Lord Abbett
Research Fund
Large-Cap Series o Small-Cap Value Series
Semi-Annual Report For the Six Months Ended May 31, 2000
Two portfolios designed to help
you build for your future
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Web Site and get:
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other useful information at
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Lord Abbett Research Fund Large-Cap Series o Small-Cap Value Series
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 value stocks of large companies.
Large-Cap Series Performance Average Annual Total Returns as of 5/31/00
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1 year 5 years
Large-Cap Series 6.19% 18.63%
Morningstar Average .01% 15.82%
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Lord Abbett Research Fund--Small-Cap Value Series has outperformed small value
company stocks in general and the average of mutual funds that focus on value
stocks of small companies for the period since its inception.
Small-Cap Value Series Performance Average Annual Total Returns as of 5/31/00
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1 year Life of Series
Small-Cap Value Series 11.01% 15.10%
Morningstar Average 5.50% 11.42%
Russel 2000 Value Index -.26% 9.88%
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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 6/30/00 at the Class A share
maximum sales charge of 5.75%, with all distributions reinvested:
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1 year 5 years Life of Series
Large-Cap -7.10% 16.27% 16.45%
Small-Cap Value 3.70 - 14.99%
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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 12/13/95-5/31/00 for the Small-Cap Value Series; 1/1/96-5/31/00 for
Morningstar average and the Russell 2000 Value Index, which is an unmanaged
index. 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, 2000
[PHOTO OF
ROBERT S. DOW]
/s/ Robert S. Dow
Robert S. Dow
Chairman
June 6, 2000
"...value-oriented stocks made a sharp rebound as investors shifted their focus
away from highly speculative earnings growth and toward stronger company
fundamentals."
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| DALBAR Lord, Abbett & Co. is proud to |
| HONORS COMMITMENT TO announce we have received a DALBAR |
| INVESTORS award for providing consistently |
| 1999 good service to shareholders, the |
| 1999 Key Honors Award for Mutual |
| Fund Service. DALBAR, Inc., an |
| independent research firm and |
| evaluator of mutual fund service, |
| presents the award to financial |
| services firms that provide |
| consistently solid service to |
| clients. |
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Lord Abbett Research Fund completed the first six months of its fiscal year on
May 31, 2000. We are pleased to present you with an overview of performance and
class-specific data for the period.
Class A Class B Class C Class P Class Y
------------------------------------------------
Net asset value $24.83 $24.48 $24.50 $24.92 $24.72
Dividends $ 0.03 $ - $ - $ 0.01 $ 0.11
Capital gains paid $ 1.31 $ 1.31 $ 1.31 $ 1.31 $ 1.31
Total return(1) +3.42% +3.08% +3.08% +3.54% +3.37%
Class A Class B Class C Class P Class Y
-----------------------------------------------
Net asset value $17.24 $16.87 $16.87 $17.25 $17.35
Dividends $ - $ - $ - $ - $ -
Capital gains paid $ - $ - $ - $ - $ -
Total return(1) +10.30% +9.97% +9.97% +10.36% +10.44%
The last six months saw a dramatic swing in investors' attitudes toward
corporate earnings and fair market value in the stock market. At the end of
1999, investors were caught up in what could only be deemed a "momentum market"
-- where investors seemed to hastily and recklessly buy stocks simply because
their prices were on the rise. The turn of the millennium brought with it a
broadening out in the stock market, as investors sought new opportunities and
turned their attention to small- and mid-sized companies. However, they seemed
to remain focused on growth-oriented technology stocks that provided recent
strong returns and pay little mind to the rapidly rising valuations of these
stocks in relation to their underlying fundamentals. Throughout most of the
first quarter, growth stocks (as measured by the Russell 2000 Growth Index(2))
outperformed value stocks (as measured by the Russell 2000 Value Index(3)), and
a climate of high economic growth, strong corporate earnings and higher interest
rates created extreme volatility in the U.S. equities market. Feeling confident
amid this strong macroeconomic environment, investors defiantly ignored a series
of Federal Reserve ("the Fed") rate increases and continued to pour money into
the stock market. In late March, the tides turned and value-oriented stocks made
a sharp rebound as investors shifted their focus away from highly speculative
earnings growth and toward stronger company fundamentals. The ensuing months saw
a day-to-day volley between growth and value stocks, as confused investors tried
to move their money into what they hoped would be the next surging area.
About the Large-Cap Series(4)
Throughout the period, our relatively large exposure to energy companies paid
off well as rising oil prices helped boost the price of many of these stocks.
Select stocks of pharmaceutical companies and HMOs also enjoyed strong rallies,
and several of our consumer staple holdings added a boost late in the period.
Additionally, we benefited from the outperformance of many of our utility
company stocks. Early in the period, the select technology company stocks we
held continued to be positive contributors to the portfolio. However, we
aggressively pared back our overall exposure to technology in late March in
response to high valuations and hints of negative fundamentals seen in some of
our stocks. Many of the proceeds from these sales went towards investments in
areas where we saw more intrinsic value, such as stocks of capital goods,
healthcare and, to a lesser extent, less credit-sensitive financial services
companies. Stocks of financial services companies underperformed for the period,
but since investors had already discounted the prospect of several Fed rate
increases, they fared better than they typically have during periods of interest
rate anxiety.
1
<PAGE>
REPORT TO SHAREHOLDERS
We were hardest hit by our remaining technology exposure late in the period, as
well as our exposure to companies in sectors such as communication services,
basic materials (metals and chemicals) and retail. In many cases, we had already
begun to scale back our holdings in these companies when their stocks began to
decline.
About the Small-Cap Value Series(4)
Strong global growth and rising oil prices created excellent opportunities for
our holdings in oil services and energy companies. Additionally, our careful
stock selection in the materials and processing, transportation and producer
durables sectors was the biggest contributor to the portfolio's positive
performance. The consumer discretionary sector was an area where we uncovered
what we believed were some "diamonds in the rough." Improved valuations have
helped boost a number of our holdings in this sector, and a renewed focus on
education spending by presidential candidates has aided our holdings in stocks
of education-oriented companies. We added a few investments in financial company
stocks that we felt had an advantage over others in the industry. But on the
whole, we grossly underweighted this sector -- which had underperformed for most
of the period -- compared to leading indicators of small-cap value performance
such as the Russell 2000 Value Index.
We were very pleased with the strong performance that some of the technology
company stocks in the portfolio exhibited early in the period. However, our
overweighting in technology, and in particular information services companies,
hurt us later on as investors sought safety in sectors that displayed stronger
business fundamentals and more visible earnings growth relative to company
valuations. Transportation stocks performed well for us early in the year, but
suffered later on. Likewise, a shift in consumer spending had a negative effect
on selected retail and apparel holdings.
Looking Ahead
While investors attempt to hit moving targets in this volatile market, we remain
true to our long-term, value-driven investment approach. Our research is focused
on individual companies. However, certain sectors may be overweighted from time
to time primarily because we have identified numerous companies in those
industries that we believe represent outstanding value. In the months ahead, we
will pay special attention to the Fed's actions, as we believe there may be at
least one more interest rate hike in store before they are comfortable with the
rate of U.S. economic growth. Our entry into interest-sensitive sectors such as
financial services will hinge largely on future Fed actions.
Thank you for investing in Lord Abbett Research Fund. We value the confidence
you place in us and look forward to serving your investment needs in the years
to come.
(1) Total return which is not annualized is the percent change in net asset
value, assuming the reinvestment of all distributions. Past performance is
no indication of future results.
(2) The Russell 2000(R) Growth Index measures the performance of those Russell
2000(R) companies with higher price-to-book ratios and higher forecasted
growth values. An investor cannot invest directly in an index.
(3) The Russell 2000(R) Value Index measures the performance of those Russell
2000(R) companies with lower price-to-book ratios and lower forecasted
growth values. An investor cannot invest directly in an index.
(4) The portfolio is actively managed and subject to change.
2
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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 $37,295 as of May 31, 2000, an average annual gain of 17.9%.
