Lord Abbett Mid-Cap
Value Fund
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED JUNE 30, 1996
[Graphic of Violin]
Designed to help provide you with
capital appreciation from a portfolio
of the stocks of midsized companies
[LOGO]
<PAGE>
Report to Shareholders
For the Six Months Ended June 30, 1996
[Photo of Robert S. Dow, Chairman]
Robert S. Dow
Chairman
July 12, 1996
- --------------------------------------------------------------------------------
We would like to thank all shareholders who voted their proxy ballots. We are
pleased to announce that, on June 19, 1996, shareholders approved all the
proposals recommended by your Board of Directors.
- --------------------------------------------------------------------------------
Lord Abbett Mid-Cap Value Fund completed the first half of its fiscal year on
June 30, 1996 with a net asset value of $11.75 per share, versus $11.13 six
months ago (the latter figure has been adjusted for a capital gains distribution
of $1.05 per share, paid in January). During the period, the Fund paid dividends
totaling $.16 per share. Over the period, your Fund produced a total return of
7.2%, which reflects the percent change in net asset value assuming the
reinvestment of all distributions.
1996 began amidst slow economic growth and low inflation in the U.S. By
February, economic growth began to pick up, and strong corporate earnings pushed
the broad stock market averages moderately higher. The stock market's response,
however, was inhibited by concerns that faster growth would lead to higher
inflation which, ultimately, would cause the Federal Reserve to raise short-term
interest rates. These same fears caused long-term bond rates to rise sharply in
March and April.
The volatility in long-term interest rates influenced your Fund's performance.
We maintained our weighting in financial companies (such as banks and insurance
companies) which are sensitive to interest-rate fluctuations and, therefore, did
not perform well over the period. However, as the economy slows and long-term
interest rates decline, we believe these stocks will provide the opportunity for
price appreciation. In our last letter to you, we mentioned that we reduced
holdings which tend to be sensitive to economic activity; we continued this
effort over the first six months of 1996. In addition, we de-emphasized sectors
of the market which may be at risk for earnings disappointments, such as
technology and transportation.
We believe the U.S. economy will slow later in the year and in early 1997 to a
sustainable rate of about 2 1/4%, with inflation remaining close to 3%. This
environment would allow for a decline in long-term interest rates, which would
act to calm the equity markets. We expect 1996's corporate earnings will be
little changed from last year's; and with few broad sectors of the market
representing compelling value, your Fund's performance will be driven mainly by
individual stock selection. Your Fund will continue to look for undervalued
middle capitalization issues (stocks of companies with market capitalizations
ranging from $500 million to $5 billion) with good prospects for exceeding
investors' expectations.
Shareholders should understand that the equity market's high returns over the
last 18 months were well above the long-term average, and probably are not
sustainable now that corporate earnings are peaking. We are confident, however,
that our disciplined, value-oriented investment style will help shareholders
earn competitive returns while reducing volatility.
We regret to inform you that Ronald P. Lynch, Chairman of your Fund, passed away
on June 27, 1996. Mr. Lynch had been with the Firm since 1965. He will be sorely
missed. Your Fund's Board of Directors has elected Robert S. Dow as the new
Chairman of your Fund.
We are pleased Lord Abbett Mid-Cap Value Fund is a part of your investment
portfolio and thank you for your continued trust and confidence.
<PAGE>
The Mid-Cap Advantage
Lord Abbett Mid-Cap Value Fund is one of the few mutual
funds in the industry that focuses on midsized companies
while utilizing a value approach to investing. The Fund
generally focuses on companies with market capitalizations
ranging from $500 million to $5 billion. Because midsized
companies operate from a smaller earnings base, it is
mathematically easier for these companies to grow earnings
at a faster rate than larger companies. Below are three
reasons we believe opportunity exists in the mid-cap sector.
A Valuation Gap Exists
o Mid-cap companies have been less followed by investment
analysts and have been less a focus of investor interest in
recent years. As a result, their price/earnings and
price-to-book ratios are relatively attractive compared to
large-cap companies. Also, we believe midsized companies
offer the potential for higher growth rates than large
companies.
Decreased Tax Burden
o Tax rates for capital gains are lower than rates on ordinary
income. By investing in mid-cap companies, the 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.
Targeted Investing Signals Opportunity
o Midsized companies often concentrate their efforts on one
product or service. This singular focus means management's
efforts are not diluted across many industries.
The Fund Versus Inflation
Years pass and prices increase. It seems to be a fact of
life. Another fact: if your purchasing power does not keep
up with inflation, your standard of living will suffer.
Historically, stocks have proven a successful defense
against the erosion caused by inflation.
