Lord Abbett Mid-Cap
Value Fund
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED JUNE 30, 1998
[GRAPHIC OMITTED]
Designed to provide capital appreciation
from a stock portfolio of mid-sized companies
[LOGO](R)
<PAGE>
Report to Shareholders
For the Six Months Ended June 30, 1998
[PHOTO OMITTED]
/s/ ROBERT S. DOW
- --------------------
ROBERT S. DOW
CHAIRMAN
July 25, 1998
"We continue to seek value opportunities, focusing on those companies with the
potential to improve earnings in the economic environment we are forecasting."
Lord Abbett Mid-Cap Value Fund completed the first half of its fiscal year on
June 30, 1998 with aggregate net assets of $413.9 million. Below is an overview
of class-specific data through the first half of the fiscal year:
Six Months Ended June 30, 1998
------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------
Net asset value $14.51 $14.41 $14.40
Total return* 8.53% 8.10% 8.03%
The Search For Value
During the past six months, Lord Abbett Mid-Cap Value Fund produced attractive
returns in a market climate that generally favored large-capitalization stocks.
Our investment strategy focuses on companies that we believe offer the best
value in the mid-capitalization sector (companies with market capitalizations
ranging from $500 million to $5 billion). We remain committed to our bottom-up,
value-oriented style of stock selection. Our approach, which emphasizes solid
fundamental research, led us to timely investments in a number of electric
utilities and HMOs, two sectors that contributed positively to our performance.
As always, we will continue to invest with the goal of minimizing downside risk
while maintaining maximum upside potential.
Looking Forward
Our outlook through 1998 is for the economy to grow at a rate averaging less
than 2 1/2%, with inflation remaining moderate. We are watchful of the Asian
situation and any possible effects on the U.S. market, but believe the unrest
overseas will successfully offset domestic concerns regarding the strength of
the economy. We continue to seek value opportunities, focusing on those
companies with the potential to improve earnings in the economic environment we
are forecasting.
We remain committed to helping you achieve your long-term financial goals. Thank
you for including Lord Abbett Mid-Cap Value Fund in your investment portfolio.
Mutual funds are not insured by the FDIC, are not deposits or other obligations
of, or guaranteed by banks, and are subject to investment risks, including
possible loss of principal amount invested.
*Total return is the percent change in net asset value, assuming the
reinvestment of all distributions. Not annualized.
<PAGE>
The Mid-Cap Advantage
The table below illustrates the wide discrepancy between today's valuation of
ultra-large capitalization stocks, as measured by the 50 largest market cap
stocks and S&P 500 and those of mid-cap stocks, as represented by the S&P
Mid-Cap 400. This valuation advantage is even greater when comparing these
benchmarks with the Lord Abbett Mid-Cap Value Fund.
50 Largest
Market Lord Abbett
Capitalization S&P 500 S&P Mid-Cap Mid-Cap
Stocks* Index** 400 Index*** Value Fund
- --------------------------------------------------------------------------------
Price/Earnings 26.1x 23.8x 20.5x 17.7x
Price/Book 6.1x 4.2x 2.9x 2.1x
All prices and data as of 6/30/98. The portfolio is actively managed and
the Fund's attributes will differ over time. Price/Earnings Ratio (P/E) is
the price of a stock divided by its earnings per share estimated for the
next full fiscal year. Price/Book Ratio is the price of a stock divided by
its stockholders' equity per share.
* Based on data from Compustat, FactSet Data Systems.
** The S&P 500 Index is a market capitalization weighted index consisting of
500 widely held common stocks chosen for market size, liquidity and
industry group representation.
*** The S&P MidCap 400 Index is comprised of 400 widely held common stocks
chosen for their mid-cap size and industry characterizations. The indices
are unmanaged and are not available for investment.
