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.14 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Amendment No.16 [X]
LORD ABBETT MID-CAP VALUE FUND, INC.
(formerly 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, 1996 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
February 28, 1996.
1
<PAGE>
LORD ABBETT MID-CAP VALUE FUND, INC.
FORM N-1A
Cross Reference Sheet
Post-Effective Amendment No. 14
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 MID-CAP
VALUE FUND, INC.
THE GENERAL MOTORS BUILDING
767 FIFTH AVENUE
NEW YORK, NY 10153-0203
800-426-1130
LORD ABBETT MID-CAP VALUE FUND, INC., FORMERLY 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, 1996.
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 Fund's 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") .20%(3)
Other Expenses (See "Our Management") .32%
Total Operating Expenses 1.27%(3)
<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
$70(4) $95(4) $123(4) $202(4)
(1) Sales "load" is referred to as sales "charge" and "deferred sales load" is
referred to as "contingent deferred reimbursement charge" throughout this
Prospectus. With a front-end sales charge and the Rule 12b-1 plan described
herein, long-term shareholders may pay more than the economic equivalent of
the maximum permitted front-end sales charge pursuant to the rules of the
National Association of Securities Dealers.
(2) Redemptions of shares on which the Fund's 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) The Board of Directors has approved under a new 12b-1 plan, subject to
shareholder approval, payments that, had they been in effect for the Fund's
most recent fiscal year, would have increased 12b-1 fees and total expenses
to 0.25% and 1.32%, respectively. See "Rule 12b-1 Plan" for more details.
(4) 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
public accountants, in connection with their annual audit of the Fund's
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
Ended Year Ended
Per Share Operating Year Ended December 31, Dec. 31, February 28,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Performance: 1995 1994 1993 1992 1991 1990 1989 1988 1987* 1987 1986
Net asset value, beginning of period $11.25 $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 .162 .18 .16 .20 .23 .28 .29 .34 .30 .32 .23
Net realized and unrealized
gain (loss) on securities 2.383 (.545) 1.42 1.31 2.30 (.77) 1.57 1.08 (2.24) 2.11 3.42
Total from investment operations 2.545 (.365) 1.58 1.51 2.53 (.49) 1.86 1.42 (1.94) 2.43 3.65
Distributions
Dividends from net investment income (.17) (.16) (.20) (.22) (.26) (.30) (.32) . (.61) (.23) (.23)
Distributions from net realized gain (1.445) (.875) (1.33) (.50) (.26) . (.48) (.98) (2.95) (.86) .
Net asset value, end of period $12.18 $11.25 $12.65 $12.60 $11.81 $9.80 $10.59 $9.53 $9.09 $14.59 $13.25
Total Return** 26.09% (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) $227,149 $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 1.27% 1.12% 1.22% 1.22% 1.14% 1.12% .94% 1.02% .81% .89% .86%
Net investment income 1.48% 1.53% 1.35% 1.71% 2.16% 2.79% 2.91% 3.41% 2.42% 2.42% 2.19%
Portfolio turnover rate 41.42% 57.49% 33.42% 62.55% 34.20% 51.49% 30.42% 26.53% 43.97% 52.41% 21.28%
<FN>
*The Financial Statements cover ten months because the fiscal year-end was changed during the year from February 28 to December 31.
**Total return does not consider the effects of sales loads.
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 company's 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. Under normal circumstances at least 65% of our total assets will
consist of middle-sized companies (aggregate market value of outstanding stock
between $500 million and $5 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.
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 Fund's 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
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
<PAGE>
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 Fund's 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 Mid-Cap Value 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 Abbett's 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>
<PAGE>
In selecting dealers to execute portfolio transactions for the Fund's
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.
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"), any series of 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 purchaser's 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 director's or employee's 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 ("mutual fund wrap fee programs"), (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 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
<PAGE>
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 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.
