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. ("WE" OR THE "FUND"), IS A MUTUAL FUND WITH
FOUR CLASSES OF SHARES. THESE CLASSES, DESIGNATED CLASS A, B, C AND P SHARES
PROVIDE INVESTORS WITH DIFFERENT INVESTMENT OPTIONS IN PURCHASING SHARES OF THE
FUND. SEE "PURCHASES" FOR A DESCRIPTION OF THESE CHOICES. THE CLASS P SHARES
WILL BE OFFERED TO THE PUBLIC FOR THE FIRST TIME ON OR ABOUT NOVEMBER 10, 1997.
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, 1997, AS SUPPLEMENTED ON NOVEMBER 10, 1997.
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 3
4 How We Invest 3
5 Purchases 4
6 Shareholder Services 13
7 Our Management 14
8 Dividends, Capital Gains
Distributions and Taxes 14
9 Redemptions 15
10 Performance 16
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>
CLASS A CLASS B CLASS C CLASS P
SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES(1)
(AS A PERCENTAGE OF OFFERING PRICE)
Maximum Sales Load(2) on Purchases
(See "Purchases") 5.75% None None None
Deferred Sales Load(2) (See "Purchases") None 5% if shares are redeemed 1% if shares None
before 1st anniversary are redeemed
of purchase, declining before 1st anniversary
to 1% before 6th of purchase
anniversary and
eliminated on and
after 6th anniversary(3)
ANNUAL FUND OPERATING EXPENSES(4)
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees (See "Our Management") 0.73% 0.73% 0.73% 0.73%
12b-1 Fees (See "Purchases")(1)(2) 0.22% 1.00% 1.00% 0.45%
Other Expenses (See "Our Management") 0.28% 0.28% 0.28% 0.28%
Total Operating Expenses 1.23% 2.01% 2.01% 1.46%
EXAMPLE: Assume an annual return of 5% and there is no change in the level of
expenses described above. For a $1,000 investment, with reinvestment of all
dividends and distributions, you would pay the following total expenses,
assuming redemption on the last day of each period indicated.
1 year 3 years 5 years 10 years
Class A shares $70 $95 $121 $198
Class B shares(3) $70 $93 $128 $213
Class C shares $30 $63 $108 $234
Class P shares $15 $46 $80 $175
EXAMPLE: You would pay the following expenses on the same investment, assuming
no redemption.
1 year 3 years 5 years 10 years
Class A shares $70 $95 $121 $198
Class B shares(3) $20 $63 $108 $213
Class C shares $20 $63 $108 $234
Class P shares $15 $46 $80 $175
<FN>
(1)Although the Fund does not, with respect to the Class B, C and P shares,
charge a front-end sales charge, investors should be aware that long-term
shareholders may pay, under each Rule 12b-1 plan applicable to the Class B, C
and P shares of the Fund (which pays annually 0.20%, for service, in the case of
Class P, and 0.25% for service, in the case of Class B and C and 0.25%, for
distribution, in the case of Class P, and 0.75% for distribution, in the case of
Class B and C), more than the economic equivalent of the maximum front-end sales
charge as permitted by certain rules of the National Association of Securities
Dealers, Inc. Likewise, with respect to Class A shares, investors should be
aware that, over the long term, such maximum may be exceeded due to the Rule
12b-1 plan applicable to Class A shares which permits the Fund to pay up to
0.50% in total annual fees, half for service and the other half for
distribution. The 12b-1 fees for the Class A shares have been restated to
reflect the current fees under the recently amended Class A 12b-1 Plans.
(2)Sales "load" is referred to as sales "charge," "deferred sales load" is
referred to as "contingent deferred sales charge" (or "CDSC") and "12b-1 fees"
which consist of a "service fee" and a "distribution fee" are referred to by
either or both of these terms where appropriate with respect to Class A, B, C
and P shares throughout this Prospectus.
(3)Class B shares will automatically convert to Class A shares on the eighth
anniversary of the purchase of Class B shares.
(4)The annual operating expenses for the Class A shares have been restated from
December 31, 1996 fiscal-year amounts to reflect current fees. The annual
operating expenses for the Class B, C and P shares are based on estimated
expenses incurred by Class A shares because these classes were not available for
purchase prior to the Fund's current fiscal year.
</FN>
The foregoing is provided to give investors a better understanding of the
expenses that are incurred by an investment in the Fund.
</TABLE>
<PAGE>
3 FINANCIAL HIGHLIGHTS
The following financial highlights have been audited by Deloitte & Touche LLP,
independent accountants, whose report thereon is incorporated by reference into
the Statement of Additional Information and may be obtained upon request.