In our illustration, 1985 and 1996 are actual costs--then
and now. "Mid-Cap Value Fund 1996" is what the 1985 amount
would have grown to had it been invested in the Fund.
Investments in Lord Abbett Mid-Cap Value Fund (up 217.8%)
surpassed increases in the cost of living (up 43.4%) in
these 10 1/2 years. Finding investments that grow faster
than inflation is one important way to maintain--and
enhance--your lifestyle.
<TABLE>
<CAPTION>
[Graphic-Laptop Computer [Graphic-Keys] [Graphic-Check]
on stack of books]
One-Year Private One-Family House(1) Income per Capita(1)
College Tuition(1)
<S> <C> <C> <C>
1985 $5,418 $90,800 $12,339
1996 $12,432 $138,700 $20,606
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Mid-Cap Value Fund 1996 $17,218 $288,562 $39,213
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</TABLE>
Lord Abbett Mid-Cap Value Fund's results reflect total
return at net asset value, with all distributions reinvested
for the 10 1/2 years ended 6/30/96. See Important
Information on page 2.
(1) National average.
Sources: U.S. Department of Education, Statistics Bureau
Section, College Board Annual Survey of Colleges; National
Association of Realtors, Research Division; Department of
Commerce, Bureau of Economic Analysis Statistics.
Average Annual Total Returns
Average annual total returns for periods ended 6/30/96 at
the 5.75% maximum sales charge, with all distributions
reinvested: 1 year: +10.90%
5 years: +12.80%
10 years: +9.19%
The past performance of the Fund, stocks and inflation is no
indication of future results. The investment return and
principal value of an investment in the Fund will fluctuate
so that shares, on any given day or when redeemed, may be
worth more or less than their original cost.
<PAGE>
The Value of a Managed Equity Portfolio
The cost of goods and services (as measured by the Consumer
Price Index) has risen steadily over the past 10 1/2 years,
increasing at an average of 3.5% per year. Over this time
frame, the 6.2% average annual return of CDs outpaced
inflation. However, investors in the Fund saw their $100,000
investment grow an average of 11.2% per year, to $305,931.
There is no doubt that when it comes to saving for near-term
obligations, CDs are important. But, when investing for
long-term goals such as a house, a child's education or
retirement, owning good companies through a fund like Lord
Abbett Mid-Cap Value Fund can help your money work harder
for you.
Growth of $100,000: 12/31/85-6/30/96
[The following table was represented by a graph in the printed document]
DATE THE FUND SIX-MONTH CD INFLATION
1985 9627 10000 10000
1986 11200 10654 10109
1987 10732 11395 10558
1988 12409 12288 11024
1989 14903 13415 11537
1990 14211 14520 12241
1991 18099 15403 12616
1992 20536 15996 12982
1993 23402 16523 13339
1994 22638 17299 13696
1995 28543 18343 14071
6/330/96 30593 18834 14336
(1) The Fund's results reflect the deduction of the reduced
sales charge of 3.75% applicable to investments of $100,000.
All distributions were reinvested.
(2) Source: Salomon Brothers and The Federal Reserve Bank.
Total return is the percent change in value assuming the
reinvestment of all distributions. Results of the CD
investment reflect the average six-month CD rate available
each year during the period. It is important to remember
that, unlike the Fund, a CD's rate and principal are
guaranteed if held until maturity. The Federal Deposit
Insurance Corporation ("FDIC") insures CDs up to $100,000.
Important Information
Results quoted herein represent past performance based on
the current sales charge schedule and reflect appropriate
Rule 12b-1 Plan expenses from commencement of the Plan. Past
performance is no indication of future results. Tax
consequences are not reflected. The Fund's sales charge
structure has changed from the past. The investment return
and principal value of a Fund investment will fluctuate so
that shares, on any given day or when redeemed, may be worth
more or less than their original cost. If used as sales
material after 9/30/96, this report must be accompanied by
Lord Abbett's Performance Quarterly for the most recently
completed calendar quarter.