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
Fund's 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. The Board of Directors
of the Fund has approved, subject to shareholder approval at a meeting to be
held on June 19, 1996, a new Rule 12b-1 plan. Under the most significant
difference between the two plans, the board could approve under the proposed new
plan maximum annual fees of up to 0.50% of average daily net assets, consisting
of a distribution fee of 0.25% and a service fee of 0.25% (except that the
service fee may not exceed 0.15% in the case of shares sold or attributable to
shares sold prior to June 1, 1990). The board has approved under the proposed
new plan, subject to such shareholder approval, payments that, had they been in
effect for the Fund's most recent fiscal year, would have increased 12b-1 fees
from 0.20% to 0.25% of average net assets.
6 SHAREHOLDER 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 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
<PAGE>
(800-521-5129) prior to the close of the NYSE to obtain the fund's 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 ($250 initial and
$50 subsequent 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.
Householding: A new procedure has been inaugurated whereby a single copy of an
annual or semi-annual report is sent to an address to which more than one
registered shareholder of the Fund with the same last name has indicated mail is
to be delivered, unless additional reports are specifically requested in writing
or by telephone.
All correspondence should be directed to Lord Abbett Mid-Cap Value 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 65 years and currently manages over $19 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. Edward K. von
der Linde, Executive Vice President, has been primarily responsible for the
day-to-day management of the Fund since October 1995, although he has been
involved with the Fund's management since 1988. Mr. von der Linde has been with
Lord, Abbett & Co. since 1988 and has over 10 years of investment experience.
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, 1995, 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. Our ratio of expenses, including
management fee expenses, to average net assets for the fiscal year ended
December 31, 1995 was 1.27%.
<PAGE>
Our former name was Lord Abbett Value Appreciation Fund, Inc. Our name was
changed to Lord Abbett Mid-Cap Value Fund, Inc.
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. If you elect a cash
payment (i) a check will be mailed to you as soon as possible after the monthly
reinvestment date or (ii) if you arrange for direct deposit, your payment will
be wired directly to your bank account within one day after the date on which
the dividend is paid. Supplemental dividends also may be paid on or about
December 31.
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%. Legislation pending 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 Mid-Cap Value 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 date the
redemption order was received in proper form. Payment will be made within three
days. 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
<PAGE>
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
Abbett's 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
concurrent with, the redemption request.
10 PERFORMANCE
The Fund ended fiscal 1995 on December 31 with a net asset value of $12.18 per
share, versus $9.81 one year ago. The latter figure has been adjusted for
capital gains distributions totaling $1.445 per share paid in February 1995. In
addition, the Fund paid dividends of $.17 during the fiscal year. The Fund's
total return (which is the percent change in net asset value assuming the
reinvestment of all distributions) was 26.1% for the year.
The stock market benefited from a favorable economic environment in
1995. The Fund started the year with an overweighting in economically sensitive
stocks. This position was gradually decreased over the year, with most of the
proceeds reinvested in the stocks of consumer non-durable companies (such as
food and drugs/health care).
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
Fund's 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 Fund's yield reflects the deduction of the maximum initial sales charge and
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 Fund's 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 Mid-Cap Value 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>
12-31-85 $10,000 $ 9,429 $10,000
12-31-86 11,634 10,970 11,820
12-31-87 11,149 10,511 11,847
12-31-88 12,890 12,153 14,194
12-31-89 15,481 14,596 17,922
12-31-90 14,761 13,918 15,861
12-31-91 18,800 17,726 22,446
12-31-92 21,332 20,113 26,115
12-31-93 24,308 22,919 29,850
12-31-94 23,515 22,172 29,222
12-31-95 29,649 27,956 39,289
Average Annual Total Return(3)
1 Year 5 Years 10 Years
18.80% 13.61% 10.83%
(1)Data reflects the deduction of the maximum sales charge of 5.75%.
(2)Performance numbers for the unmanaged Russell Mid-Cap Index do not reflect
transaction costs or management fees. An investor cannot invest directly in
the Index.