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Large-Cap Series $37,295
Morningstar Average $29,267
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(1) Series performance is at net asset value for Class A shares and assumes the
reinvestment of all distributions.
(2) Source: Morningstar. Performance reflects the period 6/1/92-5/31/00.
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 $18,686 as of May 31,
2000, outperforming both the unmanaged Russell 2000 Value Index and the
Morningstar Average of Small Value Funds. This represents an average annual gain
of 15.2%.
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Small-Cap Value $18,686
Morningstar Average $16,109
Russel 2000 Value Index $15,158
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(1) Series performance is at net asset value for Class A shares and assumes the
reinvestment of all distributions.
(2) Source: Morningstar.
(3) 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.
3
<PAGE>
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
9/30/2000, this report must be accompanied by Lord Abbett's Performance
Quarterly for the most recently completed calendar quarter.
Statement of Net Assets (unaudited)
SMALL-CAP VALUE SERIES MAY 31, 2000
<TABLE>
<CAPTION>
Investments Shares Value
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<S> <C> <C>
Common Stocks 99.71%
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Aerospace/Defense 5.70% AAR Corp.-Major supplier of products and services
for the worldwide aviation industry 405,000 $ 5,619,375
*Alliant Techsystems, Inc.-Develops and supplies aerospace and defense
technologies, products and systems to the U.S. and its allies 95,000 6,555,000
*Moog, Inc. Class A+-Manufactures electrohydraulic control systems 449,900 9,616,613
Precision Castparts Corp.-Manufactures engine castings
and other components for the aerospace industry 125,000 6,093,750
Total 27,884,738
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Apparel 1.72% *Cutter & Buck, Inc.-Designs and markets upscale sportswear and outerwear 220,000 2,227,500
*Gildan Activewear, Inc. Class A-Manufactures branded basic activewear 15,500 511,500
Phillips-Van Heusen Corp.-Apparel manufacturer 650,400 5,650,350
Total 8,389,350
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Auto Parts: Original *American Axle & Manufacturing Holdings, Inc.-Manufactures
Equipment 2.67% driveline systems for light trucks and sports utility vehicles 214,900 3,532,419
Superior Industries International-Designs and manufactures aluminum wheels 340,000 9,498,750
Total 13,031,169
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Auto Trucks & Parts 2.34% Oshkosh Truck Corp.-Manufactures and markets a broad
range of heavy specialized motor vehicles 375,200 11,443,600
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Banks: Money Center .22% UCBH Holdings, Inc.-Holding company for United Commercial Bank 43,100 1,082,888
Banks: Regional .50% East West Bancorp, Inc.-A commercial bank specializing
in commercial, construction and real estate lending as well as
financing international trade 200,000 2,462,500
Beverages: Wines 1.54% *Robert Mondavi Corp. Class A-Provides and markets wines 240,000 7,530,000
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Biotechnology .77% *Gliatech, Inc.-Develops and commercializes medical
devices designed to inhibit excessive surgical scarring
and adhesion formation 200,800 3,765,000
Broadcasting .29% *Salem Communications Corp. Class A-A radio broadcasting company 138,200 1,399,275
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Building Materials 5.20% Florida Rock Industries, Inc.-Manufactures building
materials in the Southeastern United States 128,600 5,087,737
Hughes Supply, Inc.-Supplier of building materials and plumbing supplies 285,000 5,415,000
LSI Industries, Inc.-Manufactures lighting fixtures,
menu board systems and graphic products 120,000 2,040,000
*Simpson Manufacturing Co., Inc.-Manufactures construction-related fasteners 270,000 12,858,750
Total 25,401,487
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Business Services 1.13% *Kronos, Inc.-Designs, develops and markets hardware and
software systems for data processing 185,000 5,503,750
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Chemicals 1.31% H. B. Fuller Co.-Manufactures and markets adhesives,
sealants, coatings, paints and other specialty chemical products worldwide 165,000 6,404,062
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Computer Services 4.54% *American Management Systems Inc.-Provides a range of consulting services 244,100 9,138,494
Analysts International Corp.-Provides a variety of computer
software services to computer users 392,400 3,188,250
4
<PAGE>
Statement of Net Assets (unaudited)
SMALL-CAP VALUE SERIES MAY 31, 2000
Investments Shares Value
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*CIBER, Inc.-Provides management consulting for business technology solutions 391,100 $ 6,330,931
*Metro Information Services, Inc.-Distributes and
manufactures electronic products and custom-made electronic assemblies 357,300 3,561,852
Total 22,219,527
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Computer: Software 3.68% *Datastream Systems, Inc.-Develops and markets computers,
file/server enterprise software for the industrial automation market 566,100 5,661,000
*Systems & Computer Technology Corp.-Provides client/server,
mission-critical enterprise software and information technology services 653,600 12,336,700
Total 17,997,700
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Construction/Home Granite Construction, Inc.-Heavy civil construction
Building 1.12% and transportation contractor serving
both public and private sector clients in the United States 210,000 5,473,125
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Consumer Electronics .58% *Good Guys, Inc.-Warrants expiring 8/19/2002 387,500 231,260
*Good Guys, Inc.-Retailer of consumer electronics products 1,000,500 2,626,313
Total 2,857,573
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Consumer Products 4.59% Dreyer's Grand Ice Cream, Inc.-Ice cream manufacturer and distributor 767,400 16,259,287
*Smithfield Foods, Inc.-Fresh pork and processed meats producer and marketer 250,000 6,187,500
Total 22,446,787
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Containers 2.07% *Ivex Packaging Corp.+-Designs and manufactures flexible packaging products 1,125,000 10,125,000
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Diversified Material/ *Lydall, Inc.-Manufactures engineered materials 93,900 980,081
Processing .76%
Teleflex, Inc.-Diversified industrial firm 77,000 2,728,688
Total 3,708,769
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Drugs .85% *ChiRex, Inc.-Provides services to pharmaceuticals and life science companies 240,000 4,155,000
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Electrical
Equipment .73% Woodhead Industries, Inc.-Manufactures specialty electrical products 220,000 3,547,500
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Electronics:
Components 7.45% *Rogers Corp.+-Manufactures specialty materials and components used in
the communications, computer and transportation market 1,177,600 36,432,000
------------------------------------------------------------------------------------------------------------------------============
Electronics: Analogic Corp.-Manufactures high precision medical
Equipment 6.75% and industrial diagnostic and measurement instruments and equipment 31,300 1,130,713
BEI Technologies, Inc.+-Designs, makes and sells electronic
devices that provide vital sensory input for the control systems of
advanced machinery and automation systems 424,300 7,637,400
*Kent Electronics Corp.-Manufactures electronic components
and interconnect assemblies 350,000 9,712,500
*Sensormatic Electronics Corp.-Supplies electronic
security systems to the retail, commercial and industrial marketplaces 925,000 14,510,938
Total 32,991,551
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Engineer/Control
Services .68% *Michael Baker Corp.+-Engineering, operations, maintenance
and construction firm 511,500 3,324,750
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Financial: Doral Financial Corp.-Originates, purchases, sells and services
Miscellaneous 3.22% mortgage loans for single-family residences in Puerto Rico 775,000 8,621,875
*Financial Federal Corp.-Provides installment financing and
leasing programs to the manufacturing industries 400,000 7,100,000
Total 15,721,875
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Healthcare Products Arrow International, Inc.-Supplies disposable catheters and
5.00% related clinical products 60,000 1,980,000
*ICU Medical, Inc.-Manufactures proprietary disposable
medical connection devices for use in intravenous therapy applications 274,100 5,122,244
Invacare Corp.-Manufactures medical equipment for
the home health care, retail and extended care markets 429,200 10,622,700
Mentor Corp.-Develops, makes and sells a broad range of
products for plastic and reconstructive surgery 279,800 6,715,200
Total 24,440,144
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Household Furnishing .93% American Woodmark Corp.-Manufactures kitchen cabinets and
vanities for the remodeling and new home construction markets 27,100 511,512
*Furniture Brands International, Inc.-Manufactures
and distributes residential furniture 254,500 4,056,094
Total 4,567,606