2
<PAGE>
Statement of Net Assets June 30, 1996
<TABLE>
<CAPTION>
Number of Market Value
Security Shares (Note 1a)
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INVESTMENTS IN COMMON STOCKS 96.80%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aerospace AAR Corp.-Major supplier of products and services
1.94% for the worldwide aviation industry 150,000 $ 3,056,250
*SPACEHAB Inc.-Develops and operates habitable
modules for space-based research and cargo
services aboard the U.S. Space Shuttle system 135,000 1,485,000
Total 4,541,250
---------
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Apparel * Fruit of The Loom-Producer of non-fashion
2.46% apparel and undergarments 110,000 2,805,000
* Jones Apparel Group-Leading designer,
manufacturer and marketer of women's apparel 60,000 2,947,500
Total 5,752,500
---------
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Auto Parts 2.74% Genuine Parts Company-National distributor
of automotive replacement parts 140,000 6,405,000
---------
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Automotive Johnson Controls, Inc.-Diversified manufacturer of
5.43% auto seats, car batteries, plastic beverage
containers and systems for commercial buildings 60,000 4,170,000
Snap-On, Inc.-Manufactures and distributes hand tools
and diagnostic equipment for the automotive industry 180,000 8,527,500
Total 12,697,500
----------
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Banks: Regional Bank of Boston Corp.-Leading New England regional bank 100,000 4,950,000
2.11% ---------
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Chemicals 3.72% Crompton & Knowles Corp.-Specialty chemicals and plastic
processing equipment manufacture 180,000 3,015,000
Hanna, M.A. Co.-Leading producer
and distributor of plastic compounds, resins and additives 180,000 3,757,500
Lyondell Petrochemical Co.-Integrated manufacturer
and marketer of petrochemicals
and refined petroleum products 80,000 1,930,000
Total 8,702,500
---------
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Computer Software/Services
1.23% *Cheyenne Software Inc.-Leading international
developer of software services for Local Area Networks 150,000 2,887,500
---------
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Containers Sonoco Products Co.-A leading U.S. producer of
2.29% specialty paper and plastic packaging components 189,000 5,362,875
---------
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Drugs/Health Care *DSG International Ltd.-Global manufacturer of disposable diapers 140,000 1,557,500
Products *Laboratory Corporation of America-Major provider
6.70% of clinical laboratory testing services in the U.S. 300,000 2,250,000
Mallinckrodt Group Inc.-Producer of medical products,
specialty chemicals and veterinary supplies 195,000 7,580,625
*Vivra Inc.-Leading provider of end-stage
renal dialysis treatment 130,000 4,273,750
Total 15,661,875
----------
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Electric Power Illinova Corp.-Major midwestern electric utility holding company 100,000 2,875,000
4.83% Ipalco Enterprises Inc.-Major midwestern electric utility holding company 150,000 3,937,500
SCANA Corp.-Major southeastern electric and gas utility holding company 160,000 4,500,000
Total 11,312,500
----------
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Electronics: Equipment *EMC Corp.-A supplier of high-performance
5.32% storage devices and related services 140,000 2,607,500
Perkin-Elmer Corp-Leading manufacturer of
analytical instuments and life science systems 105,000 5,066,250
*Plantronics, Inc.-Leading supplier of communication headset products
and services to users and providers worldwide 130,000 4,777,500
Total 12,451,250
----------
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Food Dean Foods Co.-Major producer of dairy foods, canned
10.60% and frozen vegetables 240,000 5,940,000
Flowers Industries, Inc.-Major producer of baked and
snack-food products in the U.S. 200,000 3,225,000
Hershey Foods Corp.-Major U.S. maker of chocolate and
confectionary products 40,000 2,935,000
Supervalu Inc.-Second largest U.S. food wholesaler 40,000 4,410,000
Universal Foods Corp.-Manufacturer of yeast, flavorings,
colorants and dried spices for the food industry 225,000 8,296,875
Total 24,806,875
----------
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Health Care Services
1.27% *Health Systems International Inc. Class A-Health
maintenance organization operator 110,000 2,983,750
---------
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Hotel/Motel Patriot American Hospitality, Inc. Real Estate Investment
2.82% Trust-Hotel real estate investment trust 100,000 2,962,500
Starwood Lodging Trust Real Estate Investment Trust-Hotel
real estate investment trust 100,000 3,637,500
Total 6,600,000
---------
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Insurance Alexander & Alexander Services-Second largest
6.62% insurance broker in the world 250,000 4,937,500
CMAC Investment Corp.-Major private mortgage insurance provider 50,000 2,875,000
The Progressive Corporation-Insurance holding
company specializing in non-standard auto insurance 60,000 2,775,000
</TABLE>
3
<PAGE>
Statement of Net Assets June 30, 1996
<TABLE>
<CAPTION>
Number of
Shares
or Principal Market Value
Security Amount (Note 1a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Transatlantic Holdings Inc.-International property
and casualty reinsurer 70,000 $ 4,908,750
