related clinical products 515,000 13,068,125
*Gliatech Inc.- Manufacturer of medical devices designed to inhibit excessive surgical scarring
and adhesion formation 195,000 4,996,875
*Haemonetics Corp. - Major manufacturer of blood collection systems 59,000 1,121,000
Invacare Corp. - Manufacturer of medical equipment for the home health care, retail and
extended care markets 285,000 7,107,188
*ICU Medical Inc.- Manufacturer of proprietary disposable medical connection devices for use
in intravenous therapy applications 300,000 5,325,000
Mentor Corp. - Develops, makes and sells a broad range of products for plastic and
reconstructive surgery 228,800 3,646,500
Total 35,264,688
==========
Health-Care
Services 2.02% *Gene Logic Inc.- Develops proprietary genomic information products, software and
research services 168,000 735,000
*Sierra Health Services Inc.- Provider of managed health and workers' compensation
plans in Nevada, Texas and the Northeast 550,000 8,387,500
Total 9,122,500
==========
Insurance:
Property & Casualty Chartwell Re Corp. - Property casualty insurance company 159,600 2,503,725
.63% *Philadelphia Cons Holding Co - Property casualty insurance company 15,000 357,188
Total 2,860,913
==========
Manufacturing
Diversified .96% Varlen Corp. - Manufacturer of metal products used in a variety of industries 115,075 4,344,081
==========
Oil & Gas:
E& P 2.57% *Basin Exploration Inc. - U. S. gas and oil exploration, development and production
company 256,900 4,303,075
*Meridian Resource Corp. - U. S. gas and oil exploration, development and production
company 1,365,100 7,337,413
Total 11,640,488
==========
Oil Well
Equipment /Service
3.78% *National-Oilwell Inc. - Domestic oil and gas drilling and production company 219,000 2,641,688
*Newpark Resources Inc. - Provides comprehensive environmental management and
oilfield construction services for the oil and gas industry 890,000 8,010,000
*Oceaneering International Inc. - Sub-sea diving services 278,000 4,291,625
*Offshore Logistics Inc. - Provides helicopter transportation services for the worldwide
offshore oil and gas industry 190,000 2,149,375
Total 17,092,688
==========
Printing
and Publishing
1.00% *Scholastic Corp. - A leading publisher of children's books and educational materials 92,900 4,505,650
==========
Restaurants .94% *Buca Inc. - Owns and operates "BUCA di DEPPO" restaurants 13,700 238,038
CBRL Group Inc. - Operates Cracker Barrel restaurants throughout the U. S. 232,400 4,023,425
Total 4,261,463
==========
</TABLE>
5
<PAGE>
Statement of Net Assets
SMALL-CAP VALUE SERIES May 31, 1999
<TABLE>
<CAPTION>
Shares or
Investments Principal Amount Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail-Food .78% Ruddick Corp. - Manufactures sewing thread; operates
supermarkets in the Southeast 200,500 $ 3,533,813
Retail: Department Stores *ColdWater Creek Inc. - A specialty direct mail retailer 133,500 2,670,000
& Merchandise 2.78% *Elder-Berrman Stores Corp. - Operates Midwestern department and shoe 771,100 6,747,125
stores
*Party City Corp. - Provides a large variety of party supplies 240,000 240,000
*United Retail Group Inc. - Retails large-size women's apparel and 199,200 2,888,400
accessories
Total 12,545,525
=============
Specialty Materials 4.31% *Rogers Corp.+ - Manufacturer of specialty materials and components 683,500 19,479,750
=============
Steel .03% *NS Group Inc. - Manufacturer of oil country tubular steel products and industrial
adhesive products 21,400 152,475
=============
Transportation .35% *Airnet System Inc. - Operates a national air transportation network to make time-critical
deliveries 150,000 1,584,375
=============
Truckers .77% *Smithway Motor Express Corp.+ - Class A Truckload carrier concentrating on the
flatbed segment 340,000 3,474,358
=============
Total Investments in Common Stocks (Cost $459,869,071) 440,862,561
=============
Other Assets, Less Liabilities 2.51%
- ------------------------------------------------------------------------------------------------------------------------------------
Short-term Investments Dow Chemical Co. 4.90%, due 6/1/1999 (Cost $9,271,212) $9,275,000 9,271,212
=============
Cash 211,172
=============
Receivable for: Securities sold 15,306,048
Capital stock sold 572,614
Dividends 215,789
Other 46,036
Total Other Assets 25,622,871
=============
Payable for: Securities purchased 13,318,429
Capital stock reacquired 969,780
Total Liabilities 14,288,209
Total Other Assets, Less Liabilities 11,334,662
Net Assets 100.00% $452,197,223
=============
Class A Shares-Net asset value ($183,458,403/11, 816,429 shares outstanding) $15.53
Maximum offering price (net asset value plus sales charge of 5.75% of the of fering price $16.48
Class B Shares-Net asset value ($ 170,641,910/11,159,976 shares outstanding) $15.29
Class C Shares-Net asset value ($ 51,521, 750/3,369,417 shares outstanding) $15.29
Class Y Shares-Net asset value ($ 46,575,160/2,990,822 shares outstanding) $15.57
*Non-income producing security.
+Affiliated issuer (holdings represent 5% or more of the outstanding voting securities).
See Notes to Financial Statements.