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5
<PAGE>
Statement of Net Assets (unaudited)
SMALL-CAP VALUE SERIES MAY 31, 2000
Investments Shares Value
------------------------------------------------------------------------------------------------------------------------------------
Machinery 1.96% *Astec Industries, Inc.-Manufactures equipment and components
used in road building 66,800 $ 1,728,450
*Gardner Denver, Inc.-Manufactures stationary air
compressors and blowers for industrial applications 190,000 3,325,000
Nordson Corp.-Manufactures systems that apply adhesive
sealants and coating to consumer and industrial products during
manufacturing operations 11,000 533,500
Robbins & Myers, Inc.-Manufactures fluids management products and systems 185,000 4,000,625
Total 9,587,575
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Machinery: Oil Helmerich & Payne, Inc.-Contract driller and producer of
Well Equipment crude oil and natural gas 476,300 17,742,175
9.91%
*Marine Drilling Co., Inc.-Provides offshore contract drilling
services for independent and major oil and gas companies 298,600 8,584,750
*National-Oilwell, Inc.-Domestic oil and gas drilling and production company 525,000 13,650,000
*Oceaneering International, Inc.-Sub-sea diving services 233,500 4,553,250
*Universal Compression Holdings, Inc.-Natural gas compression services company 164,200 3,910,013
Total 48,440,188
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Manufacturing 3.52% Carlisle Cos., Inc.-Manufactures and distributes
construction materials and transportation products 265,000 11,014,062
*SPS Technologies, Inc.-Producer of industrial fasteners,
specialty and magnetic materials, aerospace structures
and precision tools 176,700 6,206,588
Total 17,220,650
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Metal Fabricating 1.92% *The Shaw Group, Inc.-Supplies piping systems and
industrial construction and maintenance services 215,000 9,379,375
------------------------------------------------------------------------------------------------------------------------============
Non-Ferrous Metals .18% *RTI International Metals, Inc.-Distributes titanium
and specialty metal mill products 68,600 891,800
------------------------------------------------------------------------------------------------------------------------============
Oil: Crude Producers *Basin Exploration, Inc.-U.S. gas and oil exploration,
2.04% development and production company 400,000 6,625,000
*Forest Oil Corp.-Produces and markets natural gas in North America 210,900 3,361,219
Total 9,986,219
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Publishing 4.30% Houghton Mifflin Co.-Publishes books for schools and colleges 120,000 4,800,000
*Scholastic Corp.-A leading publisher of children's books
and educational materials 305,000 16,222,188
Total 21,022,188
------------------------------------------------------------------------------------------------------------------------============
Restaurants .47% *Buca, Inc.-Owns and operates "BUCA di BEPPO" restaurants 165,800 2,310,837
------------------------------------------------------------------------------------------------------------------------============
Retail 1.37% *Shopko Stores, Inc.-A specialty discount retailer
operating primarily in the Upper Midwest, Western Mountain
and Pacific Northwest 365,000 6,706,875
------------------------------------------------------------------------------------------------------------------------============
Retail: Specialty 2.28% *Ann Taylor Stores Corp.-Retails women's apparel,
shoes and accessories primarily under the Ann Taylor brand name 210,000 5,460,000
*Coldwater Creek, Inc.-A specialty direct mail retailer 190,000 4,358,125
Regis Corp.-Operates and franchises hair and retail product salons 110,500 1,332,906
Total 11,151,031
------------------------------------------------------------------------------------------------------------------------============
Soaps & House Church & Dwight Co., Inc.-Produces and sells sodium bicarbonate
Chemicals 1.08% and sodium bicarbonate-based products under the ARM & HAMMER trademark 290,300 5,279,831
------------------------------------------------------------------------------------------------------------------------============
Steel .61% Carpenter Technology Corp.-Manufactures, fabricates
and distributes stainless steels, titanium and specialty metal alloys 145,000 2,999,687
------------------------------------------------------------------------------------------------------------------------============
Telecommunications 2.33% *Anixter International, Inc.-Distributes multimedia technology
products throughout North America, Europe, Asia and Latin America 138,200 3,904,150
*Commscope, Inc.-Designs, manufactures and markets coaxial cables 193,800 7,485,525
Total 11,389,675
------------------------------------------------------------------------------------------------------------------------============
Truckers .69% *Heartland Express, Inc.-Short to medium-haul truckload carrier 59,100 1,082,269
*Smithway Motor Express Corp. Class A-Truckload carrier
concentrating on the flatbed segment 85,600 214,000
*Swift Transportation Co., Inc.-National truckload carrier 148,800 2,092,500
Total 3,388,769
------------------------------------------------------------------------------------------------------------------------============
Wholesale .71% *MSC Industrial Direct Co., Inc. Class A-Direct marketer of
metalworking and repair supplies 150,000 3,459,375
Total Investments in Common Stocks (Cost $445,333,145) 487,520,801
------------------------------------------------------------------------------------------------------------------------============
6
<PAGE>
Statement of Net Assets (unaudited)
SMALL-CAP VALUE SERIES MAY 31, 2000
Principal
Investments Amount Value
------------------------------------------------------------------------------------------------------------------------------------
Short-Term Investment .63%
------------------------------------------------------------------------------------------------------------------------------------
Associates Corp. 6.77% due 6/1/2000 (Cost $3,100,000) $3,100,000 $ 3,100,000
Total Investments 100.34% (Cost $448,433,145) 490,620,801
------------------------------------------------------------------------------------------------------------------------============
Cash and Receivables, Net of Liabilities (.34)% (1,656,143)
====================================================================================================================================
Net Assets 100.00% $488,964,658
====================================================================================================================================
Class A Shares-Net asset value ($243,225,881 / 14,111,839 shares outstanding) $17.24
Maximum offering price (net asset value plus sales charge of 5.75% of the offering price) $18.29
Class B Shares-Net asset value ($140,645,399 / 8,338,008 shares outstanding) $16.87
Class C Shares-Net asset value ($43,525,011 / 2,580,306 shares outstanding) $16.87
Class P Shares-Net asset value ($1,197.71 / 69.442 shares outstanding) $17.25
Class Y Shares-Net asset value ($61,567,169 / 3,548,057 shares outstanding) $17.35
*Non-income producing security.
+Affiliated issuer (holdings represent 5% or more of the outstanding voting securities).
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Net Assets (unaudited)
LARGE-CAP SERIES MAY 31, 2000
Investments Shares Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 95.59%
------------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense 2.19% Boeing Co.-World's leading commercial aircraft manufacturer 90,700 $ 3,542,969
United Technologies Corp.-Provides high-technology
products and support services to customers in the aerospace
and building industries worldwide 44,000 2,659,250
Total 6,202,219
------------------------------------------------------------------------------------------------------------------------============
Aluminum 1.65% Alcoa, Inc.-Largest U.S. aluminum producer 80,000 4,675,000
------------------------------------------------------------------------------------------------------------------------============
Auto Parts:
Original Equipment
1.14% Eaton Corp.-Main U.S. producer of heavy truck components 44,700 3,243,544
------------------------------------------------------------------------------------------------------------------------============
Automotive 1.00% Ford Motor Co.-World's second largest producer of cars and trucks 55,700 2,704,931
General Motors Corp.-Worldwide auto producer 1,895 133,834
Total 2,838,765
------------------------------------------------------------------------------------------------------------------------============
Banks: Money Center Bank of New York Co., Inc.-Provides a complete range of
2.78% banking and other financial services to corporations and
individuals worldwide 72,500 3,402,969
Chase Manhattan Corp.-Major money-center bank holding company 60,000 4,481,250
Total 7,884,219
------------------------------------------------------------------------------------------------------------------------============
Banks: Regional 6.20% Bank One Corp.-Leading bank holding company 90,000 2,975,625
First Tennessee National Corp.-Provides a range of financial services 207,600 4,255,800
Fleet Boston Financial Corp.-Provides commercial and
investment banking services in the U.S.
