Mid-Cap
Lord Abbett Value Fund
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED JUNE 30, 1997
Designed to provide
you with capital
appreciation from a
stock portfolio of
midsized companies
[PHOTO: Basket of Apples]
[LOGO](R)
<PAGE>
Report to Shareholders
For the Six Months Ended June 30, 1997
[PHOTO: Robert S. Dow]
/s/ ROBERT S. DOW
- -----------------
ROBERT S. DOW
CHAIRMAN
JULY 11, 1997
"...carefully researched,
company-specific stock
selection...will continue
as our major strategy
going forward."
Lord Abbett Mid-Cap Value Fund completed the first half of its fiscal year on
June 30, 1997. Below is an overview of class-specific data as of the close of
the period.
Six Months Ended Two Months Ended
June 30, 1997 June 30, 1997*
----------------- -------------------------------
Class A Class B Class C
- ---------------------------------------------- -------------------------------
Net asset value $13.60 $13.59 $13.58
Dividends $ 0.15 -- --
Capital gains $ 1.35 -- --
Total return** +15.0% +11.9% +11.9%
Over the past six months, the stock market continued to move sharply upward
against a background of steady economic growth, low unemployment and high
consumer confidence. With no major economic catalyst to favor specific sectors,
the Fund has de-emphasized sector selection and focused primarily on specific
stock selection in order to invest in companies we believe provide the best
value. You may notice a major portion of the Fund's investment concentration
(over 25%) falls into the insurance, chemicals and electric power categories.
This is due to individual companies which offered exceptional value, not an
attempt to emphasize particular industries. This carefully researched,
company-specific stock selection method, which has been responsible for the
Fund's strong performance, will continue as our major strategy going forward.
We expect the economy to remain strong, though we anticipate a slight slowing of
growth later in the year, due primarily to probable increases in short-term
interest rates by the Federal Reserve Board. This should slow economic growth
toward 2%-2 1/2%, (possibly lower) by the end of the year and bring the yield on
the U.S. Treasury bond down to the area of 6 1/4%. These circumstances could
create opportunities in certain sectors for the Fund, but our primary objective
remains value investing for better-than-market returns with less-than-market
risk.
We are confident that our disciplined, value approach to investing will prove
rewarding to our investors over the long term and we look forward to helping you
attain your financial goals.
* Class B and C shares were first offered May 1, 1997.
** Total return is the percent change in net asset value, assuming the
reinvestment of all distributions.
Not annualized.
<PAGE>
The Mid-Cap Advantage
Lord Abbett Mid-Cap Value Fund is one of the few mutual funds in the industry
that focuses on midsized companies while utilizing a value approach to
investing. The Fund generally focuses on companies with market capitalizations
ranging from $500 million to $5 billion. Because midsized companies operate from
a smaller earnings base, it is mathematically easier for these companies to grow
earnings at a faster rate than larger companies. Below are three reasons we
believe opportunity exists in the mid-cap sector.
A Valuation Gap Exists
Mid-cap companies have been less followed by investment analysts and have been
less a focus of investor interest in recent years. As a result, their
price/earnings and price-to-book ratios are relatively attractive compared to
large-cap companies. Also, we believe midsized companies offer the potential for
higher growth rates than large companies.
Decreased Tax Burden
Tax rates for capital gains are lower than rates on ordinary income. By
investing in mid-cap companies, the Fund derives a greater portion of its total
return (price appreciation plus dividends) from capital appreciation than from
income. The result: a smaller tax burden.
Targeted Investing Signals Opportunity
Midsized companies often concentrate their efforts on one product or service.
This singular focus means management's efforts are not diluted across many
industries.
The Fund Versus Inflation
Years pass and prices increase. It seems to be a fact of life. Another fact: if
your purchasing power does not keep up with inflation, your standard of living
will suffer. Historically, stocks have proven to be a successful defense against
the erosion caused by inflation.
In our illustration, 1986 and 1997 are actual costs--then and now. "Mid-Cap
Value Fund 1997" is what the 1986 amount would have grown to had it been
invested in the Fund. Investments in Lord Abbett Mid-Cap Value Fund (up 313.5%)
surpassed increases in the cost of living (up 45.1%) in these 10 1/2 years.
Finding investments that grow faster than inflation is one important way to
maintain--and enhance--your lifestyle.
<TABLE>
<CAPTION>
PHOTO: laptop and school books] [PHOTO: keys] [PHOTO: envelope and statement]
One-Year Private One-Family House(1) Income per Capita(1)
College Tuition(1)
<S> <C> <C> <C>
1986 $ 6,581 $ 98,500 $16,981
1997 $12,823 $153,200 $19,158
============================================================================================
Mid-Cap Value Fund 1997 $27,212 $407,298 $70,216
</TABLE>
Lord Abbett Mid-Cap Value Fund's results reflect total return at net asset
value, with all distributions reinvested for the 10 1/2 years ended
6/30/97. See Important Information on page 2.
