Lord Abbett Mid-Cap Value Fund
1999 Annual Report
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Designed to provide you with capital appreciation from a stock portfolio of
mid-sized companies.
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Visit our Web Site and get: up-to-date statistics and other useful information
at www.lordabbett.com
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Report to Shareholders
For the Fiscal Year Ended December 31, 1999
[PHOTO]
Robert S. Dow
Chairman
January 15, 2000
"As investors continue to shift away from large-cap growth, we believe mid-cap
value will offer good investment opportunities."
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Lord, Abbett & Co. is proud to announce we have received a DALBAR award for
providing consistently good service to shareholders, the 1999 Key Honor Award
for Mutual Fund Service. DALBAR, Inc., an independent research firm and
evaluator of mutual fund service, presents the awards to financial services
firms that provide consistently solid service to clients.
Lord Abbett Mid-Cap Value Fund completed its fiscal year December 31, 1999
with aggregate net assets of $394 million. The following chart provides an
overview of class-specific data through the fiscal year.
Year Ended December 31, 1999
- --------------------------------------------------------------------------------
Class A Class B Class C Class P Class Y**
- --------------------------------------------------------------------------------
Net asset value $13.24 $13.06 $13.06 $13.11 $13.25
Total return* 4.23% 3.54% 3.62% 3.44% 1.45%
Prevailing Winds Keep Prevailing...
Momentum investing was the dominant theme for the stock markets in 1999,
just as it had been in 1998. The performance of many stocks seemed to be
determined more by the market capitalization of the underlying company and
the previous movements of the price of its stock than by any reasonable
fundamental aspects. In other words, bigger was better and stocks that went
up in 1998 generally kept going up in 1999, what is termed momentum
investing. And while the major market indices rose to record levels by the
end of the year, the average stock treaded water. For example, in 1999 more
of the stocks listed on the New York Stock Exchange declined than advanced,
by a ratio of greater than 2:1.
But There are Signs of a Sea Change...
The year started with several months of volatile stock market performance,
which was most likely caused by the after-effects of 1998's collapse of the
Long Term Capital hedge fund and South American financial panics. The
stocks of technology and telecommunications companies dominated the indices
during the first quarter of 1999. A shift occurred in the second quarter
when, in what we see as a harbinger of things to come, value stocks
outperformed growth stocks. The third quarter was fairly uneventful until
near its end, when the stocks of technology, telecommunications and biotech
companies began a new run that extended through the end of the year. During
the fourth quarter, the gains made through value investing faded as
momentum investing once again took hold.
With Steady Hands at the Helm...
Despite the success of momentum investing, we stayed with our discipline of
investing in seasoned, mid-sized U.S. and multinational companies in sound
financial condition. The Fund's performance was driven primarily by our
investments in the stocks of energy companies and select technology
companies. At the end of 1998 and the beginning of 1999, the stocks of many
energy companies (oil and gas, refining) were selling at attractive
discounts. We took advantage of these "fire sale" prices and built a
substantial position in the energy sector. These investments saw sizeable
returns as oil prices rose from around $10 a barrel at the beginning of the
year up to the $20 a barrel range as 1999 ended. We also continued to
reduce our exposure to the stocks of financial companies during the first
half of 1999, largely avoiding the weak performance of this group caused by
rising interest rates in the second half of the year.
...We Look Confidently to the Future.
The mania that is price momentum investing cannot last forever. We believe
that when the tide turns, it will turn to tried and true value style. The
second quarter of last year gives only an inkling of what we believe is to
come. The stocks of many large companies, especially technology and
telecommunications companies, which have performed well over the last two
years, are greatly overvalued by traditional measures. As investors seek
opportunities away from the mania and headlines, we feel that they will
naturally gravitate to the solid fundamentals and attractive valuations of
the medium-sized companies that make up the universe in which your Mid-Cap
Value Fund practices its style of investing.
As always, we look forward to helping you achieve your long-term financial
goals, and thank you for including the Lord Abbett Mid-Cap Value Fund in
your investment portfolio.