and in the other countries around the world 130,000 4,915,625
Wells Fargo & Co.-Midwestern regional bank holding company 120,000 5,430,000
Total 17,577,050
------------------------------------------------------------------------------------------------------------------------============
Brokers .59% *Knight Trading Group, Inc.-Market maker in NASDAQ
securities and in the Third market, which is the over-the-counter
market in exchange-listed equity securities 57,400 1,668,187
------------------------------------------------------------------------------------------------------------------------============
Cable Services 1.67% Time Warner, Inc.-A major entertainment and communications firm 60,000 4,736,250
------------------------------------------------------------------------------------------------------------------------============
Chemicals 2.90% Dow Chemical Co.-Leading global chemical producer 45,000 4,817,813
Rohm & Haas Co.-Manufacturer of specialty chemicals and plastics 100,000 3,412,500
Total 8,230,313
------------------------------------------------------------------------------------------------------------------------============
Communications Motorola, Inc.-Provides integrated communications solutions and embedded
Technology .64% electronics solutions 19,500 1,828,125
------------------------------------------------------------------------------------------------------------------------============
7
<PAGE>
Statement of Net Assets (unaudited)
LARGE-CAP SERIES MAY 31, 2000
Investments Shares Value
------------------------------------------------------------------------------------------------------------------------------------
Computer Services .99% First Data Corp.-Information supplier for credit card
processing and related services 50,000 $ 2,803,125
------------------------------------------------------------------------------------------------------------------------============
Computer: Hardware 2.39% Compaq Computer Corp.-Develops and markets hardware,
software, solutions and services 77,700 2,039,625
*Electronics for Imaging, Inc.-Develops technologies that
enable digital color printing over computer network 33,000 1,214,812
Intel Corp.-Leading producer of semi-conductor processing circuits 17,100 2,131,087
*Solectron Corp.-Provides integrated solutions that span the
entire product life cycle 42,500 1,405,156
Total 6,790,680
------------------------------------------------------------------------------------------------------------------------============
Computer: Software 3.71% *BMC Software, Inc.-Provides management solutions for
mainframe and distributed information technology systems 39,600 1,742,400
*Cadence Design Systems, Inc.-Provides software technology
and comprehensive design and consulting services and technology 180,000 2,880,000
Computer Associates International, Inc.-Designs, develops,
markets, licenses and supports standardized computer software products 59,000 3,038,500
*Compuware Corp.-A developer of software products that
improve the productivity of computer programmers 76,600 780,362
*Oracle Corp.-Supplies software for enterprise information management 29,000 2,084,375
Total 10,525,637
------------------------------------------------------------------------------------------------------------------------============
Conglomerates 3.32% Honeywell International, Inc.-Manufacturer of automation and control systems 91,900 5,025,781
Minnesota Mining & Manufacturing Co.-Diversified
global manufacturer of value-added
industrial, consumer and medical products 28,100 2,409,575
Tyco International Ltd.-Through its subsidiaries, designs,
manufactures and sells electrical and electronic components,
undersea cable, disposable medical supplies, fire suppression and
detection equipment, security systems and flow control products 41,800 1,967,212
Total 9,402,568
------------------------------------------------------------------------------------------------------------------------============
Consumer Products 1.06% Avon Products, Inc.-Manufacturer and direct seller of beauty
and related products 72,980 3,014,986
------------------------------------------------------------------------------------------------------------------------============
Drugs 5.05% *Alza Corp.-Research-based pharmaceutical products company
with drug delivery technologies 92,100 4,679,831
American Home Products Corp.-Producer of drugs and packaged
medicine and medical products 125,000 6,734,375
Pharmacia & Upjohn, Inc.-Develops, makes and sells
prescription pharmaceuticals and other related health care products 55,700 2,892,919
Total 14,307,125
------------------------------------------------------------------------------------------------------------------------============
Electric Power 7.06% Dominion Resources, Inc.-Diversified utility holding
company in Virginia and Northeastern North Carolina 120,000 5,490,000
Duke Energy Corp.-Electric utility company serving North and South Carolina 100,000 5,825,000
FirstEnergy Corp.-Major Midwestern electric utility holding company 180,000 4,522,500
Reliant Energy, Inc.-International energy services company 74,600 2,126,100
Unicom Corp.-Produces, purchases, transmits, distributes
and sells electricity across northern Illinois 49,200 2,051,025
Total 20,014,625
------------------------------------------------------------------------------------------------------------------------============
Electrical Equipment .45% Xerox Corp.-World's leading duplication technology supplier 47,000 1,274,875
------------------------------------------------------------------------------------------------------------------------============
Electronics .96% *General Motors Corp. Class H-Represents Hughes
Electronics Corporation which designs, manufactures and markets
advanced electronics systems 4,158 409,303
Texas Instruments, Inc.-Major producer of semiconductors
and electronic equipment 32,000 2,312,000
Total 2,721,303
------------------------------------------------------------------------------------------------------------------------============
Energy Equipment Schlumberger Ltd.-Provider of oilfield services 85,000 6,252,812
& Services 2.81%
Transocean Sedco Forex, Inc.-An offshore drilling contractor 35,000 1,721,562
Total 7,974,374
------------------------------------------------------------------------------------------------------------------------============
Entertainment .51% Seagram Co. Ltd.-Operates music, filmed entertainment,
recreation and produces and markets
distilled spirits and wines worldwide 30,300 1,444,931
------------------------------------------------------------------------------------------------------------------------============
Financial Services 1.52% Morgan Stanley Dean Witter & Co.-Major brokerage and credit card company 60,000 4,316,250
------------------------------------------------------------------------------------------------------------------------============
Financial: Fannie Mae-America's largest supplier of conventional home mortgages 44,900 2,699,613
Miscellaneous 1.26%
8
<PAGE>
Statement of Net Assets (unaudited)
LARGE-CAP SERIES MAY 31, 2000
Investments Shares Value
------------------------------------------------------------------------------------------------------------------------------------
Freddie Mac-Stockholder-owned corporation established by
the United States Congress to create a continuous flow of
funds to mortgage lenders 19,900 $ 885,550
Total 3,585,163
------------------------------------------------------------------------------------------------------------------------============
Food 3.11% Archer-Daniels-Midland Co.-Leading processor and seller of
agricultural commodities 340,000 4,058,750
General Mills, Inc.-Leading producer of consumer
foods and operator of restaurant chains 119,900 4,758,531
Total 8,817,281
------------------------------------------------------------------------------------------------------------------------============
Health Care CIGNA Corp.-One of the largest health and retirement benefits
Services 3.44% management companies in the U.S. 13,200 1,172,325
*HCA-The Healthcare Co.-Operates hospitals and related health care entities 165,700 4,473,900
UnitedHealth Group, Inc.-Owns and manages organized health
systems in the United States and internationally 55,000 4,100,937
Total 9,747,162
------------------------------------------------------------------------------------------------------------------------============
Insurance 8.57% AON Corp.-Multiline insurance company 107,500 3,775,937
Ace Ltd.-Insurance holding company specializing in property
and casualty coverage 227,300 6,094,481
American General Corp.-A leading provider of financial
services, including life/health insurance, annuities, consumer
credit and mortgage financing 75,900 4,862,344
Jefferson-Pilot Corp.-Life insurance holding company 80,000 5,490,000
*MetLife, Inc.-Provides insurance and financial services to a
range of individual and institutional customers 199,000 4,079,500
Total 24,302,262
------------------------------------------------------------------------------------------------------------------------============
Machinery .42% Caterpillar, Inc.-Designs, manufactures and markets
construction, mining, agricultural and forestry machinery 31,300 1,197,225
------------------------------------------------------------------------------------------------------------------------============
Machinery: Agriculture
1.61% Deere & Co.-World's largest manufacturer of farm equipment 110,000 4,571,875
------------------------------------------------------------------------------------------------------------------------============
Media 1.66% *Viacom, Inc.-Worldwide entertainment and publishing company 75,950 4,708,900
------------------------------------------------------------------------------------------------------------------------============
Natural Gas 2.71% Coastal Corp.-A diversified gas pipeline company 125,000 7,671,875