(1) National average.
Sources: U.S. Department of Education, Statistics Bureau Section, College
Board Annual Survey of Colleges; National Association of Realtors, Research
Division; Department of Commerce, Bureau of Economic Analysis Statistics.
Average Annual Total Returns
Average annual compounded total returns for periods ended 6/30/97 at the
Class A share 5.75% maximum sales charge, with all distributions
reinvested: 1 year: +22.70%
5 years: +15.25%
10 years: +11.37%
The past performance of the Fund, stocks and inflation is no indication of
future results. The investment return and principal value of an investment
in the Fund will fluctuate so that shares, on any given day or when
redeemed, may be worth more or less than their original cost.
1
<PAGE>
The Value of a Managed Equity Portfolio
The cost of goods and services (as measured by the Consumer Price Index) has
risen steadily over the past 10 1/2 years, increasing at an average of 3.6% per
year. Over this time frame, the 6.4% average annual return of CDs outpaced
inflation. However, investors in the Fund saw their $100,000 investment grow an
average of 12.4% per year, to $341,962.
There is no doubt that when it comes to saving for near-term obligations, CDs
are important. But, when investing for long-term goals such as a house, a
child's education or retirement, owning good companies through a fund like Lord
Abbett Mid-Cap Value Fund can help your money work harder for you.
Growth of $100,000: 12/31/86-6/30/97
Cumulative Total
Returns Over
10 1/2 Years
The Fund: 242.0%
CDs: 92.2%
Inflation: 45.1%
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL]
Year Fund 6-Month CD Inflation
12/31/86 96221 100000 100000
12/31/87 92201 106948 104434
12/31/88 106604 115329 109050
12/31/89 128028 125911 114118
12/31/90 122086 136283 121086
12/31/91 155488 144570 124796
12/31/92 176422 150131 128416
12/31/93 201040 155080 131946
12/31/94 194475 162520 135475
12/31/95 245208 172330 138914
12/31/96 297257 181754 143529
6/30/96 341962 192150 145068
(1) The Fund's results reflect the deduction of the Class A share reduced sales
charge of 3.75% applicable to investments of $100,000. All distributions
were reinvested.
(2) Source: Salomon Brothers and The Federal Reserve Bank.
Total return is the percent change in value assuming the reinvestment of all
distributions. Results of the CD investment reflect the average six-month CD
rate available each year during the period. It is important to remember that,
unlike the Fund, a CD's rate and principal are guaranteed if held until
maturity. The Federal Deposit Insurance Corporation ("FDIC") insures CDs up to
$100,000.
Important Information
Results quoted herein represent past performance based on the current sales
charge schedule and reflect appropriate Rule 12b-1 Plan expenses from
commencement of the Plan. Past performance is no indication of future results.
Tax consequences are not reflected. The Fund's sales charge structure has
changed from the past. The investment return and principal value of a Fund
investment will fluctuate so that shares, on any given day or when redeemed, may
be worth more or less than their original cost. The Fund issues additional
classes of shares (Class B and C) with distinct pricing options. For a full
discussion of the differences in pricing alternatives, please call Lord Abbett
Distributor LLC at 800-874-3733 and ask for the Fund's current prospectus. If
used as sales material after 9/30/97, this report must be accompanied by Lord
Abbett's Performance Quarterly for the most recently completed calendar quarter.
