1933 Act File No. 2-82544
1940 Act File No. 811-3691
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 13 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Amendment No. 15 [X]
LORD ABBETT VALUE APPRECIATION FUND, INC.
Exact Name of Registrant as Specified in Charter
767 FIFTH AVENUE, NEW YORK, N. Y. 10153-0203
Address of Principal Executive Office
REGISTRANT'S TELEPHONE NUMBER (212) 848-1800
Kenneth B. Cutler, Vice President & Secretary
767 FIFTH AVENUE, NEW YORK, N. Y. 10153
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
______ immediately on filing pursuant to paragraph (b) of Rule 485
__X___ on May 1, 1995 pursuant to paragraph (b) of Rule 485
______ 60 days after filing pursuant to paragraph (a) (1) of Rule 485
______ on (date) pursuant to paragraph (a) (1) of Rule 485
______ 75 days after filing pursuant to paragraph (a) (2) of Rule 485
______ on (date) pursuant to paragraph (a) (2) of Rule 485
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a previously
filed post-effective amendment
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Rule 24f- 2(a)(1) and a Rule 24f-2 Notice for
Registrant's most recent fiscal year was filed with the Commission on or about
Febrary 27, 1995.
<PAGE>
LORD ABBETT VALUE APPRECIATION FUND, INC.
FORM N-1A
Cross Reference Sheet
Post-Effective Amendment No. 13
Pursuant to Rule 481(a)
Form N-1A Location In Prospectus or
ITEM NO. STATEMENT OF ADDITIONAL INFORMATION
1 Cover Page
2 Fee Table
3 (a) Financial Highlights; Performance
3 (b) N/A
3(c) Performance
3(d) N/A
4 (a) (i) Cover Page
4 (a) (ii) Investment Objective; How We Invest
4 (b) (c) How We Invest
5 (a) (b) (c) Our Management; Back Cover Page
5 (d) N/A
5 (e) Back Cover Page
5 (f) Our Management
5 (g) N/A
5 A Performance
6 (a) Cover Page
6 (b) (c) (d) N/A
6 (e) Cover Page
6 (f) (g) Dividends, Capital Gains
Distributions and Taxes
6(h) N/A
7 (a) Back Cover Page
7 (b) (c) (d)
(e) (f) Purchases
8 Redemptions
9 N/A
10 Cover Page
11 Cover Page - Table of Contents
12 N/A
13 Investment Objective and Policies
14 Directors and Officers
15 (a) (b) N/A
15 (c) Directors and Officers
16 (a) (i) Investment Advisory and Other Services
16 (a) (ii) Directors and Officers
16 (a) (iii) Investment Advisory and Other Services
16 (b) Investment Advisory and Other Services
16 (c) (d) (e)
(g) N/A
16 (f) Purchases, Redemptions; Investment Advisory and
Other Services
and Shareholder Services
16 (h) Investment Advisory and Other Services
16 (i) N/A
2
<PAGE>
Form N-1A Location In Prospectus or
ITEM NO. STATEMENT OF ADDITIONAL INFORMATION
--------- -----------------------------------
17 (a) Portfolio Transactions
17 (b) N/A
17 (c)(d) Portfolio Transactions
17 (e) N/A
18 (a) Cover Page
18 (b) N/A
19 (a) (b) Purchases, Redemptions
and Shareholder Services
19 (c) N/A
20 Taxes
21 (a) Purchases, Redemptions
and Shareholder Services
21 (b) (c) N/A
22 (a) N/A
22 (b) Past Performance
23 Financial Statements
3
<PAGE>
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)
- ----------------------------------------------------
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%
====================================================
<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
- ------------------------------------------------------------------------------------------------------------------------------------
<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
- ------------------------------------------------------------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN* (3.27)% 13.95% 13.46% 27.36% (4.64)% 20.09% 15.62% (16.40)% 19.55% 38.14%
- ------------------------------------------------------------------------------------------------------------------------------------
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
close of its business day, will be confirmed at the applicable public offering
price effective at such NYSE close. Orders received by dealers after the NYSE
closes and received by Lord Abbett in proper form prior to the close of its next
business day are executed at the applicable public offering price effective as
of the close of the NYSE on that next business day. The dealer is responsible
for the timely transmission of orders to Lord Abbett. A business day is a day on
which the NYSE is open for trading. For information regarding the proper form of
a purchase or redemption order, call the Fund at 800-821-5129. This offering may
be suspended, changed or withdrawn. Lord Abbett reserves the right to reject any
order. The offering price is based on the per-share net asset value next
computed after your order is accepted plus a sales charge as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS A DEALERS
PERCENTAGE OF: CONCESSION
AS A TO COMPUTE
NET PERCENTAGE OFFERING
OFFERING AMOUNT OF OFFERING PRICE, DIVIDE
SIZE OF INVESTMENT PRICE INVESTED PRICE* NAV BY
<S> <C> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00% .9425
$50,000 to $99,999 4.75% 4.99% 4.00% .9525
$100,000 to $249,999 3.75% 3.90% 3.25% .9625
$250,000 to $499,999 2.75% 2.83% 2.25% .9725
$500,000 to $999,999 2.00% 2.04% 1.75% .9800
$1,000,000 or more No sales charge 1.00% 1.0000
<FN>
*Lord Abbett may, for specified periods, allow dealers to retain the full sales
charge for sales of shares during such periods, or pay an additional concession
to a dealer who, during a specified period, sells a minimum dollar amount of our
shares and/or shares of other Lord Abbett-sponsored funds. In some instances,
such additional concessions will be offered only to certain dealers expected to
sell significant amounts of shares. Lord Abbett may, from time to time,
implement promotions under which Lord Abbett will pay a fee to dealers with
respect to certain purchases not involving the imposition of a sales charge.
Additional payments may be paid from Lord Abbetts own resources and will be made
in the form of cash or, if permitted, non-cash payments. The non-cash payments
will include business seminars at resorts or other locations, including meals
and entertainment, or the receipt of merchandise. The cash payments will include
payment of various business expenses of the dealer.
</FN>
</TABLE>
In selecting dealers to execute portfolio transactions for the Funds
portfolio, if two or more dealers are considered capable of obtaining best
execution, we may prefer the dealer who has sold our shares and/or shares of
other Lord Abbett-sponsored funds.
<PAGE>
VOLUME DISCOUNTS. This section describes several ways to qualify for a lower
sales charge if you inform Lord Abbett or the Fund that you are eligible at the
time of purchase.
(1) Any purchaser (as described below) may aggregate a purchase in the Fund
with purchases of any other eligible Lord Abbett-sponsored fund, together with
the current value at maximum offering price of any shares in the Fund and in any
eligible Lord Abbett-sponsored funds held by the purchaser. (Holdings in the
following funds are not eligible for the above rights of accumulation: Lord
Abbett Equity Fund (LAEF), Lord Abbett Series Fund (LASF), Lord Abbett Research
Fund if not offered to the general public (LARF) and Lord Abbett U.S. Government
Securities Money Market Fund (GSMMF), except for existing holdings in GSMMF
which are attributable to shares exchanged from a Lord Abbett-sponsored fund
offered with a front-end sales charge or from a fund in the Lord Abbett Counsel
Group.) (2) A purchaser may sign a non-binding 13 month statement of intention
to invest $50,000 or more in the Fund or in any of the above eligible funds. If
the intended purchases are completed during the period, each purchase will be at
the sales charge, if any, applicable to the aggregate of such purchasers
intended purchases. If not completed, each purchase will be at the sales charge
for the aggregate of the actual purchases. Shares issued upon reinvestment of
dividends or distributions are not included in the statement of intention. The
term purchaser includes (i) an individual, (ii) an individual and his or her
spouse and children under the age of 21 and (iii) a trustee or other fiduciary
purchasing shares for a single trust estate or single fiduciary account
(including a pension, profit-sharing, or other employee benefit trust qualified
under Section 401 of the Internal Revenue Code more than one qualified employee
benefit trust of a single employer, including its consolidated subsidiaries, may
be considered a single trust, as may qualified plans of multiple employers
registered in the name of a single bank trustee as one account), although more
than one beneficiary is involved. Our shares may be purchased at net asset value
by our directors, employees of Lord Abbett, employees of our shareholder
servicing agent and employees of any securities dealer having a sales agreement
with Lord Abbett who consents to such purchases or by the trustee or custodian
under any pension or profit-sharing plan or Payroll Deduction IRA established
for the benefit of such persons or for the benefit of any national securities
trade organization to which Lord Abbett belongs or any company with an
account(s) in excess of $10 million managed by Lord Abbett on a
private-advisory-account basis. For purposes of this paragraph, the terms
directors and employees include a directors or employees spouse (including the
surviving spouse of a deceased director or employee). The terms directors and
employees of Lord Abbett also include other family members and retired directors
and employees.
Our shares also may be purchased at net asset value (a) at $1 million or
more, (b) with dividends and distributions from other Lord Abbett-sponsored
funds, except for dividends and distributions on shares of LARF, LAEF, LASF and
Lord Abbett Counsel Group, (c) under the loan feature of the Lord
Abbett-sponsored prototype 403(b) plan for share purchases representing the
repayment of principal and interest, (d) by certain authorized brokers, dealers,
registered investment advisers or other financial institutions who have entered
into an agreement with Lord Abbett in accordance with certain standards approved
by Lord Abbett, providing specifically for the use of our shares in particular
investment products made available for a fee to clients of such brokers,
dealers, registered investment advisers and other financial institutions, (e) by
employees, partners and owners of unaffiliated consultants and advisers to Lord
Abbett or Lord Abbett-sponsored funds who consent to such purchase if such
persons provide services to Lord Abbett or such funds on a continuing basis and
<PAGE>
are familiar with such funds and (f) subject to appropriate documentation,
through a securities dealer where the amount invested represents redemption
proceeds from shares (Redeemed Shares) of a registered open-end management
investment company not distributed or managed by Lord Abbett (other than a money
market fund), if such redemptions have occurred no more than 60 days prior to
the purchase of our shares, the Redeemed Shares were held for at least six
months prior to redemption and the proceeds of redemption were maintained in
cash or a money market fund prior to purchase. Purchasers should consider the
impact, if any, of contingent deferred sales charges in determining whether to
redeem shares for subsequent investment in our shares. Lord Abbett may suspend
or terminate the purchase option referred to in (f) above at any time. Our
assets may be issued at net asset value in exchange for the assets, subject to
possible tax adjustment, of a personal holding company or an investment company.
RULE 12B-1 PLAN. We have adopted a Rule 12b-1 Plan (the Plan) which authorizes
the payment of distribution fees to dealers in order to provide additional
incentives for them (a) to provide continuing information and investment
services to their shareholder accounts and otherwise to encourage their accounts
to remain invested in the Fund and (b) to sell shares of the Fund. Under the
Plan (except as to certain accounts for which tracking data is not available),
the Fund pays to Lord Abbett, who passes on to dealers, (1) an annual service
fee (payable quarterly) of .25% of the average daily net asset value of the
Funds shares attributable to sales by dealers on or after June 1, 1990 and .15%
of the average daily net asset value of shares sold by dealers prior to that
date and (2) a one-time 1% sales distribution fee, at the time of sale, on all
shares sold by dealers at the $1 million level. The shareholder privileges of
rights of accumulation and 13-month statements of intention may be used in
calculating such sales eligible for the 1% sales distribution fee. Lord Abbett
is required to pay the full amount of the sales distribution fees to dealers as
compensation for selling our shares.
Holders of shares on which the 1% sales distribution fee has been paid will
be required to pay a contingent deferred reimbursement charge of 1% of the
original cost or the then net asset value, whichever is less, of all shares so
purchased which are redeemed out of the Lord Abbett-sponsored family of funds on
or before the end of the twenty-fourth month after the month in which the
purchase occurred. (An exception is made for redemptions by tax-qualified plans
under Section 401 of the Internal Revenue Code due to plan loans, hardship
withdrawals, death, retirement, or separation from service with respect to plan
participants.) If shares have been exchanged into another Lord Abbett-sponsored
fund and are thereafter redeemed out of the Lord Abbett-sponsored family of
funds on or before the end of such twenty-fourth month, the charge will be
collected for the Fund by the other fund. The Fund will collect such a charge
for other Lord Abbett-sponsored funds in a similar situation. Shares of a fund
or series on which the 1% sales distribution fee has been paid may not be
exchanged into a fund or series with a Rule 12b-1 Plan for which the payment
provisions have not been in effect for at least one year.
6 SHAREHOLDERS SERVICES
We offer the following shareholder services:
TELEPHONE EXCHANGE PRIVILEGE: Shares may be exchanged, without a service
charge, for those of any other Lord Abbett-sponsored fund except for (i) LAEF,
LARF, LASF and Lord Abbett Counsel Group and (ii) certain tax-free single-state
series where the exchanging shareholder is a resident of a state in which such
series is not offered for sale (together, Eligible Funds).
You or YOUR REPRESENTATIVE WITH PROPER IDENTIFICATION can instruct the Fund
to exchange uncertificated shares (held by the transfer agent) by telephone.
Shareholders have this
<PAGE>
privilege unless they refuse it in writing. The Fund will not be liable for
following instructions communicated by telephone that it reasonably believes to
be genuine and will employ reasonable procedures to confirm that instructions
received are genuine, including requesting proper identification and recording
all telephone exchanges. Instructions must be received by the Fund in Kansas
City (800-521-5315) prior to the close of the NYSE to obtain each funds net
asset value per share on that day. Expedited exchanges by telephone may be
difficult to implement in times of drastic economic or market change. The
exchange privilege should not be used to take advantage of short-term swings in
the market. The Fund reserves the right to terminate or limit the privilege of
any shareholder who makes frequent exchanges. The Fund can revoke the privilege
for all shareholders upon 60 days prior written notice. A prospectus for the
other Lord Abbett-sponsored fund selected by you should be obtained and read
before an exchange. Exercise of the Exchange Privilege will be treated as a sale
for federal income tax purposes and, depending on the circumstances, a capital
gain or loss may be recognized.
SYSTEMATIC WITHDRAWAL PLAN: Except for retirement plans for which there is
no such minimum, if the maximum offering price value of your uncertificated
shares is at least $10,000, you may have periodic cash withdrawals automatically
paid to you in either fixed or variable amounts.
DIV-MOVE: You can invest the dividends paid on your account ($50 minimum
investment) into an existing account in any other Eligible Fund. The account
must be either your account, a joint account for you and your spouse, a single
account for your spouse, or a custodial account for your minor child under the
age of 21. You should read the prospectus of the other fund before investing.
INVEST-A-MATIC: You can make fixed, periodic investments ($50 minimum
investment) into the Fund and/or any Eligible Fund by means of automatic money
transfers from your bank checking account. You should read the prospectus of the
other fund before investing.
RETIREMENT PLANS: Lord Abbett makes available the retirement plan forms and
custodial agreements for IRAs (Individual Retirement Accounts including
Simplified Employee Pensions), 403(b) plans and pension and profit-sharing
plans, including 401(k) plans.
All correspondence should be directed to Lord Abbett Value Appreciation
Fund, Inc. (P.O. Box 419100, Kansas City, Missouri 64141; 800-821-5129).
7 OUR MANAGEMENT
Our business is managed by our officers on a day-to-day basis under the overall
direction of our Board of Directors. We employ Lord Abbett as investment manager
pursuant to a Management Agreement. Lord Abbett has been an investment manager
for over 60 years and currently manages about $16 billion in a family of mutual
funds and other advisory accounts. Under the Management Agreement, Lord Abbett
provides us with investment management services and executive and other
personnel, pays the remuneration of our officers and our directors affiliated
with Lord Abbett, provides us with office space and pays for ordinary and
necessary office and clerical expenses relating to research, statistical work
and supervision of our portfolio and certain other costs. Lord Abbett provides
similar services to fifteen other Lord Abbett-sponsored funds having various
investment objectives and also advises other investment clients. John J. Walsh,
a Lord Abbett partner, serves as portfolio manager for the Fund and has done so
since January 1994. Mr. Walsh has been with Lord Abbett since 1960 and also
manages corporate pension fund accounts.
Under the Management Agreement, the Fund is obligated to pay Lord Abbett a
monthly fee based on average daily net assets for each month. For the fiscal
year ended December 31, 1994, the fee paid to Lord Abbett as a percentage of
average daily net assets was at the annual rate of .75%. In addition, we pay all
expenses not expressly assumed by Lord Abbett.
<PAGE>
Our ratio of expenses, including management fee expenses, to average net assets
for the fiscal year ended December 31, 1994 was 1.12%.
8 DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
Dividends from net investment income may be taken in cash or reinvested in
additional shares at net asset value without a sales charge.
Checks representing dividends paid in cash will be mailed to shareholders
as soon as practicable after the payment date.
A long-term capital gains distribution is made when we have net profits
during the year from sales of securities which we have held more than one year.
If we realize net short-term capital gains, they also will be distributed. Any
capital gains distribution will be paid in January. You may take it in cash or
reinvest it in additional shares at net asset value without a sales charge.
Dividends and distributions may be paid in December or January. Dividends
and distributions declared in October, November or December of any year to
shareholders of record as of a date in such a month will be treated for federal
income tax purposes as having been received by shareholders in that year if they
are paid before February 1 of the following year.
We intend to continue to meet the requirements of Subchapter M of the
Internal Revenue Code. We will try to distribute to shareholders all our net
investment income and net realized capital gains, so as to avoid the necessity
of the Fund paying federal income tax. Shareholders, however, must report
dividends and capital gains distributions as taxable income. Distributions
derived from net long-term capital gains which are designated by the Fund as
capital gains dividends will be taxable to shareholders as long-term capital
gains, whether received in cash or shares, regardless of how long a taxpayer has
held the shares. Under current law, net long-term capital gains are taxed at the
rates applicable to ordinary income, except that the maximum rate for long-term
capital gains for individuals is 28%. Provisions of the Contract with America
Tax Relief Act of 1995, that were pending in Congress as of the date of this
Prospectus, would have the effect of reducing the federal income tax rate on
capital gains.