------------------------------------------------------------------------------------------------------------------------============
------------------------------------------------------------------------------------------------------------------------============
Oil: Integrated BP Amoco plc ADR-Major integrated petroleum and natural
International 7.30% gas company with sizeable interests in chemicals 133,800 7,275,375
Exxon Mobil Corp.-World's largest integrated oil company 90,000 7,498,125
Total Fina SA ADR-Leading French international oil and gas company 75,000 5,920,313
Total 20,693,813
------------------------------------------------------------------------------------------------------------------------============
Paper and Forest Bowater, Inc.-Manufacturer of newsprint, groundwood,
Products 3.80% kraft pulp and lumber products 100,000 5,168,750
*Packaging Corp. of America-Manufactures containerboard and
corrugated packaging products for use in protecting goods during shipment 487,800 5,609,700
Total 10,778,450
------------------------------------------------------------------------------------------------------------------------============
Publishing 2.36% Dow Jones & Co., Inc.-Publisher of The Wall Street
Journal and Barron's and operator of news wires and information
retrieval services 55,000 3,740,000
Tribune Co.-Major Chicago-based newsprint company 77,000 2,964,500
Total 6,704,500
------------------------------------------------------------------------------------------------------------------------============
Retail .83% *Consolidated Stores Corp.-Major U.S. retailer specializing
in closeouts and toys 180,000 2,340,000
------------------------------------------------------------------------------------------------------------------------============
Steel .56% USX-U.S. Steel Group-Manufactures and sells steel
mill products, coke and taconite pellets 70,000 1,579,375
------------------------------------------------------------------------------------------------------------------------============
Supermarkets 1.33% *Safeway, Inc.-Operates a retail food and drug chain
in the United States and Canada 82,000 3,782,250
------------------------------------------------------------------------------------------------------------------------============
Telecommunications 6.04% AT&T Corp.-Global telecommunications giant 100,700 3,493,031
Alltel Corp.-Regional telephone holding company 23,100 1,511,606
Bell Atlantic Corp.-Regional telephone company 86,200 4,557,825
BellSouth Corp.-Regional telephone company 27,700 1,293,244
SBC Communications, Inc.-Regional telephone monopoly 77,700 3,394,519
*WorldCom, Inc.-Provides a broad range of communications,
outsourcing and managed network services worldwide 76,400 2,874,550
Total 17,124,775
------------------------------------------------------------------------------------------------------------------------============
Total Investments in Common Stocks (Cost $242,837,231) 271,079,057
------------------------------------------------------------------------------------------------------------------------============
9
<PAGE>
Statement of Net Assets (unaudited)
LARGE-CAP SERIES MAY 31, 2000
Investments Shares Value
------------------------------------------------------------------------------------------------------------------------------------
Short-Term Investment 4.28%
Associates Corp. 6.77% due 6/1/2000 (Cost $12,130,000) $12,130,000 $ 12,130,000
Total Investments 99.87% (Cost $254,967,231) 283,209,057
------------------------------------------------------------------------------------------------------------------------============
Cash and Receivables, Net of Liabilities .13% 362,255
====================================================================================================================================
Net Assets 100.00% $283,571,312
====================================================================================================================================
Class A Shares-Net asset value ($188,334,794 / 7,586,120 shares outstanding) $24.83
Maximum offering price (net asset value plus sales charge of 5.75% of the offering price) $26.34
Class B Shares-Net asset value ($72,486,107 / 2,961,437 shares outstanding) $24.48
Class C Shares-Net asset value ($22,748,068 / 928,553 shares outstanding) $24.50
Class P Shares-Net asset value ($1,185.85 / 47.577 shares outstanding) $24.92
Class Y Shares-Net asset value ($1,156.95 / 46.805 shares outstanding) $24.72
*Non-income producing security.
ADR American Depositary Receipt.
See Notes to Financial Statements.
</TABLE>
Statements of Operations (unaudited)
<TABLE>
<CAPTION>
Six Months Ended May 31, 2000
---------------------------------------------------------------------------------------------------------------
Small-Cap Value Large-Cap
Investment Income Series Series
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Income Dividends $ 1,153,041 $ 2,346,368
Interest 87,003 330,083
Total income 1,240,044 2,676,451
---------------------------------------------------------------------------------------------------------------
Expenses Management fee 1,809,944 1,053,707
12b-1 distribution plan-Class A 432,551 336,632
12b-1 distribution plan-Class B 734,780 349,866
12b-1 distribution plan-Class C 220,116 102,213
12b-1 distribution plan-Class P 2 2
Shareholder servicing 799,237 372,292
Reports to shareholders 79,259 35,493
Registration 66,819 36,099
Professional 29,471 12,725
Directors' fees 9,134 3,349
Other 196,870 8,004
Total expenses before reductions 4,378,183 2,310,382
---------------------------------------------------------------------------------------------------------------
Expense reductions (34,355) (6,012)
---------------------------------------------------------------------------------------------------------------
Net expenses 4,343,828 2,304,370
---------------------------------------------------------------------------------------------------------------
Net investment income (loss) (3,103,784) 372,081
---------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)on Investments
---------------------------------------------------------------------------------------------------------------
Net realized gain from investment transactions 17,462,138 12,170,552
---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation/depreciation of investments 31,936,456 (3,796,636)
---------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 49,398,594 8,373,916
---------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $46,294,810 $ 8,745,997
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended May 31, 2000 (unaudited) Year Ended November 30, 1999
--------------------------------------------------------------------------------------------------------------------------------
Small-Cap Value Large-Cap Small-Cap Value Large-Cap
Increase (Decrease) in Net Assets Series Series Series Series
-------------------------------------------------------------------------------------------------- ----------------------------
<S> <C> <C> <C> <C>
Operations Net investment income (loss) $ (3,103,784) $ 372,081 $ (5,197,874) $ 211,908
Net realized gain (loss) from investment transactions 17,462,138 12,170,552 (8,631,538) 13,423,990
Net change in unrealized appreciation/depreciation
of investments 31,936,456 (3,796,636) 44,960,551 13,428,381
Net increase in net assets resulting from operations 46,294,810 8,745,997 31,131,139 27,064,279
--------------------------------------------------------------------------------------------------- ---------------------------
Distributions to shareholders from:
Net investment income-Class A - (206,280) - (477,863)
Net investment income-Class B - (310) - (172)
Net investment income-Class C - (95) - (40)
Net investment income-Class P - (1) - (1)
Net investment income-Class Y - (5) - (2)
Net realized gain from investment transactions-Class A - (8,833,566) - (747,010)
Net realized gain from investment transactions-Class B - (3,604,129) - (272,906)
Net realized gain from investment transactions-Class C - (919,961) - (60,913)
Net realized gain from investment transactions-Class P - (59) - -
Net realized gain from investment transactions-Class Y - (58) - -
Total - (13,564,464) - (1,558,907)
---------------------------------------------------------------------------------------------------- --------------------------
Capital share transactions:
Net proceeds from the sales of shares 73,479,362 54,254,105 105,814,165 120,696,797
Net asset value of shares issued in reinvestment of
dividends and distributions - 13,086,232 - 1,507,539
Total 73,479,362 67,340,337 105,814,165 122,204,336
--------------------------------------------------------------------------------------------------- ---------------------------
Cost of shares reacquired (91,358,552) (34,953,753) (191,775,139) (34,859,734)
--------------------------------------------------------------------------------------------------- ----------------------------
Increase (decrease) in net assets derived from capital
share transactions (17,879,190) 32,386,584 (85,960,974) 87,344,602
--------------------------------------------------------------------------------------------------- ----------------------------
Increase (decrease) in net assets 28,415,620 27,568,117 (54,829,835) 112,849,974
---------------------------------------------------------------------------------------------------- ---------------------------
Net Assets
Beginning of period 460,549,038 256,003,195 515,378,873 143,153,221
--------------------------------------------------------------------------------------------------- ---------------------------
End of period+ $488,964,658 $283,571,312) $460,549,038 $256,003,195
--------------------------------------------------------------------------------------------------- ---------------------------
+Including undistributed (overdistributed) net investment income of $(3,105,558), and $177,972, respectively, as of May
31, 2000 and $(1,774) and $12,582, respectively,as of November 30, 1999.