2
<PAGE>
Statement of Net Assets
June 30, 1997
<TABLE>
<CAPTION>
Investments Shares Market Value
====================================================================================================================================
<S> <C> <C> <C>
Investments in Common Stocks 95.85%
====================================================================================================================================
Aerospace .84% AAR Corp.-Major supplier of products and services for the worldwide
aviation industry 75,000 $ 2,423,437
- -----------------------------------------------------------------------------------------------------------------------============
Apparel 1.56% *Fruit of the Loom-Producer of non-fashion apparel and undergarments 145,000 4,495,000
- -----------------------------------------------------------------------------------------------------------------------============
Auto Parts 4.77% Echlin Mfg. Co.-Manufacturer of auto and truck replacement parts 150,000 5,400,000
Snap-on, Inc.-Manufacturer and distributor of hand tools and
diagnostic equipment for the automotive industry 212,500 8,367,187
Total 13,767,187
- -----------------------------------------------------------------------------------------------------------------------============
Banks: Regional 3.76% BankBoston, N.A.-Leading New England regional bank 70,000 5,044,375
Crestar Financial Corp.-Leading mid-atlantic regional bank 100,000 3,887,500
Cullen/Frost Bankers-Leading Texas bank 45,000 1,906,875
Total 10,838,750
- -----------------------------------------------------------------------------------------------------------------------============
Chemicals 9.81% Crompton & Knowles Corp.-Specialty chemicals and plastic processing
equipment manufacturer 250,000 5,562,500
Hanna, M.A. Co.-Leading producer and distributor of plastic compounds,
resins and additives 200,000 5,762,500
Morton International Inc.-Producer of specialty chemicals and salt 100,000 3,018,750
*Polymer Group Inc.-Major global manufacturer of non-woven materials 500,000 8,062,500
Witco Corp.-Producer of specialty chemicals and petroleum products
for industrial and consumer applications 155,000 5,880,313
Total 28,286,563
- -----------------------------------------------------------------------------------------------------------------------============
Computer Software/
Services 1.82% Adobe Systems-Developer of computer software products 150,000 5,259,375
- -----------------------------------------------------------------------------------------------------------------------============
Containers 1.88% Ball Corp.-Manufacturer of aluminum and steel containers for the
beverage and food industries 180,000 5,411,250
- -----------------------------------------------------------------------------------------------------------------------============
Drugs/Health Care
Products 3.52% Mallinckrodt Group Inc.-Producer of medical products and
specialty chemicals 160,000 6,080,000
Mylan Laboratories-Leading producer of prescription generic drugs
and brand-name dermatological products 275,000 4,056,250
Total 10,136,250
- -----------------------------------------------------------------------------------------------------------------------============
Electric Power 8.94% Illinova Corp.-Major midwestern electric utility holding company 190,000 4,180,000
Ipalco Enterprises Inc.-Major midwestern electric utility holding company 150,000 4,687,500
*Northeast Utilities-Major northeastern electric utility company 300,000 2,868,750
SCANA Corp.-Major southeastern electric and gas utility holding company 215,000 5,334,688
Sierra Pacific Resources-Western electric, water and
gas utility holding company 90,000 2,880,000
UtiliCorp United Inc.-Major midwestern electric and gas utility
holding company 200,000 5,825,000
Total 25,775,938
- -----------------------------------------------------------------------------------------------------------------------============
Electronics: Equipment 4.47% Perkin-Elmer Corp.-Leading manufacturer of analytical instruments
and life science systems 80,000 6,365,000
*Plantronics, Inc.-Leading supplier of communication headset products
and services to users and providers worldwide 130,000 6,516,250
Total 12,881,250
- -----------------------------------------------------------------------------------------------------------------------============
Financial: Miscellaneous .97% Healthcare Realty Trust Inc.-Healthcare facility real estate
investment trust 100,000 2,787,500
- -----------------------------------------------------------------------------------------------------------------------============
Food 6.03% Dean Foods Co.-Major producer of dairy foods, canned and frozen vegetables 140,000 5,652,500
Dreyer's Grand Ice Cream-Ice cream manufacturer and distributor 50,000 1,975,000
Flowers Industries, Inc.-Major producer of baked goods and
snack-food products in the U.S. 150,000 2,521,875
Universal Foods Corp.-Manufacturer of yeast, flavorings, colorants
and dried spices for the food industry 190,000 7,243,750
Total 17,393,125
- -----------------------------------------------------------------------------------------------------------------------============
Health Care Products 1.01% *St. Jude Medical, Inc.-A leading manufacturer of artificial heart valves 75,000 2,925,000
- -----------------------------------------------------------------------------------------------------------------------============
Health Care Services 3.77% *Humana Inc.-Major U.S. provider of managed-health plans 125,000 2,890,625
*Sierra Health Services-Provider of managed-health plans in Nevada and Texas 100,000 3,125,000
*Trigon Healthcare Inc.-Provider of managed-health plans in Virginia 200,000 4,850,000
Total 10,865,625
- -----------------------------------------------------------------------------------------------------------------------============
Household Products 2.57% James River Corp.-Producer of paper-based consumer products, packaging
and communication papers 200,000 7,400,000
- -----------------------------------------------------------------------------------------------------------------------============
Insurance 9.08% Ace Ltd.-Insurance holding company specializing in property
and casualty coverage 75,000 5,540,625
CMAC Investment Corp.-Major private mortgage insurance provider 140,000 6,685,000
</TABLE>
3
<PAGE>
Statement of Net Assets
June 30, 1997
<TABLE>
<CAPTION>
Shares
Investments or Principal Amount Market Value
====================================================================================================================================
<S> <C> <C> <C>