Shareholders may be subject to a $50 penalty under the Internal Revenue
Code and we may be required to withhold and remit to the U.S. Treasury a portion
(31%) of any redemption proceeds (including the value of shares exchanged into
another Lord Abbett-sponsored fund), and of any dividend or distribution on any
account, where the payee (shareholder) failed to provide a correct taxpayer
identification number or to make certain required certifications.
We will inform shareholders of the federal tax status of each dividend and
distribution after the end of each calendar year. Shareholders should consult
their tax advisers concerning applicable state and local taxes as well as the
tax consequences of gains or losses from the redemption or exchange of our
shares.
9 REDEMPTIONS
To obtain the proceeds of an expedited redemption of $50,000 or less, you or
YOUR REPRESENTATIVE WITH PROPER IDENTIFICATION can telephone the Fund. The Fund
will not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine and will employ reasonable procedures to
confirm that instructions received are genuine, including requesting proper
identification, recording all telephone redemptions and mailing the proceeds
only to the named shareholder at the address appearing on the account
registration.
If you do not qualify for the expedited procedures described above, to
redeem shares directly, send your request to Lord Abbett Value Appreciation
Fund, Inc. (P.O. Box 419100, Kansas City, Missouri 64141) with signature(s) and
any legal capacity of the signer(s) guaranteed by an eligible guarantor,
accompanied by any certificates for shares to be redeemed and other required
documentation. We will make payment of the net asset value of the shares on the
<PAGE>
date the redemption order was received in proper form. Payment will be made
within seven days (such period to be reduced to three business days on and after
June 7, 1995). The Fund may suspend the right to redeem shares for not more than
seven days or longer under unusual circumstances as permitted by Federal law. If
you have purchased Fund shares by check and subsequently submit a redemption
request, redemption proceeds will be paid upon clearance of your purchase check,
which may take up to 15 days. To avoid delays you may arrange for the bank upon
which a check was drawn to communicate to the Fund that the check has cleared.
Shares also may be redeemed by the Fund at net asset value through your
securities dealer who, as an unaffiliated dealer, may charge you a fee. If your
dealer receives your order prior to the close of the NYSE and communicates it to
Lord Abbett, as our agent, prior to the close of Lord Abbetts business day, you
will receive the net asset value of the shares being redeemed as of the close of
the NYSE on that day. If the dealer does not communicate such an order to Lord
Abbett until the next business day, you will receive the net asset value as of
the close of the NYSE on that next business day.
Shareholders who have redeemed their shares have a one-time right to
reinvest into another account having the identical registration in any of the
Eligible Funds, at the then applicable net asset value of the shares being
purchased, without the payment of a sales charge. Such reinvestment must be made
within 60 days of the redemption and is limited to no more than the dollar
amount of the redemption proceeds.
Under certain circumstances and subject to prior written notice, our Board
of Directors may authorize redemption of all of the shares in any account in
which there are fewer than 25 shares.
TAX-QUALIFIED PLANS: For redemptions of $50,000 or less, follow normal
redemption procedures. Redemptions over $50,000 must be in writing from the
employer, broker or plan administrator stating the reason for the redemption.
The reason for the redemption must be received by the Fund prior to, or
concurrently with, the redemption request.
10 PERFORMANCE
Lord Abbett Value Appreciation Fund ended fiscal 1994 on December 31 with a net
asset value of $11.25 per share, versus $11.78 one year ago. The latter figure
has been adjusted for capital gains distributions totalling $.875 paid last
February. In addition, the Fund paid a dividend of $.16 during the fiscal year.
The Funds total return (which is the percent change in net asset value assuming
the reinvestment of all distributions) was -3.3% for the year.
The rising interest-rate environment of 1994 placed pressure on financial
assets in general and, in particular, on mid-capitalization stocks (the area of
focus for the Fund). In anticipation of this difficult market environment, the
Fund implemented portfolio strategies which modestly aided performance relative
to the Russell Mid Cap Index. By cutting holdings of utilities, banks and
insurance stocks, the Funds vulnerability to an upturn in interest rates was
diminished. Meanwhile, our emphasis on companies with high sensitivity to the
business cycle proved advantageous as the market responded positively to the
large earnings gains posted by these companies. Late in the year, as prices of a
number of these issues rose to where we consider them fully valued, we reduced
these holdings and invested the proceeds in relatively defensive and
moderately-valued consumer goods issues.
YIELD AND TOTAL RETURN. Yield and total return data may, from time to time, be
included in advertisements about the Fund. Yield is calculated by dividing the
Funds annualized net investment income per share during a recent 30-day period
by the maximum public offering price per share on the last day of that period.
The Funds yield reflects the deduction of the maximum initial sales charge and
<PAGE>
reinvestment of all income dividends and capital gains distributions. Total
return for the one-, five- and ten-year periods represents the average annual
compounded rate of return on an investment of $1,000 in the Fund at the maximum
public offering price. Total return also may be presented for other periods or
based on investment at reduced sales charge levels or net asset value. Any
quotation of total return not reflecting the maximum initial sales charge would
be reduced if such sales charge were used. Quotations of yield or total return
for any period when an expense limitation is in effect will be greater than if
the limitation had not been in effect.
See Past Performance in the Statement of Additional Information for a more
detailed discussion concerning the computation of the Funds total return and
yield.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFER IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN SUPPLEMENTAL SALES
MATERIAL AUTHORIZED BY THE FUND AND NO PERSON IS ENTITLED TO RELY UPON ANY
INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN OR THEREIN.
<PAGE>
Comparison of change in value of a $10,000 investment, assuming reinvestment of
all dividends and distributions, in Lord Abbett Value Appreciation Fund and
Russell Mid Cap Index.
<TABLE>
<CAPTION>
The Fund The Fund
at Net at Maximum Russell
Asset Value Offering Mid Cap
Date Price Index
- ---- ----------- ---------- --------
<S> <C> <C> <C>
12-31-84 $10,000 $ 9,426 $10,000
12-31-85 13,468 12,695 13,207
12-31-86 15,668 14,769 15,611
12-31-87 15,014 14,153 15,647
12-31-88 17,360 16,363 18,746
12-31-89 20,848 19,652 23,669
12-31-90 19,881 18,741 20,948
12-31-91 25,319 23,868 29,644
12-31-92 28,728 27,081 34,489
12-31-93 32,737 30,700 39,423
12-31-94 31,668 29,851 38,594
<FN>
(1) Total return is the percent change in value, after deduction of the maximum
sales charge of 5.75%, with all dividends and distributions reinvested for
the periods shown ending December 31, 1994 using the SEC-required uniform
method to compute such return.
(2) Data reflects the deduction of the maximum sales charge of 5.75%.
(3) Value Line ceased providing the Value Line Arithmetic Index on a total
return basis as used by the Fund for this comparison in the past.
Therefore, the Russell Mid Cap Index is shown. Performance numbers for both
indices do not reflect transaction costs or management fees. An investor
cannot invest directly in either Index. For the fiscal year ended December
31, 1993, this comparison would have shown a change in value of 12.47% for
the Fund without a sales charge, 11.81% for the Fund at maximum sales
charge, 13.91% for the Value Line Arithmetic Index and 14.83% for the
Russell Mid Cap Index.
</FN>
</TABLE>
<PAGE>
UNDERWRITER AND INVESTMENT MANAGER
Lord, Abbett & Co.
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
212-848-1800
CUSTODIAN
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10005
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
United Missouri Bank of Kansas City, N.A.
Tenth and Grand
Kansas City, Missouri 64141
SHAREHOLDER SERVICING AGENT
DST Systems, Inc.
P.O. Box 419100
Kansas City, Missouri 64141
800-821-5129
AUDITORS
Deloitte & Touche LLP
COUNSEL
Debevoise & Plimpton
Printed in the U.S.A.
LAVA-1-595
<PAGE>
LORD ABBETT
VALUE APPRECIATION FUND, INC.
THE GENERAL MOTORS BUILDING
767 FIFTH AVENUE
NEW YORK, NY 10153-0203
LORD
ABBETT
MAY 1 95
- ---------
APPLICATION
INSIDE
LORD
ABBETT
VALUE
APPRECIATION
FUND
A MUTUAL FUND SEEKING CAPITAL APPRECIATION.
<PAGE>
LORD ABBETT
STATEMENT OF ADDITIONAL INFORMATION MAY 1, 1995
LORD ABBETT
VALUE APPRECIATION
FUND, INC.
- -------------------------------------------------------------------------------
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from your securities dealer or from Lord, Abbett & Co. at The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. This
Statement relates to, and should be read in conjunction with, the Prospectus
dated May 1, 1995.
Lord Abbett Value Appreciation Fund, Inc. (sometimes referred to as "we" or the
"Fund") was incorporated under Maryland law on March 14, 1983. Our authorized
capital stock consists of a single class of 150,000,000 shares, $.10 par value.
All shares have equal noncumulative voting rights and equal rights with respect
to dividends, assets and liquidation. They are fully paid and nonassessable when
issued and have no preemptive or conversion rights.
Shareholder inquiries should be made by writing directly to the Fund or by
calling 800-821-5129. In addition, you can make inquiries through your dealer.
TABLE OF CONTENTS Page
1. Investment Objective and Policies 2
2. Directors and Officers 2
3. Investment Advisory and Other Services 5
4. Portfolio Transactions 6
5. Purchases, Redemptions and
Shareholder Services 7
6. Past Performance 11
7. Taxes 11
8. Information About the Fund 12
9. Financial Statements 13
<PAGE>
1.
Investment Objective and Policies
The Fund's investment objective and policies are described in the Prospectus
under "How We Invest." In addition to those policies described in the
Prospectus, we are subject to the following investment restrictions which cannot
be changed without shareholder approval. We may not: (1) sell short securities
or buy securities or evidences of interests therein on margin, although we may
obtain short-term credit necessary for the clearance of purchases of securities;
(2) buy or sell put or call options, although we may buy, hold or sell warrants;
(3) borrow money, except as a temporary measure for extraordinary or emergency
purposes, and then not in excess of 5% of our gross assets (at cost or market
value, whichever is lower) at the time of borrowing; (4) invest knowingly in
securities or other assets not readily marketable at the time of purchase or
subject to legal or contractual restrictions on resale; (5) act as underwriter
of securities issued by others, unless we are deemed to be one in selling a
portfolio security requiring registration under the Securities Act of 1933; (6)
make loans other than by making demand or time deposits with banks or buying
commercial paper; (7) pledge, mortgage or hypothecate our assets; (8) buy or
sell real estate including limited partnership interests therein (except
securities of companies, such as real estate investment trusts, that deal in
real estate or interests therein) or oil, gas or other mineral leases,
commodities or commodity contracts in the ordinary course of our business,
except such interests and other property acquired as a result of owning other
securities, though securities will not be purchased in order to acquire any of
these interests; (9) buy securities issued by any other open-end investment
company, except pursuant to a merger, acquisition or consolidation, although we
may invest up to 5% of our gross assets, taken at market value at the time of
purchase in closed-end investment companies if bought in the open market with a
fee or commission no greater than the customary broker's commission; (10) invest
more than 5% of our gross assets, taken at market value at the time of
investment, in companies (including their predecessors) with less than three
years' continuous operation; (11) buy securities if the purchase would then
cause us to have more than 5% of our gross assets, at market value at the time
of purchase, invested in securities of any one issuer, except securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities; (12)
buy voting securities if the purchase would then cause us to own more than 10%
of the outstanding voting stock of any one issuer; (13) own securities in a
company when any of its officers, directors, or security holders is an officer
or director of the Fund or an officer, director or partner of our investment
adviser if, after the purchase, any one of such persons owns beneficially more
than 1/2 of 1% of such securities and such persons together own more than 5% of
such securities; (14) concentrate our investments in any particular industry
but, if deemed appropriate for attainment of our investment objective, up to 25%
of our gross assets (at market value at the time of investment) may be invested
in any one industry classification we use for investment purposes or (15) buy
securities from or sell them to our officers, directors, or employees, or to our
investment adviser or to its partners and employees, other than capital stock of
the Fund.
Other Investment Restrictions (which can be changed without shareholder
approval)
- --------------------------------------------------------------------------------
Pursuant to Texas regulations, we will not invest more than 5% of our net assets
in warrants and not more than 2% in warrants not listed on the New York or
American Stock Exchanges, except when they form a unit with other securities. As
a matter of operating policy, we will not invest more than 5% of our net assets
in rights.
PORTFOLIO TURNOVER RATE
For the year ended December 31, 1994, our portfolio turnover rate was 57.49% and
33.42% for the prior year.
2.
Directors and Officers
The following directors are partners of Lord, Abbett & Co., The General Motors
Building, 767 Fifth Avenue, New York, New York 10153-0203. They have been
associated with Lord Abbett for over five years and are also officers and/or
directors or trustees of the fifteen other Lord Abbett-sponsored funds. They are
"interested persons" as defined in the Investment Company Act of 1940, as
amended, and as such, may be considered to have an indirect financial interest
in the Rule 12b-1 Plan described in the Prospectus.
Ronald P. Lynch, age 59, President and Chairman
2
<PAGE>
Thomas S. Henderson, age 63, Executive President
The following outside directors are also directors or trustees of the fifteen
other Lord Abbett-sponsored funds referred to above except for Lord Abbett
Research Fund, Inc., of which only Messrs. Millican and Neff are directors.
E. Thayer Bigelow
Time Warner Cable
300 First Stamford Place
Stamford, Connecticut
President and Chief Executive Officer of Time Warner Cable Programming, Inc.
Formerly President and Chief Operating Officer of Home Box Office, Inc. Age 53.
Stewart S. Dixon
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon. Age 64.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 69.
C. Alan MacDonald
The Marketing Partnership, Inc.
27 Signal Road
Stamford, Connecticut
General Partner, The Marketing Partnership, Inc., a full service marketing
consulting firm that specializes in strategic planning and customer-specific
marketing. Formerly Acquisition Consultant, The Noel Group, a private consulting
firm (1994). Formerly Chairman and Chief Executive Officer of Lincoln Foods,
Inc., manufacturer of branded snack foods (1992- 1994). Formerly President and
Chief Executive Officer of Nestle Foods Corporation, a subsidiary of Nestle S.A.
(Switzerland). Age 61.
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 65.
Thomas J. Neff
Spencer Stuart & Associates
277 Park Avenue
New York, New York
President of Spencer Stuart & Associates, an executive search consulting firm.
Age 57.
The second column of the following table sets forth the compensation accrued for
the Fund's outside directors. The third and fourth columns set forth information
with respect to the retirement plan for outside directors maintained by the Lord
3
<PAGE>
Abbett-sponsored funds. The fifth column sets forth the total compensation
payable by such funds to the outside directors. The columns give information for
the Fund's fiscal year ended December 31, 1994. No director of the Fund
associated with Lord Abbett and no officer of the Fund received any compensation
from the Fund for acting as a director or officer.
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
(1) (2) (3) (4) (5)
Pension or Estimated Annual
Retirement Benefits Benefits Upon
Accrued as Expenses Retirement Proposed Total Compensation
by the Fund to be Paid by the Fund Accrued by the Fund and
Aggregate and Fifteen Other and Fifteen Other Fifteen Other Lord
Compensation Lord Abbett-sponsored Lord Abbett-sponsored Abbett-sponsored
Name of Director from the Fund (1) Funds (2) Funds(2) Funds (3)
---------------- ----------------- --------------------- ---------------------- ------------------------
<S> <C> <C> <C> <C>
E. Thayer Bigelow 4 $133 None $33,600 $8,400
Thomas F. Creamer 5 $462 $27,578 $33,600 $29,650
Stewart S. Dixon $683 $22,595 $33,600 $43,600
John C. Jansing $666 $28,636 $33,600 $42,500
C. Alan MacDonald $650 $27,508 $33,600 $41,500
Hansel B. Millican, Jr. $654 $24,842 $33,600 $41,750
Thomas J. Neff $645 $16,214 $33,600 $41,200
<FN>
1. Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on net
assets of each fund. Fees payable by the Fund to its outside directors are
being deferred under a plan that deems the deferred amounts to be invested
in shares of the Fund for later distribution to the directors. The amounts
accrued by the Fund for the year ended December 31, 1994, are as set forth
after each outside Director's name above. The total amount accrued for each
outside Director since the beginning of his tenure with the Fund, together
with dividends reinvested and changes in net asset value applicable to such
deemed investments, were as follows as of December 31, 1994: Mr. Bigelow,
$133; Mr. Creamer, $20,473; Mr. Dixon, $28,597; Mr. Jansing, $28,485; Mr.
MacDonald, $10,234; Mr. Millican, $29,262; and Mr. Neff, $29,444.
2. Each Lord Abbett-sponsored fund has a retirement plan providing that
outside directors will receive annual retirement benefits for life equal to
80% of their final annual retainers following retirement at or after age 72
with at least 10 years of service. Each plan also provides for a reduced
benefit upon early retirement under certain circumstances, a pre-retirement
death benefit and actuarially reduced joint-and-survivor spousal benefits.
The amounts stated, except in the case of Mr. Creamer, would be payable
annually under such retirement plans if the director were to retire at age
72 and the annual retainers payable by such funds were the same as they are
today. The amounts accrued in column 3 were accrued by the Lord
Abbett-sponsored funds during the fiscal year ended December 31, 1994 with
respect to the retirement benefits in column 4.
3. This column shows aggregate compensation, including director's fees and
attendance fees for board and committee meetings, of a nature referred to
in footnote one, accrued by the Lord Abbett-sponsored funds during the year
ended December 31, 1994.