* Total return is the percent change in net asset value, assuming the
reinvestment of all distributions.
** Total return for Class Y shares is not annualized. The inception date
for Mid-Cap Value Fund Class Y shares was 5/3/99.
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.
<PAGE>
The Mid-Cap Advantage
The table below illustrates the wide margin among current valuations of
ultra-large capitalization stocks, as measured by the 50 largest market cap
stocks, the S&P 500 Index and mid-cap stocks as represented by the S&P MidCap
400 Index. This valuation margin is even greater when comparing these benchmarks
with the Lord Abbett Mid-Cap Value Fund.
<TABLE>
<CAPTION>
50 Largest
Market Lord Abbett
Capitalization S&P 500 S&P MidCap Mid-Cap
Stocks* Index** 400 Index+ Value Fund++
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Price/Earnings 32.5x 24.8x 18.2x 12.2x
Price/Book 8.2x 5.3x 2.8x 1.6x
</TABLE>
All prices and data as of 12/31/99. 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.
* Representative data were calculated at Lord Abbett using the ValueLine
Database on Factset, which may not include all securities in any portfolio
or index.
** 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. Representative data were calculated at Lord
Abbett using the ValueLine Database on Factset, which may not include all
securities in any portfolio or index.
+ The S&P MidCap 400 Index is comprised of 400 widely held common stocks
chosen for their mid-cap size and industry characterizations.
Representative data were calculated at Lord Abbett using the ValueLine
Database on Factset, which may not include all securities in any portfolio
or index.
++ The Price/Earnings and Price/Book Ratios for the Lord Abbett Mid-Cap Value
Fund represent the weighted average of each of these ratios for all of the
stocks in the Fund's portfolio. Representative data were calculated at Lord
Abbett using the ValueLine Database on Factset, which may not include all
securities in any portfolio or index. The indices are unmanaged and are not
available for investment.
Average Annual Total Returns
Average annual compounded total returns for periods ended 12/31/99. Assumes
deduction of the Class A share 5.75% maximum sales charge, with all
distributions reinvested.
Class A
- --------------------------------------------------------------------------------
1 year: -1.70%
5 years: +14.48%
10 years: +11.56%
Portfolio Data(1)
Top Ten Holdings as of 12/31/99 Top Sectors as of 12/31/99
Holding %TNA(2) Sector %TNA(2)
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Dynegy, Inc. 4.26% Utilities 15.8%
Polymer Group, Inc. 3.70% Healthcare 15.4%
Cabletron Systems, Inc. 3.17% Energy 16.0%
CK Witco Corp. 3.11% Consumer Non-Cyclicals 10.2%
Varian Medical Systems, Inc. 3.01% Financial Services 9.0%
Illinova Corp. 2.91% Materials & Processing 9.9%
Varian Semiconductor Equipment Technology 5.9%
Associates, Inc. 2.89%
Mylan Laboratories, Inc. 2.84% Basic Industry 5.5%
Caremark Rx, Inc. 2.57% Cash 1.8%
EOG Resources, Inc. 2.39% Consumer Cyclicals 7.5%
(1) The Fund's portfolio is actively managed and is subject to change.
(2) Percent of total net assets.
The past performance of the Fund 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 2.99% per year. Over this time frame, the 5.59% average
annual return of CDs outpaced inflation. However, investors in the
Fund saw their $100,000 investment grow an average of 11.80% per year
to $305,100(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.
Growth of $100,000: 12/31/89 - 12/31/99
Cumulative Total
Returns Over
10 Years
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December 31, The Fund Six-Month CD CPI
1989 96,273 100,000.00 100,000.00
1990 91,804 108,490.00 106,110.00
1991 116,922 115,064.49 109,356.97
1992 132,662 119,459.96 112,528.32
1993 151,175 123,449.92 115,622.85
1994 146,238 129,684.14 118,709.98
1995 184,388 137,672.68 121,725.21
1996 223,526 145,396.12 125,766.49
1997 294,014 153,930.87 127,904.52
1998 292,695 162,520.22 129,963.78
1999 305,100 171,605.10 133,849.70
The Fund: 205.10%
CDs: 71.61%
Inflation: 33.85%
(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. The Fund's maximum sales charge is 5.75%.\
(2) Source: Lipper, 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. 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 3/31/00, this report must be accompanied by Lord
Abbett's Performance Quarterly for the most recently completed
calendar quarter.