<TABLE>
<CAPTION>
TEN MONTHS YEAR
ENDED ENDED
PER CLASS A SHARE+ OPERATING YEAR ENDED DECEMBER 31, DEC. 31, FEB. 28,
PERFORMANCE: 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987* 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.18 $11.25 $12.65 $12.60 $11.81 $9.80 $10.59 $9.53 $9.09 $14.59 $13.25
INCOME FROM INVESTMENT OPERATIONS
Net investment income .13 .162 .18 .16 .20 .23 .28 .29 .34 .30 .32
Net realized and unrealized
gain (loss) on securities 2.19 2.383 (.545) 1.42 1.31 2.30 (.77) 1.57 1.08 (2.24) 2.11
Total from investment operations 2.32 2.545 (.365) 1.58 1.51 2.53 (.49) 1.86 1.42 (1.94) 2.43
DISTRIBUTIONS
Dividends from net investment income (.16) (.17) (.16) (.20) (.22) (.26) (.30) (.32) .-- (.61) (.23)
Distributions from net realized gain (1.05) (1.445) (.875) (1.33) (.50) (.26) .-- (.48) (.98) (2.95) (.86)
NET ASSET VALUE, END OF PERIOD $13.29 $12.18 $11.25 $12.65 $12.60 $11.81 $9.80 $10.59 $9.53 $9.09 $14.59
TOTAL RETURN** 21.22% 26.09% (3.27)% 13.95% 13.46% 27.36% (4.64)% 20.09% 15.62% (16.40)%++ 19.55%
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.22% 1.27% 1.12% 1.22% 1.22% 1.14% 1.12% .94% 1.02% .81%++ .89%
Net investment income 1.12% 1.48% 1.53% 1.35% 1.71% 2.16% 2.79% 2.91% 3.41% 2.42%++ 2.42%
TEN MONTHS YEAR
ENDED ENDED
YEAR ENDED DECEMBER 31, DEC. 31, FEB. 28,
SUPPLEMENTAL DATA FOR ALL CLASSES: 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987* 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $257,148 $227,149 $190,788 $202,519 $173,380 $166,056 $155,018 $190,189 $188,380 $223,288 $318,793
Portfolio turnover rate 38.88% 41.42% 57.49% 33.42% 62.55% 34.20% 51.49% 30.42% 26.53% 43.97% 52.41%
Average commissions per share
paid on equity transactions $ .064 $ .066 ---- ---- ---- ---- ---- ---- ---- ---- ----
<FN>
*The Financial Statements cover ten months because the fiscal year-end was
changed from February 28 to December 31.
**Total return does not consider the effects of sales loads.
+ The Fund had only one class of shares prior to May 1, 1997. That class of
shares is now designated Class A shares.
++ Not annualized.
See Notes to Financial Statements.
</FN>
</TABLE>
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. Under normal circumstances, at least 65% of the Fund's
total assets will consist of investments in mid-cap companies, determined at the
time of purchase. "Mid-cap companies" are defined for this purpose as companies
whose outstanding equity securities have an aggregate market value of between
$200 million and $5 billion.
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
<PAGE>
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. 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. While we may take short-term gains if deemed appropriate,
normally we will hold securities in order to realize long-term capital gains.
Characteristically, we will not carry a large cash position as an investment
strategy; however, 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. We will not change our investment objective without
shareholder approval. 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.
RISK FACTORS. Securities markets of foreign countries are not subject to the
same degree of regulation as the U.S. markets and may be more volatile and less
liquid than the major U.S. markets. There may be less publicly-available
information on publicly-traded issuers in foreign countries than is generally
the case 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,
expropriation, higher transaction costs, currency fluctuations, withholding
taxes that cannot be passed through as a tax credit or deduction to shareholders
and different securities settlement practices. Foreign securities may be traded
on days that we do not value our portfolio securities and, accordingly, our net
asset value may be significantly affected on days when shareholders do not have
access to the Fund.
PORTFOLIO TURNOVER. The portfolio turnover rate for the fiscal year ended
December 31, 1996 was 38.88% compared to 41.42% for the prior fiscal year.
5 PURCHASES
ALTERNATIVE SALES ARRANGEMENTS
CLASSES OF SHARES. The Fund offers investors four different classes of shares.
The different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and will likely have different
share prices. Investors should read this section carefully to determine which
class represents the best investment option for their particular situation.
CLASS A SHARES. If you buy Class A shares, you pay an initial sales charge on
investments of less than $1 million (or on investments for employer-sponsored
retirement plans under the Internal Revenue Code (hereinafter referred to as
"Retirement Plans") with less than 100 eligible employees or on investments that
do not qualify to be under a "special retirement wrap program" defined under
"Class A Share Net Asset Value Purchases" below). If you purchase Class A shares
as part of an investment of at least $1 million (or for Retirement Plans with at
least 100 eligible employees or under a special retirement wrap program) in
shares of one or more Lord Abbett-sponsored funds, you will not pay an initial
sales charge, but if you redeem any of those shares within 24 months after the
month in which you buy them, you may pay to the Fund a contingent deferred sales
charge ("CDSC") of 1% except for redemptions under a special retirement wrap
program. Class A shares are subject to service and distribution fees that are
<PAGE>
currently estimated to total annually approximately 0.22 of 1% of the annual net
asset value of the Class A shares. The initial sales charge rates, the CDSC and
the Rule 12b-1 plan applicable to the Class A shares are described under
"General" below.
CLASS B SHARES. If you buy Class B shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the sixth anniversary of
buying them, you will normally pay a CDSC to Lord Abbett Distributor LLC ("Lord
Abbett Distributor"). That CDSC varies depending on how long you own shares.
Class B shares are subject to service and distribution fees at an annual rate of
1% of the annual net asset value of the Class B shares. The CDSC and the Rule
12b-1 plan applicable to the Class B shares are described under "General" below.
CLASS C SHARES. If you buy Class C shares, you pay no sales charge at the time
of purchase, but if you redeem your shares before the first anniversary of
buying them, you will normally pay the Fund a CDSC of 1%. Class C shares are
subject to service and distribution fees at an annual rate of 1% of the annual
net asset value of the Class C shares. The CDSC and the Rule 12b-1 plan
applicable to the C shares are described under "General" below.
CLASS P SHARES. If you buy Class P shares, you pay no sales charge at the time
of purchase, and if you redeem your shares you pay no CDSC. Class P shares are
subject to service and distribution fees at an annual rate of .45 of 1% of the
average daily net asset value of the Class P shares. The Rule 12b-1 plan
applicable to the Class P shares is described in "Class P Rule 12b-1 Plan".