ReliaStar Financial Corp.-Insurance holding company specializing in
life insurance and group annuity contracts 60,000 $ 4,387,500
The Progressive Corporation-Insurance holding company specializing
in non-standard auto insurance 30,000 2,610,000
Transatlantic Holdings Inc.-International property and casualty reinsurer 70,000 6,947,500
Total 26,170,625
- -----------------------------------------------------------------------------------------------------------------------============
Machinery: Diversified 1.49% *Coltec Industries Inc.-Diversified manufacturer of aerospace, defense
and automotive products 220,000 4,290,000
- -----------------------------------------------------------------------------------------------------------------------============
Manufacturing
Diversified 2.49% AGCO Corp.-Manufacturer and distributor of farm equipment machinery
and parts worldwide 200,000 7,187,500
- -----------------------------------------------------------------------------------------------------------------------============
Miscellaneous 4.11% Jostens Inc.-Produces class rings, yearbooks and recognition products
for schools and businesses 225,000 6,018,750
National Service Industries, Inc.-Diversified manufacturer of
lighting equipment, rental uniforms and specialty chemicals 120,000 5,842,500
Total 11,861,250
- -----------------------------------------------------------------------------------------------------------------------============
Natural Gas
Distribution 4.20% Bay State Gas-Natural gas distributor in Massachusetts 45,000 1,198,125
CTG Resources Inc.-Natural gas distributor in Connecticut 30,000 660,000
Eastern Enterprises-Natural gas distributor in Massachusetts 150,000 5,203,125
South Jersey Industries-Natural gas and fuel oil distributor in New Jersey 60,000 1,335,000
Southwest Gas Corp.-Natural gas distributor in Arizona and Nevada 150,000 2,981,250
Yankee Energy System Inc.-Natural gas distributor in Connecticut 30,000 735,000
Total 12,112,500
- -----------------------------------------------------------------------------------------------------------------------============
Natural Gas
Diversified 2.55% Sonat Inc.-Major diversified energy company with interests in natural
gas pipelines, exploration and drilling 50,000 2,562,500
The Coastal Corporation-A diversified gas pipeline company 90,000 4,786,875
Total 7,349,375
- -----------------------------------------------------------------------------------------------------------------------============
Oil Well Equipment/
Service 2.10% Coflexip S.A. Sponsored ADR-World leader in design, manufacture
and installation of flexible pipe for offshore petroleum transportation 200,900 6,052,112
- -----------------------------------------------------------------------------------------------------------------------============
Oil: Domestic 1.98% Ultramar Diamond Shamrock Corp.-Refiner and marketer of petroleum products 175,000 5,709,375
- -----------------------------------------------------------------------------------------------------------------------============
Paper and Forest
Products 1.31% *Buckeye Cellulose Corp.-Producer of specialty cellulose pulp 112,300 3,790,125
- -----------------------------------------------------------------------------------------------------------------------============
Restaurants 1.24% *Brinker International Inc.-Major developer and operator of casual
dining restaurants 250,000 3,562,500
- -----------------------------------------------------------------------------------------------------------------------============
Retail 4.78% *Office Depot Inc.-Largest retail office supply store operator
in North America 200,000 3,887,500
*OfficeMax Inc.-Major operator of office product superstores 200,000 2,887,500
*Proffitt's Inc.-Regional department store chain 160,000 7,020,000
Total 13,795,000
- -----------------------------------------------------------------------------------------------------------------------============
Savings and Loan .68% *Glendale Federal Bank FSB-California savings and loan 75,000 1,959,375
- -----------------------------------------------------------------------------------------------------------------------============
Tire and Rubber Goods 2.15% Standard Products Co.-Manufactures plastic and rubber products for
the automotive and appliance industries 245,000 6,186,250
- -----------------------------------------------------------------------------------------------------------------------============
Toys 1.97% Hasbro Inc.-Major U.S. manufacturer of toys and games 200,000 5,675,000
- -----------------------------------------------------------------------------------------------------------------------============
Total Investments in Common Stocks (Cost $211,682,808) 276,347,237
====================================================================================================================================
Other Assets, Less Liabilities 4.15%
====================================================================================================================================
Corporate Obligations Ford Motor Credit Corp. 5.58% due 7/1/2001 5,700M 5,700,000
General Electric Capital Corp. 5.50% due 7/2/2002 6,400M 6,400,000
Total 12,100,000
- -----------------------------------------------------------------------------------------------------------------------============
Cash and Receivables, Net of Liabilities (107,512)
- -----------------------------------------------------------------------------------------------------------------------============
Total Other Assets, Less Liabilities 11,992,488
====================================================================================================================================
Net Assets 100.00% $288,339,725
====================================================================================================================================
Class A Shares-Net asset value ($287,738,650 / 21,156,353 shares outstanding) $13.60
Class B Shares-Net asset value ($354,261 / 26,071 shares outstanding) $13.59
Class C Shares-Net asset value ($246,814 / 18,176 shares outstanding) $13.58
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
4
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
Investment Income Six Months Ended June 30, 1997
===================================================================================================================
<S> <C> <C> <C>
Income Dividends $ 2,238,332
Interest 228,422
Total income $ 2,466,754
----------------------------------------------------------------------------------------------------
Expenses Management fee 946,897