Total 15,496,250
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Machinery: Diversified *Coltec Industries Inc.-Diversified manufacturer of
3.26% aerospace, industrial and automotive products 175,000 2,493,750
Goulds Pumps, Inc.-Largest U.S. producer of industrial
and residential pump systems 200,000 5,125,000
Total 7,618,750
---------
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Miscellaneous Moore Corp. Ltd.-World's largest manufacturer of business
5.17% forms and related products 350,000 6,606,250
National Service Industries, Inc.-Diversified
manufacturer of lighting equipment, rental
uniforms and specialty chemicals 140,000 5,477,500
Total 12,083,750
----------
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Natural Gas Distribution
2.35% Eastern Enterprises-Natural gas distributor in Massachusetts 165,000 5,486,250
---------
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Natural Gas Diversified Sonat Inc.-Major diversified energy company with
3.15% interests in natural gas pipelines,
exploration and drilling 80,000 3,600,000
The Coastal Corporation-A diversified gas pipeline company 90,000 3,757,500
Total 7,357,500
---------
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Oil: Domestic 1.43% Ultramar Corp.-Refiner and marketer of petroleum products 115,000 3,335,000
---------
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Oil Well Equipment/
Service COFLEXIP S.A. Sponsored ADR-World leader in design,
1.72% manufacture and installation
of flexible pipe for offshore petroleum transportation 230,900 4,011,887
---------
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Paper and Forest Products James River Corp.-Producer of paper-based
3.34% consumer products, packaging and
communication papers 220,000 5,802,500
Westvaco Corporation-Major producer of paper and paprboard
products 67,500 2,016,563
Total 7,819,063
---------
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Railroads Canadian National Railway (Partially Paid)-Major Canadian-based
.94% railroad operator 50,100 920,588
Illinois Central Corp.-Major midwestern freight railroad operator 45,000 1,276,875
Total 2,197,463
---------
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Restaurants 2.57% *Brinker International Inc.-Major developer
and operator of casual dining restaurants 400,000 6,000,000
---------
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Retail Dillard Department Stores Inc.-Southwestern department store chain 35,000 1,277,500
3.10% Jostens Inc.-Produces class rings, yearbooks and
recognition products for schools and businesses 150,000 2,962,500
*Payless Shoe Source-Major U.S. footwear retailer 50,000 1,587,500
*Proffitt's Inc.-Regional department store chain 40,000 1,420,000
Total 7,247,500
---------
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Savings and Loan Ahmanson, H.F. & Co.-Largest savings and loan holding company in the U.S. 140,000 3,780,000
3.73% *Glendale Federal Bank FSB-California savings and loan 75,000 1,359,375
Great Western Financial Corp.-A leading savings and loan company 150,000 3,581,250
Total 8,720,625
---------
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Tire and Rubber Goods Cooper Tire & Rubber Company-Major manufacturer of replacement tires and
3.82% inner tubes for cars, trucks and buses 175,000 3,893,750
Standard Products Co.-Manufactures plastic and rubber products
for the automotive and appliance industries 216,600 5,035,950
Total 8,929,700
---------
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Toys 2.14% Hasbro Inc.-Major U.S. manufacturer of toys and games 140,000 5,005,000
---------
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Total Investments in Common Stocks (Cost $189,348,522) 226,424,113
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OTHER ASSETS, LESS LIABILITIES 3.20%
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Corporate Obligations,
at Cost American Express Credit Corp. 5.45% due 7/2/1996 7,000M 7,000,000
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Cash and Receivables, Net of Liabilities 473,288
--------------------------------------------------------------------------------------------------------
Total Other Assets, Less Liabilities 7,473,288
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Net Assets (equivalent to $11.75 a share on 19,904,993 shares of
100.00% $0.10 par value capital stock outstanding; authorized, 150,000,000 shares) $233,897,401
--------------------------------------------------------------------------------------------------------
*Non-income producing.
See Notes to Financial Statements.
</TABLE>
4
<PAGE>
Portfolio Changes
Issues added to or eliminated from the portfolio (exclusive of U.S. Government
obligations and short-term investments) during the six months ended June 30,
1996
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Additions+ Cheyenne Software Inc. Flowers Industries, Inc. Payless Shoe Source
CMAC Investment Corp. Health Systems International Inc. Plantronics, Inc.
Coltec Industries Inc. Class A Proffitt's Inc.
Crompton & Knowles Corp Illinova Corp.
DuPont Photomasks Inc. Jostens Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Eliminations+ Banta Corp. Kerr-McGee Corp. Nordstrom Inc.
DuPont Photomasks Inc. LoralCorp. Union Carbide Corp.
Equitable Resources, Inc. Nalco Chemical Co. Western Gas Resources, Inc.
</TABLE>
+Includes securities previously classified in the Investment Portfolio under
"Other".