Class P shares are available to a limited number of investors who are not
necessarily eligible for the other classes of shares offered by this Prospectus.
See "Buying Class P shares" below.
WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial adviser. The Fund's class-specific expenses and the
effect of the different types of sales charges on your investment will affect
your investment results over time. The most important factors are how much you
plan to invest and how long you plan to hold your investment. If your goals and
objectives change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider another class of
shares.
In the following discussion, to help provide you and your financial adviser with
a framework in which to choose a class, we have made some assumptions using a
hypothetical investment in the Fund. We used the sales charge rates that apply
to Class A, Class B and Class C and considered the effect of the higher
distribution fees on Class B and Class C expenses (which will affect your
investment return). Of course, the actual performance of your investment cannot
be predicted and will vary, based on the Fund's actual investment returns, the
operating expenses borne by each class of shares, and the class of shares you
purchase. The factors briefly discussed below are not intended to be investment
advice, guidelines or recommendations, because each investor's financial
considerations are different. The discussion below of the factors to consider in
purchasing a particular class of shares assumes that you will purchase only one
class of shares and not a combination of shares of different classes.
HOW LONG DO YOU EXPECT TO HOLD YOUR INVESTMENT? While future financial needs
cannot be predicted with certainty, knowing how long you expect to hold your
investment will assist you in selecting the appropriate class of shares. For
example, over time, the reduced sales charges available for larger purchases of
Class A shares may offset the effect of paying an initial sales charge on your
investment, compared to the effect over time of higher class-specific expenses
on Class B or Class C shares for which no initial sales charge is paid. Because
of the effect of class-based expenses, your choice should also depend on how
much you plan to invest.
INVESTING FOR THE SHORT TERM. If you have a short-term investment horizon (that
is, you plan to hold your shares for not more than six years), you should
probably consider purchasing Class A or Class C shares rather than Class B
shares. This is because of the effect of the Class B CDSC if you redeem before
the sixth anniversary of your purchase, as well as the effect of the Class B
distribution fee on the investment return for that class in the short term.
<PAGE>
Class C shares might be the appropriate choice (especially for investments of
less than $100,000), because there is no initial sales charge on Class C shares,
and the CDSC does not apply to shares you redeem after holding them for one
year.
However, if you plan to invest more than $100,000 for the short term, then the
more you invest and the more your investment horizon increases toward six years,
the more attractive the Class A share option may become. This is because the
annual distribution fee on Class C shares will have a greater impact on your
account over the longer term than the reduced front-end sales charge available
for larger purchases of Class A shares. For example, Class A shares might be
more appropriate than Class C shares for investments of more than $100,000
expected to be held for 5 or 6 years (or more). For investments over $250,000
expected to be held 4 to 6 years (or more), Class A shares may become more
appropriate than Class C shares. If you are investing $500,000 or more, Class A
shares may become more desirable as your investment horizon approaches 3 years
or more.
For most investors who invest $1 million or more, for Retirement Plans with at
least 100 eligible employees or for investments pursuant to a special retirement
wrap program, in most cases Class A shares will be the most advantageous choice,
no matter how long you intend to hold your shares. For that reason, Lord Abbett
Distributor normally will not accept purchase orders (i) for Class B shares of
$500,000 or more and for Class C shares of $1,000,000 or more from a single
investor or (ii) for Class B or C shares (a) from Retirement Plans with at least
100 eligible employees or (b) from special retirement wrap programs.
INVESTING FOR THE LONGER TERM. If you are investing for the longer term (for
example, to provide for future college expenses for your child) and do not
expect to need access to your money for seven years or more, Class B shares may
be an appropriate investment option if you plan to invest less than $100,000. If
you plan to invest more than $100,000 over the long term, Class A shares will
likely be more advantageous than Class B shares or Class C shares, as discussed
above, because of the effect of the expected lower expenses for Class A shares
and the reduced initial sales charges available for larger investments in Class
A shares under the Fund's rights of accumulation.
Of course, these examples are based on approximations of the effect of current
sales charges and expenses on a hypothetical investment over time, and should
not be relied on as rigid guidelines.
ARE THERE DIFFERENCES IN ACCOUNT FEATURES THAT MATTER TO YOU? Some account
features are available in whole or in part to Class A, Class B and Class C
shareholders. Other features (such as Systematic Withdrawal Plans) might not be
advisable in non-Retirement Plan accounts for Class B shareholders (because of
the effect of the CDSC on the entire amount of a withdrawal if it exceeds 12%
annually) and in any account for Class C shareholders during the first year of
share ownership (due to the CDSC on withdrawals during that year). See
"Systematic Withdrawal Plan" under "Shareholder Services" for more information
about the 12% annual waiver of the CDSC with respect to Class B shares. You
should carefully review how you plan to use your investment account before
deciding which class of shares you buy. For example, the dividends payable to
Class B and Class C shareholders will be reduced by the expenses borne solely by
each of these classes, such as the higher distribution fee to which Class B and
Class C shares are subject, as described below.
HOW DOES IT AFFECT PAYMENTS TO MY BROKER? A salesperson, such as a broker, or
any other person who is entitled to receive compensation for selling Fund shares
may receive different compensation for selling one class than for selling
another class. As discussed in more detail below, such compensation is primarily
paid at the time of sale in the case of Class A and B shares and is paid over
time, so long as shares remain outstanding, in the case of Class C shares. It is
important that investors understand that the primary purpose of the CDSC for the
Class B shares and the distribution fee for Class B and Class C shares is the
same as the purpose of the front-end sales charge on sales of Class A shares: to
compensate brokers and other persons selling such shares. The CDSC, if payable,
<PAGE>
supplements the Class B distribution fee and reduces the Class C distribution
fee expenses for the Fund and Class C shareholders.