6
<PAGE>
Statement of Net Assets
LARGE-CAP SERIES May 31, 1999
Investments Shares Value
----------- ------ -----
Investments in Common Stocks 95.31%
Aerospace 1.23% Rockwell International Corp. - Leading producer of space systems and electrical and
electronic products including defense, telecommunications and factory automation
systems 45,000 $ 2,483,438
==========
Aluminum 1.50% Alcoa Inc.- Largest U. S. aluminum producer 55,000 3,025,000
==========
Apparel .92% VF Corp. - Leading producer of blue jeans and other apparel 40,000 1,840,000
==========
Automobiles 1.14% Ford Motor Co - World's second largest producer of cars and trucks 40,000 2,282,500
==========
Banks: Money
Center 1.70% Chase Manhattan Corp. - Major money-center bank holding company 47,000 3,407,500
==========
Banks: Regional 6.65% Bank One Corp. - Leading bank holding company 75,000 4,242,188
BankAmerica Corp. - Major Western and Midwestern bank holding company 26,000 1,681,888
First Union Corp. - Major East Coast bank 65,000 2,994,062
Fleet Financial Group, Inc.- Northeastern regional bank holding company 50,000 2,056,250
Wells Fargo Co - Midwestern regional bank holding company 60,000 2,400,000
Total 13,374,388
==========
Brokers 1.20% Morgan Stanley Dean Witter & Co - Major brokerage and credit card company 25,000 2,412,500
==========
Chemicals .96% Rohm & Haas Co - Manufacturer of specialty chemicals and plastics 48,000 1,926,000
==========
Communications
Services 1.93% *QUALCOMM Inc. - Leading producer of communications technologies and products 40,000 3,890,000
==========
Computer: Hardware
& Services International Business Machines Corp. - World's largest computer manufacturer 46,000 5,350,375
7.04% *Sun Microsystems Inc. - Supplier of network computer products including
workstations, servers, software, microprocessors, and a full range of services
and support 65,000 3,883,750
*Unisys Corp. - Provides information services, technology, software and customer
support 130,000 4,931,875
Total 14,166,000
==========
Data Processing 2.68% First Data Corp. - Information supplier for credit card processing and related
services 120,000 5,392,500
==========
Drugs/Health-Care
Products American Home Products Corp. - Producer of drugs, food housewares and packaged
3.79% medicine and medical products 65,000 3,745,625
Pharmacia & Upjohn Inc. - Develops, makes and sells prescription pharmaceutical
& other related health care products 70,000 3,880,625
Total 7,626,250
==========
Electric Power 3.67% Carolina Power & Light Co - Electric utility company serving North and South
Carolina 72,000 3,150,000
Duke Energy Corp. - Major electric and gas utility company 70,000 4,221,875
Total 7,371,875
==========
Electrical
Equipment 1.43% Emerson Electric Co - Diversified manufacturer of consumer and industrial
electrical components 45,000 2,874,375
==========
Electronics:
Semiconductors 2.18 Texas Instruments, Inc. - Major producer of semiconductors and electronic
equipment 40,000 4,375,000
==========
Food 3.06% Heinz H. J. Co - Domestic packaged foods producer 85,000 4,106,563
Ralston Purina Co - Produces and sells dog and cat foods 75,000 2,043,750
Total 6,150,313
==========
Health-Care
Products 1.61% Baxter International Inc. - World's leading distributor and major manufacturer
of hospital supplies and related medical equipment 50,000 3,228,125
==========
Health-Care
Services 3.25% Aetna Inc. - Major health-care and retirement services company 50,000 4,540,625
Columbia/HCA Healthcare Corp. - A leading HMO 85,000 2,002,812
Total 6,543,437
==========
Insurance: Life 2.34% American General Corp. - A leading provider of financial services,
including life/health insurance, annuities, consumer credit and mortgage financing 65,000 4,696,250
==========
Insurance: Property
& Casualty Allstate Corp. - Second largest provider of personal lines of insurance in the U. S. 55,000 2,004,062
6.35% Aon Corp. - Multi-line insurance company 55,000 2,365,000
Chubb Corp. - Broad-based property and casualty insurance organization 42,000 2,942,625
CIGNA Corp. - Multi-line insurance and medical services company 30,000 2,797,500
==========
7
<PAGE>
Statement of Net Assets
LARGE-CAP SERIES May 31, 1999
Shares or
Investments Principal Amount Value
----------- ---------------- -----
St. Paul Companies Inc. - Large property-casualty insurance company 75,000 $ 2,667,188
Total 12,776,375
==========
Machinery:
Diversified 1.51% Deere & Co - World's largest manufacturer of farm equipment 80,000 3,045,000
==========
Manufacturing:
Diversified 1.52% Allied-Signal Inc. - Major producer of aerospace components, automotive
parts and engineered materials 30,000 1,741,875
Honeywell Inc. - Manufacturer of automation and control systems 10,000 946,250
United Technologies Corp. - Diversified manufacturing company 6,000 372,375
Total 3,060,500
==========
Media 2.98% CBS Corp. - Largest pure-play radio and broadcasting company 70,000 2,922,500
Time Warner Inc. - A major entertainment and communications firm 45,000 3,062,813
Total 5,985,313
==========
Natural Gas:
Diversified 1.92% The Coastal Corp. - A diversified gas pipeline company 100,000 3,856,250
==========
Office Equipment/
Supplies 1.54% Xerox Corp. - World's leading duplication technology supplier 55,000 3,090,313
==========
Oil Well Equipment/
Services .75% Schlumberger Ltd - Provider of oilfield services 25,000 1,504,687
==========
Oil: International
Integrated Atlantic Richfield Co - Major integrated oil and natural gas company 25,000 2,092,187
8.73% BP Amoco plc Sponsored ADR- Major integrated petroleum and natural gas
company with sizeable interests in chemicals 30,000 3,215,625
Exxon Corp. - World's largest integrated oil company 27,000 2,156,625
Mobil Corp. - Large international oil company 35,000 3,543,750
Texaco Inc. - Major integrated oil and natural gas company 35,000 2,292,500
Total S. A. ADR- Leading French international oil and gas company 70,000 4,256,875
Total 17,557,562
==========
Paper and
Forest Products International Paper Co - Producer of paper and forest products 90,000 4,500,000
2.2
==========
Pollution Control Waste Management Inc. - A leading waste-management concern 85,000 4,494,375
2.23
==========
Printing and Dow Jones & Co. Inc. - Publisher of The Wall Street Journal and Barron's
Publishing 3.51% and operator of news wires and information retrieval services 55,000 2,887,500
==========
Gannett Co., Inc. - Major U. S. newspaper publisher 25,000 1,806,250
Tribune Co - Major Chicago-based newspaper company 30,000 2,368,125
Total 7,061,875
==========
Retail: Department Federated Department Store Co - Leading department store retailer 75,000 4,087,500
