LORD ABBETT
VALUE APPRECIATION FUND, INC.
THE GENERAL MOTORS BUILDING
767 FIFTH AVENUE
NEW YORK, NY 10153-0203
800-426-1130
LORD ABBETT VALUE APPRECIATION FUND, INC. (WE OR THE FUND), IS A DIVERSIFIED,
OPEN-END MANAGEMENT INVESTMENT COMPANY INCORPORATED UNDER MARYLAND LAW ON MARCH
14, 1983. WE HAVE A SINGLE CLASS OF SHARES WITH EQUAL RIGHTS AS TO VOTING,
DIVIDENDS, ASSETS AND LIQUIDATION.
WE SEEK CAPITAL APPRECIATION THROUGH INVESTMENTS PRIMARILY IN EQUITY
SECURITIES WHICH ARE BELIEVED TO BE UNDERVALUED IN THE MARKETPLACE. THERE CAN BE
NO ASSURANCE THAT OUR OBJECTIVE WILL BE ACHIEVED. INCOME IS NOT AN OBJECTIVE OF
THE FUND, BUT MAY ARISE INCIDENTALLY IN PURSUIT OF OUR BASIC OBJECTIVE.
WE WILL ENDEAVOR TO ACHIEVE A MEASURE OF PRICE APPRECIATION THAT IS GREATER
THAN THAT OF THE BROAD MARKET AVERAGES OVER THE COURSE OF A FULL MARKET CYCLE.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE FUND THAT A
PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING. ADDITIONAL INFORMATION ABOUT
THE FUND HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE
STATEMENT OF ADDITIONAL INFORMATION IS INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS AND MAY BE OBTAINED, WITHOUT CHARGE, BY WRITING TO THE FUND OR BY
CALLING 800-874-3733. ASK FOR PART B OF THE PROSPECTUS THE STATEMENT OF
ADDITIONAL INFORMATION. THE DATE OF THIS PROSPECTUS AND OF THE STATEMENT OF
ADDITIONAL INFORMATION IS MAY 1, 1995.
PROSPECTUS
INVESTORS SHOULD READ AND RETAIN THIS PROSPECTUS. SHAREHOLDER INQUIRIES SHOULD
BE MADE IN WRITING TO THE FUND OR BY CALLING 800-821-5129. YOU ALSO CAN MAKE
INQUIRIES THROUGH YOUR BROKER-DEALER.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
AN INVESTMENT IN THE FUND INVOLVES RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
CONTENTS PAGE
1 Investment Objective 2
2 Fee Table 2
3 Financial Highlights 2
4 How We Invest 3
5 Purchases 4
6 Shareholder Services 6
7 Our Management 7
8 Dividends, Capital Gains
Distributions and Taxes 8
9 Redemptions 8
10 Performance 9
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
1 INVESTMENT OBJECTIVE
Our investment objective is to seek capital appreciation through investments,
primarily in equity securities, which are believed to be undervalued in the
marketplace.
2 FEE TABLE
A summary of the Funds expenses is set forth in the table below. The example
should not be considered a representation of past or future expenses. Actual
expenses may be greater or less than those shown.
<TABLE>
<CAPTION>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
(AS A PERCENTAGE OF OFFERING PRICE)
Maximum Sales Load(1) on Purchases
(See Purchases) 5.75%
Deferred Sales Load(1) (See Purchases) None(2)
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ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees (See Our Management) .75%
12b-1 Fees (See Purchases) .19%
Other Expenses (See Our Management) .18%
- ----------------------------------------------------
Total Operating Expenses 1.12%
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<FN>
Example: Assume an annual return of 5% and there is no change in the level of
- -------
expenses described above. For every $1,000 invested, with reinvestment of all
distributions, you would pay the following total expenses if you closed your
account after the number of years indicated.
1 year 3 years 5 years 10 years
------ ------- ------- --------
$68(3) $91(3) $116(3) $186(3)
(1) Sales load is referred to as sales charge and deferred sales load is
referred to as contingent deferred reimbursement charge throughout this
Prospectus.