GENERAL
HOW MUCH MUST YOU INVEST? You may buy our shares through any independent
securities dealer having a sales agreement with Lord Abbett Distributor, 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 Individual Retirement
Accounts ($250 minimum). For Retirement Plans there is no minimum investment
required. See "Shareholder Services." 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 Distributor reserves the
right to reject any order.
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.
BUYING SHARES THROUGH YOUR DEALER. 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 Distributor 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 Distributor 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 Distributor. A business day is a day on
which the NYSE is open for trading.
Lord Abbett Distributor 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 Distributor may,
from time to time, implement promotions under which Lord Abbett Distributor will
pay a fee to dealers with respect to certain purchases not involving imposition
of a sales charge. Additional payments may be paid from Lord Abbett
Distributor'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. 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.
BUYING CLASS A SHARES. The offering price of Class A shares is based on the
per-share net asset value next computed after your order is accepted plus a
sales charge as follows.
SALES CHARGE AS A DEALER'S
PERCENTAGE OF: CONCESSION
AS A TO COMPUTE
NET PERCENTAGE OFFERING
OFFERING AMOUNT OF OFFERING PRICE, DIVIDE
SIZE OF INVESTMENT PRICE INVESTED PRICE NAV BY
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
+AUTHORIZED INSTITUTIONS RECEIVE CONCESSIONS ON PURCHASES MADE BY A RETIREMENT
PLAN, PURSUANT TO A SPECIAL RETIREMENT WRAP PROGRAM OR BY ANOTHER QUALIFIED
PURCHASER WITHIN A 12-MONTH PERIOD (BEGINNING WITH THE FIRST NET ASSET VALUE
PURCHASE) AS FOLLOWS: 1.00% ON PURCHASES OF $5 MILLION, 0.55% OF THE NEXT $5
MILLION, 0.50% OF THE NEXT $40 MILLION AND 0.25% ON PURCHASES OVER $50 MILLION.
SEE "CLASS A RULE 12B-1 PLAN" BELOW.
CLASS A SHARE VOLUME DISCOUNTS. This section describes several ways to qualify
for a lower sales charge when purchasing Class A shares if you inform Lord
Abbett Distributor or the Fund that you are eligible at the time of purchase.
<PAGE>
(1) Any purchaser (as described below) may aggregate a Class A share purchase in
the Fund with any share 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 not offered to the general
public ("LARF") and Lord Abbett U.S. Government Securities Money Market Fund
("GSMMF"), except for holdings in GSMMF which are attributable to any shares
exchanged from a Lord Abbett-sponsored fund.) (2) A purchaser may sign a
non-binding 13-month statement of intention to invest $50,000 or more in any
shares of the Fund or in any of the above eligible funds. If the intended
purchases are completed during the period, the total amount of your intended
purchases of any shares will determine the reduced sales charge rate for the
Class A shares purchased during the period. If not completed, each Class A share
purchase will be at the sales charge for the aggregate of the actual share
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.
CLASS A SHARE NET ASSET VALUE PURCHASES. Our Class A 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 Distributor 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 or Lord Abbett
Distributor 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 Class A shares
also may be purchased at net asset value (a) at $1 million or more, (b) with
dividends and distributions on Class A shares of other Lord Abbett-sponsored
funds, except for dividends and distributions on shares of LARF, LAEF and LASF,
(c) under the loan feature of the Lord Abbett-sponsored prototype 403(b) plan
for Class A 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 Distributor in accordance with certain standards approved by Lord
Abbett Distributor, providing specifically for the use of our Class A 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, Lord Abbett
Distributor or Lord Abbett-sponsored funds who consent to such purchase if such
persons provide services to Lord Abbett, Lord Abbett Distributor or such funds
on a continuing basis and are familiar with such fund, (f) through Retirement
Plans with at least 100 eligible employees, (g) 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
<PAGE>
Distributor or Lord Abbett (other than a money market fund), if such redemptions
have occurred no more than 60 days prior to the purchase of our Class A 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 and (h) through a "special retirement wrap program" sponsored by an
authorized institution having one or more characteristics distinguishing it, in
the opinion of Lord Abbett Distributor from a mutual fund wrap fee program. Such
characteristics include, among other things, the fact that an authorized
institution does not charge its clients any fee of a consulting or advisory
nature that is economically equivalent to the distribution fee under a Class A
12b-1 plan and the fact that the program relates to participant-directed
Retirement Plans. Purchasers should consider the impact, if any, of contingent
deferred sales charges in determining whether to redeem shares for subsequent
investment in our Class A shares pursuant to the purchase option in (g) above.
Lord Abbett Distributor may suspend or terminate the purchase option in (g)
above at any time. We plan to terminate the net asset value transfer privilege
in (g) on June 1, 1997.
CLASS A RULE 12B-1 PLAN. We have adopted a Class A share Rule 12b-1 plan (the "A
Plan") which authorizes the payment of fees to authorized institutions (except
as to certain accounts for which tracking data is not available) in order to
provide additional incentives for them (a) to provide continuing information and
investment services to their Class A shareholder accounts and otherwise to
encourage those accounts to remain invested in the Fund and (b) to sell Class A
shares of the Fund. Under the A Plan, in order to save on the expense of
shareholders' meetings and to provide flexibility to the Board of Directors, the
Board, including a majority of the outside directors who are not "interested
persons" of the Fund as defined in the Investment Company Act of 1940, is
authorized to approve annual fee payments from our Class A assets of up to 0.50
of 1% of the average net of such assets consisting of distribution and service
fees, each at a maximum annual rate not exceeding 0.25 of 1%. (the "Fee
Ceiling").