Stores & Merchandise Wal-Mart Stores Inc. - Largest U. S. discount retailer 25,000 1,065,625
2.56%
Total 5,153,125
==========
Telecom and
Data Services AT& T Corp. - Global telecommunications giant 135,000 7,492,500
5.44%
*MCI WorldCom Inc. - Diversified telecommunications company 40,000 3,455,000
Total 10,947,500
==========
Telephone: Regional Alltel Corp. - Regional telephone holding company 60,000 4,301,250
5.75%
Bell Atlantic Corp. - Regional telephone company 72,000 3,942,000
SBC Communications Inc. - Regional telephone monopoly 65,000 3,323,125
Total 11,566,375
==========
Total Investments in Common Stocks (Cost $158,560,717) 191,664,701
Other Assets, Less Liabilities 4.69%
- -----------------------------------
Short-term
Investments American General Finance Corp. 4.90%, due 6/1/1999 $1,310,000 1,310,000
Dow Chemical Co. 4.90%, due 6/1/1999 7,940,000 7,936,757
Total Short-term Investments (Cost $9,246,757) 9,246,757
==========
Cash 428,599
==========
Receivable for: Securities sold 9,800,465
Capital stock sold 2,471,128
8
<PAGE>
Statement of Net Assets
LARGE-CAP SERIES May 31, 1999
Value
-----
Dividends and interest $ 218,689
Other 54,028
Total Other Assets 22,219,666
==========
Payable for: Securities purchased 12,591,981
Capital stock reacquired 200,895
Total Liabilities 12,792,876
==========
Total Other Assets, Less Liabilities 9,426,790
==========
Net Assets 100.00% $201,091,491
==========
Class A Shares- Net asset value ($ 134,967,033/5,465,791 shares outstanding) $24.69
Maximum offering price (net asset value plus sales charge of 5.75% of the offering price) $26.20
Class B Shares- Net asset value ($ 54,245,761/2,218,165 shares outstanding) $24.46
Class C Shares- Net asset value ($ 11,876,615/485,460 shares outstanding) $24.46
Class P Shares- Net asset value ($ 1,111.93/45.012 shares outstanding) $24.70
Class Y Shares- Net asset value ($ 970.14/39.293 shares outstanding) $24.69
*Non-income producing security.
ADR American Depositary Receipt.
See Notes to Financial Statements.
</TABLE>
9
<PAGE>
Statements of Operations
Six Months Ended May 31, 1999
-----------------------------
Small-Cap Value Large-Cap
Investment Income Series Series
- ----------------- ------ ------
Income Dividends $ 1,397,491 $ 1,221,694
Interest 169,890 189,152
Total income 1,567,381 1,410,846
--------- ---------
Expenses Management fee 1,811,731 630,156
12b-1 distribution plan- Class A 290,689 159,179
12b-1 distribution plan- Class B 875,742 212,659
12b-1 distribution plan- Class C 272,530 46,211
Shareholder servicing 735,085 188,363
Reports to shareholders 68,643 29,058
Registration 35,071 35,087
Professional 32,533 13,684
Directors' fees 4,508 1,033
Other 34,330 2,664
Total expense before reductions 4,160,862 1,318,094
--------- ---------
Expense reductions (18,396) (3,538)
Net expenses 4,142,466 1,314,556
--------- ---------
Net investment income (loss) (2,575,085) 96,290
--------- ---------
Realized and Unrealized Gain on Investments
========= =========
Net realized gain from investment transactions 18,899,529 6,724,656
--------- ---------
Net change in unrealized appreciation of investments 15,702,841 14,493,903
--------- ---------
Net realized and unrealized gain on investments 34,602,370 21,218,559
--------- ---------
Net Increase in Net Assets Resulting from Operations $32,027,285 $21,314,849
========= =========
See Notes to Financial Statements.
10
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
Six Months Ended May 31, 1999 Year Ended November 30, 1998
----------------------------- ----------------------------
Small-Cap Value Large-Cap Small-Cap Value Large-Cap
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------- -----------------------------------
Increase (Decrease) in Net Assets Series Series Series Series
Operations Net investment income (loss) $ (2,575,085) $ 96,290 $ (4,088,565) $ 544,083
Net realized gain (loss) from investment
transactions 18,899,529 6,724,656 (30,380,175) 1,225,829
Net change in unrealized appreciation
(depreciation) of investments 15,702,841 14,493,903 (49,772,112) 10,300,214
Net increase (decrease) in net assets
resulting from operations 32,027,285 21,314,849 (84,240,852) 12,070,126
Undistributed net investment income included in price of
share transactions -- -- -- 550,688
- ----------------------------------------------------------------------------------------------- -----------------------------------
Dividends and distributions to shareholders from:
Net investment income- Class A -- (307,606) -- (217,361)
Net investment income- Class B -- -- -- --
Net investment income- Class C -- -- -- --
Net realized gain from investment
transactions- Class A -- (747,006) (3,626,593) (1,758,495)
Net realized gain from investment
transactions- Class B -- (272,904) (2,865,444) (683,991)
Net realized gain from investment
transactions- Class C -- (60,913) (808,272) (60,358)
Total -- (1,388,429) (7,300,309) (2,720,205)
-------------------------------------------------------------------------------- -----------------------------------
Capital share transactions:
Net proceeds from the sales of shares 27,070,456 57,014,663 276,645,136 78,226,590
Net asset value of shares issued in
reinvestment of dividends and distributions -- 1,342,553 6,933,940 2,588,508
Total 27,070,456 58,357,216 283,579,076 80,815,098
-------------------------------------------------------------------------------- -----------------------------------
Cost of shares reacquired (122,279,391) (20,345,366) (112,434,885) (17,358,805)
-------------------------------------------------------------------------------- -----------------------------------
Increase in net assets derived from
capital share transactions (95,208,935) 38,011,850 171,144,191 63,456,293
-------------------------------------------------------------------------------- -----------------------------------
Increase (decrease) in net assets (63,181,650) 57,938,270 79,603,030 73,356,902
- ----------------------------------------------------------------------------------------------- -----------------------------------
Net Assets
Beginning of period 515,378,873 143,153,221 435,775,843 69,796,319
-------------------------------------------------------------------------------- -----------------------------------
End of period + $ 452,197,223 $ 201,091,491) $ 515,378,873 $ 143,153,221
-------------------------------------------------------------------------------- -----------------------------------
+ Including undistributed (overdistributed) net investment income of $(2,576,859) and $67,436, respectively, as of
May 31, 1999 and $(1,774) and $278,752, respectively, as of November 30, 1998.