Average Annual Total Returns
Average annual compounded total returns for periods ended 6/30/98, assuming
deduction of the Class A share 5.75% maximum sales charge, with all
distributions reinvested: 1 year: +17.00%
5 years: +16.10%
10 years: +13.62%
Portfolio Data(1)
Top Ten Holdings Top Ten Sectors
Holding %TNA Sector %TNA
- ---------------------------------------------------------------------------
Plantronics Inc. 3.61% Consumer Non-Cyclicals 26.02%
Tricon Global Restaurants 2.87% Consumer Cyclicals 16.83%
Northeast Utilities 2.46% Utilities 13.56%
Ball Corp. 2.43% Finance 12.14%
Fruit of the Loom 2.41% Basic Industry 7.60%
Dean Foods Co. 2.39% Technology 6.63%
Med Partners Inc. 2.32% Energy 6.52%
Polymer Group Inc. 2.20% Capital Goods 2.91%
Fort James Corp. 2.15% Not Rated 2.70%
Proffitt's Inc. 2.15% Cash 5.09%
(1) The Fund's portfolio is actively managed and is subject to change.
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 years, increasing at an average of 3.3% per
year. Over this time frame, the 6.1% average annual return of CDs outpaced
inflation. However, investors in the Fund saw their $100,000 investment grow an
average of 13.9% per year to $366,008(1).
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.
Cumulative Total
Returns Over
10 Years
The Fund: 266.0%
CDs: 80.9%
Inflation: 38.3%
Growth of $100,000: 6/30/88-6/30/98
Fund Six-Month CD Inflation-CPI
6/30/88 100000 100000 100000
12/31/88 91951 104400 102119
12/31/89 110431 114276 106864
12/31/90 105305 123978 113390
12/31/91 134116 131491 116864
12/31/92 152171 136514 120254
12/31/93 173406 141074 123559
12/31/94 167743 148198 126864
12/31/95 211504 157327 130085
12/31/96 256397 166153 134407
12/31/97 337252 175906 136695
6/30/98 366008 180902 138305
(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: Lipper Analytical Services, Inc.
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. Prior to May 1, 1997, the Fund had only one class of
shares, which is now designated as Class A shares. Results for periods from May
1, 1997 onward relate to Class A shares. 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 with distinct pricing options. For a full
discussion of the differences in pricing alternatives, please call Lord Abbett
Distributor LLC at 800-874-3733 (or your investment professional) and ask for
the Fund's current prospectus. If used as sales material after 9/30/98, 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, 1998
<TABLE>
<CAPTION>
Investments Shares Market Value
===================================================================================================================================
Investments in Common Stocks 94.91%
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aerospace 1.35% *Orbital Sciences Corp.-A space and information systems company
that designs, manufactures, operates and markets a broad range of
affordable space-technology products and satellite-based services 150,000 $ 5,606,250
- -----------------------------------------------------------------------------------------------------------------------============
Apparel 2.41% *Fruit of The Loom-Producer of non-fashion apparel and undergarments 300,000 9,956,250
- -----------------------------------------------------------------------------------------------------------------------============
Auto Parts 2.54% Snap-on, Inc.-Manufacturer and distributor of hand tools and diagnostic
equipment for the automotive industry 100,000 3,625,000
Standard Products Co.-Manufactures plastic and rubber products for the
automotive and appliance industries 245,000 6,890,625
Total 10,515,625
- -----------------------------------------------------------------------------------------------------------------------============
Banks: Regional 2.17% Cullen/Frost Bankers-Leading Texas bank 100,000 5,425,000
TCF Financial Inc.-Leading midwestern regional bank 120,000 3,540,000
Total 8,965,000
- -----------------------------------------------------------------------------------------------------------------------============
Chemicals: Specialty 4.32% Crompton & Knowles Corp.-Specialty chemicals and plastic processing
equipment manufacturer 250,000 6,296,875
Morton International Inc.-Producer of specialty chemicals, salt and airbags 100,000 2,500,000
*Polymer Group Inc.-Major global manufacturer of non-woven materials 800,000 9,100,000
Total 17,896,875
- -----------------------------------------------------------------------------------------------------------------------============
Communications Equipment 3.61% *Plantronics, Inc.-Leading supplier of communications headset products