Under the A Plan, the Board has approved payments by the Fund to Lord Abbett
Distributor which uses or passes on to authorized institutions (1) an annual
service fee (payable quarterly) of .25% of the average daily net asset value of
the Class A shares serviced by authorized institutions and (2) a one-time
distribution fee of up to 1% (reduced according to the following schedule: 1% of
the first $5 million, .55% of the next $5 million, .50% of the next $40 million
and .25% over $50 million), payable at the time of sale on all Class A shares
sold during any 12-month period starting from the day of the first net asset
value sale (i) at the $1 million level by authorized institutions, including
sales qualifying at such level under the rights of accumulation and statement of
intention privileges; (ii) through Retirement Plans with at least 100 eligible
employees or (iii) constituting new sales pursuant to a "special retirement wrap
program" and excluding exchanges into the Fund under such a program. In
addition, the Board has approved for those authorized institutions which
qualify, a supplemental annual distribution fee equal to 0.10% of the average
daily net asset value of the Class A shares serviced by authorized institutions
which have a satisfactory program for the promotion of such shares comprising a
significant percentage of the Class A assets, with a lower than average
redemption rate. Institutions and persons permitted by law to receive such fees
are "authorized institutions."
Under the A Plan, Lord Abbett Distributor is permitted to use payments received
to provide continuing services to Class A shareholder accounts not serviced by
authorized institutions and, with Board approval, to finance any activity which
is primarily intended to result in the sale of Class A shares. Any such payments
are subject to the Fee Ceiling. Any payments under that Plan not used by Lord
Abbett Distributor in this manner are passed on to authorized institutions.
Holders of Class A shares on which the 1% sales distribution fee has been paid
may be required to pay to the Fund on behalf of its Class A shares a CDSC of 1%
of the original cost or the then net asset value, whichever is less, of all
Class A shares so purchased which are redeemed out of the Lord Abbett-sponsored
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family of funds on or before the end of the twenty-fourth month after the month
in which the purchase occurred. (Exceptions are made for: (i) redemptions by
Retirement Plans due to any benefit payment such as Plan loans, hardship
withdrawals, death, retirement or separation from service with respect to plan
participants or the distribution of any excess contributions and (ii)
participant-directed redemptions which continue as program investments in
another fund participating in a "special retirement wrap program.") If the Class
A shares have been exchanged into another Lord Abbett-sponsored fund and are
thereafter redeemed out of the Lord Abbett family of funds on or before the end
of such twenty-fourth month, the charge will be collected for the Fund's Class A
shares by the other fund. The Fund will collect such a charge for other Lord
Abbett-sponsored funds in a similar situation.
BUYING CLASS B SHARES. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed for
cash before the sixth anniversary of their purchase, a CDSC may be deducted from
the redemption proceeds. That sales charge will not apply to shares purchased by
the reinvestment of dividends or capital gains distributions. The charge will be
assessed on the lesser of the net asset value of the shares at the time of
redemption or the original purchase price. The Class B CDSC is paid to Lord
Abbett Distributor to compensate it for its services rendered in connection with
the distribution of Class B shares, including the payment and financing of sales
commissions. See "Class B Rule 12b-1 Plan" below.
To determine whether the CDSC applies to a redemption, the Fund redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held until the sixth anniversary of
their purchase or later, and (3) shares held the longest before the sixth
anniversary of their purchase.
The amount of the CDSC will depend on the number of years since you invested and
the dollar amount being redeemed, according to the following schedule.
ANNIVERSARY
OF THE DAY ON CONTINGENT DEFERRED
WHICH THE PURCHASE SALES CHARGE ON
ORDER WAS ACCEPTED REDEMPTIONS
(AS % OF AMOUNT
On Before SUBJECT TO CHARGE)
1st 5.0%
1st 2nd 4.0%
2nd 3rd 3.0%
3rd 4th 3.0%
4th 5th 2.0%
5th 6th 1.0%
on or after the None
6th anniversary
In the table, an "anniversary" is the 365th day subsequent to a purchase or a
prior anniversary. All purchases are considered to have been made on the
business day the purchase was made. See "Buying Shares Through Your Dealer"
above.
If Class B shares are exchanged into the same class of another Lord
Abbett-sponsored fund and the new shares are subsequently redeemed for cash
before the sixth anniversary of the original purchase, the CDSC will be payable
on the new shares on the basis of the time elapsed from the original purchase.
The Fund will collect such a charge for other Lord Abbett-sponsored funds in a
similar situation.
WAIVER OF CLASS B SALES CHARGES. The Class B CDSC will not be applied to shares
purchased in certain types of transactions nor will it apply to shares redeemed
in certain circumstances as described below.
The Class B CDSC will be waived for redemptions of shares (i) in connection with
the Systematic Withdrawal Plan and Div-Move services, as described in more
detail under "Shareholder Services" below, (ii) by Retirement Plans due to any
benefit payment such as Plan loans, hardship withdrawals, death, retirement or
separation from service with respect to plan participants or the distribution of
any excess contributions, (iii) in connection with mandatory distributions under
403(b) plans and individual retirement accounts and (iv) in connection with the
death of the shareholder.