See Notes to Financial Statements.
</TABLE>
11
<PAGE>
Financial Highlights
SMALL-CAP VALUE SERIES
<TABLE>
<CAPTION>
Class A Shares Class B Shares
-------------- --------------
Six Months Ended Year Ended 12/13/95(a) to Six Months Ended Year Ended 11/15/96(b) to
May 31, 11/30/ 11/30/ May 31, November 30, 11/30/
Per Share Operating Performance: 1999 1998 1997 1996 1999 1998 1997 1996
- ------------------------------------------------------------------------------ ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.36 $16.56 $12.01 $10.00 $14.20 $16.44 $12.00 $11.67
- ------------------------------------------------------------------------------ ----------------------------------------------------
Income (loss) from
investment operations
Net investment income (loss) (.06)(c) (.06)(c) .02(c) .127 (.11)(c) (.17)(c)(.09)(c) .001
Net realized and unrealized
gain (loss) on investments 1.23 (1.85) 4.53 2.658 1.20 (1.82) 4.53 .329
Total 1.17 (1.91) 4.55 2.785 1.09 (1.99) 4.44 .33
- ------------------------------------------------------------------------------ ----------------------------------------------------
Distributions
Dividends from net
investment income - - - (.075) - - - -
Distributions from net
realized gain - (.29) - (.700) - (.25) - -
Total - (.29) - (.775) - (.25) - -
- ------------------------------------------------------------------------------ ----------------------------------------------------
Net asset value, end of period $15.53 $14.36 $16.56 $12.01 $15.29 $14.20 $16.44 $12.00
- ------------------------------------------------------------------------------ ----------------------------------------------------
Total Return (d) 8.15%(e) (11.71)% 37.89% 28.24%(e) 7.68%(e) (12.27)% 37.00% 2.84%(e)
====================================================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver and
reimbursements .73%(e)(f)1.28% 1.17% .01%(e) 1.07%(e)(f)2.00% 1.86% .04%(e)
Expenses, excluding waiver and
reimbursements .73%(e) 1.28% 1.17% 1.00%(e) 1.07%(e) 2.00% 1.86% .07%(e)
Net investment income (loss) (.39)%(e) (.37)% .10% 1.02%(e) (.74)%(e) (1.09)% (.56)% .01%(e)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class C Shares Class Y Shares
-------------- --------------
Six Months Ended Year Ended April 1, 1997(b) to Six Months Ended 12/30/97(b) to
May 31, November 30, November 30, May 31, 11/30/
Per Share Operating Performance: 1999 1998 1997 1999 1998
- ------------------------------------------------------------------------------ ----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 14.20 $16.44 $12.81 $14.40 $16.34
- ------------------------------------------------------------------------------ ----------------------------------------------------
Income (loss) from
investment operations
Net investment loss (c) (.11) (.17) (.05) (.04) (.01)
Net realized and unrealized gain (loss)
on investments 1.20 (1.82) 3.68 1.21 (1.93)
Total 1.09 (1.99) 3.63 1.17 (1.94)
- ------------------------------------------------------------------------------ ----------------------------------------------------
Distributions
Distributions from net realized gain - (.25) - - -
- ------------------------------------------------------------------------------ ----------------------------------------------------
Net asset value, end of period $15.29 $14.20 $16.44 $15.57 $14.40
- ------------------------------------------------------------------------------ ----------------------------------------------------
Total Return (d) 7.68%(e) (12.27)% 28.34%(e) 8.12%(e) (11.87)%(e)
====================================================================================================================================
Ratios to Average Net Assets:
Expenses 1.07%(e)(f) 2.00% 1.25%(e) .58%(e)(f) .96%(e)
Net investment loss (.74)%(e) (1.09)% (.30)%(e) (.24)%(e) (.05)%(e)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 13, 1995 (a) to
May 31, November 30, November 30,
Supplemental Data for All Classes: 1999 1998 1997 1996
- ---------------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Net assets, end of period (000) $452,197 $515,379 $435,776 $8,772
Portfolio turnover rate 37.07% 67.86% 45.24% 110.09%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Commencement of operations.
(b) Commencement of offering respective class shares.
(c) Calculated using average shares outstanding during the period.
(d) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.
(e) Not annualized.
(f) The ratio includes expenses paid through an expense offset arrangement.
See Notes to Financial Statements.