2
<PAGE>
Statement of Net Assets
December 31, 1999
<TABLE>
<CAPTION>
Investments Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
Common Stocks 98.18%
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<S> <C> <C>
Air Transportation 1.44% SkyWest Inc.-A regional airline that provides passenger and freight service
in the Western United States 203,300 $ 5,692,400
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Apparel 1.28% *Tommy Hilfiger Corp.-Designs and markets apparel, accessories, footwear,
fragrance, and home furnishings 216,000 5,035,500
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Auto Parts: After Market .74% Snap-on, Inc.-Manufacturer and distributor of hand tools and diagnostic
equipment for the automotive industry 110,000 2,921,875
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Banks: Regional .91% Cullen/Frost Bankers Inc.-Leading Texas bank 138,500 3,566,375
- -----------------------------------------------------------------------------------------------------------------------============
Chemicals 3.11% CK Witco Corp.-Specialty chemicals and equipment manufacturer 915,000 12,238,125
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Communications Technology *Cabletron Systems Inc.-Manufactures, markets and installs network
3.17% connectivity hardware and software 479,800 12,474,800
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Containers 5.66% American National Can Group-Manufacturer of beverage cans 427,400 5,556,200
Ball Corp.-Leading manufacturer of aluminum, plastic and steel containers
for the beverage and food industries 206,400 8,127,000
*Pactiv Corp.-Provider of packaging solutions and manufacturer of food
service products 810,000 8,606,250
Total 22,289,450
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Drugs 2.84% Mylan Laboratories Inc.-Leading producer of prescription generic drugs
and brand-name dermatological products 445,000 11,208,437
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Electric Power 12.05% FirstEnergy Corp.-Major Midwestern electric utility holding company 220,000 4,991,250
Illinova Corp.-Major Midwestern electric utility holding company 330,000 11,467,500
Ipalco Enterprises Inc.-Major Midwestern electric utility holding company 356,400 6,081,075
*Niagara Mohawk Holdings Inc.-Electric and gas utility company 543,000 7,568,063
Northeast Utilities-Major Northeastern electric utility company 364,800 7,501,200
SCANA Corp.-Major Southeastern electric and gas utility holding company 251,000 6,745,625
Sierra Pacific Resources-Western electric, water and gas utility 180,000 3,116,250
holding company
Total 47,470,963
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Electronics: Semiconductor
2.89% *Varian Semiconductor Equipment Associates, Inc.-Manufacturer of
semiconductor equipment 335,000 11,390,000
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Financial Services 1.57% CIT Group Inc. Class A-Provides commercial and individual financing
through a nationwide distribution network 293,100 6,191,738
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Food 7.93% Dean Foods Co.-Major producer of dairy foods, canned and frozen vegetables 220,000 8,745,000
*Del Monte Foods Co.-Major producer of canned foods 561,300 6,911,006
IBP Inc.-Beef and pork processor 400,200 7,203,600
Universal Foods Corp.-Manufacturer of yeast, flavorings, colorants and
dried spices for the food industry 412,800 8,410,800
Total 31,270,406
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Gaming 1.89% *Mirage Resorts Inc.-Owns and operates casino-based entertainment resorts 486,200 7,444,937
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Health Care Products 4.05% *Acuson Corp.-Manufacturer of medical diagnostic ultrasound imaging systems 574,900 7,222,181
*St. Jude Medical, Inc.-A leading manufacturer of artificial heart valves
and pacemakers 285,000 8,745,938
Total 15,968,119
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Health Care Services 8.47% *Caremark Rx Inc.-Leading physician practice management company 2,000,000 10,125,000
*Manor Care Inc.-Owns and operates long-term care centers in the
United States 160,000 2,560,000
*Oxford Health Plans-Health benefit plans provider for New York,
New Jersey, and Connecticut 300,000 3,806,250
*Trigon Healthcare Inc. Class A-Provider of managed health plans in Virginia 170,000 5,015,000
*Varian Medical Systems Inc.-A worldwide supplier of integrated cancer-care
systems 397,900 11,862,394
Total 33,368,644
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Insurance 7.14% Ace Ltd.-Insurance holding company specializing in property and casualty
coverage 240,000 4,005,000
MONY Group Inc.-Major U.S. life insurer 253,850 7,409,247
PartnerRe Ltd.-Provides multi-line reinsurance to insurance companies 52,500 1,702,969