CLASS B RULE 12B-1 PLAN. The Fund has adopted a Class B share Rule 12b-1 Plan
(the "B Plan") under which the Fund periodically pays Lord Abbett Distributor
(i) an annual service fee of 0.25 of 1% of the average daily net asset value of
<PAGE>
the Class B shares and (ii) an annual distribution fee of 0.75 of 1% of the
average daily net asset value of the Class B shares that are outstanding for
less than eight years.
Lord Abbett Distributor uses the service fee to compensate authorized
institutions (except as to certain accounts for which tracking data is not
available) for providing personal services for accounts that hold Class B
shares. Those services are similar to those provided under the A Plan, described
above.
Lord Abbett Distributor pays an up-front payment to authorized institutions
totalling 4%, consisting of 0.25% for service and 3.75% for a sales commission
as described below.
Lord Abbett Distributor pays the 0.25% service fee to authorized institutions in
advance for the first year after Class B shares have been sold by the authorized
institutions. After the shares have been held for a year, Lord Abbett
Distributor pays the service fee on a quarterly basis. Lord Abbett Distributor
is entitled to retain such service fee payable under the B Plan with respect to
accounts for which there is no authorized institution of record or for which
such authorized institution did not qualify. Although not obligated to do so,
Lord Abbett Distributor may waive receipt from the Fund of part or all of the
service fee payments.
The 0.75% annual distribution fee is paid to Lord Abbett Distributor to
compensate it for its services rendered in connection with the distribution of
Class B shares, including the payment and financing of sales commissions.
Although Class B shares are sold without a front-end sales charge, Lord Abbett
Distributor pays authorized institutions responsible for sales of Class B shares
a sales commission of 3.75% of the purchase price. This payment is made at the
time of sale from Lord Abbett Distributor's own resources. Lord Abbett has made
arrangements to finance these commission payments, which arrangements include
non-recourse assignments by Lord Abbett Distributor to the financing party of
such distribution and CDSC payments concerning Class B shares.
The distribution fee and CDSC payments described above allow investors to buy
Class B shares without a front-end sales charge while allowing Lord Abbett
Distributor to compensate authorized institutions that sell Class B shares. The
CDSC is intended to supplement Lord Abbett Distributor's reimbursement for the
commission payments it has made with respect to Class B shares and its related
distribution and financing costs. The distribution fee payments are at a fixed
rate and the CDSC payments are of a nature that, during any year, both forms of
payment may not be sufficient to reimburse Lord Abbett Distributor for its
actual expenses. The Fund is not liable for any expenses incurred by Lord Abbett
Distributor in excess of (i) the amount of such distribution fee payments to be
received by Lord Abbett Distributor and (ii) unreimbursed distribution expenses
of Lord Abbett Distributor incurred in a prior plan year, subject to the right
of the Board of Directors or shareholders to terminate the B Plan. Over the long
term, the expenses incurred by Lord Abbett Distributor are likely to be greater
than such distribution fee and CDSC payments. Nevertheless, there exists a
possibility that for a short-term period Lord Abbett Distributor may not have
sufficient expenses to warrant reimbursement by receipt of such distribution fee
payments. Although Lord Abbett Distributor does not intend to make a profit
under the B Plan, the B Plan is considered a compensation plan (i.e.,
distribution fees are paid regardless of expenses incurred) in order to avoid
the possibility of Lord Abbett Distributor not being able to receive
distribution fees because of a temporary timing difference between its incurring
expenses and receipt of such distribution fees.
AUTOMATIC CONVERSION OF CLASS B SHARES. On the eighth anniversary of your
purchase of Class B shares, those shares will automatically convert to Class A
shares. This conversion relieves Class B shareholders of the higher annual
distribution fee that applies to Class B shares under the B Plan. The conversion
is based on the relative net asset values of the two classes, and no sales
charge or other charge is imposed. When Class B shares convert, any other Class
B shares that were acquired by the reinvestment of dividends and distributions
will also convert to Class A shares on a pro rata basis. The conversion feature
is subject to the continued availability of an opinion of counsel or a tax
<PAGE>
ruling described in "Purchases, Redemptions and Shareholder Services" in the
Statement of Additional Information.
BUYING CLASS C SHARES. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed for
cash before the first anniversary of their purchase, a CDSC of 1% will be
deducted from the redemption proceeds. That reimbursement charge will not apply
to shares purchased by the reinvestment of dividends or capital gains
distributions. The charge will be assessed on the lesser of the net asset value
of the shares at the time of redemption or the original purchase price. The
Class C CDSC is paid to the Fund to reimburse it, in whole or in part, for the
service and distribution fee payments made by the Fund at the time such shares
were sold, as described below.
To determine whether the CDSC applies to a redemption, the Fund redeems shares
in the following order: (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held for one year or more and (3) shares
held the longest before the first anniversary of their purchase. If Class C
shares are exchanged into the same class of another Lord Abbett-sponsored fund
and subsequently redeemed before the first anniversary of their original
purchase, the charge will be collected by the other fund on behalf of this
Fund's Class C shares. The Fund will collect such a charge for other Lord
Abbett-sponsored funds in a similar situation.