(3)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, 1995 using the SEC-required uniform
method to compute such return.
<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
The Bank of New York
48 Wall Street
New York, New York 10286
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.
<PAGE>
LORD ABBETT
STATEMENT OF ADDITIONAL INFORMATION MAY 1, 1996
LORD ABBETT
MID-CAP VALUE
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, 1996.
Lord Abbett Mid-Cap Value Fund, Inc. (formerly 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 3
3. Investment Advisory and Other Services 5
4. Portfolio Transactions 6
5. Purchases, Redemptions and
Shareholder Services 7
6. Past Performance 11
7. Taxes 12
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.
The Board of Directors has approved, subject to shareholder approval at a
meeting to be held June 19, 1996, various amendments to the investment
restrictions described above in order to provide greater uniformity among the
Lord Abbett-sponsored Funds and greater flexibility in the future management of
the Fund's portfolios. The principal effect of the proposed amendments will be
to permit the Fund to take certain actions not now permitted to it without
obtaining additional shareholder approval. The Board of Directors has no present
intention of approving any such action.
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, 1995, our portfolio
turnover rate was 41.42% and 57.49% for the prior year.
2
<PAGE>
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 60, Chairman
Robert S. Dow, age 51, 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 54.
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 65.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 70.
C. Alan MacDonald
The Marketing Partnership, Inc.
27 Signal Road
Stamford, Connecticut
General Partner, The Marketing Partnership, Inc., a full service marketing
consulting firm. Formerly Chairman and Chief Executive Officer of Lincoln
Snacks, Inc., manufacturer of branded snack foods (1992-1994). Formerly
President and Chief Executive Officer of Nestle Foods Corp, and prior to that,
President and Chief Executive Officer of Stouffer Foods Corp., both subsidiaries
of Nestle SA, Switzerland. Currently serves as Director of Den West Restaurant
Co., J. B. Williams, and Fountainhead Water Company. Age 62.
3
<PAGE>
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 67.
Thomas J. Neff
Spencer Stuart & Associates
277 Park Avenue
New York, New York
President of Spencer Stuart & Associates, an executive search consulting firm.
Age 58.
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
Abbett-sponsored funds. The fifth column sets forth the total compensation
payable by such funds to the outside directors. The first four columns give
information for the Fund's fiscal year ended December 31, 1995; the fifth column
gives information for the year ended December 31, 1995. 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>
<TABLE>
<CAPTION>
For the Fiscal Year Ended December 31, 1995
(1) (2) (3) (4) (5)
Pension or Estimated Annual For Year Ended
Retirement Benefits Benefits Upon December 31, 1995
Accrued as Expenses Retirement Accrued Total Compensation
by the Fund and by the Fund and Accrued by the Fund and
Aggregate Fifteen Other Lord Fifteen Other Lord Fifteen Other Lord
Compensation Abbett-sponsored Abbett-sponsored Abbett-sponsored
Name of Director from the Fund1 Funds2 Funds2 Funds3
<S> <C> <C> <C> <C>
E. Thayer Bigelow $658 $9,772 $33,600 $41,700
Stewart S. Dixon $662 $22,472 $33,600 $42,000
John C. Jansing $678 $28,480 $33,600 $42,960
C. Alan MacDonald $675 $27,435 $33,600 $42,750
Hansel B. Millican, Jr. $679 $24,707 $33,600 $43,000
Thomas J. Neff $663 $16,126 $33,600 $42,000
<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. A portion of the 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
total amount accrued under the plan for each outside director since the
beginning of his tenure with the Fund, including dividends reinvested and
changes in net asset value applicable to such deemed investments were as follows
as of December 31,1995: Mr. Bigelow, $894; Mr. Dixon, $36,057 ; Mr. Jansing,
$36,665; Mr. MacDonald, $12,903; Mr. Millican, $37,645 and Mr. Neff, $37,858.