4. Mr. Bigelow was elected a director of the Fund on October 19, 1994.
5. Mr. Creamer retired as a director of the Fund effective September 21, 1994.
The stated amount of his retirement income (column 4) is the annual amount
payable to him by the Lord Abbett-sponsored funds before reduction for a
joint-and-survivor spousal benefit.
</FN>
</TABLE>
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Allen, Carper, Cutler, Dow, Henderson, Nordberg and Walsh are partners of Lord
Abbett; the others are employees: John J. Walsh, age 58, Executive Vice
President, Kenneth B. Cutler, age 62, Vice President and Secretary; Stephen I.
Allen, age 41, Daniel E. Carper, age 43, Robert S. Dow, age 50, Thomas S.
Henderson, age 63, E. Wayne Nordberg, age 57, , Jeffery H. Boyd, age 38 (with
Lord Abbett since 1994 - formerly partner in the law firm of Robinson & Cole),
John J. Gargana, Jr., age 63, Thomas F. Konop, age 53, Victor W. Pizzolato, age
62, Vice Presidents; and Keith F. O'Connor, age 39, Treasurer.
4
<PAGE>
The Fund's By-Laws provide that the Fund shall not hold an annual meeting of its
stockholders in any year unless one or more matters are required to be acted on
by stockholders under the Investment Company Act of 1940, as amended (the
"Act"), or unless called by a majority of the Board of Directors or by
stockholders holding at least one quarter of the stock of the Fund outstanding
and entitled to vote at the meeting. When any such annual meeting is held, the
stockholders will elect directors and vote on the approval of the independent
auditors of the Fund.
As of April 1, 1995, our officers and directors, as a group, owned less than 1%
of our outstanding shares.
3.
Investment Advisory and Other Services
As described under "Our Management" in the Prospectus, Lord Abbett is the Fund's
investment manager. The eight general partners of Lord Abbett, all of whom are
officers and/or directors of the Fund, are: Stephen I. Allen, Daniel E. Carper,
Kenneth B. Cutler, Robert S. Dow, Thomas S. Henderson, Ronald P. Lynch, E. Wayne
Nordberg and John J. Walsh. The address of each partner is The General Motors
Building, 767 Fifth Avenue, New York, New York 10153-0203.
The services performed by Lord Abbett are described in the Prospectus under "Our
Management". Under the Management Agreement, we pay Lord Abbett a monthly fee,
based on average daily net assets for each month, at the annual rate of .75 of
1% of the portion of our net assets not in excess of $200,000,000; .65 of 1% of
the portion in excess of $200,000,000 but not in excess of $500,000,000; and .50
of 1% of the portion in excess of $500,000,000. For the fiscal years ended
December 31, 1994, 1993 and 1992, the management fees paid to Lord Abbett
amounted to $1,385,336, $1,433,925 and $1,179,637, respectively.
We pay all expenses not expressly assumed by Lord Abbett, including, without
limitation, 12b-1 expenses, outside directors' fees and expenses, association
membership dues, legal and auditing fees, taxes, transfer and dividend
disbursing agent fees, shareholder servicing costs, expenses relating to
shareholder meetings, expenses of preparing, printing and mailing stock
certificates and shareholder reports, expenses of registering our shares under
federal and state securities laws, expenses of preparing, printing and mailing
prospectuses to existing shareholders, insurance premiums, brokerage and other
expenses connected with executing portfolio security transactions.
We have agreed with the State of California to limit operating expenses
(including management fees but excluding taxes, interest, extraordinary expenses
and brokerage commissions) to 2 1/2% of average annual net assets up to
$30,000,000, 2% of the next $70,000,000 of such assets and 1 1/2% of such assets
in excess of $100,000,000. The expense limitation is a condition on the
registration of investment company shares for sale in the State and applies so
long as our shares are registered for sale in that State.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281, are
the independent auditors of the Fund and must be approved at least annually by
our Board of Directors to continue in such capacity. They perform audit services
for the Fund including the examination of financial statements included in our
annual report to shareholders.
Morgan Guaranty Trust Company of New York ("Morgan"), 60 Wall Street, New York,
New York 10005, is the Fund's custodian. In accordance with the requirements of
Rule 17f-5 under the Act, the Fund's directors have approved arrangements
permitting the Fund's foreign assets not held by Morgan or its foreign branches
to be held by certain qualified foreign banks and depositories.
4.
Portfolio Transactions
Our policy is to have purchases and sales of portfolio securities executed at
the most favorable prices, considering all costs of the transaction including
brokerage commissions and dealer markups and markdowns, consistent with
obtaining best execution, except to the extent that we may pay a higher
commission as described below. This policy governs the selection
5
<PAGE>
of brokers or dealers and the market in which the transaction is executed. To
the extent permitted by law, we may, if considered advantageous, make a purchase
from or sale to another Lord Abbett-sponsored fund without the intervention of
any broker-dealer.
We select broker-dealers on the basis of their professional capability and the
value and quality of their brokerage and research services. Normally, the
selection is made by our traders who are officers of the Fund and also are
employees of Lord Abbett. Our traders do the trading as well for other accounts
- -- investment companies (of which they are also officers) and other investment
clients -- managed by Lord Abbett. They are responsible for the negotiation of
prices and commissions.
A broker may receive a commission for portfolio transactions exceeding the
amount another broker would have charged for the same transaction if our traders
determine that such amount is reasonable in relation to the value of the
brokerage and research services performed by the executing broker viewed in
terms of either the particular transaction or the broker's overall
responsibilities with respect to us and other accounts managed by Lord Abbett.
Brokerage services may include such factors as showing us trading opportunities
including blocks, willingness and ability to take positions in securities,
knowledge of a particular security or market, proven ability to handle a
particular type of trade, confidential treatment, promptness, reliability and
quotation and pricing services. Research may include the furnishing of analyses
and reports concerning issuers, industries, securities, economic factors and
trends, portfolio strategy and the performance of accounts. Such research may be
used by Lord Abbett in servicing all their accounts, and not all of such
research will necessarily be used by Lord Abbett in connection with their
services to us; conversely, research furnished in connection with brokerage on
other accounts managed by Lord Abbett may be used in connection with their
services to us, and not all of such research will necessarily be used by Lord
Abbett in connection with their services to such other accounts. We have been
advised by Lord Abbett that, although such research is often useful, no dollar
value can be ascribed to it nor can it be accurately ascribed or allocated to
any account and it is not a substitute for services provided by them to us; nor
does it materially reduce or otherwise affect the expenses incurred by Lord
Abbett in the performance of such services. We make no commitments regarding the
allocation of brokerage business to or among dealers.
If two or more broker-dealers are considered capable of offering the equivalent
likelihood of best execution, the broker-dealer who has sold our shares and/or
shares of other Lord Abbett-sponsored funds may be preferred.
If other clients of Lord Abbett buy or sell the same security at the same time
as we do, transactions will, to the extent practicable, be allocated among all
participating accounts in proportion to the amount of each order and will be
executed daily until filled so that each account shares the average price and
commission cost of each day.
We will not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from
broker-dealers as consideration for the direction to them of portfolio business.
If we tender portfolio securities pursuant to a cash tender offer, we will seek
to recapture any fees or commissions involved by designating Lord Abbett our
agent so that the fees may be passed back to us. As other legally permissible
opportunities come to our attention for the direct or indirect recapture by us
of brokerage commissions or similar fees paid on portfolio transactions, our
directors will determine whether we should or should not seek such recapture.
During the fiscal years ended December 31, 1994, 1993 and 1992, we paid total
commissions to independent dealers of $617,797, $290,264 and $622,114,
respectively.
5.
Purchases, Redemptions
and Shareholder Services
The Fund values its portfolio securities at market value as of the close of the
New York Stock Exchange. Market value will be determined as follows: securities
listed or admitted to trading privileges on the New York or American Stock
Exchange or on the NASDAQ National Market System are valued at the last sales
price, or, if there is no sale on that day, at the mean between the last bid and
asked prices, or, in the case of bonds, in the over-the-counter market if, in
the judgment of the Fund's officers, that market more accurately reflects the
market value of the bonds. Over-the-counter securities not traded on the
6
<PAGE>
NASDAQ National Market System are valued at the mean between the last bid and
asked prices. Securities for which market quotations are not available are
valued at fair market value under procedures approved by the Board of Directors.
Information concerning how we value our shares for the purchase and redemption
of our shares is described in the Prospectus under "Purchases" and
"Redemptions", respectively.
As disclosed in the Prospectus, we calculate our net asset value and are
otherwise open for business on each day that the NYSE is open for trading. The
NYSE is closed on Saturdays and Sundays and the following holidays -- New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas. The maximum offering price of our shares on December
31, 1994 was computed as follows:
Net asset value per share (net assets divided by shares
outstanding)........................................................$11.25
Maximum offering price per share (net asset value
divided by .9425)...................................................$11.94
The Fund has entered into a distribution agreement with Lord Abbett under which
Lord Abbett is obligated to use its best efforts to find purchasers for the
shares of the Fund and to make reasonable efforts to sell Fund shares, so long
as, in Lord Abbett's judgment, a substantial distribution can be obtained by
reasonable efforts.
For the last three fiscal years, Lord Abbett, as our principal underwriter,
received net commissions after allowance of a portion of the sales charge to
independent dealers as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Gross sales charge $304,416 $320,040 $171,569
Amount allowed
to dealers 262,840 276,729 148,793
-------- -------- -------
Net commissions
received by
Lord Abbett $ 41,576 $ 43,311 $ 22,776
======== ======== ========
</TABLE>
As described in the Prospectus, the Fund has adopted a Distribution Plan and
Agreement (the "Plan") pursuant to Rule 12b-1 of the Investment Company Act of
1940, as amended. In adopting the Plan and in approving its continuance, the
Board of Directors has concluded that there is a reasonable likelihood that the
Plan will benefit the Fund and its shareholders. The expected benefits include
greater sales and lower redemptions of Fund shares, which should allow the Fund
to maintain a consistent cash flow, and a higher quality of service to
shareholders by dealers than would otherwise be the case. During the last fiscal
year, the Fund accrued or paid through Lord Abbett to dealers $377,509 under the
Plan. Lord Abbett uses all amounts received under the Plan for payments to
dealers for (i) providing continuous services to the Fund's shareholders, such
as answering shareholder inquiries, maintaining records, and assisting
shareholders in making redemptions, transfers, additional purchases and
exchanges and (ii) their assistance in distributing shares of the Fund.
The Plan requires the Board of Directors to review, on a quarterly basis,
written reports of all amounts expended pursuant to the Plan and the purpose for
which such expenditures were made. The Plan shall continue in effect only if its
continuance is specifically approved at least annually by vote of the Fund's
Board of Directors and of the Fund's directors who are not interested persons of
the Fund and who have no direct or indirect financial interest in the operation
of the Plan or in any agreements related to the Plan ("outside directors"), cast
in person at a meeting called for the purpose of voting on such Plan and
agreements. The Plan may not be amended to increase materially the amount spent
for distribution expenses without approval by a majority of the Fund's
outstanding voting securities and the approval of a majority of the directors,
including a majority of the Fund's outside directors. The Plan may be terminated
at any time by vote of a majority of the Fund's outside
7
<PAGE>
directors or by vote of a majority of the Fund's outstanding voting securities.
As stated in the Prospectus, a 1% contingent deferred reimbursement charge
("CDRC") is imposed with respect to those shares (or shares of another Lord
Abbett-sponsored fund or series acquired through exchange of such shares) on
which the Fund has paid the one-time 1% 12b-1 sales distribution fee if such
shares are redeemed out of the Lord Abbett-sponsored family of funds within a
period of 24 months from the end of the month in which the original sale
occurred.
No CDRC is payable on redemptions by tax qualified plans under section 401 of
the Internal Revenue Code for benefit payments due to plan loans, hardship
withdrawals, death, retirement or separation from service with respect to plan
participants. The CDRC is received by the Fund and is intended to reimburse all
or a portion of the amount paid by the Fund if the shares are redeemed before
the Fund has had an opportunity to realize the anticipated benefits of having a
large, long-term shareholder account in the Fund. Shares of a fund or series on
which such 1% sales distribution fee has been paid may not be exchanged into a
fund or series with a Rule 12b-1 plan for which the payment provisions have not
been in effect for at least one year.
The other Lord Abbett-sponsored funds and series which participate in the
Telephone Exchange Privilege (except Lord Abbett U.S. Government Securities
Money Market Fund, Inc. ("GSMMF") and certain series of Lord Abbett Tax-Free
Income Fund, Inc. and Lord Abbett Tax-Free Income Trust for which a Rule 12b-1
Plan is not yet in effect (collectively, the "Series")) have instituted a CDRC
on the same terms and conditions. No CDRC will be charged on an exchange of
shares between Lord Abbett funds. Upon redemption of shares out of the Lord
Abbett family of funds, the CDRC will be charged on behalf of and paid to the
fund in which the original purchase (subject to a CDRC) occurred. Thus, if
shares of a Lord Abbett fund are exchanged for shares of another such fund and
the shares tendered ("Exchanged Shares") are subject to a CDRC, the CDRC will
carry over to the shares being acquired, including GSMMF ("Acquired Shares").
Any CDRC that is carried over to Acquired Shares is calculated as if the holder
of the Acquired Shares had held those shares from the date on which he or she
became the holder of the Exchanged Shares. Although GSMMF and the Series will
not pay a 1% sales distribution fee on $1 million purchases of their own shares,
and will therefore not impose their own CDRC, GSMMF will collect the CDRC on
behalf of other Lord Abbett funds. Acquired shares held in GSMMF which are
subject to a CDRC will be credited with the time such shares are held in that
fund.
In no event will the amount of the CDRC exceed 1% of the lesser of (i) the net
asset value of the shares redeemed or (ii) the original cost of such shares (or
of the Exchanged Shares for which such shares were acquired). No CDRC will be
imposed when the investor redeems (i) amounts derived from increases in the
value of the account above the total cost of shares being redeemed due to
increases in net asset value, (ii) shares with respect to which no Lord Abbett
fund paid a 1% sales distribution fee on issuance (including shares acquired
through reinvestment of dividend income and capital gains distributions) or
(iii) shares which, together with Exchanged Shares, have been held continuously
for 24 months from the end of the month in which the original sale occurred. In
determining whether a CDRC is payable, (a) shares not subject to the CDRC will
be redeemed before shares subject to the CDRC and (b) of shares subject to a
CDRC, those held the longest will be the first to be redeemed.
Under the terms of the Statement of Intention to invest $50,000 or more over a
13-month period as described in the Prospectus, shares of Lord Abbett-sponsored
funds (other than shares of Lord Abbett Equity Fund ("LAEF"), Lord Abbett Series
Fund ("LASF"), Lord Abbett Research Fund if not offered to the general public
("LARF"), and GSMMF, unless holdings in GSMMF are attributable to shares
exchanged from a Lord Abbett-sponsored fund offered with a sales charge or from
a fund in the Lord Abbett Counsel Group) currently owned by you are credited as
purchases (at their current offering prices on the date the Statement is signed)
toward achieving the stated investment. Shares valued at 5% of the amount of
intended purchases are escrowed and may be redeemed to cover the additional
sales charge payable if the Statement is not completed. The Statement of
Intention is neither a binding obligation on you to buy, nor on the Fund to
sell, the full amount indicated.
As stated in the Prospectus, purchasers (as defined in the Prospectus) may
accumulate their investment in Lord Abbett- sponsored funds (other than LAEF,
LARF, LASF, and GSMMF, unless holdings in GSMMF are attributable to shares
exchanged from a Lord Abbett-sponsored fund offered with a front-end sales
charge or from Lord Abbett Counsel Group) so that a current investment, plus the
purchaser's holdings valued at the current maximum offering price, reach a level
8
<PAGE>
eligible for a discounted sales charge.
As stated in the Prospectus, our shares may be purchased at net asset value by
our directors, employees of Lord Abbett, employees of our shareholder servicing
agent and employees of any securities dealer having a sales agreement with Lord
Abbett who consents to such purchases or by the trustee or custodian under any
pension or profit-sharing plan or Payroll Deduction IRA established for the
benefit of such persons or for the benefit of employees of any national
securities trade organization to which Lord Abbett belongs or any company with
an account(s) in excess of $10 million managed by Lord Abbett on a
private-advisory-account basis. For purposes of this paragraph, the terms
"directors" and "employees" include a director's or employee's spouse (including
the surviving spouse of a deceased director or employee). The terms "our
directors" and "employees of Lord Abbett" also include other family members and
retired directors and employees.
Our shares also may be purchased at net asset value (a) at $1 million or more,
(b) with dividends and distributions from other Lord Abbett-sponsored funds,
except for LARF, LAEF, LASF and Lord Abbett Counsel Group, (c) under the loan
feature of the Lord Abbett-sponsored prototype 403(b) plan for share purchases
representing the repayment of principal and interest, (d) by certain authorized
brokers, dealers, registered investment advisers or other financial institutions
who have entered into an agreement with Lord Abbett in accordance with certain
standards approved by Lord Abbett, providing specifically for the use of our
shares in particular investment products made available for a fee to clients of
such brokers, dealers, registered investment advisers and other financial
institutions, and (e) by employees, partners and owners of unaffiliated
consultants and advisors to Lord Abbett or Lord Abbett-sponsored funds who
consent to such purchase if such persons provide service to Lord Abbett or such
funds on a continuing basis and are familiar with such funds. Shares are offered
at net asset value to these investors for the purpose of promoting goodwill with
employees and others with whom Lord Abbett and/or the Fund have business
relationships.
Our shares also may be purchased at net asset value, subject to appropriate
documentation, through a securities dealer where the amount invested represents
redemption proceeds from shares ("Redeemed Shares") of a registered open-end
management investment company not distributed or managed by Lord Abbett (other
than a money market fund), if such redemption has occurred no more than 60 days
prior to the purchase of our shares, the Redeemed Shares were held for at least
six months prior to redemption and the proceeds of redemption were maintained in
cash or a money market fund prior to purchase. Purchasers should consider the
impact, if any, of contingent deferred sales charges in determining whether to
redeem shares for subsequent investment in our shares. Lord Abbett may suspend,
change or terminate this purchase option at any time.