Transatlantic Holdings Inc.-International property and casualty reinsurer 90,000 7,025,625
XL Capital Ltd. Class A-Excess liability insurer 154,300 8,004,312
Total 28,147,153
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Materials & Commodities 1.04% IMC Global Inc.-Producer and distributor of crop nutrients and
animal feed ingredients 250,000 4,093,750
- -----------------------------------------------------------------------------------------------------------------------============
\
3
<PAGE>
Investments Shares Value
- -----------------------------------------------------------------------------------------------------------------------------------
Milling: Fruits/Grain 2.33% Corn Products International Inc.-Leading refiner of corn and other grains 280,000 $ 9,170,000
- -----------------------------------------------------------------------------------------------------------------------============-
Natural Gas 6.65% Dynegy Inc.-Major U.S. marketer of natural gas, natural gas liquids, crude
oil and electricity 690,000 16,775,625
EOG Resources Inc.-Oil and gas exploration, production and development
company 537,100 9,432,819
Total 26,208,444
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Oil: Crude Producers 3.68% Kerr-McGee Corp.-Oil and gas exploration and production, refining
and chemicals 135,600 8,407,200
*Santa Fe Snyder Corp.-Explorer and producer of crude oil and natural gas 762,000 6,096,000
Total 14,503,200
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Oil: Integrated Domestic 1.44% Amerada Hess Corp.-Oil and gas exploration, production and refining company 100,000 5,675,000
- -----------------------------------------------------------------------------------------------------------------------============
Oil: Refiners 4.22% Ultramar Diamond Shamrock Corp.-Refiner and marketer of petroleum products 360,100 8,169,769
Valero Energy Corp.-An independent petroleum refining and marketing company 426,700 8,480,662
Total 16,650,431
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REIT 2.02% Healthcare Realty Trust Inc.-Healthcare facility real estate investment
trust 510,006 7,968,844
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Restaurants 2.06% CBRL Group Inc.-Operates restaurants throughout the United States 835,900 8,110,846
- -----------------------------------------------------------------------------------------------------------------------============
Retail 2.17% *Consolidated Stores Corp.-Major U.S. retailer specializing in closeouts
and toys 526,800 8,560,500
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Synthetic Fibers 3.70% Polymer Group Inc.-Major global manufacturer of non-woven materials 800,000 14,600,000
- -----------------------------------------------------------------------------------------------------------------------============
Utilities 3.73% Eastern Enterprises-Natural gas distributor in Massachusetts 150,000 8,615,625
Southwest Gas Corp.-Natural gas distributor in Arizona and Nevada 264,700 6,088,100
Total 14,703,725
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Total Investments in Common Stocks (Cost $342,319,911) 386,923,662
- -----------------------------------------------------------------------------------------------------------------------============
Short-Term Investments 6.68%
- -----------------------------------------------------------------------------------------------------------------------------------
American Express Credit Corp. 2.50% due 1/4/2000 $11,770,000 11,770,000
American Express Credit Corp. 4.25% due 1/3/2000 14,555,000 14,555,000
Total Short-Term Investments (Cost $26,325,000) 26,325,000
- -----------------------------------------------------------------------------------------------------------------------============
Total Investments 104.86% (Cost $368,644,911) 413,248,662
- -----------------------------------------------------------------------------------------------------------------------============
Cash and Receivables, Net of Liabilities (4.86%) (19,142,213)
====================================================================================================================================
Net Assets 100.00% $394,106,449
====================================================================================================================================
Class A Shares-Net asset value ($347,305,757 / 26,224,758 shares outstanding) $13.24
Maximum offering price (net asset value plus sales charge of 5.75% of the offering price) $14.05
Class B Shares-Net asset value ($32,907,325 / 2,518,784 shares outstanding) $13.06
Class C Shares-Net asset value ($13,483,651 / 1,032,454 shares outstanding) $13.06
Class P Shares-Net asset value ($408,582 / 31,152 shares outstanding) $13.12
Class Y Shares-Net asset value ($1,134.14 / 85.603 shares outstanding) $13.25
The descriptions of the companies are unaudited.