12b-1 distribution plan-Class A 254,695
12b-1 distribution plan-Class B 259
12b-1 distribution plan-Class C 163
Shareholder servicing 138,698
Reports to shareholders 45,510
Professional 31,637
Other 9,749
Total expenses 1,427,608
----------------------------------------------------------------------------------------------------
Net investment income 1,039,146
----------------------------------------------------------------------------------------------------
Realized and Unrealized Gain on Investments
===================================================================================================================
Realized gain from investment transactions
Proceeds from sales 100,340,088
Cost of investments sold 71,590,707
----------------------------------------------------------------------------------------------------
Net realized gain 28,749,381
----------------------------------------------------------------------------------------------------
Unrealized appreciation of investments 7,948,732
- -------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 36,698,113
- -------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $37,737,259
===================================================================================================================
</TABLE>
See Notes to Financial Statements.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Year Ended
Ended June 30, December 31,
Increase (Decrease) in Net Assets 1997 1996
===================================================================================================================
<S> <C> <C> <C>
Operations Net investment income $ 1,039,146 $ 2,654,143
Net realized gain from investment transactions 28,749,381 25,461,909
Net unrealized appreciation of investments 7,948,732 17,866,612
Net increasein net assets resulting from operations 37,737,259 45,982,664
----------------------------------------------------------------------------------------------------
Undistributed net investment income included in price of share transactions (17,154) (47,257)
- -------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income-Class A (2,901,573) (2,962,616)
Net realized gain from investment transactions-Class A (26,115,431) (19,436,362)
Total distributions (29,017,004) (22,398,978)
----------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sales of shares 12,537,387 18,759,962
Net asset value of shares issued in reinvestment of net investment
income and realized gain from investment transactions 26,418,646 20,251,955
Total 38,956,033 39,011,917
----------------------------------------------------------------------------------------------------
Cost of shares reacquired (16,467,228) (32,549,103)
----------------------------------------------------------------------------------------------------
Increase in net assets derived from capital share transactions 22,488,805 6,462,814
----------------------------------------------------------------------------------------------------
Increase in net assets 31,191,906 29,999,243
- -------------------------------------------------------------------------------------------------------------------
Net Assets
Beginning of period 257,147,819 227,148,576
----------------------------------------------------------------------------------------------------
End of period (including (overdistributed) undistributed net
investment income of $(278,929) and $1,600,652, respectively) $288,339,725 $257,147,819
====================================================================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A Shares
--------------------------------------------------------------------------
Six Months Year Ended
Ended June 30, December 31,
Per Share Operating Performance: 1997 1996 1995 1994 1993 1992
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.29 $12.18 $11.25 $12.65 $12.60 $11.81
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .05 .13 .162 .18 .16 .20
Net realized and unrealized gain(loss) on investments 1.76 2.19 2.383 (.545) 1.42 1.31
Total from investment operations 1.81 2.32 2.545 (.365) 1.58 1.51
---------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.15) (.16) (.17) (.16) (.20) (.22)
Distributions from net realized gain (1.35) (1.05) (1.445) (.875) (1.33) (.50)
---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.60 $13.29 $12.18 $11.25 $12.65 $12.60
- --------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 15.04%(c) 21.22% 26.09% (3.27)% 13.95% 13.46%
================================================================================================================================
Ratios to Average Net Assets:
Expenses .54%(c) 1.22% 1.27% 1.12% 1.22% 1.22%
Net investment income .39%(c) 1.12% 1.48% 1.53% 1.35% 1.71%
===========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class B Class C
Shares Shares
--------------- ---------------
5/1/97(b) 5/1/97(b)
Per Share Operating Performance: to 6/30/97 to 6/30/97
==================================================================================================================== ===============
<S> <C> <C>
Net asset value, beginning of period $12.14 $12.14
- -------------------------------------------------------------------------------------------------------------------- ---------------
Income (loss) from investment operations
Net investment loss (.00)(d) (.00)(d)
Net realized and unrealized gain on investments 1.45 1.44
Total from investment operations 1.45 1.44
--------------------------------------------------------------------------------------------------------------- ---------------
Net asset value, end of period $13.59 $13.58
- -------------------------------------------------------------------------------------------------------------------- ---------------
Total Return(a)(c) 11.94% 11.86%
====================================================================================================================================
Ratios to Average Net Assets(C):
Expenses .30% .30%
Net investment loss (.01)% (.01)%
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended June 30, Year Ended December 31,
Supplemental Data for All Classes: 1997 1996 1995 1994 1993 1992
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $288,340 $257,148 $227,149 $190,788 $202,519 $173,380
Portfolio turnover rate 37.72% 38.88% 41.42% 57.49% 33.42% 62.55%
Average commissions per share paid
on equity transactions $ .062 $ .064 $ .066 n/a n/a n/a
====================================================================================================================================
</TABLE>
(a) Total return does not consider the effects of sales loads.