Our shares may be issued at net asset value in exchange for the assets, subject
to possible tax adjustment, of a personal holding company or an investment
company. There are economies of selling efforts and sales-related expenses with
respect to offers to these investors and those referred to above.
The Prospectus briefly describes the Telephone Exchange Privilege. You may
exchange some or all of your shares for those of Lord Abbett-sponsored funds
currently offered to the public with a sales charge and GSMMF, to the extent
offers and sales may be made in your state. You should read the prospectus of
the other fund before exchanging. In establishing a new account by exchange,
shares of the Fund being exchanged must have a value equal to at least the
minimum initial investment required for the fund into which the exchange is
made.
Shareholders in such other funds have the same right to exchange their shares
for the Fund's shares. Exchanges are based on relative net asset values on the
day instructions are received by the Fund in Kansas City if the instructions are
received prior to the close of the NYSE in proper form. No sales charges are
imposed except in the case of exchanges out of GSMMF (unless a sales charge was
paid on the initial investment). Exercise of the exchange privilege will be
treated as a sale for federal income tax purposes, and, depending on the
circumstances, a gain or loss may be recognized. In the case of an exchange of
shares that have been held for 90 days or less where no sales charge is payable
on the exchange, the original sales charge incurred with respect to the
exchanged shares will be taken into account in determining gain or loss on the
exchange only to the extent such charge exceeds the sales charge that would have
been payable on the acquired shares had they been acquired for cash rather than
by exchange. The portion of the original sales charge not so taken into account
will increase the basis of the acquired shares.
Shareholders have the exchange privilege unless they refuse it in writing. You
should not view the exchange privilege as
9
<PAGE>
a means for taking advantage of short-term swings in the market, and we reserve
the right to terminate or limit the privilege of any shareholder who makes
frequent exchanges. We can revoke or modify the privilege for all shareholders
upon 60 days' prior notice. "Eligible Funds" are other Lord Abbett-sponsored
funds which are eligible for the exchange privilege, except LASF which offers
its shares only in connection with certain variable annuity contracts, LAEF
which is not issuing shares, LARF and Lord Abbett Counsel Group.
A redemption order is in proper form when it contains all of the information and
documentation required by the order form or supplementally by Lord Abbett or the
Fund to carry out the order. The signature(s) and any legal capacity of the
signer(s) must be guaranteed by an eligible guarantor. See the Prospectus for
expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Directors may authorize redemption of all of the shares in any
account in which there are fewer than 25 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least 30 days' prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
Under the Div-Move service described in the Prospectus, you can invest the
dividends paid on your account into an existing account in any other Eligible
Fund. The account must be either your account, a joint account for you and your
spouse, a single account for your spouse, or a custodial account for your minor
child under the age of 21. You should read the prospectus of the other fund
before investing.
The Invest-A-Matic method of investing in the Fund and/or any other Eligible
Fund is described in the Prospectus. To avail yourself of this method you must
complete the application form, selecting the time and amount of your bank
checking account withdrawals and the funds for investment, include a voided,
unsigned check and complete the bank authorization.
The Systematic Withdrawal Plan (the "SWP") also is described in the Prospectus.
You may establish a SWP if you own or purchase uncertificated shares having a
current offering price value of at least $10,000. Lord Abbett prototype
retirement plans have no such minimum. The SWP involves the planned redemption
of shares on a periodic basis by receiving either fixed or variable amounts at
periodic intervals. Since the value of shares redeemed may be more or less than
their cost, gain or loss may be recognized for income tax purposes on each
periodic payment. Normally, you may not make regular investments at the same
time you are receiving systematic withdrawal payments because it is not in your
interest to pay a sales charge on new investments when in effect a portion of
that new investment is soon withdrawn. The minimum investment accepted while a
withdrawal plan is in effect is $1,000. The SWP may be terminated by you or by
us at any time by written notice.
The Prospectus indicates the types of retirement plans for which Lord Abbett
provides forms and explanations. Lord Abbett makes available the retirement plan
forms and custodial agreements for IRAs (Individual Retirement Accounts
including Simplified Employee Pensions), 403(b) plans and qualified pension and
profit-sharing plans, including 401(k) plans. The forms name Investors Fiduciary
Trust Company as custodian and contain specific information about the plans.
Explanations of the eligibility requirements, annual custodial fees and
allowable tax advantages and penalties are set forth in the relevant plan
documents. Adoption of any of these plans should be on the advice of your legal
counsel or qualified tax adviser.
6.
Past Performance
The Fund computes the average annual compounded rate of total return during
specified periods that would equate the initial amount invested to the ending
redeemable value of such investment by adding one to the computed average annual
total return, raising the sum to a power equal to the number of years covered by
the computation and multiplying the result by one thousand dollars, which
represents a hypothetical initial investment. The calculation assumes deduction
of the maximum
10
<PAGE>
sales charge from the initial amount invested and reinvestment of all income
dividends and capital gains distributions on the reinvestment dates at prices
calculated as stated in the Prospectus. The ending redeemable value is
determined by assuming a complete redemption at the end of the period(s) covered
by the average annual total return computation.
Using this method to compute average annual compounded rates of total return for
the Fund's last one, five and ten fiscal year periods ending on December 31,
1994 are as follows: -8.80%, 7.43% and 11.56%, respectively.
Our yield quotation is based on a 30-day period ended on a specified date,
computed by dividing our net investment income per share earned during the
period by our maximum offering price per share on the last day of the period.
This is determined by finding the following quotient: take the Fund's dividends
and interest earned during the period minus its expenses accrued for the period
and divide by the product of (i) the average daily number of Fund shares
outstanding during the period that were entitled to receive dividends and (ii)
the Fund's maximum offering price per share on the last day of the period. To
this quotient add one. This sum is multiplied by itself five times. Then one is
subtracted from the product of this multiplication and the remainder is
multiplied by two. For the 30-day period ended December 31, 1994, the yield for
the Fund was 1.65%.
These figures represent past performance, and an investor should be aware that
the investment return and principal value of a Fund investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Therefore, there is no assurance that this performance will be
repeated in the future.
7.
Taxes
The value of any shares redeemed by the Fund or otherwise sold may be more or
less than your tax basis in the shares at the time the redemption or sale is
made. Any gain or loss generally will be taxable for federal income tax
purposes. Any loss realized on the sale or redemption of Fund shares which you
have held for six months or less will be treated for tax purposes as a long-term
capital loss to the extent of any capital gains distributions which you received
with respect to such shares. Losses on the sale of stock or securities are not
deductible if, within a period beginning 30 days before the date of the sale and
ending 30 days after the date of the sale, the taxpayer acquires stock or
securities that are substantially identical.
The Fund will be subject to a 4% nondeductible excise tax on certain amounts not
distributed (and not treated as having been distributed) on a timely basis in
accordance with a calendar-year distribution requirement. The Fund intends to
distribute to shareholders each year an amount adequate to avoid the imposition
of such excise tax.
As described in the Prospectus under "Risk Factors", the Fund may be subject to
foreign withholding taxes which would reduce the yield on its investments. Tax
treaties between certain countries and the United States may reduce or eliminate
such taxes. It is expected that Fund shareholders who are subject to United
States federal income tax will not be entitled to claim a federal income tax
credit or deduction for foreign income taxes paid by the Fund.
Gains and losses realized by the Fund on certain transactions, including sales
of foreign debt securities and certain transactions involving foreign currency,
will be treated as ordinary income or loss for federal income tax purposes to
the extent, if any, that such gains or losses are attributable to changes in
exchange rates for foreign currencies. Accordingly, distributions taxable as
ordinary income will include the net amount, if any, of such foreign exchange
gains and will be reduced by the net amount, if any, of such foreign exchange
losses.
If the Fund purchases shares in certain foreign investment entities, called
"passive foreign investment companies," it may be subject to United States
federal income tax on a portion of any "excess distribution" or gain from the
disposition of such shares, even if such income is distributed as a taxable
dividend by the Fund to its shareholders. Additional charges in the nature of
interest may be imposed on either the Fund or its shareholders with respect to
deferred taxes arising from such distributions or gains. If the Fund were to
invest in a passive foreign investment company with respect to which the Fund
elected to make a "qualified electing fund" election in lieu of the foregoing
requirements, the Fund might be required to include in income each year a
portion of the ordinary earnings and net capital gains of the qualified electing
fund, even if such amount were not distributed to the Fund.
11
<PAGE>
Dividends paid by the Fund will qualify for the dividends-received deduction for
corporations to the extent they are derived from dividends paid by domestic
corporations.
8.
Information About the Fund
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment accounts. In engaging
in personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Fund's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security 7 days
before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account
considers a trade or trades in such security, from profiting on trades of the
same security within 60 days and from trading on material and non-public
information. The Code imposes certain similar requirements and restrictions on
the independent directors and trustees of each Lord Abbett- sponsored mutual
fund to the extent contemplated by the recommendations of the Advisory Group.
9.
Financial Statements
The financial statements for the fiscal year ended December 31, 1994 and the
report of Deloitte & Touche LLP, independent auditors, on such financial
statements contained in the 1994 Annual Report to Shareholders of Lord Abbett
Value Appreciation Fund, Inc. are incorporated herein by reference to such
financial statements and report in reliance upon the authority of Deloitte &
Touche LLP as experts in auditing and accounting.
12
<PAGE>
- --------------------------------------------------------------------------------
VALUE APPRECIATION
FUND
SOME COMPANIES ARE TOO BIG,
SOME COMPANIES ARE TOO SMALL...
LORD ABBETT VALUE APPRECIATION FUND:
FOCUSING ON MIDSIZED COMPANIES
Spring 1995
[P1 - Photo of father and son holdering a water hose]
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
THE IMPACT OF INFLATION
A DOLLAR IS ONLY Since 1984, the purchasing power of the dollar has
AS GOOD AS WHAT decreased by 30%. Put another way, today you need $1.42 to
IT WILL BUY. purchase what a dollar bought in 1984. Had you invested
that dollar in Lord Abbett Value Appreciation Fund, it
would be worth $3.17 today, keeping you well ahead of
inflation.
LORD ABBETT VALUE
APPRECIATION FUND
DECEMBER 31, 1984 DECEMBER 31, 1994 DECEMBER 31, 1994*
[P2 - Photo of dollar bill(s) and coins representing the value of
each of the amounts represented below.]
$1.00 $1.42 $3.17
*Fund performance is at net asset value.
- --------------------------------------------------------------------------------
WHY IS OWNERSHIP IMPORTANT?
HISTORY HAS SHOWN "Ownership of well-managed companies is the only way you
THAT, FOR INVESTORS, can capture the creative potential of the entrepreneur."
THE BEST LONG-TERM
GROWTH PROSPECTS John J. Walsh, Partner -- Equity Investments and Portfolio
LIE IN THE Manager of Lord Abbett Value Appreciation Fund
OWNERSHIP OF WELL-
MANAGED COMPANIES. Equities represent ownership in companies and offer the
opportunity to share in the rewards of a company's profits
and growth.
Owning shares of a mutual fund that invests in a
diversified portfolio of securities issued by well-managed
companies offers investors participation in the
performance of a wide variety of management teams in many
industries. By diversifying its portfolio among many
midsized companies in many different industries, Lord
Abbett Value Appreciation Fund reduces the risks
associated with investing in just one, or a small number
of companies.
1
<PAGE>
FOUR REASONS WHY OPPORTUNITY EXISTS TODAY
- --------------------------------------------------------------------------------
1. THE MID-CAP SECTOR IS UNDER RESEARCHED
There are fewer analysts covering midsized companies than
there are covering large companies. Lord, Abbett & Co.
has a well-staffed research department that uses a
disciplined valuation system to discover targets of
opportunity among midsized companies.
AVERAGE NUMBER OF INDUSTRY ANALYSTS FOLLOWING A
COMPANY WITHIN THIS CATEGORY
[G1 - BAR CHART APPEARS HERE. The chart shows that the average number of
analysts following the 100 Largest Companies at approximately 18 and the
average number of analysts following the Mid-Cap Universe at approximately
8.7]
*Mid-cap companies are defined as stocks with market
capitalizations between $500 million and $3 billion.
Source: Lord, Abbett & Co. and Zacks Investment Research,
Inc.
- --------------------------------------------------------------------------------
2. MORE "BANG" FOR THE BUCK
A consensus opinion of Wall Street analysts estimates that
the expected long-term earnings growth rate for mid-cap
companies exceeds that of large companies. And,
interestingly, current valuation measures (price/earnings
and price-to-book) for the two sectors are approximately
the same. In other words, should Wall Street's estimates
prove correct, our investment analysts believe mid-cap
stocks offer more value than the large-cap sector.
Source: Lord, Abbett & Co. and Zacks Investment Research,
Inc. Of course, there can be no assurance that estimates
will prove correct.
- --------------------------------------------------------------------------------
3. TARGETED INVESTING SIGNALS OPPORTUNITY
IT TAKES ONE TO KNOW Mid-cap companies often concentrate on one product or
ONE. AT LORD ABBETT, service. This focus helps prevent management talent from
THE INVESTMENT becoming diluted. Most large-cap companies have many
BUSINESS IS OUR ONLY divisions and products. By extending their efforts across
BUSINESS. different, unrelated businesses, many larger companies
limit the positive effects of any one component. And,
because these companies are larger, it is relatively
difficult for them to meaningfully grow.
- --------------------------------------------------------------------------------
4. DECREASED TAX BURDEN
Tax rates for capital gains are lower than rates on
ordinary income. Lord Abbett Value Appreciation Fund
derives a greater portion of its total return (price
appreciation plus dividends) from capital appreciation
than from income. The result: a smaller tax burden.
2
<PAGE>
- --------------------------------------------------------------------------------
THE VALUE MANAGEMENT STYLE
Value investing is a concept that means different things
to different people. At Lord, Abbett & Co., the
concept of value investing is really quite simple. By
focusing on companies that are currently unpopular, for
example, we think we can often find bargains. Most
consumers understand this concept.
- --------------------------------------------------------------------------------
CONSUMER "VALUE" QUIZ
Q: When are you most likely to get the best value for your
money when purchasing these items?
<TABLE>
<S> <C> <C> <C>
-----------------------------------------------------------------------------------
Snow Blower [ ] A The morning after a snow storm
[X] B In July
-----------------------------------------------------------------------------------
Summer Fashions [ ] A When the new lines are introduced
[X] B In August
-----------------------------------------------------------------------------------
Convertible Sports Car [ ] A As the weather warms in spring
[X] B In November
-----------------------------------------------------------------------------------
Holiday Gift Wrap [ ] A In December, when malls are crowded
[X] B In January
</TABLE>
The checked responses highlight an important precept of
value investing: when others are not interested in buying
an item, you are more likely to find it on sale.
Like bargain shopping, value investing also requires
moving away from the crowd. Companies that are ignored (or
even shunned) by Wall Street may offer good investment
potential. However, investing is more difficult than
shopping. Just because a company looks like a bargain does
not mean it is a good investment.
Companies are selected for our portfolios if we believe
there are dynamics at work (that have not yet been
identified by the "crowd") that may positively impact the
company. These might include changes in top management,
technological breakthroughs, implementation of a new
business plan; or perhaps changes in external factors,
such as the economic environment or regulatory background.
- --------------------------------------------------------------------------------
RECENT PERFORMANCE
Performance from January 1992 (the beginning of the first
full year that Standard & Poor's tracked mid-cap
stocks) illustrates that mid-cap companies have provided
better returns than large companies and that Lord Abbett
Value Appreciation Fund, a managed portfolio of
undervalued mid-cap companies, performed even better.
CUMULATIVE TOTAL RETURNS:
JANUARY 1, 1992 - DECEMBER 31, 1994
THE FUND VERSUS THE BENCHMARKS
[BAR CHART APPEARS HERE. The information below describes the contents of the Bar
Chart]
Total Return
------------
Lord Abbett Value Appreciation Fund 25.1%
Large Companies 20.0%
Midsized Companies 23.0%
Large company performance is measured by the unmanaged S&P
500 Index.
Midsized company performance is measured by the unmanaged
S&P 400 Mid-Cap Index.
Fund performance is at net asset value. Total return
assumes the reinvestment of all dividends and capital
gains.
The market value of stocks of mid-cap companies may
fluctuate more than the market value of stocks of large
companies.
3
<PAGE>
- --------------------------------------------------------------------------------
THE ADVANTAGE OF OWNERSHIP
PROBLEM: A $100,000 investment in Lord Abbett Value Appreciation
A DOLLAR DOESN'T Fund ten years ago returned, on average, 11.8% per year.
BUY WHAT IT USED TO. Meanwhile, inflation increased the cost of goods and
services by 3.6% per year since 1984. Six-month CDs had an
SOLUTION: average annual return of 6.5% over this period, but did
USE TODAY'S DOLLARS not match the returns earned by the shareholders of Lord
TO BUY WELL-MANAGED Abbett Value Appreciation Fund.
COMPANIES, FOR
TOMORROW. There is no doubt that when it comes to meeting short-term
obligations, CDs can be an important part of your
portfolio. But, when investing for long-term goals such as
a house, a child's education or retirement, owning
companies with the potential for growth through a fund
like Lord Abbett Value Appreciation Fund may provide the
advantage you need to reach your goals.