</TABLE>
12
<PAGE>
Financial Highlights
LARGE-CAP SERIES
<TABLE>
<CAPTION>
Class A Shares
--------------
Six Months Ended
May 31, Year Ended November 30,
Per Share Operating Performance: 1999 1998 1997 1996 1995 1994
- -------------------------------- ---- ---- ---- ---- ---- ----
Net asset value, beginning of period $21.91 $20.08 $17.86 $15.54 $12.79 $12.33
- ------------------------------------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Income from investment operations
Net investment income .04 (a) .15 (a) .08 (a) .270 .42 .34
Net realized and unrealized gain on
investments 2.98 2.45 3.21 3.505 3.44
.65
Total 3.02 2.60 3.29 3.775 3.86 .99
----- ---- ---- ---- ----- ---- ---
Distributions
Dividends from net investment income (.07) (. 06) (.12) (.57) (.29) (.20)
Distributions from net realized gain (.17) (. 71) (.95) (.885) (.82) (.33)
Total (.24) (. 77) (1.07) (1.455) (1.11) (.53)
----- ----- ------ ------ ------- ------ -----
Net asset value, end of period $24.69 $21.91 $20.08 $17.86 $15.54 $12.79
- ------------------------------ ------ ------ ------ ------ ------ ------
Total Return (b) 13.95% (d) 13.45% 19.87% (d) 26.25% 32.82% 8.21%
=============== =========== ====== =========== ======== ======= ======
Ratios to Average Net Assets:
Expenses, including waiver and
reimbursements .66% (d) (f) 1.24% 1.52% (d) .36% .00% .00%
Expenses, excluding waiver and
reimbursements .66% (d) 1.24% 1.52% .96% 1.02% 1.15%
Net investment income .17%(d) 0.74% 0.42% 2.24% 3.27% 2.65%
--------------------- ------- ----- ----- ----- ----- -----
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Class C Shares
-------------- --------------
Six Months Ended Year Ended 8/1/96(c) to Six Months Ended Year Ended 4/1/97(c) to
May 31, November 30, 11/30/ May 31, November 30, 11/30/
Per Share Operating Performance: 1999 1998 1997 1996 1999 1998 1997
- -------------------------------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $21.71 $20.00 $17.83 $15.24 $21.73 $20.01 $16.90
- ------------------------------------ ------ ------ ------ ------ ------ ------ ------
Income (loss) from
investment operations
Net investment income (loss) (.04)(a) -(a)(e) (.06)(a) .12 (.05)(a) (.01)(a) (.07)(a)
Net realized and unrealized gain
on investments 2.96 2.42 3.20 2.66 2.95 2.44 3.18
Total 2.92 2.42 3.14 2.78 2.90 2.43 3.11
----- ---- ---- ---- ---- ---- ---- ----
Distributions
Dividends from net investment income - - (.02) (.19) - - -
Distributions from net realized gain (.17) (.71) (.95) - (.17) (.71) -
Total (.17) (.71) (.97) (.19) (.17) (.71) -
----- ----- ----- ----- ----- ----- ----- -
Net asset value, end of period $24.46 $21.71 $20.00 $17.83 $24.46 $21.73 $20.01
- ------------------------------ ------ ------ ------ ------ ------ ------ ------
Total Return (b) 13.57% (d) 12.56% 18.92% 18.39% (d) 13.46%(d) 12.61% 18.40%(d)
================ =========- =====- ====== ========== ======== ====== =========
Ratios to Average Net Assets:
Expenses 1.01% (d)(f) 2.00% 2.28% .59% (d) 1.01%(d) (f) 2.00% 1.54%(d)
Net investment income (loss) (.18)% (d) (.01)% (.34)% .22% (d) (.18)%(d) (.04%) (.37)%(d)
---------------------------- ---------- ------ ------ -------- --------- ------ ---------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
LARGE-CAP SERIES
Class P Shares Class Y Shares
-------------- --------------
<S> <C> <C> <C>
4/28/99(c) 5/4/99(c)
Per Share Operating Performance: to 5/31/99 to 5/31/99
- -------------------------------- ---------- ----------
Net asset value, beginning of period $25.09 $25.21
- ------------------------------------ ------ ------
Income (loss) from investment operations
Net investment income (a) .01 (e) - (e)
Net realized and unrealized loss on investments (.40) (.52)
Total (.39) (.52)
----- ----- -----
Net asset value, end of period $24.70 $24.69
- ------------------------------ ------ ------
Total Return (b) (d) (1.55)% (2.06)%
==================== ======= =======
Ratios to Average Net Assets (d) :
Expenses .14%(f) .08%(f)
Net investment income .05% .09%
--------------------- ---- ----
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended May 31, Year Ended November 30,
Supplemental Data For All Classes: 1999 1998 1997 1996 1995 1994
---------------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $201,091 $143,153 $69,796 $23,592 $7,549 $5,558
Portfolio turnover rate 33.63% 99.14% 30.81% 62.25% 37.17% 43.85%
----------------------- ------ ------ ------ ------ ------ ------
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.
(c) Commencement of offering respective class shares.
(d) Not annualized.
(e) Amount less than $.01.
(f) The ratio includes expenses paid through an expense offset arrangement.
See Notes to Financial Statements.
</TABLE>
14
<PAGE>
Notes to Financial Statements
1. Significant Accounting Policies
Lord Abbett Research Fund, Inc. (the "Company") is an open-end management
investment company incorporated under Maryland law on April 26, 1992. The
Company consists of three separate portfolios. This report covers two of the
portfolios (" Series") - Small-Cap Value Series (formerly Small-Cap Series) and
Large-Cap Series . Each Series is diversified as defined under the Investment
Company Act of 1940. The financial statements have been prepared in conformity
with generally accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the Company:
(a) Securites are valued as follows: Portfolio 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 ask price
on such exchange, or, in the case of bonds, in the over-the-counter market if,
in the judgment of the Company's officers, that market more accurately reflects
the market value of the bonds. Securities traded only in the over-the-counter
market are valued at the mean between the bid and ask prices, except that
securities admitted to trading on the NASDAQ National Market System are valued
at the last sales price if it is determined that such price more accurately
reflects the value of such securities. Short-term securities maturing in 60 days
or less are valued at amortized cost which approximates market value. Securities
for which market quotations are not available are valued at fair value under
procedures approved by the Board of Directors.
(b) It is the policy of the Company to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income. Therefore, no federal income tax provision is required.
(c) Investment transactions are accounted for on the date that the securities
are purchased or sold (trade date). Realized gains and losses from investment
transactions are calculated on the identified cost basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Net
investment income (other than distribution and service fees) and realized and
unrealized gains or losses are allocated to each class of shares based upon the
relative proportion of net assets at the beginning of the day.
(d) Prior to December 1, 1998, Large-Cap Series followed the accounting practice
of equalization whereby a portion of the proceeds from the sales and costs of
repurchases of capital shares was allocated to undistributed net investment
income. Effective December 1, 1998, the Large-Cap Series discontinued the use of
equalization. Discontinuing the use of equalization will result in a simpler and
more meaningful financial statement presentation.