(b) Commencement of offering Class shares.
(c) Not annualized.
(d) Amounts less than $0.01.
See Notes to Financial Statements.
6
<PAGE>
Notes to Financial Statements
1. Significant Accounting Policies Lord Abbett Mid-Cap Value Fund, Inc. (the
"Company") is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The financial statements
have been prepared in conformity with generally accepted accounting principles
which permit management to make certain estimates and assumptions at the date of
the financial statements. The following summarizes the significant accounting
policies of the Company: (a) Market value is determined as follows: Securities
listed or admitted to trading privileges on any national securities exchange are
valued at the last sales price on the principal securities exchange on which
such securities are traded, or, if there is no sale, at the mean between the
last bid and asked prices on such exchange. Securities traded only in the
over-the-counter market are valued at the mean between the last bid and asked
prices in such market, except that securities admitted to trading on the NASDAQ
National Market System are valued at the last sales price if it is determined
that such price more accurately reflects the value of such securities.
Securities for which market quotations are not available are valued at fair
value under procedures approved by the Board of Directors. (b) It is the policy
of the Company to meet the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its taxable income.
Therefore, no income tax provision is required. (c) Security transactions are
accounted for on the date that the securities are purchased or sold (trade
date). Realized gains and losses from security transactions are calculated on
the identified cost basis. Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest income is accrued on a daily basis.
Net investment income (other than distribution and service fees) and realized
and unrealized gains or losses are allocated to each class of shares based upon
the relative proportion of net assets at the beginning of the day. (d) A portion
of proceeds from sales and costs of repurchases of capital shares, equivalent to
the amount of distributable net investment income on the date of the
transaction, is credited or charged to undistributed income. Undistributed net
investment income per share thus is unaffected by sales or repurchases of
shares.
2. Management Fee and Other Transactions with Affiliates The Company has a
management agreement with Lord, Abbett & Co. ("Lord Abbett") pursuant to which
Lord Abbett supplies the Company with investment management, research,
statistical and advisory services and pays officers' remuneration and certain
other expenses of the Company. The management fee is based on average daily net
assets at the following annual rates: .75 of 1% on the first $200 million; .65
of 1% on the next $300 million; and .50 of 1% on the excess over $500 million.
The Company has Rule 12b-1 plans and agreements (the "Class A, Class B and Class
C Plans") with Lord Abbett Distributor LLC ("Distributor"), an affiliate of Lord
Abbett. The Company makes payments to Distributor which uses or passes on such
payments to authorized institutions. Pursuant to the Class A Plan, the Company
pays Distributor (1) an annual service fee of 0.15% of the average daily net
asset value of shares sold prior to June 1, 1990 and 0.25% of the average daily
net asset value of shares sold on or after that date, (2) a one-time
distribution fee of up to 1% on certain qualifying purchases and (3) a
supplemental annual distribution fee of 0.10% of the average daily net assets of
Class A shares serviced by certain qualifying institutions. Pursuant to the
Class B Plan, the Company pays Distributor an annual service and distribution
fee of 0.25% and 0.75%, respectively, of the average daily net asset value of
the Class B shares. Pursuant to the Class C Plan, the Company pays Distributor
(1) a service fee and a distribution fee, at the time such shares are sold, not
to exceed 0.25% and 0.75%, respectively, of the net asset value of such shares
sold and (2) at each quarter-end after the first anniversary of the sale of such
shares, a service fee and a distribution fee at an annual rate not to exceed
0.25% and 0.75%, respectively, of the average annual net asset value of such
shares outstanding. Distributor received $35,295 representing payment of
commissions on sales of Class A shares after deducting $195,610 allowed to
authorized distributors as concessions. Certain of the Company's officers and
directors have an interest in Lord Abbett.
3. Distributions Dividends from net investment income and net realized gain from
investment transactions, if any, are declared annually. At June 30, 1997,
undistributed net realized gain for financial reporting purposes aggregated
$29,765,640.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from methods used to determine the
corresponding income and capital gain amounts in accordance with generally
accepted accounting principles.