and services to users and providers worldwide 290,000 14,935,000
- -----------------------------------------------------------------------------------------------------------------------============
Computer: Software 2.05% Adobe Systems-Developer of computer software products 200,000 8,487,500
- -----------------------------------------------------------------------------------------------------------------------============
Containers 2.43% Ball Corp.-Manufacturer of aluminum, plastic and steel containers for
the beverage and food industries 250,000 10,046,875
- -----------------------------------------------------------------------------------------------------------------------============
Drugs/Health-Care Med Partners Inc.-Leading physician practice management company 1,200,000 9,600,000
Products 4.13% Mylan Laboratories-Leading producer of prescription generic drugs and
brand-name dermatological products 250,000 7,515,625
Total 17,115,625
- -----------------------------------------------------------------------------------------------------------------------============
Electric Power 10.83% First Energy Corp.-Major midwestern electric utility holding company 200,000 6,150,000
Ipalco Enterprises Inc.-Major midwestern electric utility holding company 150,000 6,665,625
LG&E Energy Corp.-Electric and gas utility 160,000 4,330,000
Niagara Mohawk Power Corp.-Electric and gas utility 500,000 7,468,750
*Northeast Utilities-Major northeastern electric utility company 600,000 10,162,500
Sierra Pacific Resources-Western electric, water and gas utility holding
company 100,000 3,631,250
SCANA Corp.-Major southeastern electric and gas utility holding company 215,000 6,409,688
Total 44,817,813
- -----------------------------------------------------------------------------------------------------------------------============
Food 7.10% Corn Products International Inc.-Leading refiner of corn and other grains 180,000 6,097,500
Dean Foods Co.-Major producer of dairy foods, canned and frozen vegetables 180,000 9,888,750
Dreyer's Grand Ice Cream-Ice cream manufacturer and distributor 100,000 2,012,500
IBP Inc.-Beef and pork processor 200,000 3,625,000
Universal Foods Corp.-Manufacturer of yeast, flavorings, colorants and
dried spices for the food industry 350,000 7,765,625
Total 29,389,375
- -----------------------------------------------------------------------------------------------------------------------============
Health-Care Products 3.39% *Acuson Corp.-Manufacturer of medical diagnostic ultrasound imaging systems 300,000 5,456,250
*Sierra Health Services-Provider of managed health plans in Nevada and Texas 165,000 4,155,938
St. Jude Medical, Inc.-A leading manufacturer of artificial heart valves 120,000 4,417,500
Total 14,029,688
- -----------------------------------------------------------------------------------------------------------------------============
Health-Care Services 1.75% *Trigon Healthcare Inc.-Provider of managed health plans in Virginia 200,000 7,237,500
- -----------------------------------------------------------------------------------------------------------------------============
Household Products 2.15% Fort James Corp.-Producer of paper-based consumer products, packaging and
communication papers 200,000 8,900,000
- -----------------------------------------------------------------------------------------------------------------------============
Insurance: Property and Ace Ltd.-Insurance holding company specializing in property and casualty
Casualty 9.97% coverage 200,000 7,800,000
CMAC Investment Corp.-Major private mortgage insurance provider 100,000 6,150,000
Exel Ltd Ord-Excess liability insurer 50,000 3,890,625
Landamerica Financial Group Inc.-Title Insurance company 100,000 5,725,000
</TABLE>
3
<PAGE>
Statement of Net Assets
June 30, 1998
<TABLE>
<CAPTION>
Shares or
Investments Principal Amount Market Value
===================================================================================================================================
<S> <C> <C>
Reliastar Financial Corp.-Insurance holding company specializing in life
insurance and group annuity contracts 120,000 $ 5,760,000
The Progressive Corporation-Insurance holding company specializing in
non-standard auto insurance 30,000 4,230,000
Transatlantic Holdings Inc.-International property and casualty reinsurer 100,000 7,731,250
Total 41,286,875
- -----------------------------------------------------------------------------------------------------------------------============
Leisure Time 1.04% *TV Azteca-Major Mexican television broadcasting company 400,000 4,325,000