Statement of Operations For the Six Months Ended June 30, 1996
<TABLE>
<CAPTION>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Income Dividends $ 2,464,921
------------------------------------------------------------------------------ ----------- -------------
Interest 236,335
------------------------------------------------------------------------------ ----------- -------------
Total income $ 2,701,256
- ---------------------------------------------------------------------------------------------------------- ----------- -------------
Expenses Management fee (Note 5) 847,742
------------------------------------------------------------------------------ ----------- -------------
12b-1 distribution plan (Note 5) 345,310
------------------------------------------------------------------------------ ----------- -------------
Shareholder servicing 150,000
------------------------------------------------------------------------------ ----------- -------------
Reports to shareholders 42,000
------------------------------------------------------------------------------ ----------- -------------
Audit 24,000
------------------------------------------------------------------------------ ----------- -------------
Directors' fees 12,000
------------------------------------------------------------------------------ ----------- -------------
Other 46,813
------------------------------------------------------------------------------ ----------- -------------
Total expenses 1,467,865
------------------------------------------------------------------------------ ----------- -------------
Net investment income 1,233,391
------------------------------------------------------------------------------ ----------- -------------
Net Realized and Unrealized Gain (Loss) on Investments (Note 4)
- ----------------------------------------------------------------------------------------------------------- ---------- -------------
Net realized gain from securities transactions (excluding short-term securities)
--------------------------------------------------------------------------------------------------------
Proceeds from sales 48,831,911
------------------------------------------------------------------------------ ----------- -------------
Cost of securities sold 32,307,651
------------------------------------------------------------------------------ ----------- -------------
Net realized gain 16,524,260
------------------------------------------------------------------------------ ----------- -------------
Net unrealized appreciation (depreciation) of investments
------------------------------------------------------------------------------ ----------- -------------
Beginning of period 38,849,085
------------------------------------------------------------------------------ ----------- -------------
End of period 37,075,591
------------------------------------------------------------------------------ ----------- -------------
Net unrealized depreciation (1,773,494)
------------------------------------------------------------------------------ ----------- -------------
Net realized and unrealized gain on investments 14,750,766
------------------------------------------------------------------------------ ----------- -------------
Net Increase in Net Assets Resulting from Operations $15,984,157
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</TABLE>
See Notes to Financial Statements.
5
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, December 31,
Increase (Decrease) in Net Assets 1996 1995
- ----------------------------------------------------------------------------------------------------------- ---------- -------------
<S> <C> <C> <C>
Operations Net investment income $ 1,233,391 $ 3,060,026
------------------------------------------------------------------------------ ----------- -------------
Net realized gain from securities transactions 16,524,260 20,044,535
------------------------------------------------------------------------------ ----------- -------------
Net unrealized (depreciation) appreciation of investments (1,773,494) 24,306,741
------------------------------------------------------------------------------ ----------- -------------
Net increase in net assets resulting from operations 15,984,157 47,411,302
- ----------------------------------------------------------------------------------------------------------- ---------- -------------
Undistributed net investment income included in price of shares sold
(reacquired) (Note 1d) 29,263 (41,423)
- ----------------------------------------------------------------------------------------------------------- ---------- -------------
Distributions to shareholders from
------------------------------------------------------------------------------ ----------- -------------
Net investment income (2,962,429) (2,778,098)
------------------------------------------------------------------------------ ----------- -------------
Net realized gain from securities transactions (19,436,362) (23,613,521)
------------------------------------------------------------------------------ ----------- -------------
Total distributions (22,398,791) (26,391,619)
- ----------------------------------------------------------------------------------------------------------- ---------- -------------
Capital share transactions
------------------------------------------------------------------------------ ----------- -------------
Net proceeds from sales of 766,210 and 2,103,934 shares, respectively 8,811,109 22,817,148
------------------------------------------------------------------------------ ----------- -------------
Net asset value of 1,867,268 and 2,422,885 shares, respectively,
issued to shareholders in reinvestment of net investment income
and realized gain from securities transactions 20,251,955 23,501,594
------------------------------------------------------------------------------ ----------- -------------
Total 29,063,064 46,318,742
------------------------------------------------------------------------------ ----------- -------------
Cost of 1,377,917 and 2,829,370 shares reacquired, respectively (15,928,868) (30,936,149)
------------------------------------------------------------------------------ ----------- -------------
Increase in net assets derived from capital share transactions
(net increase of 1,255,561 and 1,697,449 shares, respectively) 13,134,196 15,382,593
- ----------------------------------------------------------------------------------------------------------- ---------- -------------
Increase in net assets 6,748,825 36,360,853