*Non-income producing security.
REIT Real Estate Investment Trust
See Notes to Financial Statements.
4
</TABLE>
<PAGE>
Statement of Operations
Investment Income Year Ended December 31, 1999
- -------------------------------------------------------------------------------
Income Dividends $ 5,526,829
Interest 1,047,759
Total income 6,574,588
- -------------------------------------------------------------------------------
Expenses Management fee 2,792,854
12b-1 distribution plan-Class A 1,114,234
12b-1 distribution plan-Class B 297,415
12b-1 distribution plan-Class C 125,930
12b-1 distribution plan-Class P 1,062
Shareholder servicing 961,879
Reports to shareholders 107,346
Registration 101,710
Professional 68,167
Directors' fees 25,121
Other 39,398
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Total expenses before reductions 5,635,116
Expense reductions (26,542)
- -------------------------------------------------------------------------------
Net expenses 5,608,574
- -------------------------------------------------------------------------------
Net investment income 966,014
- -------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
- -------------------------------------------------------------------------------
Net realized gain from investment transactions 36,414,649
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Net change in unrealized appreciation of investments (23,559,784)
- -------------------------------------------------------------------------------
Net realized and unrealized gain on investments 12,854,865
- -------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $13,820,879
===============================================================================
See Notes to Financial Statements.
5
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, December 31,
Increase (Decrease) in Net Assets 1999 1998
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations Net investment income $ 966,014 $ 1,301,551
Net realized gain from investment transactions 36,414,649 16,394,308
Net change in unrealized appreciation of investments (23,559,784) (21,076,685)
Net increase (decrease)in net assets resulting from operations 13,820,879 (3,380,826)
- --------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (1,370,426) -
Class B - -
Class C - -
Class P (526) -
Class Y - -
Total (1,370,952) -
- --------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gain from investment:
Class A (14,800,901) -
Class B (1,118,553) -
Class C (486,334) -
Class P (14,191) -
Class Y - -
Total (16,419,979) -
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions (17,790,931) -
- --------------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sales of shares 85,821,932 127,473,361
Net asset value of shares issued in reinvestment of dividends and distributions 16,443,137 -
Total 102,265,069 127,473,361
- --------------------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (111,094,564) (60,422,158)
- --------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets derived from capital share transactions (8,829,495) 67,051,203
- --------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (12,799,547) 63,670,377
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets Beginning of year 406,905,996 343,235,619
- --------------------------------------------------------------------------------------------------------------------------------
End of year+ $394,106,449 $406,905,996
================================================================================================================================
+Includes undistributed net investment income of $536,073 and $941,011, respectively.
See Notes to Financial Statements.