(e) The organization expenses of each Series are amortized evenly over a period
of five years.
(f) Each Series may write call options on securities it owns. Premiums received
by the Series upon writing covered call options are included in the Series'
statement of net assets as an asset and an equivalent liability. The liability
is adjusted daily to the market value of the options written. If an option
expires, or if the Series enters into a closing purchase transaction, the Series
realizes a gain or, if the cost of a closing purchase transaction exceeds the
premium originally received, a loss, and the liability related to the option is
extinguished. If an option is exercised, the proceeds of the sale of the
underlying security are increased by the premium originally received when the
option was written.
(g) Small-Cap Value Series along with certain other funds managed by Lord Abbett
(the "Underlying Funds") has entered into a Servicing Arrangement with the Alpha
Series of Lord Abbett Securities Trust pursuant to which the Underlying Funds
will pay a portion of the expenses of the alpha Series in proportion to the
average daily value of shares owned by the Alpha Series. Other expenses includes
approximately $31,000 accrued pursuant this Servicing Arangement.
2. Management Fee and Other Transactions with Affiliates
The Company has a management agreement with Lord, Abbett & Co. (" Lord Abbett")
pursuant to which Lord Abbett supplies the Company with investment management
services and executive and other personnel, pays the remuneration of officers,
provides office space and pays for ordinary and necessary office and clerical
expenses relating to research, statistical work and the supervision of the
Company's investment portfolios. The management fee paid is based on average
daily net assets for each month at the annual rate of .75 of 1%. Each Series of
the Company has Rule 12b-1 plans and agreements (the "Class A, Class B, Class C
Plans and Class P Plan for Large Cap Series") with Lord Abbett Distributor LLC
(" Distributor"), an affiliate of Lord Abbett. Each Series makes payments to
Distributor which uses or passes on such payments to authorized institutions.
Pursuant to the Class A Plan, each Series pays Distributor (1) an annual service
fee of 0.25% of the average daily net assets of Class A shares, (2) a one-time
distribution fee of up to 1% on certain qualifying purchases and (3) an annual
distribution fee of 0.10% of the average daily net asset value of Class A
shares. Pursuant to the Class B Plan, each Series pays Distributor an annual
service and distribution fee of 0.25% and 0.75%, respectively, of the average
daily net asset value of the Class B shares. Pursuant to the Class C Plan, each
Series pays Distributor (1) a service fee and a distribution fee, at the time
such shares are sold, not to exceed 0.25% and 0.75%, respectively, of the net
asset value of such shares sold and (2) at each quarter end after the first
anniversary of the sale of such shares, a service fee and a distribution fee at
an annual rate not to exceed 0.25% and 0.75%, respectively, of the average
annual net asset value of such shares outstanding. Pursuant to the Class P Plan,
the Large-Cap Series pays Distributor an annual service and distribution fee of
0.20% and 0.25%, respectively, of the average daily net asset value of the Class
P shares. Class Y for each Series does not have a Rule 12b-1 plan. Distributor
received the following commissions on sales of Class A shares of each Series
after concessions were paid to authorized dealers:
Distributor Dealers'
Series Commissions Concessions
- ------ ----------- -----------
Small-Cap Value $ 26,977 $172,241
Large-Cap $127,865 $764,707
- --------- -------- --------
Certain of the Company's officers and directors have an interest in Lord Abbett.
3. Capital
The Company has authorized 240 million shares of $.001 par value capital stock
for these two Series, designated as follows: Small-Cap Value Series: Class A- 20
million, Class B- 30 million, Class C- 20 million, Class P-20 million, Class Y-
30 million; Large-Cap Series: Class A- 20 million, Class B- 30 million, Class C-
20 million, Class P- 20 million, Class Y- 30 million. Paid in capital for the
Company amounted to $485,261,238 for the Small-Cap Value Series and $161,
088,602 for the Large-Cap Series at May 31, 1999. Transactions in capital stock
were as follows:
Six Months Ended 5/31/99
------------------------
Small-Cap Value Series Large-Cap Series
---------------------- ----------------
Class A Shares Amount Shares Amount
- ------------------------------------------------------- ------------------------
Sales of shares 758,973 $11,189,354 1,465,587 $34,253,837
- ------------------------------------------------------- ------------------------
Shares issued to share-
holders in reinvestment
of dividends and
distributions - - 47,827 1,027,804
- ------------------------------------------------------- ------------------------
Total 758,973 11,189,354 1,513,414 35,281,641
- ------------------------------------------------------- ------------------------
Shares reacquired (4,169,522) (59,515,644) (643,664) (14,659,289)
- ------------------------------------------------------- ------------------------
Increase (Decrease)(3,410,549) $(48,326,290) 869,750 $20,622,352
- --------------------------------------------------------------------------------
15
<PAGE>
Notes to Financial Statements
Year Ended 11/30/98
-------------------
Small-Cap Value Series Large-Cap Series
---------------------- ----------------
Class A Shares Amount Shares Amount
- --------------------------------------------------- ----------------------------
Sales of shares 6,447,168 $106,238,429 2,662,006 $54,926,487
- --------------------------------------------------- ----------------------------
Shares issued to shareholders
in reinvestment
of dividends and
distributions 214,484 3,431,712 97,208 1,896,265
- --------------------------------------------------- ----------------------------
Total 6,661,652 109,670,141 2,759,214 56,822,752
- --------------------------------------------------- ----------------------------
Shares reacquired (3,627,964) (54,893,698) (605,676) (12,303,172)
- --------------------------------------------------- ----------------------------
Increase 3,033,688 $54,776,443) 2,153,538 $44,519,580
- --------------------------------------------------------------------------------
Six Months Ended 5/31/99
------------------------
Small-Cap Value Series Large-Cap Series
---------------------- ----------------
Class B Shares Amount Shares Amount
- --------------------------------------------------- ----------------------------
Sales of shares 343,601 $ 4,934,567 750,895 $17,402,685
- --------------------------------------------------- ----------------------------
Shares issued to shareholders
in reinvestment
of distributions - - 11,962 255,502
- --------------------------------------------------- ----------------------------
Total 343,601 4,934,567 762,857 17,658,187
- --------------------------------------------------- ----------------------------
Shares reacquired (3,135,677) (44,184,511) (144,959) (3,335,496)
- --------------------------------------------------- ----------------------------
Increase (Decrease) (2,792,076) $(39,249,944) 617,898 $14,322,691