- ----------------------------------------------------------------------------------------------------------- ---------- -------------
Net Assets
- ----------------------------------------------------------------------------------------------------------- ---------- -------------
Beginning of period 227,148,576 190,787,723
------------------------------------------------------------------------------ ----------- -------------
End of period (including undistributed net investment income of
$1,294,823 and $2,994,598, respectively) $233,897,401 $227,148,576
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
Financial Highlights
<TABLE>
<CAPTION>
Six Months
Ended
June 30, Year Ended December 31,
Per Share Operating Performance: 1996 1995 1994 1993 1992 1991
===================================================== ========== =============================================================
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.18 $11.25 $12.65 $12.60 $11.81 $9.80
--------------------------------------------- ---------- -------- -------- -------- -------- --------
Income from investment operations
------------------------------------- ---------- -------- -------- -------- -------- --------
Net investment income .06+ .162 .18 .16 .20 .23
------------------------------------- ---------- -------- -------- -------- -------- --------
Net realized and unrealized gain (loss)
on investments .72 2.383 (.545) 1.42 1.31 2.30
------------------------------------- ---------- -------- -------- -------- -------- --------
Total from investment operations .78 2.545 (.365) 1.58 1.51 2.53
--------------------------------------------- ========== ======== ======== ======== ======== ========
Distributions
------------------------------------- ---------- -------- -------- -------- -------- --------
Dividends from net investment income (.16) (.17) (.16) (.20) (.22) (.26)
------------------------------------- ---------- -------- -------- -------- -------- --------
Distributions from net realized gain (1.05) (1.445) (.875) (1.33) (.50) (.26)
- ----------------------------------------------------- ---------- -------- -------- -------- -------- --------
Net asset value, end of period $11.75 $12.18 $11.25 $12.65 $12.60 $11.81
- ----------------------------------------------------- ========== ======== ======== ======== ======== ========
Total Return* 7.18%+ 26.09% (3.27)% 13.95% 13.46% 27.36%
===================================================== ========== =============================================================
Ratios/Supplemental Data:
===================================================== ========== =============================================================
Net assets, end of period (000) $233,897 $227,149 $190,788 $202,519 $173,380 $166,056
------------------------------------- ---------- -------- -------- -------- -------- --------
Ratios to Average Net Assets:
============================================= ========== =============================================================
Expenses .63%+ 1.27% 1.12% 1.22% 1.22% 1.14%
------------------------------------- ---------- -------- -------- -------- -------- --------
Net investment income .53%+ 1.48% 1.53% 1.35% 1.71% 2.16%
--------------------------------------------- ---------- -------- -------- -------- -------- --------
Portfolio turnover rate 20.53% 41.42% 57.49% 33.42% 62.55% 34.20%
====================================================================================================================================
</TABLE>
*Total return does not consider the effects of sales loads.
+Not annualized.
See Notes to Financial Statements.
6
<PAGE>
Notes to Financial Statements
1. Significant Accounting Policies
The Company is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The following is a summary
of significant accounting policies consistently followed by the Company. The
policies are in conformity with generally accepted accounting principles.
(a) Market value is determined as follows: Securities listed or admitted to
trading privileges on any national securities exchange are valued at the last
sales price on the principal securities exchange on which such securities are
traded, or, if there is no sale, at the mean between the last bid and asked
prices on such exchange. Securities traded only in the over-the-counter market
are valued at the mean between the last bid and asked prices in such market,
except that securities admitted to trading on the NASDAQ National Market System
are valued at the last sales price if it is determined that such price more
accurately reflects the value of such securities. Securities for which market
quotations are not available are valued at fair value under procedures approved
by the Board of Directors; such procedures require the use of estimates.
(b) It is the policy of the Company to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income in taxable distributions. Therefore, no income tax
provision is required.
(c) Security transactions are accounted for on the date that the securities are
purchased or sold (trade date). Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Interest income is accrued on
a daily basis.
(d) A portion of proceeds from sales and costs of repurchases of capital shares,
equivalent to the amount of distributable net investment income on the date of
the transaction, is credited or charged to undistributed income. Undistributed
net investment income per share thus is unaffected by sales or repurchases of
shares.
(e) Certain amounts of the components of net assets in prior periods have been
reclassified to conform the presentation of such components to that reported in
the current period.
2. Distributions
Taxable net realized gain from securities transactions, if any, is declared in
December of the current year or January of the succeeding year. At June 30,
1996, undistributed net realized gain for financial reporting purposes, which is
substantially the same as for federal income tax purposes, aggregated
$18,194,041.
Income and capital gains distributions are determined in accordance with income
tax regulations which may differ from methods used to determine the
corresponding income and capital gains amounts in accordance with generally
accepted accounting principles. These differences are primarily caused by
differences in the timing of recognition of certain components of income,
expense or capital gain. Where such differences are permanent in nature, they
are reclassified in the Sources of Net Assets based upon their ultimate
characterization for federal income tax purposes. Any such reclassifications
will have no effect on net assets, results of operations or net asset value of
the Fund.