- -----------------------------------------------------------------------------------------------------------------------============
Machinery: Diversified 1.56% *Coltec Industries Inc.-Diversified manufacturer of aerospace, defense
and automotive products 325,000 6,459,375
- -----------------------------------------------------------------------------------------------------------------------============
Miscellaneous 3.34% Jostens Inc.-Produces class rings, yearbooks and recognition products for
schools and businesses 275,000 6,565,625
Safety-Kleen Corp.-Largest hazardous waste management company in
North America 2,000,000 7,250,000
Total 13,815,625
- -----------------------------------------------------------------------------------------------------------------------============
Natural Gas: Distribution 2.73% Eastern Enterprises-Natural gas distributor in Massachusetts 150,000 6,431,250
Southwest Gas Corp.-Natural gas distributor in Arizona and Nevada 200,000 4,887,500
Total 11,318,750
- -----------------------------------------------------------------------------------------------------------------------============
Natural Gas: Diversified 3.10% Dynegy-Major U.S. marketer of natural gas, natural gas liquids, crude
oil and electricity 525,000 6,562,500
The Coastal Corporation-A diversified gas pipeline company 90,000 6,283,125
Total 12,845,625
- -----------------------------------------------------------------------------------------------------------------------============
Office Equipment/Supplies .97% Cabletron Systems Inc.-Manufactures, markets and installs network
connectivity hardware and software 300,000 4,031,250
- -----------------------------------------------------------------------------------------------------------------------============
Oil Well Equipment/Service COFLEXIP S.A. Sponsored ADR-World leader in design, manufacture and
1.70% installation of flexible pipe for offshore petroleum transportation 115,000 7,029,375
- -----------------------------------------------------------------------------------------------------------------------============
Oil: Domestic Integrated 1.72% Ultramar Diamond Shamrock Corp.-Refiner and marketer of petroleum products 225,000 7,101,562
- -----------------------------------------------------------------------------------------------------------------------============
Paper and Forest *Buckeye Technology Corp.-Producer of specialty cellulose pulp 300,000 7,068,750
Products 3.28% Unisource Worldwide Inc.-Distributor of printing and imaging supplies
in North America 600,000 6,487,500
Total 13,556,250
- -----------------------------------------------------------------------------------------------------------------------============
REITS & Finance 3.30% Capstone Capital Corp.-Healthcare facility, real estate investment trust 170,000 3,910,000
Equity Office Prop.-Office building real estate investment trust 200,000 5,675,000
Healthcare Realty Trust Inc.-Health-care facility real estate
investment trust 150,000 4,087,500
Total 13,672,500
- -----------------------------------------------------------------------------------------------------------------------============
Restaurants 2.87% *Tricon Global Restaurants, Inc.-Major operator of fast food restaurants 375,000 11,882,813
- -----------------------------------------------------------------------------------------------------------------------============
Retail 7.15% Nine West Group Inc. Com.-Designs, sources and markets at retail and
wholesale women's footwear 300,000 8,043,750
*Officemax Inc.-Major operator of office product superstores 450,000 7,425,000
*Proffitt's Inc.-Regional department store chain 220,000 8,882,500
Talbots Inc.-Women's apparel retailer 200,000 5,237,500
Total 29,588,750
- -----------------------------------------------------------------------------------------------------------------------============
Toys 1.95% Hasbro Inc.-Major U.S. manufacturer of toys and games 205,000 8,059,062
- -----------------------------------------------------------------------------------------------------------------------============
Total Investments in Common Stocks (Cost $303,683,876) 392,872,188
===================================================================================================================================
Other Assets, Less Liabilities 5.09%
===================================================================================================================================
Short-term Investments
U.S. Government Obligation Federal Home Loan Mortgage Corp. 5.68% Note due 7/01/1998 3,430M 3,429,467