- --------------------------------------------------------------------------------
Year Ended 11/30/98
-------------------
Small-Cap Value Series Large-Cap Series
---------------------- ----------------
Class B Shares Amount Shares Amount
- --------------------------------------------------- ----------------------------
Sales of shares 5,076,837 $83,914,314 822,431 $17,009,086
- --------------------------------------------------- ----------------------------
Shares issued to shareholders
in reinvestment
of distributions 171,715 2,735,421 32,991 633,431
- --------------------------------------------------- ----------------------------
Total 5,248,552 86,649,735 855,422 17,642,517
- --------------------------------------------------- ----------------------------
Shares reacquired (2,413,115) (35,334,535) (212,259) (4,357,417)
- --------------------------------------------------- ----------------------------
Increase 2,835,437 $51,315,200) 643,163 $13,285,100
- --------------------------------------------------------------------------------
Six Months Ended 5/31/99
------------------------
Small-Cap Value Series Large-Cap Series
---------------------- ----------------
Class C Shares Amount Shares Amount
- --------------------------------------------------- ----------------------------
Sales of shares 250,684 $ 3,598,214 229,929 $ 5,356,016
Shares issued to shareholders
in reinvestment
of distributions - - 2,771 59,247
- --------------------------------------------------- ----------------------------
Total 250,684 3,598,214 232,700 5,415,263
- --------------------------------------------------- ----------------------------
Shares reacquired (1,311,458) (18,579,236) (102,010) (2,350,581)
- --------------------------------------------------- ----------------------------
Increase (Decrease) (1,060,774) $(14,981,022) 130,690 $ 3,064,682
- --------------------------------------------------------------------------------
Year Ended 11/30/98
-------------------
Small-Cap Value Series Large-Cap Series
---------------------- ----------------
Class C Shares Amount Shares Amount
- --------------------------------------------------- ----------------------------
Sales of shares 2,714,384 $ 45,179,963 306,208 $6,291,017
Shares issued to shareholders
in reinvestment
of distributions 48,136 766,807 3,059 58,812
- --------------------------------------------------- ----------------------------
Total 2,762,520 45,946,770 309,267 6,349,829
- --------------------------------------------------- ----------------------------
Shares reacquired (1,441,481) (21,034,948) (34,936) (698,216)
- --------------------------------------------------- ----------------------------
Increase 1,321,039 $ 24,911,822) 274,331 $5,651,613
- --------------------------------------------------------------------------------
4/28/99
(Commencement of
Offering Class P Shares) to
5/31/99
-------
Large-Cap Series
----------------
Class P Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 45 $1,125
- --------------------------------------------------------------------------------
Shares reacquired - -
- --------------------------------------------------------------------------------
Increase 45 $1,125
- --------------------------------------------------------------------------------
5/4/99
(Commencement of
Offering Class Y Shares) to
Six Months Ended 5/31/99 5/31/99
------------------------ -------
Small-Cap Value Series Large-Cap Series
---------------------- ----------------
Class Y Shares Amount Shares Amount
- --------------------------------------------------- ----------------------------
Sales of shares 512,786 $7,348,321 39 $1,000
- --------------------------------------------------- ----------------------------
Shares reacquired - - - -
- --------------------------------------------------- ----------------------------
Increase 512,786 $7,348,321) 39 $1,000
- --------------------------------------------------------------------------------
12/30/97
(Commencement of
Offering Class Y Shares) to
11/30/98
--------
Small-Cap Value Series
----------------------
Class Y Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 2,570,909 $41,312,430
- --------------------------------------------------------------------------------
Shares reacquired (92,873) (1,171,704)
- --------------------------------------------------------------------------------
Increase 2,478,036 $40,140,726
- --------------------------------------------------------------------------------
There was no capital stock activity for Class P shares of Small-Cap
Value Series during the period.
4. Distributions
Dividends from net investment income are declared annually for the Small-Cap
Value Series and semi-annually for the Large-Cap Series. Net realized gain from
investment transactions, if any, is distributed to shareholders annually. At May
31, 1999, accumulated net realized gain (loss) for each Series was as follows:
- --------------------------------------------------------------------------------
Small-Cap Value Series $(11,480,646)
Large-Cap Series $ 6,831,469
- --------------------------------------------------------------------------------
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from methods used to determine the
corresponding income and capital gain amounts in accordance with generally
accepted accounting principles. Dividends declared from net investment income on
June 23, 1999 and payable on July 1, 1999 to shareholders of record on June 23,
1999 for Large-Cap Series were as follows:
Rate Aggregate
Per Share Amount
- --------------------------------------------------------------------------------
Class A $0.03 $169,846
Class P 0.03 1
Class Y 0.04 2
- --------------------------------------------------------------------------------
5. Purchases and Sales of Securities
Purchases and sales of securities (other than short-term investments) for the
six months ended May 31, 1999 were as follows:
Series Purchases Sales
- --------------------------------------------------------------------------------
Small-Cap Value $171,587,735 $262,398,231
Large-Cap $ 91,247,444 $ 54,829,803
- --------------------------------------------------------------------------------
As of May 31, 1999, net unrealized appreciation, unrealized appreciation and
unrealized depreciation of investments based on cost for federal income tax
purposes were as follows:
Net Unrealized
Appreciation Unrealized Unrealized
Series (Depreciation) Appreciation (Depreciation)
- --------------------------------------------------------------------------------
Small-Cap Value $(19,006,510) $46,154,658 $(65,161,168)
Large-Cap $ 33,103,984 $34,704,656 $ (1,600,672)
- --------------------------------------------------------------------------------
The cost of investments for federal income tax purposes is substantially the
same as that used for financial reporting purposes
16
<PAGE>
Notes to Financial Statements
6. Directors' Remuneration
The Directors of the Company associated with Lord Abbett and all officers of the
Company receive no compensation from the Company for acting as such. Outside
Directors' fees and retirement costs are allocated among all funds in the Lord
Abbett group based on the net assets of each fund. Directors' fees payable at
May 31, 1999, under a deferred compensation plan, were $8,511.