</TABLE>
6
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A Shares Class B Shares
- --------------------------------------------------------------------------------------------- ------------------------------------
Year Ended Year Ended 5/1/97(b)
Per Share Operating Performance: 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95 12/31/99 12/31/98 to 12/31/97
- --------------------------------------------------------------------------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $13.31 $13.37 $13.29 $12.18 $11.25 $13.17 $13.33 $12.14
- ---------------------------------------------------------------------------------------------- -----------------------------------
Income (loss) from
investment operations
Net investment income (loss) .04(e) .05(e) .08 .13 .162 (.04)(e) (.05)(e) -(c)
Net realized and unrealized
gain(loss) on investments .48 (.11) 3.61 2.19 2.383 .47 (.11) 3.27
Total from investment
operations .52 (.06) 3.69 2.32 2.545 .43 (.16) 3.27
- ---------------------------------------------------------------------------------------------- -----------------------------------
Distributions
Dividends from net
investment income (.05) - (.23) (.16) (.17) - - (.05)
Distributions from
net realized gain (.54) - (3.38) (1.05) (1.445) (.54) - (2.03)
Total (.59) - (3.61) (1.21) (1.615) (.54) - (2.08)
- ---------------------------------------------------------------------------------------------- -----------------------------------
Net asset value, end of year $13.24 $13.31 $13.37 $13.29 $12.18 $13.06 $13.17 $13.33
- ---------------------------------------------------------------------------------------------- -----------------------------------
Total Return(a) 4.23% (0.45)% 31.53% 21.22% 26.09% 3.54% (1.20)% 27.51%(d)
=============================================================================================== ==================================
Ratios to Average
Net Assets:
Expenses(f) 1.34% 1.16% 1.25% 1.22% 1.27% 2.02% 1.92% 1.29%(d)
Net investment income (loss) .31% .39% .74% 1.12% 1.48% (.34)% (.35)% (.15)%(d)
=============================================================================================== ==================================
</TABLE>
<TABLE>
<CAPTION>
Class C Shares Class P Shares Class Y Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/1/97(b) Year Ended 1/1/98(b) 5/3/99(b)
Per Share Operating Performance: 12/31/99 12/31/98 to 12/31/97 12/31/99 to 12/31/98 to 12/31/99
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $13.16 $13.33 $12.14 $13.25 $13.38 $13.06
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations
Net investment income (loss) (.04)(e) (.05)(e) -(c) .04(e) .02(e) .05(e)
Net realized and unrealized gain
(loss) on investments .48 (.12) 3.27 .39 (.15) .14
Total from investment
operations .44 (.17) 3.27 .43 (.13) .19
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income - - (.05) (.02) - -
Distributions from net realized gain (.54) - (2.03) (.54) - -
Total (.54) - (2.08) (.56) - -
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $13.06 $13.16 $13.33 $13.12 $13.25 $13.25
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 3.62% (1.28)% 27.51%(d) 3.44% (.97)% 1.45%(d)
===================================================================================================================================
Ratios to Average Net Assets:
Expenses(f) 2.02% 1.92% 1.28%(d) 1.45% 1.37% .69%(d)
Net investment income (loss) (.34)% (.35)% (.13)%(d) .31% .20% .41%(d)
===================================================================================================================================
Year Ended December 31,
Supplemental Data for AllClasses: 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $394,106 $406,906 $343,236 $257,148 $227,149
Portfolio turnover rate 64.76% 46.58% 56.96% 38.88% 41.42%
====================================================================================================================================
(a) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.
(b) Commencement of operations of respective Class shares.
(c) Amounts less than $0.01.
(d) Not annualized.
(e) Calculated using average shares outstanding during the year.
(f) The ratios for 1998 and 1999 include expenses paid through an expense offset arrangement.
See Notes to Financial Statements.
</TABLE>
7
<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 follow ing summarizes the significant
accounting policies of the Company: (a) Securities are valued as follows:
Portfolio 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 amortized 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 se
curities 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
class-specific 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.
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 for each month 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 mil lion. At Decem ber 31, 1999, the management fee payable was $205,427.
The Company has Rule 12b-1 plans and agreements (the "Class A, Class B, Class C
and Class P Plans") with Lord Abbett Distributor LLC ("Distributor"), an
affiliate of Lord Abbett. The Company makes payments to Distributor which uses
or passes on such payments to authorized institutions. Pursuant to the Class A
Plan, the Company pays Distributor (1) an annual service fee of 0.15% of the
average daily net asset value of shares sold prior to June 1,1990 and 0.25% of
the average daily net asset value of shares sold on or after that date, (2) a
one-time distribution fee of up to 1% on certain qualifying purchases and (3) an
annual distribution fee of 0.10% of the average daily net asset value of Class A
shares. 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. Pursuant to the Class P Plan,
the Company pays Distributor an annual service and distribution fee of 0.20% and
0.25%, respectively, of the average daily net asset value of the Class P shares.