Corporate Obligation Morgan Stanley Dean Witter 6.57% Note due 7/01/1998 16,000M 15,997,222
Total 19,426,689
---------------------------------------------------------------------------------------============
Cash and Receivables, Net of Liabilities 1,631,742
- -----------------------------------------------------------------------------------------------------------------------============
Total Other Assets, Less Liabilities 21,058,431
===================================================================================================================================
Net Assets 100.00% $413,930,619
===================================================================================================================================
Class A Shares-Net asset value ($383,473,671 / 26,434,554 shares outstanding) $14.51
Class B Shares-Net asset value ($20,721,293 / 1,437,892 shares outstanding) $14.41
Class C Shares-Net asset value ($9,735,655 / 676,050 shares outstanding) $14.40
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
4
<PAGE>
Statement of Operations
Investment Income Six Months Ended June 30, 1998
================================================================================
Income Dividends $ 2,364,960
Interest 400,569
Total income $ 2,765,529
------------------------------------------------------------------
Expenses Management fee 1,347,484
12b-1 distribution plan-Class A 444,483
12b-1 distribution plan-Class B 59,155
12b-1 distribution plan-Class C 28,621
Shareholder servicing 199,757
Reports to shareholders 48,072
Registration 35,421
Professional 25,506
Other 12,733
Total expenses 2,201,232
------------------------------------------------------------------
Net investment income 564,297
------------------------------------------------------------------
Realized and Unrealized Gain on Investments
================================================================================
Realized gain from investment transactions
Proceeds from sales 104,936,118
Cost of investments sold 75,313,260
------------------------------------------------------------------
Net realized gain 29,622,858
------------------------------------------------------------------
Unrealized depreciation of investments (51,908)
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investment 29,570,950
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $30,135,247
================================================================================
See Notes to Financial Statements.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, December 31,
Increase (Decrease) in Net Assets 1998 1997
===================================================================================================================================
<S> <C> <C>
Operations Net investment income $ 564,297 $ 1,955,734
Net realized gain from investment transactions 29,622,858 45,271,868
Net unrealized appreciation (depreciation) of investments (51,908) 32,524,523
Net increase in net assets resulting from operations 30,135,247 79,752,125
---------------------------------------------------------------------------------------------------------------------
Undistributed net investment income included in price of share transactions - 63,709
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income-Class A - (4,640,263)
Net investment income-Class B - (16,865)
Net investment income-Class C - (10,681)
Net realized gain from investment transactions-Class A - (70,221,872)
Net realized gain from investment transactions-Class B - (684,709)
Net realized gain from investment transactions-Class C - (433,661)
Total distributions - (76,008,051)
---------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sale of shares 68,398,834 46,415,746
Net asset value of shares issued in reinvestment of net investment income
and realized gain from investment transactions - 69,433,618
Total 68,398,834 115,849,364
---------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (27,839,081) (33,569,347)
---------------------------------------------------------------------------------------------------------------------
Increase in net assets derived from capital share transactions 40,559,753 82,280,017
---------------------------------------------------------------------------------------------------------------------
Increase in net assets 70,695,000 86,087,800
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets
Beginning of period 343,235,619 257,147,819
---------------------------------------------------------------------------------------------------------------------