3. Capital Paid In
At June 30, 1996, capital paid in aggregated $177,332,946.
4. Purchases and Sales of Securities
Purchases and sales of investment securities (other than short-term investments)
aggregated $45,558,821 and $48,831,911, respectively. Security gains and losses
are computed on the identified cost basis.
As of June 30, 1996, net unrealized appreciation for federal income tax purposes
aggregated $37,075,591, of which $41,378,319 related to appreciated securities
and $4,302,728 related to depreciated securities. For federal income tax
purposes, the identified cost of investments owned at June 30, 1996 was
substantially the same as the cost for financial reporting purposes.
5. Management Fee and Other Transactions with Affiliates
Lord, Abbett & Co. received a management fee of $847,742 for which it supplied
investment management, research, statistical and advisory services and paid
officers' remuneration and certain other expenses of the Company. The management
fee is based on average daily net assets at the following annual rates: .75 of
1% on the first $200 million; .65 of 1% on the next $300 million; and .50 of 1%
on the excess over $500 million. Lord, Abbett & Co. also received $24,243,
representing payment of commissions on sales of capital stock of the Company
after deducting $156,582 allowed to authorized distributors as concessions.
Certain of the Company's officers and directors have an interest in Lord, Abbett
& Co.
The Company has a Rule 12b-1 Plan providing for (a)the payment of a service fee
to dealers at the annual rate of .15% of the average daily net asset value of
the Company's shares sold by dealers prior to June 1, 1990 and .25% of the
average daily net asset value of such shares sold on or after that date and (b)
a one-time 1% distribution fee, at the time of sale, on such shares sold at net
asset value of $1 million or more.
6. Directors' Remuneration
The Directors of the Company associated with Lord, Abbett & Co. and all officers
of the Company receive no compensation from the Company for acting as such.
Outside Directors' fees, including attendance fees for board and committee
meetings, and outside Directors' retirement costs, are allocated among all funds
in the Lord Abbett group based on net assets of each fund. The direct
remuneration accrued during the period for outside Directors of the Company as a
group was $2,006 (exclusive of expenses), a portion of which has been deemed
invested in shares of the Company under a deferred compensation plan
contemplating future payment of the value of those shares. As of June 30, 1996,
the aggregate amount in Directors' accounts maintained under the plan was
$207,943. Retirement costs accrued during the period amounted to $1,212.
7
<PAGE>
Our Management
Board of Directors
Robert S. Dow
Thomas S. Henderson
E. Thayer Bigelow*+
Stewart S. Dixon*
John C. Jansing*
C. Alan MacDonald*+
Hansel B. Millican, Jr.*+
Thomas J. Neff*
* Outside Director
+ Audit Committee
Officers
Robert S. Dow, Chairman and President
Edward K. von der Linde, Executive
Vice President and Portfolio Manager
Kenneth B. Cutler, Vice President
and Secretary
Stephen I. Allen, Vice President
Daniel E. Carper, Vice President
Thomas S. Henderson, Vice President
Robert G. Morris, Vice President
E. Wayne Nordberg, Vice President
John J. Walsh, Vice President
John J. Gargana, Jr., Vice President
Paul A. Hilstad, Vice President
and Assistant Secretary
Thomas F. Konop, Vice President and
Assistant Secretary
Victor W. Pizzolato, Vice President
Keith F. O'Connor, Treasurer
Joseph Van Dyke, Assistant Treasurer
Lydia Guzman, Assistant Secretary
Robert M. Hickey, Assistant Secretary
A. Edward Oberhaus III,
Assistant Secretary
Investment Manager and
Underwriter
Lord, Abbett & Co. and
Lord Abbett Distributor LLC
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
212-848-1800
Custodian
The Bank of New York
New York, NY
Transfer Agent
United Missouri Bank of
Kansas City, N.A.
Shareholder Servicing Agent
DST Systems, Inc.
P.O. Box 419100
Kansas City, MO 64141
800-821-5129
Auditors
Deloitte & Touche LLP
New York, NY
Counsel
Debevoise & Plimpton
New York, NY
Copyright (C) 1996 by Lord Abbett Mid-Cap Value Fund, Inc.
767 Fifth Avenue, New York, NY 10153-0203
This publication, when not used for the general information of shareholders of
Lord Abbett Mid-Cap Value Fund, Inc., is to be distributed only if preceded or
accompanied by a current prospectus which includes information concerning the
Fund's investment objective and policies, sales charges and other matters. There
is no guarantee that the forecasts contained within this publication will come
to pass.