A REWARDING TOTAL RETURN
[GRAPH APPEARS HERE]
The Six-Month
Fund DCs(1) Inflation
---- --------- ---------
12-31-84 $ 98,273 $100,000 $100,000
12-31-85 129,654 108,305 103,799
12-31-86 150,844 115,396 104,938
12-31-87 144,543 123,413 109,592
12-31-88 167,123 133,085 114,435
12-31-89 200,710 148,971 119,753
12-31-90 191,394 161,243 127,066
12-31-91 243,757 171,048 130,959
12-31-92 276,574 177,627 134,758
12-31-93 315,168 183,483 138,462
12-31-94 304,876 187,359 142,165
Total return is the percent change in value assuming the
reinvestment of all distributions. Results of the CD
investment reflect the average six-month CD rate available
each year during the period. It is important to remember
that, unlike the Fund, a CD's rate and principal are
guaranteed if held to maturity. The FDIC insures CDs up to
$100,000.
/(1)/Source: Salomon Brothers.
SEC AND OTHER IMPORTANT INFORMATION
The SEC-required uniformly computed average annual rates
of total return at the current maximum sales charge of
5.75% for the following periods ended 3/31/95 were:
<TABLE>
<CAPTION>
----------------------------------------------------------------------
1 Year 5 Years 10 Years 10 Years (at net asset value)
<S> <C> <C> <C>
+1.20% +9.39% +11.74% +12.41%
----------------------------------------------------------------------
</TABLE>
Results quoted herein represent past performance based on
the current sales charge schedule and reflect appropriate
Rule 12b-1 Plan expenses from commencement of the Plan.
Past performance is no indication of future results. Tax
consequences are not reflected. The Fund's sales charge
structure has changed from the past. The investment return
and principal value of a Fund investment will fluctuate so
that shares, on any given day or when redeemed, may be
worth more or less than their original cost. If used after
6/30/95, this literature must be accompanied by Lord
Abbett's Performance Quarterly for the most recently
completed calendar quarter.
<PAGE>
- --------------------------------------------------------------------------------
LORD ABBETT VALUE APPRECIATION FUND'S TOP TEN EQUITY HOLDINGS
(AS OF 12/31/94)
Lord Abbett Value Appreciation Fund is one of the few
mutual funds that focuses its research efforts on midsized
companies with market capitalizations generally ranging
from $500 million to $3 billion.
While not all midsized companies have familiar names,
chances are you have used many goods and services they
provide. The Fund is a managed portfolio and holdings are
subject to change.
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
MOORE CORP. A producer of business forms......................................................... 3.2%
TORONTO, ALBERTA,
CANADA
- -----------------------------------------------------------------------------------------------------------------
EASTERN ENTERPRISES Natural gas distributor in Massachusetts; river barging and
WESTON, MA water distribution components........................................................ 3.0%
- -----------------------------------------------------------------------------------------------------------------
SNAP-ON, INC. Manufactures and distributes hand tools and diagnostic
KENOSHA, WI equipment for the automotive industry................................................ 2.9%
- -----------------------------------------------------------------------------------------------------------------
GENUINE PARTS CO. National distributor of automotive replacement parts................................. 2.8%
ATLANTA, GA
- -----------------------------------------------------------------------------------------------------------------
GREAT WESTERN Leading savings and loan company..................................................... 2.7%
FINANCIAL CORP.
CHATSWORTH, CA
- -----------------------------------------------------------------------------------------------------------------
KERR-MCGEE CORP. Oil and gas exploration and production, refining and chemicals....................... 2.7%
OKLAHOMA CITY, OK
- -----------------------------------------------------------------------------------------------------------------
JOHNSON CONTROLS, Diversified manufacturer of auto seats, car batteries, plastic beverage
INC. containers and systems for commercial buildings...................................... 2.6%
MILWAUKEE, WI
- -----------------------------------------------------------------------------------------------------------------
STANDARD PRODUCTS Manufactures plastic and rubber products for the automotive and
CO. appliance industries................................................................. 2.5%
CLEVELAND, OH
- -----------------------------------------------------------------------------------------------------------------
DEAN FOODS CO. Major producer of dairy foods, canned and frozen vegetables.......................... 2.4%
FRANKLIN PARK, IL
- -----------------------------------------------------------------------------------------------------------------
LINCOLN NATIONAL Holding company with operations in insurance, reinsurance and
CORP. investment-related services.......................................................... 2.3%
FORT WAYNE, IN
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
For more complete information on the Fund, including charges and expenses, call
your financial adviser or Lord, Abbett & Co. at 800-874-3733 for a prospectus.
An investor should read the prospectus carefully before investing in the Fund.
Lord, Abbett & Co.
Investment Management
[LOGO OF LORD, ABBETT & CO APPEARS HERE]
A Tradition of Performance
Through Disciplined Investing
767 Fifth Avenue, New York, NY 10153-0203
800-426-1130
LAVA-6-1294
<PAGE>
PART C OTHER INFORMATION
ItemFINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements Part A - Financial Highlights for the period
April 19, 1983 (date of initial capitalization) to December
31,1994.
Part B - Statement of Net Assets at December 31, 1994. Statement
of Operations for the year ended December 31, 1994. Statements of
Changes in Net Assets for the years ended December 31, 1994 and
1993.
Supplementary financial Information for the fiscal years ended
December 31, 1989 through December 31, 1994.
(b) Exhibits -
99.B1 Articles of Incorporation*
99.B5 Management Agreement*
99.B6 Distribution Agreement*
99.B7a Retirement Plan for Non-interested Person Directors and
Trustees of Lord Abbett Funds.****
99.B7b Lord Abbett Prototype Retirements Plans***
(1) 401(k)
(2) IRA
(3) 403(b)
(4) Profit-Sharing, and
(5) Money Purchases
99.B8 Custody Agreement*
99.B11 Consent of Deloitte & Touche*
99.B16 Total Return and Yield Computations*
* Filed herewith.
** Previously filed.
*** Incorporated by reference to Post-Effective Amendment No. 7 to the
Registration Statement (on Form N1-A) of Lord Abbett Equity Fund (File No.
811-6033).
**** Incorporated by reference to Post-Effective Amendment No. 6 to the
Registration Statement (on Form N-1A) of Lord Abbett Securities Trust (File
No. 811-7538).
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
Item 26. NUMBER OF RECORD HOLDERS OF SECURITIES
At April 7, 1995 - 11,953
Item 27. INDEMNIFICATION
Registrant is incorporated under the laws of the State of Maryland and
is subject to Section 2-418 of the Corporations and Associations
Article of the Annotated Code of the State of Maryland controlling the
indemnification of the directors and officers. Since Registrant has
its executive offices in the State of New York, and is qualified as a
foreign corporation doing business in such State, the persons covered
by the foregoing statute may also be entitled to and subject to the
limitations of the indemnification provisions of Section 721-726 of
the New York Business Corporation Law.
The general effect of these statutes is to protect officers, directors
and employees of Registrant against legal liability and expenses
incurred by reason of their positions with the Registrant. The
statutes provide for indemnification
<PAGE>
for liability for proceedings not brought on behalf of the corporation
and for those brought on behalf of the corporation, and in each case
place conditions under which indemnification will be permitted,
including requirements that the officer, director or employee acted in
good faith. Under certain conditions, payment of expenses in advance
of final disposition may be permitted. The By-Laws of Registrant,
without limiting the authority of Registrant to indemnify any of its
officers, employees or agents to the extent consistent with applicable
law, makes the indemnification of its directors mandatory subject only
to the conditions and limitations imposed by the above-mentioned
Section 2-418 of Maryland Law and by the provisions of Section 17(h)
of the Investment Company Act of 1940 as interpreted and required to
be implemented by SEC Release No. IC-11330 of September 4, 1980.
In referring in its By-Laws to, and making indemnification of
directors subject to the conditions and limitations of, both Section
2-418 of the Maryland Law and Section 17(h) of the Investment Company
Act of 1940, Registrant intends that conditions and limitations on the
extent of the indemnification of directors imposed by the provisions
of either Section 2-418 or Section 17(h) shall apply and that any
inconsistency between the two will be resolved by applying the
provisions of said Section 17(h) if the condition or limitation
imposed by Section 17(h) is the more stringent. In referring in its
By-Laws to SEC Release No. IC-11330 as the source for interpretation
and implementation of said Section 17(h), Registrant understands that
it would be required under its By-Laws to use reasonable and fair
means in determining whether indemnification of a director should be
made and undertakes to use either (1) a final decision on the merits
by a court or other body before whom the proceeding was brought that
the person to be indemnified ("indemnitee") was not liable to
Registrant or to its security holders by reason of willful
malfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office ("disabling conduct") or
(2) in the absence of such a decision, a reasonable determination,
based upon a review of the facts, that the indemnitee was not liable
by reason of such disabling conduct, by (a) the vote of a majority of
a quorum of directors who are neither "interested persons" (as defined
in the 1940 Act) of Registrant nor parties to the proceeding, or (b)
an independent legal counsel in a written opinion. Also, Registrant
will make advances of attorneys' fees or other expenses incurred by a
director in his defense only if (in addition to his undertaking to
repay the advance if he is not ultimately entitled to indemnification)
(1) the indemnitee provides a security for his undertaking, (2)
Registrant shall be insured against losses arising by reason of any
lawful advances, or (3) a majority of a quorum of the non-interested,
non-party directors of Registrant, or an independent legal counsel in
a written opinion, shall determine, based on a review of readily
available facts, that there is reason to believe that the indemnitee
ultimately will be found entitled to indemnification.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expense incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
In addition, Registrant maintains a directors' and officers errors and
omissions liability insurance policy protecting directors and officers
against liability for breach of duty, negligent act, error or omission
committed in their capacity as directors or officers. The policy
contains certain exclusions, among which is exclusion from coverage
for active or deliberate dishonest or fraudulent acts and exclusion
for fines or penalties imposed by law or other matters deemed
uninsurable.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Lord, Abbett & Co. acts as investment adviser for seventeen other
open-end investment companies (of which it is principal underwriter
for fourteen) and as investment adviser to approximately 5,100 private
accounts. Other
2
<PAGE>
than acting as directors and/or officers of open-end investment
companies managed by Lord, Abbett & Co., none of Lord, Abbett & Co.'s
partners has, in the past two fiscal years, engaged in any other
business, profession, vocation or employment of a substantial nature
for his own account or the capacity of director, officer, employee, or
partner of any entity except as follows:
John J. Walsh
Trustee
Brooklyn Hospital Center
100 Parkside Avenue
Brooklyn, N.Y.
Item 29. (a) PRINCIPAL UNDERWRITER
---------------------
Affiliated Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett California Tax-Free Income Fund, Inc.
Lord Abbett Fundamental Value Fund, Inc.
Lord Abbett U.S. Government Securities Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett U.S. Government Securities Money Market Fund, Inc.
Lord Abbett Series Fund, Inc.
Lord Abbett Equity Fund
Lord Abbett Tax-Free Income Trust
Lord Abbett Securities Trust
Lord Abbett Investment Trust
INVESTMENT ADVISER
------------------
American Skandia Trust (Lord Abbett Growth and Income Portfolio)
America's Utility Fund
Lord Abbett Research Fund, Inc.
(b) The partners of Lord, Abbett & Co. are:
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS (1) WITH REGISTRANT
Ronald P. Lynch Chairman
Kenneth B. Cutler Vice President & Secretary
Stephen I. Allen Vice President
Daniel E. Carper Vice President
Robert S. Dow Vice President
Thomas S. Henderson Vice President
E. Wayne Nordberg Vice President
John J. Walsh Vice President
(1) Each of the above has a principal business address:
767 Fifth Avenue, New York, NY 10153
3
<PAGE>
(c) Not applicable
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Registrant maintains the records, required by Rules 31a -1(a) and (b),
and 31a - 2(a) at its main office.
Lord, Abbett & Co. maintains the records required by Rules 31a - 1(f)
and 31a - 2(e) at its main office.
Certain records such as cancelled stock certificates and
correspondence may be physically maintained at the main office of the
Registrant's Transfer Agent, Custodian, or Shareholder Servicing Agent
within the requirements of Rule 31a-3.
Item 31. MANAGEMENT SERVICES
None
Item 32. UNDERTAKINGS
(c) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all the requirements
for effectiveness of this Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Registration Statement
and/or any amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on the
27th day of April 1995.
LORD ABBETT VALUE APPRECIATION FUND, INC.
By /S/ RONALD P. LYNCH
Ronald P. Lynch, Chairman
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
NAME TITLE DATE
- ----- ----- ----
Chairman,
/s/ Ronald P. Lynch President & Director April 27, 1995
/s/ John J. Gargana, Jr. Vice President & April 27, 1995
Chief Financial Officer
/s/ E. Thayer Bigelow Director April 27, 1995
/s/ Stewart S. Dixon Director April 27, 1995
Thomas S. Henderson Director
/s/ John C. Jansing Director April 27, 1995
/s/ C. Alan MacDonald Director April 27, 1995
/s/ Hansel B. Millican, Jr. Director April 27, 1995
/s/ Thomas J. Neff Director April 27, 1995
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
99.B1 Articles of Incorporation
99.B5 Management Agreement
99.B6 Distribution Agreement
99.B8 Custody Agreement
99.B11 Consent of Deloitte & Touche
99.B16 Total Return and Yield Computations
EX-27 Financial Data Schedule
EXHIBIT 99.B1
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
LORD ABBETT VALUE APPRECIATION FUND, INC.
LORD ABBETT VALUE APPRECIATION FUND, INC, a Maryland
corporation having its principal office in Baltimore City, Maryland
(hereinafter called the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: The Corporation filed its original Articles of
Incorporation with the State Department of Assessment and
Taxation on March 14, 1983.
SECOND: The Articles of Incorporation of the Corporation are
hereby amended to increase the authorized number of shares of capital
stock of the Corporation by striking out Section 1 of Article VI and
inserting in lieu thereof the following:
"ARTICLE VI
SECTION 1. The total number of shares which the
Corporation has authority to issue is 150,000,000 shares of
capital stock of the par value of ten cents ($.10) each, all
of one class, having an aggregate par value of $15,000,000".
<PAGE>
THIRD: The Board of Directors of the Corporation, at a
meeting duly convened and held on June 8, 1983 duly adopted
a resolution in which was set forth the foregoing amendment,
declaring that the said amendment was advisable and
directing that it be submitted to the vote of the holders of
the outstanding capital stock, of the Corporation entitled
to vote a meeting of shareholders or by unanimous written
consent shareholders in lieu of holding a meeting.
FOURTH: Said amendment was duly approved by the
shareholders of the Corporation by unanimous written
consent, dated June 20, 1983, all in accordance with the
requirements of the Corporation's Articles of Incorporation
for approval of such an amendment.
FIFTH: Prior to the Amendment, 100,000,000 shares of
capital stock, ten cents ($.10) par value, having an
aggregate par value of $10,000,000, all of one class, were
authorized to be issued by the Corporation; as amended,
150,000,000 shares of capital stock, ten cents ($.10) par
value, having an aggregate par value of $15,000,000, all of
one class, are authorized to be issued by the Corporation.
IN WITNESS WHEREOF, the Corporation has caused these
presents to be signed in its name and on its behalf by its
President and attested by its Secretary on June 21, 1983.
<PAGE>
LORD ABBETT VALUE APPRECIATION FUND, INC.
By /S/ JOHN M. MCCARTHY
John M.McCarthy, President
ATTEST:
/S/ KENNETH B. CUTLER
Kenneth B. Cutler
<PAGE>
THE UNDERSIGNED, President of Lord Abbett Value
Appreciation Fund, Inc., who executed on behalf of said
Corporation the foregoing Articles of Amendment, of which
this certificate is made a part, hereby acknowledges, in the
name and on behalf of said Corporation, the foregoing
Articles of Amendment to be the corporate act of said
Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set
forth therein with respect to the approval thereof are true
in all material respects, under the penalties of perjury.
/S/ JOHN M. MCCARTHY
John M. McCarthy, President
<PAGE>
The Chairman stated that it would be desirable for the Board
to authorize management (as permitted in Article VIII, Section 3
of the Corporation's Articles of Incorporation) to value
portfolio securities which are quoted on the NASDAQ National
Market System by using the last sales price if there has been a
sale.
After discussion, on motion duly made and seconded, the
following resolution was unanimously adopted:
RESOLVED, that it is necessary and desirable that the Corporation
value securities in the over-the- counter market based on
the last sales price of securities which are traded in the
NASDAQ National Market System, and that effective January 1,
1984, the Corporation is hereby authorized to value
securities traded in the NASDAQ National Market System by
using the last sales prices for such securities, whenever it
is believed by the appropriate officers of the Corporation
that using such prices would more accurately reflect the
true value of such securities than by using the mean between
the last bid and asked prices for such securities.
<PAGE>
ARTICLES OF INCORPORATION
OF
LORD ABBETT VALUE APPRECIATION FUND, INC.
THIS is to Certify:
Article I
I, the subscriber, Kenneth B. Cutler, whose post office address is 63
Wall Street, New York, New York 10005, being over eighteen years of age, am
acting as incorporator with the intention of forming a corporation under
and by virtue of the General Laws of the State of Maryland authorizing the
formation of corporations.
Article II
The name of the corporation (hereinafter called the "Corporation") is
Lord Abbett Value Appreciation Fund, Inc.
Article III
The address of the principal office of the Corporation is 63 Wall
Street, New York, New York 10005
Article IV
The post office address of the place at which the principal office of
the Corporation in the State of Maryland will be located is c/o The
Prentice-Hall Corporation System, Maryland, 929 North Howard Street,
Baltimore, Maryland 21201.
The Corporation's resident agent is The Prentice-Hall Corporation
System, Maryland, 929 North Howard Street, Baltimore, Maryland 21201. Said
resident agent is a corporation of the State of Maryland.
Article V
The purpose or purposes for which the Corporation is formed and the
business or objects to be transacted, carried on and promoted by it, are as
follows:
<PAGE>
1. To conduct, operate and carry on the business of
an investment company.