(2) Redemptions of shares on which the Funds 1% Rule 12b-1 sales distribution
fee for purchases of $1 million or more has been paid are subject to a 1%
contingent deferred reimbursement charge, if the redemption occurs within
24 months after the month of purchase, subject to certain exceptions
described herein.
(3) Based on total operating expenses shown in the table above.
The foregoing is provided to give investors a better understanding of the
expenses that are incurred by an investment in the Fund.
</FN>
</TABLE>
3 FINANCIAL HIGHLIGHTS
The following table has been audited by Deloitte & Touche llp, independent
accountants, in connection with their annual audit of the Funds Financial
Statements, whose report thereon is incorporated by reference in the Statement
of Additional Information and may be obtained upon request, and has been
included herein in reliance upon their authority as experts in accounting and
auditing.
<TABLE>
<CAPTION>
TEN MONTHS
YEAR ENDED ENDED YEAR ENDED
PER SHARE OPERATING DECEMBER 31, DEC. 31, FEBRUARY 28,
----------------------------------------------------------------
PERFORMANCE: 1994 1993 1992 1991 1990 1989 1988 1987** 1987 1986
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.65 $12.60 $11.81 $9.80 $10.59 $9.53 $9.09 $14.59 $13.25 $9.83
INCOME FROM INVESTMENT OPERATIONS
Net investment income .18 .16 .20 .23 .28 .29 .34 .30 .32 .23
Net realized and unrealized
gain (loss) on securities (.545) 1.42 1.31 2.30 (.77) 1.57 1.08 (2.24) 2.11 3.42
TOTAL FROM INVESTMENT OPERATIONS (.365) 1.58 1.51 2.53 (.49) 1.86 1.42 (1.94) 2.43 3.65
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DISTRIBUTIONS
Dividends from net investment income (.16) (.20) (.22) (.26) (.30) (.32) - (.61) (.23) (.23)
Distributions from net realized gain (.875) (1.33) (.50) (.26) - (.48) (.98) (2.95) (.86) -
NET ASSET VALUE, END OF PERIOD $11.25 $12.65 $12.60 $11.81 $9.80 $10.59 $9.53 $9.09 $14.59 $13.25
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TOTAL RETURN* (3.27)% 13.95% 13.46% 27.36% (4.64)% 20.09% 15.62% (16.40)% 19.55% 38.14%
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RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $190,788 $202,519 $173,380 $166,056 $155,018 $190,189 $188,380 $223,288 $318,793 $308,812
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.12% 1.22% 1.22% 1.14% 1.12% .94% 1.02% .81%*** .89% .86%
Net investment income 1.53% 1.35% 1.71% 2.16% 2.79% 2.91% 3.41% 2.42%***2.42% 2.19%
PORTFOLIO TURNOVER RATE 57.49% 33.42% 62.55% 34.20% 51.49% 30.42% 26.53% 43.97% 52.41% 21.28%
====================================================================================================================================
<FN>
* TOTAL RETURN DOES NOT CONSIDER THE EFFECTS OF SALES LOADS.
** THE FINANCIAL STATEMENTS COVER A SHORT YEAR (TEN MONTHS) BECOAUSE THE
FISCAL YEAR-END WAS CHANGED DURING THE YEAR FROM FEBRUARY 28 TO DECEMBER 31
*** NOT ANNUALIZED
</FN>
</TABLE>
<PAGE>
4 HOW WE INVEST
We invest primarily in common stocks (including securities convertible into
common stocks) of companies with good prospects for improvement in earnings
trends or asset values that are not yet fully recognized in the investment
community. Selection of stocks is based on appreciation potential, without
regard to current income.