2. The retirement plan of the Lord Abbett-sponsored funds provides that outside
directors will receive an annual retirement benefit equal to 80% of their final
annual retainer following retirement at or after age 72 with at least 10 years
of service. The 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 would be payable
annually under such retirement plan if the director were to retire at age 72 and
the annual retainer payable
4
<PAGE>
by such funds were the same as it is today. The
amounts accrued in column 3 by the Lord Abbett-sponsored funds during the fiscal
year ended December 31, 1995 are used to fund 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 the
first sentence of footnote one accrued by the Lord Abbett-sponsored funds during
the year ended December 31, 1995.
</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, Henderson, Morris, Nordberg and Walsh are partners of
Lord Abbett; the others are employees: Edward von der Linde age 34, Executive
Vice President, Kenneth B. Cutler, age 63, Vice President and Secretary; Stephen
I. Allen, age 42; Daniel E. Carper, age 44; Robert G. Morris, age 51, E. Wayne
Nordberg, age 59; John J. Gargana, Jr., age 64; Paul A. Hilstad, age 53 (with
Lord Abbett since 1995; formerly Senior Vice President and General Counsel of
American Capital Management & Research, Inc.); Thomas F. Konop, age 54; Victor
W. Pizzolato, age 63; John J. Walsh, age 59, Vice Presidents; and Keith F.
O'Connor, age 41, Treasurer.
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 March 27, 1996, our officers and directors, as a group, owned less than
1.6% 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 nine 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, Robert
G. Morris, 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, 1995, 1994 and 1993, the management fees paid to Lord Abbett
amounted to $1,584,007, $1,385,336 and $1,433,925, 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 public accountants of the Fund and must be approved at least
annually by our Board of Directors to continue in such capacity.
5
<PAGE>
They perform audit services for the Fund including the examination of financial
statements included in our annual report to shareholders.
The Bank of New York ("BNY"), 40 Wall Street, New York, New York 10286, 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 BNY or its foreign branches to be held by certain
qualified foreign banks and depositories.
4.
Portfolio Transactions
Our policy is to obtain best execution on all our portfolio transactions, which
means that we seek 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 and taking into account
the full range and quality of the brokers' services. Consistent with obtaining
best execution, we generally pay, as described below, a higher commission than
some brokers might charge on the same transactions. Our policy with respect to
best execution governs the selection 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.
Broker-dealers are selected on the basis of their professional capability and
the value and quality of their brokerage and research services.Normally, the
selection is made by traders who are officers of the Fund and also are employees
of Lord Abbett.These 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 obtaining best
execution.
We pay a commission rate that we believe is appropriate to give maximum
assurance that our brokers will provide us, on a continuing basis, the highest
level of brokerage services available. While we do not always seek the lowest
possible commissions on particular trades, we believe that our commission rates
are in line with the rates that many other institutions pay. Our traders are
authorized to pay brokerage commissions in excess of those that other brokers
might accept on the same transactions in recognition of the value of the
services performed by the executing brokers, viewed in terms of either the
particular transaction or the overall responsibilities of Lord Abbett with
respect to us and the other accounts they manage. Such services include showing
us trading opportunities including blocks, a 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
and reliability.
Some of these brokers also provide research services at least some of which are
useful to Lord Abbett in their overall responsibilities with respect to us and
the other accounts they manage. Research includes the furnishing of analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts and trading equipment and
computer software packages, acquired from third-party suppliers, that enable
Lord Abbett to access various information bases. Such services may be used by
Lord Abbett in servicing all their accounts, and not all of such services will
necessarily be used by Lord Abbett in connection with their management of the
Fund; conversely, such services furnished in connection with brokerage on other
accounts managed by Lord Abbett may be used in connection with their management
of the Fund, and not all of such services will necessarily be used by Lord
Abbett in connection with their advisory services to such other accounts. We
have been advised by Lord Abbett that research services received from brokers
cannot be allocated to any particular account, are not a substitute for Lord
Abbett's services but are supplemental to their own research effort and when
utilized, are subject to internal analysis before being incorporated by Lord
Abbett into their investment process. As a practical matter, it would not be
possible for Lord Abbett to generate all of the information presently provided
by brokers. While receipt of research services from brokerage firms has not
reduced Lord Abbett's normal research activities, the expenses of Lord Abbett
could be materially increased if it attempted to generate such additional
information through its own staff and purchased such equipment and software
packages directly from the suppliers.