2. To purchase, subscribe for, invest in or otherwise acquire,
and to own, hold, sell, possess, transfer or otherwise dispose of, or
turn to account or realize upon, and generally deal in, all forms of
securities of every nature, kind, character, type and form, including
but not limited to, shares, stocks, bonds, debentures, notes, scrip,
participation certificates, rights to subscribe, warrants, options,
certificates of deposit, choices in action, evidences of indebtedness,
certificates of indebtedness and certificates of interest of any and
every kind and nature whatsoever, secured and unsecured, issued or to
be issued, by any corporation, partnership, association, trust, entity
or person, public or private, whether organized under the laws of the
United States, or any state, commonwealth, territory or possession
thereof, or organized under the laws of any foreign country.
3. To issue, sell, repurchase, redeem, retire, cancel,
acquire, resell, transfer, and otherwise deal in shares of the capital
stock of the Corporation, and to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of shares of
capital stock of the Corporation, any funds of the Corporation, whether
capital, surplus or otherwise to the full extent permitted by the laws
of Maryland, all without the vote or consent of the stockholders of the
Corporation.
4. To conduct its business in the State of Maryland, all other
states and elsewhere in any part of the world, and to have one or more
offices outside the State of Maryland.
5. To do any and all things herein set forth, and in addition
such other acts and things as are necessary or convenient to the
attainment of the purposes of this Corporation, or any of them, to the
same extent as natural persons lawfully might or could do in any part
of the world, and to engage in any lawful act or activity for which
corporations may be organized under the laws of the State of Maryland.
The foregoing objects and purposes shall, except as
otherwise expressly provided, be in no way limited or restricted
<PAGE>
by reference to, or inference from the terms of any other clause
of this or any other Article of these Articles of Incorporation,
and shall each be regarded as independent, and construed as
powers as well as objects and purposes, and the enumeration of
specific purposes, objects and powers shall not be construed to
limit or restrict in any manner the meaning of general terms or
the general powers of the Corporation now or hereafter conferred
by the laws of the State of Maryland, nor shall the expression of
one thing be deemed to exclude another, though it be of like
nature, not expressed; provided, however, that the Corporation
shall not have power to carry on within the State of Maryland any
business whatsoever the carrying on of which would preclude it
from being classified as an ordinary business corporation under
the laws of said State; nor shall any of the foregoing statements
of its objects, purposes and powers be deemed to permit the
Corporation to carry on any business, or exercise any powers, in
any state, territory, district or country except to the extent
that the same may lawfully be carried on or exercised under the
laws thereof.
Article VI
SECTION 1. The total number of shares which the Corporation
has authority to issue is 100,000,000 shares of capital stock of
the par value of ten cents ($.10) each, all of one class, having
an aggregate par value of $15,000,000.
SECTION 2. Each share of the capital stock of the
Corporation shall be subject to the following provisions:
(a) All shares of the capital stock of the Corporation now
or hereafter authorized shall be subject to redemption
and redeemable at the option of the stockholder, in the
sense used in the General Laws of the State of Maryland
authorizing the formation of corporations. Each holder
of the capital stock of the Corporation, upon request
to the Corporation accompanied by surrender (to the
Corporation, or an agent designated by it) of the
appropriate stock certificate or certificates, if any,
in proper form for transfer, and such other instruments
as the Board of Directors may require, shall be
entitled to require the Corporation to redeem all or
any part of the shares of capital stock standing in the
name of such holder on the books of the Corporation, at
a redemption price equal to the net asset value of such
<PAGE>
shares determined as hereinafter set forth, less a charge, not
to exceed one percent (1%) of such net asset value, if and as
fixed by resolution of the Board of Directors of the
Corporation from time to time.
(b) Notwithstanding the foregoing, the Board of Directors of the
Corporation may suspend the right of the holders of the
capital stock of the Corporation to require the Corporation to
redeem shares of such capital stock or may suspend any
voluntary purchase of such capital stock:
(i) for any period (A) during which the New York
Stock Exchange is closed other than the customary weekend and
holiday closing, or (B) during which trading on the New York
Stock Exchange is restricted;
(ii) for any period during which an emergency, as
defined by the rules of the Securities and Exchange Commission
or any successor thereto, exists as a result of which (A)
disposal by the Corporation of securities owned by it is not
reasonably practicable, or (B) it is not reasonably
practicable for the Corporation fairly to determine the value
of its net assets; or
(iii) for such other periods as the Securities
and Exchange Commission or any successor thereto may by
order permit for the protection of security holders of
the Corporation.
(c) The Corporation, pursuant to a resolution of the Board of
Directors and without the vote or consent of stockholders of the
Corporation, shall have the right to redeem at net asset value
all shares of capital stock in any stockholder account in which
there are less than 25 shares or such lesser number of shares as
shall be specified in such resolution. Such resolution shall set
forth that redemption of shares in such accounts has been
determined to be in the economic best interest of the Corporation
or necessary to reduce disproportionately burdensome expenses in
servicing stockholder accounts. Such resolution shall provide
that prior notice of at least 30 days shall be given to a
stockholder before such redemption of shares and that the
stockholder will have 30 days (or such longer
<PAGE>
period as is specified in the resolution) from the date of the
notice to avoid such redemption by increasing his account to
at least 25 shares, or such lesser number of shares as is
specified in the resolution.
SECTION 3. Notwithstanding any provision of Maryland law
requiring any action to be taken or authorized by the affirmative
vote of the holders of a designated proportion greater than a
majority of the shares outstanding or of the votes entitled to be
cast, such action shall be effective and valid if taken or
authorized by the affirmative vote of the holders of a majority
of the total number of shares outstanding and entitled to vote
thereon pursuant to the provisions of these Articles of
Incorporation.
SECTION 4. No holder of stock of the Corporation shall, as
such holder, have any right to purchase or subscribe for any
shares of the capital stock of the Corporation of any class which
it may issue or sell (whether out of the number of shares now or
hereafter authorized by these Articles of Incorporation, or any
amendment thereof, or out of any shares of the capital stock of
the Corporation acquired by it after the issue thereof, or
otherwise) other than such right, if any, as the Board of
Directors, in its discretion, may determine.
<PAGE>
Article VII
The initial number of directors of the Corporation shall be
nine, and the names of those who shall act as such until the
first annual meeting or until their successors are duly elected
and qualify are as follows:
Ronald P. Lynch
John M. McCarthy
Robert S. Driscoll
James F. Creamer
Paul M. Fye
John C. Jansing
Thomas J. Neff
Hansel B. Millican, Jr.
Stewart S. Dixon
However, the By-Laws of the Corporation may fix the number of
directors at a number other than eight and may authorize the
Board of Directors, by the vote of a majority of the entire
Board of Directors, to divide the Board into classes, to
increase or decrease the number of directors within a limit
specified in the By-Laws, provided that in no case shall the
number of directors be less than three, and to fill the
vacancies created by any such increase in the number of
directors. Unless otherwise provided by the By-Laws of the
Corporation, the directors of the Corporation need not be
stockholders.
Article VIII
The following provisions are inserted for the management of
the business and conduct of the affairs of the Corporation, and
to create, define, limit and regulate the powers of the
Corporation, the directors and the stockholders.
SECTION 1. In furtherance and not in limitation of the
powers conferred by statute and pursuant to these Articles of
Incorporation, the Board of Directors is expressly authorized to
do the following:
(a) To make, adopt, alter, amend and repeal By-Laws of the
Corporation.
(b) To distribute, in its discretion, for any fiscal year
<PAGE>
(in the year or in the next fiscal year) as ordinary dividends
and as capital gains distributions, respectively, amounts
sufficient to enable the Corporation as a regulated investment
company to avoid any liability for Federal income tax in respect
of such year. Any distribution or dividend paid to stockholders
from any capital source shall be accompanied by a written
statement showing the source or sources of such payment. Anything
in these Articles of Incorporation to the contrary
notwithstanding, the Board of Directors may at any time declare
and distribute pro rata among the stockholders, as of a fixed
record date, a stock dividend out of either authorized but
unissued or treasury shares of the Corporation, or both;
(c) To issue and sell or to cause the issuance and sale of shares
of the Corporation's capital stock in such amounts and on such
terms and conditions, for such purpose and for such amount or
kind of consideration as is now or hereafter permitted by the
laws of the State of Maryland;
(d) To purchase and to cause to be purchased shares of the
capital stock of the Corporation, pursuant to these Articles of
Incorporation, upon tender thereof by the holder or holders
thereof or otherwise, provided the Corporation has assets legally
available for such purpose whether arising out of paid-in
surplus, other surplus, net profits or otherwise, to such extent
and in such manner and upon such terms as the Board of Directors
shall deem expedient, and to pay for such shares in cash then
held or owned by the Corporation;
(e) To authorize, subject to such vote, consent, or approval of
stockholders and other conditions, if any, as may be required by
any applicable statute, rule or regulation, the execution and
performance by the Corporation of an agreement or agreements with
any person, corporation, association, partnership or other
organization whereby, subject to the supervision and control of
the Board of Directors, any such other person, corporation,
association, partnership, or other organization shall render
managerial, investment advisory and related services to the
Corporation
<PAGE>
(including, if deemed advisable, the management or supervision of
the investment portfolio of the Corporation) upon such terms and
conditions as may be provided in such agreement or agreements;
(f) To authorize, subject to such vote, consent or approval of
stockholders and other conditions, if any, as may be required by
any applicable statute, rule or regulation, the execution and
performance by the Corporation of an agreement or agreements,
which may be exclusive, with any person, corporation,
association, partnership or other organization, as distributor,
providing for the sale and distribution of shares of the capital
stock of the Corporation. Such agreement or agreements may
provide for the charge by the Corporation of a premium over the
net asset value (determined as hereinafter provided) of such
shares and allowance of a discount by the Corporation to such
distributor, and may further provide for the reallowance by such
distributor of concessions or commissions from but not exceeding
such discount; provided, however, that such discount shall not
exceed the amount of the premium;
(g) To authorize any agreement of the character described in
sections (e) or (f) of this Section 1 with any person,
corporation, association, partnership or other organization,
although one or more of the members of the Board of Directors or
officers of the Corporation may be the other party to any such
agreement or an officer, director, shareholder, or member of such
other party, and no such agreement shall be invalidated or
rendered voidable by reason of the existence of any such
relationship. Any director of the Corporation who is also a
director or officer of such corporation or who is so interested
may be counted in determining the existence of a quorum at any
meeting of the Board of Directors which authorize any such
agreement, and may vote thereat to authorize any such contract or
transaction, with like force and effect as if he were not such
director or officer of such other corporation or not so
interested. Any Agreement entered into pursuant to said
subsections (e) or (f), shall be consistent with and subject to
the requirements of Section 15 of the Investment Company Act of
1940 (including any amendment thereof or other applicable
<PAGE>
Act of Congress hereafter enacted), and no amendment to any
agreement entered into pursuant to said subsection (e) (other
than an amendment reducing the compensation of the other party
thereto) shall be effective unless assented to by the affirmative
vote of a majority of the outstanding voting securities of the
Corporation, as such phrase is defined in the Investment Company
Act of 1940.
SECTION 2. The Board of Directors may authorize the purchase by
the Corporation, either directly or through any agent, of shares of
its capital stock, in the open market or otherwise, at prices not in
excess of the net asset value of such shares (determined as
hereinafter provided) as of a time determined by the Board of
Directors reasonably proximate to the time of purchase by the
Corporation or any such agent.
SECTION 3. For the purposes referred to in these Articles of
Incorporation, the net asset value of shares of the capital stock of
the Corporation as of any particular time shall be determined by or
pursuant to the direction of the Board of Directors as follows:
(a) The net asset value of each share of such stock at any
particular time shall be the quotient, carried out to not
less than two decimal points, obtained by dividing the net
value of the assets of the Corporation (determined as
hereinafter provided) as of such determination time by the
total number of shares then outstanding, including all
shares which the Corporation has agreed to sell for which
the price has been determined, and excluding shares which
have been surrendered to the Corporation or an agent and
which the Corporation has agreed to purchase, for which the
price has been determined.
The net value of the assets of the Corporation as of any
such determination time shall be determined in accordance
with sound accounting practice by deducting from the gross
value of the assets of the Corporation (determined as
hereinafter provided) at such time the amount of all
liabilities, including expenses incurred and accrued and
unpaid, such reserves as may be set up to cover taxes and
any other liabilities, and such other deductions as in the
opinion of the Board of
<PAGE>
Directors of the Corporation are in accordance with sound
accounting practice.
The gross value of the assets of the Corporation at any such
determination time shall be an amount equal to all cash,
receivables, the market value of all securities and the fair
value of other assets held by the Corporation at such
determination time, all determined in accordance with sound
accounting practice and giving effect to the following:
(1) the market value as of any such determination time of any
security owned by the Corporation which is listed or admitted
to trading privileges on the New York Stock Exchange or the
American Stock Exchange shall be the last sale price or (in
the case of a security in which there has been no previously
reported sale transaction since the last determination time)
the mean between the last bid price and the last asked price,
for such security on such exchange. In case securities being
valued are listed or admitted to trading privileges on any
securities exchange other than the New York Stock Exchange or
the American Stock Exchange, the securities exchange, sale
transactions or bid or asked prices which are to be used as
aforesaid shall be selected by the Board of Directors or by
any officer or other person designated by the Board of
Directors for the purpose.
(2) The market value of securities dealt in an
over-the-counter market shall be the mean between the last bid
and asked price in such market prior to such determination
time.
(3) The market value of other property, including any
securities which are neither listed nor admitted to trading
privileges on any exchange or dealt in an over-the-counter
market shall be determined in good faith in such manner as the
Board of Directors shall prescribe from time to time.
(4) The determination of the market value of securities
hereunder may be made in reliance on any recognized source of
quotations or basis for ascertaining quotations.
<PAGE>
(5) If a security is traded in more than one market, a
determination may be made as to which market most accurately
reflects the value of such security.
(b) The Board of Directors is empowered, in its discretion, to
establish other methods for determining such net asset value
whenever such other methods are deemed by it to be necessary
or desirable, including, but with-out limiting the generality
of the foregoing, any method deemed necessary or desirable in
order to enable the Corporation to comply with any provision
of the Investment Company Act of 1940 or any rule or
regulation thereunder.
SECTION 4. Any determination as to any of the following
matters made by or pursuant to the direction of the Board of
Directors consistent with these Articles of Incorporation and in
the absence of willful misfeasance, bad faith, gross negligence
or reckless disregard of duties, shall be final and conclusive
and shall be binding upon the Corporation and every holder of
shares of its capital stock, namely, the amount of the assets,
obligations, liabilities and expenses of the Corporation; the
amount of the net income of the Corporation from dividends and
interest for any period and the amount of assets at any time
legally available for the payment of dividends; the amount of
paid-in surplus, other surplus, annual or other net profits, or
net assets in excess of capital, undivided profits, or excess of
profits over losses on sales of securities; the amount, purpose,
time of creation, increase or decrease, alteration or
cancellation of any reserves or charges and the propriety thereof
(whether or not any obligation or liability for which such
reserves or charges shall have been created shall have been paid
or discharged); the market value, or any sale, bid or asked price
to be applied in determining the market value, of any security
owned or held by the Corporation; the fair value of any other
asset owned by the Corporation; the number of shares of the
Corporation issued or outstanding; the existence of conditions
permitting the postponement or payment of the repurchase price of
shares of capital stock of the Corporation or the suspension of
the right of redemption as provided by law; any matter relating
to the acquisition, holding and disposition of securities and
other assets by the Corporation; any question as to whether any
transaction constitutes purchase of securities on margin, a short
sale of securities, or an underwriting of the sale of, or
participation
<PAGE>
in any underwriting or selling group in connection with the
public distribution of, any securities; and any matter relating
to the issue, sale, repurchase and/or other acquisition or
disposition of shares of capital stock of the Corporation.
SECTION 5. If the Corporation should change its name and
adopt its corporate title through permission of the firm of Lord,
Abbett & Co, which shall have entered into a management or
advisory contract with the Corporation, the Corporation shall
make appropriate agreements that upon the termination of such
contract for any cause, or if such firm or subsidiary or
affiliate or successor deems it advisable to withdraw the right
to the use of its name, the Corporation will at the request of
such firm or subsidiary or affiliate or successor, take such
action as may be necessary to change its name to eliminate all
use of or reference to the words "Lord Abbett" in any form and
will neither use the registered service mark of Lord, Abbett &
Co, without the written consent of such firm or subsidiary or
affiliate or successor. The Corporation shall also agree in such
contract that investment companies other than the Corporation for
which such firm or a subsidiary successor may act as investment
adviser, and other companies affiliated with Lord, Abbett & Co,
may be formed with the words "Lord Abbett" in their corporate
titles. Such agreements on the part of the Corporation are hereby
made binding upon it, its directors, officers, stockholders,
creditors and all other persons claiming under or through it.
Article IX
From time to time any of the provisions of these Articles of
Incorporation may be amended, altered or repealed (including any
amendment that changes the terms of any of the outstanding stock by
classification, reclassification or otherwise), and other provisions
that might, under the statutes of the State of Maryland at the time in
force, be lawfully contained in articles of incorporation may be added
or inserted, upon the vote of the holders of a majority of the shares
of capital stock of the Corporation at the time outstanding and
entitled to vote, and all rights at any time conferred upon the
stockholders of the Corporation by these Articles of Incorporation are
subject to the provisions of this Article IX.
IN WITNESS WHEREOF, I have signed these ARTICLES of
INCORPORATION on this 11th day of March, 1983. And acknowledge
<PAGE>
the same to be my act.
/S/ KENNETH B. CUTLER
Kenneth B. Cutler
SEAL
EXHIBIT 99.B5
MANAGEMENT AGREEMENT
AGREEMENT made this 15th day of April, 1983 by and between LORD ABBETT
VALUE APPRECIATION FUND, INC. a Maryland corporation (hereinafter called
the "Corporation"), and LORD, ABBETT & CO. a New York partnership
(hereinafter called the "Investment Manager").