End of period (including overdistributed net investment income of $483,507
and $1,047,804, respectively) $413,930,619 $343,235,619
=====================================================================================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A Shares
-------------------------------------------------------------------------------------
Six Months Ended Year Ended December 31,
Per Share Operating Performance: 6/30/98 1997 1996 1995 1994 1993
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.37 $13.29 $12.18 $11.25 $12.65 $12.60
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income .02(e) .08 .13 .162 .18 .16
Net realized and unrealized gain (loss)
on investments 1.12 3.61 2.19 2.383 (.545) 1.42
Total from investment operations 1.14 3.69 2.32 2.545 (.365) 1.58
-----------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income - (.23) (.16) (.17) (.16) (.20)
Distributions from net realized gain - (3.38) (1.05) (1.445) (.875) (1.33)
-----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.51 $13.37 $13.29 $12.18 $11.25 $12.65
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 8.53%(d) 31.53% 21.22% 26.09% (3.27)% 13.95%
===================================================================================================================================
Ratios to Average Net Assets:
Expenses 0.56%(d) 1.25% 1.22% 1.27% 1.12% 1.22%
Net investment income 0.16%(d) 0.74% 1.12% 1.48% 1.53% 1.35%
===================================================================================================================================
<CAPTION>
Class B Shares Class C Shares
---------------------------------- -----------------------------------
Six Months Ended 5/1/97(b) Six Months Ended 5/1/97(b)
Per Share Operating Performance: 6/30/98 to 12/31/97 6/30/98 to 12/31/97
============================================================================================= ===================================
<S> <C> <C> <C> <C>
Net asset value, beginning of period $13.33 $12.14 $13.33 $12.14
- --------------------------------------------------------------------------------------------- -----------------------------------
Income (loss) from investment operations
Net investment loss (.03)(e) .00(c) (.03)(e) .00(c)
Net realized and unrealized gain on investments 1.11 3.27 1.10 3.27
Total from investment operations 1.08 3.27 1.07 3.27
--------------------------------------------------------------------------------------- -----------------------------------
Distributions
Dividends from net investment income - (.05) - (.05)
Distributions from net realized gain - (2.03) - (2.03)
- --------------------------------------------------------------------------------------------- -----------------------------------
Net asset value, end of period $14.41 $13.33 $14.40 $13.33
- --------------------------------------------------------------------------------------------- -----------------------------------
Total Return(a)(d) 8.10% 27.51% 8.03% 27.51%
============================================================================================= ===================================
Ratios to Average Net Assets(d):
Expenses 0.93% 1.29% 0.93% 1.28%
Net investment loss (0.21)% (0.15)% (0.21)% (0.13)%
======================================================================================= ===================================
<CAPTION>
Six Months Ended Year Ended December 31,
Supplemental Data for All Classes: 6/30/98 1997 1996 1995 1994 1993
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $413,931 $343,236 $257,148 $227,149 $190,788 $202,519
Portfolio turnover rate 28.48% 56.96% 38.88% 41.42% 57.49% 33.42%
===================================================================================================================================
</TABLE>
(a) Total return does not consider the effects of sales loads and assumes
reinvestment of all distributions.
(b) Commencement of offering Class shares.
(c) Amounts less than $0.01.
(d) Not annualized.
(e) Calculated using average shares outstanding during the period.
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 require 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. Short-term securities
are valued at cost which approximates market value. (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 *7 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 $190,798 representing payment of commissions on sales of
Class A shares after deducting $1,168,511 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, 1998,
undistributed net realized gain for financial reporting purposes aggregated
$30,686,174.