Class Y does not have a Rule 12b-1 plan. At December 31, 1999, the 12b-1 fee
payable with respect to all classes of shares aggregated $13,779.
Distributor received $158,398 representing payment of commissions on sales of
Class A shares after deducting $934,573 allowed to authorized dealers 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 December 31, 1999,
undistributed net realized gain for financial reporting purposes aggregated
$36,330,820.
Distributions declared on January 20, 2000 and paid on January 28, 2000, to
shareholders of record on January 20, 2000 were as follows:
Rate Aggregate
Per Share Amount
- --------------------------------------------------------------------------------
Net Investment Income - Class A $ 0.0221 $ 574,232
Net Investment Income - Class P 0.0130 407
Net Investment Income - Class Y 0.0686 6
Capital Gains - Class A 1.2391 32,195,942
Capital Gains - Class B 1.2391 3,133,453
Capital Gains - Class C 1.2391 1,286,558
Capital Gains - Class P 1.2391 38,782
Capital Gains - Class Y 1.2391 106
- --------------------------------------------------------------------------------
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 150 million shares of $.001 par value
capital stock designated as follows: Class A-90 million shares, Class B-15
million shares, Class C-15 million shares, Class P-15 million shares and Class
Y-15 million shares. Paid in capital amounted to $312,635,805 at December 31,
1999. Transactions in shares of capital stock were as follows:
Year Ended Year Ended
December 31, 1999 December 31, 1998
- --------------------------------------------------------------------------------
Class A Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 4,977,296 $ 65,129,612 6,679,081 $ 89,842,339
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 1,210,990 14,919,395 - -
Total 6,188,286 80,049,007 6,679,081 89,842,339
- --------------------------------------------------------------------------------
Shares reacquired (7,604,904) (96,986,822) (4,048,822) (54,443,261)
Increase (decrease) (1,416,618) $(16,937,815) 2,630,259 $ 35,399,078
- --------------------------------------------------------------------------------
Year Ended Year Ended
December 31, 1999 December 31, 1998
- --------------------------------------------------------------------------------
Class B Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 1,012,260 $12,935,186 1,915,350 $26,070,405
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 85,467 1,045,263 - -
Total 1,097,727 13,980,449 1,915,350 26,070,405
- --------------------------------------------------------------------------------
Shares reacquired (653,306) (8,200,650) (247,290) (3,182,255)
Increase 444,421 $ 5,779,799 1,668,060 $22,888,150
- --------------------------------------------------------------------------------
8
<PAGE>
Notes to Financial Statements
Year Ended Year Ended
December 31, 1999 December 31, 1998
- --------------------------------------------------------------------------------
Class C Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 538,770 $ 6,987,618 848,457 $11,559,761
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 37,920 463,762 - -
Total 576,690 7,451,380 848,457 11,559,761
- --------------------------------------------------------------------------------
Shares reacquired (436,890) (5,567,140) (212,341) (2,796,591)
Increase 139,800 $ 1,884,240 636,116 $ 8,763,170
- --------------------------------------------------------------------------------
January 1, 1998
(Commencement of
operations of Class
Year Ended shares) to
December 31, 1999 December 31, 1998
- --------------------------------------------------------------------------------
Class P Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 58,806 $768,389 76 $856
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 1,196 14,717 - -
Total 60,002 783,106 76 856
- --------------------------------------------------------------------------------
Shares reacquired (28,922) (339,952) (4) (51)
Increase 31,080 $443,154 72 $805
- --------------------------------------------------------------------------------
May 3, 1999
(Commencement of
operations of Class shares)
to December 31, 1999
- --------------------------------------------------------------------------------
Class Y Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 86 $1,127
Increase 86 $1,127
- --------------------------------------------------------------------------------
5. Purchases and Sales of Securities Purchases and sales of investment
securities (other than short-term investments) aggregated $247,482,514 and
$268,045,785, respectively.