6
<PAGE>
No commitments are made regarding the allocation of brokerage business to or
among brokers, and trades are executed only when they are dictated by investment
decisions of the Fund to purchase or sell portfolio securities.
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. Other clients who direct that their brokerage
business be placed with specific brokers or who invest through wrap accounts
introduced to Lord Abbett by certain brokers may not participate with us in the
buying and selling of the same securities as described above. If these clients
wish to buy or sell the same security as we do, they may have their transactions
executed at times different from our transactions and thus may not receive the
same price or incur the same commission cost as we do.
We will not seek "reciprocal" dealer business (for the purpose of applying
commissions in whole or in part for our benefit or otherwise) from dealers as
consideration for the direction to them of portfolio business.
During the fiscal years ended December 31, 1995, 1994 and 1993, we paid total
commissions to independent broker-dealers of $586,752, $617,797 and $290,264,
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 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, 1995 was computed as follows:
Net asset value per share (net assets divided by
shares
outstanding)..........................................................$12.18
Maximum offering price per share (net asset value
divided by
.9425)................................................................$12.92
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:
7
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Year Ended December 31,
1995 1994 1993
Gross sales charge $335,708 $304,416 $320,040
Amount allowed
to dealers $305,733 $ 262,840 276,729
Net commissions
received by Lord Abbett $29,975 $ 41,576 $ 43,311
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 $412,336 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 directors or by vote of
a majority of the Fund's outstanding voting securities.
As stated in the Prospectus, the Board of Directors of the Fund has approved,
subject to shareholder approval at a meeting to be held June 19, 1996, a new
Rule 12b-1 plan.
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
8
<PAGE>
Income Fund, Inc. and Lord Abbett Tax-Free Income Trust for which a Rule12b-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
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
9
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 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.
10
<PAGE>
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 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,
1995 are as follows: 18.80%,13.61% and 10.83%, 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
11
<PAGE>
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, 1995, the yield for the Fund was 8.13%.
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.
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.
The foregoing discussion relates solely to U. S. federal income tax law as
applicable to United States persons (United States citizens or residents and
United States domestic corporations, partnerships, trusts and estates). Each
shareholder who is not a United States person should consult his tax adviser
regarding the U. S. and foreign tax consequences of the ownership of shares of
the Fund, including a 30% (or lower treaty rate) United States withholding tax
on dividends
12
<PAGE>
representing ordinary income and net short-term capital gains, and
the applicability of United States gift and estate taxes to non-United States
persons who own Fund shares.
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, 1995 and the
report of Deloitte & Touche LLP, independent public accountants, on such
financial statements contained in the 1995 Annual Report to Shareholders of Lord
Abbett Mid-Cap Value 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.
13
<PAGE>
PART C OTHER INFORMATION
Item 24 Financial Statements and Exhibits
(a) Financial Statements
Part A - Financial Highlights for the period April 19, 1983 (date
of initial capitalization) to December 31,1995.
Part B - Statement of Net Assets at December 31, 1995. Statement
of Operations for the year ended December 31, 1995. Statements
of Changes in Net Assets for the years ended
December 31, 1995 and 1994.
Supplementary financial Information for the fiscal years ended
December 31, 1989 through December 31, 1995.
(b) Exhibits -
99B.7a Retirement Plan for Non-interested Person Directors and
Trustees of Lord Abbett Funds.***
99B.7b Lord Abbett Prototype Retirements Plans**
(1) 401(k)
(2) IRA
(3) 403(b)
(4) Profit-Sharing, and
(5) Money Purchases
99B.11 Consent of Deloitte & Touche*
99.B16 Total Return and Yield Computations*
* Filed herewith.