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 105 million shares of $.001 par value
capital stock designated Class A, 15 million shares of $.001 par value capital
stock designated Class B, 15 million shares of $.001 par value capital stock
designated Class C and 15 million shares of $.001 par value capital stock
designated Class P. There have been no Class P shares sold to date. Paid in
capital amounted to $294,539,640 at June 30, 1998. Transactions in shares of
capital stock were as follows:
Year Ended Year Ended
June 30, 1998 December 31, 1996
------------------------ -----------------------------
Class A Shares Amount Shares Amount
- ------------------------------------------------- -----------------------------
Sales of shares 3,267,001 $ 46,323,618 2,714,070 $37,708,782
Shares issued to
shareholders in
reinvestment of net
investment income
and realized gain
from investment
transactions - - 5,431,935 68,327,594
Total 3,267,001 46,323,618 8,146,005 106,036,376
- ------------------------------------------------- -----------------------------
Shares reacquired (1,843,564) (26,406,844) (2,480,990) (33,318,181)
Increase in shares 1,423,437 $ 19,916,774 5,665,015 $ 72,718,195
- --------------------------------------------------------------------------------
May 1, 1997
(Commencement of
Six Months Ended offering Class shares)
June 30, 1998 to December 31, 1997
------------------------ -----------------------------
Class B Shares Amount Shares Amount
- ------------------------------------------------- -----------------------------
Sales of shares 1,074,116 $15,263,924 359,887 $5,284,991
Shares issued to
shareholders in
reinvestment of net
investment income
and realized gain
from investment
transactions - - 52,392 675,859
Total 1,074,116 15,263,924 412,279 5,960,850
- ------------------------------------------------- -----------------------------
Shares reacquired (42,527) (610,299) (5,976) (87,713)
Increase in shares 1,031,589 $14,653,625 406,303 $5,873,137
- --------------------------------------------------------------------------------
May 1, 1997
(Commencement of
Six Months Ended offering Class shares)
June 30, 1998, to December 31, 1997
------------------------ -----------------------------
Class C Shares Amount Shares Amount
- ------------------------------------------------- -----------------------------
Sales of shares 481,002 $6,811,292 233,963 $3,421,973
Shares issued to
shareholders in
reinvestment of net
investment income
and realized gain
from investment
transactions - - 33,345 430,165
Total 481,002 6,811,292 267,308 3,852,138
- ------------------------------------------------- -----------------------------
Shares reacquired (61,490) (821,938) (10,770) (163,453)
Increase in shares 419,512 $5,989,354 256,538 $3,688,685
- --------------------------------------------------------------------------------
7
<PAGE>
Notes to Financial Statements
5. Purchases and Sales of Securities Purchases and sales of investment
securities (other than short-term investments) aggregated $130,232,224 and
$104,936,118, respectively.
As of June 30, 1998, unrealized appreciation based on cost for federal income
tax purposes aggregated $89,188,312, of which $100,501,420 related to
appreciated securities and $11,313,108 related to depreciated securities. The
cost 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, 1998, under a deferred compensation plan,
were approximately $304,000.
7. Line of Credit The Company along with certain other funds managed by Lord
Abbett, have available a $200,000,000 unsecured revolving credit facility
("Facility"), from a consortium of banks, to be used for temporary or emergency
purposes as an additional source of liquidity to fund redemptions of investor
shares. Any borrowings under this Facility will bear interest at current market
rates as defined in the agreement. The fee for this Facility is 0.05% per annum.
There were no loans outstanding pursuant to this Facility at June 30, 1998, nor
was the Facilitly utilized at any time during the period.
Our Management
Board of Directors
Robert S. Dow
E. Wayne Nordberg
E. Thayer Bigelow*+
Stewart S. Dixon*
John C. Jansing*
C. Alan MacDonald*+
Hansel B. Millican, Jr.*
Thomas J. Neff*+
* Outside Director
+ Audit Committee
Officers
Robert S. Dow, Chairman and President
Edward K. von der Linde, Executive Vice
President and Portfolio Manager
Kenneth B. Cutler, Vice President
and Secretary
Stephen I. Allen, Vice President
Zane E. Brown, Vice President
Daniel E. Carper, Vice President
Daria L. Foster, Vice President
Robert G. Morris, Vice President
Robert J. Noelke, Vice President
E. Wayne Nordberg, Vice President
John J. Walsh, Vice President
Paul A. Hilstad, Vice President
and Assistant Secretary
Thomas F. Konop, Vice President
and Assistant Secretary
Keith F. O'Connor, Vice President
and Treasurer
A. Edward Oberhaus III, Vice President
Donna McManus, Assistant Treasurer
Joseph Van Dyke, Assistant Treasurer
Lydia Guzman, Assistant Secretary
Robert M. Hickey, Assistant Secretary
Investment Manager and
Underwriter
Lord, Abbett & Co. and
Lord Abbett Distributor LLC
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
212-848-1800
Custodian
The Bank of New York
New York, NY
Transfer Agent
United Missouri Bank of
Kansas City, N.A.