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
Financial Highlights
Small-Cap Value Series
<TABLE>
<CAPTION>
Class A Shares
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended 12/13/1995(a)
May 31, 2000 November 30, to 11/30/
Per Share Operating Performance: (unaudited) 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.63 $14.36 $16.56 $12.01 $10.00
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income (loss) (.09)(c) (.12)(c) (.06)(c) .02(c) .127
Net realized and unrealized gain (loss) on investments 1.70 1.39 (1.85) 4.53 2.658
Total 1.61 1.27 (1.91) 4.55 2.785
------------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income - - - - (.075)
Distributions from net realized gain - - (.29) - (.700)
Total - - (.29) - (.775)
====================================================================================================================================
Net asset value, end of period $17.24 $15.63 $14.36 $16.56 $12.01
====================================================================================================================================
Total Return(d) 10.30%(e) 8.84% (11.71)% 37.89% 28.24%(e)
====================================================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursements .82%(e)(f) 1.52%(f) 1.28% 1.17% .01%(e)
Expenses, excluding waiver and reimbursements .82%(e)(f) 1.52%(f) 1.28% 1.17% 1.00%(e)
Net investment income (loss) (.55)%(e) (.80)% (.37)% .10% 1.02%(e)
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class B Shares
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended 11/15/1996(b)
May 31, 2000 November 30, to 11/30/
Per Share Operating Performance: (unaudited) 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.34 $14.20 $16.44 $12.00 $11.67
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income (loss) (.14)(c) (.22)(c) (.17)(c) (.09)(c) .001
Net realized and unrealized gain (loss) on investments 1.67 1.36 (1.82) 4.53 .329
Total 1.53 1.14 (1.99) 4.44 .33
------------------------------------------------------------------------------------------------------------------------------------
Distributions
Distributions from net realized gain - - (.25) - -
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.87 $15.34 $14.20 $16.44 $12.00
====================================================================================================================================
Total Return(d) 9.97%(e) 8.03% (12.27)% 37.00% 2.84%(e)
====================================================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursements 1.12%(e)(f) 2.19%(f) 2.00% 1.86% .04%(e)
Expenses, excluding waiver and reimbursements 1.12%(e)(f) 2.19%(f) 2.00% 1.86% .07%(e)
Net investment income (loss) (.85)%(e) (1.48)% (1.09)% (.56)% .01%(e)
====================================================================================================================================
</TABLE>
12
<PAGE>
Financial Highlights
Small-Cap Value Series
<TABLE>
<CAPTION>
Class C Shares
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
May 31, 2000 November 30, 4/1/1997(b) to
Per Share Operating Performance: (unaudited) 1999 1998 11/30/1997
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $15.34 $14.20 $16.44 $12.81
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment loss(c) (.14) (.22) (.17) (.05)
Net realized and unrealized gain (loss) on investments 1.67 1.36 (1.82) 3.68
Total 1.53 1.14 (1.99) 3.63
------------------------------------------------------------------------------------------------------------------------------------
Distributions
Distributions from net realized gain - - (.25) -
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.87 $15.34 $14.20 $16.44
------------------------------------------------------------------------------------------------------------------------------------
Total Return(d) 9.97%(e) 8.03% (12.27)% 28.34%(e)
====================================================================================================================================
Ratios to Average Net Assets:
Expenses 1.12%(e)(f) 2.19%(f) 2.00% 1.25%(e)
Net investment loss (.86)%(e) (1.48)% (1.09)% (.30)%(e)
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class P Shares Class Y Shares
--------------------------------------------------------------------------------- -------------------------------------------------
Six Months Six Months
Ended June 23, 1999(b) Ended Year Ended 12/30/1997(b)
May 31, 2000 to November 30, May 31, 2000 November 30, to 11/30/
Per Share Operating Performance: (unaudited) 1999 (unaudited) 1999 1998
---------------------------------------------------------------------------------- ------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.63 $16.41 $15.71 $14.40 $16.34
---------------------------------------------------------------------------------- -----------------------------------------------
Income (loss) from investment operations
Net investment loss(c) (.10) (.06) (.06) (.07) (.01)
Net realized and unrealized gain (loss)
on investments 1.72 (.72) 1.70 1.38 (1.93)
Total 1.62 (.78) 1.64 1.31 (1.94)
---------------------------------------------------------------------------------- -----------------------------------------------
Net asset value, end of period $17.25 $15.63 $17.35 $15.71 $14.40
---------------------------------------------------------------------------------- -----------------------------------------------
Total Return(d) 10.36%(e) (4.75)%(e) 10.44%(e) 9.10% (11.87)%(e)
====================================================================================================================================
Ratios to Average Net Assets:
Expenses .86%(e)(f) .72%(e)(f) .62%(e)(f) 1.19%(f) .96%(e)
Net investment loss (.59)%(e) (.41)%(e) (.36)%(e) (.47)% (.05)%(e)
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended
May 31, 2000 November 30, 12/13/1995(a) to
Supplemental Data for AllClasses: (unaudited) 1999 1998 1997 11/30/1996
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets, end of period (000) $488,965 $460,549 $515,379 $435,776 $8,772
Portfolio turnover rate 41.63% 83.93% 67.86% 45.24% 110.09%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Commencement of operations.
(b) Commencement of offering respective class of 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.
13
<PAGE>
Financial Highlights
Large-Cap Series
<TABLE>
<CAPTION>
Class A Shares
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended
May 31, 2000 Year Ended November 30,
Per Share Operating Performance: (unaudited) 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $25.32 $21.91 $20.08 $17.86 $15.54 $12.79
------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .06(a) .08(a) .15(a) .08(a) .270 .42
Net realized and unrealized gain on investments .79 3.60 2.45 3.21 3.505 3.44
Total .85 3.68 2.60 3.29 3.775 3.86
------------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.03) (.10) (.06) (.12) (.57) (.29)
Distributions from net realized gain (1.31) (.17) (.71) (.95) (.885) (.82)
Total (1.34) (.27) (.77) (1.07) (1.455) (1.11)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $24.83 $25.32 $21.91 $20.08 $17.86 $15.54
------------------------------------------------------------------------------------------------------------------------------------
Total Return(b) 3.42%(d) 16.99% 13.45% 19.87% 26.25% 32.82%
====================================================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver and reimbursements .75%(d)(e) 1.43%(e) 1.24% 1.52% .36% .00%
Expenses, excluding waiver and reimbursements .75%(d)(e) 1.43%(e) 1.24% 1.52% .96% 1.02%
Net investment income .24%(d) .33% .74% .42% 2.24% 3.27%
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Class C Shares
------------------------------------------------------------------------------------------------------------------------------------
Six Months 8/1/1996(c) Six Months 4/1/1997(c)
Ended Year Ended to Ended Year Ended to
Per Share May 31, 2000 November 30, 11/30/ May 31, 2000 November 30, 11/30/
Operating Performance: (unaudited) 1999 1998 1997 1996 (unaudited) 1999 1998 1997
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $25.03 $21.71 $20.00 $17.83 $15.24 $25.05 $21.73 $20.01 $16.90
--------------------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations
Net investment income (loss) (.02)(a) (.09)(a) -(a)(f) (.06)(a) .12 (.01)(a) (.09)(a) (.01)(a) (.07)(a)
Net realized and
unrealized gain
on investments .78 3.58 2.42 3.20 2.66 .77 3.58 2.44 3.18
Total .76 3.49 2.42 3.14 2.78 .76 3.49 2.43 3.11
--------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net
investment income - - - (.02) (.19) - - - -
Distributions from net
realized gain (1.31) (.17) (.71) (.95) - (1.31) (.17) (.71) -
Total (1.31) (.17) (.71) (.97) (.19) (1.31) (.17) (.71) -
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $24.48 $25.03 $21.71 $20.00 $17.83 $24.50 $25.05 $21.73 $20.01
--------------------------------------------------------------------------------------------------------------------------------
Total Return(b) 3.08%(d) 16.21% 12.56% 18.92% 18.39%(d) 3.08%(d) 16.20% 12.61% 18.40%(d)
--------------------------------------------------------------------------------------------------------------------------------
Ratios to Average
Net Assets:
Expenses 1.06%(d)(e) 2.11%(e) 2.00% 2.28% .59%(d) 1.06%(d)(e) 2.11%(e) 2.00% 1.54%(d)
Net investment
income (loss) (.07)%(d) (.35)% (.01)% (.34)% .22%(d) (.06)%(d) (.35)% (.04)% (.37)%(d)
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
Financial Highlights
Large-Cap Series
<TABLE>
<CAPTION>
Class P Shares Class Y Shares
------------------------------------------------------------------------------------------------------------------------------------
Six Months Six Months
Ended Ended
May 31, 2000 4/28/1999(c) May 31, 2000 5/4/1999(c)
Per Share Operating Performance: (unaudited) to 11/30/1999 (unaudited) to 11/30/1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $25.36 $25.09 $25.30 $25.21
------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income(a) .05 .09 .10 .04
Net realized and unrealized gain on investments .83 .21 .74 .09
Total .88 .30 .84 .13
------------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.01) (.03) (.11) (.04)
Distributions from net realized gain (1.31) - (1.31) -
Total (1.32) (.03) (1.42) (.04)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $24.92 $25.36 $24.72 $25.30
------------------------------------------------------------------------------------------------------------------------------------
Total Return(b) (d) 3.54% 1.20% 3.37% .52%
------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(d)(e) .79% .92% .56% .63%
Net investment income(d) .22% .34% .43% .15%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended
May 31, 2000 Year Ended November 30,
Supplemental Data for All Classes: (unaudited) 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $283,571 $256,003 $143,153 $69,796 $23,592 $7,549
Portfolio turnover rate 52.18% 60.59% 99.14% 30.81% 62.25% 37.17%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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 of shares.