CLASS C RULE 12B-1 PLAN. The Fund has adopted a Class C share Rule 12b-1 Plan
(the "C Plan") under which (except as to certain accounts for which tracking
data is not available) the Fund pays authorized institutions through Lord Abbett
Distributor (1) a service fee and a distribution fee, at the time shares are
sold, not to exceed 0.25 and 0.75 of 1%, respectively, of the net asset value of
such shares and (2) at each quarter-end after the first anniversary of the sale
of shares, fees for services and distribution at annual rates not to exceed 0.25
and 0.75 of 1%, respectively, of the average annual net asset value of such
shares outstanding (payments with respect to shares not outstanding during the
full quarter to be prorated). These service and distribution fees are for
purposes similar to those mentioned above with respect to the A Plan. Sales in
clause (1) exclude shares issued for reinvested dividends and distributions and
shares outstanding in clause (2) include shares issued for reinvested dividends
and distributions after the first anniversary of their issuance.
BUYING CLASS P SHARES. Class P shares are currently sold at net asset value to
the trustees of, or employer-sponsors with respect to, pension or retirement
plans with at least 100 eligible employees (such as a plan under Section 401(a),
401(k) or 457(b) of the Internal Revenue Code) which engage an investment
professional providing, or participating in an agreement to provide, certain
recordkeeping, administrative and/or sub-transfer agency services to the Fund on
behalf of the Class P shareholders.
Purchases and redemption of Class P shares will be effected at net asset value
by trustees, custodians or employers on behalf of plan participants who will not
deal directly with the Fund.
CLASS P RULE 12B-1 PLAN. The Fund has adopted a Class P share Rule 12b-1 Plan
(the "P Plan") which authorizes the payment of fees to authorized institutions
(except as to certain accounts for which tracking data is not available) in
order to provide additional incentives for them (a) to provide continuing
information and investment services to their Class P shareholder accounts and
otherwise to encourage those accounts to remain invested in the Fund and (b) to
sell Class P shares of the Fund. Under the P Plan, in order to save on the
expense of shareholders' meetings and to provide flexibility to the Board of
Directors, the Board, including a majority of the outside directors who are not
"interested persons" of the Fund as defined in the Act, is authorized to approve
annual fee payments from Class P assets of up to 0.75 of 1% of the average net
asset value of such assets consisting of distribution and service fees, at
maximum annual rates not exceeding 0.50 and 0.25 of 1%, respectively (the "Fee
Ceiling").
The Board of Directors has approved payments from Class P assets to Lord Abbett
Distributor which uses or passes on to authorized institutions (1) an annual
<PAGE>
service fee (payable quarterly) of 0.20 of 1% of the average daily net asset
value of Class P shares serviced by authorized institutions and (2) a
distribution fee of up to 0.25 of 1% of the average daily net asset value of
Class P shares sold by authorized institutions that have a satisfactory program
for the promotion of such shares. Institutions and persons permitted by law to
receive such fees are "authorized institutions."
Under the P Plan, Lord Abbett Distributor is permitted to use payments received
to provide continuing services to Class P shareholder accounts not serviced by
authorized institutions and, with Board approval, to finance any activity which
is primarily intended to result in the sale of Class P shares. Any such payments
are subject to the Fee Ceiling. Any payments under the P Plan not used by Lord
Abbett Distributor in this manner are passed on to authorized institutions.
Authorized institutions may receive different compensation with respect to one
class of Fund shares over the other.
6 SHAREHOLDER SERVICES
We offer the following shareholder services:
TELEPHONE EXCHANGE PRIVILEGE: Shares of any class may be exchanged without a
service charge: (a) for shares of the same class of any other Lord
Abbett-sponsored fund except for (i) LAEF, LASF and LARF 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 and (b) for shares of any
authorized institution's affiliated money market fund satisfying Lord Abbett
Distributor as to certain omnibus account and other criteria (together,
"Eligible Funds").
You or YOUR REPRESENTATIVE WITH PROPER IDENTIFICATION can instruct the Fund to
exchange uncertificated shares of a class (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 (800-821-5129) prior to the close of the
NYSE to obtain each fund's net asset value per class 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 ("SWP"): 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. With respect to Class B shares,
the CDSC will be waived on redemptions of up to 12% per year of the current net
asset value of your account at the time your SWP is established. For Class B
shares (over 12% per year) and C shares, redemption proceeds due to a SWP will
be derived from the following sources in the order listed: (1) shares acquired
by reinvestment of dividends and capital gains, (2) shares held for six years or
more (Class B) or one year or more (Class C); and (3) shares held the longest
before the sixth anniversary of their purchase (Class B) or before the first
anniversary of their purchase (Class C). For Class B share redemptions over 12%
per year, the CDSC will apply to the entire redemption.
Therefore, please contact the Fund for assistance in minimizing the CDSC in this
situation. Shareholders should be careful in establishing a SWP, especially to
the extent that such a withdrawal exceeds the annual total return for a class,
in which case, the shareholder's original principal will be invaded and, over
time, may be depleted.
DIV-MOVE: You can invest the dividends paid on your account ($50 minimum
<PAGE>
investment) into an existing account within the same class in any 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. Such dividends are not subject to a CDSC. You should
read the prospectus of any 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 documents,
including 401(k) plans and custodial agreements for IRAs (Individual Retirement
Accounts including Simple IRAs and Simplified Employee Pensions), 403(b) plans
and pension and profit-sharing plans.
HOUSEHOLDING: A single copy of an annual or semi-annual report will be 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 67 years and currently manages approximately $22 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 twelve 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. He is assisted by Howard E.
Hansen. 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, 1996, 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, 1996 was 1.22%.
THE FUND. The Fund is a diversified open-end management investment company
incorporated under Maryland law on March 14, 1983. Its Class A, B and C shares
have equal rights as to voting, dividends, assets and liquidation except for
differences resulting from certain class-specific expenses.