4. Capital The Company has authorized 120 million shares of $.001 par value
capital stock designated Class A, 15 million shares of $.001 par value capital
stock designated Class B and 15 million shares of $.001 par value capital stock
designated Class C. Paid in capital amounted to $194,188,585 at June 30, 1997.
Transactions in shares of capital stock were as follows:
Six Months Ended Year Ended
June 30, 1997 December 31, 1996
-------------------------- ----------------------------
Class A Shares Amount Shares Amount
- -------------------------------------------------- ----------------------------
Sales of shares 963,812 $11,955,964 1,578,024 $18,759,962
Shares issued to
shareholders in
reinvestment of net
investment income
and realized gain
from investment
transactions 2,186,974 26,418,646 1,867,268 20,251,955
Total 3,150,786 38,374,610 3,445,292 39,011,917
- -------------------------------------------------- ----------------------------
Shares reacquired (1,340,534) (16,467,134) (2,748,622) (32,549,103)
Increase in shares 1,810,252 $21,907,476 696,670 $6,462,814
- --------------------------------------------------------------------------------
May 1, 1997 (Commencement of
offering Class B shares) to June 30, 1997
-----------------------------------------
Class B Shares Amount
- -------------------------------------------------------------------------------
Sales of shares 26,078 $342,080
- -------------------------------------------------------------------------------
Shares reacquired (7) (94)
Increase in shares 26,071 $341,986
- -------------------------------------------------------------------------------
May 1, 1997 (Commencement of
offering Class C shares) to June 30, 1997
- -------------------------------------------------------------------------------
Class C Shares Amount
- -------------------------------------------------------------------------------
Sales of shares 18,176 $239,343
- -------------------------------------------------------------------------------
Shares reacquired -- --
Increase in shares 18,176 $239,343
- -------------------------------------------------------------------------------
5. Purchases and Sales of Securities Purchases and sales of investment
securities (other than short-term investments) aggregated $95,857,958 and
$100,340,088, respectively. As of June 30, 1997, unrealized appreciation based
on cost for federal income tax purposes aggregated $64,664,429, of which
$65,959,626 related to appreciated securities and $1,295,197 related to
depreciated securities. The costs of investments for federal income tax purposes
is substantially the same as that used for financial reporting purposes.
6. Directors' Remuneration The Directors of the Company associated with Lord
Abbett and all officers of the Company receive no compensation from the Company
for acting as such. Outside Directors' fees and retirement costs are allocated
among all funds in the Lord Abbett group based on net assets of each fund.
Directors' fees payable at June 30, 1997, under a deferred compensation plan,
were $271,599.
7
<PAGE>
Our Management
Board of Directors Investment Manager and
Underwriter
Robert S. Dow
E. Wayne Nordberg Lord, Abbett & Co. and
E. Thayer Bigelow*+ Lord Abbett Distributor LLC
Stewart S. Dixon*
John C. Jansing* The General Motors Building
C. Alan MacDonald*+ 767 Fifth Avenue
Hansel B. Millican, Jr.* New York, NY 10153-0203
Thomas J. Neff*+ 212-848-1800
* Outside Director
+ Audit Committee
Custodian
Officers The Bank of New York
New York, NY
Robert S. Dow, Chairman and President
Edward K. von der Linde, Executive Vice
President and Portfolio Manager Transfer Agent
Kenneth B. Cutler, Vice President
and Secretary United Missouri Bank of
Stephen I. Allen, Vice President Kansas City, N.A.
Zane E. Brown, Vice President
Daniel E. Carper, Vice President
Daria L. Foster, Vice President Shareholder Servicing Agent
Robert G. Morris, Vice President
Robert J. Noelke, Vice President DST Systems, Inc.
E. Wayne Nordberg, Vice President P.O. Box 419100
John J. Walsh, Vice President Kansas City, MO 64141
Paul A. Hilstad, Vice President 800-821-5129
and Assistant Secretary
Thomas F. Konop, Vice President
and Assistant Secretary Auditors
Keith F. O'Connor, Vice President
and Treasurer Deloitte & Touche LLP
A. Edward Oberhaus III, Vice President New York, NY
Donna McManus, Assistant Treasurer
Joseph Van Dyke, Assistant Treasurer
Lydia Guzman, Assistant Secretary Counsel
Robert M. Hickey, Assistant Secretary
Debevoise & Plimpton
New York, NY
Copyright (C) 1997 by Lord Abbett Mid-Cap Value Fund, Inc.