(d) Not annualized.
(e) The ratio includes expenses paid through an expense offset arrangement.
(f) Amount less than $.01. See Notes to Financial Statements.
Notes to Financial Statements (unaudited)
1. Significant Accounting Policies
Lord Abbett Research Fund, Inc. (the "Company") is an open-end manage ment
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 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 accounting principles
generally accepted in the United States of America which permit management to
make certain estimates and assumptions at the date of the financial statements.
The following summarizes the significant accounting policies of the Company:
(a) Securities 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.
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%. At May 31,
2000, management fees payable were $314,080 for Small-Cap Value Series and
$173,720 for Large-Cap Series.
Each Series of the Company has Rule 12b-1 plans and agreements (the "Class A,
Class B, Class C and Class P Plans") with Lord Abbett Distributor LLC
("Distributor"), an affiliate of Lord Abbett. Each Series makes payments to
Distributor which uses or passes on such payments to authorized institutions.
Pursuant to the Class A Plan, each Series pays Distributor (1) an annual service
fee of 0.25% of the average daily net asset value of Class A shares, (2) a
one-time distribution fee of up to 1% on certain qualifying purchases and
15
<PAGE>
Notes to Financial Statements (unaudited)
(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, each 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 of each Series does not have a Rule 12b-1 plan. At May 31,
2000, the 12b-1 fees payable were $221,334 for Small-Cap Value Series and
$120,208 for Large-Cap Series.
Small-Cap Value Series, along with certain other funds managed by Lord Abbett
(the "Underlying Funds"), has entered into a Servicing Arrange ment 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 the Underlying Funds' shares owned by the Alpha
Series. Other expenses include approximately $160,000 accrued pursuant to this
Servicing Arrangement.
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 $ 34,850 $197,028
Large-Cap 112,827 612,594
--------------------------------------------------------------------------------
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 the 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 $471,432,135 for the Small-Cap Value Series and $242,807,938 for the
Large-Cap Series at May 31, 2000. Transactions in capital stock were as follows:
Six Months Ended 5/31/2000
--------------------------------------------------------------------------------
Small-Cap Value Series Large-Cap Series
--------------------------------------------------------------------------------
Class A Shares Amount Shares Amount
--------------------------------------------------------------------------------
Sales of shares 3,450,281 $ 56,464,956 1,414,004 $ 33,987,373
--------------------------------------------------------------------------------
Shares issued to share-
holders in reinvestment
of dividends and
distributions - - 361,947 8,849,613
--------------------------------------------------------------------------------
Total 3,450,281 56,464,956 1,775,951 42,836,986
--------------------------------------------------------------------------------
Shares reacquired (2,740,844) (45,350,362) (897,458) (21,404,801)
--------------------------------------------------------------------------------
Increase 709,437 $11,114,594 878,493 $ 21,432,185
--------------------------------------------------------------------------------
Year Ended 11/30/1999
--------------------------------------------------------------------------------
Small-Cap Value Series Large-Cap Series
--------------------------------------------------------------------------------
Class A Shares Amount Shares Amount
--------------------------------------------------------------------------------
Sales of shares 4,651,787 $ 75,759,779 3,072,501 $74,412,345
--------------------------------------------------------------------------------
Shares issued to share-
holders in reinvestment
of dividends and
distributions - - 54,377 1,192,790
--------------------------------------------------------------------------------
Total 4,651,787 75,759,779 3,126,878 75,605,135
--------------------------------------------------------------------------------
Shares reacquired (6,476,363) (95,848,509) (1,015,292) (23,925,525)
--------------------------------------------------------------------------------
Increase (Decrease) (1,824,576) $(20,088,730) 2,111,586 $51,679,610
--------------------------------------------------------------------------------
Six Months Ended 5/31/2000
--------------------------------------------------------------------------------
Small-Cap Value Series Large-Cap Series
--------------------------------------------------------------------------------
Class B Shares Amount Shares Amount
--------------------------------------------------------------------------------
Sales of shares 342,335 $ 5,576,889 523,706 $ 12,443,031
--------------------------------------------------------------------------------
Shares issued to share-
holders in reinvestment
of dividends and
distributions - - 138,521 3,349,441
--------------------------------------------------------------------------------
Total 342,335 5,576,889 662,227 15,792,472
--------------------------------------------------------------------------------
Shares reacquired (2,138,116) (34,602,409) (441,531) (10,335,478)
--------------------------------------------------------------------------------
Increase (Decrease) (1,795,781) $(29,025,520) 220,696 $ 5,456,994
--------------------------------------------------------------------------------
Year Ended 11/30/1999
--------------------------------------------------------------------------------
Small-Cap Value Series Large-Cap Series
--------------------------------------------------------------------------------
Class B Shares Amount Shares Amount
--------------------------------------------------------------------------------
Sales of shares 828,910 $ 12,470,571 1,429,541 $34,164,653
--------------------------------------------------------------------------------
Shares issued to share-
holders in reinvestment
of distributions - - 11,962 255,502
--------------------------------------------------------------------------------
Total 828,910 12,470,571 1,441,503 34,420,155
--------------------------------------------------------------------------------
Shares reacquired (4,647,173) (67,423,653) (301,029) (7,175,003)
--------------------------------------------------------------------------------
Increase (Decrease) (3,818,263) $(54,953,082) 1,140,474 $27,245,152
--------------------------------------------------------------------------------
Six Months Ended 5/31/2000
--------------------------------------------------------------------------------
Small-Cap Value Series Large-Cap Series
--------------------------------------------------------------------------------
Class C Shares Amount Shares Amount
--------------------------------------------------------------------------------
Sales of shares 290,372 $ 4,756,240 328,108 $ 7,823,701
--------------------------------------------------------------------------------
Shares issued to share-
holders in reinvestment
of dividends and
distributions - - 36,655 887,061
--------------------------------------------------------------------------------
Total 290,372 4,756,240 364,763 8,710,762
--------------------------------------------------------------------------------
Shares reacquired (703,216) (11,365,281) (137,563) (3,213,474)
--------------------------------------------------------------------------------
Increase (Decrease) (412,844) $ (6,609,041) 227,200 $ 5,497,288
--------------------------------------------------------------------------------
Year Ended 11/30/1999
--------------------------------------------------------------------------------
Small-Cap Value Series Large-Cap Series
--------------------------------------------------------------------------------
Class C Shares Amount Shares Amount
--------------------------------------------------------------------------------
Sales of shares 507,260 $ 7,620,650 502,800 $12,117,536
--------------------------------------------------------------------------------
Shares issued to share-
holders in reinvestment
of distributions - - 2,771 59,247
--------------------------------------------------------------------------------
Total 507,260 7,620,650 505,571 12,176,783
--------------------------------------------------------------------------------
Shares reacquired (1,944,301) (28,400,305) (158,988) (3,759,206)
--------------------------------------------------------------------------------