As of December 31, 1999, net unrealized appreciation based on cost for federal
income tax purposes aggregated $44,603,751, of which $67,257,208 related to
appreciated securities and $22,653,457 related to depreciated securities. The
cost of investments for federal income tax purposes is substantially the same as
that used for financial re porting 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 the net assets of each fund.
Directors' fees payable at December 31, 1999, under a deferred compensation
plan, were $295,770.
7. Expense Reductions TheCompany has entered into an arrangement with its
transfer agent whereby credits realized as a result of uninvested cash balances
were used to reduce a portion of the Fund's expenses.
8. Line of Credit The Company along with certain other funds managed by Lord
Abbett, has 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 was at an annual
rate of 0.06% during the year. Effective December 17, 1999, this fee was
increased to 0.09% per annum. There were no loans outstanding pursuant to this
Facility at December 31, 1999, nor was the Facility utilized at any time during
the year.
Independent Auditors' Report
The Board of Directors and Shareholders,
Lord Abbett Mid-Cap Value Fund, Inc.:
We have audited the accompanying statement of net assets of Lord Abbett Mid-Cap
Value Fund, Inc. as of December 31, 1999, the related statements of operations
for the year then ended and of changes in net assets for each of the years in
the two-year period then ended and the financial highlights for each of the
periods presented. These financial statements and the financial highlights are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and the financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1999 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Lord Abbett Mid-Cap
Value Fund, Inc. at December 31, 1999, the results of its operations, the
changes in its net assets and the financial highlights for each of the periods
presented in conformity with generally accepted accounting principles.
[GRAPHIC OMITTED]
New York, New York
February 25, 2000
Copyright(C)2000 by Lord Abbett Mid-Cap Value Fund, Inc., 90 Hudson Street,
Jersey City, NJ 07302-3973
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.
<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
Growth Large-Cap Research Fund - Balanced World Bond- National U. S. Government
Opportunities Growth Fund Large-Cap Series** Debenture Series California Securities Money
Fund Research Fund- Series Global Fund - Connecticut Market Fund +++
Small-Cap Value Growth & Income Series Florida
Series Income Series High Yield Fund Georgia
Alpha Series* Affiliated Fund Bond-Debenture Hawaii
Developing International Fund Michigan
Growth Fund Series Limited Duration Minnesota
Lord Abbett Mid-Cap U. S. Government Missouri
Developing Value Fund Securities Series+ New Jersey
Growth Fund Global Fund- U. S. Government) New York
is closed to Equity Series Securities Series+ Pennsylvania
new investors Texas
Washington
</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
under stand your investment objectives and, ultimately, offering fund recom
mendations 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 the fund(s) covered by this
report.
For more complete information about any Lord Abbett fund, in cluding risks,
charges and ongoing expenses, call your investment professional or Lord Abbett
Distributor LLC at 800-874-3733 for a prospectus. Read it carefully before
investing.
The Lord Abbett Family of Funds lets you access more than 30 portfolios designed
to meet a variety of investment needs.
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.
You may reallocate assets among our funds at any time. Speak with your
investment professional to help you customize your investment plan.
Numbers to Keep Handy
For Shareholder Account or Statement Inquiries: 800-821-5129
For Literature Only: 800-874-3733
24-Hour Automated Shareholder
Service Line: 800-865-7582
Visit Our Web Site:
www.lordabbett.com
** Lord Abbett Securities Trust - Alpha Series is a fund of funds investing in
shares of Lord Abbett Developing Growth Fund, Lord Abbett Research Fund -
Small-Cap Value Series and Lord Abbett Securities Trust - International
Series.
** Lord Abbett Balanced Series is a fund of funds investing in shares of
certain other Lord Abbett funds.
+ An investment in this Fund is neither insured nor guaranteed by the U.S.
Government.
++ An investment in this 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 mutual fund shares are distributed by:
LORD ABBETT DISTRIBUTOR LLC
90 Hudson Street o Jersey City, New Jersey 07302-3973
LAMCVF-2-1299
(3/00)