All rights reserved. Printed in the U.S.A.
8
<PAGE>
Lord, Abbett & Co.
A Tradition of Performance Through
Disciplined
Investing
[photo of Investment Team]
FPO
(seated)
John J. Walsh, partner
(standing, left to right)
Edward K. von der Linde,
portfolio manager--Lord Abbett
Mid-Cap Value Fund
W. Thomas Hudson, Jr.,
portfolio manager
A successful long-term track record is evidence of a successful investment
strategy. For decades we, at Lord, Abbett & Co., have believed that investing
with a disciplined, value approach is the best way to achieve competitive
returns and reduce portfolio risk. This commitment and the dedication of our
team of 48 investment professionals have helped us earn the trust of financial
professionals and investors for over 65 years.
About Your
Fund's
Board of
Directors
The Securities and Exchange Commission (SEC) views the role of the independent
Board of Directors as one of the most important components in overseeing a
mutual fund. The Board of Directors watches over your Fund's general operations
and represents your interests. Board members review and approve every contract
between your Fund and Lord, Abbett & Co. (the Fund's investment manager) and
Lord Abbett Distributor LLC (the Fund's underwriter). They meet regularly to
review a wide variety of information and issues regarding your Fund. Every
member of the Board possesses extensive business experience; Lord Abbett Mid-Cap
Value Fund's shareholders are indeed fortunate to have a group of independent
directors with diverse backgrounds to provide a variety of viewpoints in the
oversight of their Fund. Below, we feature one of our independent directors,
Stewart S. Dixon.
Stewart S. Dixon,
Director--Lord Abbett
Mid-Cap Value Fund
[Photo of Stewart S. Dixon]
An alumnus of Yale University, Mr. Dixon also holds a law degree from the
University of Michigan, and has practiced law for nearly 40 years. He was one of
the founding partners of the firm of Wildman, Harrold, Allen & Dixon (Chicago)
in 1967, where he practices in the areas of corporate/securities; anti-trust;
and estate planning.
He serves as a director of Ortho S.A.Sprague Memorial Institute and as a trustee
of the Chicago Historical Society. He has served as a director of Children's
Memorial Hospital, the Infant Welfare Society and the Chicago Zoological
Society. He has been an independent director for all of Lord Abbett's funds
since 1976.
<PAGE>
Investing in the
Lord Abbett
Family of Funds
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Growth & Balanced Income Tax-Free Money
Growth Fund Funds Income Funds Fund Funds Income Funds Market Fund
Developing Mid-Cap Affiliated Fund Balanced Series U.S. Government o National U.S. Government
Growth Fund Value Fund Securities Series* o California Securities
Growth & o Connecticut Money Market
Global Fund- Income Series Bond-Debenture o Florida Fund*+
Equity Series Fund o Georgia
Research Fund- o Hawaii
Large-Cap Global Fund- o Michigan
Series Income Series o Minnesota
o Missouri
Limited Duration o New Jersey
U.S. Government o New York
Securities Series* o Pennsylvania
o Texas
o Washington
</TABLE>
Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe your financial adviser provides value in helping you identify and
understand your investment objectives and, ultimately, offering fund
recommendations suitable for your individual needs.
This publication, when used as sales literature, is to be distributed only
if preceded or accompanied by a current prospectus for Lord Abbett Mid-Cap
Value Fund.
For more complete information about any other Lord Abbett fund, including
charges and expenses, call your financial adviser or Lord Abbett
Distributor LLC at 800-874-3733 for a prospectus. Read it carefully before
investing.
When you invest in a family of funds, you benefit from:
Diversification. You and your financial adviser can diversify your
investments between equity and income funds.
Flexibility. As your investment goals change, your financial adviser can
help you reallocate your portfolio.
As an investor in the Lord Abbett Family of Funds, you have access to 26
portfolios designed to meet a variety of investment needs. While you may
reallocate your assets among our funds at any time, we recommend speaking
with your financial adviser to help you customize your investment plan.
* An investment in this Fund is neither insured nor guaranteed by the U.S.
Government.
+ There can be no assurance that this Fund will be able to maintain a stable
net asset value of $1.00 per share. This Fund is managed to maintain, and
has maintained, its stable $1.00 per share price.
Numbers to Keep Handy
For Literature: 800-874-3733
For Account Information: 800-821-5129
For Fund Information: 800-426-1130
[LOGO] LORD ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
LORD ABBETT DISTRIBUTOR LLC LAMCVF-3-696
- ------------------------------------------------------------ (8/96)
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203