Increase (Decrease) (1,437,041) $(20,779,655) 346,583 $ 8,417,577
--------------------------------------------------------------------------------
Six Months Ended 5/31/2000
--------------------------------------------------------------------------------
Small-Cap Value Series Large-Cap Series
--------------------------------------------------------------------------------
Class P Shares Amount Shares Amount
--------------------------------------------------------------------------------
Sales of shares - $ - - $ -
--------------------------------------------------------------------------------
Shares issued to share-
holders in reinvestment
of dividends and
distributions - - 2 57
--------------------------------------------------------------------------------
Total - - 2 57
--------------------------------------------------------------------------------
Shares reacquired - - - -
--------------------------------------------------------------------------------
Increase - $ - 2 $57
--------------------------------------------------------------------------------
4/28/1999
(Commencement of
Offering Class P Shares) to
11/30/1999
--------------------------------------------------------------------------------
Small-Cap Value Series Large-Cap Series
--------------------------------------------------------------------------------
Class P Shares Amount Shares Amount
--------------------------------------------------------------------------------
Sales of shares 69 $1,126 45 $1,131
--------------------------------------------------------------------------------
Increase 69 $1,126 45 $1,131
--------------------------------------------------------------------------------
16
<PAGE>
Notes to Financial Statements (unaudited)
Six Months Ended 5/31/2000
--------------------------------------------------------------------------------
Small-Cap Value Series Large-Cap Series
--------------------------------------------------------------------------------
Class Y Shares Amount Shares Amount
--------------------------------------------------------------------------------
Sales of shares 392,426 $6,681,277 - $ -
--------------------------------------------------------------------------------
Shares issued to share-
holders in reinvestment
of dividends and
distributions - - 3 60
--------------------------------------------------------------------------------
Total 392,426 6,681,277 3 60
--------------------------------------------------------------------------------
Shares reacquired (2,557) (40,500) - -
--------------------------------------------------------------------------------
Increase 389,869 $6,640,777 3 $60
--------------------------------------------------------------------------------
5/4/1999
(Commencement of
Offering Class Y Shares) to
Year Ended 11/30/1999 11/30/1999
--------------------------------------------------------------------------------
Small-Cap Value Series Large-Cap Series
--------------------------------------------------------------------------------
Class Y Shares Amount Shares Amount
--------------------------------------------------------------------------------
Sales of shares 686,634 $9,962,039 44 $1,132
--------------------------------------------------------------------------------
Shares reacquired (6,482) (102,672) - -
--------------------------------------------------------------------------------
Increase 680,152 $9,859,367 44 $1,132
--------------------------------------------------------------------------------
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, 2000, accumulated net realized gain (loss) for each Series was as follows:
--------------------------------------------------------------------------------
Small-Cap Value Series $(21,549,575)
Large-Cap Series 12,343,576
--------------------------------------------------------------------------------
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 accounting
principles generally accepted in the United States of America.
At May 31, 2000, the Small-CapValue Series had a capital loss carry forward of
$39,011,713, of which $30,380,175 will expire in 2006 and $8,631,538 in 2007.
5. Purchases and Sales of Securities
Purchases and sales of securities (other than short-term investments) for the
period ended May 31, 2000 were as follows:
Series Purchases Sales
--------------------------------------------------------------------------------
Small-Cap Value $197,996,217 $219,764,660
Large-Cap 150,147,841 133,938,888
--------------------------------------------------------------------------------
As of May 31, 2000, net unrealized appreciation, gross unrealized appreciation
and gross unrealized depreciation of investments based on cost for federal
income tax purposes were as follows:
Net Unrealized Unrealized Unrealized
Series Appreciation Appreciation (Depreciation)
--------------------------------------------------------------------------------
Small-Cap Value $42,187,656 $84,827,626 $(42,639,970)
Large-Cap 28,241,826 38,261,451 (10,019,625)
--------------------------------------------------------------------------------
The cost of investments for federal income tax purposes is substantially the
same as that used for financial reporting purposes.
6. Directors` Remuneration
The Directors of theCompany 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, 2000 under a deferred compensation plan, were $22,832.
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 ("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 was at an annual rate of
0.06% during the year ended November 30, 1999. Effective December 17, 1999, this
fee was increased to 0.09% per annum. There were no loans outstanding pursuant
to this Facility at May 31, 2000, 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. Small-Cap Value Series had
the following transactions during the period with companies that are affiliates:
<TABLE>
<CAPTION>
Balance of Balance of Realized Gain Dividend Income
Shares Held Gross Gross Shares Held Value Dec. 1, 1999 to Dec. 1, 1999 to
Affiliates Nov. 30, 1999 Purchases Sales May 31, 2000 May 31, 2000 May 31, 2000 May 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BEI Technologies, Inc. 415,000 9,300 - 424,300 7,637,400 - 16,972
------------------------------------------------------------------------------------------------------------------------------------
Ivex Packaging Corp. 1,050,000 75,000 - 1,125,000 10,125,000 - -
------------------------------------------------------------------------------------------------------------------------------------
Michael Baker Corp. 511,500 - - 511,500 $ 3,324,750 $ - $ -
------------------------------------------------------------------------------------------------------------------------------------
Moog, Inc. Class A 455,200 - (5,300) 449,900 9,616,613 60,636 -
------------------------------------------------------------------------------------------------------------------------------------
Rogers Corp. 663,800 - (75,000) 1,177,600(a) 36,432,000 1,383,077 -
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Adjusted for 2 for 1 stock split.
Copyright(C)2000 by Lord Abbett Research Fund, Inc., 90 Hudson Street, Jersey
City, NJ 07302-3973
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.
17
<PAGE>
INVESTING IN THE
LORD ABBETT
FAMILY OF FUNDS
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
GROWTH
---------------------------------------------------------------------------------------------------------------------------
INCOME
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Funds Growth & Balanced Fund Income Funds Tax-Free Money
Growth Fund Income Funds Income Funds Market Fund
Growth Large-Cap Research Fund - Balanced World Bond- National U. S. Government
Opportunities Growth Fund Large-Cap Series** Debenture Series California Securities Money
Fund Research Fund- Series Global Fund - Connecticut Market Fund + ++
Small-Cap Value Growth & Income Series Florida
Series Income Series High Yield Fund Georgia
Alpha Series* Affiliated Fund Bond-Debenture Hawaii
Developing International Fund Michigan
Growth Fund Series Limited Duration Minnesota
Lord Abbett Mid-Cap U. S. Government Missouri
Developing Value Fund Securities Series+ New Jersey
Growth Fund Global Fund- U. S. Government) New York
is closed to Equity Series Securities Series+ Pennsylvania
new investors. Texas
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
under stand your investment objectives and, ultimately, offering fund recom
mendations 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, in cluding 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:
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
-----------------------------------------------------
90 Hudson Street o Jersey City, New Jersey 07302-3973
LARF-3-500
(7/00)