WHEREAS, the Corporation desires to obtain the investment management
services of the Investment Manager and the Investment Manager is willing to
provide services of the nature desired upon the terms and conditions
hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and of other
good and valuable consideration, receipt of which is hereby acknowledged,
it is agreed as follows:
1. The Corporation hereby employs the Investment Manager under the
terms and conditions of this Agreement, and the Investment Manager hereby
accepts such employment and agrees to perform supervisory functions of the
Corporation with respect to the investment and reinvestment of its property
and assets (whether or not held in trust or in the custody of a bank or
trust company subject to the Corporation's direction or control) including
without limitation, the supervision of its investment portfolio and the
recommendation of investment policies and procedures within the limitations
set forth in the Corporation's
<PAGE>
Registration Statements on file with the Securities and Exchange Commission
under the Securities Act of 1933 and the Investment Company Act of 1940.
The Investment Manager agrees to maintain an adequate organization of
competent persons to perform the supervisory functions mentioned herein.
All recommendations with respect to the investment portfolio will be made
to the Corporation's trading department which, with the approval of authorized
officers of the Corporation, will execute all trades in accordance with the
Corporation's investment procedures.
The Investment Manager reserves the right, in its discretion, to purchase
or otherwise obtain statistical information and services from other sources,
including affiliated persons of the Investment Manager.
Notwithstanding the provisions of this paragraph 1, the investment policies
and procedures and all other actions of the Corporation are, and shall at all
times be, subject to the control and direction of its Board of Directors.
2. The Corporation agrees to pay the Investment Manager for its services
under this Agreement and for the expenses assumed, a management fee computed and
payable monthly at the annual rate of three-quarters (.75) of one percent (1%)
of the value of the
<PAGE>
Corporation's average daily net assets which does not exceed $200,000,000;
sixty-five one-hundredths (.65) of one percent (1%) of such value which exceeds
$200,000,000 but does not exceed $500,000,000; and one-half (.50) of one percent
(1%) of such value which is in excess of $500,000,000. The value of the net
assets of the Corporation shall include all assets held in trust or in custody
of any bank, savings bank or trust company for the Corporation, subject to its
control or direction, and shall be determined as provided in the Articles of
Incorporation of the Corporation. The fee shall be paid on the first day of each
month for the preceding month.
The Investment Manager may receive research and other statistical
information from broker-dealers and from other sources and, in accordance with
section 28(e) of the Securities Exchange Act of 1934, a broker-dealer may be
paid a commission for a transaction involving portfolio securities of the
Corporation exceeding the amount another broker-dealer would have charged for
the same transaction if it is determined by the Investment Manager that such
amount of commission is reasonable in relation to the value of the research
services provided by the executing broker-dealer, viewed in terms of either the
particular transaction or the overall responsibilities of the Investment Manager
with respect to the Corporation and other accounts
<PAGE>
(investment companies and other investment clients) with respect to which it
exercises investment discretion. Such research services may be used by the
Investment Manager in serving all its accounts, and not all of such research
services need necessarily be used by the Investment Manager in connection with
its services to the Corporation.
It is understood that any supplemental advisory or statistical services
which may be provided to the Corporation or to the Investment Manager from time
to time by independent broker-dealers or persons other than the Investment
Manager, for whatever reason, shall not reduce the amount of the fees payable to
the Investment Manager hereunder. It is recognized that such supplementary
advisory or statistical services may be useful to the Investment Manager and the
Corporation, but their value is indeterminable and is not to be considered a
substitute for the services provided by the Investment Manager hereunder.
3. It is understood that the services of the Investment Manager are not
deemed to be exclusive, and nothing in this Agreement shall prevent the
Investment Manager, or any officer, director, partner or employee thereof, from
providing similar services to other investment companies and other clients
(whether or not their investment objectives and policies are similar to those of
the Corporation) or to engage in other activities. When
<PAGE>
other clients of the Investment Manager desire to purchase or sell the same
portfolio security at the same time as the Corporation, it is understood that
such purchases and sales will be made as nearly as practicable on a pro rata
basis in proportion to the amounts desired to be purchased or sold by each
client.
4. The Corporation will, at its own expense, furnish to the Investment
Manager periodic (but not less than semiannually) statements of its books of
account, including balance sheets and earnings statements, and all other
information which may reasonably be required from time to time, by the
Investment Manager, and will, at its own expense, at all times keep the
Investment Manager fully advised as to the cash, securities and other property
then comprising its assets, and furnish daily detailed price makeup sheets with
respect to its investment portfolio and shares of its capital stock.
5. The Investment Manager shall be under no obligation to pay any fees,
costs, expenses or other charges of the Corporation, except the compensation of
its officers, the compensation, if any, of its directors who are affiliated with
the Investment Manager, rental for its office space, and except for its ordinary
and necessary office and clerical expenses relating to research, statistical
work and supervision of the
<PAGE>
Corporation's investment portfolio, to be performed by the Investment Manager
under paragraph 1 of this Agreement. The Corporation will pay all other fees,
costs, expenses or charges relating to its assets and operations, including
without limitation, office and clerical expenses not relating to research,
statistical work and supervision of the Corporation's investment portfolio, fees
and expenses of directors not affiliated with the Investment Manager,
governmental fees, interest charges, taxes, association membership dues, fees
and charges for legal and auditing services; fees and expenses of any custodians
or trustees with respect to custody of its assets; fees, charges and expenses of
dividend disbursing agents, registrars and transfer agents (including the cost
of keeping all necessary shareholder records and accounts, and handling any
problems relating thereto and the expense of furnishing to all shareholders
including the expense of mailing); cost and expense of repurchase and redemption
of its shares; cost and expense of preparing, printing and mailing stock
certificates and reports, notices and proxy statements to shareholders and cost
of preparing reports to governmental agencies; brokerage fees and commissions of
every kind and expenses in connection with the execution of portfolio security
transactions (including the cost of any service or agency designed to facilitate
the purchase and
<PAGE>
sale of portfolio securities); all postage; insurance premiums; and any other
fee, cost, expense or charge of any kind not expressly assumed by the Investment
Manager under this Agreement.
Notwithstanding any other provision of this Agreement, if expenses
(including the management fee hereunder but excluding interest, taxes, brokerage
fees, and where permitted, extraordinary expenses) borne by the Corporation in
any fiscal year exceed expense limitations applicable to the Corporation imposed
by state securities administrators, as such limitations may be lowered or raised
from time to time, the Investment Manager will reimburse the Corporation for any
such excess.
If the Investment Manager pays for other expenses of the Corporation or
furnishes the Corporation with services the cost of which is to be borne by the
Corporation under this Agreement, the Investment Manager shall not be deemed to
have waived its rights under this Agreement to have the Corporation pay for such
expenses or provide such services in the future.
6. The Investment Manager agrees that it shall observe and be bound by all
of the provisions of the Articles of Incorporation (including any amendments
thereto) of the Corporation which shall in any way limit or restrict or prohibit
or otherwise regulate any action by the Investment Manager.
7. Other than to abide by the provisions hereof and render
<PAGE>
the services called for hereunder in good faith, the Investment Manager assumes
no responsibility under this Agreement and having so acted, the Investment
Manager shall not be held liable or accountable for any mistakes of law or fact,
or for any error or omission of its officers, directors, partners or employees,
or for any loss or damage arising or resulting therefrom suffered by the
Corporation or any of its stockholders, creditors, directors or officers;
provided however, that nothing herein shall be deemed to protect the Investment
Manager against any liability to the Corporation or to its stockholders by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties hereunder, or by reason of the reckless disregard of its
obligations and duties hereunder. The Investment Manager shall not be
responsible for any action of the Board of Directors of the Corporation in
following or declining to follow any advice or recommendation of the Investment
Manager.
8. Neither this Agreement nor any other transaction between the parties
hereto pursuant to this Agreement shall be invalidated or in any way affected by
the fact that any or all of the directors, officers, stockholders, or other
representatives of the Corporation are or may be interested in the Investment
Manager, or any successor or assignee thereof, or that any or all of the
directors, officers, partners, or other representatives of
<PAGE>
the Investment Manager are or may be interested in the Corporation, except as
otherwise may be provided in the Investment Company Act of 1940. The Investment
Manager in acting hereunder shall be an independent contractor and not an agent
of the Corporation.
9. This Agreement shall become effective upon the effective date of the
Registration Statement of the Corporation filed with the Securities and Exchange
Commission on March 18, 1983, and shall continue in force for two years from the
date thereof, and is renewable annually thereafter by specific approval of the
Board of Directors of the Corporation or by vote of a majority of the
outstanding voting securities of the Corporation; any such renewal shall be
approved by the vote of a majority of the directors who are not parties to this
Agreement or interested persons of the Investment Manager or of the Corporation,
cast in person at a meeting called for the purpose of voting on such renewal.
This Agreement may be terminated without penalty at any time by the
Corporation upon 60 days written notice. This Agreement shall automatically
terminate in the event of its assignment. The terms "interested persons",
"assignment" and "vote of a majority of the outstanding voting securities" shall
have the same meanings as those terms are defined in the Investment
<PAGE>
Company Act of 1940.
10. The Investment Manager reserves the right to grant the use of the name
"LORD ABBETT" or "LORD, ABBETT & CO.", or any derivative thereof, to any other
investment company or business enterprise. The Investment Manager reserves the
right to withdraw from the Corporation the use of the name "LORD ABBETT" and the
use of its registered service mark; at such time of withdrawal of the right to
use the name "LORD ABBETT", the Investment Manager agrees that the question of
continuing this Agreement may be submitted to a vote of the Corporation's
shareholders. In the event of such withdrawal or the termination of this
Agreement, for any reason, the Corporation will, on the written request of the
Investment Manager, take such action as may be necessary to change its name and
eliminate all reference to the words "LORD ABBETT" in any form, and will no
longer use such registered service mark.
<PAGE>
IN WITNESS WHEREOF the Corporation has caused this Agreement to be executed
by its duly authorized officers and its corporate seal to be affixed hereto, and
the Investment Manager has caused this Agreement to be executed by one of its
partners, all on the day and year first above written.
LORD ABBETT VALUE APPRECIATION FUND, INC.
By /S/ RONALD P. LYNCH
Chairman of the Board
/S/ CHARLES J. FINLAYSON
Assistant Secretary
LORD, ABBETT & CO.
By /S/ KENNETH B. CUTLER
A Partner
EXHIBIT 99.B6
AMENDMENT TO DISTRIBUTION AGREEMENT
-----------------------------------
AGREEMENT made this 31st day of December, 1986 between LORD ABBETT VALUE
APPRECIATION FUND, INC, a Maryland corporation (the "Corporation"), and Lord,
Abbett & Co, a New York partnership (the "Distributor").
WHEREAS, the Corporation and the Distributor have heretofore entered
into a Distribution Agreement, dated April 15, 1983 (the "Distribution
Agreement"); and
WHEREAS, the Corporation and the Distributor desire to amend the
Distribution Agreement to specifically provide for the payment by the
Corporation of certain expenses of the Corporation.
NOW, THEREFORE, in consideration of the mutual covenants and of other
good and valuable consideration, receipt of which is hereby acknowledged, the
Distribution Agreement is hereby amended, effective January 1, 1987, to change
sections 6 and 7 to read as follows:
"6. The Corporation will pay all fees, costs, expenses and
charges in connection with the issuance, federal registration,
transfer, redemption and repurchase of its shares of capital stock,
including without limitation, all fees, costs, expenses and charges of
transfer agents and
<PAGE>
registrars, all taxes and other Governmental charges, the costs of
qualifying or continuing the qualification of the Corporation as
broker-dealer, if required, and of registering the shares of the
Corporation's capital stock under the state blue sky laws, or similar
laws of any jurisdiction, costs of preparation and mailing prospectuses
to its shareholders, and any other cost, expense or charge not
expressly assumed by the Distributor hereunder. The Corporation will
also furnish to the Distributor daily such information as may
reasonably be requested by the Distributor in order that it may know
all of the facts necessary to sell shares of the Corporation's stock.
7. The Distributor agrees to pay the cost of all sales
literature and other material which it may require or think desirable
to use in connection with sale of such shares, including the cost of
reproducing the offering prospectus furnished to it by the Corporation.
The Corporation agrees to use its best efforts to qualify its shares of
stock for sale under the laws of such states of the United States and
such other jurisdictions as the Distributor may reasonably request.
If the Distributor pays for other expenses of the
Corporation or furnishes the Corporation with services, the
<PAGE>
cost of which is to be borne by the Corporation under this Agreement,
the Distributor shall not be deemed to have waived its rights under
this Agreement to have the Corporation pay for such expenses or provide
such services in the future".
<PAGE>
IN WITNESS WHEREOF, THE CORPORATION HAS CAUSED THIS
amendment to be executed by its duly authorized officers and its
corporate seal to be affixed thereto, and the Distributor has caused
this Agreement to be executed by one of its partners on the day and
year first above written.
LORD ABBETT VALUE APPRECIATION FUND, INC.
By /S/ JOHN M. MCCARTHY
President
ATTEST:
/S/ CHARLES J. FINLAYSON
Assistant Secretary
LORD, ABBETT & CO.
By /S/ KENNETH B. CUTLER
Partner
EXHIBIT 99.B8
CUSTODY AGREEMENT
THIS AGREEMENT made on January 31, 1984 amends and restates the
agreement dated April 15, 1983, between LORD ABBETT VALUE APPRECIATION
FUND, INC, a Maryland corporation (hereinafter called the "Corporation"),
and MORGAN GUARANTY TRUST COMPANY of NEW YORK, a corporation organized
under the laws of the State of New York (hereinafter called the
"Custodian").
WITNESSETH:
WHEREAS, the Corporation and the Custodian entered into a Custody
Agreement dated as of April 15, 1983, setting forth the terms and
conditions upon which the property and assets of the Corporation are to be
held, applied and delivered; and
WHEREAS, the parties desire to amend the Agreement to authorize the
Custodian to rely on Eligible Trade Reports of the Depository Trust Company
in lieu of officer's certificates in connection with purchases and sales of
securities of the Corporation settled through Depository Trust Company.
NOW, THEREFORE, in consideration of the mutual agreement herein made,
the Agreement is hereby amended and restated as follows:
<PAGE>
SEC. 1. Definitions.
-----------
The word "securities" as used herein includes stocks, bonds,
debentures, notes, evidences of indebtedness, evidences of interest,
warrants and other securities, irrespective of their form, the name by
which they may be described, or the character or form of the entities by
which they are issued or created.
The words "officer's certificate" shall mean a request or direction or
certification in writing signed in the name of the Corporation by the
Chairman, President or a Vice President and the Secretary or the Treasurer
or an Assistant Secretary or an Assistant Treasurer.
The word "Depository" as used herein shall mean any "system" or
"person" contemplated by Section 17(f) of the Investment Company Act of
1940 in which Custodian may, under that Section and any rules, regulations
or orders thereunder and under Section 13 of this Agreement, deposit all or
part of the securities of the Corporation.
The word "receipt" whenever used in this Agreement in connection with
receipt of securities by Custodian shall mean receipt by Custodian of: (i)
securities in bearer form or in form for transfer satisfactory to
Custodian; or, (ii) written or telegraphic advice from a Depository that
securities have been credited to the account of the Custodian at the
Depository; or,
<PAGE>
(iii) written or telegraphic advice from any branch of the Custodian doing
business in the United States and/or any foreign country that such
securities have been deposited with it.
The word "receipt" whenever used in the Agreement in connection with
receipt of payment by Custodian shall mean receipt by Custodian of: (i)
cash or check certified or issued by a bank (which term as used herein
shall include a Federal Reserve Bank), trust company, member firm of a
national securities exchange or a Depository; or, (ii) written or
telegraphic advice from a bank, trust company, registered clearing agency
or a Depository that funds have been or will be credited to the account of
the Custodian at one or more of the foregoing; or, (iii) payment other than
the foregoing if specified in an officer's certificate covering the
transaction in question.
SEC. 2. Names, Titles and Signatures.
----------------------------
The Corporation will furnish to Custodian from time to time, whenever
any change occurs, an officer's certificate setting forth the names, titles
and signatures of its officers, the name of the transfer agent of its
capital stock, and the names and signatures of the officers and employees
thereof entitled to sign.
SEC. 3. Receipt and Disbursement of Money.
---------------------------------
A. Custodian shall open and maintain a separate account or
<PAGE>
accounts in the name of the Corporation and shall hold in such account
or accounts all cash received by it for the account of the
Corporation. Custodian shall make payments of cash to, or for the
account of, the Corporation from such cash accounts only (a) upon the
purchase of securities for the portfolio of the Corporation, (b) for
the purchase or redemption of shares of the capital stock of the
Corporation, (c) for the payment of dividends, taxes, management or
supervisory fees or operating expenses, (d) for payments in connection
with the conversion, exchange or surrender of securities owned by the
Corporation, (e) for payments in connection with the return of
securities loaned by the Corporation or the reduction of cash
collateral held by Custodian upon receipt of such securities or proper
notification of the reduction of cash collateral held by the
Custodian, or (f) for other proper corporate purposes. In making any
such payment Custodian shall first receive an officer's certificate
requesting such payment and stating the clause of this subsection A
pursuant to which such payment is permitted, and any additional
evidence specifically called for in this subsection A, and for the
purposes of clause (f) above, the Custodian shall also receive a
resolution of the Board of Directors of the Corporation signed by an
officer of the Corporation and certified by its Secretary or an
Assistant
<PAGE>
Secretary, setting forth the purposes of such payment, declaring such
purposes to be proper corporate purposes, and naming the person or
persons to which such payment is to be made.
B. Custodian is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received by Custodian for
the account of the Corporation.
SEC. 4. Receipt of Securities.