7. Line of Credit
Each Series, along with certain other funds managed by Lord Abbett, has
available a $200,000,000 unsecured revolving credit facility from a consortium
of banks, to be used for temporary or emergency purposes as an additional source
of liquidity to fund redemptions of investor shares. Any borrowings under this
Facility will bear interest at current market rates as defined in the agreement.
The fee for this Facility is 0.06% per annum. There were no loans outstanding
pursuant to this Facility at May 31, 1999, nor was the Facility utilized at any
time during the period.
8. Expense Reduction
The Company has entered into an arrangement with its transfer agent whereby
credits realized as a result of uninvested cash balances were used to reduce a
portion of the Company's expenses.
9. Transactions with Affiliated
Companies An affiliated company is a company in which a Series has ownership of
at least 5% of the voting securities of the underlying issuer. SmallCap Value
Series had the following transactions during the period with companies that are
affiliates:
<TABLE>
<CAPTION>
Balance of Balance of Realized Gain (Loss) Dividend Income
Shares Held Gross Gross Shares Held Value Dec. 1, 1998 to Dec. 1, 1998 to
Affiliates Nov. 30, 1998 Purchases Sales May 31, 1999 May 31, 1999 May 31, 1999 May 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BEI Technologies Inc. 400,000 14,500 (10,000) 404,500 $ 4,019,719 $ 21,588 $ 24,380
- ------------------------------------------------------------------------------------------------------------------------------------
Baker Michael Corp. 550,000 - (38,500) 511,500 3,708,375 (19,360) -
- ------------------------------------------------------------------------------------------------------------------------------------
Moog Inc. Class A 547,100 - (91,900) 455,200 11,835,200 178,975 -
- ------------------------------------------------------------------------------------------------------------------------------------
Neutral Posture
Ergonomics Inc. 310,000 - (5,000) 305,000 686,250 (10,290) -
- ------------------------------------------------------------------------------------------------------------------------------------
Oshkosh Truck Corp. 400,000 101,000 (1,000) 500,000 19,875,000 11,752 125,125
- ------------------------------------------------------------------------------------------------------------------------------------
Rogers Corp. 685,000 - (1,500) 683,500 19,479,750 (2,717) -
- ------------------------------------------------------------------------------------------------------------------------------------
Smithway Motor
Express Corp. Class A 325,000 15,000 - 340,000 3,474,358 - -
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Copyright (c) 1999 by Lord Abbett Research Fund, Inc., 767 Fifth Avenue, New
York, NY 10153-0203
This publication, when not used for the general information of shareholders of
Lord Abbett Research Fund, Inc., is to be distributed only if preceded or
accompanied by a current prospectus which includes information concerning each
Series' investment objective and policies, sales charges and other matters.
There is no guarantee that the forecasts contained in this publication will come
to pass.
All rights reserved. Printed in the U. S. A.
<PAGE>
Investing in the
Lord Abbett
Family of Funds
<TABLE>
<CAPTION>
GROWTH
INCOME
Aggressive Growth Funds Growth & Balanced Fund Income Funds Tax-Free Money
Growth Fund Income Funds Income Funds Market Fund
<S> <C> <C> <C> <C> <C> <C>
Developing Research Fund - Research Fund - Balanced World Bond Debenture National U.S. Government
Growth Fund Small-Cap Value Large-Cap Series** Series California Securities Money
Series Series Global Fund - Connecticut Market Fund+ ++
Alpha Series* Growth & Income Series Florida
International Income Series High Yield Fund Georgia
Series Affiliated Fund Bond-Debenture Hawaii
Mid-Cap Fund Michigan
Value Fund Limited Minnesota
Growth Duration U. S. Missouri
Opportunities Government New Jersey
Fund Securities New York
Global Fund- Series+ Pennsylvania
Equity Series U. S. Government Texas
Securities Series+ Washington
</TABLE>
Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe your investment professional provides value in helping you identify and
understand your investment objectives and, ultimately, offering fund
recommendations suitable for your individual needs.
This publication, when used as sales literature, is to be distributed only if
preceded or accompanied by a current prospectus for the fund(s) covered by this
report.
For more complete information about any Lord Abbett fund, including risks,
charges and ongoing expenses, call your investment professional or Lord Abbett
Distributor LLC at 800-874-3733 for a prospectus. Read it carefully before
investing.
The Lord Abbett Family of Funds lets you access more than 30 portfolios designed
to meet a variety of investment needs.
Diversification. You and your investment professional can diversify your
investments between equity and income funds.
Flexibility. As your investment goals change, your investment professional can
help you reallocate your portfolio.
You may reallocate assets among our funds at any time. Speak with your
investment professional to help you customize your investment plan.
Numbers to Keep Handy
For Shareholder Account or Statement Inquiries: 800-821-5129
For Literature Only: 800-874-3733
24-Hour Automated Shareholder Service Line: 800-865-7582
Visit Our Web Site: http://www.lordabbett.com
*Lord Abbett Securities Trust - Alpha Series is a fund of funds investing in
shares of Lord Abbett Developing Growth Fund, Lord Abbett Research Fund -
Small-Cap Value Series and Lord Abbett Securities Trust - International Series.
** Lord Abbett Balanced Series is a fund of funds investing in shares of certain
other Lord Abbett funds.
+ An investment in this Fund is neither insured nor guaranteed by the U. S.
Government.
++ An investment in this Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the Fund
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund. This Fund is managed to
maintain and has maintained its stable $1.00 price per share.
[LOGO]
Lord Abbett mutual fund shares are distributed by:
LORD ABBETT DISTRIBUTOR LLC
- ---------------------------
The GM Building 767 Fifth Avenue New York, NY 10153-0203
LARF-3-599
(7/99)