** 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 1, 1996 - 12,220
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.
1
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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 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.
2
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
Lord, Abbett & Co. acts as investment adviser for fifteen other
open-end investment companies (of which it is principal underwriter
for fifteen) and as investment adviser to approximately 5,100 private
accounts. Other 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
Lord Abbett 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
Lord Abbett Research Fund, Inc.
Investment Adviser
American Skandia Trust (Lord Abbett Growth and Income Portfolio)
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
Business Address (1) with Registrant
Ronald P. Lynch Chairman
Robert S. Dow President
Kenneth B. Cutler Vice President & 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
3
<PAGE>
(1) Each of the above has a principal business address:
767 Fifth Avenue, New York, NY 10153
(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.
The registrant undertakes, if requested to do so by the holders of at
least 10% of the registrant's outstanding shares, to call a meeting of
shareholders for the purpose of voting upon the question of removal of
a director or directors and to assist in communications with other
shareholders as required by Section 16(c).
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
29th day of April 1996.
LORD ABBETT MID-CAP VALUE 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 & Director April 29, 1996
/s/ John J. Gargana, Jr. Vice President & April 29, 1996
Chief Financial Officer
/s/ E. Thayer Bigelow Director April 29, 1996
/s/ Robert S. Dow President & Director April 29, 1996
/s/ Stewart S. Dixon Director April 29, 1996
Thomas S. Henderson Director
/s/ John C. Jansing Director April 29, 1996
/s/ C. Alan MacDonald Director April 29, 1996
/s/ Hansel B. Millican, Jr. Director April 29, 1996
/s/ Thomas J. Neff Director April 29, 1996
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
99.B11 Consent of Deloitte & Touche
99.B16 Total Return and Yield Computations
EX-27 Financial Data Schedule
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
Lord Abbett Mid-Cap Value Fund, Inc.:
We consent to the use in Post-Effective Amendment No. 14 to Registration
Statement No. 2-82544 of our report dated February 9, 1996 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 26, 1996
EXHIBIT 16
Lord Abbett Mid-Cap Value Fund, Inc.
Post Effective Amendment No. 14
Results of a $1,000 investment reflecting the maximum sales charge and the
reinvestment of all distributions:
Period Ending December 31, 1995
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 = $1,188 ERV = $1,893 ERV = $2,796
T = Average annual total return
1,000 (1+T)1 = 1,000 (1+T)5 = 1,893 1000(1+T)10 = 2,796
(1+T) = 1,188 (1+T)5 = 1,893 (1+T)10 = 2,796
--------- --------- -----
1,000 1,000 1,000
(1+T) = 1,188 (1+T) = [1,893 ].20 (1+T) = [2,796].10
--------- ----------- -----------
1,000 [1,000] [1,000]
T = [ 1,188 ]-1 T = [ 1,893 ].20-1 T = [2,796].10-1
------- ---------- -----------
[1,000] [1,000] [1,000]
T = 18.80% T = 13.61% T = 10.83%
<PAGE>
Calculation of yield appearing in the Statement of Additional Information for
Lord Abbett Mid-Cap Value Fund, Inc. Post-Effective amendment No. 14 on Form
N-1A.
YIELD FORMULA
For the 30 Days
Ended December 31, 1995
YIELD = 2[(a-b+1))6-1] =1.42%
cd
When a = Fund dividends and interest earned during the period in the
amount of $497,561
b = Fund expenses accrued for the period (net of reimbursements)
in the amount of $213,306
c = The average daily number of Fund shares outstanding during
the period that were entitled to receive dividends
were 18,661,832
d = The maximum offering price per Fund share on the last day of
the period was $12.92
<TABLE> <S> <C>
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<NAME> LORD ABBETT MID-CAP VALUE FUND, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
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<PERIOD-START> JAN-01-1995
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