---------------------
Custodian agrees to receive and hold in a separate account, any
securities owned by the Corporation which may now or hereafter be delivered
to it by or for the account of the Corporation. All such securities are to
be held or disposed of by Custodian or by a Depository for, and subject at
all times to the instructions of, the Corporation pursuant to the terms of
this Agreement.
SEC. 5. Transfer, Exchange, Delivery, etc. of Securities.
------------------------------------------------
Custodian shall have sole power to release or deliver any securities
of the Corporation held by it pursuant to this Agreement. Custodian agrees
to transfer, exchange or deliver securities held by it hereunder only (a)
upon sales of such securities for the account of the Corporation and
receipt by Custodian of payment therefor, (b) when such securities are
called, redeemed or retired or otherwise become payable, (c) for
examination by any broker selling any such securities in
<PAGE>
accordance with "street delivery" custom, (d) in exchange for or upon
conversion into other securities alone or other securities and cash whether
pursuant to any plan of merger, consolidation, reorganization,
recapitalization or readjustment, or otherwise, (e) upon conversion of such
securities pursuant to their terms into other securities, (f) upon exercise
of subscription, purchase or other similar rights represented by such
securities, (g) for the purpose of exchanging interim receipts or temporary
securities for definitive securities, (h) for the purpose of redeeming in
kind shares of capital stock of the Corporation, (i) for loans of
securities by the Corporation, or for the return of securities held as
collateral in connection with such loans, (j) upon deposit of securities of
the Corporation in a Depository, or (k) for other proper corporate
purposes, but only, for purposes of this clause (k), upon receipt of a
resolution of the Board of Directors of the Corporation, signed by an
officer of the Corporation and certified by its Secretary or an Assistant
Secretary, specifying the securities to be delivered, setting forth the
purposes for which such delivery is to be made, declaring such purposes to
be proper corporate purposes, and naming the person or persons, each of
whom shall be stated in such resolution to be an officer or employee of the
Corporation bonded against larceny or embezzlement, to whom delivery of
such
<PAGE>
securities shall be made. In making any such transfer, exchange or
delivery, Custodian shall first receive an officer's certificate requesting
such transfer, exchange or delivery and stating the clause of this Section
5 pursuant to which such transfer, exchange or delivery is permitted, and
any additional evidence specifically called for in this Section 5. For the
purposes of clause (i) above, the officer's certificate shall also identity
the securities to be delivered and shall state the loan agreement under
which the delivery is to be made, the date of delivery, the name of the
borrower and the amount and description of collateral to be received in
connection therewith.
SEC. 6. Custodian's Acts Without Instructions.
-------------------------------------
Unless and until Custodian receives an officer's certificate to the
contrary, Custodian sihall:
(a) Present for payment all coupons and other income items held by it for
the account of the Corporation which call for payment upon presentation, and
hold the cash received by it upon such payment for the account of the
Corporation;
(b) Collect interest and cash dividends received, and other income of any
kind, with notice to the Corporation, for the account of the Corporation;
(c) Hold for the account of the Corporation hereunder all stock dividends,
rights and similar securities issued with
<PAGE>
respect to any securities held by it hereunder; and,
(d) Execute as agent on behalf of the Corporation all necessary ownership
certificates required by the Internal Revenue Code or the Income Tax Regulations
of the United States Treasury Department now or hereafter in effect, inserting
the Corporation's name on such certificates as the owner of the securities
covered thereby, to the extent it may lawfully do so.
SEC. 7. Registration of Securities.
--------------------------
Custodian shall register all securities, except such as are in bearer form
or held by a Depository (except as otherwise directed by an officer's
certificate) in the name of a registered nominee of Custodian as defined in the
Internal Revenue Code and any Regulations of the Treasury Department issued
thereunder or in any provision of any subsequent Federal tax law exempting such
transaction from liability for stock transfer taxes and shall execute and
deliver all such certificates in connection therewith as may be required by such
laws or Regulations or under the laws of any State. Custodian shall use its best
efforts to the end that the specific securities held by it hereunder shall be at
all times identifiable.
The Corporation shall from time to time furnish to Custodian appropriate
instruments to enable Custodian to hold or deliver in proper form for transfer,
or to register in the name of its
<PAGE>
registered nominee, any securities which it may hold for the account of the
Corporation and which may from time to time be registered in the name of the
Corporation.
SEC. 8. Voting and Other Action.
-----------------------
Neither Custodian nor any nominee of Custodian shall vote any of the
securities held hereunder by or for the account of the Corporation, except in
accordance with the instructions contained in an officer's certificate.
Custodian shall execute and deliver, or cause to be executed and delivered, to
the Corporation all notices, proxies and proxy soliciting materials with
relation to such securities, but without indicating the manner in which such
proxies are to be voted.
SEC. 9. Transfer Taxes and Other Disbursements.
--------------------------------------
The Corporation shall pay or reimburse Custodian from time to time for any
transfer taxes payable upon transfers of securities made hereunder, and for all
other necessary and proper disbursements and expenses made or incurred by
Custodian in the performance of this Agreement.
Custodian shall execute and deliver such certificates in connection with
securities delivered to it or by it under this Agreement as may be required
under the Provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any State, to exempt
from
<PAGE>
taxation any exemptible transfers and/or deliveries of any such securities.
SEC. 10. Custodian's Liability.
---------------------
In taking any action called for by this Agreement, Custodian shall be
entitled in good faith to rely upon the officer's certificate and other evidence
specifically called for by the appropriate section of this Agreement. The
Corporation, its successors and assigns, shall at all times fully indemnify and
save harmless Custodian, its successors and assigns, from any and all liability
whatsoever which may arise in connection with this Agreement, except any and all
liability which may arise out of the obligation of Custodian to perform, the
things to be done by it under this Agreement. Nothing herein shall exempt
Custodian from liability due to its own negligence or willful misconduct.
SEC. 11. Reports.
--------
Custodian shall advise the Corporation with respect to transactions for the
account of the Corporation and shall report as to the composition of the
Corporation's assets at such times as the Corporation shall reasonably request.
The books and records of Custodian pertaining to its actions under this
Agreement shall be open to inspection and audit at reasonable times by the
Corporation's officers and auditors.
<PAGE>
SEC. 12. Custodian Compensation.
----------------------
Custodian shall be paid as compensation for its services pursuant to this
Agreement such compensation as may from time to time be agreed upon between the
two parties.
SEC. 13. Depositories.
------------
The parties agree that, as of the date of this Agreement, the Depositories
in which deposits of securities may be made are Federal Reserve/Treasury Book
Entry System (the "System") and Depository Trust Company ("DTC"), subject to the
terms and conditions of this Section 13. Other Depositories may be used under
this Agreement if both parties consent in writing to the use thereof; any such
use shall be subject to the terms and conditions of this Section 13 applicable
to the System and DTC except to the extent, if any, to which such terms and
conditions are changed in any such consent or consents.
The terms of the use of any Depository under this Agreement shall be
governed by the terms and conditions of Rule 17f-4 under the Investment Company
Act of 1940, to which terms and conditions the parties hereto agree and such
terms and conditions shall supersede conflicting provisions of this Agreement.
Nothing herein shall be deemed to require that the Custodian ascertain, as a
condition to the use of the System and DTC, that any required action has been
taken by the Board of Directors of the Corporation. Notwithstanding the use of
any Depository
<PAGE>
hereunder, the securities of the Corporation at all times will be deemed to be
in the custody of, and maintained by, the Custodian, and the Custodian will
indemnify and save harmless the Corporation for any losses caused by the use of
a Depository. If and to the extent that a Depository permits the withdrawal of a
security from it in certificate form and the Corporation requires a certificate
for making a loan or otherwise, the Custodian shall take all necessary and
appropriate action to obtain such certificate upon receipt of an officer's
certificate requesting the same.
The Corporation has agreed to use DTC's Institutional Delivery (ID) system
which will provide it with broker trade confirmations of certain securities
transactions which it has entered into. After comparing the trade data with each
confirmation, the Corporation shall affirm to DTC electronically all trades
whose confirmations accurately reflect the trades which it has entered into,
such affirmations constituting its instructions to deliver or receive portfolio
assets of the Corporation. Upon receipt of each affirmation, DTC has been
instructed to send appropriate instructions to the Custodian in the form of an
"Eligible Trade Report". In the event a broker's trade confirmation does not
accurately reflect the transaction in question, the Corporation shall not affirm
the transaction in
<PAGE>
question in which event DTC has been instructed not to send the Custodian
instructions with respect to such trade confirmation. Accordingly, anything in
this Agreement to the contrary notwithstanding, whenever securities transactions
of the Corporation are to be settled through the DTC ID system, or through a
similar depository system, the Custodian shall be authorized to act in
accordance with, and shall be entitled to rely on, and be protected in acting
on, those instructions received by it on the Eligible Trade Report through such
depository system to the same extent as if the information contained in such
instructions was given in an officer's certificate, signed by officers of the
Corporation. In the event that such depository system for any reason does not
furnish the Custodian with an Eligible Trade Report, the Corporation shall
provide the Custodian with an officer's certificate with the same information
such Report otherwise would have contained.
SEC. 14. Termination or Assignment of Agreement.
--------------------------------------
This Agreement may be terminated by the Corporation on thirty days' notice
or by Custodian on sixty days' notice given in writing and sent by registered
mail to Custodian at 30 West Broadway, New York, N.Y. 10015, or to the
Corporation, at 63 Wall Street, New York, N.Y. 10005, as the case may be. Upon
any termination of this Agreement, including any termination pursuant
<PAGE>
to Section 15 hereof, Custodian shall not be required to make any delivery or
payment of cash and securities held by it hereunder until full payment shall
have been made by the Corporation of all liabilities constituting a charge on or
against the cash and securities held by Custodian or on or against Custodian,
and until full payment shall have been made to Custodian of all its fees,
compensation, cost and expenses, or until Custodian shall have been furnished
with security and indemnity satisfactory to it against any liability,
obligation, fees, compensation, cost or expense in connection with this
Agreement or on account of any action taken or omitted by the Corporation or its
officers or directors under this Agreement.
This Agreement may not be assigned by the Custodian without the consent of
the Corporation, authorized or approved by a resolution of its Board of
Directors.
SEC. 15. Successors.
----------
A. Upon any termination of this Agreement, or in case at any time Custodian
shall tender its resignation or shall be removed or dissolved, or otherwise
shall become incapable of acting, or in case control of Custodian or of its
officers shall be taken over by any public officer or officers the Corporation,
by an officer's certificate furnished to Custodian, (a) may designate a
successor, to whom Custodian shall thereupon deliver
<PAGE>
all cash and securities of the Corporation held by it, or held in its name by a
Depository, or (b) certify that the stockholders of the Corporation have duly
voted that it function without a qualified bank or trust company to hold its
cash and securities and request delivery of all cash and securities to it, in
which case Custodian shall thereupon deliver to the Corporation all cash and
securities of the Corporation held by it or held in its name by a Depository, or
(c) in the absence of any officer's certificate pursuant to (a) or (b), within a
period of 60 days after such resignation, removal, dissolution, incapacity or
taking over, Custodian may deliver any cash and securities of the Corporation
held by it or held in its name by a Depository to a bank or trust company in the
City of New York, having a capital, surplus and undivided profit aggregating not
less than $5,000,000 selected by it, such cash and securities to be held subject
to the same terms as those set forth in this Agreement. Any successor appointed
by the Corporation or selected by Custodian shall immediately and without
further act be superseded by a successor appointed by the holders of not less
than a majority of the shares of the capital stock of the Corporation at the
time outstanding.
B. Any bank or trust company in or into which Custodian or any successor
hereunder may be merged or converted, or with which
<PAGE>
it or any such successor may be consolidated, or any bank or trust company
resulting from any merger, conversion or consolidation to which Custodian or any
such successor shall be a party, or any bank or trust company succeeding to the
business of Custodian or any such successor, shall be substituted as successor
under this Agreement and any amendments thereof without the execution of any
instrument or any further act on the part of the Corporation or any such
successor, provided such bank or trust company be a national banking association
or trust company or banking corporation organized under the laws of the United
States or any State thereof and have a capital, surplus and undivided profits
aggregating not less than $5,000,000.
C. Any successor resulting from the provisions of subsections A or B above
shall be vested with all the powers, duties and obligations of its predecessor
under this Agreement and any amendments thereof and shall succeed to all the
exemptions and privileges of its predecessor under this Agreement and any
amendments thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and their respective corporate seals to be affixed hereto as of the
date first above written by their respective officers thereunto duly authorized.
Executed in four counterparts, each of which is an original.
<PAGE>
LORD ABBETT VALUE APPRECIATION FUND, INC.
By /S/ KENNETH B. CUTLER
Vice President
(Seal)
Attest:
/S/ CHARLES J. FINLAYSON
Assistant Secretary
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By /S/ RALPH M. MASTRANGELO
Ralph M. Mastrangelo
Senior Vice President
(Seal)
Attest:
/S/
Assistant Secretary
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 31st day of January, 1984, before me personally came Kenneth
B. Cutler to me known, who, being by me duly sworn, did depose and say that
he resides in Bronxville, New York, that he is a Vice-President of LORD
ABBETT VALUE APPRECIATION FUND, INC. the Corporation described in and which
executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors of said
corporation, and that he signed his name thereto by like order.
(Notarial Seal) /S/ MINNIE J. GIGANTE
Notary Public
<PAGE>
STATE of NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 5 day of March, 1984, before me personally came RALPH M.
MASTRANGELO to me known, who, being by me duly sworn, did depose and say
that he resides at Franklin Lakes, N.J. that he is a Senior Vice President
of Morgan Guaranty Trust Company of New York, the corporation described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
(Notarial Seal) /S/ ELIZABETH A. BUCKLEY
Notary Public
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
Lord Abbett Value Appreciation Fund, Inc.:
We consent to the use in Post-Effective Amendment No. 13 to Registration
Statement No. 2-82544 of our report dated February 10, 1995 appearing in the
annual report to shareholders and to the reference to us under the captions
"Financial Highlights" in the Prospectus and "Investment Advisory and Other
Services" and "Financial Statements" in the Statement of Additional Information,
both of which are part of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
New York, New York
April 24, 1995
EXHIBIT 16
Lord Abbett Value Appreciation Fund, Inc.
Post Effective Amendment No. 13
Results of a $1,000 investment reflecting the maximum sales charge and the
reinvestment of all distributions:
Period Ending December 31, 1994
P(1+T)N = ERV,
One Five 10
Year Years Years
---- ----- -----
P = 1,000 P = 1,000 P = 1,000
N = 1 N = 5 N = 10
ERV = $912 ERV = $1,431 ERV = $2,985
T = Average annual total return
1,000 (1+T)1 = 1,000 (1+T)5 = 1,431 1000(1+T)10 = 2,985
(1+T) = 912 (1+T)5 = 1,431 (1+T)10 = 2,985
--------- --------- -----
1,000 1,000 1,000
(1+T) = 912 (1+T) = [1,431 ].20 (1+T) = [2,985].10
--------- ----------- -----------
1,000 [1,000] [1,000]
T = [ 912 ]-1 T = [ 1,431 ].20-1 T = [2,985].10-1
------- ---------- -----------
[1,000] [1,000] [1,000]
T = -8.80% T = 7.43% T = 11.56%
<PAGE>
Calculation of yield appearing in the Statement of Additional Information for
Lord Abbett Value Appreciation Fund, Inc. Post-Effective amendment No. 13 on
Form N-1A.
YIELD FORMULA
For the 30 Days
Ended December 31, 1994
YIELD = 2[(a-b+1))6-1] = 1.65%
cd
When a = Fund dividends and interest earned during the period in the
amount of $470,752
b = Fund expenses accrued for the period (net of reimbursements)
in the amount of $204,725
c = The average daily number of Fund shares outstanding during
the period that were entitled to receive dividends
were 15,261,752
d = The maximum offering price per Fund share on the last day of
the period was $11.95
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Annual
Report to Shareholders and is qualified in its entirety by reference to such
Annual Report.
</LEGEND>
<CIK> 0000716788
<NAME> LORD ABBETT VALUE APPRECIATION FUND, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 163451881
<INVESTMENTS-AT-VALUE> 177994225
<RECEIVABLES> 684964
<ASSETS-OTHER> 15292805
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 193971994
<PAYABLE-FOR-SECURITIES> 2658265
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 526006
<TOTAL-LIABILITIES> 3184271
<SENIOR-EQUITY> 1695198
<PAID-IN-CAPITAL-COMMON> 148973185
<SHARES-COMMON-STOCK> 16951983
<SHARES-COMMON-PRIOR> 16003886
<ACCUMULATED-NII-CURRENT> 2613098
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 24659096
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14542344
<NET-ASSETS> 190787723
<DIVIDEND-INCOME> 4685966
<INTEREST-INCOME> 594570
<OTHER-INCOME> 0
<EXPENSES-NET> 2232078
<NET-INVESTMENT-INCOME> 3048458
<REALIZED-GAINS-CURRENT> 24301857
<APPREC-INCREASE-CURRENT> (34053037)
<NET-CHANGE-FROM-OPS> (6702722)
<EQUALIZATION> 25456
<DISTRIBUTIONS-OF-INCOME> 2579254
<DISTRIBUTIONS-OF-GAINS> 14064523
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1994914
<NUMBER-OF-SHARES-REDEEMED> 2281809
<SHARES-REINVESTED> 1234992
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 2259433
<ACCUMULATED-GAINS-PRIOR> 14437795
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1385336
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2232078
<AVERAGE-NET-ASSETS> 198876268
<PER-SHARE-NAV-BEGIN> 12.65
<PER-SHARE-NII> .18
<PER-SHARE-GAIN-APPREC> (.545)
<PER-SHARE-DIVIDEND> .16
<PER-SHARE-DISTRIBUTIONS> .875
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.25
<EXPENSE-RATIO> 1.12
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