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
<PAGE>
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 has been proposed that 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 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
<PAGE>
Funds at the then applicable net asset value of the shares being purchased, (i)
without the payment of a sales charge or (ii) with reimbursement for the payment
of any CDSC. 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 completed its fiscal year on December 31, 1996 with a net asset value
of $13.29 per share, versus $11.13 per share one year ago. The latter figure has
been adjusted for capital gains distributions totaling $1.05 per share paid last
January. In addition, the Fund paid dividends of $0.16 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 21.22% for the year. Recently, the
Fund's Board of Directors declared a dividend of $0.15 per share and a capital
gains distribution of $1.35 per share. Both were paid on January 22, 1997 to
shareholders of record on January 15, 1997.
The past year saw stock market averages climb to new heights against a
background of modest economic growth, low inflation and volatile interest rates.
Within this environment, the Fund's strong performance during 1996 can be
attributed to careful, research-driven stock selection. Over or underweightings
in particular industries did not have a significant impact on the overall
portfolio. The Fund was invested in select companies among a variety of
industries.
YIELD AND TOTAL RETURN. Yield and total return data may, from time to time, be
included in advertisements about the Fund. Each class of shares calculates its
"yield" by dividing the annualized net investment income per share on the
portfolio during a 30-day period by the maximum offering price on the last day
of the period. The yield of each class will differ because of the different
expenses (including actual 12b-1 fees) of each class of shares. The yield data
represents a hypothetical investment return on the portfolio, and does not
measure investment return based on dividends actually paid to shareholders. To
show that return, a dividend distribution rate may be calculated. A dividend
distribution rate is calculated by dividing the dividends of a class derived
from net investment income during a stated period by the maximum offering price
on the last day of the period. The yield and dividend distribution rate for
Class A shares reflect the deduction of the maximum initial sales charge, but
may also be shown based on the Fund's net asset value per share. Yields for
Class B and Class C shares do not reflect the deduction of the CDSC.
"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. When total return is quoted for Class A shares,
it includes the payment of the maximum initial sales charge. When total return
is shown for Class B and Class C shares, it reflects the effect of the
applicable CDSC. Total return also may be presented for other periods or based
on investments at reduced sales charge levels or net asset value. Any quotation
of total return not reflecting the maximum sales charge (front-end, level, or
back-end) 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 description.
See "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 or 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.
The performance of the Class A shares which is shown in the comparison below
will be greater than or less than that for Class B, Class C and Class P shares
based on the differences in sales charges and fees paid by shareholders
investing in the different classes.
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 the
unmanaged Russell Mid-Cap Index.
The The
Fund at Fund at
Net Asset Maximum Offering Russell Mid-Cap
Date Value Price Index
12/31/86 $10000 $ 9423 $10000
12/31/87 9583 9028 9781
12/31/88 11079 10439 12188
12/31/89 13306 12538 14954
12/31/90 12688 11955 12549
12/31/91 16159 15227 17308
12/31/92 18335 17276 21061
12/31/93 20893 19687 24351
12/31/94 20211 19045 23832
12/31/95 25484 24013 32158
12/31/96 30894 29110 38372
AVERAGE ANNUAL TOTAL RETURN
FOR CLASS A SHARES(3)
1 Year 5 Years 10 Years
14.30% 12.51% 11.28%
(1)Data reflects the deduction of the maximum sales charge of 5.75% applicable
to Class A shares.
(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% applicable to Class A shares, with all dividends and
distributions reinvested for the periods shown ending December 31, 1996 using
the SEC-required uniform method to compute such return.
<PAGE>
Investment Manager and Underwriter
Lord, Abbett & Co. and Lord Abbett Distributor LLC
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.
LAMCVF-1-1097
(11/97)
LORD ABBETT
PROSPECTUS '97
MAY 1, 1997
APPLICATION INSIDE
AS SUPPLEMENTED NOVEMBER 10, 1997
Lord Abbett
Mid-Cap
Value Fund
<PAGE>
SUPPLEMENT TO THE STATEMENT OF ADDITIONAL INFORMATION OF LORD ABBETT MID-
CAP VALUE FUND, INC. DATED MAY 1, 1997.
Pension Class Rule 12b-1 Plan. As described in the Prospectus, the Fund has
adopted a Distribution Plan and Agreement pursuant to Rule 12b-1 of the Act for
the Pension Class (the "Pension Plan"). In adopting the Pension Plan and in
approving its continuance, the Board of Directors has concluded that there is a
reasonable likelihood that the Pension Plan will benefit the Class and its
shareholders. The expected benefits include greater sales and lower redemptions
of Class shares, which should allow the Class to maintain a consistent cash
flow, and a higher quality of service to shareholders by authorized institutions
than would otherwise be the case. The Pension Plan requires the directors to
review, on a quarterly basis, written reports of all amounts expended pursuant
to the Pension Plan and the purposes for which such expenditures were made. The
Pension Plan shall continue in effect only if its continuance is specifically
approved at least annually by vote of the directors, including a majority of the
directors who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Pension Plan or in any
agreements related to the Pension Plan ("outside directors"), cast in person at
a meeting called for the purpose of voting on the Plan. The Plan may not be
amended to increase materially above the limits set forth therein the amount
spent for distribution expenses thereunder without approval by a majority of the
outstanding voting securities of the applicable class and the approval of a
majority of the directors, including a majority of the outside directors. The
Pension Plan may be terminated at any time by vote of a majority of the outside
directors or by vote of a majority of its Class's outstanding voting securities.
SUPPLEMENT EFFECTIVE DATE: NOVEMBER 10, 1997