Shareholder Servicing Agent
DST Systems, Inc.
P.O. Box 419100
Kansas City, MO 64141
800-821-5129
Auditors
Deloitte & Touche LLP
New York, NY
Counsel
Debevoise & Plimpton
New York, NY
Copyright (C) 1998 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 OMITTED]
(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 57 investment professionals have helped us earn the trust of investment
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, E.
Thayer Bigelow, Jr.
E. Thayer Bigelow, Jr.
Director--Lord Abbett
Mid-Cap Value Fund
[PHOTO OMITTED]
Mr. Bigelow is a graduate of Trinity College and earned his MBA at Colgate
University's Darden Business School. He is currently the CEO of Court Room
Television Network, and previously served for five years as President and CEO of
Time Warner Cable Programming, Inc.
Mr. Bigelow serves as a member of the Board of Trustees for the Cate School. He
is also a member of the Board of Directors for the Visiting Nurse Service of New
York, Crane Co., Medusa Inc., and The Boy's Club of New York. He has been an
independent director for all of Lord Abbett's funds since 1994.
<PAGE>
Investing in the
Lord Abbett
Family of Funds
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
GROWTH
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
INCOME
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Funds Growth & Balanced Fund Income Funds Tax-Free Money
Growth Fund Income Funds Income Funds Market Fund
Developing Alpha Series Affiliated Fund Balanced Series Bond-Debenture o National U.S. Government
Growth Fund Fund o California Securities
Global Fund- Growth & o Connecticut Money Market
Equity Series Income Series Global Fund- o Florida Fund**+
Income Series o Georgia
International Research Fund- o Hawaii
Series Large-Cap Limited Duration o Michigan
Series U.S. Government o Minnesota
Mid-Cap Securities Series** o Missouri
Value Fund o New Jersey
U.S. Government o New York
Research Fund- Securities Series** o Pennsylvania
Small-Cap o Texas
Series* World Bond- o Washington
Debenture Series
</TABLE>
Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe your investment professional provides value in helping you identify and
understand your investment objectives and, ultimately, offering fund
recommendations suitable for your individual needs.
This publication, when used as sales literature, is to be distributed only if
preceded or accompanied by a current prospectus for Lord Abbett Mid-Cap Value
Fund.
For more complete information about any other Lord Abbett fund, including
charges and expenses, call your investment professional or Lord Abbett
Distributor LLC at 800-874-3733 for a prospectus. Read it carefully before
investing.
When you invest in a family of funds, you benefit from:
Diversification. You and your investment professional can diversify your
investments between equity and income funds.
Flexibility. As your investment goals change, your investment professional can
help you reallocate your portfolio.
As an investor in the Lord Abbett Family of Funds, you have access to 30
portfolios designed to meet a variety of investment needs. While you may
reallocate your assets among our funds at any time, we recommend speaking with
your invest-ment professional to help you customize your investment plan.
Numbers to Keep Handy
For Shareholder Account or
Statement Inquiries: 800-821-5129
For Literature: 800-874-3733
For 24-Hour Automated Shareholder
Service Line: 800-865-7582
Visit Our Web Site:
http://www.lordabbett.com
*The Lord Abbett Research Fund-Small-Cap Series is closed to new investors.
**An investment in this Fund is neither insured nor guaranteed by the U.S.
Government.
+An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Fund. This Fund is managed to maintain, and has
maintained, its stable $1.00 price per share.
[LOGO] LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
LORD ABBETT DISTRIBUTOR LLC
- -----------------------------------------------------------
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203 LAMCVF-3-698
(8/98)