Our investment portfolio is diversified among many issues representing many
different industries. The holdings in our portfolio typically are selected for
their potential for significant market appreciation from growing recognition of
substantial improvement in the companies financial results or increasing
anticipation of such improvement. This potential may derive from such factors as
(i) changes in the economic and financial environment, (ii) new or improved
products or services, (iii) new or rapidly expanding markets, (iv) changes in
management or structure of the company, (v) price increases due to shortages of
resources or productive capacity, (vi) improved efficiencies resulting from new
technologies or changes in distribution or (vii) changes in governmental
regulations, political climate or competitive conditions. The companies
represented will have a strong or, in our perception, an improving financial
position. At December 31, 1994 our investments consisted primarily of
middle-sized companies (aggregate market value of outstanding stock between $500
million and $3 billion). The outstanding stock of companies in our portfolio
ordinarily will have an aggregate market value of not less than approximately
$50 million. At the time of purchase, the stocks may be largely neglected by the
investment community or, if widely followed, they may be out of favor or at
least controversial. Characteristically, we will not carry a large cash position
as an investment strategy. While we may take short-term gains if deemed
appropriate, normally we will hold securities in order to realize long-term
capital gains. Although normally we intend to be fully invested in common
stocks, we may temporarily put a portion of our assets in cash or cash
equivalents (short-term obligations of banks, corporations or the U.S.
Government) for liquidity purposes or to create reserve purchasing power pending
other investments. Since we invest primarily in common stocks with their
inherent market risks, we cannot, of course, assure that our investment
objective will be achieved. If we determine that our objective can best be
achieved by a substantive change in investment policy or strategy, we may make
such a change without shareholder approval by disclosing it in our prospectus.
We may invest up to 10% of our net assets in securities (of the type described
above) which are primarily traded in foreign countries.
We will not change our investment objective without shareholder approval.
FUTURE CONVERSION. In the future, upon shareholder approval, the Fund may seek
to achieve its investment objective by investing all of its assets in another
investment company (or series or class thereof) having the same investment
objective. Shareholders will be notified thirty days in advance of such
conversion. Shareholders of the Fund will be able to exchange shares for shares
of the other funds, series or classes in the Lord Abbett family having an
exchange privilege with the Fund.
RISK FACTORS. Securities markets of foreign countries in which the Fund may
invest, generally, are not subject to the same degree of regulation as U.S.
markets and may be more volatile and less liquid than major U.S. markets. Lack
of liquidity may affect the Funds ability to purchase or sell large blocks of
securities and thus obtain the best price. There may be less publicly-available
information on publicly-traded companies, banks and governments in foreign
countries than generally is the case for such entities in the United States. The
lack of uniform accounting standards and practices among countries impairs the
validity of direct comparisons of valuation measures (such as price/earnings
ratios) for securities in different countries. Other considerations include
<PAGE>
political and social instability, currency fluctuation between the dollar and
foreign currencies, expropriation, higher transaction costs, currency controls
of foreign governments, withholding taxes that cannot be passed through as a tax
credit or deduction to shareholders and different securities settlement
practices. Settlement periods for foreign securities, which are sometimes longer
than those for securities of U.S. issuers, may affect portfolio liquidity. These
different settlement practices may cause missed purchasing opportunities and/or
the loss of interest on money market and debt investments pending further equity
or long-term debt investments. In addition, foreign securities held by the Fund
may be traded on days that the Fund does not value its portfolio securities,
such as Saturdays and customary business holidays and, accordingly, the Funds
net asset value may be significantly affected on days when shareholders do not
have access to the Fund.
5 PURCHASES
You may buy our shares through any independent securities dealer having a sales
agreement with Lord Abbett, our exclusive selling agent. Place your order with
your investment dealer or send it to Lord Abbett Value Appreciation Fund, Inc.
(P.O. Box 419100, Kansas City, Missouri 64141). The minimum initial investment
is $1,000, except for Invest-A-Matic and Div-Move ($250 initial and $50
subsequent minimum) and Retirement Plans ($250 minimum). Subsequent investments
may be made in any amount. See Shareholder Services. The net asset value of our
shares is calculated every business day as of the close of the New York Stock
Exchange (NYSE) by dividing net assets by the number of shares outstanding.
Securities are valued at their market value as more fully described in the
Statement of Additional Information.
Orders for shares received by the Fund prior to the close of the NYSE, or
received by dealers prior to such close and received by Lord Abbett prior to the