767 Fifth Avenue, New York, NY 10153-0203
This publication, when not used for the general information of shareholders of
Lord Abbett Mid-Cap Value Fund, Inc., is to be distributed only if preceded or
accompanied by a current prospectus which includes information concerning the
Fund's investment objective and policies, sales charges and other matters. There
is no guarantee that the forecasts contained within this publication will come
to pass.
All rights reserved. Printed in the U.S.A.
8
<PAGE>
Lord, Abbett & Co.
A Tradition of Performance Through
Disciplined
Investing
[PHOTO: John J. Walsh and Edward k. von der Linde]
(from left to right)
John J. Walsh, partner
Edward K. von der Linde,
portfolio manager--Lord Abbett
Mid-Cap Value Fund
A successful long-term track record is evidence of a successful investment
strategy. For decades we, at Lord, Abbett & Co., have believed that investing
with a disciplined, value approach is the best way to achieve competitive
returns and reduce portfolio risk. This commitment and the dedication of our
team of 51 investment professionals have helped us earn the trust of financial
professionals and investors for over 65 years.
About Your
Fund's
Board of
Directors
The Securities and Exchange Commission (SEC) views the role of the independent
Board of Directors as one of the most important components in overseeing a
mutual fund. The Board of Directors watches over your Fund's general operations
and represents your interests. Board members review and approve every contract
between your Fund and Lord, Abbett & Co. (the Fund's investment manager) and
Lord Abbett Distributor LLC (the Fund's underwriter). They meet regularly to
review a wide variety of information and issues regarding your Fund. Every
member of the Board possesses extensive business experience. Lord Abbett Mid-Cap
Value Fund's shareholders are indeed fortunate to have a group of independent
directors with diverse backgrounds to provide a variety of viewpoints in the
oversight of their Fund. Below, we feature one of our independent directors,
Hansel B. Millican, Jr.
[PHOTO: Hansel B. Millican, Jr.]
Hansel B. Millican, Jr.
Director--Lord Abbett
Mid-Cap Value Fund
An alumnus of North Carolina State University (Raleigh), Mr. Millican has over
45 years of corporate management experience. He is currently the President and
CEO of Rochester Button Company. Mr. Millican has been an independent director
for all of Lord Abbett's funds since 1982.
<PAGE>
Investing in the
Lord Abbett
Family of Funds
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME
- ------------------------------------------------------------------------------------------------------------------------------------
Growth Funds Growth & Balanced Income Tax-Free Money
Income Funds Fund Funds Income Funds Market Fund
<S> <C> <C> <C> <C> <C> <C>
Developing Global Fund- Affiliated Fund Balanced Series Bond-Debenture o National U.S. Government
Growth Fund Equity Series Fund o California Securities
Growth & o Connecticut Money Market
International Mid-Cap Income Series Global Fund- o Florida Fund*+
Series Value Fund Income Series o Georgia
Research Fund- o Hawaii
Research Fund- Large-Cap Limited Duration o Michigan
Small-Cap Series U.S. Government o Minnesota
Series Securities Series* o Missouri
o New Jersey
U.S. Government o New York
Securities Series* o Pennsylvania
o Texas
o Washington
</TABLE>
<TABLE>
<S> <C> <C>
Finding the right mutual fund can be When you invest in a family of funds, Numbers to Keep Handy
confusing. At Lord, Abbett & Co., we you benefit from:
believe your financial adviser provides For Shareholder Account or
value in helping you identify and Diversification. You and your financial Statement Inquiries:
understand your investment objectives adviser can diversify your investments 800-821-5129
and, ultimately, offering fund between equity and income funds.
recommendations suitable for your For Literature:
individual needs. Flexibility. As your investment goals 800-874-3733
change, your financial adviser can help
This publication, when used as sales you reallocate your portfolio. For More Information:
literature, is to be distributed only if 800-426-1130
preceded or accompanied by a current As an investor in the Lord Abbett Family
prospectus for Lord Abbett Mid-Cap Value of Funds, you have access to 28 Visit Our Web Site:
Fund. portfolios designed to meet a variety of http://www.lordabbett.com
investment needs. While you may
For more complete information about any reallocate your assets among our funds * An investment in this Fund is
other Lord Abbett fund, including at any time, we recommend speaking with neither insured nor guaranteed by
charges and expenses, call your your financial adviser to help you the U.S. Government.
financial adviser or Lord Abbett customize your investment plan.
Distributor LLC at 800-874-3733 for a + There can be no assurance that this
prospectus. Read it carefully before Fund will be able to maintain a
investing. stable net asset value of $1.00 per
share. This Fund is managed to
maintain, and has maintained, its
stable $1.00 per share price.
</TABLE>
[LOGO](R) LORD,ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
LORD ABBETT DISTRIBUTOR LLC LAMCVF-3-697
- ------------------------------------------------------------
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203 (8/97)
